As Six-Month Student Loan Grace Period Expires,Sallie Mae Offers Flexible
Repayment Choices
RESTON, Va., Nov. 2 /PRNewswire-FirstCall/ -- As last spring's college
graduates near the end of their six-month student loan grace period, now is
the time for them to consider repayment options that will help establish
financial security and a healthy credit history.
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"Your repayment plan drives how much you pay each month and how much
you pay over the life of your loan," said Martha Holler, spokeswoman for
Sallie Mae. "Building a history of on-time payments can improve your credit
score and help you the next time you have to borrow, whether for a house, a
car or a graduate degree. And remember, you can prepay our loans at any
time without penalty."
Sallie Mae's Loan Repayment Calculator estimates the monthly payment
amount and total interest expense under the company's different repayment
plans, and to determine which plan makes the most sense for their current
financial situation. In addition, customers whose loans are serviced by
Sallie Mae can view detailed account information and make payment plan
selections when they log into their account at http://www.SallieMae.com. Sallie
Mae offers the following flexible repayment plans to customers:
-- Standard Repayment: Available to both federal student loan and
private student loan customers, this is the least expensive option, as
it offers the lowest total interest expense. Regular payments of
principal and interest are made each month, excluding periods of
deferment and forbearance. The minimum monthly payment is $50.
Federal Stafford and Federal PLUS loans have a standard repayment term
of 10 years; Sallie Mae's private Signature Student Loan has a
standard repayment term of 15 years.
-- Graduated Repayment: Available to both federal student loan and
private Signature Student Loan customers, this plan allows customers
to make reduced payments that may be as low as "interest only" for up
to four years, followed by standard payments of principal and interest
for the remaining repayment term. In some cases, the initial payments
can be nearly 50 percent lower during the reduced payment period than
they would be under a standard plan. The reduced payments will,
however, increase the customer's overall cost over the life of the
loan.
-- Extended Repayment: Customers with more than $30,000 in eligible
federal student loans may be eligible under federal law to extend
their repayment term from the standard 10-year term to a 25-year
repayment term. As above, these customers will pay more in interest
by extending repayment than they would under standard repayment;
however, they will be able to reduce their monthly payment amount by
paying off the loan over a longer term. Extended repayment is also
available for Sallie Mae private Signature Student Loan customers, and
repayment terms may extend to 20, 25 or 30 years, depending on loan
balance.
-- Income-Sensitive Repayment: With this plan, federal student loan
customers may choose a monthly payment amount that is between 4
percent and 25 percent of their monthly gross income. Federal law
requires that each payment be large enough to satisfy the loan's
accruing interest. Payments are adjusted annually to reflect changes
in income and to ensure payoff over the standard 10-year term. Using
this option to reduce the monthly payment amount may mean that
customers will pay more in interest than they would under the standard
repayment plan.
Additionally, Sallie Mae customers may also take advantage of Upromise
Loan Link to help pay down education bills. Upromise allows students and
families to save money for education by earning rewards on everyday
purchases from participating companies and accumulating savings for
college. With Upromise Loan Link, customers can link their Sallie Mae loan
account to their Upromise account and use their Upromise rewards to
automatically transfer savings to help pay down eligible Sallie
Mae-serviced student loans. Visit http://www.salliemae.com/upromise to learn more
and to enroll.
Sallie Mae advises customers to weigh the benefits and drawbacks of
consolidating their federal student loans. Recent legislative changes
created fixed interest rates for Federal Stafford and PLUS loans (6.8
percent and 8.5 percent, respectively), eliminating the need to consolidate
federal student loans as a way to lock in interest rates. By consolidating,
customers stand to lose the flexibility to prepay individual loans as well
as the borrower benefits offered as part of their Stafford or Graduate PLUS
loans. Even if customers opt against consolidation, Sallie Mae will combine
billing statements, ensuring them the convenience of a single monthly
payment.
Sallie Mae's Private Consolidation Loan is a fee-free option for
customers with private education loans -- either from Sallie Mae or another
lender -- that combines eligible loans into one new loan and potentially
lowers the monthly payment amount by extending the repayment term to up to
30 years, depending on the loan amount. Interest rates are variable and
based on the customer's or cosigner's credit history. More than 75 percent
of Sallie Mae's private consolidation loan customers lowered their interest
rate when they consolidated their private student loans.
In addition, recently passed higher education legislation has
authorized changes to federal student loan repayment for certain customers:
-- Delayed Repayment for Military Personnel: The legislation eliminates
a three-year limitation on loan deferment for certain members of the
armed forces, allows deferments until 180 days after the borrowers are
demobilized and allows borrowers in the military to receive the
benefit regardless of when the loan was originated. In addition,
active duty reservists and retired service members who are called to
active duty while enrolled in college are now eligible for loan
deferment during the 13 months after they complete their service.
According to federal law, the deferment expires if they enroll in
school again.
-- Income-Based Repayment: Effective July 1, 2009, an additional loan
repayment plan will be offered, in accordance with federal law, to
Stafford loan, Graduate PLUS loan and certain federal consolidation
loan customers who qualify for a partial financial hardship. Payments
on eligible loans will be limited to 15 percent of the amount by which
the customer's and the customer's spouse's income exceeds 150 percent
of the poverty line applicable to the borrower's family size, divided
by 12. Unpaid interest and principal will be capitalized on eligible
loans, and any outstanding balance will be forgiven after 25 years of
repayment.
SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the
nation's leading provider of saving- and paying-for-college programs. The
company manages $160 billion in education loans and serves nearly 10
million student and parent customers. Through its Upromise affiliates, the
company also manages $19 billion in 529 college-savings plans, and 8
million members have joined Upromise to help save for college with rewards
on purchases at nearly 70,000 places. Sallie Mae and its subsidiaries offer
debt management services as well as business and technical products to a
range of business clients, including higher education institutions, student
loan guarantors and state and federal agencies. More information is
available at http://www.salliemae.com. SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.
SOURCE Sallie Mae
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Related links:
http://www.salliemae.com
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CONTACT:
Beth Guerard of Sallie Mae, +1-703-984-5621,
beth.guerard@salliemae.com
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