collageSallie Mae is the largest private lender of student loans in the country. The company was created in 1972 as Student Loan Marketing Association (SLMA), but was purchased by its current owner in 1997. Today, Sallie Mae helps more than 12 million people each year pay for their education by providing them with financial assistance through student loans. They also offer refinancing options for existing borrowers who wish to take advantage of lower interest rates or shorter repayment terms on their existing loans. In this article, we find out does sallie mae consolidate student loans, can you consolidate private student loans, private loan consolidation, can you consolidate private student loans with federal and sallie mae income based repayment.
Sallie Mae is a student loan lender, and they don’t exactly make it easy to find out whether or not they consolidate student loans. In fact, they don’t even give you the option to consolidate your private student loans with them! Read on to know more about sallie mae consolidate student loans, can you consolidate private student loans, private loan consolidation, can you consolidate private student loans with federal and sallie mae income based repayment.
If you want to know if Sallie Mae consolidates student loans, keep reading—we’ll answer that question for you. But first, let’s talk about what consolidation is and whether or not it’s a good idea.
best way to refinance sallie mae loans
What Is Loan Consolidation?
Loan consolidation is when you combine multiple debts into one big debt. This sounds like a good idea because it makes it easier on your budget and more manageable. The truth is that loan consolidation often doesn’t save money or make things easier on your budget.
Why Isn’t Loan Consolidation Always A Good Idea?
The main reason why loan consolidation isn’t always a good idea is because it changes the terms of your original loan agreement in favor of the lender. For example, if you have an interest rate of 6% on an unsubsidized Stafford Loan and then consolidate with another lender who offers fixed rates at 3%.
sallie mae consolidate student loans
We begin with sallie mae consolidate student loans, then can you consolidate private student loans, private loan consolidation, can you consolidate private student loans with federal and sallie mae income based repayment.
Consolidation vs refinancing
Consolidation
With a Direct Consolidation Loan, you can consolidate multiple federal student loans into one loan with a fixed interest rate that’s a weighted average of your loans’ various interest rates rounded up to the nearest one-eighth of one percent.1 You won’t necessarily get a lower interest rate with consolidation, but you’ll have the convenience of making just one payment.
You can consolidate most federal education loans through StudentLoans.gov, and private student loans through some private lenders. However, you can’t consolidate both federal and private loans through the federal program.1
Refinancing
Refinancing occurs when a company buys all your current student loans and issues you a new loan to pay them all off. You’ll get a new rate but you may lose payment flexibility and special benefits that were available through the individual lenders or the government.
We don’t offer consolidation or refinancing at this time. We recommend that you consider the impact that these actions may have on your student loan benefits and Total Loan Cost.
Questions to answer before consolidating or refinancing student loans
You may want to make a single, lower monthly payment; however, before you decide to consolidate or refinance, you should consider the pros and cons of each option. Answer these questions before you act:
- Are you saving money or are you just paying over a longer term, so you’ll end up paying more over the life of your loans?
- Will you lose any current student loan benefits, such as repayment options or Public Service Loan Forgiveness?
- Is your credit score sufficient for a lender to approve you for a consolidation or refinancing?
- Will your new loan be considered a student loan or a personal loan? If it’s not a student loan, will you lose out on an interest tax benefit?
- Will you have to pay any service fees to refinance your student loans?
- Will you lose any discounts that you’ve had with your loan originator?
can you consolidate private student loans
Now we review: can you consolidate private student loans, private loan consolidation, can you consolidate private student loans with federal and sallie mae income based repayment.
If you have multiple private student loans, you may be able to combine them into one larger loan. This is called a consolidation loan, and it means that instead of having several different loans with different interest rates and repayment terms, you will have just one large loan.
The main benefit of consolidating your private loans is that you will have a single monthly payment for your new consolidated loan. This makes it easier to keep track of how much money you’re paying back each month, especially if your original loans were spread out over several months.
You also should know that after consolidating your loans, they will be eligible for federal protections such as deferment and forbearance.
private loan consolidation
More details coming up on private loan consolidation, can you consolidate private student loans with federal and sallie mae income based repayment.
If you have more than one student loan, you may be able to lower your monthly payments through private consolidation.
With a private consolidation loan, you can combine and refinance multiple education loans into one new loan with a new interest rate, repayment term and monthly payment amount. This could result in a lower interest rate and/or a lower monthly payment.
Consolidating your loans could also help you manage your finances better by having just one payment per month instead of multiple payments spread out over several loans.
can you consolidate private student loans with federal
You can’t consolidate private student loans into a federal loan, and you can’t consolidate private student loans and federal student loans together.
Student loan refinance is when you change private loan lenders to typically get a better rate or more suitable terms. The difference between consolidation and refinancing is that consolidation involves taking out one new loan with a new lender, whereas refinancing involves taking out a new loan from your original lender at a lower rate – essentially, consolidating your current loans with another company.
If you have federal student loans as well as private student loans, you may be able to get a lower interest rate by refinancing your private loans into a direct consolidation loan through the Department of Education’s Direct Consolidation Loan Program. This program allows borrowers to combine multiple federal education loans into one new loan at a fixed interest rate. However, this option is only available if you’ve consolidated all of your federal education loans first (such as through the Public Service Loan Forgiveness Program).
sallie mae income based repayment.
Sallie Mae doesn’t offer income-based repayment for private student loans. But they do offer repayment plans that lower your loan payments for a short period.
Income-Based Repayment (IBR) plans are available for federal loans only. The IBR plan can lower your monthly payment to as low as 10% of your discretionary income and extend the repayment term to 25 years. That means you’ll have a smaller monthly payment and be able to pay off your loan faster!
To qualify for this type of repayment plan, you must not have any outstanding balance on any federal loans and make less than $50,000 per year (if married) or $40,000 per year (if single). The amount you pay each month will be recalculated annually based on your income and family size. If there’s an increase in your income or family size during the year, you may no longer qualify for this plan.
You cannot consolidate Sallie Mae student loans because Sallie Mae is no longer a federal student loan servicer. Sallie Mae became a private company in 2008. As such, the student loans they offer are private.
Unless you got your Sallie Mae student loans before 2008, your only option for combining student loans is through refinancing. Sallie Mae itself does not offer refinancing options, but you can go to another private lender. Here’s a closer look into student loan consolidation and refinancing.
Consolidating Sallie Mae Student Loans
Student loan consolidation combines multiple federal student loans into one Direct Consolidation Loan. Some Sallie Mae student loans may qualify for a federal consolidation loan if you got them prior to 2008.
If your loans qualify, consolidating them with the federal government would give you one convenient monthly payment. You may not necessarily get a lower interest rate because your new rate will depend on your existing loans’ interest rate.
Your new interest rate will be a weighted average of your combined Sallie Mae loan interest rates, rounded up to the nearest one-eighth of a percentage. It will be a fixed rate, meaning you won’t have to worry about your interest rate changing over time.
With a potentially higher interest rate, you may end up paying more interest than the principal amount you borrowed. You may even pay more if you opt for longer repayment terms, giving your loan more time to accrue interest. However, longer repayment terms may give you lower monthly payments.
Consolidating Sallie Mae student loans may also reset your progress in qualifying for student loan forgiveness. The Public Service Loan Forgiveness program is a tool that can help borrowers qualify for student loan forgiveness if they’ve been in repayment for a while. Considering that you may have been paying off your qualifying Sallie Mae student loans, consolidation may not be the best option.
Refinancing Sallie Mae Student Loans
Refinancing student loans is when another private student loan provider buys your existing student loans by giving you a new private student loan with new terms. As a new private student loan, any federal student loans you refinance will lose the federal benefits associated with them. Reconsider refinancing if you intend to use repayment plans and student loan forgiveness programs.
Despite losing benefits, refinancing Sallie Mae student loans may get you a lower interest rate. It is a practical option if you are in a better financial situation and have a higher credit score. Your new private lender will base your interest on your current standing or if you have a cosigner with a credit score that meets their standards.
Be sure to look at multiple private lenders when shopping for refinancing options. Some lenders may offer programs similar to the federal benefits you would lose when refinancing Sallie Mae student loans.
Bottom Line
You can only consolidate Sallie Mae student loans with the federal government if you got your student loans before 2008. This means you can combine your Sallie Mae student loans through refinancing.
Refinancing Sallie Mae student loans involves leaving Sallie Mae as your student loan provider and getting a new servicer to pay off your existing loans.
Be sure to weigh your options before refinancing your Sallie Mae student loans. Compare all the private institutions offering refinancing options and select the policy that meets your goals.
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