The state Office of Higher Education would be able to refinance student and parent loans under recently proposed legislation.
The bill's author, Sen. Greg Clausen of Apple Valley, says he has heard complaints that interest rates on many private loans are too high, and repayment plans too inflexible.
"We talked to students who are carrying loans anywhere from nine to 12 percent," he said. "And if we can lower that down into the three-, four percent, that's a considerable savings."
Clausen said as many as 18 states have started loan-refinance programs in the past few years, but do so in limited numbers.
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Several members of the Senate higher-education committee said they support the idea. But they wanted more details on financing and oversight of the operation.
"I love this concept," said DFLer Kathy Sheran of Mankato. "I think it's really ripe and needed. But we have to be responsible about how we roll it out."
A version of the bill was introduced last session, but didn't gain traction.
Clausen said this year it's one of three bills designed to help ease the cost of college. The other two attempt to lighten the burden through various tax credits.
The committee approved the bill and forwarded it on to the Senate finance committee for further study.