State loans are private (non-federal) student loans offered by state agencies or state-chartered non-profit organizations. State loans are usually restricted to students who are state residents or who are enrolled at colleges in the state. Some state loan programs may offer state-specific loan forgiveness options for students who remain in the state after graduation.
Nationally, about 0.1% of undergraduate students received state loans in 2011-2012, with an average loan amount of about $6,400.
Often, a state loan program will offer lower interest rates than commercial private student loans. Some state loan programs offer the same interest rates to all eligible borrowers, regardless of credit scores. Many state loan programs offer fixed interest rates.
In-school deferment options on state loans may be limited due to restrictions on the bonds used to fund the state loans.
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