State-Based Student Loans
Depending on which state you live in, you may be eligible for state-based student
loans. Just like
state loans likely offer more favorable rates and repayment terms than
Five states currently offer loans, and each has its own terms and conditions. They
are Minnesota, Texas, New Jersey, Alaska, and Hawaii.
Minnesota Student Loan Programs
Minnesota offers SELF loans to undergraduate and graduate students. Undergraduate
students may borrow up to $7,500 per year, while graduate students may borrow up
Borrowing through a SELF loan requires quarterly repayment starting 90 days after
the first disbursement. Interest rates vary quarterly throughout the life of the
loan. However, the interest rate cannot increase or decrease by more than 3% in
any 12-month period. The historical average interest rate for the past 12 months
(ending Aug. 2009) is 6.6%.
To be eligible, Minnesota residents must have a creditworthy cosigner and attend
a college either in Minnesota or in a state or Canadian province that has completed
an "operating agreement" with the Minnesota Office of Higher Education. Just because
you're not from Minnesota, it doesn't mean you won't be eligible. Check with the
college you're applying to.
Texas Student Loan Programs
The Hinson-Hazlewood College Student Loan Program provides low-interest student
loans to Texas residents who are enrolled at least half-time. The borrower (or cosigner)
must have a good credit standing.
The Hinson-Hazlewood Program consists of two loan programs: the College Access Loan
Program (CAL) and the Health Education Loan Program (HELP).
The CAL Program offers students a choice of variable or fixed interest rates and
provides a six-month grace period before repayment begins. The fixed annual rate
for 2008-09 was 6%, and the variable rate was 3.91%. The variable rate changes each
year, but it will never be more than 4 points above the rate at which the loan was
originally made. Both undergraduate and graduate students may be eligible for this
The HELP loan has a fixed interest rate of 6% for 2008-09. There is a nine-month
grace period before repayment begins. This program is available to students enrolled
in programs leading to a degree in medicine, osteopathy, dentistry, podiatry, veterinary
medicine, pharmacy, public health, nursing, or allied health.
New Jersey Student Loan Programs
NJCLASS Loans allow you or your parent to borrow money at a low, fixed interest
rate, and the funds may be used for any education-related expenses. The borrower
(or cosigner) must demonstrate creditworthiness and meet minimum income requirements
on the federal poverty level for a family of four. You must borrow the subsidized
portion of your Stafford Loan (if eligible) before receiving the NJCLASS Loan.
The borrower has a choice of three repayment options:
- Monthly principal and interest payments;
- Interest-only payments while in college; or
- Deferred principal and interest while in college.
Loans approved after August 7, 2008, have an interest rate of 7.62% for options
1 and 2, and 7.92% for option 3. These fixed interest rates change annually.
Alaska Student Loan Programs
The Alaska Supplemental Education Loan Program offers fixed, low-interest loans
to undergraduate and graduate students. Repayment starts six months after graduation
or when the student's enrollment status is less than half-time.
- You must complete a loan application/promissory note and have a good credit standing,
or a creditworthy cosigner is required.
- You must be up to date with your child support payments.
- There is a 3% origination fee that is deducted from the awarded amount.
- Alaska residents attending an eligible out-of-state college may qualify for this
award if the student maintains Alaska residency. Non-Alaska residents may also be
eligible for this award if attending a participating Alaska college. Check with
your college to see if it participates in this loan program.
Hawaii Student Loan Programs
The Hawaii State Higher Education Loan (SHEL) is available to undergraduate and
graduate students. Hawaii residents who demonstrate financial need are eligible
for this low, fixed-rate loan.
- You must sign a promissory note and possibly attend a loan counseling session.
Contact the college's financial aid office for procedure details and deadlines.
- The interest rate was a fixed 5% as of August 2009, and repayment begins nine
months from the day the student drops below half-time status, leaves college, or
- You may not be able to consolidate this loan award with your federal loans. Check
with the college's financial aid office about consolidation rules.
- Your loan amount may vary depending on the type of college you attend.