The Rhode Island Student Loan Authority, known as RISLA, is a nonprofit, consumer-friendly student loan refinancing option that offers repayment benefits many lenders don’t. It’s the only refinancing lender, for instance, that allows struggling borrowers to make monthly payments based on income.
RISLA also aims for transparency in its lending process. It offers the same interest rates to all qualifying borrowers; rates only vary depending on the loan term you choose and whether you use a co-signer. That may mean, however, that the most creditworthy grads could get lower rates elsewhere.
At a glance
- Interest rates: 4.24% to 5.74% with a co-signer; 5.49% to 6.99% without a co-signer (including 0.25% discount for making monthly payments by auto-debit)
- Repayment terms of 5, 10 and 15 years; the shorter the term, the lower the interest rate
- Residents of all 50 states eligible
RISLA was founded in 1981 to make loans to college students. A year and a half ago the authority started refinancing parent PLUS loans, then expanded to federal and private student loans. Despite its name, RISLA works with borrowers from all 50 states.
RISLA has set itself apart by developing a borrower-centric approach to refinancing:
- The authority won’t refinance federal Perkins loans. That helps grads maintain access to Perkins student loan forgiveness if they work in public service (or decide to in the future).
- RISLA offers only fixed-rate loans to encourage customers to take advantage of currently low interest rates, says Charles Kelley, executive director of RISLA. “I don’t think they can go down much further. So better to lock in your interest rates now,” he says. “That way you’re protected from future interest rate and monthly payment increases.”
- RISLA recommends borrowers pay off their loans as quickly as possible. It rewards customers who choose shorter repayment terms with lower interest rates.
» MORE: 4 signs you’re ready to refinance federal student loans
Do you qualify?
| Minimum qualifications |
The typical borrower |
|
|---|---|---|
| Credit score |
680 | 778 |
| Income | $40,000 |
$76,000 |
Debt-to-income ratio |
RISLA prefers a borrower’s debt equal no more than 50% of his or her annual income. | 41% |
Reasons to use RISLA
Income-based repayment: RISLA’s most generous feature is its income-based repayment plan. Borrowers who can’t afford to repay their refinanced loan (generally due to a major event like a job loss or a medical emergency) can pay up to 15% of their monthly income and receive loan forgiveness after 20 years.
The program is based on the federal government’s income-based student loan repayment plan. While refinancing customers should sign up for it only if they need to, it might help to know the program is there.
“It’s not meant just to be used as a way of reducing your payment, because then you extend out your term,” Kelley says. “It’s a safety net should unfortunate things happen.”
Transparency: Borrowers may find RISLA’s focus on transparency appealing. Many refinancing lenders provide you with an interest rate after you’ve completed at least a few steps in the application process. But RISLA’s approach means you can compare its rates to other lenders’ without a credit check.
Where RISLA falls short
Interest rates: The authority’s approach might be borrower-centric, but it also means customers with excellent credit could get a better deal elsewhere.
A qualified borrower who wants to repay her loans in five years, for instance, will receive an interest rate of either 4.24% (with a co-signer) or 5.49% (without a co-signer). She won’t be subject to underwriting to determine her interest rate, but other lenders might offer lower rates if she has particularly strong financial history.
Use caution if you’re comparing fixed rates and variable rates, however. Variable rates are riskier because they’ll increase if the Federal Reserve raises interest rates in the future. Be sure you understand how frequently your variable interest rate might change, and how high it could go, before you choose one.
Flexibility: Some borrowers may want to refinance their Perkins loans because they won’t take advantage of Perkins loan cancellation. Others may prefer a longer repayment term than RISLA’s maximum of 15 years, though that means paying more in interest, or they want a low variable-rate loan that they’ll pay off quickly. In those cases, another lender could be a better fit.
» MORE: How to choose the best student loan refinancing offer for you
Next steps
RISLA’s own online application takes about 10 minutes to fill out. You can also complete an application through NerdWallet’s partner Credible, a refinancing marketplace that includes RISLA. That will let you compare offers from up to seven lenders.
The calculator below will estimate how much you could save from refinancing your loans through Credible. Note that it assumes a 15-year loan term and the lowest interest rate currently available to you, which may be variable. Choose “Get personalized offers” on the next screen to compare potential refinanced loans from RISLA and other lenders.
Brianna McGurran is a staff writer at NerdWallet. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.
Image via iStock.
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