PhD Payroll Transition Loan

APPLICATIONS OPEN ON 7/1/24 

Guidelines 

The transition from the PhD living assistance stipend to a salaried student Research Assistant (RA) appointment payroll may create a short-term cash flow problem for PhD students. A PhD student’s living assistance stipend is paid in monthly installments on the first of the month. These stipend payments are paid in advance and intended for living expenses from the time of payment through the end of the payment month. Salaried student RAs will be paid biweekly, beginning on July 1, 2024. These salary payments are not paid in advance. They are paid for a two-week period in the week after the payment period ends. As a result, during the transition from stipend payroll to salaried RA payroll, a student will experience about a month and a half gap between payments.  

For example, a student who transitions from a June stipend to a July 1 salaried RA appointment in 2024 would receive their final stipend check on June 1, 2024 and their first biweekly RA check on July 19, 2024 for the period of July 1, 2024–July 13, 2024. This gap in pay may cause a short-term cash flow financial hardship for some students. To address this potential hardship, Harvard Griffin GSAS is partnering with Harvard Federal Credit Union (Harvard FCU) to offer the PhD Payroll Transition Loan. This optional loan program is intended to relieve that cash flow financial hardship by providing a short-term zero percent interest loan, effectively advancing some future pay to cover short-term cash needs. 

While Harvard Griffin GSAS is securing the loan, allowing the zero percent interest rate, potential borrowers need to understand the following: 

•  This is an official loan between Harvard Federal Credit Union and the student, which will require the student to sign a legal promissory note. 
• The borrower is solely responsible for making timely payments to Harvard FCU. 
  • Late payments, missed payments, or a failure to repay the loan will negatively affect the student’s personal credit. 
  • Timely monthly payments of this loan over the 10-month repayment period should be thought of as no different than other consumer debt payments, such as credit card payments, where each late or missed payment will be sent to all three credit bureaus and noted on the borrower's credit report.  
• As the securer of the loan, Harvard University will take appropriate action to collect any balance due from the borrower in the case of default.  

Intent of program

The intent of the program is to provide a one-time short-term loan to Harvard Griffin GSAS PhD students who experience financial hardship due to the change in pay schedule when moving from a stipend to a salaried student research assistant (RA) appointment payroll. 

Eligibility 

• Active Harvard Griffin GSAS PhD students who are transitioning from the stipend payroll to a salaried student research assistant (RA) appointment payroll (most common in the sciences)  

Terms 

• Maximum loan amount of $3,000 
• Zero percent interest rate 
• Repayment to the Harvard FCU must be made over a 10-month period (loan term) 
• The application will be subject to a $25 processing fee to secure the loan, which may be deducted from the loan disbursement  
• Borrowers agree to pay balances due before leaving the University (graduation, leave, or other reason that removes active student status with Harvard Griffin GSAS). 

Failure to repay the loan, including failure to settle an outstanding loan prior to leaving the University, will negatively affect the borrower’s credit rating. In cases of default, Harvard Griffin GSAS will pay Harvard FCU the unpaid balance owed. Harvard Griffin GSAS will post any default to the student’s term bill, or attempt to recover by any other legal means, including deducting the defaulted amount from the borrower’s pay or stipend. If Harvard Griffin GSAS cannot recover the funds and discharges this debt, the University will report the defaulted amount to the IRS as taxable income for the borrower and the borrower will owe relevant income taxes. 

Process

Initial Affidavit

1. Interested and eligible students will complete an initial affidavit, which will be reviewed by the student’s home program and Harvard Griffin GSAS. The affidavit will: 
   1. confirm the student’s eligibility
   2. acknowledge and affirm the student’s understanding of certain terms and ramifications of default 
   3. confirm that the student is likely to be transitioning from the stipend payroll to the RA payroll within the eligibility period 
   4. confirm that the student has not previously taken advantage of this loan opportunity 
   5. confirm that the loan is requested due to anticipated financial hardship due to the payroll transition. 
2. Following the affidavit, the student will be connected to Harvard Federal Credit Union to complete the application. 
3. Repayment will begin 30 days after the loan is fulfilled. 
4. The borrower is responsible for making timely payments to Harvard Federal Credit Union.  

Restrictions 

• Students are eligible for this loan program once during their student career. 
• Eligible students will be able to apply starting one month before their expected transition date (RA appointment start date) and ending on the 15th of the month after their transition date. Affidavits received outside that period will not be eligible for this loan. 
  • For example, if the student and program anticipate that the student will transition from a stipend to a RA on July 1, the student can initiate the application from June 1–July 15. 
• Participants must be a member of Harvard Federal Credit Union (which requires a $5 minimum deposit). 
• If a student intends to complete a degree or otherwise leave Harvard Griffin GSAS (as an active student) prior to the end of the term of the loan, the student would not be eligible for this loan program.