The innovative Smart Option Student Loan helps student save money, build good credit, and pay off their student loan debt faster.

Designed to help shorten the amount of time it takes to pay off the loan, the Smart Option Student Loan requires interest-only payments while in school and during the six-month separation period to avoid capitalized interest.

Students save money on interest, significantly reducing the total loan costs.

Use after all other options

The Sallie Mae Smart Option Student Loan is an ideal solution for students who still need funds after they have maximized grants, scholarships and federal loans.

With this school-certified loan, student can borrow up to the full cost of their education, less other aid received ^l

Understanding the Costs of Using Private Student Loans to Finance College

College aid programs, including scholarships and federal Stafford loans may cover a portion of the costs, but they cannot cover them all. Therefore, many students are now turning to private student loans to make up the difference.

There are plenty of lenders out there who are more than happy to lend you the money. Incentives and ad displays promising you all the money you need without having to pay anything until after graduation.

This sounds enticing, but are you certain that you understand the long-term costs with that decision?

Let’s run through an example:

Say that you borrow $12,000 for the year that includes all related fees.

You use the money to pay any expenses not covered by your financial aid package.  Likewise, you choose to defer repayments until 180 days after graduation.

The interest charged on your borrowed loan is "capitalized" and added to the loan.

The interest rate on private student loans is variable

meaning it can go up or down each month while you are in school and when you are in repayment.

For this illustration, let’s say the rate stays constant at 7% for the next 48 months (the 4 years that you are in school):

• Loan amount borrowed: $12,000
• Annual interest rate: 7.0%
• Deferment period: 54 months (includes 180 days after graduation)

By the time you graduate (with an 180 day deferment), the total amount of your loan will be approximately $15,780

which includes the original loan amount and the interest charges capitalized during the deferment period.

Now, let’s assume that you borrow the same amount to pay tuition, housing, books, etc., again in your 2nd, 3rd, and 4th years in school:

• Sophomore Year: $12,000 borrowed
• Junior Year: $12,000 borrowed
• Senior Year: $12,000 borrowed

You have now graduated from college. You will have 180 days after graduation before you make the first payment.

The repayment terms will be as follows assuming the interest rate was constant:

• Loan Amount: $58,080 (this is the approximate amount of money borrowed over the academic years that includes the amount of interest charges capitalized your deferment period).
• Interest Rate: 7% (this is a variable rate that can change monthly. For this purpose, we will keep the interest rate constant).
• Term: 240 months (you will have 20 years to repay the loan).
• Monthly Payment: approximately $450.29

That is a big monthly amount to make each month.

But it may be okay considering that you have made an investment into a great career. However, you need to understand the cost-benefits analysis using private student loans to finance your college.

Now let's consider the costs by using the Sallie Mae Smart Option Student Loan

monthly interest-only payments are required during the in-school period and during the 6-month separation period

By doing so you'll avoid capitalized interest and reduce your total loan cost.

For example

The repayment terms will be as follows assuming the interest rate was constant:

• Loan Amount: $48,000 (this is the approximate amount of money borrowed that does not include capitalized interest).
• Interest Rate: 7% (this is a variable rate that can change monthly. For this purpose, we will keep the interest rate constant).
• Term: 240 months (you will have 20 years to repay the loan).
• Monthly Payment: approximately $372.14

Saves you money

The innovative Smart Option Student Loan helps students save money, build good credit, and pay off their student loan debt faster.

Students save money on interest, significantly reducing the total loan cost.

Plus you begin building your credit history that will be needed when you graduate and buy your first home.

Just be careful on the amount that you will borrow.

Only borrow the amount you need to cover the cost of education minus other college financial aid that you may receive. 

Also use our budgeting worksheet to plan your education costs. It can be a useful tool to help you keep higher education costs down.

Join Upromise® from Sallie Mae® and you can earn rewards on your everyday purchases. Those earnings can be automatically transferred to your student loan account, as long as your loans are serviced by Sallie Mae, to help pay down your eligible Sallie Mae-serviced student loans through Upromise Loan Link.® Not all loans are eligible.

to register: visit www.Upromise.com/LoanLink

Notes:

1 Borrow as much as you need to pay for your education, up to the cost of attendance as certified by your school and confirmed by Sallie Mae, less other financial aid received. Sallie Mae reserves the right to approve a lower loan amount than what the school has certified.

2 The automatic debit benefit is available for as long as the borrower's monthly payment amount is successfully deducted from the designated bank account. Borrowers can elect to make payments via automatic debit through Sallie Mae's online account management system. The benefit lowers the borrower's interest rate but does not change the amount of the monthly payment. This benefit is suspended during periods of forbearance and certain deferments.

3 The release of a consigner is at the sole discretion of Sallie Mae. The borrower must have a satisfactory history of making principal and interest payments and meet underwriting guidelines when the request for cosigner release is processed. The borrower's account must remain current until the request for release is processed and the borrower must be a U.S. citizen or permanent resident at the time the cosigner release is processed.

4 Consult your financial advisor for more information or visit http://www.irs.gov/pub/irs-pdf/p970.pdf

5 Join Upromise® from Sallie Mae® and you can earn rewards on your everyday purchases. Those earnings can be automatically transferred to your student loan account, as long as your loans are serviced by Sallie Mae, to help pay down your eligible Sallie Mae-serviced student loans through Upromise Loan Link.® Not all loans are eligible.

To view whether or not a loan is eligible to participate in the Upromise Loan Link program, please visit Upromise.com/LoanLink. Access to Upromise is not limited to Sallie Mae customers.




Sallie Mae Smart Option Student Loans are made by Sallie Mae Bank ®. nBuy Associates is compensated for the referral of Smart Option Student Loan customers.

Borrower benefit information is valid as of August 01, 2009.

SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES AND BORROWER BENEFITS (INCLUDING INTEREST RATE REDUCTIONS) AT ANY TIME WITHOUT NOTICE. APPLICANTS SHOULD CHECK THE SALLIE MAE WEBSITE (SALLIEMAE.COM) CLOSE TO THEIR LOAN APPLICATION DATE AND AGAIN PRIOR TO DISBURSEMENT TO OBTAIN THE MOST UP-TO-DATE INFORMATION REGARDING PRODUCTS, SERVICES AND BORROWER BENEFITS.

Sallie Mae, and Sallie Mae Bank are registered service marks and Sallie Mae Smart Option Student Loan is a service mark of Sallie Mae, Inc. Upromise and Upromise Loan Link are registered service marks of Upromise, Inc. SLM Corporation and its subsidiaries, including Sallie Mae, Inc., are not sponsored by or agencies of the United States of America. c2009 Sallie Mae, Inc. All Rights reserved (08/09)