NEWARK, Del.--(BUSINESS WIRE)--Sallie Mae, the nation’s No. 1 financial services company specializing in education, announced a new fixed interest rate option on its private education loans for academic year 2012-13. The new fixed interest rates, available to undergraduate and graduate students at degree-granting institutions on May 21, will start at 5.75 percent with no origination fees.
Sallie Mae will continue to offer variable rate private education loans at rates starting at 2.25 percent for students at degree-granting institutions, with no origination fees.
Private education loans are designed to bridge the gap between family resources, scholarships and grants, federal loans and the full cost of a college education. Sallie Mae’s Smart Option Student Loan offers interest rates among the lowest in the country and choices to help customers save money and pay off faster than a conventional private loan.
“With the addition of fixed interest rates on our private loans, Sallie Mae offers a full range of payment options to families who need to fill a gap after exploring federal financial aid,” said Joe DePaulo, executive vice president, Sallie Mae. “Whether you want the guarantee of a fixed interest rate or you’d like to benefit from today’s extremely low interest rate environment, we offer you a loan with transparency and family-friendly consumer protections.”
Families may select from three in-school repayment options for either the fixed interest rate or variable interest rate loans and save compared to a 15-year interest-deferred loan:
- Interest-only monthly payments in school – with pay-as-you-go monthly interest, save as much as 50 percent in interest charges.
- $25 fixed monthly payment in school – defray some of the accruing interest and save as much as 30 percent in interest charges.
- No minimum monthly payment in school – with the loan’s shorter average repayment term save as much as 17 percent in interest charges.
Sallie Mae was the first national private lender to encourage payments while in school and to design shorter repayment periods based on loan amounts, resulting in far lower costs over the life of the loan. In fact, customers who choose to keep their costs down by making payments while in school can save an estimated 30 percent to 50 percent in interest costs over the life of the loan compared to a typical 15-year repayment period. Due to the loan’s shorter required repayment term, Sallie Mae private education loan customers can, on average, pay off three to eight years faster than the traditional interest-deferred 15-year loan.
“It’s challenging to work full time and go to college. The Smart Option Student Loan helped me tremendously because there was no way that I could pay for a master’s degree on my own,” said Alison R., a student at Widener University in Chester, Pa., who signed up for the $25 fixed monthly in-school repayment option. “It’s a good way to budget and reduce my total loan costs all at once.”
Starting variable rates on Sallie Mae Smart Option Student Loans range between 2.25 percent to 10.125 percent (APR 2.25% to 9.37%), and vary with LIBOR. Fixed interest rates will range between 5.75 percent and 12.875 percent (APR 5.74% to 11.85%). The actual rate a customer is offered depends on credit history and other factors.
While applying, Sallie Mae private education loan applicants receive a series of disclosures explaining loan terms and estimating total cost. Applicants also complete a Department of Education form to certify their cost of attendance. In addition, Sallie Mae requires private education loans to be approved by the school’s financial aid office to ensure that customers borrow no more than the cost of attendance, less other financial aid received.
Sallie Mae private education loan customers enjoy built-in safeguards including:
- Cash back rewards for in-school on-time payments and an interest-rate discount for payments by automatic debit.
- Up to $5,000 ($2,500 per semester) in tuition insurance coverage for academic year 2012-13 (for tuition lost due to covered medical withdrawal for loans first disbursed between July 1 and Oct. 31, 2012).
- Cosigner release option available after the student graduates and makes 12 consecutive on-time principal and interest payments.
- Peace of mind with loan forgiveness for the cosigner if the student borrower dies or becomes permanently disabled.
- Alternative repayment options during financial hardship.
Sallie Mae advises families to follow its “1-2-3 approach” to paying for college: first, maximize scholarships and grants and tap college savings. Second, explore federal student loans. Third, fill the gap with a responsible private education loan.
Join the conversation on how to save, plan and pay for college at Facebook.com/SallieMae.
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for its 25 million customers. With products and services that include college savings programs, scholarship search tools, education loans, tuition insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at SallieMae.com and connect at Facebook.com/SallieMae. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.