Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
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Maybe you’re headed to a Connecticut college or university and need student loans. Or maybe you have existing Connecticut student loans and want to save on repayment. Either way, there are plenty of options.
|Connecticut student debt: At a glance|
|Average debt upon graduation in Connecticut||$38,669|
|Percentage of students who graduate with debt||59|
|National ranking for average debt||1|
|Info based on the Class of 2018 |
Source: The Institute for College Access & Success
When it comes to borrowing student loans in Connecticut, you should first look into federal student loans from Federal Student Aid. If you hit your borrowing limits and need additional funds, then you might consider taking out private student loans.
Federal and state student loans in Connecticut
Federal student loans typically come with the most competitive rates, as well as protections such as income-driven repayment (IDR) plans after you graduate.
If you have financial need, you might even qualify for subsidized loans, which don’t start accruing interest until after you graduate. To access federal student loans, you must submit the Free Application for Federal Student Aid, also known as the FAFSA.
But since federal student loans don’t always cover the full cost of attendance, you might need extra funding. One option is for your parents to borrow a parent PLUS loan, which comes with a 5.3% interest rate.
Connecticut students might also qualify for a loan from the Connecticut Higher Education Supplemental Loan Authority (CHESLA). CHESLA offers loans from $2,000 to $125,000, with fixed annual rates of 4.85% and an origination fee of 3.00% (as of Sept. 3, 2020).
If you’re an undergraduate, you’ll make interest-only payments on your CHESLA loan while you’re in school and for six months after you graduate, after which you’ll begin making full payments. Graduate students can defer interest at these times. Both Connecticut residents and nonresidents attending school in Connecticut can borrow from CHESLA.
Note that federal and state student loan options are almost always preferable to private ones, since they typically come with the lowest interest rates. But since federal loans also include borrowing limits, you might still need more funding in the form of a private student loan.
Private student loans
Once you’ve exhausted your federal and private options for student loans in Connecticut, you might consider a private student loan. Each private lender sets its own rates and terms. Some allow you to defer student loan repayment until after you’ve graduated, but others require you to start paying back your debt right away.
Each lender also sets its own eligibility criteria, typically requiring that you have decent credit and a steady income to qualify. Since most undergraduates can’t fulfill these criteria on their own, they apply with a cosigner who can, such as a parent or guardian.
Once you qualify, you can often choose between a fixed and variable interest rate, as well as select a student loan repayment term, often between five and 15 years. Choose your term wisely since you don’t want to be stuck with high monthly bills you can’t afford.
Private loans rarely come with the same protections as federal loans. You typically won’t have access to IDR plans or loan forgiveness programs, and only a few lenders offer forbearance if you run into financial hardship.
Before borrowing a private loan, make sure you understand how it differs from a federal student loan. If you (or your cosigner) decide it’s the right option for your education, you might consider the following lenders that provide student loans in Connecticut.
- Webster Bank
- Headquarters: Waterbury, Conn.
- Partners with Sallie Mae to provide the Smart Option Student Loan
- CorePlus Credit Union
- Headquarters: Norwich, Conn.
- Partners with Sallie Mae to provide undergraduate, graduate and parent loans
- Dutch Point Credit Union
- Headquarters: Wethersfield, Conn.
- Offers an undergraduate line of credit with variable rates
- Offers membership to anyone who lives, works, worships, goes to school, or conducts business in Hartford, New Haven, New London or Middlesex counties, or who’s related to a member
- College Ave Student Loans
- Provides loans from $1,000 up to school’s cost of attendance to students across the country.
- Offers repayment terms of five, eight, 10 or 15 years.
- APRs start at 1.04% to 12.99%
- Offers student loans with repayment terms of five, 10 or 15 years.
- APRs start from 3.84% to 10.74%.
Before choosing a lender, make sure to shop around for your best deal. By researching your options, you can find a private student loan with the lowest costs of borrowing over the long term.
Even if you shopped around for a low interest rate when you took out student loans, that doesn’t mean you can’t snag an even lower rate after graduation. Student loan refinancing could get you that lower rate, possibly saving you hundreds or even thousands of dollars over the life of your loan.
When you choose to refinance student loans, you can completely restructure your debt as well. You might select a shorter repayment term to get out of debt faster. Or you could lengthen your term to decrease your payments and take some of the pressure off your monthly budget.
Finally, refinancing could simplify your payments by consolidating multiple student loans into a single loan. Instead of keeping track of several bills and due dates each month, you would only have to remember one.
Before you refinance student loans, though, make sure you understand the consequences of this move. If you refinance federal loans with a private lender, you essentially turn them into a single private loan. As a result, you lose access to federal programs, including IDR plans and Public Service Loan Forgiveness.
Refinancing is also different from federal consolidation, which refers to combining your federal loans into one with a Direct consolidation loan. Note that this process simplifies your debt, but unlike refinancing it doesn’t get you a lower interest rate.
Make sure you’re not mixing up the two processes before you pursue refinancing. If you’ve thought through the pros and cons of refinancing and decided it’s right for you, then take a look at these local and national refinancing lenders.
- Refinances student loans starting at $5,000
- APRs from 2.25% to 6.88%
- Laurel Road
- Terms: Up to 20 years
- APRs from 1.89% to 6.00%
- Citizens Bank
- Refinances student loans starting at $10,000
- Terms: Up to 20 years
- APRs from 1.22% to 11.80%
Just as you should shop around before borrowing a private student loan, you should also compare your offers before you refinance student loans. Several refinancing lenders make it easy to get an instant rate quote with no impact on your credit score.
Although a rate quote will only show you a preliminary offer, it could give you a good sense of your offers. If you’re struggling to qualify or want even lower rates, you might consider applying for refinancing with a cosigner.
Whatever you choose, research multiple providers to find a refinanced student loan with an offer that best serves your situation.