Sallie Mae Smart Option Private Student Loan Review

Michael Lux Blog, Student Loan Reviews, Student Loans 3 Comments

Sallie Mae is the biggest name in student loans.  Not only does Sallie Mae have the largest number of student loan borrowers, but it is also the subject of a massive amount of student loan press.

Given the amount of press that Sallie Mae receives, and the many controversies involving Sallie Mae, it is important for any potential borrower to get all the facts, good and bad, before making the decision on a Sallie Mae loan.

The Basics

Sallie Mae offers both variable rate and fixed rate student loans.  The interest rate on the variable loans starts as low as 2.25% and go as high as 9.37%.  Your creditworthiness will determine the rate that you qualify for.  Sallie Mae also has fixed rate loans starting at 5.74%, with a max of 11.85%.

Like most private loan lenders, you are able to borrow up to 100% of what your school deems to be the total cost of attendance.  This number includes estimates for books, transportation, housing, etc.

Sallie Mae’s repayment terms are fairly standard, and there is no prepayment penalty, which means there is no harm in paying off your loans as soon as you can.

The Good

The interest rates offered by Sallie Mae are fairly competitive, and a 12 month co-signer release is one of the shortest on the market.  The zero percent loan origination fee is also something that every borrower should expect.

We also like to see that there are multiple payment plans for students still in school.  Making payments during this time is a great idea because it is important for the borrower to have an understanding of how much debt they are in and it prevents the interest from compounding on your loan.

The Bad

For starters, Sallie Mae private loans suffer from the same disadvantages that apply to all private lenders.  Even though the government loans may have a higher interest rate, Federal government loans are still a better alternative for most students, largely because the Federal loans have the most forgiving repayment plans.  Therefore, students should first maximize FAFSA funds prior to selecting any private loan.

Borrowers should also be very careful about getting co-signers involved with their student loans.  Sallie Mae recently took some heat from the government and in the press for the practice of auto-defaults.  In cases where the co-signer dies or declares bankruptcy, Sallie Mae has the ability to automatically place the loan in default status.

The Bottom Line

If you are going to take out a private loan, make sure you get all the facts, before agreeing to any terms and conditions, take the time to read them.  It may all seem like useless legal jargon, but it makes a big difference and the terms vary from company to company.

Sallie Mae makes loans that are easy to get and the loan money to lots of people.  They have helped many pay for college, but they’ve also angered plenty along the way.  Reading the fine print can help avoid unwanted surprises and ensure a positive experience.