Sallie Mae is one of the largest student loan lenders in the United States offering private student loans to undergraduate students, graduate students, and parents. Formerly known as Student Loan Marketing Association, Sallie Mae has been in operation since 1973. In that time, Sallie Mae has grown to hold a significant percentage of all student loan debt in the country.
Sallie Mae's Smart Option Student Loan Product
For undergraduate students, Sallie Mae offers the Smart Option student loan. These loans are available to any student who is seeking a bachelor’s or associate’s degree, or a certificate at a degree-granting school. The Smart Option loan is available as either a variable or fixed interest rate loan. Variable rate loans currently have an interest rate of between 3.25 and 10.22 annual percentage rate (APR). Fixed rate loans currently have an interest rate of between 5.74 and 11.85 APR. Smart Option loans are available in amounts from $1,000 up to the cost of attendance.
There are a number of repayment options for the Smart Option loan. The deferred repayment option allows borrowers to make no repayments while they are in school and for a six-month grace period after leaving school. Interest accrues during this time and will be added to the principal of the loan after the grace period. However, students who choose this option often end up paying more over time.
The fixed repayment option permits borrowers to pay $25 per month while in school and during the grace period. This can help borrowers reduce the amount of interest added to the principal after the grace period. The interest repayment option is where borrowers pay interest on their loans every month while in school and in the grace period. The interest rate is one point lower than with the deferred repayment option and there is no accrued interest to be added to the principal after the grace period.
Undergraduates can get a 0.25 percent interest rate discount for enrolling in automatic debit for payments and does not charge an origination fee or penalty for paying off your loan before its due date. Sallie Mae also offers up to 120 minutes of tutoring through a partnership with Chegg Study for its borrowers.
Sallie Mae also offers a Smart Option student loan for graduate students. As with the undergraduate Smart Option student loan, borrowers can choose between a variable and fixed rate loan, but for graduate students the APRs are lower. Variable rate loans for graduate students currently have APRs that range from 3.25 to 8.21 percent, while fixed rate loans currently have APRs that range from 5.74 to 8.56 percent.
Sallie Mae offers the same three repayment choices for graduate Smart Option loans as with undergraduate loans: deferred repayment, fixed repayment, and interest repayment. Similarly, graduate students can borrow as little as $1,000 and up to the full school-certified cost of attendance. The same benefits are available for graduate Smart Option loans, include a 0.25 percent interest rate deduction for auto debit enrollment, 120 minutes of tutoring through Chegg Study, and no penalties or fees for loan prepayment.
Parents can also take out loans to help their children pay for undergraduate, graduate, or certificate education through Sallie Mae’s Parent Loans. These loans are available as variable interest rate loans with APRs currently ranging from 4.75 to 11.12 percent or as fixed interest rate loans with APRs ranging from 5.74 to 12.87 percent.
Parents can take out a loan of $1,000 and up to the full cost of attendance. There are two repayment options. The interest repayment option allows parents to pay interest only while their child is in school for up to 48 months and then make interest and principal payments for 10 years. The principal and interest payment option involves parents paying both interest and principal for the entire term of the loan. As with undergraduate and graduate loans, borrowers who take Parent Loans can get an interest rate discount of 0.25 percent by enrolling in auto debit and are not charged penalties or fees for paying off the loan early.
Undergraduate, graduate, and parent borrowers can apply for a Sallie Mae student loan directly through the Sallie Mae website. Borrowers will need to provide basic information, such as address, Social Security number, school enrollment information, loan amount, employment status, financial information, and two personal contacts. If a borrower is applying with a co-signer, which may be necessary if they are under age 25 or do not have a strong credit score, they will need to provide additional information. The minimum credit score to qualify for a student loan with Sallie Mae is 640; however, the typical borrower had a credit score of 748.Sallie Mae will then review the application and request additional information if necessary. If approved, the borrower will be given the opportunity to choose the type of interest rate and repayment option, accept the loan, and sign it electronically. Sallie Mae will then ask your school to certify your eligibility and the loan amount.