When it comes to paying for the cost of higher education, student loans have become an increasingly popular option for those interested in pursuing an undergraduate or postgraduate degree. However, all student loans are not created equal. Each type of loan has its advantages and disadvantages.
Knowing which loan is the right choice for you and your respective needs can help ensure a positive pathway once your education is complete. Find out if Sallie Mae is the best choice for you.
Types of Student Loans
There are two primary types of loans available to those seeking to fund their higher education:
- Federal loans are provided and guaranteed by the federal government.
- Private loans are provided by private sources such as banks, credit unions, and states.
Types of Private Student Loans
Future students may arrive at the conclusion that federal student loan sources may not work for their personal situation. If that is the case, the potential borrowers should know that they may be able to receive a student loan from private sources. Private loans can be sourced from credit unions, banks, and even online platforms.
If you are considering using a private lender for your student loans, be sure to compare and contrast loans from multiple sources. Compare interest rates, repayment terms, fees, and possible pause options in case you experience financial hardship down the line.
In some instances, borrowers lacking established credit may need to seek out a cosigner to secure a private loan. This can actually be beneficial to the prospective borrower as a cosigner with good credit can help expedite the loan process and secure better rates. There are providers that will offer a cosigner release clause after a certain number of payments have been successfully made.
What Type of Loan is Sallie Mae?
A loan disbursed by Sallie Mae is a private loan. In fact, Sallie Mae is the nation’s largest provider of private student loans. Sallie Mae provides loans for a variety of academic pursuits, such as undergraduate degrees and specialized degrees like MBA or law degrees.
Three Types of Sallie Mae Loans
Sallie Mae offers three different types of loans: The Undergraduate Student Loan, the Postgraduate Loan, and the Parent Loan. Each loan type has its respective advantages, and knowing the difference between the three will help ensure that borrowers are pursuing the right option for them.
Undergraduate Student Loans
For those beginning their academic journey, Sallie Mae offers the Smart Option Student Loan. It is considered to be the best option available for students who will be seeking to earn an associate degree, a bachelor’s degree, or a certification from a degree-granting school or university. Some of the benefits of this type of loan include:
- Full, 100% financing for expenses that are considered to be school-certified.
- No origination fee at the beginning of the loan.
- A .025% rate reduction offered for borrowers that elect to electronically auto-deduct their payments.
Repayment Options for Undergraduate Student Loans
Sallie Mae also offers three different repayment pathways.
- Deferred Repayment Plan: This plan requires no payment while the borrower attends school full-time, and there is a six-month grace period post-graduation. Students can focus on their academics without the immediate concern of repayment. It’s important to keep in mind that interest will accrue while the borrower attends school, but the grace period does provide a window to find a job and begin preparing to make loan payments.
- Fixed Repayment Plan: This payment option allows students to make small fixed payments towards their loans while attending school and during the grace period after graduation. These small contributions can actually reduce loan payments by as much as 14% with a minimum payment of only $25 per month. This can be a fantastic option for students that can pay a small amount towards their debt while still pursuing their degree.
Interest Repayment Plan: For those who are interested in paying down their loans from the outset, this payment option may be the top choice. Borrowers will pay the accrued interest each month on their loan. While those that choose this option will pay more while attending school, they can actually reduce their total loan cost by as much as 27% compared to the deferred repayment plan.
Postgraduate Student Loans
These are for borrowers who have completed their undergraduate degrees and are seeking to move into a more specialized field of academics such as medicine, law, or business. Sallie Mae’s most popular postgraduate loan product is the Sallie Mae Graduate School Loan. This loan is ideal for students that are interested in pursuing a master’s or doctoral degree. This loan:
- Allows for 100% coverage of school-certified expenses while attending school.
- Includes a six-month grace period.
- Allows for 48 months of payment deferment.
- Allows for 12 interest-only payments.
- Provides 15 years for repayment, and does not carry any penalties for prepayment.
Repayment Options for Postgraduate Student Loans
As with the Smart Option Student Loan for undergraduates, the Sallie Mae Graduate School Loan offers the same three repayment options. Borrowers should consider which option is best for their financial situation after graduation, especially if they may have accrued undergraduate student debt.
Sallie Mae offers parents, or other credit-worthy individuals, the option to assist students by becoming a cosigner for the student seeking a loan. This loan product is simply known as the Sallie Mae Parent Loan. Some of the benefits of this type of loan include the following:
- No loan origination fee
- Full, 100% coverage of all expenses that are school-certified
- A .025% reduction in interest when the borrower signs up for electronic debit
- Possible tax deduction on interest paid on the loan
- Improved FICO credit score with on-time payments
Repayment Options for Parent Loans
With the Sallie Mae Parent Loan, there are only two payment options:
- Interest Repayment Plan: Payments are made only on the interest while the student is still enrolled. This type of repayment plan is good for up to 48 months. After graduation, payments on unpaid interest and the principal will need to be made, but this option does allow for lower payments while the student still pursues his or her degree.
Principal and Interest Repayment Plan: While the payment will be higher while the student is still in school, this option does allow for quicker repayment of the loan and may reduce the overall loan cost.
Benefits of Choosing Sallie Mae as a Student Loan
Choosing Sallie Mae as your student loan provider comes with a variety of benefits that make the loan application process easier. First of all, the loan process can be conveniently executed online. Applicants will navigate through a series of questions designed to help them make the best selection for their respective needs. The application process is straightforward, and Sallie Mae offers customer support five days per week for those that may need help with this process.
Another benefit of choosing Sallie Mae is that the loan qualifications are relatively easy to meet. The applicant must be credit-worthy, attending a participating U.S. school, enrolled in school at least half-time, meet basic citizenship requirements, and be seeking to borrow at least $1,000.
In addition, Sallie Mae also provides a variety of tools and resources for potential borrowers to explore while deciding if a private loan is the right option for them. Sallie Mae provides information on scholarships, work-study programs, federal loans, and loan repayment tools so that borrowers have an idea of what to expect if they choose to seek out a private lender for their student loan needs.
Do Your Homework
As is the case with academics, doing one’s homework is key when it comes to choosing a student loan provider. Anyone looking to take out a loan, Sallie Mae or otherwise, should compare loan fees, terms, and repayment options. For more information on student loan options, our team of experts at College Finance have created helpful resources. We want you to get the most out of your college experience by making informed decisions about college education financing. Check out our latest guides and articles today.