Editor’s Note: In response to the coronavirus pandemic, as of March 13, 2020, the Trump Administration has halted interest payments on federal student loans. Please note that this applies to federally held student loans only and may not apply to your private student loans. Also note that student loan payments are still required, however your entire payment will now be made toward the principal of the loan. Check with your student loan provider for more information.
Life teaches you that earning a college education will open the door to getting a good job and living happily ever after. But, as with most things, it’s not that easy.
The U.S. Department of Education reports student loan debt more than doubled between 1992 and 2012 for borrowers who graduated with a bachelor’s degree. When you think about books, room and board, and the ever-increasing cost of food, it’s enough to make your head spin.
How do you pay for all that? Most turn to student loans.
Unfortunately, a good chunk of your monthly payment will likely go toward interest. Paying interest is like throwing money out the window. It can add up to tens of thousands over the life of the loan, and it can take forever to get the balance paid off.
Since 1984, the Minnesota Office of Higher Education has tried to change that. They created the Student Education Loan Fund program, more commonly known as a SELF Loan. This program opens the door to long-term, low-interest college loans for residents or students in Minnesota.
If you’re a Minnesota resident or considering attending a college or university in the state, keep reading. In this SELF Loan review, we’ll cover how the program works, who’s eligible, the current rates and terms, and help you decide if it’s a good fit for your college plans!
For those without a Minnesota connection, here are some other resources you may like:
- Best Private Student Loan Rates and Companies (Updated Monthly)
- Best Student Loan Refinancing Rates (Updated Monthly)
- Choosing a College: The Complete Guide to Finding Your Best Fit
SELF Loan at a Glance
- Launched by Minnesota Office of Higher Education in 1984
- Provided over $2 billion in loans to students to date
- Can save you money with low interest rates that don’t depend on income or credit
- Requires you to have a co-signer
- Requires interest payments while in school
- Certificates and degree programs are eligible with loan amounts from $500 to $20,000 a year
- Participating colleges are found around the U.S. for Minnesota residents
- Non-Minnesota residents qualify if they attend a participating Minnesota school
What is SELF Loan?
SELF Loan stands for the Student Education Loan Fund program. The Minnesota Office of Higher Education put it together, and it provides student loans to Minnesota residents or out-of-state students attending a school in Minnesota.
With a SELF Loan, you can bridge the gap when federal student loans aren’t enough. Although companies like Credible are a great way to compare private student loan rates, a SELF Loan may be able to help Minnesota students save more with even lower rates. This is because SELF Loan interest rates are not determined by your credit score or income. Every student is given the same interest rate and can choose between a fixed or variable loan.
How Does a SELF Loan Work?
When you attend college, the cost of tuition can cause some major sticker-shock. The price of attendance is so outrageous!
In many cases, federal student loans can only go so far. Additionally, the federal government sets limits on the amount of subsidized vs. unsubsidized student loans you can receive.
Private student loans are another option but can come with higher interest rates. Paying more in interest might not sound so bad when you take out the loan. Over time, though, it adds up.
A SELF Loan is the perfect in-between solution.
Where private loans depend on your credit history to qualify, SELF Loans offer the same rate to everyone – regardless of income or credit. Keep in mind, though, you will need a cosigner. That is one reason they’re able to keep the rates so low. Cosigners are usually parents or guardians, but they can also be a spouse, relative, or friend.
To find out if a SELF Loan could work for you, first check out the list of participating schools. Not all schools will originate a new loan through the program, though the ones that do are found across the U.S.
Before jumping into this student loan option, make sure you look into federal loans, too. Federal student loans come with a few benefits you won’t get with a SELF Loan. For instance, federal repayment programs include deferments, forbearance, and monthly payments based on your income. With a SELF Loan, you won’t have the choice to defer and your repayment options aren’t flexible.
SELF Loan Eligibility Criteria
SELF Loans are state-funded student loans that can save you money on interest. Because it’s through the Minnesota Office of Higher Education, not everyone will qualify. Though you don’t have to reside in Minnesota, here are the requirements you must meet:
- Enroll in an eligible school in the state of Minnesota or be a resident of Minnesota enrolled in a participating school
- Have a cosigner willing to make payments if you’re not able to do so
- Maintain at least half-time enrollment status in a certificate program or while pursuing an associate, bachelor’s, or graduate degree
- Complete sufficient academic progress
- Keep all required student loan payments up to date
SELF Loan: Rates and Terms
SELF Loans have fixed and variable rates to pick from, and – unlike private student loans – everyone pays the same rate regardless of your income or credit history. The variable rate currently stands at 4.50% and the fixed rate is 5.75%.
The specific terms are easy and fall into three time-frames: In-School Period, Transition Period, and Repayment Period.
While in school, you must pay the interest once each quarter. The Transition Period begins when you graduate, drop below half-time enrollment, or transfer to a school that doesn’t qualify. During this time, you’re required to make interest payments monthly.
You can stay in Transition for up to 12 months before the Repayment Period. Your monthly principal and interest payments depend on how much you borrow, but you can choose between the Standard Plan or Extended-Interest Plan to pay back the money you borrowed.
There is one exception: If it’s been nine years since you first received your SELF Loan, you must repay it even if you’re still in school or in a Transition Period.
SELF Loan: Pros and Cons
|Pros of SELF Loan||Cons of SELF Loan|
|No penalty for paying it off early||You must make interest payments every three months while you’re in school|
|Can save money by paying lower interest over the life of the loan||No grace periods or deferment options if you fall on hard financial times|
|No credit history or income requirement to meet||Cannot include SELF Loans in federal loan consolidation|
|Covers education expenses that federal loans might not be enough to cover||Cannot release or change cosigner until the loan is paid in full|
|May find lower interest rates than private student loans||Limited eligibility to Minnesota residents/students and qualifying schools|
|No application or origination fees|
|Has both variable and fixed interest rates to pick from|
What’s Great about SELF Loan Student Loans
No Credit Score Required
With SELF Loan, everyone pays the same interest rate. Unlike most private student loans, it doesn’t matter what your credit score is. The rate you pay depends on whether you pick fixed or variable interest.
Saving You Money
Because your credit doesn’t influence your interest rate, you can save money by paying lower interest fees. You also won’t pay any application, processing, guarantee, or other processing fees. And if you want to pay it off early, that’s no problem – there’s no prepayment penalty to worry about.
Get the Cash You Need for College
Federal student loans have limits on what you can borrow each year, and that might not be enough to cover tuition, books, and other expenses. Before you turn to private loans, consider a SELF Loan to see if it can get you a lower interest rate. You can borrow up to $20,000 per year for a total of $140,000, though just how much depends on the program you’re enrolled in.
Where SELF Loans Fall Short
- You Need a Cosigner – Cosigners help ensure payments are made on the loan, and SELF Loan claims this helps keep the interest rates as low as they are. A cosigner can’t be just anyone, though – they must be creditworthy. That includes not having a history of bankruptcy, and not owing more than $300 in negative credit accounts, among other things.
- Not Eligible for Deferment – One of the primary benefits of federal education loans is their flexible repayment options. From grace periods, deferments, forbearances, and income-based repayment plans, you have options if you fall on hard times. With a SELF Loan, there are no grace periods or deferments.
- Limited Student Eligibility – Because SELF Loan is a state-level program by the Minnesota Office of Higher Education, it isn’t open to everyone in the U.S. The loans are only good at participating schools. If your school of choice isn’t on the list, you’re out of luck. Plus, you must be a Minnesota resident or an out-of-state student enrolled in an eligible school in Minnesota.
Who Should Consider a SELF Loan?
Students Who Live in Minnesota – If you live in Minnesota, the list of eligible schools is huge. From Alabama State and American University to WyoTech and Yale, the door is wide open to colleges across the U.S.
Students Interested in Attending a College in Minnesota – No matter where you live, there are plenty of college options within the state of Minnesota. If you attend a college within the state, you’re eligible to receive a SELF Loan.
Anyone Without a Solid Credit Record – SELF Loans differ from federal or private student loans. With federal loans, you must show a financial need, while private student loans may require a decent credit history to qualify. However, you can get a SELF Loan without either of those things since rates are the same for everyone and credit scores don’t matter.
Current Students Needing More Financial Help – If you qualify for federal student loans, there are limits to how much you can borrow. With the cost of books, room and board, and everything else that goes into paying for college, it might not be enough. With a SELF Loan, you can borrow up to $20,000 per year to help bridge the gap.
Who Should Avoid SELF Loans?
Students Whose Needs are Covered by Federal Loans – Taking out federal student loans because you have a financial need can be a smart option. It rarely requires a cosigner, and lets you take advantage of deferment, forbearance, and income-based repayment options. SELF Loans don’t offer those things.
Non-residents Attending Schools Outside of Minnesota – Since the program eligibility is limited, you might not qualify. If you’re not a Minnesota resident or an out-of-state student planning to attend a school in Minnesota, this isn’t the program for you.
How to Apply for a SELF Loan Student Loan
Applying for a SELF Loan is super easy. There is no application or origination fee to worry about, and it only takes about 30 minutes. You can get started here.
Keep in mind, you will need to enter your cosigner’s information on the application. They can log in later to review and sign their portion.
It can take four weeks to process, so make sure you apply early enough to get everything before your college term starts.
SELF Loan Review: The Bottom Line
College isn’t cheap. With that said, getting a higher education can unlock career opportunities you otherwise might not have had, so it still might be a smart move for you.
Just remember that a SELF Loan isn’t a grant or scholarship. It’s a loan, and that means the funds you borrow must be paid back.
If you live in Minnesota or are thinking of attending a college there, a SELF Loan is an excellent way to get cash for school with a low-interest loan. Your credit doesn’t matter, though you will need a cosigner. And unlike most federal and private student loans, you must make quarterly interest payments on the loan even while you’re in school.
The application process is simple and there are no fees. Plus, knowing what your interest rate will be before you apply for the loan is a nice perk.
With all the confusion around student loans, we hope this SELF Loan review has been helpful. Thanks for reading and good luck!