If you took out Sallie Mae student loans to pay for college, you might want to refinance to get better terms than what you have right now. Refinancing can help you save money by lowering your interest rate, monthly payments or both.
Sallie Mae is a consumer banking company that offers savings accounts, credit cards and private student loans. If you’ve exhausted all your federal aid options, including scholarships, grants and federal student loans, you can take out private student loans with a lender like Sallie Mae to fill in any funding gaps.
Sallie Mae no longer offers refinancing on student loans, but you can refinance Sallie Mae loans with other lenders.
Should I Refinance My Sallie Mae Loans?
Refinancing can be a smart option for a lot of student loan borrowers—but it doesn’t mean it’s the right choice for everyone. You should consider refinancing your Sallie Mae loans if you:
■ Can get a lower interest rate. With excellent credit, you might qualify for the lowest interest rate available with some lenders. But if it doesn’t lower your current interest rate, you might want to wait. Otherwise, you could refinance at a higher rate, which makes your loan more expensive.
■ Want to combine all your loans into one. You might have a few loans with different lenders, which makes it hard to stay on top of your debt. Refinancing will pay off all of your existing loans and combine your debt into just one loan—with one payment to make. This makes it easier to make payments and track your payoff progress.
■ Aren’t eligible for forgiveness. If you have federal student loans that are on track for forgiveness through Public Service Loan Forgiveness (PSLF) or you’re on an income-driven repayment (IDR) plan, you will lose those benefits if you refinance. Refinancing will make all your loans private, and forgiveness is only available with federal loans.
■ Are comfortable losing federal protections and benefits. Along with losing the opportunity to qualify for forgiveness, you’ll miss out on flexible forbearance as well. In 2020, the government paused federal student loan payments and set interest rates to 0%. Payments still haven’t started back up, more than two years later. But if you refinance now, your new private student loan won’t be considered for the Covid-related forbearance.
■ Can lower your monthly payment. If you’re struggling to make payments on your current student loans, refinancing can be a good way to lower monthly payments. But keep in mind that refinancing means you’ll lose the opportunity to enroll in IDR plans if you’re considering that route.
■ Want to change lenders. If you haven’t had a good experience with Sallie Mae as your student loan lender, you can refinance your student loans to switch lenders. Then, you’ll make payments to your new lender instead of Sallie Mae.
How to Refinance Sallie Mae Student Loans
If you’re considering refinancing your Sallie Mae student loans, you’ll need to explore other lenders, since Sallie Mae doesn’t offer student loan refinancing. Here’s how to refinance your student loans.
1. Research and compare lenders
Since not every private lender offers refinancing, you’ll need to find ones that do and see which you qualify for. Every lender has different eligibility requirements, so review which lenders are best for you based on credit score and income requirements.
Also, look for lenders that offer hardship assistance or financial help in case you can’t make payments, fewer fees and interest rates lower than what you’re paying now.
2. Get prequalified
Once you’ve found some lenders you like, you can prequalify to see if you’re eligible. Prequalifications don’t cause a hard inquiry on your credit, but instead use a soft credit check. This is to see if you’re eligible for a refinanced loan based on your self-reported credit score and income. You can also view estimated interest rates that you may qualify for.
3. Complete an application
Once you find the best lender for your needs, you’ll complete a full application. Make sure you have the appropriate paperwork and documents prepared, like tax returns, pay stubs and identification.
4. Continue to make payments while you wait for the transfer
It can take a few days for your application to get approved and a few weeks to transfer your debt to the new lender.
You won’t start making payments on your refinanced loan until your new lender tells you to do so. Continue making payments on your Sallie Mae loans until you can confirm that the refinancing is complete. If you end up overpaying, you’ll get a refund for the overpaid amount.
Stay on top of your payments! If you fall behind on payments during the transfer, your credit score will drop. This can hurt your chances of borrowing in the future, whether it’s another loan or a credit card.