In addition to federal student loans and private loans from private lenders, your student should also explore state student loans from state agencies as another source of money to borrow for college.
What Are State Loan Programs?
Many families may not know about state student loans, but they are a viable option for students who don’t want to take out high-interest private loans from private lenders. These loans are offered by state agencies or state-chartered nonprofit organizations.
According to the most recent census data, less than one percent of undergraduate students received state loans and the average loan amount was $6,400. State loan programs often offer lower interest rates sometimes with in-school deferments, flexible repayment options after graduation based on income, loan forgiveness for public service and deferment for financial hardship.
Other private loans from private lenders will not offer these options.
In addition, some state programs offer the same interest rate to all borrowers, regardless of their credit score, and offer fixed interest rates.
These state student loan programs vary from state to state. If your student is interested in information about these loans, they should consult their state department of post-secondary education.
Each state will provide information on their specific requirements, but the fundamental requirement is residency—either a resident of the state or an out-of-state student enrolled in a college within that state.
In most states, student loan application protocol requires each candidate to file the FAFSA (Free Application for Federal Student Aid). Each state’s filing deadline varies, and it’s often earlier than the federal standard, so it is important to be acquainted with your state’s deadlines.
The following are a few examples of state funded loans and their requirements:
MEFA, The Massachusetts Educational Financing Authority, offers student loan refinancing and private student loans for undergrads and graduate students. The MEFA Loan is a non-need based family education loan funded by the Massachusetts Educational Financing Authority (MEFA).
The fixed rate Undergraduate MEFA Loan allows students and their families to borrow up to the full cost of education less financial aid at Massachusetts colleges and universities. Borrowers must live or go to college in Massachusetts.
The Florida Department of Education is a great resource for those wanting to research more information on student loans for the state and its unique initiative programs like the Bright Futures Scholarship Program and the Florida Public Postsecondary Career Education Student Assistance Grant Program.
You should be able to access the contact information and pinpoint the resources you need for all financial aid and college loan programs, both public and private, in the state of Florida.
The Pennsylvania Higher Education Assistance Agency (PHEAA) is one of the most well recognized agencies providing Pennsylvania State Loans and state financial aid and lending options in the country. Monthly fixed interest rates are based upon loan repayment and creditworthy borrowers earn the lowest interest rates.
Their loans have no origination fee and there is no fee to apply. Students can borrow up to 100% of the full school-certified cost of attendance and can choose from multiple repayment options.
The Texas Higher Education Coordinating Board (THECB) extends alternative loans. Since 1965, Texas has loaned money to students who are residents in the State of Texas and are qualified to pay in-state tuition.
The THECB provides consistent, low-interest college financing opportunities for state students. The loan programs are designed to assist state students who qualify to pay in-state tuition rates. Borrowers must be credit-worthy.
Of special interest is the BOT (Be-On-Time) state loan that offers loan forgiveness after graduation based on academic success of at least a B average and no more than four years of courses while in college.
The state of California supports higher education with a far-reaching state financial aid program. A large majority of California’s students receive some form of state aid for college. Their flagship program, CalGrants, provides educational funding in three specific sub-chapters:
- CalGrant A for the majority of students
- CalGrant B for the neediest applicants
- CalGrant C for technical, vocational and occupational students
This program is for two and four-year students as well as those who transfer into the California University System.
Additional initiatives target specific students like the Chaffee grant for foster youth and the California National Guard Educational Assistance Award Program for state resident Guard members. There are also other state loans available which you can research on their state educational website.
State-By-State Student Loan Programs
For information about your specific state, parents and students can do a search for each state’s department of post-secondary education by using the contact information on the U.S. Department of Education’s list of state higher education agencies.
Also helpful is a list compiled by CollegeScholarships.Org providing specific information about state loans available and direct links to each state’s program: Student Loans for Each US State.
For parents and students who need financing for college, state loan programs can offer additional options. These programs are accessible to all resident students and designed to promote higher education within the state by providing funding for college.
With the information we have provided, parents and students should be able to easily find their state loan requirements and availability, and use that information to apply for state financial aid.
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This post was written by Suzanne Shaffer, who counsels parents and students in the college admissions process and the importance of early college preparation. Her Parenting for College blog offers timely college tips for parents and students, as well as providing parents with the resources necessary to help their college-bound teens navigate the college maze.