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Whether you’re a Rhode Island resident or not, it’s worth checking out the Rhode Island Student Loan Authority (RISLA) student loan refinancing program. By refinancing with this nonprofit, you may be able to lower your interest rates and save money on your college debt.
Rhode Island Student Loan Authority review: the basics
RISLA is a non-profit organization commissioned by the state of Rhode Island in 1981. Since then, it has delivered programs to make higher education more affordable. Services include loans, college planning assistance, financial literacy resources and – which we will focus our attention on – refinancing.
Some of RISLA’s programs are designed for Rhode Island residents and students attending college in the state. But the RISLA student loan refinancing program is open to anyone living in the 50 states.
Here’s what you need to know about refinancing with RISLA:
With RISLA you can refinance the following loans:
- Private Loans
- Parent PLUS Loans
- Stafford Loans
- Subsidized and non-subsidized direct loans
The program offers 5, 10 and 15 year maturities and fixed interest rates. It also gives you a 0.25% discount if you set up automatic payments. Here’s a breakdown of the interest rates (including the discount), as of August 24, 2020:
- 5-year term: 3.49% -6.64% APR
- 10-year term: 3.74% -6.34% APR
- 15 year term: 4.49% -8.14% APR
You also don’t pay upfront costs when setting up the new loan or prepayment costs if you pay them off early. You can refinance between $ 7,500 and $ 250,000. The maximum amount you can refinance depends on the highest degree you have earned.
RISLA requires applicants to have a good credit score and earn a minimum of $ 40,000 per year. However, you can meet the credit and income requirements by applying to a co-signer.
Add a co-signer
If you don’t earn enough to meet the program’s income requirement, you can combine your income with a co-signer who lives at the same address. If you and your co-signer don’t live at the same address, at least one of you must earn the minimum.
In some cases, it may be a good idea to apply with a co-signer, even if you are earning enough yourself; you may qualify for a lower interest rate.
Make sure your co-signer understands that RISLA does not have a co-signer release program. However, once your income and credit improve, you can reapply for refinancing without a co-signer.
Repayment based on income
Once you refinance through RISLA, you may qualify for one repayment based on income (IBR) plan. With an IBR plan, your monthly contributions are 15% of your and the co-signer’s discretionary income or less, depending on your income and family size.
In addition, your loans will be waived after 25 years of payments. Tolerance and grace periods do not count towards that 25-year timeline. Plus, your forgiven balance potentially taxable.
RISLA also requires you to provide income and other documentation each year. They may adjust your payments depending on changes in your income and family size. See full terms and conditions of RISLA’s income-based repayment plan at their website.
Tolerance and procrastination
RISLA offers a grace period of up to 12 months for financial problems. The program allows you to request forbearance in steps of three months.
Deferment is also available up to 36 months, but RISLA only offers it to graduate students. To be eligible, the student must attend school at least half the time.
If you’re interested in refinancing with RISLA, there are some important pros and cons you should know about.
- Repayment based on income: Private student loan service providers generally do not offer flexible payment options. Repayment plans based on income are very rare. RISLA’s income-based repayment plan can help you stay afloat when you are struggling financially.
- Competitive rates: All RISLA interest rates are fixed. With a co-signer, you may qualify for the lowest rates available.
- It is not limited by the state: Unlike other state-based refinancing programs, RISLA does not require you to be a Rhode Island resident. Borrowers across the country can take advantage of the program.
- High Income and Credit Requirement: RISLA requires an annual income of at least $ 40,000 to qualify. Some other refinancing programs have no or lower minimum income requirements.
RISLA’s credit score requirement is also quite high, with or without a co-signer. If your indebtedness is your creditworthiness, you may not qualify.
- No cosigner release: It’s not a standard feature by any means, but some other refinance programs allow you to release a co-signer without having to refinance again. With RISLA’s high eligibility standards, it may take you a while to improve your credit and income and then refinance on your own.
- Unable to Refinance Perkins Loans: If you want to refinance your Perkins loans because you don’t qualify for cancellation, you’ll have to look elsewhere.
You can register online or by calling RISLA directly at 1-800-758-7562. During the registration process, you provide the following information:
- Name, telephone number, e-mail address and permanent address
- Highest completed education
- Citizen service number, date of birth and citizenship
- Driver’s license number
- Information about employment and income
- Liquid assets
- Housing costs
- Details about the loans you want to refinance, including the lender, payments and balances
- Your desired loan period
After you sign up, you will immediately receive a pre-approval response. If you are pre-approved, you must send RISLA the following documents to verify your information:
- Most recent billing statements for each loan you want to refinance (unless they are existing RISLA loans)
- 60 day installment amount for each loan you want to refinance (unless they are existing RISLA loans)
- Payment slips or another form of income verification
- W-2’s from the previous tax year
- Statements verifying your cash
You can submit your supporting documents via RISLA’s website.
If you meet RISLA’s income and credit requirements, the refinance program can be a good option. If you have federal loans, you don’t have to give up an income-based repayment plan. You also get access to competitive rates, especially if you have a co-signer.
If you qualify for federal student loan forgiveness, you may want to keep your loans where they are. The same applies if you already have a favorable interest rate. With RISLA’s high income and credit minima, you can take advantage of it too other refinancing options.
Rebecca Safier contributed to this report.
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