Sallie Mae Loan Caps: What You Need To Know

Sallie Mae is a private lender that offers undergraduate, graduate, and professional student loans. It was established in 1972 by the US government as a secondary market for federal student loans. In 1996, Congress began converting Sallie Mae to a private company, a process that was completed in 2004. The company offers competitive rates and flexible repayment options, including a 0.25% automatic payment discount. However, it does not offer refinancing options, and its repayment terms are limited to 120 to 180 months. While Sallie Mae does not disclose its credit score requirements, it is known that the company will run a credit check as part of the loan application process. The maximum loan amount offered by Sallie Mae is not explicitly stated, but it is generally understood that private student loans are limited to the total cost of attendance at a given school.

Sallie Mae's private student loans

Sallie Mae is a private lender offering undergraduate, graduate, and professional student loans. It was established in 1972 by the US government as a government-sponsored enterprise and became a private student loan lender in 2004.

Sallie Mae offers private student loans for students in undergraduate, graduate, certificate, dental, medical, and health profession programs. It also offers private student loans for graduates studying for the bar exam or relocating for medical and dental residencies.

Sallie Mae offers competitive rates and repayment terms of 10, 12, or 15 years. There are no origination or application fees, and you can borrow up to 100% of your school-certified costs for the entire year. Interest is charged starting when funds are sent to the school, and there is a 0.25% automatic payment discount available.

Before applying for a private student loan, it is important to evaluate all anticipated monthly loan payments and how much the student expects to earn in the future. It is recommended to start with savings, grants, scholarships, and federal student loans before considering a private student loan.

Undergraduate, graduate and professional loans

Undergraduate, graduate, and professional loans are available from Sallie Mae. These loans are designed for students in undergraduate, graduate, certificate, dental, medical, and health professions programs. The company also offers loans for graduates studying for the bar exam or relocating for medical and dental residencies.

For undergraduate loans, students can borrow up to $10,000 with a 4-year in-school period and no prior Sallie Mae-serviced loans. The interest rates for variable-rate loans may increase or decrease over the life of the loan, based on changes in the financing rate. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option, and unpaid interest is added to the loan's current principal at the end of the grace/separation period. To get a 0.25% interest rate discount, the borrower or cosigner must enrol in auto-debit through Sallie Mae.

Sallie Mae offers private student loans for graduate school, and federal loans are also available for graduate students. The Sallie Mae Graduate School Loan has two interest rates: a fixed rate of 3.49% - 14.48% APR and a variable rate of 4.54% - 13.98% APR. Similar to undergraduate loans, interest rates for variable-rate loans may increase or decrease, and the Fixed and Deferred Repayment Options have a higher interest rate than the Interest Repayment Option. A 0.25% interest rate discount is also available for graduate loans.

Sallie Mae provides loans for specific graduate degrees, including medical school, dental school, law school, MBA, and health professions. The company also offers a graduate school loan for humanities, sciences, and other degrees. The loan amount for graduate students cannot exceed the cost of attendance less financial aid received, as certified by the school.

Cosigners and credit checks

When applying for a private loan, Sallie Mae will check your credit, including your borrowing/repayment history, to decide if you qualify for a loan. Many federal loans don't require a credit check. Private student loans are credit-based, which means Sallie Mae will check your credit rating and other information. If you're just entering college, you may not have much credit history, so you may need a creditworthy cosigner.

A cosigner is a creditworthy adult who signs your loan and is equally responsible for paying it back on time and in full. A cosigner can be a relative, guardian, friend, or spouse. Last year, students were 4x more likely to be approved with a cosigner, and 88% of Sallie Mae undergraduate loans were cosigned. If you're applying for a graduate student loan and you don't have a credit history, you may also benefit from having a cosigner.

To qualify as a cosigner, you must meet the age of majority in your state and provide proof of graduation (or completion of a certification program), income, and U.S. citizenship or permanent residency. In the last 12 months, the borrower can't have been past due on any loans serviced by Sallie Mae for 30 or more days or enrolled in any hardship forbearances or modified repayment programs. The borrower must also demonstrate the ability to assume full responsibility for the loan(s) individually and pass a credit review.

Sallie Mae does not disclose its credit score requirements for loans, and you might need a co-signer to qualify. You can receive a 0.25% interest rate discount if the borrower or cosigner enrols in auto-debit through Sallie Mae.

Loan rates and repayment options

Sallie Mae is a private lender offering undergraduate, graduate, and professional student loans. It does not offer parent or spousal loans or loans for DACA recipients. It offers competitive rates and repayment terms of 10, 12, or 15 years. There are no origination, application, or prepayment fees. However, borrowers may have to pay late fees or returned payment fees of up to $25.

Sallie Mae offers both fixed and variable interest rates. A fixed rate remains the same over the life of the loan, while a variable interest rate can change with the market, affecting your monthly payment. The interest is charged starting when the funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option, and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period.

Sallie Mae provides multiple discounts, including a 0.25% automatic payment discount and a 0.50% discount for making payments on graduate student loans while in school. Forbearance may be available in certain cases, although Sallie Mae does not specify the qualifying criteria. The company also does not offer refinancing options.

Sallie Mae offers repayment terms of 120 to 180 months, which is less flexible than many other lenders. Students must apply for a new loan each school year. The loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school.

Sallie Mae does not disclose its credit score requirements for loans, and you might need a cosigner to qualify. Last year, 88% of Sallie Mae undergraduate loans were cosigned. A cosigner is usually a parent or other responsible adult who shares responsibility for paying back the loan.

Sallie Mae's history and alternatives

Sallie Mae's History

Sallie Mae, or SLM Corporation, is one of the largest private student loan companies in America, comprising 55% of the private student lending market share as of the fourth quarter of 2023. The company was formed in 2013 and provides private education loans for students and their families. These loans are not made, insured, or guaranteed by any state or federal government.

Sallie Mae was originally created in 1972 as the Student Loan Marketing Association, a government-sponsored enterprise (GSE). It began privatizing its operations in 1997, a process it completed at the end of 2004 when Congress terminated its federal charter, ending its ties to the government.

In August 2006, Sallie Mae acquired Upromise, a company that provides rebates to buyers of certain brands, which can be applied to college savings accounts. In April 2007, Sallie Mae announced that an investor group led by J.C. Flowers & Co. signed an agreement to purchase the company for approximately $25 billion. However, the deal fell through in September 2007 due to adverse changes in the business outlook.

In February 2014, Sallie Mae announced the launch of Navient, a separate entity for federal student loan servicing. On April 30, 2014, Sallie Mae legally separated from Navient and made private student loans, banking products, and credit cards for college students and their families its primary focus.

In March 2020, the company announced Jonathan Witter, a former Hilton executive, would replace Raymond Quinlan as the new CEO. Sallie Mae also operates offices in several states across the US, including Delaware, Massachusetts, Indiana, Utah, and Virginia.

Alternatives to Sallie Mae

There are several alternatives to Sallie Mae for students seeking loans. Here are some options:

• Discover: A financial services company that provides banking and lending products, including credit cards and online banking services.
• Climb Credit: A company that provides financial services and specializes in student payment solutions within the education sector. They offer private loans to individuals.
• SoFi: A company that provides a range of modern financial products and services to assist individuals in borrowing, saving, spending, investing, and protecting money.
• CommonBond: A financial technology company offering a suite of student loan-based solutions to consumers and enterprises.
• LendKey: A financial services company specializing in loan origination and refinancing within the education and home improvement sectors. They offer private student loans, refinancing, and home improvement loans, all designed to provide lower interest rates and a simplified loan application process.
• Earnest: A technology company using technology, data, and design to build affordable financial products. They offer loans, student loan refinances, and private loans.
• Navient: A company that specializes in technology-enabled education finance and business processing solutions within the financial and business services sectors.
• The Student Loan Corporation: Provides private student loans in the United States and advises students to compare federal and private student loans.
• Nelnet: A company involved in student loan servicing, offering private student loans, refinancing, financial aid management, and technology solutions for education.
• Defynance: Focuses on alternative financing and investments in the financial services sector. They offer student loan refinancing through a smart income share agreement and provide investors with opportunities in alternative investments.

These are just a few alternatives to Sallie Mae, and it is important for students to research and compare different lenders to find the best fit for their personal needs and goals.

Frequently asked questions