Minnesota Student Loan Refinance: State officials in Minnesota are attempting to take some of the stings out of high student debt, carrying out a new program that could encourage thousands of residents to refinance student loans and drive down monthly payments.
Most times, everyone wants to be at the top but the case is different with Minnesotan’s College debt. With the average Minnesota student borrower accruing $31,911 in debt by graduation, Minnesota takes the ninth spot in a list of states with the highest average debt.
Minnesota has a loan delinquency rate of 9.37 per cent on loan payments, slightly above average (9.23 per cent), and certainly well below the highest rates that hit just over 16 per cent.
One way to keep your student debt in check is to secure the best rates, and if you are a resident of Minnesota who has completed a post-secondary study course, you may be able to refinance your existing loan debt through the frequently referred to as SELF Refi’s Minnesota Student Loan Refinancing Program.
Who Can Qualify For the Minnesota Student Loan Refinance?
The State of Minnesota has detailed qualification criteria. This is a program to help the best borrowers obtain the lowest rates. People with less than perfect credit history or a low FICO score will not be able to qualify. However, in order to qualify, you must:
Be a resident of Minnesota
Have a certificate, diploma, associate, bachelor or graduate degree
Have a minimum credit of 720 to qualify without a co-signer. With a co-signer, you can have a FICO as low as 650. However, there is a minimum credit requirements for the co-signer.
Have a debt-to-income ratio of 45% or lower. This ratio is calculated by taking your monthly payment obligations and dividing them by your monthly income. If you have an unused credit card, the minimum payment (based upon your available credit) will be used in the calculation.
Have no delinquencies on your credit history.
Must have no unpaid charge offs, liens, or judgments of $300 or more.
Have a co-signer if the borrower is not a US citizen or a permanent resident.
You cannot refinance Parent PLUS loans with this program.
Are There Downsides to This Program?
The rates for this Minnesota Student Loan Refinancing Program are not highly competitive, with many student loan refinancing firms offering full 1–2 percentage points below the lowest rates available through the SELF Refi Loan.
That does not, however, suggest that these lower rates can be easily obtained, so borrowers in Minnesota may want to include the SELF Refi Loan in their list of potential lenders.
Borrowers should also be aware, apart from the rates, that there are no deferment options— not even while the borrower is in school— and repayment plans must start as soon as the funds are disbursed. That said, the program offers two four-month lifetime of the loan.
It is also important to note that the benefits associated with these loans will no longer be available to borrowers who are considering refinancing their federal student loans. It includes deferments, revenue-driven repayment plans, and student loan forgiveness in some other situations.
While rates are not necessarily as low as those offered by alternative lenders, however, credit requirements are fairly high, some borrowers may not be eligible based on their credit score history, debt-to-income ratio, or past delinquencies, bonds, and judgments that appear on their credit report and credit history. In fact, certain lenders with excellent credit would probably find this option.
Are Better Deals Elsewhere?
The SELF Refi programme, which is set by the loan term, offers very competitive interest rates. Your credit score will not affect your rate. For example, a five-year loan has a fixed 3.50 percent interest rate and a variable 3.00 percent interest rate. Fifteen-year loans have a rate of 6.95% (fixed) and 4.35% (variable).
Variable interest rates start at 2,13% for five-year loans and fixed interest rates start at 3,50%. But at some leading lenders, interest rates can rise to 7.74 per cent (fixed) and 5.93 per cent (variable).
Like the State of Minnesota, if you apply to refinance with a private lender you will give up federal income-based protection. Before chosing, you should apply to as many lenders as possible to find your best rate.
And you do not have to worry about the impact on your credit score. According to FICO, “your score considers all inquiries within a 45 days period for a mortgage, an auto loan or a student loan as a single inquiry.”
You may be accepted at a private lender, even if the Minnesota State has refused you. And, in some circumstances, you may find that a private lender gives you a lower interest rate. Until making a decision, it is worth the time to make a comprehensive price comparison.
For instance, SoFi, a leading lender on the market, has recently completely abandoned the use of FICO. You could be approved regardless of your credit score if you are a recent graduate with an excellent income and job. Minnesota State has transparent and strict cutoffs from FICO.
Does This Solve The Student Loan Problem?
Sadly, the majority of lenders are trying to help people with the best credit ratings and the greatest probability of repayment. Two groups with some of the highest default rates are for-profit graduates and people who have never completed their college degree. The refinancing solutions discussed in this post will address this issue in a limited way.
The core issue remains the high cost of college education, as well as the easy credit which helped fuel those price increases. Solutions designed to handle the debt are welcome and appropriate. But we need to find ways to make it cheaper for college education.