State Loans 101

Federal loans are generally a good idea for college students because of their (relatively) low and fixed interest rates as well as their flexible repayment plans. Most federal aid is obtained without a credit check, so students and parents with marks on their credit history still qualify for government aid. However, there is only so much that the federal government can do to help the people of the United States pay for their college education. The point where the federal government reaches its limits is where the state government steps in.

What are state loans?

State loans are essentially federal loans that can only be obtained by residents of the state. Each state has their own programs, fund resources and allocations that they can give to college students attending within their state.


That’s right – you can also qualify for loans within the state that you are attending college.

What are the loans that my state offers?

If you’re already attending a college, you can head over to your local financial aid office to get the rundown on any state scholarships and loans that you qualify for. And whether you’re a high school senior or not, you can always google for resources like these lists of state loans: ( and ( Simply find the state you’re interested in attending in (or are already attending!) and click the link.

Yes, it will take a decent amount of time to sift through all the different loans you can get from a given state. No, they won’t all be better deals than federal or private loans. Is it worth investigating anyways? Only if you already know which state you’re eligible to borrow from – if you’re attending a given college or have chosen which school you’ll attend.


State Bank Of Mysore Education Loan

State Bank Of Mysore Education Loan

Why should I take out a state loan?

State loans should be considered right alongside federal loans. If you qualify for a federal loan, it’s worth checking first to see if your state doesn’t offer a better deal right off the bat. The benefits to taking out a state loan are similar to taking out federal loans – these loans are safer, interest rates tend to be lower and fixed, and repayment plans tend to be more flexible than private loans.


That being said, you should only take out a loan that makes sense for you: one that is cheap and repayable.

How does the state make money on my loan?

It’s always advisable to carefully read the fine print of any loan you consider. Lenders can make a profit on their loans in three ways: interest, loan charges, and fees. States loans won’t generally have fees on their loans, and only a handful will charge a percentage more than interest. Unfortunately, the loan with the lowest interest rate isn’t always the cheapest loan. A healthy understanding of the terms and conditions of a particular loan is highly advised.

As you consider taking out a loan, be mindful of all of the resources available to you. It’s always wise to have scholarships or income cover as much of your college costs as possible, but there’s usually not enough free money to pay for your education. Taking out as few, select loans as possible is just one step you can take towards financial security as you invest in college.

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