If you’re pursuing higher education in the Land of 10,000 Lakes but want to avoid drowning in Minnesota student loans, you’ve come to the right place.
Whether you’re attending the University of Minnesota (UM) or another school in or beyond the Twin Cities — or even if you’ve already graduated — there are programs in Minnesota for your borrowing or repayment purposes, besides the federal and private options available nationally.
By borrowing smarter, you could stand out among your neighbors. After all, about 7 of 10 college graduates in Minnesota leave school with debt, the fourth-highest proportion in the country, according to the Institute for College Access & Success.
How to get student loans in Minnesota
Federal and Minnesota student loans
Assuming you’ve already investigated Minnesota grants for school and other gift aid that doesn’t need to be repaid, the federal government will likely be your first stop on the search for loans.
Although the Minnesota Office of Higher Education (MOHE) also provides a student loan option, MOHE also recommends considering your federal loan options first. Part of the reason is that the state’s offering — nearly 8,000 SELF Loans were disbursed in 2017 — doesn’t include federal loan protections, such as:
With the Department of Education acting as the lender, federal loans are accessible to undergraduates, postgraduate students and parents borrowing on behalf of children. If you’re especially in need, you could qualify for Direct Subsidized Loans, which are interest-free while enrolled, during post-school grace periods and for other deferments.
Completing the Free Application for Federal Student Aid (FAFSA) is a required first step for both federal and Minnesota’s SELF loans. Both also award the same interest rates, regardless of credit history or income.
But that’s where the SELF Loan starts to differ from federal loans in a few important ways. Specifically, with SELF Loans…
- A cosigner is required (but cosigner release isn’t available until the loan is paid in full).
- Fixed and variable interest rates are available.
- Loans are exclusively for students attending a Minnesota school or Minnesota residents attending an eligible out-of-state school.
- No grace periods or deferments are provided.
- In-school interest payments are required.
Also, there are only two repayment plan options: a standard plan that calls for principal and interest payments and an extended interest plan that allows you to make interest-only payments for two years before entering full repayment. Your repayment term — 10, 15 or 20 years — depends on the amount you borrow.
Because the SELF Loan is weaker on repayment flexibility and safeguards, you’re likely better off prioritizing federal loans. Instead, consider the SELF Loan — like private loans described below — as a potential supplement.
Another possible bridge toward your cost of attendance are loans directly from your school. Although treated by the Department of Education as private loans in some cases, this type of debt could include more protections than the average bank provides. If you attend UM, for example, you could receive up to $4,000 (for undergraduates) or $6,000 (graduate students) per year via the University Trust Fund Loan.
Private student loans
There are rare cases when you should resort to private student loans over federal and Minnesota student loans, but they don’t apply to most borrowers. Unless you have an exceptional credit score, stable career and no need for government protections, for example, private loans should be your last resort, since they lack the safety net given by federal loans.
Like MOHE, private lenders — including retail banks, credit unions and online institutions — often require undergraduates to apply with a cosigner, particularly if they have a thin credit file.
If you prefer being walked through the private student loan process with a local lender, consider these Minnesota-based banks and credit unions:
- Think Mutual Bank
- Borrow as little as $1,000 or as much as $100,000 for undergraduates, and $300,000 for graduates
- Choose between variable and fixed hybrid rates
- Repayment options include an income-sensitive plan
- Affinity Plus Federal Credit Union
- Take out as much as $75,000 on a line of credit that could span your college tenure
- Select a repayment term of 5, 10 or 15 years
- Mid Minnesota Federal Credit Union
If finding the best loan available — regardless of whether the lender has a nearby branch — is your priority, consider the following nationally-ranked private lenders too:
- Citizens Bank
- Accessible to undergraduates, graduate students and parents, as well as international students with a U.S. citizen or permanent resident cosigner
- Receive multi-year approval to expedite future borrowing
- College Ave Student Loans
- Pick one of four repayment options, including in-school payments or full deferment
- Apply with a cosigner and score a low fixed or variable rate
- Receive borrowing advice from a CommonBond Money Mentor
- Find relief from repayment via economic hardship forbearance
Balance your priorities — whether they’re in-person customer service and long loan terms, or mobile-friendly account monitoring and protections — with your search for a low interest rate to save you significant cash down the road.
How to refinance student loans in Minnesota
As you might already know, student loan refinancing, like consolidation, allows you to group your current loans into one new loan. Unlike consolidation, you could potentially score a lower overall interest rate, depending on your (or your cosigner’s) credit score and debt-to-income ratio (DTI).
Refinancing isn’t right for every borrower, however. It permanently strips away government-exclusive protections on federal loans, turning them private in one fell swoop. It also locks you into a repayment plan, unless you choose to refinance again.
If these side effects of refinancing sound alarming, you might be better off consolidating your federal loans with the Department of Education. That way, you can group your loans and retain repayment flexibility, though you won’t get to lower your interest rate.
But if refinancing sounds appealing, the good news is that it’s available from a variety of different sources. You could even refinance with MOHE: It’s SELF Refi loan is open to borrowers (and cosigners) with credit scores at or above 700 and DTIs at or below 45%.
It’s not exactly Minnesota’s motto, but if you’re unhappy with your rate, you don’t have to stay in-state. Like with 529 college savings plans, many states allow you to refinance with them regardless of where you live or went to school. You could refinance your Minnesota student loans in Massachusetts, for example.
There are also plenty of local banks and credit unions, as well as online lenders competing for your business:
- Affinity Plus Federal Credit Union
- Refinance up to $100,000 of education debt
- Choose a fixed or variable interest rate
- North Shore Federal Credit Union
- Refinance up to $100,000 of education debt
- Select a loan term of 5, 10 or 15 years
- Prequalify without harming your credit
- Choose a loan term between 5 and 20 years
- Laurel Road
- Refinance education debt for your associate’s, undergraduate or postgraduate degree
- No application, origination, disbursement or prepayment fees
- Refinance up to the full balance of your qualified loans
- Pause your loan repayment via the lender’s unemployment protection program
If you’re sure that refinancing will help alleviate — not worsen — your Minnesota student loans, take your time finding the right lender. Shop around not only for a low interest rate, but also a loan company that will be by your side as you progress toward the finish line.
You could start your search with our top-ranked student loan refinance companies.
The bottom line: Student loans in Minnesota
For veteran and rookie borrowers alike, student loans in Minnesota come in many shapes and sizes. Banks and credit unions located in the state compete with online lenders that operate nationally.
Minnesota residents and students should prioritize their federal loan protections, however, and also consider the state’s SELF Loan program among the competition.
Whether you’re looking to optimize your repayment, or you’re a new borrower seeking the right lender, don’t settle for the first offer you receive. Hunt down the lowest interest rate and best overall loan. That can help put you in an excellent position to repay it down the road.
Note: Student Loan Hero has independently collected the above information related to student loan interest rates and terms. The financial institutions mentioned have neither provided nor reviewed the information shared in this article.