Most students who borrow money for their education should start with federal student loans. The federal loan programs offer borrowers a variety of repayment, forgiveness, cancellation and discharge programs that aren’t available from private lenders.
But if you reach your federal loan limits, or exam your options and find you might be better off with a private student loan, you can compare loan offerings from private student lenders. One of the largest private student loan companies, Sallie Mae, has a dozen education loan products you can consider.
Started over 40 years ago, Sallie Mae has played a variety of roles in the student loan space, including lending federally guaranteed loans and private student loans, and servicing federal and private loans.
Sallie Mae spun off a portion of its student loan servicing business to form a new company, Navient, in 2014. And due to changes in the federal student loan programs Sallie Mae no longer originates federally guaranteed loans. Now, Sallie Mae offers and services its private student loans, and also has banking products, such as savings accounts.
Types of student loans Sallie Mae offers
Whether you’re a parent of a grade school student or about to begin your doctorate, Sallie Mae may have a student loan that fits your needs. Its loan products include two for parents or sponsors of students; seven for students enrolled in a degree, training or certification program; and three for health profession and law students to cover residency or bar exam costs.
- K-12.For a parent or sponsor of a child who wants to take out a loan to pay for a student’s private kindergarten-through-high school education.
- Parent.For a parent or sponsor of a child who wants to take out a loan and pay for an undergraduate, graduate or certificate program.
- Career training. For students at eligible non-degree granting schools.
- Undergraduate. For students at degree-granting schools who are earning an associate or bachelor’s degree.
- Graduate. For students at degree-granting schools who are earning a master’s, doctorate or law degree.
- MBA. For business school students.
- Health professions graduate. For graduate health profession students, including those in nursing, psychology and dental assistant programs.
- Dental school. For graduate dental degree students, including those in dentistry, endodontics and orthodontics programs.
- Medical school. For graduate medical degree students, including those in allopathic, osteopathic and podiatric programs.
- Medical residency and relocation. For medical residency students to help pay for board examinations and residency-related travel and moving expenses.
- Dental residency and relocation. For dental residency students to help pay for board examinations and residency-related travel and moving expenses.
- Bar study. For law students and recent graduates to help pay for bar review courses, registration and living expenses while you study.
Sallie Mae student loans in a nutshell
Most of Sallie Mae’s loans are identical when it comes to fees, cosigner release options and discounts.
- Aside from the K-12 loan’s 3% disbursement fee, none of the loans have application, origination, disbursement or prepayment fees.
- Late payments result in a fee that’s 5% of the amount due (capped at $25).
- Returned checks carry a $20 fee.
- You can apply to release a cosigner after making 12 consecutive, on-time, full interest and principal payments. However, parent loans don’t offer a cosigner release option.
- With all but the K-12 loans, you can receive a 0.25% interest rate discount if you sign up for automatic payments.
**Variable rates are capped at 25%.
**Variable-rate loans have a 25% APR cap.
How Sallie Mae compares with other lenders
Sallie Mae is one of MagnifyMoney’s top five private student lenders for 2018. We compared undergraduate student loan products and began with the nation’s 10 largest national lenders. The reviews focused on loans’ APR ranges, discounts, fees and repayment terms, as well as lenders’ policies for releasing a cosigner, deferring loan payments and their online applications.
Sallie Mae took third place, behind SunTrust Bank and Wells Fargo, partially because it only offers one discount opportunity (the other two allow borrowers to get up to 0.50% or 0.75% interest rate discounts).
In addition to having a top-rated undergraduate loan, Sallie Mae differentiates itself by offering such a wide variety of different student loans. Many of these other loans share characteristics with the undergraduate loan, including the 12-payment cosigner release requirement, lack of a specific maximum loan amount and 0.25% interest rate discount for auto debit.
However, as with any lender, there are pros and cons to consider before taking out a loan from Sallie Mae.
Advantages of Sallie Mae Student Loans
You may be able to choose a repayment plan. Depending on the loan product, you may be able to choose from up to three different repayment plans. A plan that requires you make payments while you’re in school could help you save money in the long run; however, deferring your full payments can give you more money to cover education and living expenses now.
12-month payment requirement for cosigner release. With most Sallie Mae student loans, you can apply to release your cosigner once you make 12 consecutive, full, on-time payments. Other lenders may let you apply for cosigner release, but it could take longer to qualify. For example, some lenders require you make 48 full monthly payments before you can apply.
In addition to the payments, you’ll need to pass a credit check and meet Sallie Mae’s requirements for releasing a cosigner.
Discharge due to death or permanent disability. Similar to the federal student loan guidelines, Sallie Mae will waive a borrower’s current balance if he or she dies or becomes permanently and totally disabled. The benefit may be especially important to borrowers who have a cosigner or dependents, such as a spouse or child, who could be affected if the debt isn’t waived.
No preset loan limit. While some federal student loans and private student loans set dollar-amount limits on how much you can borrow, most Sallie Mae student loans allow you to borrow up to your school’s certified cost of attendance.
Loans for less than half-time students. Some private school lenders require borrowers to have at least a half-time course load to qualify for a student loan. Sallie Mae’s loans for students don’t have this requirement.
Forbearance and deferment options. Putting your loans into forbearance or deferment lets you temporarily stop making payments without getting charged late payment fees or hurting your credit. Forbearance is generally for when you have trouble making payments, perhaps due to losing a job or a medical emergency, and deferment may apply to other circumstances, such as returning to school.
Sallie Mae could approve up to 12 months of forbearance in three-month increments and up to 60 months of deferment in 12-month increments. Interest continues to accumulate and your long-term costs may increase, but forbearance or deferment are still better options than missing a payment or letting a loan go into default.
Extra perks. Many of Sallie Mae’s student loans also come with the Study Smarter benefit. Borrowers can get four months of free study tools or 120 minutes of live online tutoring through Chegg Study® or a combination of the two.
All of Sallie Mae’s loans also give borrowers and cosigners quarterly access to a FICO® credit score.
Drawbacks of Sallie Mae Student Loans
No additional interest rate discount. Sallie Mae’s 0.25% interest rate discount is standard for most federal and private student loans. But other private lenders offer borrowers opportunities to get an additional 0.25% to 0.50% interest rate discount by having other financial products from the same lender or making auto debits from an account with the lender.
Sallie Mae assigns loan terms. Many Sallie Mae student loans have a repayment term that ranges from five to 15 years. Other lenders that offer a range of terms let borrowers choose their term, and the corresponding monthly payment and interest rate. Sallie Mae will assign you a term.
No loan pre-approval. Private student loans require a credit check. Some lenders will do a soft credit pull, which doesn’t hurt your score, to determine if you can qualify for a loan or need a cosigner and to show you estimated interest rates if you qualify. Sallie Mae will only show you rates after a hard credit inquiry, which could hurt your score.
What it takes to qualify with Sallie Mae
All Sallie Mae student loans have the same basic requirements:
Minimum credit score. Sallie Mae doesn’t disclose a minimum credit score requirement. In 2016, applicants that were approved for a Sallie Mae student loan on average had a 748 FICO® Score 8 at the time of approval.
Minimum age for borrowers. Borrowers must be the age of majority in their state (often 18 years old). Younger applicants will need an eligible and creditworthy cosigner.
State residency requirements. Sallie Mae student loans are available in every state.
Eligible schools. Sallie Mae doesn’t publish a list of eligible schools, but you can search for the name of a school at the beginning of the loan application to see if your school qualifies.
What borrower is Sallie Mae best for?
Sallie Mae offers a variety of student loan products that could be a good fit for parents or students. If you, or a student you’re supporting, can’t take out additional federal student loans but need more money for school, Sallie Mae’s lack of a predefined loan limit could make it a good option.
The medical and dental residency programs and the bar study loan do have a loan limit. But even then, it’s higher than the limit of some competitors’ who offer similar types of loans.
You also may want to consider Sallie Mae if you think you’ll need a cosigner and would like to release the cosigner later. Although you still may not qualify depending on your creditworthiness, the 12 months of consecutive full payments is shorter than some other lenders require.
Taking a closer look at the online platform
You can learn a lot of details about Sallie Mae’s student loans on its website. There are landing pages for each loan product that have a lot of the basic information you’ll want to know. And there are pages with generally helpful information, such as how to make a loan payment or options if you’re having trouble making payments.
Some of the informational pages, such as on the one about interest rates and interest capitalization, also have quick video explainers to help you understand the topic and why it’s important to student loan borrowers.
The actual loan application doesn’t have quite as nice of a design as the other parts of the Sallie Mae website. But the application is still easy to navigate and fill out.
The fine print
The Sallie Mae product and informational pages give you a lot of the basic information you’ll want if you’re comparing student loans from several lenders. There are also loan application and solicitation disclosure forms for many of the loans online. In these, you can see fine-print items like the variable-rate loans’ interest rate cap and late payment fees.
It’s more difficult to find fine-print information on some of the loans, though. The K-12, residency and bar loans don’t have application and disclosure forms on their pages, for example. We were only able to confirm these loans’ fees and interest rate caps by reaching out to a representative from Sallie Mae.
While you would have a chance to review your loan details after agreeing to a credit check but before signing the loan agreement, it would be nice to have that information up front.
We were also disappointed in how difficult it is to understand how loan terms work with Sallie Mae student loans.
Some private lenders only offer one term. Others offer a variety of terms and let borrowers choose their loan term. Most of Sallie Mae’s undergraduate and graduate student loans have a five- to 15-year term, but Sallie Mae chooses which term to offer you. The loan term range, and the fact that Sallie Mae chooses the term rather than the borrow, isn’t clearly disclosed on the loan’s main page.
What to expect during the application process
Sallie Mae has an online loan application system that makes the process fairly uniform for all its student loans. A few questions may differ, but you can expect the process to be similar to the following steps. Applicants with cosigners may need their personal information, including the cosigner’s Social Security number and date of birth.
General information. Basic information about the student and borrower:
- Your name, email address and phone number.
- Your date of birth, citizenship status and Social Security number.
- Your relationship to the student, if you’re taking out a loan for someone else.
Address. Your permanent address and a previous address if you moved in the last year. If you have a different mailing address you’ll have to fill that in, too.
Student and school information. If you’re taking out the loan for a student, you’ll need the student’s name, date of birth, citizenship status and Social Security number.
Enter the name of the school and your, or the student’s academic information:
- Degree type or certificate of study
- Major or specialty
- Enrollment status
- Grade level
- Academic period that the loan will cover
- Anticipated graduation or certification graduate date
Loan amount. The cost of attendance, which the application can help you estimate, as well as your estimated financial assistance.
You’ll automatically have a loan amount for the difference between your cost of attendance and financial assistance. You can choose to request less money, and even if you’re approved, Sallie Mae could offer you less than what you requested.
Employment info. Fill in information about your work, including:
- Employment status
- Employer’s name
- Your occupation
- Work phone number
- Years with the current employer
- Gross annual income.
Financial info. You can list additional income and assets you have, such as:
- Income from alimony, child support or a rental property
- Social Security
- Income from a household member, such as a spouse
Your current assets that could be in checking, savings, CD or money market accounts.
You’ll also be asked about your expenses, including monthly housing payments (when applicable).
Personal contacts. Unless you’re taking out a loan for someone else, you’ll have to share two personal contacts that Sallie Mae can use as references. These could be a relative or family friends, and you’ll have to have their name and phone number.
You’ll have to agree to let Sallie Mae review your credit history to submit your application.
Finalize the loan
Once you’ve completed an application, you may need to send verification information (such as pay stubs or tax returns). But generally, Sallie Mae will offer a quick response based on your credit.
If you’re approved, you can choose your type of interest rate and repayment plan before accepting the loan. Once you accept the loan offer, Sallie Mae will contact your school to verify that you’re eligible for the loan and loan amount.
The school certification process may take several weeks, and could even be put on hold until about a month before your term begins. As long as everything checks out, Sallie Mae will send the loan to you or your school, depending on the type of loan.