About Private Loans
Private student loans, also known as alternative education loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete.
Some families turn to private education loans when the federal loans don't provide enough money or when they need more flexible repayment options. However, since federal education loans may be less expensive and/or offer better terms than private student loans, you should consider exhausting your eligibility for federal student loans before applying for private student loans.
Many students take out private education loans in order to finance their education. With that, it’s best to get as much information as possible before you begin the process.
DISCLOSURE ON LENDER INFORMATION
Before you and your family begin to explore your loan options, we ask that you read the University's Disclosure Concerning Lenders.
Eligibility
Generally, to be eligible for a private loan you must:
Be a student registered at Columbia University at least part-time
Have a valid U.S. Social Security Number
Be a U.S. citizen or U.S. permanent resident (International students may be eligible for a private loan with a creditworthy U.S. citizen or U.S. permanent resident
Complete a loan application with your lender of choice
Have a U.S. credit record with no bankruptcies, not be in default on any education loan or owe a refund on an education grant, and meet the applicable credit eligibility requirements.There is a co-signer option for some students who do not meet the credit criteria. We encourage you to read the Good Credit section for more information.
How To Apply
You must contact your lender of choice for the application process. Check with your School Financial Aid Office for information about specific deadlines and to see if they require you to submit a copy of the application to their office.
Borrowing Limits
The student budget or Cost of Attendance represents the maximum aid you can be awarded through any combination of scholarships, fellowships, federal and private loans certified through Columbia University for the academic year.
To determine the maximum amount you can borrow in alternative loans, take the student budget and subtract any other financial aid awards, and the balance is the amount you can borrow in an alternative loan.The minimum loan amount is generally $1,000.
PLEASE NOTE: Before applying for private or alternative loans, you should first consider borrowing the full amount for which you are eligible under the Federal Direct Loan program and any institutional loans.
AGGREGATE LIMITS
Each lender has its own policy for aggregate loan limits. Please contact them for more information.
Interest Rates
The interest rate on a private loan will always be variable or floating. This means that your rate will change every month or quarter depending on your lender. Each lender uses their own pricing models based on either the 3-month LIBOR (London Interbank Offered Rate) or the Prime Rate (as published in the Wall Street Journal) and is based on the strength of your (or your co-signer’s) credit score and history.
Interest accrues from the date of disbursement.Interest can be paid while enrolled or deferred and capitalized at the time of repayment.
Fees
There are no origination or guarantee fees, even for co-signed loans. For more information on fees, contact the lender or your School Financial Aid Office.
Getting Your Funds
Private educational loans are disbursed in a variety of ways. Some lenders send checks that are payable directly to the student borrower, others send checks that are co-payable to the student borrower and Columbia University or transmit funds electronically directly into the student’s University account. If the check is made payable directly to you, the student borrower, please contact your School Financial Aid Office.
If the check is co-payable to you, the student borrower and Columbia University, the check must be endorsed for deposit into your University account.
Private Education Loan Applicant Self-Certification Form
In addition to the three disclosures by the Truth in Lending Act, all private education loan borrowers must complete a Private Education Loan Applicant Self-Certification Form and submit the form to their lender of choice before the private loan can be consummated.
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Suggested Lenders:
2022-2023 Academic Year (current academic year):
The University has selected the Suggested Lenders based on several factors including cost and eligibility, benefits to borrowers, and overall customer service. Information about the process can be found in the University's Disclousre Concerning Lenders noted above. Students have the right and ability to select the lender of their choice and are not required to use any of the lenders on the suggested lender list. Students are encouraged to shop around to find the lender offering the rates, terms, and service that are right for them.
ELM select is an external web-site that allows students to review the Suggested Lender List(s), compare products, and apply for private loans.
- For Domestic Students, please visit ELM Select for Domestic Students
- For International Students, please visit ELM Select for International Student
Federal Direct Graduate PLUS vs. Private Education Loans
If you are still trying to decide between a private loan and Federal Direct Graduate PLUS Loan, below are some things to consider.
You may prefer the Federal Direct Graduate PLUS loan if you: | You may prefer the Private Education Loan if you: |
Like the certainty that a fixed-rate loan provides | Are comfortable with the possibility of variable interest rates |
Your credit is Good, Fair, or Poor; your cost will likely be lower given the current Prime & LIBOR rates | Have Superior credit. You may be charged less interest now |
Like the protection of greater deferment and forbearance options | Believe there is little possibility that you may use the deferment or forbearance options |
You prefer repayment incentives that reduce your interest rate to less than the 8.5% | Plan to borrow the loan only for a short time and plan to repay it quickly |
Do not mind an initial 4% origination fee |
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Need at least 10 years to repay the loan |
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Other Private Loans
Some banks may recommend a home equity loan or line of credit as an alternative to education loans. They argue that the interest rates are competitive with education loans and the interest is usually fully deductible. However, there are several aspects of these loans that should be considered.
The primary method of evaluating a loan is by comparing the interest rate on the loan with the interest rates on other forms of financing. The interest rates on most home equity loans and lines of credit are often higher than the interest rates on the Federal Stafford and Federal PLUS loans, but potentially lower than most private education loans. This means a Federal loan will typically cost less than a home equity loan, and a home equity loan will often cost less than a private education loan.
So if you are thinking about getting a private education loan, you might consider a home equity loan or line of credit as a possible alternative. But generally you will be better off relying on the Federal education loans.