Private Educational Loan Programs
Since the maximum annual loan available to graduate students through the Federal Direct Stafford Loan Program is $20,500, students may apply for private educational loans to assist them with tuition and other expenses that are part of a student’s cost of attendance. Funds from private educational loan programs may be used to meet the budgeted cost of education, minus any other financial aid, including external grants or benefits and tuition exemption. It is recommended that U.S. citizens and eligible noncitizens apply for federal loans before private/alternative loans because federal loans generally have better terms and conditions.
While the private loan programs may differ in their guidelines, limits, and costs, they all involve credit reviews, and require a satisfactory credit history for the borrower and any co-borrowers. Again, we strongly urge you to obtain a copy of your credit report, and please refer to the Credit section. Remember that students who have defaulted on prior educational loans, or who otherwise have an adverse credit history, may not be able to secure the loans necessary to finance their education. Institutional funds will not be available to replace unavailable private loans, and in such cases students will have to find other means to pay for their education.
Some Items to Consider
When considering the options for your private loan borrowing needs, you also may want to consider the Federal Direct Graduate PLUS Loan Program, which has a fixed interest rate of 7.9%. Students are eligible to borrow the Federal Direct Graduate PLUS loan provided they are U.S. citizens or eligible noncitizens, have satisfied all Selective Service Act requirements, are not in default or owe a repayment on any Title IV program, and maintain satisfactory academic progress. This loan allows the student (not your parents) to borrow up to the cost of attendance less any other financial aid and has no aggregate limits. A credit check is required to be eligible for this loan, but the credit criteria are less stringent than with most private student loans. This loan program has the benefits of a federal loan program (deferment, forbearance, death and disability cancellation, consolidation, etc.), but does not offer a grace period; repayment begins immediately after graduation or after enrollment status drops to less than half-time. However, loan servicers may offer optional deferment or forbearance for students unable to make loan payments upon graduation.
Additionally, please be aware of the College Cost Reduction and Access Act of Loan Forgiveness for Public Service Employees. The federal loan forgiveness provisions require borrowers to have borrowed Direct Loans or to have consolidated their federal loans through the Federal Direct Consolidation Program. As such, we advise that borrowers carefully consider the available educational loan programs (private versus Direct Graduate PLUS) to ensure that their individual loan borrowing fits into their long-term financial planning. While borrowing through private educational loan programs may provide better loan terms in the short term, it also may limit your options should you decide one day to use the Federal Loan Forgiveness for Public Service Employees program. While we encourage loan borrowers to refer to the detail of the actual legislation in determining all relevant issues, the Financial Aid Office is available to address individual concerns.
Please be aware that students have the right and ability to select the education loan provider of their choice, are not required to use any suggested lenders, and will suffer no penalty for choosing a lender that is not a suggested lender. Again, it is recommended that U.S. citizens and eligible noncitizens apply for federal loans before private/alternative loans because federal loans generally have better terms and conditions. We encourage you to contact loan providers directly for their most current information, and to review carefully loan terms and conditions before borrowing any loan.
More Helpful Information
Please refer to Comparing Credit-Based Educational Loans for help in understanding and evaluating credit-based (Federal Direct Graduate PLUS, private) educational loan terms, and to the sections Credit and Loan Approval for very important information on applying for credit-based educational loans.
Information regarding private educational loan programs is also located on the Columbia University Student Financial Services website under the Private Loans section. Students interested in these loan types must carefully review the Columbia University Student Financial Services website for detailed graduate loan information.