Paying off student loan debt can feel like running on a hamster wheel. Every month, payments eat up your paycheck, but your balance somehow seems unchanged.
Luckily, there may be a way to end this ceaseless cycle.
Student loan refinancing allows you to consolidate your debt and, with good credit, possibly get a lower interest rate, saving you money. Banks, credit unions and online companies offer refinancing — but did you know that your state might too?
Here’s what you need to know about getting a good deal on student loan refinancing from your state — specifically:
- How to find your state-level student loan refinancing options
- What about state employee student loan forgiveness?
- What to do if your state comes up short
- How to make sure refinancing is right for you
There are a few different ways to find student loan refinancing options on the state level. The easiest is to reach out to your state’s higher education agencies using the U.S. Department of Education’s handy map.
That said, your college or trade school’s financial aid department, as well as local credit unions, may have refinancing opportunities special to where you live. And of course, a good old-fashioned Google search never hurts either.
No matter where you look, it’s important to stay on top of your search, since laws and refinancing options can change from year to year. Programs that used to be available might not exist anymore, and there could be new programs that weren’t there the last time you checked.
As of now, here are some of the programs available by state:
|Alaska||ACPE’s Alaska Education Loan Refinancing Program||State residents only|
|Connecticut||CHESLA Connecticut Higher Education Supplemental Loan Authority Refinance Program||State residents only*|
|Indiana||INvestED Refi Loan||U.S. residents|
|Iowa||Reset Refinance Loan||U.S. residents|
|Kentucky||Advantage Refinance Loan||U.S. residents|
|Massachusetts||Massachusetts Educational Financing Authority Education Refinancing Loan||U.S. residents|
|Minnesota||SELF Refi||State residents only|
|New Jersey||NJCLASS Refi+ Loan||State residents only**|
|NJCLASS Loan Consolidation||State residents only**|
|North Dakota||DEAL One Loan||State residents only|
|DEAL One Consolidation Loan||State residents only*|
|Rhode Island||RISLA Refinance Loan||U.S. residents|
|South Carolina||PAL Refi Loan||State residents only|
*Out-of-state residents may be eligible if they’re refinancing loans that originated in the state
**Out-of-state residents may be eligible if they attended a college or university in the state
For more information, review our comprehensive guide on these states’ refinancing programs.
Based on the needs of the state you live in or attended college in, you may qualify for state employee student loan forgiveness.
For example, some states offer teachers or medical personnel loan forgiveness in exchange for committing to a certain number of years working in underserved or rural areas.
You can find out whether you qualify for loan forgiveness with Student Loan Hero’s repayment assistance program directory. Filter your search based on location, line of work, type of forgiveness or forgiveness amount to see what’s available. You might even find the work you’ve already been doing qualifies you for state employee student loan forgiveness.
Let’s say you do an extensive search for options only to find that there aren’t any state student loan refinancing options available where you live.
Don’t worry — there are still plenty of other ways you can refinance your student loans, including through many of the highly rated student loan refinancing companies that work with borrowers nationally.
One upside to shopping online for a refinancing offer is that many lenders don’t require a hard credit check right away, so your credit score won’t get dinged. Instead, the companies will do a soft check and then tell you your options in terms of interest rates and repayment terms. This way, you can compare multiple offers before choosing one.
Even if you’re eligible for state student loan refinancing, it’s still a good idea to do your research. That’s because there are pros and cons to refinancing with your state. Consider these:
- Pro: Although some states farm out their loan servicing operations, others — including Alaska and Indiana — have your loans managed by an in-state institution. If that kind of local, in-person customer service is important to you, it might be wise to opt for a state refinancing provider (or a local bank or credit union) over, say, an online-only company.
- Pro: Many state refinancing offers resemble those of banks and credit unions. They provide typical perks like interest-rate reductions for enrolling in autopay, for example. But some states take their products a step further: The Rhode Island Student Loan Authority, for instance, makes federal-loan-like income-based repayment available to borrowers who experience financial hardship.
- Con: Even if your state offers both fixed and variable interest rates — not all do — you’re likely to find a lower rate elsewhere. Some states put borrowers into buckets, issuing a standard rate based on your choice of repayment term, for example. While that might be a pro for applicants with not-so-solid credit scores, it could be a con for applicants with sterling credit who could net a much lower interest rate with an online lender.
- Con: Some states are more restrictive regarding the details of your loan. While many states offer up to three repayment term options, for example, some limit you to only one. New Jersey’s Refi+ Loan is only available under a 10-year term, for instance. If having more repayment term options is important to you, check out a lender like Earnest, an online-only company that gives you the ability to choose any term between five and 20 years.
Whether you refinance your loans with your state or a nationwide lender, consider everything: your financial goals, available interest rates, how much money you’ll save and — perhaps most important — any federal student loan benefits you may be giving up or gaining.
Know what you want out of refinancing. Want lower monthly payments? Get a longer repayment term (though that means paying more interest over the life of the loan). Want out of debt faster? Choose the shortest repayment term you can afford.
In the end, the most important thing is that you select a repayment plan that works for you and will be sustainable over time.
Andrew Pentis contributed to this report.