BC Financial Aid Office Gives Counsel on Loans

As private loans gain in popularity, Barnard College introduced an experimental program last year to cut back on the number of students taking out these loans.

Barnard’s administration expressed concern about the increasing pervasiveness of the loans because they pose an added risk to students, as they are not guaranteed by the government and have unrestricted interest rates. Alison Rabil, Director of Financial Aid at Barnard, said that before the program was implemented, she was concerned about students taking out private loans at an increasingly higher rate while the rate at which federal loans were being taken out was remaining the same.

“I was disturbed,” Rabil said of the trend. “We wanted to make sure that they [private loans] were only used as a last resort.”

Rabil’s team introduced a loan counseling program, which requires that every family applying for a private loan talk to a counselor at the Barnard College Office of Financial Aid to ensure that it had exhausted all other loan options before getting its application approved.

Through these conversations, administrators found that families were often unaware of the risks of private loans, and that there are more flexible federal loan options available to students and parents, such as government-guaranteed loans and Stafford Loans, which have fixed rates of interest and flexible repayment schedules.

“I got zero counseling before I got my loan and I was basically in my advisor’s office crying because I didn’t understand anything,” said Carmen Jo Ponce, CC ’08, who has taken out private loans to finance her education for the past three years.

“It’s like a very nicely priced credit card. You want to minimize the amount you put on this line of credit,” said Rabil.

Rabil said that since the change in policy, the number of families applying for private loans has declined by about 60 percent, down from 98 families last year to 39 this year. The total amount of money being borrowed from private loan companies decreased by 73 percent, down from a little over a million and a half dollars to $400,000 in a span of one year.

“There are definitely situations where families need to take out private loans,” Rabil said. “But at least this way they understand what they are doing and are better informed about all the options available to them.”

“I think a loan counseling program is a great idea, especially for students who have to take out loans on their own name and not their parents’, because it is such a confusing and intimidating process,” Ponce said.

Columbia’s office of Undergraduate Financial Aid declined to comment when asked whether Columbia might implement a similar program.

Niyati Roy can be reached at niyati.roy@columbiaspectator.com.