Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government and many lenders. Check with Sallie Mae on what new options might be available, and also consult our Student Loan Hero Coronavirus Information Center for additional news and details.
* * *
The Sallie Mae Parent Loan provides the option for anyone — parents, grandparents or even friends — to borrow on a student’s behalf. As our Sallie Mae Parent Loan review will detail, the product allows creditworthy adults to shield students from taking on (more) education debt, albeit without the protections guaranteed by federal Parent PLUS loans.
Sallie Mae parent loans are best for creditworthy parents and others who can handle immediate repayment on loans borrowed on behalf of a part- or full-time college student.
Review: Sallie Mae student loans for parents
Launched in April 2016, the Sallie Mae Parent Loan is named for parents, but it’s available to anyone who wants to help pay for college. We carefully reviewed these Sallie Mae student loans to highlight what’s great (and not so great) about this option.
Here are the basics:
Fixed and variable interest rates available 0.25% rate discount for enrolling in autopay Borrow up to 100% of your child’s cost of attendance No origination fee or prepayment penalty Parents of students attending college part-time are eligible Two repayment options: Make interest-only or full payments while your child is enrolled Repayment term: 10 years Forbearance is available on a case-by-case basis, if you can’t make your next payment Forgiveness in the case of the student’s death or permanent disability What to like about the Sallie Mae Parent Loan
There are a handful of important benefits of Sallie Mae parent loans, starting with how it’ll affect your bottom line.
Competitive interest rates and no fees
Sallie Mae student loan rates for these parent-focused loans are competitive with other lenders advertising similar products.
Well-qualified borrowers can get Sallie Mae student loan rates that have traditionally beaten federal student loan rates for Parent PLUS Loans. Here’s a comparison of the two options for the 2019-2020 school year:
Interest rate options
Fixed and variable
Student loan rates*
Variable rates start at Fixed rates start at
Total fees and interest on $10,000 balance**
*Rates listed for Parent PLUS loan is for July 2019-July 2020. **Projections based on lowest offered fixed rates as of June 12, 2020.
As the comparison shows, a fixed-rate Sallie Mae Parent Loan has the potential to save you as much as $1,390 for every $10,000 borrowed.
However, not every applicant will qualify for the lowest rates. Since Sallie Mae student loan rates can go as high as , some parents will get better rates by choosing Parent PLUS Loans. These federal loans also come with greater safeguards, such as the ability to postpone in-school payments, making them a much safer bet.
Also, if you’re borrowing for the 2020-2021 academic year and beyond, keep in mind that Parent PLUS Loans are headed for historically low rates. Student Loan Hero has forecasted that moms and dads could borrow these federal loans at 5.30% starting in the summer of 2020.
To know for sure if a Sallie Mae Parent Loan is a good deal for you, you’ll likely have to go through the application process. More on that later.
You don’t have to be a parent to qualify
Although this loan is called the Sallie Mae Parent Loan, Sallie Mae doesn’t require borrowers to be parents or legal guardians of the student whose education the loan is intended to finance. The borrower can be a:
Parent Guardian Spouse Grandparent or other relative Friend Choose the right in-school repayment option for you
Parents taking out Sallie Mae student loans have two repayment options:
Principal and interest repayment: Start immediately repaying both principal and interest on your Sallie Mae student loans, which have a 10-year term. These principal and interest payments are higher but will lower the loan’s total costs and get you out of debt faster. Interest repayment: Opt to make interest-only payments while your child is enrolled (for up to 48 months). Interest-only repayment will be lower than principal and interest repayment. It can free up room in your budget to pay some college costs out of pocket. Once your interest-only payment period ends, you’ll make principal and interest payments over 10 years.
Many parent student loans don’t offer a way to keep payments low while your child is in college. Having these options gives you the flexibility to decide what makes sense for you.
Keep your college student out of debt
A Sallie Mae Parent Loan is not open to students themselves as either primary borrowers or cosigners. (A Parent Loan applicant can add a student loan cosigner, but it can’t be the student.)
As the owner of this student debt, you’ll be fully responsible for repaying the loan. So if your goal is to keep your college student out of debt, this Sallie Mae private student loan will allow you to take on that responsibility.
Maintain control over your debt — and credit
You could cosign private student loans with your child as the primary borrower, but if your child misses a payment, it’ll hurt your credit.
With a Sallie Mae Parent Loan, you’re in control of the debt and can make sure it’s handled responsibly. You’ll protect yourself and your credit from the mishaps of others.
Additionally, you’ll have the power to modify or manage the debt in any way you see fit, such as refinancing your student loans.
What to keep in mind about the Sallie Mae Parent Loan
Sallie Mae isn’t the only lender option for parent-borrowed student loans, so be aware of these potential drawbacks before signing on the dotted line.
Eligibility requirements that exclude parents of some non-traditional students
To get a Sallie Mae Parent Loan, you must meet the following eligibility requirements:
Credit background: You’ll have to meet Sallie Mae’s credit criteria or have an eligible cosigner who does. Student’s enrollment: Sallie Mae student loans are offered only to students enrolled in a degree-granting program. Luckily, students enrolled less than half time will satisfy this requirement. Parent PLUS Loans, on the other hand, require a student to be enrolled part-time or full-time. S. citizenship: Both the borrower and the student must be U.S. citizens or legal permanent residents of the U.S.
If you can satisfy the above requirements, Sallie Mae is more likely to approve your student loan application.
No prequalification process available
Many private student lenders perform a soft credit check they can use to generate rate offers. Unfortunately, Sallie Mae doesn’t. The only option the lender gives site visitors is to apply for parent student loans to get a rate.
That said, the process to apply for Sallie Mae student loans is fairly straightforward.
On the Parent Loan page, simply click “Apply for a loan.” It will take you to an online application portal (pictured below). The application asks for the student’s college and enrollment status and the applicant’s contact details and identifying information.
Once you complete the application, the lender will evaluate it. You could receive results within 15 minutes. If you qualify and like your offer, you can follow the prompts to get your Sallie Mae private student loan.
Just be sure Sallie Mae delivers your best possible terms before choosing it over competing lenders. It’s wise to shop around with at least three lenders to compare rates. You might also consider lenders like Education Loan Finance that provide a prequalification rate check before completing a formal application with Sallie Mae.
One-size-fits all repayment term
With a Sallie Mae parent loan, you’re locked into a 10-year repayment plan. You could always prepay your debt on a speedier schedule, but the lender sets your monthly payment amount and due date.
Other top-rated parent loan lenders provide term options of five or 15 years. For the most flexibility, you might check out competing lender College Ave, which claims to provide 11 repayment term choices spanning five to 15 years.
Lack of federal loan-like repayment protections
Yes, Sallie Mae parent loans compete with federal Parent PLUS Loans on interest rates and fees. And yet, Sallie Mae provides a mere fraction of the repayment protections guaranteed by the Education Department.
If you borrow from Sallie Mae over the federal government, keep in mind that you’ll lose out on unique programs like income-driven repayment and expanded access to repayment postponements like deferment and forbearance.
Sallie Mae, for its part, only awards a forbearance of up to 12 months on a case-by-case basis. The lender recommends phoning its customer service if your finances don’t allow you to make your next monthly payment.
Is a Sallie Mae Parent Loan right for you?
Borrowing federal loans before resorting to private education debt is generally advisable. Still, if a Sallie Mae Parent Loan could supplement your child’s college financing, it’s a competitive option to consider.
Continue to pay attention to costs and projected monthly student loan payments, however. That way, you’ll know for sure if repaying the debt is affordable for your family. Don’t rely on Sallie Mae Parent Loan reviews to determine that for you.
Even if Sallie Mae seems like a perfect fit, it’s worth shopping around for your best possible loan. Review our list of best parent loans of 2020.
Andrew Pentis contributed to this report.
The post How Sallie Mae Student Loans Can Help Parents Pay for College appeared first on Student Loan Hero.