Columbia University Student Financial Services

Credit and Student Loans

Access to student loans has become in­creasingly important to many students to finance their professional graduate educations. Moreover, good credit determines who can borrow and who can­not. Federal Stafford loans satisfy the borrowing needs of most students, and at this time they are not credit-based. To borrow in excess of the annual Stafford limits, however, you may need to apply for a private or “alternative” loan, and these loans require that you be "credit ready" or "creditworthy.” Without good credit and access to alternative student loans, some students may be unable to afford graduate education.

Lenders carefully review credit history to determine eligibility for their loan programs. Credit criteria used to review/approve student loans can include the following:

• absence of negative credit
• no bankruptcies, foreclosures, repossessions, charge-offs, or open judgments
• no prior educational loan defaults unless paid in full or making satisfactory progress in repayment
• 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

You should bear in mind that the student loan(s) you are now applying for will become part of your credit history and will also affect your credit score. Although it is often a concern for student borrowers, having multiple education loans and/or a significant amount of education debt does not necessarily mean you will have a poor credit score. People with small or large amounts of education debt can score well, provided they have managed their credit properly. Education loans are a good way for you to establish a positive credit history by making timely payments. Conversely, failure to meet repayment obligations will have a negative impact on your credit history and financial future.