There’s a good chance you’ve heard of Sallie Mae if you’re thinking about taking out student loans. Today, Sallie Mae offers private student loans to students, parents and sponsors (such as a family member or friend) of students. Private student loans could be a good option if you’re planning on borrowing money for your education, or another student’s education.
Then, federal student loans could be a good first choice if you’re borrowing money as they may offer more forgiveness programs and repayment plans than private student loans. Federal loans may also offer a lower interest rate than private student loans, as they have a fixed rate no matter your credit or income.
Once you’ve tapped out your savings, scholarships, grants and federal financial aid, a private student loan, such as the ones that Sallie Mae offer, could fill a gap in your funding.
TABLE OF CONTENTS
What is Sallie Mae?
Types of student loans Sallie Mae offers
What borrower is Sallie Mae best for?
Taking a closer look at the online platform
The fine print
What to expect during the application process
Sallie Mae could be one of the most recognizable names in the student loan industry. Congress created the company in 1972 and named it the Student Loan Marketing Association. At the time, it was a government-sponsored enterprise (GSE) and also had the nickname Sallie Mae, similar to Fannie Mae in the mortgage industry. Due to new federal laws in the 1990s, it was restructured and hasn’t been a GSE since 2004.
Its role in the student loan space has also changed over the years. Sallie Mae has originated federally guaranteed loans through the now-defunct Federal Family Education Loan Program (FFELP), serviced federal student loans and originated and serviced private student loans.
In 2014, Sallie Mae spun off its student loan management, servicing and collection business as Navient, a new, publicly traded corporation. Navient services federal and private student loans, runs debt collection companies and helps businesses find ways to increase their revenue. Sallie Mae, also a publicly traded corporation, now offers a variety of private student loans, services the loans it originates and offers banking products to consumers. It also runs Upromise, which lets people earn cash back when they shop online or eat out. You can use your earnings to fund a college-savings account, pay off a student loan or receive a check and spend it on other expenses.
Sallie Mae has 11 private student loan programs, which target different groups: parents or sponsors of students; students who are in grade school; students who are in an undergraduate, graduate or certificate program; students who are pursuing a degree, professional training or a trade certification; and, lastly, health profession and law school students or graduates.
Here’s a brief explanation of each Sallie Mae student loan program:
- K-12. An option for financing a child’s private school education.
- Parent. A parent loan may be an option for a creditworthy adult (you don’t necessarily need to be the parent) who wants to help fund a student’s undergraduate, graduate or certificate program at a degree-granting school.
- Career training. For students who are taking professional or trade certification courses at a non-degree-granting school.
- Undergraduate. Sallie Mae’s Smart Option Student Loan® for Undergraduate Students is for students who are pursuing an associate’s or bachelor’s degree.
- Graduate. Sallie Mae’s Smart Option Student Loan® for Graduate Students is for students who are pursuing a master’s, doctorate or law degree.
- MBA. For students who are pursuing a Masters of Business Administration (MBA) degree.
- Health professions graduate. A graduate degree loan for select types of health professional degrees, including nursing, physical therapy, psychology, pharmacy, dental assistant or hygienist and chiropractic.
- Dental and medical school. A graduate degree loan for select types of dental and medical school, including dentistry, allopathic and osteopathic medicine, podiatry, radiology, sports medicine and veterinary medicine.
- Medical residency and relocation. For medical, podiatry and veterinary students to help cover the cost of board examinations, traveling for interviews and relocating for a residency program.
- Dental residency and relocation. For dental students to help cover the cost of board examinations, traveling for interviews and relocating for a residency program.
- Bar study. For law school students who graduated in the last 12 months, or are in their final year of school, to help cover the cost of review courses, registration and living expenses while studying for the bar exam.
SimpleTuition ranked Sallie Mae as one of the top five private student lenders for undergraduate student loans based on factors such as the loan’s interest rate, fees, discounts, co-signer release option and repayment terms and plans. And Sallie Mae distinguishes itself from some other private student loan companies with its wide range of student loan products and services.
Sallie Mae’s career training, undergraduate and graduate loans are all part of its Smart Option Student Loan® product line, and the same benefits may apply to these loans. The MBA, dental or medical school or graduate health profession student loans also tend to have similar terms as the Smart Option Student Loan®.
However, there may be some specific advantages or drawbacks depending on the loan you take out. The K-12 loan has a 3% disbursement fee for example; and the parent loan doesn’t offer a co-signer release option.
It’s generally a good idea to compare lenders and loan offerings before taking out any type of student loan. The following advantages and drawbacks could help you compare Sallie Mae with other lenders. But read the fine print on the loan you’re considering as they may not apply to every type of student loan that Sallie Mae offers.
Advantages of Sallie Mae Student Loans
A variety of repayment plans. Most of Sallie Mae’s student loans let you pick from several repayment plans, such as deferring your payments or making $25-a-month payments while you’re in school and during a grace period after you leave school. Most borrowers who take out one of the Smart Option Student Loans® opt for a repayment plan that starts while they’re in school. Doing so could help you graduate with less debt and save you money on interest over the lifetime of your loan.
The Smart Option Student Loan®, as well as the MBA, dental or medical school or graduate health profession loan options may be eligible for a graduated repayment plan. You need to apply during the six months before or 12 months after you start making full principal and interest payments. If you do, you may be able to make interest-only payments for up to a year after you leave school or your grace period ends. Although a graduated repayment plan can increase your overall costs, it may be a good option if you want to lower your monthly loan payments while looking for work.
Although they may not offer as many repayment plans, with the medical and dental residency loans you can apply to make interest-only payments for the first two or four years.
You can apply to release a co-signer. Having a creditworthy co-signer may help you qualify for a private student loan and — even if you would have qualified without one — possibly get a lower rate on your loan. Your co-signer takes on responsibility for repaying the loan if you don’t make payments.
In some cases, you may be able to keep the same loan terms and release your co-signer from his or her obligation. Sallie Mae lets you apply for a co-signer release after you make 12 principal and interest payments. You’ll also need to qualify to take on the loan on your own, which could include a credit check, proof of income and meeting other requirements.
Death and disability discharge. In a worst-case scenario, a student or former student could die or become permanently disabled before a loan is paid off. Some student loan companies may try to continue to collect debt from a co-signer. Sallie Mae waives the loan’s current balance if the student dies or becomes permanently and totally disabled.
Cost-of-attendance loan limit. Some student loan lenders set an aggregate limit on how much you can borrow with federal and private student loans. Aside from the residency loans and bar loan, Sallie Mae may offer to lend you the total amount you need based on your school’s certified cost of attendance.
Forbearance and deferment options. If you have trouble affording your student loan payments, you can reach out to your loan servicer to possibly put your loans into forbearance. Forbearance is a temporary period when you don’t need to make payments. Sallie Mae may let you put a loan in forbearance for a three-month period, and for a total of 12 months over the loan’s lifetime.
You may also be able to defer payments for 12-month periods (up to 60 months total) if you return to school or start an approved internship, residency or fellowship program. Interest continues to accrue during forbearance and deferment, which could increase your overall cost of repaying the loan.
Additional perks for borrowers. If you take out a Smart Option Student Loan®, or a Sallie Mae loan for an MBA, dental or medical school or a graduate health profession, you’ll receive a Study SmarterSM benefit. You can choose from free four months of Chegg study, 120 minutes of live online tutoring with Chegg Tutors or combine the two and get two months of Chegg Study and 60 minutes of tutoring.
Additionally, all the student loan products offer borrowers and their co-signers free quarterly access to one of their FICO® credit scores.
Drawbacks of Sallie Mae Student Loans
They only have one interest-rate discount option. Some private student loan lenders let you receive up to a 0.50% interest rate discount if you sign up for autopay from a bank account with that lender. Or, if you have an eligible loan or bank product when you take out your student loan. Lenders may also offer additional rewards or reductions when you graduate or if you maintain a good GPA. Sallie Mae offers a 0.25% interest rate reduction with autopay but doesn’t offer any additional discount or rewards opportunities.
You can’t pick loan terms. Although Sallie Mae offers five- to 15-year loan terms on many of its student loan products, the lender will assign you a loan term if you’re approved for a loan. Other lenders may offer varying terms and let you choose which term, and corresponding interest rate and monthly payment you want if you’re approved for a loan.
No soft credit check pre-approval. With some private student lenders, you can fill out and submit a pre-qualification application with a soft credit inquiry, the kind that doesn’t hurt your credit score. You’ll be able to see if you can get preapproved for a loan and receive approximate loan terms. Sallie Mae requires you agree to a hard credit inquiry, which may hurt your score, if you want to see if you qualify for a loan and review your loan terms.
A history of unsatisfactory service. Sallie Mae and Navient have been defendants in multiple lawsuits that alleged the companies used unfair lending practices, offered expensive loans to students knowing the borrowers would likely default, led borrowers who had trouble making payments toward options that were more expensive than necessary and engaged in deceptive collection practices. Although the lawsuits may be related to events and practices that occurred before Sallie Mae spun off its federal and private loan servicing business into Navient, borrowers should be aware of the allegations.
Whether you’re taking out a loan for a certificate program, bachelor’s degree or veterinary school, comparing loan terms, benefits and drawbacks can help you find a loan that fits your situation.
Because many of its loans don’t have an aggregate loan limit, borrowers who have already exhausted their federal student loan options, or those who are pursuing a graduate or professional degree and have undergraduate student loans could consider Sallie Mae. Even with the residency and bar study loans, Sallie Mae offers a higher loan limit than some competing lenders.
Also, although Sallie Mae isn’t the only lender that offers a co-signer release option, other lenders may require you make more than 12 full interest and principal payments before applying. So, if you’re going to apply with a co-signer and think you may want to release the co-signer later, Sallie Mae could be a good fit.
Sallie Mae’s website is easy to navigate, and we didn’t have any trouble finding basic information about each of the student loan products. There are also pages with general information on managing private student loans, ways to pay for graduate school and other student- or borrowing-related topics. And some of the articles are accompanied by videos that help explain concepts or expand on the idea covered in the article.
The website looks pretty sleek, but surprisingly, the design doesn’t carry over to the application page. However, this isn’t a big con as the application is still easy to understand and follow.
In general, we found that Sallie Mae did a good job disclosing fine print items on its Smart Option Student Loans®, parent, MBA, dental or medical school and graduate health profession loans. You can review details, such as the interest rate cap on variable-rate loans and late payment fees, in the loan disclosure forms.
However, there aren’t loan disclosure forms available on that page for K-12, residency or bar loans. As a result, we weren’t able to easily find some fine-print items, such as the interest rate cap, late payment fees and returned check fees. (Those were confirmed by a Sallie Mae representative.)
Some information was disclosed, but still unclear. For example, the page for the Smart Option Student Loan® for undergraduate students doesn’t list the possible loan terms. The number of years you take to repay your loan can affect your monthly payment and interest rate. Other lenders will prominently list their loan term offers, which may include five, seven, 10 and 15-year options.
To find the loan terms for Sallie Mae’s Smart Option Student Loan® for undergraduate students, we had to navigate from the loan’s landing page to a comparison page that shows the differences between that type of loan and a federal Parent PLUS loan. There, you can see that the repayment term is five to 15 years, but it’s still unclear if the borrower gets to choose a loan term in that range. Only after reaching out to a representative from Sallie Mae did we learn that Sallie Mae assigns the borrower loan terms.
All the student loans use a similar OpenNet application. While the exact questions can vary depending on the type of loan you’re applying for and your situation, the following can give you an approximation of what to expect. It’s based on sample applications we began for an undergraduate, parent and medical residency loans without a co-signer.
If you have a co-signer, you may need his or her name, email address, phone number, date of birth, citizenship status, Social Security number and address.
General information. To start, you’ll have to fill in the general information about the student or the borrow (for K-12 and parent loans). This includes:
- Your name, email address and phone number.
- Your date of birth, citizenship status and Social Security number.
- Your relationship to the student, for K-12 and parent loans.
Address. Once you complete the basic information step, you’ll have to enter your permanent address, and a mailing address if it’s different than your permanent address. If you’ve lived at your current address for less than a year, you may also have to share your previous address.
Student and school information. If you’re applying for a K-12 or parent loan, you’ll also need to share the student’s name, date of birth, citizenship status and Social Security number.
Next, fill in information about the school, including the school’s name, the degree/certificate program, the major or specialty, enrollment status, grade level, GPA, the academic period the loan will cover and the anticipated month and year of graduation or completion.
Loan amount. Fill in the student’s cost of attendance (the website can help estimate this based on your school) and estimated financial assistance. The application will then automatically calculate your loan amount as the difference between the two. However, you can request a smaller amount if you want.
If you’re applying for a residency loan, you can request a loan amount that’s below the maximum limit. And, you can choose to have the loan disbursed via two payments (the disbursement amount doesn’t need to be evenly split between the disbursements).
Employment info. Indicate your employment status: full-time, part-time, retired, self-employed or not employed. If you are working, you’ll also need to enter the employer’s name, your occupation, your work phone number, how many years you’ve worked there and your gross annual income.
Financial info. List additional income, such as investments, disability or Social Security, as well as additional household income from another person if you want it to be considered.
Next, you’ll list the assets you have in checking, savings, CD and money market accounts.
Finally, indicate whether you rent or own your home, or other and your monthly payment amount. Student applicants can also choose dormitory or living with parents and won’t have to list a monthly payment.
Personal contacts. Student borrowers need to list two adult contacts, such as a relative or parent, who aren’t a co-signer on the loan. You’ll need the person’s name and phone number, and indicate your relationship with the adult.
Once you review the forms, you can choose to submit an application. Or, there’s another chance to add a co-signer before submission. Once you click submit, Sallie Mae may pull your credit and contact your school.
Finalize the loan
After you submit your application, Sallie Mae will review your information and credit (and a co-signer’s if you added one) and send you an official loan offer if you’re approved. In some cases, you may need to send copies of documents to verify your information.
If you decide to accept the loan terms, you can choose the interest-rate type and repayment plan, and electronically sign the loan document. Sallie Mae could then ask your school to verify your enrollment and eligibility for the requested loan amount. The money will either be sent to the school, or in the case of residency and bar study loans, the money is sent directly to you.
Depending on the repayment plan you chose, you may need to start making payments after your loan is disbursed. If the money is being sent to your school, the loan may not be disbursed until about 30 days before the enrollment period for the term starts, which could be months after you applied for the loan.