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Updated on Thursday, November 10, 2016
If you don’t know much about North Dakota, it has some interesting quirks. It’s the largest producer of honey and sunflowers in the U.S. It’s home to the largest scrap metal sculpture in the world. In the past year, it has had both the largest population growth and the biggest economic contraction of any U.S. state.
North Dakota is also home to the only remaining state-owned bank in the country. The Bank of North Dakota (BND) collects all state tax revenues to redistribute into various programs. One of those programs is the Deal One Loan, which gives residents the chance to refinance their student debt at competitive interest rates.
You must be a resident of North Dakota to qualify for this loan option. This means your primary residence has had a physical address in the state for at least the past six months. On top of being a state resident, you must also be a citizen of the United States.
If you are able to refinance by yourself, your credit score must be 700 or higher. If you cannot qualify solo, you can also look at getting a co-signer who has a minimum credit score of 600.
Co-signers can be released after 48 straight months of on-time payments as long as you meet the current credit score requirements at that time. It’s important to know Bank of North Dakota looks at your complete credit history when determining your eligibility.
The final criteria for qualifying is the loan itself. If your loan is in repayment or a grace period, you qualify, but if it is delinquent or in default, you cannot refinance through this program. Most loans are eligible, including federal, state, and private loans for both undergraduate work and graduate school. However, you cannot currently be attending school if you want to use this refinancing option.
The length of the term on your loan will depend on how much you are refinancing.
|If you owe…||Your term will be….|
|Under $10,000||10 years|
|$30,001 or more||25 years|
While terms vary depending on how much you owe, interest rates are the same across all terms. Currently, fixed interest rates sit at 4.97%, while variable interest rates are at 3.09%. If you choose to go with a variable rate, the maximum variable interest rate is 10%. If you sign up for automatic payment, you can decrease your interest rate by 0.25%.
There are no application or origination fees with a Deal One Loan. However, if you are more than 15 days late on a payment you will have to pay a late fee. The late fee will be 6% of the missed payment amount, as long as 6% doesn’t exceed $15.
It is also important to note that when you refinance federal loans, even at the state level, you will be giving up access to certain advantaged repayment options like REPAYE, IBR, and other benefits. Always make sure any refinancing program is worth forfeiting these programs for.
While these federal benefits will be lost, BND does offer some deferment and forbearance options of their own. If you find yourself unemployed, disabled, in a state of financial difficulty, or deployed as an active duty member of the armed services, you may qualify for partial or full deferment or forbearance.
These special exceptions do have guidelines, but are generally handled on a case-by-case basis.
Pros and Cons of Refinancing with BND’s Deal One Loan
- No application or origination fees.
- Extremely competitive rates, especially on longer loan terms.
- BND does allow for some form of forbearance on deferment in extreme circumstances.
- Co-signer release is available.
- Only available to residents of North Dakota.
- Late fees will be assessed.
- Credit score criteria may be high for some new graduates.
- You will lose access to advantaged programs if refinancing federal loans.
Application Process and Documents Needed
You can apply for a Deal One Loan online. Before you start the application process, make sure you have the following documentation and information:
- The lender’s name, current balance, loan type, account number, and interest rate of any loans you are attempting to refinance.
- Your Social Security number and driver’s license number.
- The names, addresses, and phone numbers of three separate references who live at three separate addresses.
If you do not qualify for the loan based on your own credit score, you will be provided with information to give to a co-signer at the end of the application process. The co-signer will use this information to create their own account and apply to co-sign your loan.
After you have finished the application, you will need to send in the Authorization for Release of Student Loan Information via email, fax, or snail mail. This form allows BND to confirm that the loan information that you submitted was accurate. You may also need to sign a Federal Student Loan Benefits Waiver.
After BND has confirmed and approved your loan, you will need to sign some paperwork to accept the refinancing offer. You will be given one more chance after this to change your mind, and will be required to sign the Loan Final Disclosure. Then, BND will pay off your existing loans.
How It Stacks Up
As far as state-run refinancing programs go, the Deal One Loan has some of the lowest interest rates around. The only states that compare are Kentucky, Iowa, and Rhode Island.
Kentucky’s Advantage Education Loans only offer fixed interest rates. Those rates are low, though, starting at 3.49%. You cannot be eligible for both North Dakota and Kentucky’s programs. Advantage Education Loans are only available to residents of Kentucky, Georgia, Mississippi, Missouri, Ohio, Virginia, and West Virginia.
Iowa’s Reset Refinance Loans do compete with North Dakota on interest rates, but they do so with a few caveats. The first is that the longer your term, the higher your interest rate will be. This means rates are only truly competitive with North Dakota on their five-year product. On that product, the interest rate is 3.75% for Iowa residents and 4.00% for non-residents, but only if your credit score is 830 or above. Reset Refinance Loans also come with a financing fee, which puts North Dakota clearly ahead.
If you are refinancing with a co-signer, Rhode Island’s RISLA Refinance Loans come in at a respectable 3.49% fixed interest rate with autopay, but, again, this is only for five-year loans. While this program is open nationwide, North Dakota residents will still have an advantage by staying loyal to their own state’s program.
Overall, if you’re a resident of North Dakota and want to refinance after considering the loss of advantaged programs from your federal loans, staying with your own state program or shopping the private sector is likely the best way to go.
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