How Does a Sallie Mae Student Loan Work?
To provide students who would otherwise not have an opportunity for higher education, companies like Sallie Mae offer low-interest student loans to help with the expenses of college tuition. When selecting a loan, students have two options available to them: a federal loan or a private loan. Unlike most lenders, Sallie Mae provides both private and federally funded loans to their borrowers.
Federal Student Loans
Guaranteed by the government, a federally funded student loan offers a fixed interest rate and is eligible to almost anyone regardless of credit history, as long as the student is attending an accredited school at least half the time. Although federal student loans are the most common types of student loans, they require potential borrowers to complete a detailed application known as the Free Application for Federal Student Aid. Additionally, the FAFSA application must be completed by a specific deadline in order for the applicant to receive any type of federal grant or student loan. If the borrower meets residency requirements, has not been convicted of drug abuse and is attending an eligible school, she can receive a federally sponsored loan to fund her entire education cost. Federal loans are also available for graduate students and can even be loaned to the student's parents. However, federal financial aid is limited based upon the type of loan and the student's financial need. If additional funds are needed, the student may need to obtain a privately funded student loan.
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Private Student Loans
For many people, obtaining a private student loan is actually easier than the federal loan process. Unlike federal student loans, the applicant does not need to complete a FAFSA; however, a credit check will be done on the person applying for the funds. Because the FAFSA is not required, a person may apply for a private student loan at any time and can be approved with or without the use of a consigner.
Sallie Mae Loans
Like all student loans--both federally and privately funded--Sallie Mae student loans are provided only to students, and proof of school expenses must be shown in order to receive funds. In most circumstances, the funds are dispersed directly to the school. However, in some cases, the monies will be given directly to the student. The borrower does not have to make any payments until 6 months after her graduation date, at which time she will have 20 years to pay off the balance and will have the option to consolidate multiple student loans. Remember that even if the borrower does not graduate, she is still responsible for the loan and will be required to pay it back under the same conditions as a borrower who did graduate.