July 23, 2018
Contact: Sandy Connolly (651) 259-3902
As Minnesota students and families finalize details on paying for college this fall, they often find their resources don't fully cover all of the costs of attendance. If a private student loan is considered to help bridge that gap, it is important for families to know that not all private loans are equal.
"We encourage students and families to carefully consider how much they borrow for college, but loans are often a necessary part of the package," said Commissioner Larry Pogemiller, Minnesota Office of Higher Education. "While there are several options on the market, families need to be careful - many come with high interest rates and lack flexibility."
The SELF Loan, a private loan administered by the State of Minnesota Office of Higher Education (OHE), is one of the least costly and most transparent options. The SELF Loan offers both a fixed and variable interest rate, currently at 6% and 4.3%, which are the same for all applicants regardless of income or credit score. And unlike many other private loans, applicants know the interest rate they'll pay prior to completing the application. Another benefit is there are no application or origination fees.
An applicant for the SELF Loan must be enrolled in an eligible school in Minnesota or be a Minnesota resident enrolled in an eligible out-of-state school. The applicant must be enrolled at least half-time in a certificate, associate, bachelor's or graduate degree program, have satisfactory academic standing and be current on any existing student loan obligations.
Students are required to complete the Free Application for Federal Student Aid (FAFSA) as the first step to SELF Loan qualification and are encouraged to explore federal loan options that may offer features and flexibility the applicant finds attractive. It is important to note, however, that while the U.S. Department of Education recently raised the interest rate of a Direct PLUS Loan for parents to 7.6%, the fixed rate for SELF Loans remains at 6%.
Student loan borrowers locked into higher rate private loans may be able to lower their monthly payments and overall debt by refinancing with the SELF Refi loan program. To be eligible for the SELF Refi program, borrowers must be a Minnesota resident, have completed at least one postsecondary credentialed program and meet certain credit criteria. The majority of all student loans qualify.
Pogemiller said that an increased investment in state need-based aid over the past few years, combined with a growing awareness of the long-term costs of borrowing, has led to a small decline in student borrowing. Private loans still remain an important resource, however, to helping some students complete their postsecondary education.
If you have any questions, contact Sandy Connolly at 651-259-3902, or by email at email@example.com.