taking a close look at Sallie Mae Smart Option loans

Sallie Mae Smart Option Private Student Loan Review

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

Sallie Mae Smart Option

Interest Rates
Repayment Options
Loan Terms

Some Concerns

Sallie Mae offers some low interest rates and has high approval numbers, but there are also some red flags for students to consider.

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.

Sallie Mae Private Student Loan Basics

Sallie Mae offers both variable rate and fixed rate student loans.  The interest rate on the variable loans starts as low as 4.25% and go as high as 11.35%.  Your creditworthiness will determine the rate that you qualify for.  Sallie Mae also has fixed rate loans starting at 5.49%, with a max of 11.85%.

The rates on the lower end of the spectrum are competitive with many other top lenders.  The higher rates offered by Sallie Mae are awful.

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.

One area where the Sallie Mae differs from other lenders is repayment length.  Most lenders allow borrowers to pick a 5, 10, or 15 year repayment plan.  Sallie Mae loans have 5 to 15 years of repayment, but the borrower does not get to pick the repayment length.  Instead, Sallie Mae determines the repayment length based upon amount borrowed, interest rate, and time of graduation.

Smart Option Benefits

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.  Borrowers have the option of making no payment, paying $25 per month, or paying the interest that accumulates each month.

One area where Sallie Mae should get some credit is their approval rate.  Getting a loan with Sallie Mae is usually easier than with other lenders.  Borrowers just need to make sure the loan interest rate is reasonable.

Sallie Mae Private Loan Issues

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.  Sallie Mae does claim to have a cosigner release policy, but we have found these policies to not be of much use in real life.  This is because lenders like Sallie Mae require the borrower to be independently creditworthy in addition to other requirements at the time of the cosigner release application.  Because Sallie Mae has no incentive to actually release the cosigner from the loan, many are denied.  We suggest that borrowers and cosigners never plan on a release.  If they do want a release, this guide should help get it done with relative ease.

A final persistent issue with Sallie Mae has always been their customer service.  We used the “chat with an expert” link on their page to ask a couple questions and found the “expert” to not be very helpful.  Instead of being provided with the repayment length answers requested, the expert kept sending requests to complete an application.  A good rule of thumb for borrowers to keep in mind is that customer service is normally at its best when a company is trying to win your business.  Once you are stuck with a lender, things can go downhill.  Sallie Mae seems to struggle even at the initial phase of the process when thing should be easy.

Sallie Mae Student Loan: Final Review

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 they 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.

Rather than checking your rate directly with Sallie Mae, we suggest checking rates using the Credible Platform.  This allows borrowers to shop around by checking their rates with Sallie Mae and six other lenders.

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Clarisse @ Make Money Your Way

I think, Sallie Mae is a good option for those students who in needs to have a student loan. Yes, you’re right before signing an agreement, we need to read everything and understand it very well or if you have any questions about it then you better to ask about it first.


Always read the fine print!!


Sallie Mae is an awful loan company that goes after students who do not acquire enough aid from federal loans. They will change your variable interest rate from around 6% to 12% and give no explanation. They do no work with you on their loans and will default you in a heartbeat. STAY AWAY!!!