Tag: Sallie Mae

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College Students and Recent Grads

Sallie Mae Graduate School Loans vs. Direct PLUS Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Taking out a federal Direct PLUS Loan for grad school may not be a bad idea if you need to borrow money for your education. Federal repayment options such as Income-Based Repayment, Revised Pay As You Earn, and Public Service Loan Forgiveness can make Direct PLUS Loans an attractive option for student borrowers.

However, these loans currently come with a high interest rate of 7%. On top of that, you will have to pay an origination fee between 4.264% and 4.267% just to take out the loan in the first place.

Recently, Sallie Mae put a new line of loans on the market that may outperform what is available to grad students through the federal government. While there are some negatives, like not qualifying for the aforementioned repayment programs, there are some major positives, like no origination fees and potentially lower interest rates, which could save students a lot of money over the long haul.

In this review, we’ll see how Sallie Mae grad school loans compare to federal Direct PLUS loans.

Sallie Mae vs. Direct PLUS Loan

Sallie Mae’s recent releases include three classes of loans: one for MBA programs, one for dental and medical school students, and a separate loan program for other health care professionals.

In order to qualify for any one of these loan programs, you must be enrolled in a program at a degree-granting institution with the intent of getting a degree. These loans are not for certificate programs or continuing education.

It is worth noting that you do not have to be enrolled half-time to qualify, which differs from the standards for federal PLUS loans.

Interest rates and terms

With any one of these loans, you can borrow between $1,000 and the maximum your school charges for your degree — as long as you qualify either on your own or with a co-signer. Interest rates and loan terms will vary depending on which loan you take out, though.

In the table below, we’ve compared rates for Sallie Mae’s grad school loans against the current rates for the Direct PLUS Loan program.

Keep in mind that variable rates may be lower at first, but have the potential to change significantly over the course of repayment. Fixed rates, on the other hand, tend to start out higher, but will stay stable and predictable for the course of your loan.

None of the loans come with origination fees, and you can pay them off early without incurring a penalty.

3 options to repay your Sallie Mae grad school loan

When you take out any one of these three loans, you can pick how you’ll repay. You have three options:

  1. Deferred Repayment. With this option, you make zero payments while you’re in school and during the six months following graduation — the time frame known as the “grace period.” While it’s nice that you won’t have to shell out any money while you’re focused on your studies, you will accrue interest to be paid later. This option also gives you the highest interest rate of the three options.
  2. Fixed Repayment. Maybe you can’t afford to make full monthly payments while you’re in school, but you can afford to throw a little bit of money at the interest. During your education and grace period, you’ll make nominal, interest-only payments. You will still have back interest applied to your account when your grace period is over, but the amount will be less than if you chose the Deferred Repayment plan.
  3. Interest Repayment. When you choose this plan, you’ll get the lowest interest rate that your credit history and income qualify you for, but you’ll have to make full, interest-only payments while you’re in school through your grace period. After that, you’ll start making interest-plus-principal payments just like the other two options, but your payments will be smaller as there won’t be any back interest to tack on.

Graduated Repayment Period

Worried that you’ll struggle to find a job immediately after graduation? Sallie Mae does offer a principal deferment option called Graduated Repayment Period. For the first 12 months following graduation, you have the option of making interest-only payments, but it’s not automatic. You have to opt in, and there is only a small time frame where you’ll be allowed to do so. Your monthly billing statement will alert you when you’re eligible. Start looking for the notification beginning two months before your grace period is over.

Residency and internship deferment

If you have a Dental and Medical School Loan or a Health Professions Graduate Loan, you may qualify for deferment for the entirety of your residency or internship. If you chose Deferred Repayment, you won’t have to pay anything during this time, though interest will still accrue. If you chose Fixed Repayment, you’ll continue making nominal interest payments, and if you chose Interest Repayment, you’ll continue to make full interest payments while you’re completing this necessary step.

In order to qualify for this deferment option, your residency or internship must meet one of the following three criteria:

  1. Require a bachelor’s degree.
  2. Be a supervised program that leads to a degree or certificate.
  3. Be a supervised program that is required for entry into your field.

How to qualify for a Sallie Mae grad school loan

To qualify for one of Sallie Mae’s graduate-level student loans, you must be a U.S. citizen or permanent resident, or be a nonresident with an American co-signer. U.S. citizens and permanent residents can use the loan to study abroad, but all studies for nonresidents must be completed in the U.S. at American institutions.

If you have any other Sallie Mae loans, you must be current on them in order to qualify. That includes not being in forbearance or deferment. You won’t meet this requirement if you’re on a modified payment plan.

Sallie Mae grad school loans vs. federal PLUS loans

Pros and cons of Sallie Mae grad school loans

This new set of graduate school loans from Sallie Mae has a lot of good things going on, but as with any financial product, there are both pros and cons.

Pros

  • You could potentially score a lower interest rate than federal PLUS loans.
  • No origination fees.
  • Ability to pay back early without penalty.
  • Quite a few options for repayment — including deferment options after graduation.
  • The 20-year repayment term on the Dental and Medical School Loan gives you a more realistic timeline for paying back your debt.
  • You can take out a loan even if you’re taking a credit-by-credit approach. Federal student loans require you to attend at least half-time.

Cons

  • There is the potential of getting an even higher interest rate than you’d find on a PLUS loan, though you’d still have no origination fees. This is most likely to impact those with a spotty credit history — especially if they opt for the Deferred Repayment option.
  • Dental and medical school students should take note that while a 20-year term is attractive, you will end up paying more over the course of your loan than if you had a shorter repayment term. Take advantage of the fact that there is no early repayment penalty, if at all possible.
  • Because these are private loans, you will not qualify for advantaged repayment options like the Department of Education’s REPAYE, IBR, or PSLF. Direct PLUS Loans do qualify for these programs.
  • The window for enrolling in Graduated Repayment is short. You may miss it if you’re not paying attention.

How to apply

You can complete the application process online. Before you start, make sure you’re armed with this information:

  • Your address
  • Your Social Security number
  • The name of your school
  • Your enrollment status
  • Your intended degree/course of study
  • How much money you want to borrow
  • Information on any other financial aid you’re receiving
  • Current employer information
  • Current salary information
  • Bank account information
  • Monthly mortgage/rent payments
  • Contact information of two personal references

If you’re a permanent resident, you’ll have to furnish some additional paperwork. Be prepared with either your Alien Registration Receipt Card, or its conditional counterpart accompanied by INS Form I-751. If you don’t have either of those, you can also furnish an unexpired foreign passport with an unexpired stamp certifying employment, or a Permanent Resident card.

If you’re a nonresident, you’ll need to provide an unexpired passport, an unexpired student visa, or an Employment Authorization card. You’ll also need all of the above bulleted information for your co-signer.

There is a separate application page for each loan type: Health Professions Graduate Loan, MBA Loan, and Dental and Medical School Loan.

Who are Sallie Mae’s new grad school loans best for?

Sallie Mae’s new student loans have an extremely targeted audience. If you’re studying in one of the specified fields, they can be a good option for you if you have a good credit history and can qualify for an interest rate lower than the one offered on PLUS loans. Just be mindful that while the repayment options are plentiful, they’re not quite as generous as some federal student loan programs that allow you to repay based on your income or even forgive a large portion of your debt after dedicating a portion of your career to public service.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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College Students and Recent Grads, Reviews

Review: Sallie Mae Smart Option Student Loan

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Sallie Mae has long been known as a popular lender for private student loans. In fact, on its website, it states it has “helped more than 30 million Americans pay for college since 1972.”

Does that mean it’s the best choice? Not necessarily, and there are other alternatives out there. Here are the details you should be aware of before applying, and how the Smart Option Student Loan for undergraduates and graduates compares to federal student loan options.

Details of Sallie Mae’s Smart Option Student Loan

With the Smart Option Student Loan from Sallie Mae, you’re eligible to borrow up to 100% of the cost of attending college, though it says you may be approved for less.

Sallie Mae offers variable and fixed rates. Variable APRs range from 2.25% to 9.37%, and fixed APRs range from 5.74% to 11.85%. If you enroll in automatic payments, you’ll receive a 0.25% discount.

There are a few options you have when it comes to repayment:

  • Deferred repayment: This is how federal student loans function. You won’t be required to make a payment while you’re in school, but you can pay if you want to. Interest will capitalize (become due) once the six-month grace period ends after graduation (or you fall below a part-time student).
  • Fixed repayment: This requires a monthly payment of $25 while you’re in school. According to Sallie Mae, this can save you 10 percent or more on the cost of your loan.
  • Interest only repayment: You’re responsible for making payments on the interest that accrues on your loans each month. This option can save you over 20 percent, but will likely require payments over $25 per month.

Similar to federal loans, Sallie Mae offers a six-month grace period before principal and interest payments are required. It also offers a Graduated Repayment option, where borrowers in good standing can make interest only payments for 12 months after the grace period ends.

An example payment: if you borrow $10,000 with an APR of 8.0% on a term of 10 years, your monthly payment will be $121.32, and the total cost of the loan will be $14,556.97.

How Does the Smart Option Student Loan Compare to Federal Loans?

It’s important to note that federal student loans are capped, and the amount you’re eligible for depends on many factors. You may not be able to fully finance your college education with federal loans, and that’s where private loans come into the picture. However, it’s always worth looking into federal student loans before private loans, as they typically come with lower interest rates and more consumer protections.

As of the 2015 – 2016 academic year, Direct Subsidized and Unsubsidized Loans are at a fixed 4.29% interest rate. That’s lower than Sallie Mae’s 5.74%, and you’d need to have excellent credit to receive that Sallie Mae rate in the first place.

Federal student loans (aside from PLUS loans) don’t require a credit check. Sallie Mae’s variable loans have lower rates, but this rate is can change throughout the life of your loan, which means you’ll have less stability when it comes to budgeting for your payments.

An additional factor to consider is that Direct Subsidized and Unsubsidized Loans have fees associated with them – 1.068% if a loan is disbursed on or after October 1st, 2015 and before October 1st, 2016. That’s not very high, but Sallie Mae’s loans don’t have origination fees.

Eligibility Requirements

There are no strict eligibility requirements stated on Sallie Mae’s website. It’s recommended to apply with a cosigner if you don’t have existing credit, or if you have a thin credit history, as you’ll be eligible for better rates.

Application Process and Documents Needed

Sallie Mae’s application can be completed online within 15 minutes, and you might be able to get notice of your approval as soon as you submit it.

You’ll be required to fill out general personal information, including your address and school information, as well as the type of loan you’re for which you’re looking to apply. Co-signers can fill out the application alongside you. Completing the application gives Sallie Mae permission to conduct a hard inquiry on your credit report.

You should have the following information ready before applying:

  • Social Security number for all parties applying
  • Your GPA in school and when you’ll be enrolled
  • How much you’re requesting, and any other financial aid you’re receiving for college
  • Employment information, if applicable (will be needed for co-signer)
  • Financial information such as mortgage or rent payment
  • Two personal contacts

You can check the status of your loan at any time by signing into your account. If extra documentation is needed, you’ll receive an email.

The Fine Print

There are no origination fees or prepayment penalties. Sallie Mae notes a late fee will be assessed if you fail to make a payment within 15 days of your due date. The late fee amount is included on the Disclosure form.

Repayment Assistance Options

Sallie Mae offers a few solutions to borrowers having difficulty paying back their student loans. First, it offers forbearance, which means your payments are temporarily paused. There’s no form to fill out, you simply call customer service and request it. If approved, you can enter into forbearance of a period of 3 months at a time, for up to 12 months over the entire life of your loan. Interest will continue to accrue during this time.

Sallie Mae doesn’t expand on any of its other repayment assistance options, but states that it’s committed to helping borrowers avoid delinquency, default, and bankruptcy.

Pros and Cons of the Smart Option Student Loan 

Pro: Unlike other lenders, Sallie Mae offers a quarterly FICO score (based on TransUnion) for free. You can see it by logging into your account.

Con: Compared to other lenders (and especially to Federal loans), Sallie Mae’s interest rates are on the higher side, especially considering fixed rates are as high as 11.85%.

Pro: Sallie Mae is integrated with Upromise, which is a cash rewards system. If you make payments while in school, you can receive 2% of your scheduled monthly payments into your Upromise account as a reward.

Con: Sallie Mae only seems to offer a standard 10-year repayment plan, when other private lenders have flexible terms.

Pro: You can apply with a co-signer if your credit isn’t up to par. You can also apply for the co-signer to be released after making 12 consecutive and timely payments, provided you meet credit requirements.

Smart Option Student Loan for Graduate Students

Are you looking for private loan options for graduate school? Sallie Mae offers its Smart Option Student Loan for graduate students as well, and it’s very similar to its undergraduate counterpart.

You can borrow up to 100% the cost of attendance. Variable APRs range from 2.25% to 7.27%, and fixed APRs range from 5.74% to 8.56%. There are no origination fees or prepayment penalties. It has the same exact payment options as the undergraduate loan, so you can defer all payments, pay a small amount each month, or pay the interest. It also features the Graduated Repayment option.

How does this compare to federal loans? Direct Unsubsidized Loans for graduates or professionals are at a fixed interest rate of 5.84%, and the Direct PLUS Loan is at a fixed rate of 6.84%. Both loans have fees: the Unsubsidized loan has a disbursement fee of 1.068%, and the PLUS loan has an origination fee of 4.272%.

Sallie Mae’s graduate loan is fairly competitive so long as you have a great credit score and can get approved for the lower rates.

sallie mae

Other Private Student Loan Alternatives

In case you’re not eligible for approval at Sallie Mae, you can try Discover and Citizen’s Bank for private student loans.

You can borrow up to 100% of the cost of attendance with Discover. Its variable APR ranges from 2.99% to 9.12%, and its fixed APR ranges from 6.15% to 11.99%. You have up to 15 years to repay the loan. It also has a deferred payment or in-school payment option, and there are no fees associated with the loan at all.

Discover logo

With Citizen’s Bank, you can borrow up to $90,000, and you can’t exceed $120,000 combined Federal and private student loan debt. The minimum amount to borrow is $1,000. You have the option to repay your loans on a 5, 10, or 15 year term. Variable APRs range from 2.69% to 9.15%, and fixed APRs range from 5.76% to 11.51%.

citizens-bank

Always make sure you shop around with different lenders to find the best deal. You can also look to your bank or local credit union to see what rates they offer. As long as you send out applications within a 30-day period, the credit bureaus will count all inquiries as one so you won’t be penalized. Take advantage and work with a lender that’s willing to work with you.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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Earning Cashback, Reviews

Sallie Mae MasterCard Cash Back Review

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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This card is no longer available. We will be posting a new review soon of the SallieMae Upromise MasterCard. 

The Offer

According to the Sallie Mae website, “It’s the card that earns cash back to pay down your student loan.”

This card is unique in that it offers cash back rewards, which can be used to pay down Sallie Mae student loans. But this card isn’t just for paying off student loan debt. Applicants do not need to have a Sallie Mae loan in order to obtain this card.

The card targets students and recent graduates and comes with: a signup bonus, 5% cash back (limited – and on certain purchases only) and no annual fee. The Sallie Mae MasterCard card is serviced by Barclaycard US.

Pros

  • Rewards can be applied directly towards the repayment of Sallie Mae loans.
  • Signup bonus (albeit small – $25 when card is used in first 90 days)
  • No annual fee
  • 5% cash back up to $250 per month spent on gas and groceries
  • 5% cash back up to $750 per month spent on book purchases
  • 5% cash back on many Amazon.com purchases since the Merchant Category Code used works with more than just books.
  • 1% cash back on all other purchases
  • 0% APR for first 12 months (13.99%, 20.99% or 22.99%, based on member credit worthiness)
  • 0% introductory period for balance transfers
  • World MasterCard benefits, which include concierge services, rental car insurance, travel insurance, lost and delayed baggage insurance, roadside assistance, and purchase protection.

Cons

  • 5% cash back categories have low ceilings ($250 for gas and groceries, $750 on books).
  • Signup bonus is very small.
  • Excellent credit score needed (difficult to have as a college student).
  • Monthly spending caps are less convenient than quarterly spending caps.
  • No redeeming cash to use outside the program (see fine print section below for details).
  • Foreign transaction fee of 3%
  • No EMV chip

Fine Print

This card program targets students and graduates with Sallie Mae debt. However, the card may be difficult to obtain for students and recent graduates. Taken from the Sallie Mae website, “… if the income you report is insufficient based on your obligations, we may not be able to open an account for you.” Many young people suffer from a ‘thin’ credit file so securing an excellent credit score may be a bit much to expect from students. If denied, Sallie Mae may offer its Platinum Card, which has fewer benefits. This card is less flexible in terms of reward redemption than most cash reward cards.

When redeeming the cash earned, there are 3 options

  • Statement credit
  • Deposit into a Upromise account (Upromise FAQ)
  • Statement credit on an eligible Sallie Mae student loan

Basically, if a person doesn’t have Sallie Mae loans or pays them off, they will only be able to redeem rewards as statement credit. This card uses a very self-contained ecosystem, which is not always convenient for everyone.

Rewards are not redeemable for less than 2,500 reward points (2,500 reward points = $25). Companies are exempt from using this card for rewards. Rewards do not expire as long as the card is within good standing. Good standing means the card must not go 13 months without activity.

Miscellaneous Fees

  • Balance transfer: The service costs $10 or 4% – whichever is greater. This applies to the first twelve qualified billing cycles. After that, balance transfers cost $10 or 3% – whichever is greater.
  • Cash advance: $10 or 5% – whichever is greater.
  • Late payment: $35
  • Returned payment: $35

Who This Card Would Benefit Most

This card is a worthy option for anyone who doesn’t spend too much but still wants big rewards. Those with larger monthly budgets would be better served with a cash back card offering higher monthly or quarterly limits on rewards.

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How Sallie Mae MasterCard Stacks Up Against the Competition

Sam’s Club MasterCard

The Sam’s Club MasterCard is similar to the Sallie Mae MasterCard but offers a few different perks and drawbacks:

  • 5% cash back on fuel – up to $6,000 annually vs. the monthly-capped $3,000 Sallie Mae offers. Plus, Sallie Mae includes fuel and groceries in the $3,000 annual limit as well. Drivers putting a lot of miles on their card would do well with the Sam’s Club MasterCard.
  • 3% cash back on dining and travel (Sallie Mae offers 1% on these purchases).
  • Signup bonus is $5 less than with Sallie Mae. It’s also harder to obtain because a purchase of at least $50 must be made on SamsClub.com within 24-hours of getting the card.
  • Sam’s Club membership is required (but there’s no annual fee). The cheapest Sam’s Club memberships is $45 annually.

1169_card.Sams-ClubMaster-Card

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Citi Double Cash

The Citi Double Cash card offers 2% cash back in every category. However, 2% can only be earned if the card is paid in full each month. One percent is earned at time of sale and the other 1% is earned when paid off at the end of the month. This card is not for those who carry a balance. There factors to consider:

  • No bonus
  • Similar interest rates to Sallie Mae card, except no 0% APR for the first 12 months like the Sallie Mae card.
  • Equipped with an EMV card
  • First late payment is forgiven
  • Price rewind. If Citi finds a cheaper price for something within 60 days, the price difference will be refunded.
  • Pre-qualification available

Citi_double

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A Solid Choice for the Minimal Spender

This is the only no annual fee card to offer 5% cash back on gas and groceries year-round. That’s impressive for any spending category, let alone with such popular categories. Because no student loans are required, this card is a worthy option for many people. Anyone with low spending habits and a desire to get high rewards should consider the Sallie Mae MasterCard.

Customize your cash back rewards offers with comparison tool

 

Will Lipovsky
Will Lipovsky |

Will Lipovsky is a writer at MagnifyMoney. You can email Will at will@magnifymoney.com

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