Did You Know These 6 Things About Sallie Mae Student Loans?

Student learning about Sallie Mae student loansSallie Mae is the largest private student loan lender in the US and provides funding for all sorts of higher education pursuits—from undergraduate school to MBAs and plenty more. When it comes to student loans, it pays to shop around to know exactly what you’re signing up for. So, if you are looking for a student loan provider, here are 6 things you should know about Sallie Mae student loans.

1. Types of Student Loans Available

When it comes to taking out student loans to pay for school, Sallie Mae has three main categories to choose from—Undergraduate Student Loans, Parent Loans, and Graduate Student Loans.

Smart Option Student LoanⓇ for Undergraduate Students

The Smart Option Student LoanⓇ is the best for students seeking a bachelor degree, associate degree, or certification at a degree-granting school. Some of the benefits include:

  • Borrowing up to 100% of all school-certified expenses
  • No origination fee at the start of your loan
  • 0.25% interest rate reduction if you enroll with auto-debit

Sallie Mae’s undergrad loans provide students the flexibility to choose between three repayment plan options:

Deferred Repayment Plan: No payments while enrolled full-time in school or during the 6 month grace period after graduation. This allows you to focus your attention on academics and performing well in school. Keep in mind, you may end up paying more overall with a Deferred Repayment Plan—since the interest will compound when you are in school—but it gives you time to find a job and start earning money without worrying about loan repayments starting right away.

Fixed Repayment Plan: This flexible plan allows students to contribute small, fixed payments to their loans to help balance out current expenses and loan payments. Pay as little as $25 a month while in school and during the grace period will help you save an average of 14% of total loan cost compared to the Deferred Repayment Plan. Any unpaid interest will be added to the principal amount after the grace period ends. This is a great option for students who can afford fixed, smaller payments while in school.

Interest Repayment Plan: If you are eager to start paying off your borrowed amount right away, this is the option for you. You’ll pay the accrued interest every month while in school and during the grace period. While you will be paying more during school, you’ll lower your interest rate by 1% compared to the Deferred Repayment option, and can save you an average of 27% on total loan cost comparatively. On a $20,000 loan that would mean saving around $5,400!

Sallie Mae Parent Loan℠

The Sallie Mae Parent Loan℠ is for parents (or other creditworthy individuals) who want to financially support their student’s undergraduate, graduate, or certification education. It also comes with its own set of benefits, including:

  • 100% coverage for all school-certified expenses
  • No origination fee
  • 0.25% interest rate reduction if you enroll with auto-debit
  • May qualify for tax deductions on the interest paid
  • Track your credit health for free online with FICO Credit Scores

Sallie Mae offers two repayment plan options for their Parent Loan:

Interest Repayment Plan: Pay interest monthly while your student is in school (for up to 48 months) and start making principal and remaining interest payments upon the student’s graduation. Note that this option will take longer to repay compared to the Principal and Interest Repayment Plan, but the trade-off benefit is that your monthly payments will be lower while the student is enrolled.

Principal and Interest Repayment Plan: Start repaying the principal and interest right away while the student is still in school. This plan will let parents repay the loan faster and costs less overall, but the in-school monthly payments will be higher compared to the monthly payments of the Interest Repayment Plan.

Graduate Loans

Sallie Mae offers a variety of graduate student loans depending on what type of grad school the borrower plans to attend. They offer loans for the following programs:

  • MBA
  • Medical School
  • Medical Residency
  • Dental School
  • Dental Residency
  • Health Professions
  • Law School
  • Bar Study
  • Graduate School

While each loan has its own set of features, let’s focus on the more generalized Sallie Mae Graduate School Loan℠ for now, which is for students pursuing their master’s or doctoral degrees.

  • 100% coverage for school-certified expenses (with no max)
  • 6 month grace period
  • 48 months of deferment
  • 12 interest-only payments
  • 15 years to repay (with no prepayment penalty)

Sallie Mae offers three repayment options with the Sallie Mae Graduate School Loan℠:

Deferred Repayment Plan: No payments while in school or during the grace period. Principal and interest payments start 6 months after graduation. Remember, you may end up paying more overall with a Deferred Repayment plan–since the interest will compound. Choose this if you need to generate more income in order to comfortably make repayments after the grace period ends.

Fixed Repayment Plan: Repay as little as $25 a month while in school and during the grace period. Unpaid interest will be added to the principal amount after the grace period ends. Choose this if you can afford to start making repayments right away, and want to pay off the loan faster and lower the overall cost.

Interest Repayment Plan: Pay the interest every month while in school and during the grace period. The interest rate will be 0.50% lower than the Deferred Repayment option, and 0.25% lower than the Fixed Repayment option. Choose this if you can put some money towards monthly repayments, if not a full amount. This plan can save you money on interest while keeping payments more manageable if money is tight.

2. Online Loan Application

Sallie Mae’s online loan application will take borrowers through a series of questions to determine what sort of loan will work best for the student’s situation. It is a simple design with clear-cut questions and descriptions to help guide borrowers through the process.

Every step is clearly detailed and defined, making applying painless. And if you do have a question about the application, Sallie Mae has a number you can call for help five days a week.

3. Eligibility Requirements

While specific eligibility requirements will change from loan to loan, let’s go over some of the basics.

In order to get a loan with Sallie Mae, a borrower—or their cosigner—must be creditworthy. To assess that, Sallie Mae will perform a thorough credit check. In addition, there are a few other requirements:

  • Borrowers must be enrolled in a participating US college.
  • The student needs to be enrolled in school at least half-time.
  • They must also be US citizens, permanent residents, or a non-US citizen with a cosigner who is a US citizen.
  • Sallie Mae also requires a minimum loan amount of $1,000.

4. College Planning & Financial Aid Tools

Sallie Mae is very vocal about the options students and their families should explore before turning to a private student loan. In fact, Sallie Mae has a number of sections on their site dedicated to educating students and their families about different aspects of available financial aid before taking out a private loan: like scholarships, work study programs, and federal loans.

In addition to a number of helpful articles about applying for scholarships, filing the FAFSA, and comparing financial award letters, Sallie Mae also has several tools for students to use when it comes to covering the cost of college.

  • Scholarship search
  • College planning calculator
  • Student loan payment amount estimator
  • Accrued interest calculator
  • College cost calculator
  • Future savings calculator

By utilizing these tools, students and their families can cut down on potential student loan debt by making smart decisions and limiting how much they need to take out in private student loans.

Loan Management Tools

When it comes to taking out student loans, Sallie Mae wants borrowers to be as informed as possible. They have an entire section of their site—Get Ready to Borrow—dedicated to educating borrowers about taking out student loans. It starts with ensuring that the reader understands how private loans work, takes them through how much they should borrow and which repayment option is best for them, and offers helpful information about cosigners and more.

If you do take out a student loan with Sallie Mae, definitely take advantage of their loan management tools.  There’s a wealth of information on their site including helpful articles about payments, credit, and tax information, so you’ll never feel in the dark about your options.

Co-Signer Release

Most student borrowers can’t qualify for a loan on their own (due to their lack of credit history) and will need a co-signer to help them get a loan. Co-signers accept a lot of financial responsibility when they sign on behalf of a student borrower. If the borrower can’t pay back the loan, it’s up to the co-signer to do it.

One benefit of having a student loan with Sallie Mae is the option to release your co-signer, and assume all of the loan’s responsibility for yourself. After you graduate, have 12 on-time payments, and meet a certain credit requirement, you can apply to release your co-signer.

Other eligibility requirements include:

  • Proof of graduation
  • Proof of income
  • Have no student loans in forbearance
  • Proof of citizenship

Think of releasing your co-signer as a “Thanks for having my back, but I’ve got it from here.”

Before You Sign with Sallie Mae…

Before choosing Sallie Mae, or any other student loan lender, be sure you’ve done your homework. It’s important to compare rates, terms, and repayment options. College Raptor can help you do just that! With our free Student Loan Finder, you can compare lenders and rates side by side so you can find the ideal student loan for you.

See Sallie Mae Loans® for Important Disclosures

Allison Wignall

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