Just got this announcement from the state Office of Higher Education:
MINNESOTA OFFICE OF HIGHER EDUCATION LOWERS SELF LOAN INTEREST RATE
The Minnesota Office of Higher Education (OHE) is pleased to announce a reduced interest rate on the State of Minnesota SELF V variable interest rate student loan.
The new rate on this variable loan is 3.5%, down from the previous rate of 4.0%. According to Marilyn Kosir, SELF Loan Manager at OHE, the lower rate was made possible by a reduction in the margin utilized to calculate SELF Loan interest rates. The SELF Loan also carries a fixed rate option at 7.25%.
“Our first recommendation to every student is to consider all options for paying for college before taking out any loan,” said Kosir. “However, sometimes borrowing is the only option available, so we work hard to keep SELF Loan interest rates and terms competitive.”
In 2011, over 16,000 Minnesota students borrowed $85 million through the Minnesota SELF Loan program. This number was down from 2009, when $125 million was loaned to 24,700 students. According to Larry Pogemiller, Director of OHE, this drop in participation was due to the new federal preferred lender requirement, which restricts the ability of many colleges from informing students about state run loan options.
“When Congress passed the Higher Education Opportunity Act of 2008, it became more difficult for students to learn about high quality, often less expensive, state-based student loan programs,” said Pogemiller. “As a result, students and parents often choose the easiest path, such as federal PLUS loans, which carry a higher interest rate than the state SELF Loan.
It is unfortunate that borrowing for college is costing many students and their parents more simply because they are unaware of the SELF Loan.”
Minnesota is one of 15 states that offer a state loan program with borrower-friendly terms. Colleges must certify the loan, there is no prepayment penalty, and students are charged the same rate of interest regardless of the type of postsecondary institution they attend. The loans help meet the net price of attendance after other forms of financial aid are deducted.
The SELF program operates at no cost to the state, with funding provided by revenue bond proceeds, investment earnings and student loan repayments from borrowers. SELF Loans are available to Minnesota students attending eligible postsecondary institutions within or outside Minnesota and to non-residents attending eligible postsecondary institutions in Minnesota. There are no minimum or maximum income thresholds and no application fees for the SELF Loan program. Students pay only interest on their SELF Loan while in school.