PRIVATE STUDENT LOANS

SLM Corporation (commonly known as Sallie Mae; originally the Student Loan Marketing Association) is a publicly traded U.S. corporation that provides consumer banking. Its nature has changed dramatically since it was set up in 1973. At first, it was a government entity that serviced federal education loans. It then became private and started offering private student loans, although at one point it had a contract to service federal loans.

The company’s primary business is creating, servicing, and collecting private education loans. The company also provides online tools and resources for college planning. Sallie Mae previously originated federally guaranteed student loans under the Federal Family Education Loan Program (FFELP) and worked as a servicer and collector of federal student loans on behalf of the Department of Education. The company now offers private education loans and manages more than $12.97 billion in assets.

Sallie Mae is one of the more well-known student loan companies out there, offering private loans for undergraduates and graduates in a variety of degree programs. While it doesn’t offer student loan refinancing, its college planning tools put it a cut above competitors in terms of the borrowing experience as a whole. With scholarships, college planning calculators and educational articles, not to mention competitive rates, Sallie Mae is a good choice for new student loan borrowers looking for a well-rounded lender.

Features

Sallie Mae’s private student loan offerings include undergraduate, MBA, medical school, medical residency, dental school, dental residency, health professions, law school, bar study and graduate school loans. It also offers career-training student loans.

Low rates, few fees and flexible repayment options make this lender worth considering. Sallie Mae can cover up to 100 percent of your school-certified costs of attendance, and you may be able to take advantage of extra benefits — like four months of Chegg study help.

Pros and cons of Sallie Mae student loans

Here are a few of the positives and negatives to be aware of before applying for a Sallie Mae student loan.

Pros:

• Large loan amounts: You could get 100 percent of your school-certified costs covered at an approved school or institution.
• Educational resources: Sallie Mae supports students at multiple points in their educational journey, with study help and college expense calculators available to current and prospective borrowers.
• Variety of programs supported: Most lenders require you to be attending school at least half time, but Sallie Mae offers loans for students attending less than half time, students attending online or summer classes, students studying abroad and students enrolled in professional certification courses.

Cons

• Unspecified forbearance: While Sallie Mae says that it will work with borrowers who are experiencing financial hardship, it doesn’t have a clear forbearance policy.
• Website lacks transparency: Sallie Mae doesn’t list many eligibility requirements, like a minimum credit score, on its website.
• Limited repayment terms: If you’re attending any kind of graduate school program, you’ll have only one repayment term option: 15 or 20 years, depending on the type of program. Undergraduates are limited to a term between 10 and 15 years.

Key points

• With most loans, the minimum loan amount is $1,000, and you can borrow up to the total cost of attendance.
• There are no application fees, origination fees, or prepayment penalties
• Sallie Mae has three repayment options: deferred, fixed, and interest-only repayment
• If you can’t afford your payments, Sallie Mae may allow you to enter into forbearance to delay payments
• Cosigner releases are available after as little as one year
• Sallie Mae offers undergraduate, graduate, career training, MBA, medical school, dental school, bar study, residency, and parent student loans.

Types of student loan borrowing options

If you need money for college expenses, you need to know what your borrowing options are. The two most common ways to borrow are federal student loans and private student loans.

Types of federal student loans

There are three types of federal student loans. They’re all provided by the government through the Federal Direct Loan Program:

• Direct Subsidized Loans are based on financial need.
• Direct Unsubsidized Loans are not based on financial need. They’re not credit-based, so you don’t need a cosigner. Your school will determine how much you can borrow, based on the cost of attendance and how much other financial aid you’re receiving.
• Direct PLUS Loans are credit-based, unsubsidized federal loans for parents and graduate/professional students. Direct PLUS Loans for parents are also known as Parent PLUS Loans.

It’s important to consider federal student loans before you take out a private student loan, because there are differences in interest rates, repayment options, and other features.

Types of private student loans

When you’ve explored scholarships, grants, and federal loans, and still need money for college, you can consider a private student loan.

• They’re issued by a bank or other financial institution.
• Private student loans are taken out by the student; they’re often cosigned by a parent or another creditworthy individual.
• Parent loans are another way to get money for college. A parent or other creditworthy individual takes out the loan to help their student pay for college.

Repayment Options

Aside from the standard principal-and-interest repayment method, in which you pay both principal and interest right away, even while you’re in school, Sallie Mae has 3 other repayment options:

Deferred –With deferred repayment, you don’t make payments while the student is in school and during the grace period. Deferred repayment is available for undergraduate, graduate, medical school, dental school, MBA, and law school student loans. Parent student loans and career training loans aren’t eligible.

Fixed–Under a fixed repayment plan, you pay $25 per month while you’re in school. Once you graduate and after your grace period, you begin paying the principal and interest. Career training, undergraduate, graduate, medical school, dental school, MBA, and law school loans are eligible for fixed repayment.

Interest–If you choose the interest-only repayment option, you’ll make monthly interest payments while in school and during the grace period. Parent, career training, undergraduate, graduate, medical school, dental school, MBA, and law school student loans qualify for interest repayment.

Other student loans, such as residency loans and bar exam loans, don’t require you to make payments while you’re enrolled at least half-time and during your grace period.