Minnesota Student Loan Options
Finance Your College at the Lowest Cost
Minnesota is one of the few states whose student loan program survived the recession. The state agency responsible for helping students plan and pay for college is called the Minnesota Office of Higher Education (MOHE), and MOHE also administers the student loan program, which is called the SELF Loan.
About Minnesota’s SELF Loan
SELF Loan Eligibility
The SELF Loan initiative was introduced in 1984, and to date it has disbursed loans for over $1.8 billion, a considerable achievement. To obtain a SELF Loan, the student must present a co-signer who has acceptable credit (although the interest rate is not based thereon). Additionally, interest must be paid while in school, and that feature together with the guarantee provided by the co-signer help keep SELF Loan rates low.
Eligibility criteria for SELF are as follows:
- You qualify as a Minnesota resident, and attend an eligible out-of-state school.
- You are not a Minnesota resident, but you attend an eligible school in-state.
- The last elements in both of the two standards above are 1) at least half-time enrollment, and 2) clearing a satisfactory performance bar.
There is an interactive feature on the website (the “Check if you are eligible” button) that takes you directly to a list of participating schools, or you can find a page containing the list here. You will see some of the schools on that list are marked with an asterisk, meaning they do not take any new loans (for example, the Universities of Idaho and Illinois). Many of the schools are located in other states, which is a benefit to Minnesota students.
SELF Loan Cost
The SELF Loan is not based on financial need, nor does it charge any of the following fees: origination, application, or guarantee. You can always check the Frequently Asked Questions page for current SELF Loan interest rates, but as of 2013 rates are:
- Fixed rate: 6.9% for the life of the loan.
- Variable rate, which changes every quarter based on LIBOR (London Interbank Offered Rates) for the previous quarter: currently 3.3%, with a limit of 3% on interest rate changes during any 12-month period.
No individual student is ever charged more or less than other students on either rate.
Repayment Terms For Your SELF Loan
The SELF Loan’s repayment terms are simple and straightforward: you must always pay interest on the loan, it offers neither grace periods nor loan deferments (period of time during which you can suspend your payments), and it cannot be consolidated with federal student loans. Within 90 days after your loan proceeds are paid out, you must begin quarterly interest payments. Those interest-only payments continue while you meet the eligibility standards for enrollment (meaning half-time in a participating school).
Full repayment must begin nine years from the disbursement date (at the very latest). When you finish school, assuming you have not entered required repayment status at that time, you will have a choice between two minor variations of repayment, based on when the payment amount changes from interest only to interest and principal. Here they are:
- The Standard Plan lets you pay interest once each month for a year after you leave school, and full repayment begins thereafter.
- The Extended Interest Plan lets those monthly payments continue for a total of three years prior to full repayment, but keep in mind the extra expense when considering this option.
There are also three possible lifetimes for the loan, at the end of which your SELF Loan must be paid off. They are:
- A student with a principal balance under $20,000 must repay within 10 years of leaving school.
- For balances of between $20,000 and $40,000, the time for repayment is a maximum of 15 years.
- If your balance is $40,000 or more, you can take at most 20 years to repay the loan.
The servicer for your SELF Loan will be a Nebraska company called Firstmark Services, which bills itself as a private loan servicer. The SELF Loans are considered alternate loans (loans used when all other aid sources, including federal loans, will not cover the cost of your education altogether), and you must apply for federal loans before applying for a SELF Loan.
Don’t Forget Your Federal Student Loan Options
Minnesota students have all the federal student loans at their disposal, and MOHE encourages them to apply. Here are those programs as of 2013:
- The Direct Loan program offers four types of student loan (Subsidized, Unsubsidized, PLUS, and Consolidation) for students with different financial profiles and their parents, and for students at the undergraduate and graduate levels.
- The Perkins Loan program, for both undergraduates and graduate students, supports students with the largest amounts of financial need.
You can find more information about all the federal loan products here.