The Guaranteed Student Loan Program (FFELs)
Under the guaranteed student loan program, private lenders like Sallie Mae and commercial banks issued student loans that the federal government guaranteed. Guaranteed loans are also called Federal Family Education Loans (FFELs).
The average credit score for approved Sallie Mae borrowers is around 748 for undergraduate student loans. That's pretty high – but don't panic if your credit score is much lower than that. You'll need a minimum credit score (or have a cosigner with a minimum credit score) that is somewhere in the mid-600s.
Those who borrowed from Sallie Mae after this 2014 split have private student loans, which aren't eligible for federal forgiveness programs. However, Sallie Mae will discharge debts for borrowers who die or become totally and permanently disabled.
After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers.
Enroll in auto debit and you may save money on your loan
If your loan becomes past due while enrolled in this option, we'll withdraw both the Current Amount Due and the Past Due Amount if that amount is greater than your Designated Amount. There's no penalty for paying early or paying extra.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
Loss of benefits – You'll lose eligibility for deferment, forbearance, interest-only student loan repayment options, interest-rate reduction programs, and cosigner release. Legal action: Sallie Mae or a collection agency may sue you and your cosigner to recover the debt.
Bankrate's take: Sallie Mae is a great option for those interested in borrowing from a well-established lender with low rates, few fees and a variety of loan options. It is also one of the few lenders that allows borrowers to be part-time students.
Credit decisions may require income verification documents. Both the customer and cosigner may need to log in to e-sign their application (time varies). Customers may delay choosing their repayment option and accepting the Loan Approval Disclosure (time varies).
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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 numerous benefits that private loans do not.
Thus, if you ever had a Sallie Mae loan or had Sallie Mae conduct loan servicing, that loan and servicing, likely, was transferred to Navient. Further, Navient then changed its name in 2021 to Aidvantage. See here.
Limited repayment terms: Sallie Mae only offers repayment terms of 120 to 180 months.
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., at least 10 years of payments. To benefit from PSLF, you need to repay your federal student loans under an IDR plan.
After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness. After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.
Sallie Mae loans, now serviced by private lenders, do not qualify for federal forgiveness programs. Loan forgiveness is generally reserved for federal student loans under specific programs. Private student loans might offer assistance or flexible terms, but typically lack formal forgiveness options.
If your payments aren't up to date, your account can go into default. At that point, you have to pay the entire amount owed, plus fees. The servicer or loan lender can send your account to collection. For federal loans, the servicer also has the right to take the balance of your payments from your wages.
Sallie Mae is not a federal loan servicer.
When Sallie Mae first formed, it was a government-sponsored enterprise servicing federal student loans — or loans made by the government. But in 2014, it split into two separate companies.
One of the primary reasons to prioritize federal student loans is because they tend to have lower interest rates. Right now, the average student loan rates range from 6.53% to 9.08% for federal loans, while their private counterparts range from 3.74% to 17.99%.
The average federal student loan debt is $37,853 per borrower. Outstanding private student loan debt totals $128.8 billion. The average student borrows over $30,000 to pursue a bachelor's degree.