Minnesota residents could be able to slash hundreds of dollars off their student loan repayments under a state-funded refinancing program revealed on Thursday.
The Minnesota Office of Higher Education-led initiative will give some graduates the option to change the terms of their student loans, possibly reducing their monthly payments by taking advantage of interest rates lower than when they originally borrowed, according to an email news release.
The refinancing for eligible borrowers is offered at 5-, 10- or 15-year terms, with interest rates from 3 to 6.95 percent depending on the length, the release says.
For someone currently paying off $40,000 worth of loans at 8 percent interest, refinancing through the new program could save them $200 a month – and reduce their total interest costs by $25,000 over the totality of the loan, according to the release.
Student loan debt in Minnesota
It was revealed last year that Minnesota ranks fifth in the country for having the largest student debts – with the average student owing $31,579 – according to a report by The Institute of College Access and Success.
MPR reports that as many as 500,000 Minnesotan graduates could be eligible for SELF Refi, which the state is funding through the sale of bonds and hopes will provide a boost to consumers and the wider economy.
"It makes it just so much more difficult for them to do so much more in our economy, whether it is buy a house or start a small business or buy a car." Lt. Governor Tina Smith, who announced the program, told the news organization.
To qualify, borrowers must prove that they:
- Are a Minnesota resident.
- Have completed at least one postsecondary credentialed program.
- Have at least $10,000 in qualified student loans.
- Are keeping up with their credit obligations (those with FICO credit scores higher than 720 are eligible, while those with 650-720 need a co-signer with a 720+ score).