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Updated on Friday, February 12, 2016
Paying high interest rates on your student loans? If you’re a resident of Minnesota, we have good news for you. Administered by the Minnesota Office of Higher Education, Minnesota SELF Refi loans are available to Minnesota residents with more than $10,000 in qualified student loan debt. With credit scores affecting qualification but not interest rates, qualifying borrowers are, in many situations, able to obtain rates lower than federal student loans, potentially saving them money, and reducing the amount of time they are enslaved to their student loan debt.
Minnesota SELF Refi charges no application or origination fees. Late fees are up to $25 if your payment is not made within 15 days of the due date, and returned payment charges cap at $15. Qualified borrowers can opt for either a fixed interest rate, or a variable interest rate.
Fixed Interest Rate Loans
If you qualify for a Minnesota SELF Refi loan, your interest rate is determined by the length of your loan rather than your credit score. Those who opt for fixed interest will have the same interest rate for the entire term of the loan.
- 5 years – 4.25%
- 10 years – 5.50%
- 15 years – 6.75%
Variable Interest Rate Loans
The variable option often score you a lower interest rate, with the understanding that it is subject to change over time. That means your rate could go either up or down every quarter on January 1st, April 1st, July 1st, and October 1st. Minnesota SELF Refi uses the LIBOR index to calculate quarterly rates. The LIBOR index is the average of interest rates from sixteen of the world’s largest banks.
The Minnesota Office of Higher Education pulls the rate from the past month of the LIBOR index, and then adds in a margin to cover its operating costs. Both numbers are reassessed every quarter, and their sum will be your interest rate for the next three months.
Current rates on variable interest rate loans are as follows:
- 5 years – 3.90%
- 10 years – 4.55%
- 15 years – 5.25%
Rates on variable interest loans max out at 18%.
Pros and Cons of Refinancing with Minnesota SELF Refi
- Variable interest rates are lower than current rates on federal student loans for 5- and 10-year terms, though they are subject to change.
- If you initially financed federal student loans between 2006 and 2009, rates on Minnesota SELF Refi fixed rate loans are substantially lower for 5- and 10-year terms. Five-year terms on graduate loans are lower than the current Federal rate.
- No application fees or origination fees.
- Offers refinancing options for those with diplomas, certificates, and associate’s degrees.
- Your credit score does not dictate your rate. If you qualify, you qualify for the uniform rates.
- Cosigner release is available.
- If you are refinancing a federal student loan, you will lose all benefits of any federal programs you are enrolled in.
- No deferment options available.
- Debt-to-income ratio may limit you from getting the more attractive rates that accompany shorter loan terms.
- Maximum APR on variable rate loans is on the higher end at 18%.
- Maximum loan amounts are small when compared to other refinance options in the private market.
Current Minnesota residents with a credit score of 720+ with no delinquencies on their credit report, and no charge offs, liens, or judgements of $300+ meet the credit requirements for this refinance option. Additionally, your debt-to-income ratio must be at or below 45%. You must have earned a certificate, diploma, associate’s degree, bachelor’s degree, or graduate degree, though max loan amounts differ depending on your degree.
- If you have a certificate, diploma, or associate’s degree, you can refinance loans in the amount of $10,000-$25,000.
- If you have a bachelor’s or graduate degree, you can refinance loans in the amount of $10,000-$70,000.
The loan you are refinancing must be a qualified student loan, meaning that it was used exclusively for tuition and fees, room and board, books, supplies, equipment, or other necessary expenses, like transportation, for your education at an eligible institution.
There are three situations where you must get a cosigner in order to qualify for refinancing with Minnesota SELF Refi. If you are not a US citizen or permanent resident, you must have a cosigner. If you are a citizen or permanent resident with a credit score between 650-720, you can also qualify if someone cosigns with you.
Cosigners must meet the following requirements:
- Must be a US citizen or permanent resident
- Must have a credit score of 720+
- Must have a debt-to-income ratio at or below 40%
- Must have no delinquencies on their credit report
- Must have no charge offs, judgements, or liens amounting to $300+
If you up your credit game, your cosigner can be let off the hook after 48 months of on-time payments as long as you meet the borrower requirements outlined above.
Application Process and Documents Needed
You can apply online through FirstMark Services, the loan servicer for SELF Refi loans. In order to fill out the application, you will need the following information:
- Your driver’s license number and date of issue
- Name, address, and phone number of a personal reference (cannot be your cosigner)
- Current annual income
- Current employer name and phone number, along with how long you have been there in terms of years and months
- Type of student loan you are refinancing
- Lender and servicer name
- Current interest rate you are paying
You’ll also need a printer and a scanner, as you’ll need to print, sign and upload the credit agreement. You will also need to scan and upload the following documents:
- Copy of your photo ID, and the photo ID of your cosigner if you have a cosigner
- Copy of your diploma, certificate, or degree including the date of graduation
- Current statement of the loan you are refinancing that shows your name, the lender’s or servicer’s name and address, your account number, your current balance, and your interest rate
- Your two most recent paystubs. They must show your name, your employer’s name, pay period, and pay date.
- Federal tax return including all attached schedules if you are self-employed
After you have submitted your application, Firstmark will review it within 1-2 days. If you are pre-approved, you will receive an Approval Disclosure laying out all the terms and rates which you must sign and return. Once this document is returned, it takes about 10 business days for the disbursement to make it to your current lender.
How it Stacks Up
Minnesota SELF Refi is a great option if you are a Minnesota resident, especially if you have a diploma from an education that didn’t necessarily result in a four-year degree, or if you have a lower credit score, but still want to refinance with a cosigner.
There are other options out there, and some of them come with more competitive rates. What’s best for you will depend entirely on the dynamics of your own, unique situation.
SoFi’s student loan refinancing is one of the best on the market. Like Minnesota SELF Refi, it has no origination fee, but unlike most other loan refinancing products on the market, it does give you up to three months of essential deference should you ever lose your job, as long as you weren’t at fault. It also has a program for would-be entrepreneurs that defers payments for six months while SoFihelps you get on your feet through access to networking events, mentors, and investors. In addition, it offers an option to refinance over a 20-year period, and you can refinance as little as $5,000.
SoFi is very selective in who it will approve, though. It does not typically accept anyone with a credit score under 700, and cosigners are not always an approved option. It also does not offer refinancing for anyone with less than a four-year degree.
Another option that offers refinancing on a minimum of $5,000 with the 20-year term option is Earnest. Like SoFi, it does have a deference option if you enter financial hardship. Its deference period is one month out of every year, as long as you have consistently been making on-time payments for six consecutive months.
Earnest, instead of discriminating on your credit history, wants to see that you will have the ability to pay off your loan in the future. This predictive formula is unique, and can present an advantage to those with less than desirable credit scores.