Sallie Mae Lowers Rates on Education Loans, Adds New Tuition Insurance Benefit

NEWARK, Del.--(BUSINESS WIRE)--Sallie Mae, the nation’s No. 1 financial services company specializing in education, today introduced new lower interest rates on student loans for the 2011-12 academic year. The Smart Option Student Loan, designed to supplement federal financial aid, now offers degree-seeking students the lowest rates in the country and the most choices to help customers save money and pay off faster than a conventional private loan.

“It’s a good money-management tool because it encourages me to pay monthly. You pay a little now and you owe much less when you get out in the real world.”

“With the Smart Option Student Loan, I make a small $25 a month payment,” says Jaclyn, a senior special education major from Pennsylvania. “It’s a good money-management tool because it encourages me to pay monthly. You pay a little now and you owe much less when you get out in the real world.”

With zero origination or repayment fees, Sallie Mae’s Smart Option Student Loan is available at degree-granting institutions at variable rates ranging between 2.25 percent and 9.37 percent APR, based on today’s LIBOR index. Students can also earn back 2 percent of their scheduled monthly in-school payments simply for making their payments on time.

Sallie Mae also added a new Tuition Insurance Benefit to the Smart Option Student Loan, which reimburses up to $5,000 of tuition, room, board and other covered fees not refunded by the school if a student is forced to withdraw for eligible medical reasons. Sallie Mae’s Tuition Insurance Benefit, for loans first disbursed between July 1 and Oct. 31, provides 12 months coverage at no charge to the student, giving families peace of mind and safeguarding their college investment.

The program was a financial lifesaver to tuition insurance customer Margaret after her daughter had to withdraw from college for medical reasons. “My daughter should be able to get back to school for the summer or fall session, and it certainly makes it easier knowing that her college fund is now replenished and waiting for her to get back to college,” she says.

With the introduction of the Smart Option Student Loan, Sallie Mae revolutionized the private student loan marketplace with a powerful idea: empower families to pay interest while in school and repay over a shorter time period. In fact, customers to date who continue to make on-time payments are on track to save more than $1.7 billion in interest charges over the life of their loans. Three-quarters of customers say they would recommend the loan to a friend or family member.

Today, customers may choose from three in-school monthly repayment options. Depending on the option selected, the typical freshman can save an estimated 17 to 49 percent in interest charges and pay off the loan three to eight years faster after graduation, compared to a conventional payment-deferred loan with a 15-year term:

Interest Repayment Option: Under this option a student, often with the assistance of a cosigner, pays only the monthly accruing interest while in college. After school, the loan’s repayment period is typically eight years shorter, resulting in an average savings of 49 percent in interest charges.
Fixed Repayment Option: With the Fixed Repayment Option, students pay a simple $25 per month regardless of loan balance or interest rate. With the average loan’s five-year-shorter repayment term, a typical customer can save more than 30 percent in interest charges over the life of the loan.
No in-school minimum payment or Deferred Repayment Option: No minimum payment is required while in school, though students and cosigners receive monthly statements on accruing interest, an updated balance, and information on how to make a payment. After graduation, the average term is three years shorter than the traditional 15-year repayment term, enabling a typical customer to save an estimated 17 percent in interest charges—or more if the student made any in-school payments.

The best rates are offered to those who opt to make payments in while in school. Applying with a cosigner may increase the likelihood of approval and access a more favorable interest rate. Customers who sign up for automatic electronic payments may qualify for an additional rate reduction of .25 percentage point, and there is no prepayment penalty. More details are available through a savings example.

Customers automatically receive Sallie Mae’s unsurpassed consumer safeguards designed to reward students for establishing responsible financial habits. Students and their cosigners receive easy-to-read disclosures when they apply, when they are approved, and upon acceptance of the loan. Applicants have 30 days to compare competitors’ rates before accepting an offer and have three days after accepting the loan to cancel with no obligation. In addition, the company was the first national lender to provide loan forgiveness for cosigners of its Smart Option Student Loan in the tragic circumstance of the death or permanent disability of the primary borrower.

To learn more about Sallie Mae’s Smart Option Student Loan, visit www.SallieMae.com/choosesmart.

Sallie Mae (NYSE: SLM) is the nation’s No. 1 financial services company specializing in education. Serving 23 million customers, Sallie Mae offers innovative savings tools, tuition payment plans and education loans that promote responsible financial habits and reward success. The company manages or services $238 billion in education loans and administers $37 billion in 529 college savings plans. Members of its Upromise college savings rewards program have earned $600 million to help pay for college. Sallie Mae is also one of the leading financial service providers for universities and governments at all levels, including supporting $8 billion in ecommerce transactions annually at nearly 1,000 campuses. More information is available at www.SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

GradGuard™ Tuition Insurance is a service of Next Generation Insurance Group. Tuition refund insurance is underwritten by Markel Insurance Company, an "A" (Excellent) rated company according to industry watcher A.M. Best.