State student loan programs are financial aid options offered at the state level to help residents afford the cost of higher education. These programs often provide low-interest loans, grants, or scholarships specifically for in-state students attending eligible colleges or universities.
Unlike federal loans, state loans may come with unique eligibility requirements, benefits, and repayment terms that vary by state. Understanding what your state offers can be an important part of building a well-rounded college financing plan.
Key Points
• State student loan programs provide additional financial aid opportunities for students who have exhausted federal aid and scholarships.
• These programs are typically managed by state education agencies and may offer competitive interest rates and flexible repayment terms.
• Many state loan programs require students to complete the Free Application for Federal Student Aid (FAFSA®) as a first step. Some programs operate on a first-come, first-served basis, making early application important.
• State student loans can be used to pay for various costs associated with higher education, including tuition, room and board, books, supplies, and transportation.
• Unlike private loans, state student loans may offer benefits such as fixed interest rates regardless of credit score and deferred repayment options.
State Student Loan Programs, Explained
State student loans are offered by state government agencies. They generally have similar requirements and benefits to federal loans: low, fixed interest rates and flexible repayment plans. Some even offer subsidized (interest-free) loans and a deferred repayment plan. Though some states may waive a credit check, other lenders do require it. Students without a solid credit history may need to consider applying with a cosigner.
State student loans agencies are also unique because they are run not-for-profit and benefit the local community. As a local entity, they tend to be more mission-minded and offer more personable customer service.
These programs may offer a strong alternative for students who have exhausted financial aid and federal student loans.
What Are State Student Loan Programs?
State student loan programs vary in scope by state and not all states offer this option. Typically, a state’s department of postsecondary education is responsible for managing the loan program.
Also, terms and eligibility requirements differ from state to state. For instance, Georgia state offers the “Student Access Loan” through the Georgia Student Finance Authority. It’s a 1% fixed rate loan offered exclusively to Georgia residents.
Eligibility is strict, however. Prospective or current students must be enrolled in an institution from one of three university systems in Georgia (University System of Georgia, Technical College System of Georgia, or private postsecondary institutions). A maximum of $8,000 can be awarded per year, and up to $36,000 in a college career.
Applying for State Student Loan Programs
Many state student loans’ first step is filling out a Free Application for Federal Student Aid (FAFSA®). According to the U.S. Department of Education, some programs are first-come, first-serve — so it may help to apply early.
To get started, find your state’s department of postsecondary education. The U.S. Department of Education maintains a list of each state’s agency. These departments will be your direct sources of information on loan programs, eligibility, and how to apply. They can direct you to state student loan programs, if any are available.
It’s best to contact your department first for the latest programs, but the Education Finance Council has a comprehensive list of all participating state agencies. It may also be helpful to connect with your financial aid office, as they may have insight into state and college-specific aid opportunities.
If your state does not offer student loans — consider out-of-state agencies that accept out-of-state students like the Massachusetts Educational Financing Authority (MEFA). Massachusetts’ state legislature created MEFA in 1982 to provide low-cost finance alternatives for families and students. They offer undergraduate loans with fixed rates from 5.75% to 8.95% APR, as of May 2025.
What Can State Student Loan Programs Be Used For?
Borrowers use state student loans for college programs, whether professional, undergraduate, or graduate.
Your “cost of attendance” (COA) is a federal term that defines expenses from your higher ed programs. They can include tuition, room, food, books, and supplies.
State student loans should not be used for sorority and fraternity dues, vacation travel, or non-discretionary dining. Generally, it’s wise to use the minimum required to pay for educational needs in order to pay lower interest fees after graduation.
Tuition
College Tuition is the price of the actual education. It covers the cost of your classes and varies by the amount of credits required in your major. Charges will also vary depending on whether the school is public or private, or if students are in-state.
Room & Board
Room and board refers to housing and meals provided on a college campus. Types of housing include dorms or university-owned apartments.
Some students cut substantial costs by living at home and commuting to school. If living at home is not an option, off-campus rentals can also be covered by state student loans. This option may be cheaper, especially if roommates split the rent.
Recommended: Using Student Loans for Living Expenses and Housing
School Supplies & Equipment
Books, laptops, and other educational equipment are also part of the cost of attendance. It can cover general school items, such as pens and notebooks, and degree-specific equipment, such as Adobe software for graphic design majors or cameras for photography students.
Consider buying second-hand books or renting e-books. E-books in general are cheaper than physical textbooks.
Recommended: Ways to Cut Costs on College Textbooks
Transportation
If your classes are not walking distance — COA covers all local transportation costs such as car, taxi, and public transit. Examples are monthly train passes or gas for your car. Loans cannot be used to purchase a vehicle.
Personal Expenses
These expenses cover daily needs such as toiletries, groceries, laundry, haircuts, and other personal matters while a college student. They can also cover your phone and internet bill.
Dependent Care Expenses
Childcare is included in COA. This includes daycare or babysitters. Determine your aid amount by the number and age of dependents, as well as hours of care needed.
Other Costs Associated with Schooling
Miscellaneous expenses are covered, too. Examples might include study abroad programs and special needs equipment. COA also covers general campus fees, such as orientation fees, student social activity fees, health insurance fees, and more.
Recommended: I Didn’t Get Enough Financial Aid: Now What?
State Loan Programs vs Private Student Loans
More Competitive Rates
Benefits to state student loans may include a more competitive interest rate or a deferred payment plan. Private lenders, on the other hand, typically have higher interest rates that are generally determined based on the applicant’s credit history and income, among other factors. Also, private loans may not have deferred repayment plans.
Maximum Borrowering Amounts
State loan programs usually have a maximum borrowing amount for students. For instance, Georgia’s program awards a maximum of $8,000 per year. Private lenders will typically award up to the cost of attendance, minus any other financial aid received.
Stricter Eligibility Requirements
State college loan programs have more strict eligibility requirements for borrowers. The above-mentioned state agency in Georgia lends only to in-state residents. Georgia has even stricter policies: the schools must be in-state. Alaska’s program, however, allows Alaskan residents to use funds for out of state tuition.
Lastly, state student loan programs are not available in every state — whereas there are several private lenders to choose from nationally.
The Takeaway
State student loan programs offer valuable financial aid opportunities for students seeking to manage the costs of higher education. These programs, administered by individual states, often provide low-interest loans, grants, or scholarships tailored to residents attending in-state institutions.
Other ways to pay for college include cash savings, scholarships, grants, federal student loans, and private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
What are state student loans?
State student loans are non-federal funds offered via U.S. state higher education offices. They generally offer lower interest rates and various benefits to residents. Some state agencies lend nationally.
Are state student loans offered through the government?
State student loans are offered through state-level government agencies — not national (federal) agencies.
What are the benefits of choosing a state student loan over a private loan?
State student loans often come with benefits such as lower, fixed interest rates, deferred repayment options, and standardized rates regardless of credit score. They may also offer more personalized customer service due to their community-focused nature. In contrast, private loans typically have variable rates based on credit history and may lack certain borrower protections.
Photo credit: iStock/Nelson_A_Ishikawa
SoFi Private Student Loans
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