Sallie Mae is one of the industry’s leading private student loan lenders, originating $6.4 billion in private education loans in 2023. However, the company currently does not offer any refinancing or consolidation options.
This means if you’re seeking a lower interest rate or want to change your repayment term, you may need to get rid of your Sallie Mae loans by refinancing with another lender.Another option is to negotiate your Sallie Mae loan. Here’s what you need to know if you hold Sallie Mae loans and are in need of a change.
Table of ContentsSkip to Section
- Should you get rid of Sallie Mae loans?
- When to get rid of Sallie Mae loans by refinancing
- When you shouldn’t get rid of Sallie Mae loans by refinancing
- Is Sallie Mae student loan forgiveness an option?
- What to consider before you refinance Sallie Mae loans
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Should you get rid of Sallie Mae loans?
There are times it make sense to get rid of Sallie Mae loans by refinancing with a new lender. Other times, it makes more sense to hold on to the Sallie Mae loans. We’ll dive into the details below, but here’s a summary.
| Get rid of Sallie Mae loans to: | Keep Sallie Mae loans if you: |
| Lower your interest rate | Already have a desirable interest rate |
| Pay your loans off faster | Want to remove a cosigner |
| Reduce your payment | Are close to paying off your student loans |
| Remove your cosigner with a refinance | Plan to apply for a mortgage soon |
| Improve your customer service experience | Struggle to afford your monthly payments |
When to get rid of Sallie Mae loans by refinancing
In some cases, getting rid of your Sallie Mae loans through refinancing with another lender might make sense. Read below to learn more about when changing lenders may be a smart strategy.
If you want to lower your interest rate
You can sign up for automatic payments if you want to pay less interest with Sallie Mae without refinancing your loan. Like many other lenders, Sallie Mae offers a 0.25% interest rate discount when you set up autopay.
However, if you want to save more on interest, the only permanent option is to refinance your student loans. Refinancing student loans is similar to refinancing your mortgage or auto loan. Your existing loan is paid off and replaced with a new loan.
If you signed up for a Sallie Mae loan when you entered college, you may have a high interest rate because you were a college student with no credit history and no full-time income. If you now have a stable job and a good credit score, you may be eligible for a lower interest rate.
If you want to pay off your loans faster
Sallie Mae does not charge a prepayment penalty if you repay your loans faster than scheduled, so you don’t need to refinance your loans to take advantage of this opportunity.
However, this method requires you to take the initiative to schedule extra loan payments. Alternatively, you could refinance your loan into a new one with a shorter repayment term. Your payments will be larger with a shorter term, but you’ll repay the loan faster without making extra payments.
You can choose a shorter repayment term to maximize your interest savings when refinancing. Lenders offer different interest rates for different terms. Generally, shorter terms have lower interest rates, and longer terms have higher interest rates.
If one of your main goals is reducing your interest rate, refinancing to a shorter loan can help you qualify for the lowest interest rate.
If you want to lower your payment
If you’re experiencing financial hardship, you could contact Sallie Mae to see if it would be willing to temporarily forbear or reduce your payments. However, this is only a short-term fix. Generally, the only way to permanently reduce your loan payment is to refinance your loan.
By refinancing your loan with a different lender, you may be able to extend the repayment term, lowering your monthly payments. However, remember that even if your interest rate remains the same, you’ll pay more in interest costs over the life of the loan.
The total interest costs are greater with a longer term because there’s an outstanding loan balance for more time. You’ll incur interest charges every month your loan has a remaining balance. So, the faster you repay your outstanding loan balance, the less interest you’ll pay.
If you decide to refinance your loan to lower your payment, choose the shortest possible term you can easily afford to repay. In doing so, you’ll save yourself money in the long run.
If you want to remove your cosigner with a refinance
You may have had little to no credit history when your Sallie Mae loan originated. In fact, recent data from Sallie Mae reports that 87% of the undergraduate loans it approved from October 2021 through September 2022 were cosigned.
Your loan shows up in your cosigner’s credit report, and they’re responsible for your loan if you fail to pay it back. So, removing your cosigner from the loan as soon as possible is beneficial.
You’ll need to refinance if you want to remove your cosigner and are not eligible to apply for a cosigner release with Sallie Mae. With a stable job and a good credit score, you may be able to refinance your loan and remove your cosigner in this way.
Tip
Remember that if you took out a life insurance policy to protect your cosigner, you can now repurpose it for other uses or terminate it. If you decide to terminate the policy, it can be a way to reduce your monthly expenses further, saving you money.
If you’re unhappy with the customer service
Sallie Mae has notorious problems with customer service, according to online reviews. It has a 1.07 out of 5 rating from customers on the Better Business Bureau (BBB) as of February 1st, 2024, with 484 total complaints filed in the last three years.
Complaints centered mainly on billing and collection issues. Some specific complaints include inconsistent advice from customer service representatives and an unwillingness to work with borrowers who have problems making payments.
If you’ve had a negative customer service experience with Sallie Mae, you could refinance your student loans with another lender with a better reputation. You may also be eligible for a lower interest rate with a different lender, potentially saving you hundreds or even thousands in total interest.
When refinancing Sallie Mae loans, you don’t have to worry about giving up special protections as you would with federal student loans. Sallie Mae loans are private loans, so refinancing has fewer downsides. However, you might be better off keeping your loan if you can’t get better rates or terms.
When you shouldn’t get rid of Sallie Mae loans by refinancing
There are some scenarios when you shouldn’t get rid of your Sallie Mae loans by refinancing. Keep reading to learn when you shouldn’t get rid of your Sallie Mae student loans.
If you already have a desirable interest rate
When shopping for a new loan, you might discover that you already have a good interest rate. In this case, unless there’s some other reason for the refinance—such as wanting to change your repayment term—you’re probably better off keeping your existing Sallie Mae loan.
If you want to remove a cosigner
You can apply to Sallie Mae to have your cosigner released after you graduate from college or finish your certificate program, when you’ve made 12 full payments on time, and you meet its credit criteria.
As long as you meet these criteria, you can have your cosigner released without needing to refinance your Sallie Mae loan.
If you’re close to paying off your student loans
As your loan nears the end of the repayment term, more of your monthly payment is applied to the loan balance than to interest. It usually doesn’t make sense to refinance your loan once it reaches this stage, as it resets the payments.
By refinancing your loan, even if your payments are reduced, you might end up repaying your loan for a longer term. Plus, your total interest costs might be higher than if you kept your existing loan.
If you’re about to apply for a mortgage
When you get a new loan, your lender will check your credit, which can temporarily lower your credit score. If you plan to get a mortgage soon, get your credit in the best shape possible and avoid doing anything that may lower your credit score, as higher credit scores lead to lower interest rates.
Additionally, your credit report will show that you recently refinanced the loan. When seeing this, your lender might wonder if you refinanced your loan because you had difficulty repaying it.
You should also avoid doing anything that will bring into question your ability to repay the new mortgage. This is because if your mortgage lender has reason to believe you can’t afford the new mortgage, it might be harder to get approved.
If you’re struggling to afford your monthly payments
Refinancing isn’t the only available option for those struggling to repay their student loans with Sallie Mae. If you find yourself in this situation and don’t want to refinance your loan, there are many other options you can consider.
If you’re having trouble making your monthly payments, consider one of the following options before you refinance.
Enroll in automatic payments for a rate discount
Sallie Mae offers a 0.25% interest rate discount when you sign up for automatic payments. The discount will apply every month you have autopay set up. Plus, signing up for autopay means you won’t miss a monthly payment and incur late fees.
If you owe $50,000 in student loans with a 10% interest rate and a 10-year term, for example, by enrolling in autopay, your monthly payments could be reduced from $660.75 before the discount to $653.85 after the discount.
While this isn’t a considerable amount of savings each month, you could save $828 in total interest over the life of the loan by signing up for autopay. Even though it’s a small difference, autopay is easy to implement and saves you at least some money.
Just make sure you have the money in your account each month. If not, the automatic payment could bounce, incurring fees from the bank you have an account with and Sallie Mae.
Apply for Sallie Mae’s graduated repayment period program
Sallie Mae offers a graduated repayment period program for borrowers, which is not the same as the graduated repayment option available for federal student loans.
Sallie Mae’s graduated repayment period program allows you to make interest-only payments for 12 months after the end of your loan’s separation or grace period. The loan’s separation or grace period is often six months before your monthly payments begin, starting when you leave school.
If you decide you don’t need to make interest-only payments for this whole amount of time, you always have the option of making extra payments. Sallie Mae doesn’t charge prepayment penalties, so you won’t be charged a fee if you choose to do this.
You also must have one of the following types of Sallie Mae loans to qualify for this program:
- Smart Option Student Loan
- Graduate School Loan
- Health Professions Graduate Loan
- MBA Loan
- Law School Loan
- Medical School Loan
- Dental School Loan
Call Sallie Mae (866-801-3218) if you want to enroll in the graduated repayment period program or learn more about it.
Defer payments
Deferment is available for borrowers who meet one of the following criteria:
- Returning to college
- Attending graduate school
- Starting an internship, clerkship, fellowship, or residency
Borrowers can defer their loans for 48 months in total. Interest will accrue during deferment and be added to the loan principal. This will increase the total amount of interest paid over the life of the loan and may result in higher monthly payments.
Ask Sallie Mae about financial hardship options
If you’re experiencing a financial hardship and your Sallie Mae loan becomes delinquent, you may qualify for a loan forbearance. With a loan forbearance, your payments are temporarily stopped to allow you time to recover from your financial hardship.
You might also be able to change your payment due date. While you’ll still need to make your payment, changing your due date could make it easier to make the payment on time. Sallie Mae might also be willing to change your monthly payment amount to make it more affordable.
To see if you qualify for any of these options, you’ll need to call Sallie Mae at 800-472-5543. The options offered by Sallie Mae will likely depend on the extent of your hardship and how easily you can afford the loan.
Be upfront with Sallie Mae about your circ*mstances, and be prepared to provide the lender with any required documentation. Generally, the earlier you seek help, the more likely lenders are to work with you. If your loan is already severely delinquent, your options may be limited.
Tip
If you’re already very past due on your loan payments and your loan is in default, you can expect it to be more challenging to get assistance than if your financial hardships are just beginning. This is true for nearly any loan, not just student loans with Sallie Mae.
Is Sallie Mae student loan forgiveness an option?
The government offers student loan forgiveness on some federal student loans. These types of loan forgiveness programs are generally not offered by private lenders. Sallie Mae does not offer any loan forgiveness programs.
If you’re having trouble repaying your loans because of an undue hardship and file for bankruptcy, your Sallie Mae loans might be discharged, meaning you won’t need to repay them. However, even in the case of bankruptcy, you’ll most likely be required to repay your student loans.
For these reasons, most people won’t be able to get their Sallie Mae loan forgiven and will need to fully repay it. If you’re having trouble paying your loan, you’ll need to figure out another option, such as refinancing it or asking Sallie Mae about a temporary loan forbearance.
What to consider before you refinance Sallie Mae loans
Before deciding to refinance your Sallie Mae loans, it’s essential to consider how it will affect your credit scores, ensure it aligns with your financial goals, and carefully review the terms and conditions of the new loan.
Some of the factors to consider before you refinance your Sallie Mae loans are:
- Credit score impact: If you refinance your student loans, your credit score might temporarily lower. These types of credit score decreases are generally short-lived. However, if you’re about to shop for a new loan—like a mortgage—it may be best not to refinance until your new loan goes through.
- Financial goal alignment: You should also consider if the refinancing aligns with your financial goals. While you might benefit from a reduced interest rate and lower monthly payments, it could also extend the loan term, increasing your total loan costs.
- New loan terms and conditions: Once you’ve decided to refinance your loan, carefully review the terms and conditions of the new loan. Ensure you understand if you’ll be charged any fees for the refinance and any potential costs (e.g., prepayment penalties).
Additionally, evaluate whether any immediate gains outweigh any long-term setbacks. For instance, your monthly payment might be reduced over a longer term, but you’ll make the payments for a more extended period. Genuinely evaluate if you’re okay with this.
By carefully weighing the benefits and drawbacks of refinancing your Sallie Mae loans, you’ll be setting yourself up to make the best possible decision for your circ*mstances.
