The nonprofit Rhode Island Student Loan Authority, known as RISLA, is a state-based agency that refinances student loans and lends money to students and parents for college. It offers consumer-friendly benefits, including income-based repayment and transparent interest rates. Any qualifying borrower can refinance with RISLA, but you must be a Rhode Island resident or attend school in the state to take out a private student loan for college.
Below we review RISLA student loan refinancing and private student loans available through the agency. (Click here to jump to the private student loan review.)
RISLA student loan refinancing review
RISLA was founded in 1981 to make loans to college students. A year and a half ago, the agency started refinancing parent PLUS loans, then expanded to federal and private student loans. Despite its name, RISLA refinances loans for borrowers in all 50 states.
Refinancing 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
RISLA has set itself apart by developing a borrower-centric approach to refinancing:
- It won’t refinance federal Perkins loans. That helps grads maintain access to Perkins 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 that borrowers pay off their loans as quickly as possible. It rewards customers who choose shorter repayment terms by giving them lower interest rates.
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 refinance your student loans with 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 apply to pay up to 15% of their monthly income and receive loan forgiveness after 25 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 student loan refinancing falls short
Interest rates: The agency’s approach might be borrower-centric, but it also means customers with excellent credit could get a better deal elsewhere.
A qualified borrower who chooses a five-year term, for instance, will receive an interest rate of either 4.24% with a co-signer or 5.49% without a co-signer. The borrower won’t be subject to underwriting to determine the interest rate, but other lenders might offer lower rates for 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. 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 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 multiple lenders at once.
RISLA private student loans review
RISLA also offers college loans to students and their parents who are either Rhode Island residents or who plan to attend school in the state. Nearly all of RISLA’s student loan borrowers use co-signers, says Chad Pastorius, manager of strategic planning at RISLA.
Student loans at a glance
- Interest rates: 3.99% to 5.74% fixed (including 0.25% discount for auto-debit)
- 10- or 15-year repayment term; can choose to start repaying immediately or six months after the loan is disbursed.
- $2,000 in loan forgiveness available to borrowers who take internships; Rhode Island nurses can repay loan interest-free for 48 months.
It’s best for students to borrow up to the federal student loan maximum, which will allow them to take advantage of federal loan-specific benefits, before turning to private student loans. If you do need additional money to pay for school, a RISLA student loan offers some of the perks of a federal loan in a private package.
Just like its refinance loan, RISLA’s college loans offer income-based repayment if you have trouble finding a job after graduating. Forbearance is available for short periods of unemployment or financial hardship, for a total of 12 months over the life of the loan.
RISLA also offers a parent loan at a fixed 4.74% interest rate, which includes a discount for using automatic payments. The loan has no origination fee and carries an interest rate that’s more than 2% lower than a federal parent PLUS loan, which may make it a better deal, Pastorius says.
Repayment options
RISLA offers similar loan repayment options to other private lenders:
- Immediate repayment: You’ll make full interest and principal payments while you’re in school, for a total of 10 years. This option will get you a lower interest rate and shorter repayment term, and you’ll save money in the long run.
- Deferred repayment: You won’t make payments during school or for the six months after you leave school. But your interest rate will be 1.75% higher and you’ll repay your loans over 15 years.
Do you qualify?
| Minimum qualifications | The typical borrower or co-signer | |
|---|---|---|
| Credit score | 680 | 767 |
| Income | $40,000 | $87,100 |
Reasons to take out a RISLA private student loan
Borrower protections: It’s rare for a private lender to offer income-based repayment or forgiveness programs like RISLA does. RISLA’s student loan lets borrowers with severe financial hardship pay, at most, 15% of their discretionary incomes for 25 years; at the end of the loan term, their remaining balances are forgiven (and they’ll pay income taxes on that amount).
RISLA offers two additional forgiveness programs for borrowers. RISLA can forgive $2,000 of your loan balance if you do a paid or unpaid internship for credit while you’re in school. Rhode Island nurses can also pay only the principal on their loans for four years, effectively lowering the amount they owe per month and overall.
Transparency: RISLA offers the same interest rates for all approved borrowers: 3.99% fixed for a student loan that you start repaying immediately and 5.74% fixed if you start repaying six months after you leave school. That means borrowers in the 680 credit score range could get a better interest rate with RISLA than through a lender that bases interest rates on credit history.
Where RISLA private student loans fall short
Eligibility restrictions: RISLA student loans are only available to Rhode Island residents who go to school either in Rhode Island or elsewhere, or to students at Rhode Island colleges. So a California resident who goes to school in Michigan, for instance, won’t qualify.
Fewer protections than federal student loans: While RISLA is more borrower-friendly than many private lenders, it still doesn’t offer the same level of protection that federal loans do. You can’t access the federal Public Service Loan Forgiveness program with a RISLA loan, for instance, which will forgive your entire remaining direct loan balance after 120 payments if you work in a range of public service jobs.
Next steps
Start your search for college funding by filling out the Free Application for Federal Student Aid, known as the FAFSA, which will make you eligible for federal grants, loans and work-study.
If you need additional money for college and meet the requirements, you can apply for a RISLA student loan on the agency’s website. It’s a good idea to compare interest rates from multiple lenders, so check out NerdWallet’s list of additional private student loan options.
Brianna McGurran is a staff writer at NerdWallet, a personal finance website. Email: bmcgurran@nerdwallet.com. Twitter: @briannamcscribe.
This article was updated on June 3, 2016. It was originally published March 3, 2016.
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