NEWARK, Del.--(BUSINESS WIRE)--A majority of Sallie Mae private education loan customers in college in academic year 2011-12 saved money by making payments while in school, said Sallie Mae, the nation’s No. 1 financial services company specializing in education.
In fact, 63 percent of Smart Option Student Loan customers who currently attend school elect to make payments while pursuing their degree rather than defer payments until after college. By selecting repayment plans to pay either $25 monthly or pay accruing interest monthly, a typical freshman customer can save an estimated $3,700 to $5,300 in interest expense on a $10,000 loan. Sallie Mae also offers interest rate discounts of a half to a full percentage point for customers who choose in-school payments.
In 2009, Sallie Mae became 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. Sallie Mae Smart Option Student Loan customers can, on average, pay off three to eight years faster than the traditional interest-deferred 15-year loan, and can save as much as 30 percent to 50 percent in interest costs over the life of the loan.
To help close the gap with tuition costs, DePaul University student Glenn H. of Chicago chose Sallie Mae’s private education loan and makes interest-only payments. “This was an affordable option for me, because it minimizes the payments that I make now while I’m in school,” he said. “In the future, after I graduate, I will be able to pay my loan off that much more quickly. I’m more than happy with my choice.”
“With the rising cost of college, families who need supplemental funding want to make an informed choice about how much to borrow and to understand how to minimize the cost of borrowing,” said Charlie Rocha, senior vice president, Sallie Mae. “Sallie Mae customers – students and their cosigners alike – see how paying a little now will save them a lot later and they are using that information to make smart choices.”
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, which may offer lower rates. Third, fill the gap with a responsible private education loan.
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. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.