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.
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 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.
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.