In an era where federal involvement in public financial services seems to be waning, the Bank of North Dakota continues to swim against the current and thrives. Formed in 1919 in response to increasing financial hardship of North Dakota farmers, it remains the nation’s only state-owned bank.
Perhaps stemming from its origins helping farmers, the BND has a long tradition of serving its state. Following the desperate farmland sell-off of the Great Depression, the BND made concerted efforts to ensure the land was sold back to the original families. They also assisted teachers during this period by cashing in their paychecks without a high percentage fee, standard for all other banks. They continue to recognize the particular needs of their community and develop policies to support the long-term financial success of North Dakota.
From day one the bank has been a pivotal part of the economic engine of the state. The BND's primary focus is to work with other financial institutions to promote economic growth and help the residents of North Dakota. Interestingly, the BND did not experience the same hardships as other national financial institutions during the 2008 financial crisis. Many other states and politicians have wondered if the BND state-run model can be replicated elsewhere to the same effect.
Bank of North Dakota Student Loan Services
Unlike other more traditional banks, the Bank of North Dakota operates much like a tiny state-run federal reserve. Most of its loan products are partnerships with local financial institutions. In essence, the BND provides the funding, but borrowers work with other banks or credit unions for the day to day servicing. But, when it comes to student loans, the BND offers these services directly.
DEAL Student Loan
The most common student loan provided by the BND is their private DEAL Student Loan. Eligible students must be U.S. citizens from North Dakota or out-of-state students planning to attend post-secondary education in North Dakota. They do not service outside residents attending schools in other states.
Full-time students (who go to school for more than half the year) must have already applied for federal student aid, while part-time students do not need to meet this requirement. Their loans range from a minimum of $500 to a total lifetime maximum of $50,000. Applications can easily be made online.
Interest rates are the same for North Dakota students attending in-state or out-of-state school, and even for out-of-state students attending a state school. At the time of publishing, fixed interest rates at the BND are 4.78 percent and variable rates are 2.82 percent. As of Oct 2017, the BND had committed to zero loan fees. According to the bank's website, there are no fees for any student with a DEAL student loan because the BND pays them on behalf of the student.
The BND offers an interest rate reduction of 0.25 percent when students sign up for automatic payments. It also offers in-school deferment options similar to other private loan companies. The deferment options include total delay until after graduation, interest payments only until after graduation, or borrowers can simply make full payments.
DEAL One Loan
For North Dakota residents who need to refinance existing student loans, the BND offers the DEAL One Loan. Eligible students need be a U.S. citizen that has had a permanent address in the state for at least six months. Also, none of their previous loans can already be in default.
The BND can offer to refinance many different kinds of student loans, including the DEAL Student Loan, federal student loans, and other privately held ones. Students who are looking to refinance federal loans should note that they will lose any protections if they refinance a federal loan into a private consolidation.
Interestingly, unlike their DEAL student Loan, there are no limits to the amount refinanced. The BND is currently offering the same interest rates on the DEAL One Loan as the DEAL Student Loan, 4.78 percent fixed and 2.82 percent variable. Again, there are no loan fees.
When compared to other private student loan options, the BND offers competitive rates and benefits that are not often seen in small state banks. Their services and rate structures are more typical of the highly competitive national bank student loan programs. One final benefit, which shouldn’t be overlooked, is the fact that the BND is both the funding party and the loan servicer. This structure is not always the case when it comes to student loans, as many larger banks hand over the servicing to a third party company. It can come in handy to keep everything under one roof, especially when it comes to customer complaints and disputes.
Addiction Counselor Internship Loan Program
In response to the current addiction crisis in North Dakota, the BND is offering a specific loan for students looking to work in addiction services. The state has seen spikes in opioid addiction and addiction-related fatalities over the past few years. Considering the BND has a history of offering a helping hand during times of crisis in the state, it shouldn’t be surprising that they developed a special loan for the addiction crisis.
To be eligible, students must be completing an internship for addiction counselor services at a qualified substance abuse program. The program needs to be located within the state, and as with all their other products, the student needs to be a U.S. citizen.
While the internship must be completed at a licensed facility within the state, it can either be unpaid or paid work experience. The program began in 2015 and offers students upwards of $7,500 during their internship.
Again, there are zero fees for the loan. However, the interest rate will fall between the Bank's current base rate of 4.25 percent and a maximum limit of 6 percent. They require repayment to begin no later than 12 months after the start of the program and encourage students to make repayments as early as possible to get a good head start. Interested applicants can apply here.