What is a Sallie Mae student loan?

Sallie Mae Bank was established in Utah in 2005 and is one of the most well known providers of private student loans. One of the most likely reasons for this is because of the flexibility of their payment plans. Students just leaving college are looking for ways to reduce the payments on their student loans, and with Sallie Mae they can begin doing this as soon as they receive the funds for their student loans. Unlike many other lenders, there are three different ways to repay a student loan under Sallie Mae's Smart Options program. For students who do not qualify for a federally-insured student loan or need additional funds to support his or her college education, Sallie Mae offers three repayment options.

Interest Repayment Option

Under this program students can make payments on the interest while they are still in school thus reducing any remaining payments after graduation. This plan can save each student more than 20 percent or approximately $5,000 per year on average when compared to the Deferred Repayment Option.

Fixed Repayment Option

This is another option intended to reduce the number of payments the student has remaining after graduation. The student can pay as little as $25 a month while still in school thus saving approximately $2,000 (10 percent) on the total cost of the loan compared to the Deferred Repayment Option.

Deferred Repayment Option

This option offers the most flexibility. Students do not have to make any payments while they are still in school, but they can certainly do so. Making payments while you are in school will reduce the number of payments and the total amount of money you will need to repay after graduation, making this an attractive option.

Interest Rates are Competitive

Students who are looking for a low-cost private student loan will be pleased with Sallie Mae's student loan program. According to LIBOR current rates range from 2.25 percent APR to 9.37 percent APR. Sallie Mae doesn't charge an origination fee or prepayment penalty so students can pay off their loans as soon as they desire. You can also save one quarter of a percent off your interest rate if you elect to have your monthly payments automatically deducted from your bank account through automatic debit.

Tuition Insurance Benefit

Another benefit of the Smart Option Student Loan is a new program that begins with disbursements between July 1, 2011 and October 31, 2011. This benefit will cover up to $5,000 of tuition, room, board and other fees the college will not refund in the event you need to withdraw from school for medical reasons.

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