With student loan debt ballooning, a few states have passed legislation to form refinance programs. These programs help residents refinance student loan debt with lower interest rates. The Rhode Island Student Loan Authority (RISLA) offers one program you should consider, even if you don’t live in the state.
Rhode Island Student Loan Authority review
RISLA is a non-profit organization commissioned by the state of Rhode Island in 1981. Since then, it has provided programs to help make higher education more affordable. Services include loans, refinancing, college planning assistance, and financial literacy resources.
RISLA student loan refinance program review
Some of RISLA’s programs are for Rhode Island residents and students who attend college in the state. But its refinance program is open to anyone residing in the 50 states. Here’s an overview of the program.
With RISLA, you can refinance the following loans:
- Private loans
- Parent PLUS loans
- Stafford loans
- Subsidized and Unsubsidized Direct Loans
The program offers 5-, 10-, and 15-year terms and fixed interest rates. It also gives you a 0.25 percent discount if you set up automatic payments. Here’s a breakdown of the interest rates (including the discount):
- 5-year term: 3.49%-6.14% APR
- 10-year term: 4.24%-7.14% APR
- 15-year term: 4.74%-7.64% APR
You’ll also pay no upfront fees when setting up the new loan or prepayment fees if you pay it off early. You can refinance between $7,500 and $250,000. The maximum amount you can refinance depends on the highest degree you’ve earned.
RISLA requires that applicants have a FICO credit score of 680 and an annual income of at least $40,000. However, you can meet the income requirement with a cosigner.
Adding a cosigner
If you don’t earn enough to meet the program’s income requirement, you can combine your income with a cosigner who lives at the same address. If you and your cosigner do not live at the same address, at least one of you must earn the minimum.
In some cases, applying with a cosigner might be a good idea even if you earn enough on your own; it might qualify you for a lower interest rate.
Make sure your cosigner understands that RISLA does not have a cosigner release program. Once your income and creditworthiness improve, however, you may reapply to refinance without a cosigner.
Once you’ve refinanced through RISLA, you might qualify for an income-based repayment (IBR) plan. On an IBR plan, your monthly dues are 15 percent of your and the cosigner’s discretionary income or less, depending on your income and family size.
Additionally, your loans will be forgiven after 25 years of payments. Forbearance and deferment periods don’t count toward that 25-year timeline. Plus, your forgiven balance may be taxable.
RISLA also requires that you submit income and other documentation each year. Depending on changes in your income and family size, they may adjust your payments. See the full terms of RISLA’s income-based repayment plan on their website.
Forbearance and deferment
RISLA offers forbearance for up to 12 months for financial hardship. The program allows you to apply for forbearance in three-month increments.
Deferment is also available up to 36 months, but RISLA offers it only to graduate students. To qualify, the student must be attending school at least half-time.
Pros and Cons
If you’re interested in refinancing with RISLA, there are some key benefits and drawbacks to know.
Income-based repayment: Private student loan servicers generally don’t offer flexible payment options. Income-based repayment plans are especially rare. RISLA’s income-based repayment plan can help you stay afloat when you’re financially struggling.
Competitive rates: All of RISLA’s interest rates are fixed. With a cosigner, you might be eligible for the lowest rates available.
It’s not state-restricted: Unlike other state-based refinancing programs, RISLA doesn’t require you to be a Rhode Island resident. Borrowers across the country can take advantage of the program.
High income and credit requirement: RISLA requires an annual income of at least $40,000 to qualify. Some other refinancing programs have no minimum income requirements or require as little as $24,000 a year.
RISLA’s credit score requirement is also fairly high at 680, with or without a cosigner. If your debt load is bringing down your credit score, you might not qualify.
No cosigner release: It’s not a standard feature by any means, but some other refinancing programs allow you to release a cosigner without having to refinance again. With RISLA’s high eligibility standards, it might take you a while to improve your credit score and income standing to be able to refinance alone.
Can’t refinance Perkins loans: If you want to refinance your Perkins loans because you won’t qualify for cancellation, you’ll have to look elsewhere.
Applying for RISLA refinancing
You can apply online or by calling RISLA directly at 1-800-758-7562. During the application process, you’ll provide the following information:
- Name, phone number, email address, and permanent address
- Highest level of education completed
- Social Security Number, date of birth, and citizenship
- Driver’s license number
- Employment and income information
- Liquid assets
- Housing costs
- Details about the loans you wish to refinance, including the lender, payments, and balances
- Your desired loan term
After you apply, you’ll receive a preapproval response immediately. If you are preapproved, you’ll need to send RISLA the following documents to verify your information:
- Most recent billing statements for each loan you want to refinance (unless they’re existing RISLA loans)
- 60-day payoff amount for each loan you want to refinance (unless they’re existing RISLA loans)
- Pay stubs or another form of income verification
- W2s from the previous tax year
- Statements verifying your liquid assets
You can submit your supporting documents through RISLA’s website.
Should you refinance with RISLA?
If you meet RISLA’s income and credit requirements, its refinancing program might be a good option. If you have federal loans, you won’t have to give up an income-based repayment plan. You’ll also get access to competitive rates, especially if you have a cosigner.
If you might be eligible for federal student loan forgiveness, you might want to keep your loans where they are. The same applies if you already have a favorable interest rate. Also, with RISLA’s high minimums for income and credit scores, you might benefit from other refinancing options.
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