Last Updated Jul 9, 2010 1:10 AM EDT
That's an awesome rate, but here's the catch. You have to live in North Dakota or attend school there to qualify for this variable interest rate from the only state-owned bank in the country. You can, however, snag a starting interest rate of 2.78% if you either live or attend school in Minnesota, South Dakota, Montana, Wyoming or Wisconsin.
These are the best rates that you'll find in a corner of the college loan world that most people overlook: state college loan programs. Tim Ranzetta of Student Lending Analytics recently compiled a list of college loans and interest rates in states that offer private college loans.
State private student loans offer interest rates significantly below the average private student loan. Many of these loans will require the student to have a cosigner, which is standard for private students loans.
Here are the current variable interest rates for state college loan programs:
State Current Rate Iowa 9.00%
Minnesota 1.78% - 2.78%
Montana 1.78% - 2.78%
North Dakota 1.78%
South Dakota 1.78% - 2.78%
Wisconsin 1.78% - 2.78%
Wyoming 1.78% - 2.78%
Here are the fixed interest rate college loan programs:
State Current Rate Alaska 7.20%
Iowa 7.75% - 7.90%
Massachusetts 6.89% - 8.19%
Minnesota 6.57% - 7.57%
Montana 6.57% - 7.57%
New Jersey 7.62% - 7.92%
New York 7.55% - 8.75%
North Dakota 6.57%
Rhode Island 7.25% - 8.49%
South Carolina 7.15% - 9.15%
South Dakota 6.57% - 7.57%
Wisconsin 6.57% - 7.57%
Wyoming 6.57% - 7.57%
Before you start investigating private college loans, here's a word of caution: Students are better off borrowing from the federal government first because the student loans are fixed and they offer consumer protections.
Lynn O'Shaughnessy is the author of The College Solution, an Amazon bestseller, and she also writes for TheCollegeSolutionBlog. Follow her on Twitter.
College loan image by Curtis Gregory Perry. CC 2.0.