Consolidating Sallie Mae student loans is no longer available. The financial institution used to offer consolidation loans until 2008 when Sallie Mae became a private company. So, any Sallie Mae student loans you get are private student loans.
As such, you can refinance your Sallie Mae student loans with other private student loans through another private student loan lender. Here’s a closer look at the difference between student loan consolidation and refinancing.
Student loan consolidation involves combining multiple federal student loans through the federal direct consolidation loan program. Some of your Sallie Mae student loans might qualify for a federal direct consolidation loan if you made them when Sallie Mae was a government-sponsored entity prior to 2008.
Combining federal student loans into one policy means you get the convenience of making a single monthly payment. However, you may not necessarily get a lower interest rate through federal consolidation.
Your new interest rate will be a weighted average of the federal student loans you combine, rounded up to the nearest 1/8th of a percentage. Still, this new interest rate will be a fixed rate throughout the loan’s entire lifetime.
Some private student loan lenders offer private student loan consolidation, allowing borrowers to combine student loans they borrowed from them. However, you would mostly associate combining private student loans with refinancing.
Refinancing revolves around a private entity buying your existing loans by giving you an entirely new loan with a new rate. You may refinance private student loans and federal student loans into a new policy. However, note that you will lose federal benefits associated with the federal loans you already have. These benefits include repayment plans and loan forgiveness.
Still, refinancing may be a practical option if you have a better credit standing now than when you took out your existing loans. Private institutions offering student loan refinancing will usually base your interest rate on your credit and financial situation. Alternatively, you may have a co-signer who passes the private institution’s requirements for a borrower’s creditworthiness.
Sallie Mae does not offer refinancing. However, you may refinance your Sallie Mae student loans with other private student loans through a different private student loan lender. By refinancing, you can select a new repayment plan and potentially extend your term. The point of this is to allow yourself lower monthly payments.
You cannot consolidate your private student loans with Sallie Mae. However, you can refinance your private student loans, including private Sallie Mae student loans, with another private student loan lender.
Student loan consolidation and refinancing are different processes that people tend to use interchangeably. However, the main difference between the two is the kind of student loans associated with them.
You would consolidate federal student loans through the federal student loan program. Meanwhile, you would refinance private student loans through a private student loan lender.
Both federal and private student loans are eligible for refinancing. However, you will lose federal benefits if you do so. Be sure to weigh your options and reassess your goals before you decide on combining your student loans.