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Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years. However, in , the structure and purpose of the company began to change. In , the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae.
Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. At present, Sallie Mae owns 1. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.
Both types of loans offer some benefits and drawbacks. Federal student loans are educational loans that come from the U. Under the William D. Ford Federal Direct Loan Program , there are four types of federal student loans available to qualified borrowers. With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.
On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums. Private student loans are educational loans 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.
Allows change in repayment plan after borrowing. Free money tip Want to pay less for college? Private student loans You can apply for private student loans when you need to, as long as you plan enough time for the lender to process your loan and disburse send money to the school. Terms and conditions of federal loans vs private loans All student loans—federal and private—include terms and conditions. Here are the most important items you should understand when taking out a loan for college: Is this a federal student loan or private student loan?
Who is the servicer? Is there a cosigner on the loan? What is the interest rate? Is the interest rate fixed or variable? When are you required to make payments—while in school or after?
What is the penalty for late payments? Did you choose a repayment plan where you make payments during school, or did you have a grace period after graduation? Are they helping with payments? Are you keeping up with your payments and paying interest that accrues grows before it capitalizes is added to your principal amount? Tips for repaying your student loans How student loans are different than other types of loans Be sure to understand the difference between private student loans and personal loans.
They sound similar, but there are important distinctions: Private student loans are for education, while personal loans can be used for things like consolidating credit card debt, making home improvements, or paying for a wedding. Some personal loans explicitly state they should not be used for post-secondary education or student loan debt. In general, private student loans have lower interest rates than personal loans.
They can also offer the choice of a fixed or variable interest rate. A personal loan usually only offers a fixed interest rate, which can impact the amount of your payment.
Related topics. Other borrowing options Families often use other ways to borrow money for college like a home equity loan, personal loan, or tuition payment plan. If your application is rejected, check other private student loan lenders to find a better fit.
Federal student loans have benefits not available for private loans and often come with lower interest rates. Key takeaways. How do Sallie Mae loans work?
On a similar note Dive even deeper in Student Loans. Explore Student Loans. Spot your saving opportunities.
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