Are Sallie Mae student loans federal or private?

When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which she provided federal and private student loans.

However, since 2014, all of Sallie Mae’s student loans have been private and her federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one.

What is Sallie Mae?

Sallie Mae is one company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first established the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress has given SLMA, commonly known as “Sallie Mae,” Government Sponsored Enterprise (GSE) status to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004 the structure and purpose of the company began to change. The SLMA was dissolved at the end of December of the same year and the SLM Corporation, or “Sallie Mae”, was created in its place as a fully private company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae spun off to form Navient and Sallie Mae. Navient is a federal student loan manager that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other consumer financial products. If you took out a student loan with Sallie Mae before 2014, it may be a federal student loan under the former Federal Family Education Loans Program (FFELP).

Currently, Sallie Mae holds 1.4% of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are students.

What is the difference between private and federal student loans?

When you are looking for financing to pay for your college education, you will have a great choice to make: federal or private student loans. Both types of loans offer advantages and disadvantages.

Federal student loans are educational loans issued by the US government. Under the Federal William D. Ford Direct Loans Program, there are four types of Federal Student Loans available to qualified borrowers.

With federal student loans, you usually don’t need a co-signer or even a credit check. Loans also come with many benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to suspend payments with forbearance or deferral and possibly even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans have borrowing limits, so you may need to find additional funding or scholarships if your education costs exceed federal loan limits.

Private student loans are education loans that you can access from private lenders, such as banks, credit unions, and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer have great credit, you might also be able to get a competitive interest rate.

As for the downsides, private student loans do not offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae Loans Better Than Federal Student Loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer many advantages that private loans do not. You will generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan – Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, have their place. In some cases, federal student aid, grants, scholarships, work-study programs, and savings may not be enough to cover educational expenses. In these situations, private student loans can provide you with another way to pay for your college education.

If you need private student loans, Sallie Mae is a lender to consider. It offers loans for a variety of needs, including undergraduate, MBA school, medical school, dental school, and law school. Its loans are also 100% covered, allowing you to find financing for all your certified school expenses.

That said, it’s always best to compare a few lenders before committing. All lenders assess income and credit score differently, so another lender may be able to offer you lower interest rates or more favorable terms.

The bottom line

Sallie Mae can be a good choice if you are looking for private student loans and other financial products. Just be sure to do your research up front, as you should before signing up for any form of financing. Comparing multiple offers always gives you the best chance of saving money.

Learn more:


Source link

Back To Top