If you have ever considered student loan refinancing and you live in Minnesota, you may be in luck. Recently, the state launched a new student loan refinancing program that is set to benefit students. Student loans often weigh heavily on students; this new program will help students pay back their student loans without causing them more stress.
What Is Student Loan Refinancing?
First and foremost, it is important to understand exactly what refinancing is before you decide whether or not it is good for you. Refinancing is an option open to those who meet the guidelines and the option allows you to receive a new interest rate on your loans.
For example, if you currently pay 7.5% on your student loan, you can refinance and receive a new interest rate of 3.5%. This will save you a ton of money over time and it will also lower your monthly payments as well. This is especially helpful for those paying private student loan interest rates which tend to be higher than federal loans.
Minnesota lawmakers have officially announced that they will be implementing a new program for students to refinance their student loans. This comes as a relief to those students who have been paying high interest rates on their loans.
The state will begin to offer a variety of repayment plans that range in repayment length from 5 to 15 years. In addition to the new repayment length, all of the interest rates will range from 3 percent to 6.95%.
This is a huge adjustment and it means that a student who currently pays seven or more percent can benefit from this program. In fact, a student who pays roughly nine percent on their loans could end up saving well over $20,000 over the course of the loan with a new interest rate of 3.95%.
The goal of the program is to be able to help students pay back their loan without sending all of their money to it. The state wants students to be self-sufficient and able to support themselves without the hefty bill on top of it.
Requirements to Refinance Under This Program
There are requirements that must be met before you can simply refinance your student loans. In general, refinancing requires you to have a good credit history along with a steady income. Students who do not meet this qualification may require a cosigner or they will not qualify to refinance.
In addition, the student must be a resident of Minnesota and have completed all of their post-secondary credentials. If the student has not completed a post-secondary credential, they will not be able to qualify for this program. Students will also need to have at least $10,000 of student loan debt or more.
One of the reasons this program was implemented is because the student loan debt crisis continues to stricken areas and many students are left with a lot of debt and no way to really pay it off. To help combat this, the refinancing program was implemented.
If you did not know, Minnesota is one of the highest student loan debt states coming in at number five! In fact, 70 percent of the Bachelor’s degree receiving students have at least $30,000 of student loan debt when they graduate. Now, if the student is unable to transition into their career of choice, then they may not be able to make these hefty student loan payments.
Is It a Good Idea?
Of course it is. If you are able to qualify for the refinancing program, then you should apply. The program will help you save hundreds of dollars per month when you receive a lower interest rate. Officials believe that almost all student loans will qualify for the program and the new monthly payments will help students better afford their loan debt.
If you are interested in this program, speak with your financial aid counselor to get more information. It is important that you always make your student loan payments on time to uphold your credit score. In addition, never stop paying on your loans until you know that your new terms have been updated or sent through the system.