Students worried about post-college debt can breathe a little easier.
This fall, the Alaska Student Loan program is introducing the AlaskAdvantage Stafford Loan, a federally guaranteed loan, and the Alaska Supplemental Education Loan, a new state loan.
Both have interest rates far below the federal base rate, said Stephanie Butler, director of program operations and outreach for the program.
"We'll be able to create some cost efficiencies that result in what our research is finding for us is, if not the best benefits available in the nation, very close to the best," Butler said.
Under the new federal loan, borrowers attending Alaska schools or living in Alaska after they graduate will be awarded "Alaska Presence Credit" for every year of their residency. With this credit, and other post-graduation credits for timely repayment and use of the program's direct payment options, the interest rate on loans while attending school would be 1.46 percent, 2 percent below the federal base rate of 3.46 percent.
During the post-graduation repayment period, the federal base rate rises to 4.06 percent. However, students meeting all requirements will pay an interest rate of only 0.31 percent.
The new Alaska Supplemental Education Loan replaces Alaska Student Loans offered in past years, which had a fixed interest of 7.8 percent. Both of the new loans are variable, meaning interest rates will change over time.
Under the new state loan, students who qualify for benefits will pay an interest rate of 1.96 percent while in school, and 1.31 percent after graduation.
"We really encourage borrowers to go for the federal loan before the state loan," Butler said.
To qualify for the federal loan, students have to fill out the Free Application for Federal Student Aid (FAFSA), a form requesting financial information that helps the government assess a student's financial need. The FAFSA is renewed annually, and can be filled out online.
"It's kind of a long form," Butler said. "It's not fun to fill out, but our research has shown us when students take the time to fill that form out they get access to these better rates. They get access to repayment options, and (federal) grant money."
In another change from the old program, the new loans will be available to students from outside Alaska who are attending schools in state.
"They're available to any student who otherwise qualifies who attends a school in Alaska," Butler said. "This becomes a really cool recruiting tool for the (state universities)."
Genevieve Gagne-Hawes can be reached at firstname.lastname@example.org.