Learn About Sallie Mae
Going to school is expensive and most students need help to fund their educational future.
If you are just starting on the hunt for funding, there are three main types of educational funding to consider.
Scholarships and grants are competitive and based on need and merit respectively.
Loans are much easier to obtain from both federal and private lenders, but the catch is you must repay what you borrow.
Many types and varieties of educational loans exist and are offered through various lending institutions.
Not all of them are beneficial to a student, and some may be designed specifically to take advantage.
What may look like a good deal initially may sour quickly with a high interest rate on the length of the loan or unreasonable payment plans.
Its stability and safety are why the Salle Mae loan remains very popular.
Sallie Mae loans were originally founded in 1973. This program split into two separate entities in 2014: a consumer banking business and a student loans servicer.
One of the biggest benefits of Sallie Mae private loans are the flexible repayment schedules.
The interest rate on a Sallie Mae loan is lower compared to traditional repayment options as well.
Sallie Mae loans are also one of the only lenders to offer funding to part-time students.
Use the following information to learn more about the Sallie Mae loan to determine if it may benefit you.
What is the difference between a federal and private loan?
A federal loan is money offered by the federal government while private loans are available through individual lenders like banks, schools, state agencies or credit unions.
Most financial advisors recommend taking out a federal loan before looking for a private loan.
When you take out a private loan, you are agreeing to the terms a lender dictates. In addition to private loans being more expensive, you may have extra stipulations placed on you by the lender.
Private loans have a few advantages over their federal counterparts. Private loans typically provide more funding than federal loans, since the loan provider has more funding available and does not have to reach a larger audience.
Private lenders do not have the same restrictions as federal lenders, which means it is easier to customize a private loan to better match your educational needs.
The loans themselves do not have the same restrictions as federal loans. Many federal loans specifically dictate what the money is used for.
What can Sallie Mae funding be used for?
Sallie Mae loans come from private lenders, so the funds from a Sallie Mae loan may be put towards a variety of educational expenses.
For example, along with tuition, the money can cover room and boarding fees, additional education fees and school equipment.
If you have transportation requirements or need electronics for school, the money is available to cover these costs as well.
While you have a great deal of freedom with Sallie Mae loans, the money is only usable for educational expenses.
Failure to spend the money as outlined in your contract is considered a breach and can result in legal trouble.
It may also make you ineligible to acquire future loans until your existing loans are resolved.
Learn About Requirements for a Sallie Mae Loan
Unlike many federal loans, a private loan does not usually require you to file the Free Application for Federal Student Aid (FAFSA).
Private student loans are most often offered through financial institutions, like a bank, and require a credit check.
A co-signer is required if you are too young to have a credit history or have a poor credit history.
When a co-signer is brought into this situation, choose wisely. A co-signer is someone with better credit history vouching for your trustworthiness to repay the money you are accepting.
If you cannot pay the money, your co-signer is responsible for paying the balance or suffers the consequences.
Other eligibility requirements state you must be a U.S. Citizen or permanent resident. As a student, you are required to maintain at least part-time student status at a degree-granting institution.
What to Do Before Applying for a Private Sallie Mae Student Loan
Before you apply for your Sallie Mae loan, it is crucial to determine how much you need to borrow.
Just because you have an incredible amount of money available for borrowing does not mean you must take out the full amount.
Remember, you are going to have to pay it back at some point. Try to calculate what you believe you can pay back in the future.
Borrowing more than you can pay back leaves you open to potentially defaulting on the loan.
When you decide to apply for your student loan, gather the necessary documentation first. Having everything on hand streamlines the process. Recommended documentation includes:
- Your Social Security Number (SSN)
- The requested loan amounts.
- Information on your college or university.
- Financial information.
- Employment information.
In the event you need a co-signer, you need to have these documents for him or her as well.
How to Apply for a Sallie Mae Loan
To apply for any private loans, check for the application on the specific lender’s website. As you begin to fill out the application it is important to determine what type of rate you want for your loan.
Two types of interest rates available to you are fixed and variable rates. Fixed rates are consistent, predictable monthly payments. If the interest rates fall, your rate continues at the same, higher rate.
Variable rates fluctuate with the market, so you cannot always predict monthly payments. If rates drop, you have a lower amount due each month. You also have the option of paying money on your loans now or later.
For example, if you choose to pay back your Sallie Mae while you are in school, you have low monthly payments and save 14 percent on your overall loan cost.
How to Repay Your Sallie Mae Loan
When you apply for a loan, you either choose in-school or post-school repayment options. For in-school repayment, four options are available:
- Immediate repayment
- Fixed payment
- Deferred payments
- Interest-only repayment
Immediate repayment means you make full payments following the disbursement of the Sallie Mae loan.
A fixed payment is where you pay a set amount each month, with a lower interest rate attached to the loan.
Deferred payments mean you do not make any payments when attending school. The other type of payment option is the interest-only payment.
Interest-only payments allow you to pay the interest accruing on your loan. This option has a lower interest rate compared to deferment repayment options.
Post-school repayment options offer three types of repayment options:
- Postgrad interest-only payments
Deferment covers a wide range of situations. If you are seeking an advanced degree, are deployed in the military or take up an internship, fellowship, or residency, you can defer payments.
Each situation has its own allotted time to defer payment. Postgrad interest-only payments allows you to pay interest-only payments for up to 12 months after finishing graduate school.
Forbearance is a special case to temporarily stop or reduce the amount of money repaid on a loan.
To use forbearance, certain criteria outlined by your lending institution must be met. Usually this is offered due to a hardship.