Where to Find the Best Student Loans in Minnesota

Scholarships and grants should always be a student’s first option when figuring out how to pay for school in Minnesota. But, if necessary, student loans can fill any remaining financial gap.

According to The Institute for College Access & Success, the average debt load for students who graduated from a Minnesota four-year university in 2018 was $32,317.

Whether you’re a resident or an out-of-state student planning to attend college in Minnesota, there are a variety of student loan options that can fit your needs. Here’s how much money you’ll need to fund your education in the state and some of the best student loans for Minnesota students.

How much does it cost to attend school in Minnesota?

The full cost of attending a Minnesota university varies by school and living situation.

Here’s a breakdown of the average annual expenses for students attending a Minnesota college full time in the 2019-2020 academic year:

Source: Minnesota Office of Higher Education for tuition data; U.S. Department of Education, IPEDS Institutional Characteristics Survey for other data

The total cost of an academic year at a Minnesota state university is over $20,000. But the cost at a private institution could cost between $30,000 to $50,000 a year.

Best student loans in Minnesota

College costs quickly add up over the years. And, unfortunately, financial aid might not be enough to make your education dreams come true.

Let’s look at seven of the best student loans Minnesota students can access to help cover the cost of going to college.

1. Federal Direct Subsidized Loans

Loan Limits: Up to $3,500 (first year), $4,500 (second year), $5,500 (third year and beyond).

It’s usually best to exhaust your options for federal student loans before turning to private lenders because federal loans tend to have lower interest rates, flexible income-driven repayment (IDR) plans and options for loan forgiveness, among other federal protections.

Several federal loan programs are available to students and parents, depending on student status and financial situation.

Federal Direct Subsidized Loans have the best interest rates and terms but they’re only available to undergraduate students with financial need. Financial need is calculated based on the difference between the cost of attendance at your school and your expected family contribution. Your school will determine how much you can borrow, but you will also need to be aware of annual and aggregate loan limits.

If you do qualify for Direct Subsidized Loans, the Department of Education will pay the interest that accrues while you’re still in school at least half time and during your grace period, which is the first six months after your leave school or graduate.

2. Federal Direct Unsubsidized Loans

Loan Limits: Up to $2,000 per year (dependents), $6,000 (first- and second-year independent students), $7,000 (independent students in their third year and beyond). Up to $20,500 per year for graduate students.

Undergraduates, graduate or professional students can access Federal Direct Unsubsidized Loans, regardless of financial need.

Your school will determine how much you can borrow based on other financial aid you receive. But unlike with subsidized loans, you’ll be responsible for paying any interest that accrues on unsubsidized loans from the get-go.

Borrowers can choose to make interest payments while in school or allow the interest to be capitalized and added to the principal amount when you leave school.

3. MN SELF Loan Program

Loan Limits: $500 minimum with a loan cap of $3,500, $10,000 or $20,000, depending on the program.

Minnesota’s SELF loan program provides low-interest student loans that are available to both residents and non-residents attending an eligible institution in Minnesota.

The loan program is administered by the Minnesota Office of Higher Education, and it may provide a lower interest rate than federal or private loan options. Check out historic MN SELF loan program interest rates by year.

Because the program isn’t funded by the state or federal government, all borrowers must have a cosigner and begin making quarterly interest payments while in school.

4. University Trust Fund Loan, University of Minnesota

Loan Limits: Up to $4,000 per year for undergraduates and up to $6,000 for graduate students

Undergraduates and graduates enrolled full-time at the University of Minnesota may be eligible for a University Trust Fund Loan (UTFL).

The Department of Education considers UTFL as a private loan, therefore, it requires various disclosures during the application process. Current interest rates may be as high as 7%, but rates vary by loan. Additionally, some UTFL loans begin accruing interest after graduation, while others begin immediately.

So, it’s important to carefully read the terms of your loan before signing to fully understand the details.

5. MVFCU Student Plus Loan

Loan Limits: $5,000 per year, with a $20,000 cumulative loan limit.

Using a local credit union for your student loans may have some advantages. For example, a credit union might be more willing to work with your credit history if you already have an existing relationship. And you may receive a better overall customer experience than you would with a large private lender.

Minnesota Valley Federal Credit Union (MVFCU), located in Mankato, offers a student loan option for full-time, half-time and part-time undergraduate and graduate students.

Similar to other private lenders, MVFCU weighs the student’s credit history, debt-to-income ratio and income when making a loan decision. If the student isn’t able to qualify for the loan on their own, then a cosigner is required.

6. Sallie Mae Smart Option Student Loan

Loan Limits: $1,000 minimum up to 100% of school-certified expenses.

Sallie Mae offers its Smart Option Student Loan for undergraduates seeking a bachelor’s or associate’s degree. This loan program is available for full-time, half-time and part-time students.

A cosigner is required if a student can’t qualify on their own. But Sallie Mae provides a cosigner release after graduation with 12 on-time payments and proof of the ability to assume full responsibility for the loan (e.g. satisfactory credit history and proof of income).

Sallie Mae also offers a variety of student loans for parents and graduate students with varying loan limits. Learn more about Sallie Mae.

7. Earnest Undergraduate Student Loan

Loan Limits: $1,000 minimum up to 100% the cost of attendance.

Earnest is a favorite among Student Loan Planner® readers for private student loans and refinancing. The application and approval process is easy and fast. And it offers flexible repayment plans, including the ability to skip a payment once a year.

Earnest private student loans are only available to students enrolled full time at an eligible four-year institution. Earnest doesn’t provide loans to students who reside in Nevada at this time.

Additionally, Earnest requires a cosigner if you don’t meet the following financial requirements:

• Minimum FICO score of 650
• At least three years of credit history
• An income of at least $35,000 per year

Earnest offers graduate student loans for students enrolled at least half time in a graduate program. It also has a Rate Match program that matches competitors' interest rates.

Other ways to lower your education costs

To help cover the cost of school in Minnesota, here are some additional resources to explore when planning how to pay for college:

• Minnesota State Grant
• Minnesota Teacher Candidate Grant
• Minnesota Public Safety Officer’s Survivor Grant
• Minnesota Academic Excellence Scholarship
• Minnesota Indian Scholarship

• Minnesota Educational Assistance for War Orphans
• Minnesota Veterans’ Dependents Assistance Program

And for Minnesota residents wanting to attend a university in another state, look into reduced out-of-state tuition options through the state’s reciprocity program or the Midwest Student Exchange Program.

Have a game plan for your student loans

Higher education is expensive — not just in Minnesota, but nationwide. Every student should exhaust all opportunities to make their education more affordable through scholarships, grants and work-study before turning to student loans.

But if you still need to take out student loans, you should make informed decisions and have a strategic repayment plan in place.

Our team of student loan experts can help give you this financial insight before you sign up for massive amounts of debt and help prevent you from making many of the common student debt mistakes. Book a pre-debt consultation today.