Sallie Mae is one of the largest student loan providers in the United States. It used to be a federal loan servicer, so loans serviced by Sallie Mae were eligible for both consolidation with the Department of Education and refinancing with private lenders.
However, Sallie Mae split into two companies in 2014. One of those companies, SLM Corporation, is still referred to as Sallie Mae, and it provides private loans. The other is Navient Corporation and it services federal student loans.
While you can no longer use Federal Direct Loan Consolidation to consolidate Sallie Mae loans, you can refinance them with other lenders just as you can with any other private student loan. This guide will show you how to refinance Sallie Mae loans and the implications of doing so.
In this guide:
- Refinancing Sallie Mae Loans vs Consolidating Them
- Our Top 3 Choices for Refinancing Sallie Mae Loans
- Considerations Before Refinancing
Refinancing Sallie Mae Loans vs Consolidating Them: What’s the Difference?
There are some big differences between consolidating and refinancing your loans that you need to understand if you are trying to make changes to your current Sallie Mae student loans.
>> Read More: Student Loan Consolidation vs. Refinancing
Federal student loan consolidation is only available for federal loans, such as those serviced by Navient, and it’s done through a Direct Consolidation Loan from the Department of Education. Consolidating simplifies the process of repaying federal loans by combining multiple loans into one new loan.
The new loan isn’t cheaper, though, because your new interest rate will be a weighted average of rates on the loans you consolidated.
However, if you want to consolidate or simplify your private Sallie Mae loans, you can still accomplish this by refinancing them.
Refinancing student loans is similar in the sense that you take out one new loan to repay multiple old loans, although it is different from consolidation in important ways. The goal of refinancing isn’t just to combine all existing debt into one big loan.
Instead, most people refinance to lower their monthly payments either by reducing their interest rate or by extending their repayment plan—or both.
You can often qualify for a refinance loan at a better rate if your credit has improved or if you have started earning a higher income since taking out your original loan. If you cannot afford your current student loan payments, you could also refinance your loan to increase the repayment term.
While this will reduce what you pay each month, you could end up paying more in interest over the life of the loan—even if your interest rate is the same or lower—because you’ll be paying your loan back over a longer period of time.
You cannot refinance Sallie Mae loans with Sallie Mae, as the company doesn’t refinance its own loans. But you can refinance with several other private lenders. Next, we’ll review a few of your options for refinancing Sallie Mae loans so you can decide if this is the right move for you.
LendEDU’s Top 3 Choices to Refinance Sallie Mae Loans
Here are our top picks to refinance your Sallie Mae loans. We based our picks on the weighted average of five data points, to make sure you’re comparing the best options.
Editorial Rating: 5/5
Earnest was acquired by Navient in 2017 but remains a full-service student loan company offering student loan refinancing. Here’s what you need to know about Earnest refinance loans.
- Fixed APR range: 3.47% – 7.72%
- Variable APR range: 2.41% – 6.99%
- Loan Terms: 5 – 20 years
- Loan Amounts: $5,000 up to your total outstanding loan balance
Editorial Rating: 4.97/5
U-fi refinance student loans have competitive rates with borrower friendly repayment terms. Here’s what you need to know about this loan:
- Fixed APR range: 3.48% – 8.44%
- Variable APR range: 2.51% – 8.19%
- Loan Terms: 5 – 20 years
- Loan Amounts: $5,000 – $500,000
3) Laurel Road
Editorial Rating: 4.79/5
Laurel Road is a refinance lender that has helped student borrowers refinance more than $3 billion in student debt. Here’s what you need to know about Laurel Road refinance loans:
- Fixed APR range: 3.50% – 7.02%
- Variable APR range: 2.43% – 6.65%
- Loan Terms: 5 – 20 years
- Loan Amounts: $5,000 – $50,000 maximum for borrowers with an associate degree. Up to total loan balance for borrowers with a bachelor’s degree or higher
Considerations Before Refinancing Sallie Mae Loans
If you are thinking about refinancing your Sallie Mae loans, here are a few key things to think about before you move forward.
Are You Trying to Lower Your Rate?
If your goal is to pay less in interest, refinancing will be effective only if you can qualify for a new loan at a lower rate. If your credit hasn’t improved much since you took out your original Sallie Mae loan, this may not be possible. Always check your credit report to assess how likely it is that you’ll qualify for a low-rate refinance loan.
You should also consider getting preliminary rate quotes from a few refinancing lenders before you begin the official application process. This will give you an idea of the rates you’ll receive so you can decide if going forward with refinancing is worth it.
Are You Trying to Lower Your Monthly Payment?
If your goal is to reduce your monthly payment because you can’t afford your current one, this may be possible even if you can’t qualify for a loan at a lower rate. You just need to be able to qualify for a refinance loan with an extended loan repayment term.
Keep in mind, though, that this could lead to higher costs in the long-run due to paying interest for a longer period of time.
It’s a good idea to try to forecast how your refinance loan will affect your long-term costs. Our student loan refinance calculator can help you run the numbers to see how a change in loan rates or a change in your loan repayment options could affect your costs.
Do You Still Need Your Cosigner?
If you took out your original loan with a cosigner because you couldn’t qualify on your own, refinancing may be an excellent opportunity to release that cosigner from their obligation to your student loan debt.
That said, chances are good that your cosigner still has a better credit score than you do. If that’s the case—and if your lender of choice accepts cosigners—keeping your cosigner on the refinanced loan may help you qualify for a lower interest rate.
Bottom Line: Should You Refinance Your Sallie Mae Loans?
If you are thinking about refinancing your Sallie Mae loans, you’ll need to find a private lender offering refinance loans. You’ll also need to make sure you can qualify for a new loan that’s better in some ways than your old one—either because the monthly payment is lower, the rate is lower, or both. If you can lower your rate and free up more money in your budget, refinancing your loans is likely worth doing.
Author: Christy Rakoczy
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