A new loan option from the MN Office of Higher Ed

Fixed or variable rate?

The state Office of Higher Education has announced a new twist to its SELF Loan program.

Instead of offering loans with a variable quarterly rate — currently at 3.85 percent — it’s now offering fixed-rate loans as well, which carry a rate of 7.25 percent.

Traditionally, fixed-rate loans have provide stability in financial planning. The price? They won’t be able to take advantage of lower rates.

So is this one worth it?

I’m not financial expert, so I can’t say. Out of curiosity, I looked at a history of the rates on the SELF Loan Web site. (See below. I’ve put in large type the quarters in which the rate was above 7.25 percent.) The last time rates were consistently above that rate were 1991 and prior, and then 2006 and 2007 (for Phase II and Phase IV).

Still, it’s something to talk to your financial consultant about.

The office’s news release is here, and the loan program’s Web site is here.

History of the SELF Loan Interest Rate

Year Phase Quarter
1st 2nd 3rd 4th
1988 Phase II

8.25%

9%

1989

9.75%

10.5%

10.25%

9.5%

1990

9.5%

9.5%

9.5%

9.25%

1991

8.75%

7.75%

7.5%

7.25%

1992 6.75% 5.75% 5.5% 5.25%
1993 4.75% 4.5% 4.5% 4.5%
1994 4.75% 4.5% 5.5% 6%
1995 6.5% 6.5% 7% 6.75%
1996 6.75% 6.25% 6% 6%
1997 5.75% 6% 6% 6%
1998 6% 6% 5.75% 5.75%
1999 5.25% 5.25% 5.75% 6%
2000 6.5% 7% 7.75%

8%

2001

8.25%

7% 6.25% 6.25%
2002 6.25% 5% 4.25% 4.25%
2003 Phase II

Phase III

4.5%

4.5%

3.25%

4.3%

3%

4.2%

3%

4.1%

2004 Phase II

Phase III

3%

4.2%

3%

4.4%

3%

4.6%

3.5%

5.1%

2005 Phase II

Phase III

4%

5.6%

4.5%

6.1%

5%

6.6%

5.5%

7.1%

2006 Phase II

Phase III & IV

6%

7.5%

6.5%

7.9%

6.75%

7.9%

7%

8.1%

2007 Phase II

Phase III & IV

7%

7.7%

7%

7.4%

7%

7.4%

6.5%

7.4%

2008 Phase II

Phase III & IV

5.5%

7.0%

5.0%

6.0%

5.0%

5.8%

4.5%

5.9%

2009 Phase II

Phase III & IV

3.5%

5.7%

3.0%

4.7%

3.0%

4.3%

2.5%

3.9%

2010 Phase II

Phase III, IV & V

2.0%

3.8%

2.0%

3.8%

2.25%

3.9%

2.25%

3.85%