Some states are helping graduate students pay for school. Here's what borrowers should know
Summary
Some states are offering student loans to help graduate students pay for school because the federal government has reduced its lending options. These state loans are more like private loans and often don’t provide the same protections as federal loans.Key Facts
- The federal government has cut back on lending for graduate students, including phasing out Grad PLUS loans for new borrowers.
- About two dozen states offer student loan programs to fill gaps left by federal changes.
- States like Connecticut and Minnesota expanded graduate loan programs recently, while Massachusetts, Arkansas, and New Jersey have had them for decades.
- State loans usually don’t include federal benefits like loan forgiveness or income-driven repayment plans.
- State student loans are similar to private loans but can sometimes have better terms or protections.
- Private lenders often require good credit or co-signers and charge based on credit risk, unlike most state loans.
- Massachusetts created its state loan program in the 1980s after federal financial aid cuts and expanded it recently due to further federal reductions.
- State loan programs are becoming more active partly as a response to federal policy changes under President Trump’s administration.
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