June 13, 2014
Stanford introduces new financial tools to help parents pay for college
Stanford, one of the few remaining institutions that admit undergraduates without regard for their ability to pay, is introducing a new installment program for parents and working with a company that offers innovative peer-to-peer loan programs.
By Kate Chesley
Karen Cooper, director of financial aid, says that even with Stanford's generous aid program, parents often look for financing alternatives. (Photo: Linda A. Cicero / Stanford News Service)
Stanford University is introducing two new financial tools to make college payments easier for families.
Beginning this summer, the university will offer families of undergraduates the opportunity to pay for their largest educational expenses – tuition, room and board – over the nine months of the academic year instead of in three quarterly outlays.
Under the installment program, parents of undergraduates will be able to begin spreading their payments out as early as July for the 2014-15 school year. The program will be offered without fee. Parents can learn more about the installment payment plan by visiting the Student Financial Services website.
In addition, Stanford will work with SoFi, created by Stanford graduates, to encourage the company to provide parent loans. SoFi, which was started by four alumni of Stanford Graduate School of Business, is a peer-to-peer lender that augments loan programs with career coaching, entrepreneurship support and unemployment protection.
Both new programs were reviewed by Stanford's Board of Trustees on June 11.
Stanford, one of the few remaining universities that admit U.S. students without regard for financial need, already has an aggressive undergraduate financial aid program. Under enhancements instituted in 2007, parents with typical assets and family incomes below $100,000 are expected to pay nothing toward tuition. More than 75 percent of Stanford students graduate without debt.
Still, Stanford is aware that, even with its generous financial aid program, some families struggle, according to Karen Cooper, director of financial aid at Stanford.
"We've been talking to parents for some time about what we could do to make it easier for them," Cooper said. "Even with our generous aid program, parents who haven't saved for college costs are often looking for financing alternatives. Although our parents have access to the federal parent loan program, with an origination fee over 4 percent and a 7.21 percent interest rate, we saw some parents having to make difficult choices. This alternative from SoFi gives parents another viable option."
SoFi was launched to offer innovative alternatives to federal or bank-secured loans in light of the national student debt burden. The parent loan program will be limited to U.S. citizens or permanent residents who meet credit approval criteria. Information on the program is available online.
"While Stanford has among the strongest need-based financial aid programs in the country, the university is also committed to providing a strong and reasonable parent-loan program, if and when it is necessary," said Richard Shaw, Stanford dean of undergraduate admission and financial aid. "We are pleased that SoFi has agreed to assist the parents of enrolling Stanford undergraduates with a very strong and viable option to help them meet their assessed contribution toward their children's cost, when necessary."