For Imediate Release:					Contact:
								Anne Canty  (212) 854-5579

New Columbia University Educational Financing Package Uses Bulk Buying to Save Students $1000's

Beginning in Fall 1997, students at Columbia University who borrow money to attend college can save thousands of dollars through the Columbia Comprehensive Educational Financing Plan. Columbia negotiated lower cost loans for its students by using "bulk purchasing" principles. In so doing, it has started a trend in the country's educational financing market. Last winter, more than 25 financial institutions received from Columbia a Request for Proposals (RFP) to provide a package of educational financing services, exclusively for the university. The Columbia plan offers students numerous educational financing options, which can supplement other federal, state, and institutional grants and loans. The plan includes a variety of loans, tuition installment and pre-payment plans, and tuition insurance, in case a student has to leave school. The cost of a $5,000 loan taken by a parent on behalf of a student and paid over 10 years will decline by 10%, or almost $800 from this year to next year, under the terms of the new Columbia plan. Correspondingly, the savings for a student who takes a $5,000 loan in each year of college are over $3,000. The educational financing industry's standard loan structure assumes that some students will default on their loans. Accordingly, loan rates are set to cover that risk. Because Columbia students have a low default rate, the risk factor for that group alone is smaller, therefore lower rates can be passed along to the students. Columbia was able to save money for its students by negotiating lower loan guarantee fees and in some cases, lower interest rates. Columbia students will see an almost across-the-board decline in private loan guarantee fees ranging from 12% to 29%. For instance, this year the guarantee fee for a $10,000 medical school loan was $850, next year it will be $600. With all the savings figured in, a medical student stands to save approximately $1,114 on a $10,000, 20-year loan. Columbia University is comprised comprises 15 schools, offering graduate, undergraduate, and professional degrees. The Columbia Comprehensive Educational Financing Plan is designed to offer options to the entire Columbia student body, including special loans for foreign students, part-time students, students studying for the bar, and for medical student relocation. "Columbia's student body is wonderfully diverse, including in terms of economic status and fields of study," said Columbia University President George Rupp. "We value this diversity highly, which also means that we must be creative in helping the approximately 25% to 30% of our students who borrow find better ways to pay for their education. The Columbia Comprehensive Educational Financing Plan will allow doing that in the most economical way." To provide the savings offered in its comprehensive plan, Columbia reached agreement on terms with three financial institutions on loans and payment plans exclusively for its students. A fourth company has agreed to provide tuition insurance. The three financial institutions that will provide Columbia-specific loan and plans are: --- The Access Group, which will provide eight loans, ranging from the traditional loans taken by students and their families, to loans specifically for part-time students, and relocation loans for medical students who will incur moving expenses; --- CoreStates will supply the tuition pre-payment plan and a line of credit, which may be guaranteed by a second mortgage, thereby offering tax advantages; --- USA Group Enterprises, Inc., will provide the tuition installment payment plan; and --- A.W.G. Dewar, will offer tuition insurance. "The Columbia Comprehensive Educational Financing Plan was created not only to be a vehicle for savings, but a planning tool for families and students--a way of providing better service," said Mark Burstein, Vice President for Student Services. "It is designed to help students and their families get better information about educational financial planning. The information on all the payment and loan options will be gathered in one folder, which will also include a work sheet for figuring out the best combination of payment options." Columbia's plan has already marked a shift in the country's educational financing market. According to several financial institutions that made proposals to Columbia, dozens of schools have expressed interest in similar school-specific financing programs and several have actually submitted RFPs to that end. Daniel R. Lau, President of The Access Group, said, "We see this as a unique opportunity to be involved with an innovative education financing plan that will result in a net savings for students and their families. The increased interest in school-based loan programs, and the actual RFPs that we have seen subsequent to Columbia's RFP, signal an evolving market. We hope to continue to work with Columbia to offer their students more and better options." 11.13.96 19,002