Sallie Mae Offers Competitive Private Student Loans for Families Looking to Cover Remaining College Costs
Sallie Mae’s Smart Option Student Loan and Parent Loan Offer Competitive Rates, No Upfront Fees, and a Choice of Payment Options
NEWARK, Del.--( BUSINESS WIRE )--Tuition bills have arrived, and some families are discovering that after scholarships, grants, and federal financial aid there may be a gap when it comes to covering remaining college costs. Sallie Mae – the nation’s saving, planning, and paying for college company – offers competitive and flexible private student loans to help families make college happen.
Available for students attending degree-granting institutions, the Sallie Mae Smart Option Student Loan offers competitive fixed and variable interest rates and no origination fees or prepayment penalties. Fixed rates range from 5.74 to 11.85 percent APR, while variable rates for undergraduates range from 3.25 to 10.22 percent APR.
Smart Option Student loan customers may choose to make monthly interest-only or fixed payments while in school; or defer payments until after school. Customers also have multiple options to reduce their interest rates. Customers can receive an interest rate 0.50 percentage points lower when they opt for an in-school interest-only payment over the deferred payment option, and an interest rate 0.25 percentage points lower if they choose an in-school fixed payment over the deferred payment option. Customers can also reduce their interest rate by 0.25 percentage points by enrolling in the automatic debit option.
Lower interest rates mean customers can graduate with less student loan debt. A typical freshman customer who makes interest-only payments on a Smart Option Student Loan while in school could save as much as 25 percent on total undergraduate loan costs, compared to the deferred payment option. A typical freshman customer who makes monthly fixed payments while in school could save roughly 12 percent on total loan costs, compared to the deferred payment option.
“Even with careful saving and planning, we know that predicting the total cost of college can be a challenge,” said Kelly Christiano, senior vice president, Sallie Mae. “Our Smart Option Student Loan and Parent Loan can help bridge that financing gap affordably and responsibly, giving students and families flexibility and peace of mind whether they are entering or returning to college.”
The Smart Option Student Loan also includes:
Graduated Repayment: The Graduated Repayment Period is a transitional repayment plan that offers qualified students who have graduated from a degree-granting institution greater budget flexibility upon graduation. Students who graduate and maintain their eligible Sallie Mae loans in good standing may request to make 12 interest-only payments before transitioning into full principal and interest payments.
Study Starter Benefit: This new and exclusive benefit gives customers free access to 24/7 online tutoring and study help from the experts at Chegg. Sallie Mae is the only lender to offer this up-front, in-school benefit.
Cosigner Release: After graduating, and after making 12 on-time principal and interest payments and meeting certain other credit requirements, a primary borrower may apply to have their cosigner released from the loan.
Free Access to Credit Scores: Customers have access to their FICO® Credit Score on a quarterly basis, along with information about factors that affect credit scores and why monitoring credit scores is important.
Sallie Mae also offers the Sallie Mae Parent Loan with competitive fixed and variable interest rates, no origination fee, and a choice of repayment options. Fixed rates range from 5.74 to 12.87 percent APR and variable rates range from 4.75 to 11.12 percent APR for academic year 2017-2018. By comparison, the Federal Direct PLUS Loan for Parents is offered only at a fixed rate of 7.0 percent for academic year 2017-18, and carries an origination fee of 4.276 percent.
sallie mae student loan interest
Sallie Mae Smart Option Student Loan
Phone Number for New Applicants: 888-2SALLIE (888-272-5543)
Hours of Operation: M-Th 8am-9pm, F 8am-8pm ET
- THIS IS A VARIABLE RATE LOAN. Interest rates will change during the life of loan based on changes to the 1-month LIBOR (to view current 1-month LIBOR rates, click here)
- Current Starting Interest Rate Between 2.25% and 9.37%
- Range in terms of index: 1-month LIBOR +2.0% to +9.12%
- Range in terms of index: 1-month LIBOR +2.0% to +9.12%
- Origination Fees: None
- Late Payment Fees: Will be identified on the borrower's Disclosure Statement (SLA Research: Greater of $5 or 5% of monthly payment)
- Timing: 15 days after payment is due, a payment is considered late
- Returned Payment Fees: $20
- Forbearance Fees: Forbearance Fee will be disclosed to the borrower prior to the fee being assessed. (SLA Research: $50 for each loan (maximum fee of $150 per loan), must re-apply every 3 months for up to 24 months and fee is incurred each time.)
- Standard Repayment Term: Will vary based on loan amount and year in school (SLA Research: 5-15 years)
- Interest-only payments REQUIRED while borrower is in school: No
- Auto-Debit Benefit: 0.25% interest rate reduction for signing up to make payments via auto-debit from your bank account.
- Receive a 2% reward in Upromise account for making on-time payments
- Although not required, a co-signer may help borrower reduce the interest rate on the loan and increase the chances of having the application approved
- Co-signer Release: 12 months after the separation period
- Annual Minimum Loan: $1,000
- Annual Maximum Loan: Cost of attendance less any other financial aid
- Aggregate Maximum: Varies by School
- Provides immediate response to online loan application: No
- Upon online credit approval, provides immediate "plain English" disclosure on interest rates and fees: Not applicable
- Borrower may cancel loan within 10 business days of the date of the Disclosure Statement
- Loan approval rates, which are not publicly available, may be low
- Lack of repayment flexibility: Only major private lender that REQUIRES borrowers to make interest-only payments during in-school period
- Funding of private loans reliant on ability of Sallie Mae Bank to continue to raise deposits
- Confusing repayment structure: the variable rate on loan changes monthly while monthly payment owed by borrower changes quarterly
- This loan may not be dischargeable in bankruptcy
- Once you have applied for a loan, please complete this short survey to tell us about your experience
Student Lending Analytics (SLA) is an independent research and advisory firm and is not a lender. SLA receives NO compensation from any lenders for our service nor for any referrals that they may receive through this website. While SLA has made every effort to confirm each of the lender loan terms described above, it assumes no responsibility for typographical or other errors or omissions in the information provided. SLA makes no representations or warranties about your eligibility for a particular loan. SLA recommends that you carefully review each lender's loan application and promissory note for final loan terms, including Savings Opportunities. Savings Opportunities may not be automatically available and you may not be eligible for certain Savings Opportunities.
Sallie Mae's New Fixed-Rate Student Loan Option Should Freak Congress Out
(AP Photo/Rich Pedroncelli)
In another sign the private loan industry is looking to tidy its tarnished reputation, the nation's largest private education lender, Sallie Mae, has introduced its first ever fixed-rate student loan.В
Variable interest rates are one of the most common arguments made against private student lenders, as they can jump as many as 5 points over the loan's lifetime and rapidly drag students in over their heads.
Federal loans, on the other hand, cap their interest rates at 3.4 percent for new subsidized loans and about 6.8 percent for unsubsidized loans вЂ“ but lawmakers are battling over whether to double the subsidized rate this summer.
If they do, that would make offers like Sallie Mae's far more attractive to cash-strapped undergrads, as the lender's 5.75 percent fixed-interest would strike anyone loan-shopping as the better bargain. The last thing we need is more students weighing themselves down with private loan debt, especially as they don't feature the same protections and repayment options as federal loans.
And because it's still nearly impossible to discharge student loan debt in bankruptcy, flexible terms are just about the only form of security students may have if they hit a rough patch. Not to mention the fact that we're already facing a $1 trillion student debt bubble.
As with any loan, the borrower's existing credit history will factor into the final interest rate, and Sallie Mae's fixed-rate loans can reach as high as 12.875 percent.В Sallie Mae's variable interest options will remain available, ranging from 2.25 to 10.125 percent.
Private loans are often used the fill the gap after students have exhausted other loan options and scholarships. However, private lenders and for-profit universities have been under fire for pushing students to borrow far more than necessary.В
Is the Interest on Sally Mae Educational Loans Tax Deductible?
by Michael Keenan
You can deduct student loan interest on Form 1040.
Because of the high cost of higher education, people graduating debt-free are the exception rather than the rule. Students often tap private loans because of the limits on government-backed student loans. If you took out a Sallie Mae educational loan, chances are the loan qualifies so if you meet the requirements, you'll be able to deduct the interest.
Your Sallie Mae loan counts as a student loan if you use all of the proceeds to pay for qualified expenses for yourself, your spouse or your dependents. Qualifying expenses include tuition, fees, room and board, supplies and transportation to and from a post-secondary school, such as a college, graduate school or trade school. If you used any of the proceeds for other expenses, it isn't a qualifying loan. For example, if you used most of your proceeds for tuition, but also spend some on a vacation, the loan doesn't count as a student loan. However, it doesn't matter that a Sallie Mae loan is from a private company because the tax code doesn't distinguish between government and private educational loans.
Even if your Sallie Mae loan meets the requirements for a student loan, you have to meet several other qualifications. First, you can't claim the deduction for the interest if you use the "married filing separately" status. Second, your modified adjusted gross income has to fall below the annual limits for your filing status. Third, you can't be claimed as a dependent on another person's tax return. For example, if your parent still claims you as a dependent, you can't deduct student loan interest. Finally, you have to legally liable for the debt. For example, if your parents took out a loan in their name only but you pay the interest, you can't deduct it because you're not legally obligated to pay.
If your parents pay the student loan interest on your behalf, you might be entitled to claim that as a deduction. Your parents' names aren't on the loan, so they aren't legally liable for the debt. Therefore, the Internal Revenue Service treats the payment as if your parents had given you the money as a gift and then you had paid the interest, so you get the deduction. However, if they are cosigners, then they are legally liable for the debt, so your parents would get the deduction if they paid.
Sallie Mae should send you a Form 1098-E at the end of the year that shows the interest you paid. As of 2012, you can deduct up to $2,500 in student loan interest per year. You claim the deduction using either Form 1040 or Form 1040A. You don't have to itemize because it's an adjustment to income.
Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."
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