State vs. federal student loans

Many borrowers have both federal and state loans and do not realize they play by completely different rules. Anything not listed on studentaid.gov is either a state loan or a private loan.

The core difference

Federal loans are standardized nationwide with robust income-based repayment and forgiveness options. State loans are issued by a state agency — they are closer to private loans than federal loans, with their own rates, terms, and usually no access to federal IDR or PSLF.

Side-by-side: federal vs. state loans

Federal versus state student loan features
Feature	Federal loans	State loans
Who lends the money	U.S. Department of Education	State agency (HESC, PHEAA, HESAA, MEFA, VSAC, etc.)
Income-driven repayment (IDR)	Yes — SAVE, PAYE, IBR, ICR	No federal IDR accessSome states offer their own income-based options, but they vary widely.
PSLF eligibility	Yes (Direct Loans only)	No
IDR forgiveness (20–25 yr)	Yes	No
Interest rates	Set by Congress annually; fixed for life of loan	Varies by state program; may be fixed or variable
Interest subsidy while in school	Subsidized loans: government pays	Rarely; most state loans accrue from disbursement
Deferment & forbearance	Robust options: unemployment (3 yr), economic hardship (3 yr), general forbearance	Limited; varies by state
Death / disability discharge	Yes — tax-free at federal level	Varies widely. Many state loans do not automatically discharge at death.
State-specific forgiveness	N/A	Some profession-based programs (see below)
Credit check required	No (except PLUS loans)	Yes, in most cases
Co-signer required	No	Often yes, especially for undergrad borrowers
Appears on studentaid.gov	Yes — always	No — state portal or servicer only
Servicer	MOHELA, Nelnet, Aidvantage, etc.	State agency or contracted private servicer
Consumer protections	Strong federal framework; FSA Ombudsman, CFPB oversight	State-level only; varies significantly

What you lose with state loans

These protections and programs are unavailable to state (and private) loan borrowers. The dollar impact can be enormous — especially if you work in public service or face income volatility.

No income-driven repayment

If your income drops, you cannot reduce your state loan payment to a percentage of income. You are stuck with the fixed payment — or in default.

No PSLF eligibility

Ten years in public service will not forgive your state loan balance. PSLF only applies to federal Direct Loans. See the PSLF checklist.

No $0/month safety net

Federal IDR can set your payment to $0 if income is low enough. State loans have no equivalent.

Limited death/disability discharge

Federal loans discharge automatically at death or total permanent disability. Many state loans do not — the co-signer or estate may owe the balance.

Weaker deferment options

Federal loans offer up to three years of economic hardship or unemployment deferment. State programs typically offer shorter, more limited pauses.

Some states have forgiveness programs

A small number of states offer profession-based forgiveness for state loan borrowers. These are narrower than federal programs but worth checking.

State forgiveness programs by category

These are profession-based programs — most require working in the state and in a specific field. Always verify directly with the state agency.

State student loan program categories
Category	Who it's for	States with notable programs	What to check
Teacher forgiveness	Teachers in high-need schools or shortage subjects	NY, CA, TX, PA, MN, FL — most states have some version	Subject area, school designation, years of service; TEACH Grant is federal
Healthcare worker	Physicians, nurses, dentists, mental health, rural providers	Most states; HRSA NHSC is federal but applies broadly	HRSA NHSC + your state health department programs
Legal / public interest	Public defender, legal aid, government attorneys	NY (LRAP), CA, MA, MN, state bar foundations	Law school LRAP; state bar foundation programs; income caps
Rural & underserved	Professionals in designated rural or underserved communities	Many states; often combined with healthcare or teaching	State rural development office; USDA; HRSA for health
Military / National Guard	State Guard members (separate from federal GI Bill / PSLF)	Many states	State Guard education officer; varies by branch and rank
STEM / workforce development	Engineers, scientists, tech workers in targeted industries	Limited — MN, MD, NY have had programs	State workforce or economic development agency

Best starting point

Search “[your state] student loan forgiveness” plus your profession on your state's official .gov website. Also check StudentAid.gov's state forgiveness chart — it lists state programs alongside federal ones.

Do I have state loans?

Many borrowers do not know — especially if their financial aid package mixed federal and state loans.

Step 1: Check studentaid.gov first

Log in to studentaid.gov/aid-summary. Every federal loan appears here. If your total balance there is less than what you think you owe, the difference is state or private loans.

Step 2: Check your credit report

Go to AnnualCreditReport.com. Any student loan not on studentaid.gov appears as a separate tradeline with the lender name.

Step 3: Look up your state's loan agency

Common agencies include HESC (NY), PHEAA (PA), HESAA (NJ), MEFA (MA), VSAC (VT), SELF (MN), and ISAC (IL). Search “[your state] student loan authority.”

Step 4: Review original financial aid awards

Your school's financial aid office can provide a history of all aid awarded — including state loans packaged into your offer letter.

Major state loan programs — quick reference

Selected state student loan agencies
State	Agency / program	Typical rates	Key features
New York	HESC	Varies; often competitive with federal	TAP grants; some teacher and healthcare forgiveness in NY
Pennsylvania	PHEAA / PASA	Fixed and variable options	Large agency; also services federal loans; PA grant programs
New Jersey	HESAA (NJ STARS, NJCLASS)	Variable and fixed	NJCLASS for students and parents; limited income-based options
Massachusetts	MEFA	Fixed; historically below federal PLUS rates	No-fee loans; competitive rates; limited forbearance
Vermont	VSAC	Fixed and variable	Advantage Loan program; some in-school deferment
Minnesota	SELF Loan (MOHE)	Variable, semi-annual adjustment	No origination fee; interest-only during school; credit-based
Maine	FAME	Fixed; varies by year	Alfond Scholarship; some income-based options; rural health forgiveness
All states	Varies	Varies	Check your state higher education authority — most have at least a grant program

Before taking a state loan

Exhaust federal Direct Loan eligibility first. Federal loans offer better protections, IDR access, and forgiveness options. Only consider state loans after maxing federal subsidized and unsubsidized limits — and compare rate and terms against federal PLUS and private lenders using the refinance vs. keep federal calculator.