Loan Information for Borrowers
Loans are borrowed money offered at various interest rates which are repaid over an extended period of time after you graduate or leave school. Depending on your program, financial aid packages at Columbia can contain two types of loan categories, External loans and Columbia University Loans. Please note that your access to various loans will depend on your program.
External loans come from some sources outside the University and in general fall into two categories, Federal loans and private alternative loans. Federal loans require that you complete the Free Application for Federal Student Aid (FAFSA). If you are interested in only the Federal loan programs, complete the FAFSA with your financial information and your spouse’s (if applicable).
Federal Direct Stafford Loan (Subsidized and Unsubsidized)
The Federal Direct Stafford (also called the William Ford Federal Direct Loan program) is designed to help students who are US citizens or permanent residents meet educational expenses. The lender is the US Department of Education.
If you received a Direct Subsidized Stafford Loan prior to July 1, 2012, the federal government pays the interest on the loan to the lender (i.e. "subsidizes" it) while you are in school, in grace, and during deferment periods.
All Stafford Loans for graduate students are unsubsidized loans. With the Direct Unsubsidized Stafford Loans, you are responsible for interest during in-school, grace, and deferment periods, although you may postpone paying the interest. In general, interest capitalizes after a six month grace period that begins when you graduate or leave school.
The annual loan limit for graduate students is $20,500. The cumulative debt allowed for graduate or professional study is $138,500 (of which no more than $65,500 may be in Subsidized Federal Direct Stafford Loans). This includes any Federal Direct Stafford loans received prior to matriculation at Columbia.
However, MD and DDS candidates may borrow additional Unsubsidized Stafford of $20,000 for a 9-month academic year and up to $26,667 for a 12-month academic year. This is over and above the regular annual limit of $20,500 for Direct Unsubsidized Stafford. Aggregate (cumulative) borrowing limits under the Stafford program are also higher for students eligible for this extra unsubsidized borrowing. The aggregate limit is $224,000, of which no more than $65,500 can be subsidized.
The interest rate for new loans is based on a formula for loans disbursed on or after each July 1st and is fixed for life. Each July a new rate is set for new loans (maximum 9.5%). For loans originated from 7/1/16 6/30/17 the rate is 5.31%.
An origination fee is withheld from each disbursement. As of October 1, 2016 the fee is 1.069%. It is usually adjusted annually on October 1st.
If you borrowed prior Stafford Loans your loans may have different rates than those described above.
Repayment of Staffords is “deferred” if you meet any of the following criteria:
· in school at least half-time
· unemployed, for up to three years
· can document economic hardship, for up to three years
· enrolled in a graduate fellowship program
· enrolled in a rehabilitation training program for disabled individuals (no time limit)
Payments may also be postponed for various reasons via a forbearance arrangement. Lenders cannot charge any fees in connection with granting forbearance.
Borrowers who are medical or dental residents and who do not otherwise qualify for deferment are eligible for administrative forbearance. Lenders are required to grant forbearance, which must be requested in writing in a "timely" manner. It is renewable at 12-month intervals until the residency program is completed.
Following a six month grace period and any authorized deferments or forbearance periods, the “standard” repayment plan gives you up to ten years to repay both principal and interest. If you owe at least $30,000 in federal loans you can request a 25 year ‘extended’ repayment plan. If you refinance Staffords under Federal Direct Loan Consolidation, you may extend your repayment up to 30 years, depending on your total educational debt. There are also “income driven” repayment plans based on income and family size (IBR, PAYE, and REPAYE). The first two require a “partial financial hardship” calculation to determine eligibility. These plans may provide a more affordable repayment amount than the standard and extended plans.
Federal Direct Graduate PLUS (GradPLUS)
The Federal Direct GradPLUS loan allows you to borrow up to the cost of attendance less any other financial aid you receive. This loan has a fixed interest rate and no annual or aggregate limits. You must be a US citizen or permanent resident to qualify. Credit checks are performed to determine eligibility, but the credit criteria are less stringent than for most private alternative loans. If you don’t meet the credit criteria you may still be able to obtain the loan with an “endorser” who does meet the credit requirements.
GradPLUS applicants cannot have adverse credit based on a review of at least one credit report from a national credit reporting agency. You have “adverse credit’ if you have one of the following criteria:
· Federal Student loans in default or delinquent status
· Accounts that are 90 days or more past due
· Evidence of default, foreclosure, tax lien, repossession, bankruptcy, wage garnishment, or judgments in the last 5 years
· Accounts in collection
· Accounts that were “write-offs” or were never able to be collected
A lack of credit history or insufficient credit history is not considered adverse credit. Creditworthiness is not based on a FICO score, debt to income ratio, or annual salary. To be eligible, you must complete a FAFSA. We recommend that you first apply for your maximum annual loan eligibility under the Stafford program. You will also have to complete a Master Promissory Note (MPN) for this loan.
The interest rate for new loans is based on a formula for loans disbursed on or after each July 1st and is fixed for life. Each July 1st a new rate is set for new loans (maximum 10.5%). For loans originated from 7/1/16 6/30/17 the rate is 6.31%.
An origination fee is withheld from each disbursement. As of October 1, 2016 the fee is 4.276%. It is usually adjusted annually on October 1st.
Deferment, forbearance, and repayment options are the same as for the Staffords.
GradPLUS loans taken on or after 7/1/08 have a 6 month post-enrollment deferment period. If you have both Staffords and GradPLUS loans from 7/1/06-6/30/08, you can request that the start of the repayment period for GradPLUS be “aligned” with the end of the 6 month Stafford grace period.
When comparing GradPLUS to “alternative” loans, an alternative loan may sometimes have a lower rate; but if an alternative loan’s interest rate is not fixed, and if inflation drives interest rates up, then over the life of the loan - which could be 20-25 years - the alternative loan may be more costly. Also, alternative loans may not have the same flexible postponements options or repayment plans as GradPLUS for future education or post-graduate training. GradPLUS Loans are eligible for Public Service Loan Forgiveness, while alternative loans are not.
We refer to some loans as "alternative loans" or “private loans” because they are neither institutional based loans nor are they federally authorized. If you wish to borrow an "alternative" loan, consult your Financial Aid Officer for more information. On our website you can find a guide for comparing private loans.
You can apply for most of them by phone or on-line. “Approval” is usually granted for a specific period of time (for example the approval may be good for 60 or 90 days before they would re-check your credit).
Columbia has a suggested lender list. This is not an exhaustive list of available lenders. You have the right and ability to select the education loan provider of your choice, are not required to use any of these suggested lenders and will suffer no penalty for choosing a lender that is not included on Columbia’s suggested lender list. For more information regarding Columbia’s lender selection process, please see the disclosure on their website.
Also note that there are other lenders available that offer loans for students who meet specific criteria, such as loans to students from certain states.
Good credit requires a continuous pattern of prompt payments, no current or history of payment delinquencies, and no negative items such as collections, write-offs, repossessions or foreclosures. A good credit history means that you are "creditworthy.” Some students have not yet established a credit history, and, for educational loans, this is equal to good credit. It is known as "credit-ready.” Future health service professionals are usually considered to be very good credit risks.
Bad credit, on the other hand, occurs from delinquent payments, or other negative items. The credit criteria used to approve student loans can include the following:
(1) absence of negative credit;
(2) no bankruptcies, foreclosures, repossessions, charge-offs, or open judgments;
(3) no prior educational loan defaults unless paid in full or making satisfactory progress in repayment; and
(4) absence of excessive past due accounts, i.e., no 30, 60, or 90-day delinquencies on consumer loans or revolving charge accounts within the past two years
Since lenders are required to report student loans to at least one credit bureau, your credit could be negativity affected because of failure to keep deferments current or to make required payments on time. Bad credit will not only deny you access to loans for education, you may not be able to finance a car, a home, a practice, or much of anything else. Your credit rating should be protected at all costs, and that means making wise decisions and knowing where problems might arise.
Credit scores are used by lenders to determine eligibility to borrow. Federal Direct Stafford Loans are not credit-based. To borrow in excess of the annual Direct Stafford Loan limit, you can apply for a Federal Direct Graduate PLUS, or a private (alternative) loan. These loans require you to be “credit ready” or “creditworthy.” Therefore, if you have a poor credit rating, it is imperative that you rectify past problems before matriculation. If you are denied access to these loans because of adverse credit or problems with prior educational loans, you may not be able to finance your education.
Furthermore, some “private” educational loans may require creditworthy cosigners. Before approving a co-signer, lenders may consider factors such as:
(1) do they have a good credit rating?
(2) do they have the appropriate debt - to - income ratio necessary to repay the loan if needed?
Cosigners are only called upon for repayment if you do not repay. To qualify for a private loan with a lower interest rate you may be able to add a cosigner with a long or strong credit history.
If you feel there is even a slight chance that you may have a credit problem, you should discuss the situation with your financial aid officer and immediately take whatever steps necessary to clear your record.
Columbia University (CU) Loans
CU Loans are low-cost loans lent by Columbia and awarded to students demonstrating “need”. CU Loans are available to students in the College of Physicians and Surgeons, DDS Candidates in the College of Dental Medicine, and students in the Programs in Occupational and Physical Therapy. There are currently no CU Loans available for Institute of Human Nutrition or Postdoctoral CDM students.
CU Loans are disbursed one-half each semester, and are applied towards your bill. Please note that federal regulations have identified institutional loans as “private loans” and as such, the University must follow the Regulation Z requirements, from the Truth in Lending Act (TILA) as described below.
Federal Perkins Loan No new Perkins Loans will be awarded for the 2017-2018 academic year.
The Perkins Loan is a low-interest (5%) loan previously awarded to certain students demonstrating exceptional need. No interest accrues while you are in school or during grace and deferment periods. Once grace and deferment periods have expired, the maximum repayment period is ten years, or longer if consolidated via a Federal Direct Consolidation Loan. Forbearance is available for a maximum of 36 months; during periods of forbearance, interest accrues and must be paid, but payments of principal are postponed.
Medical Students other CU Loans
By filing the FAFSA and CSS Financial Aid Profile you are automatically given consideration for "named" CU Loans, LDS, and PCL. International students must also submit the Certification of Finances Form. These loans are released one-half each semester, and are applied towards your bill.
Our "named" Columbia University Loans (CU Loans) are low-interest (4-5%) loans available to students who demonstrate financial need. Repayment terms vary with each fund; most require repayment to begin six months after graduation with a maximum repayment period of ten years. Most have liberal deferment options that allow you to postpone the start of the repayment period until post-graduate training is completed. In rare cases CU loans will require a co-maker. No interest is assessed during in-school, grace, and deferment periods. Following periods of deferment, principal and interest are repayable over a maximum of ten years.
The Loans for Disadvantaged Students (LDS) program is open to US citizens and permanent residents, and provides long term, low interest (5%) loans to students from disadvantaged backgrounds with financial need. Repayment may be deferred for the entire length of internship & residency, and for a maximum of 2 years for fellowships. Once grace and deferment periods have expired, principal and interest are repayable over a ten year period depending on the amount borrowed, or longer if “consolidated”.
The Primary Care Loan (PCL) is not awarded as part of the regular financial aid package. It provides long-term, low interest (5%) loans to students with exceptional financial need. No interest accrues while you are in school or during grace and deferment periods. Principal and interest are repayable over a 10-25 year period. This loan has the added requirements that you agree to enter and complete a residency-training program in primary health care not later than 4 years after the date on which you graduate and also that you continue as a primary care practitioner through the date on which the loan is repaid in full. If you fail to comply with the new requirements, strong financial penalties are applied. Fourth-year medical students post-match are given preference due to the severe financial penalties incurred if you do not pursue practice in an approved primary care field [this currently includes family medicine, general internal medicine, general pediatrics, and med-peds].
DDS Students Other CU Loans
By filing the FAFSA and the CSS Financial Aid Profile US citizens and permanent residents are automatically given consideration for all loans awarded directly by the school: HPSL, LDS, Hindels, and other "named" CU Loans. These loans are released one-half each semester, and are applied towards your bill.
The Health Professions Student Loan (HPSL) program provides long-term, low interest (5%) loans to students with exceptional financial need. Repayment of HPSL loans may be deferred until you have completed "advanced professional training" - this includes residency, full-time post-graduate programs (e.g. periodontics, prosthodontics), and fellowship. Fellowship deferments are available for up to two years. No interest accrues while you are in school or during grace and deferment periods. Principal and interest are repayable over a ten-year period, or longer if “consolidated”.
The George W. Hindels Loan was established to offset the burden of "high-interest" loans to students who demonstrate financial need. Repayment may be deferred until you have completed advanced professional training. (Unlike the HPSL and LDS, this deferment includes fellowships, regardless of length). No interest accrues during in-school, grace, and deferment periods. Following a six month grace period and any subsequent deferments, principal and interest (5%) are repayable over a maximum of ten years.
Our "named" Columbia University Loans are low-interest (5%) loans available to students who demonstrate financial need. Repayment terms vary with each fund, but most will have the same terms as the Hindels Loans. In rare cases CU loans will require a co-maker. No interest is assessed during in-school, grace, and deferment periods. Following the grace period and any subsequent deferments, principal and interest (5%) are repayable over a maximum of ten years.
The Loans for Disadvantaged Students (LDS) program provides long term, low interest (5%) loans to students from disadvantaged backgrounds with financial need. Repayment terms are the same as for HPSL.
OT and PT Students CU Loans
For students who demonstrate financial need, a small amount of low-interest (5%) loans are available. Repayment begins six months after graduation. Thereafter principal and interest are repayable over a maximum of ten years.
TRUTH IN LENDING ACT (TILA) & REGULATION Z
Regulation Z implements Title X of the HEOA (Higher Education Opportunity Act) which amended TILA. It added disclosure and timing requirements that apply to creditors making private education loans, which are defined as loans made for postsecondary educational expenses. The only loans exempt from these new requirements are Federal Direct Unsubsidized Stafford, Federal Direct Graduate PLUS (GradPLUS), and Federal Direct Consolidation Loans. Thus it applies to all CU Loans other than Federal Perkins, and will also apply to any private, alternative education loan.
The amendments to TILA, as implemented by Regulation Z, require that creditors (again, it could be Columbia University and/or banks extending private, alternative loans):
· Provide a number of disclosures to borrowers, which must be given at several different times in the loan origination process;
· Permit the borrower the right to accept the loan at any time within 30 days after receiving the approval disclosures;
· Allow the borrower the right to cancel the loan without penalty for 3 business days after receiving the final disclosures; and
· Obtain a signed ‘self-certification form’ from the borrower before consummating the loan.
If you plan to borrow any private, alternative loans, you can expect the lender to ask you for a ‘Private Education Loan Applicant Self-Certification Form’ prior to disbursement. The Form will request your cost of attendance, financial aid received and the gap between them. We can assist you in completing the Form.