If you are considering a private student loan to help you pay for college in addition to federal student loans, then you have almost certainly heard of Sallie Mae. (This is especially true for any students who have parents that depended on student loans to fund their own college experience.)
But who is Sallie Mae? What kind of loans do they offer? And are there alternatives that you should consider before deciding to borrow from them? Here, we answer these questions and more so that you are fully informed about this important financial decision.
Who is Sallie Mae?
Sallie Mae is a lender of private student loans, and is one of the biggest players in the private loan marketplace. The company’s history extends all the way back to 1973, when they were founded as the Student Loan Marketing Association. Back then, they operated as a Government-Sponsored Enterprise (GSE) which was created by Congress to support federally-backed student loans made under the Higher Education Act of 1965.
All of this changed in 2004, when the company’s government enterprise status was dissolved. At that point, the company became a private sector business. In 2009, Sallie Mae received a contract to service federal student loans on behalf of the Department of Education.
In 2013, Sallie Mae announced that the company would split into two separate publicly traded companies: Sallie Mae, which would offer consumer banking services (such as private student loans, credit cards, and savings accounts), and Navient, which would continue to service federal student loans.
Sallie Mae also offers college planning services, credit cards, and various savings products.
Sallie Mae and Navient
Sallie Mae and Navient originated as one company, Sallie Mae, which serviced student loans in addition to providing other services and products. When the company split into Sallie Mae and Navient, Navient retained all of the original business’s educational loans. This means that if you originally had Sallie Mae as a servicer, your student loans were transferred to Navient as a part of that split.
Types of Student Loans Offered by Sallie Mae
As a major private lender of student loans, Sallie Mae offers many different types of loans for borrowers. These include:
- Undergraduate Student Loans: Designed for students pursuing an associate’s degree, bachelor’s degree, or undergraduate certificate
- Career Training Loans: Designed for students pursuing professional training and certificates, such as culinary training, technical school, etc.
- Parent Loans: Designed for parents who wish to help their child pay for college, whether at the undergraduate or graduate level
In addition to these, Sallie Mae offers a range of graduate student loans for specific types of degrees:
- MBA Loans: For students pursuing their MBA
- Medical School Loans: For students earning their medical degree
- Medical Residency and Relocation Loans: For students completing their medical school residency
- Dental School Loans: For students earning their dental degree
- Dental Residency and Relocation Loans: For students completing the dental school residency
- Health Professions Graduate Loans: For students earning a graduate degree in allied health, nursing, pharmacy, or other graduate health degrees
- Law School Loans: For students earning their law degree
- Bar Study Loans: For students studying for the bar exam
- General Graduate Student Loans: For all other areas of study
Sallie Mae Interest Rates
As a private lender, Sallie Mae is allowed to decide their own terms of lending. This means that Sallie Mae can choose what interest rates it wishes to choose, regardless of the rates that Congress sets for federal student loans. Exactly what interest rate you might qualify for will depend on a number of factors, including:
- Your credit history: Do you have a credit history? What is your credit score? This number is designed to tell a lender how risky it will be to lend you money. If you have a higher score, you may qualify for lower interest rates.
- Your income: Whether or not you have a current source of income, and what that income is, may impact your interest rate.
- Whether or not you apply with a cosigner: Because applying for a loan with a cosigner makes you less risky, it also typically means that you can qualify for a lower interest rate.
- The type of loan you are applying for: Loans for degrees that typically lead to higher salaries (medical, dental, law, etc.) often come with lower interest rates.
When evaluating the interest rates offered by Sallie Mae, bear in mind that private lenders often advertise the lowest rates possible. These rates are typically reserved for borrowers with excellent credit scores, and/or are tied to variable rate loans which may change over time.
How to Apply for a Student Loan Through Sallie Mae
To apply for a Sallie Mae student loan, simply navigate to their website and click “Apply Now.” This will prompt you to fill out some basic information. To do so, you will need:
- Your address
- Your Social Security Number
- School information, including name, enrollment status, degree being pursued, and course of study
- The amount you need to borrow, as well as a list of any other financial aid you have received
- Employment information if applicable, including your employer’s name and your income
- Information about any bank accounts in your name
- Information about your mortgage or rent payments
- Name and contact information for two personal contacts who can vouch for you
Unfortunately, compared to other lenders, Sallie Mae does not offer a pre-approval process. This means that you must commit to a full application (including a hard credit check) in order to see the interest rate and terms that you may qualify for.
Sallie Mae Pros and Cons
Pros of Borrowing from Sallie Mae
- No fees: Sallie Mae does not charge origination or prepayment fees.
- Multi-year advantage: Student borrowers who return to Sallie Mae to borrow the next year’s student loans have an increased chance of being approved compared to first-time Sallie Mae customers.
- Interest rate reduction: Borrowers who sign up for auto pay can reduce their interest rate by 0.25%.
- Wide range of loan types: Sallie Mae offers a wide range of loans, each of which is tailored to specific situations. This means that certain borrowers may have more options and more favorable terms.
- Cosigner release: If you apply for your student loan with a cosigner, you can release them from your loan once you meet certain eligibility requirements, including having a proven source of income and making on-time payments for at least 12 months.
Cons of Borrowing from Sallie Mae
- No pre-approval process: The only way to know the interest rates that you will qualify for from Sallie Mae is to complete a full application.
- Interest rates not set by law: As a private lender, Sallie Mae regularly adjusts its interest rates depending on the underlying credit market and its own business objectives. The lowest interest rates are reserved for borrowers with the highest credit scores, which many college students will not have.
- Limited deferment options: While Sallie Mae may offer borrowers limited deferment and forbearance options in certain circumstances, these are not guaranteed as they are with federal student loans.
- No forgiveness options: Private student loans, including those offered by Sallie Mae, are not eligible for student loan forgiveness like federal loans might be in certain circumstances.
- No guaranteed acceptance: While unsubsidized undergraduate federal student loans are guaranteed to borrowers regardless of their financial situation or credit score, private student loans have much stricter eligibility requirements. You may not be approved.
- Complaints: Sallie Mae has been in business for a long time, and has racked up a wide range of complaints over the years.
How to Contact Sallie Mae
If you need to get in touch with Sallie Mae for any reason, you can do so through the options below.
Sallie Mae Phone
Hours of operation for the phone line servicing new loans are Monday through Thursday, 8am to 10pm Eastern Standard Time; Friday, 8am to 9pm; and Saturday, 9am to 6pm. They are closed on Sunday.
Hours of operation for the phone line servicing existing loans are Monday through Thursday, 8am to 9pm Eastern Standard Time; Friday, 8am to 8pm; and Saturday, 9am to 6pm. They are closed on Sunday.
Sallie Mae Address
P.O. Box 3319
Wilmington DE 19804-4319
P.O. Box 8459
Philadelphia PA 19101-8459
Alternatives to Sallie Mae
Before turning to any private lender, we always recommend that students exhaust other, more generous, forms of funding. Federal student loans, state-based student loans, and institutional student loans all offer competitive interest rates (typically much lower than private loans), borrower protections, and a variety of repayment terms.
If you do decide that a private student loan is right for you, you should be sure to shop around and compare as many lenders as possible to find the absolute lowest possible interest rate and most favorable terms. While you can do this on your own, using a student loan marketplace to quickly compare your options is often more efficient and effective, and is what we typically recommend.