Minnesota Launches Graduate Student Loan Program

The state of Minnesota this month launched the SELF Grad Loan program, a new low-interest loan option for grad students that offers fixed rates based not on their credit score but on whether the loan has a co-signer and which repayment term the borrower chooses: 10, 15 or 20 years.

Officials created the program in direct response to the federal government’s elimination of Grad PLUS loans and caps on certain other federal loans, which go into effect July 1. 

“The elimination of the Federal Grad PLUS Loan, which offered loans that covered up to the full cost of attendance, and lower caps for all Federal loans indicated a need for a new, low-interest loan option for graduate students,” a spokesperson for Minnesota’s Office of Higher Education wrote in an email. “Our SELF Grad Loan was launched to provide that option to students.”

Minnesota is now the second state, after Connecticut, to devise its own loan program to help fill funding gaps for graduate students. As of Tuesday, 35 colleges and universities in Minnesota had joined the state’s program.

The terms allow students studying advanced dentistry, medicine, pharmacology and veterinary medicine to borrow up to $300,000 with no annual limit. They also offer an optional extension period for students in residency or training.

Students in all other graduate degree or certificate programs can borrow up to $50,000 annually, with a cumulative maximum of $150,000. All students are required to take out a minimum loan of $2,000 and pay a minimum of $15 monthly while attending school.

The program’s launch comes after Minnesota failed to meet the demand for student aid for the past two years and is on track to fall short for a third year if more money isn’t allocated to the state’s financial aid program. The aid shortages are due to rising enrollment, changes to the Free Application for Federal Student Aid and tuition hikes, experts previously told Inside Higher Ed.

Connecticut was the first state to introduce a plan to create a state-level graduate loan program to fill in the gap left by the elimination of Grad PLUS loans. Lawmakers passed legislation to officially establish the program last month.