Some states are helping graduate students pay for school. Here's what borrowers should know

As the federal government shrinks its lending options for graduate education, more students are turning to state-based loans to cover the costs.

But experts say it's important that borrowers closely look at the fine print since these programs more closely resemble private loans than federal ones.

Both Connecticut and Minnesota expanded into graduate loans this year after the Trump administration phased out Grad PLUS loans for new borrowers and imposed borrowing limit caps. In all, there are roughly two dozen state student loan lenders that offer broad-based assistance to help students fill education funding gaps. Some states such as Massachusetts , Arkansas and New Jersey , have offered loan programs for decades.

Where federal loans might now have loan limits and private lending may be hard to access, state loans exist "sort of in the middle," said Rajeev Darolia, professor of public policy at the University of Kentucky. These programs may also offer more favorable terms or protections than what's available in the private market, he added.

While state student loans can be good options for some borrowers, they typically don't come with the protections of federal loans, such as forgiveness and income-driven repayment plans, which are not available in most states. Borrowers may then run into issues with their servicer or the lender if they fall behind on loans, according to a critical analysis of state student loans by advocacy group Protect Borrowers.

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