When first-time homebuyers get ready to purchase a house in North Dakota, Realtors may start handing them information on refinancing student loans as well.
The Bank of North Dakota is partnering with Realtors to get the word out about its DEAL One loan program.
Eric Hardmeyer, president of BND, said national reports have shown students graduating with an average of $27,000 to $30,000 in student loans.
“We know they’re delaying major life decisions because of student loan debt,” he said.
Hardmeyer said, in meetings between BND’s student loan and home loan staffs, the housing lenders were seeing the student loans as a barrier to housing loan approval. Those meetings led to an “aha moment.”
“There’s something we can do here,” Hardmeyer said of the conclusion.
A person with a 14 percent interest student loan can refinance it to less than 2 percent interest today with a variable interest loan.
“It’s just huge savings,” Hardmeyer said. “In some cases, it’s a life changer.”
He said, on average, people are refinancing $40,000 worth of student debt at BND. And the average interest rate on the debt was 8 to 9 percent. BND also allows them to stretch payments out from 10 years to 20 or 25 years, which lowers their monthly payment and allows them to get into a home sooner if they choose.
And it’s not just homebuyers BND is reaching out to. Realtors are just one part of the bank’s more intensive outreach effort, which started about six months ago, Hardmeyer said.
Last session, state legislators granted the bank two new full-time employees for outreach and economic development.
So far, bank staff has visited with engineering firms, the State Bar Association of North Dakota, the health care industry, manufacturers, schools and economic development groups.
“There are so many different areas we can go with this,” he said.
From these meetings, Hardmeyer said the bank has learned of the DEAL One program’s potential as a workforce recruitment tool.
“In Dickinson last week, a hospital administrator said it is a major recruitment tool for them,” Hardmeyer said.
At Microsoft in Fargo, there was a worker who had just moved to the state from Maine who was counting down the days until she met the six-month residency requirement for refinancing.
“It’s a tool our businesses can use,” Hardmeyer said. “It’s a competitive advantage we have in North Dakota.”
Hardmeyer said there are not a lot of programs like DEAL One in the United States. The program has been in existence for two years and its “numbers are impressive,” Hardmeyer said.
The bank has consolidated about 7,500 loans at a total value of about $329 million. Of that, about 25 percent comes from loans already in the DEAL One program and 75 percent is new debt to the bank.
In total, there is about $990 million in the DEAL One program, which Hardmeyer said is a “fairly significant number for a bank with 7 billion in assets.” Student loans make up 1.3 billion of the bank’s 4.7 billion loan portfolio. He said the bank will be evaluating the program over the next couple years to ensure BND maintains a balanced asset portfolio.
The Bismarck Tribune is a media partner with Forum News Service.