Sallie Mae: Student Loans with Options and Flexibility [Episode 222]
How are you going to pay for grad school if you don’t get a scholarship? Loans. Let’s learn about Sallie Mae’s student loan options.
Our guest today is Charles Rocha, EVP and CMO of Sallie Mae. Charlie had over 20 years of experience at Bank of America, MBNA and NationsBank before joining Sallie Mae in 2009. He’s going to talk about how Sallie Mae can help you pay for your education. Welcome!
Can you provide an overview of Sallie Mae’s options for graduate students? [1:50]
We have a number of specific products for graduate students – med, dental, law, business, and other grad programs.
What distinguishes these different loan programs? [2:29]
In some places, the rates and terms are slightly different. And the repayment terms are different. For instance, for doctors we offer a 20-year term.
We offer both fixed and variable rates.
For doctors, does repayment start after residency? [3:20]
Doctors can defer repayment for at least three years post graduation, so you can complete residency. But it varies based on discipline – you can defer up to five years if you’re doing a fellowship. But if you’ve gone to business school, it’s six months.
For grad admissions, the focus is on getting very specific skills to advance their career. They may go into grad school the same way, but they come out very different, and that’s where we differentiate.
What makes Sallie Mae different from other loan options? [5:00]
The amount of time and energy we invest after graduation.
We have a lot of flexibility. We give students the option to make interest only payments during the first year after graduation when they’re in transition (such as moving to a new city or starting a new job).
We also have the option of forbearance – up to 12 months.
Some folks would rather have a lower payment for a longer period.
Does interest accrue during forbearance? [9:15]
Is Sallie Mae affiliated with the US government? [9:35]
No. It was originally a government service. But we’re now a publicly traded bank – it’s just that all our lending is focused on the education industry.
There is virtually no underwriting in the government loan sector, but there is in the private sector.
What are your underwriting criteria? [11:20]
We look at credit history – have they handled credit responsibly. And we look at their overall debt composition.
We will consider you with a co-signer.
The application process only takes 10 minutes and you find out quickly if you’re approved (or approved with a co-signer).
So a college student is better off taking on some debt and establishing credit? [13:05]
Having good credit is important as soon as you graduate.
How much debt is too much? [13:40]
We look at: does the debt you’re bringing to the table look like too much, and how much will the grad program add?
What’s the application process? [14:25]
Everything can be done online at salliemae.com. There’s also a phone number if you prefer to apply over the phone.
The information we need is pretty straightforward – name, address, social security number, work history, etc. With that information (and your permission), we review your credit report and make a decision.
What advice would you give to someone planning ahead, to improve the likelihood they would qualify for a loan in the future? [15:55]
The first step is establishing credit and handling it responsibly.
Research programs and what they’re going to cost. Take advantage of scholarships and federal financial aid first – we’re not trying to make loans in lieu of federal loans, they have good rates.
Look for scholarships, file the FAFSA. Figure how much you have in savings. Then if you have a gap, look at a lender like Sallie Mae.
Are there any academic considerations? [18:15]
We do business with every college and university in America If you’ve got good credit, we can approve you so you can afford that tuition bill.
The differences between fields are really in repayment options. As far as academic requirements, we rely on the schools to make those determinations in the admissions process.
How does outstanding debt level from undergrad affect graduate loan decisions? [20:15]
We will provide up to the cost of attendance for grad school. We will look at your total student indebtedness. If it’s outside the norm, we’ll want to have a conversation with you to make sure you’ll be able to repay.
Could that require a co-signer? [21:20]
Do you make loans to non-US citizens? [21:30]
Yes, with a US-citizen co-signer.
And do you finance US students to study abroad? [21:50]
We will finance international students at US institutions with a US co-signer, and we will fund US citizens at school overseas.
What is the Study Starter Benefit? [22:30]
Everyone who takes a loan can take advantage of online tutoring and study guides through chegg.com.
Part of what we want is to ensure that people are successful. Some banks have incentives for good grades – we want to help you earn those good grades.
Does Sallie Mae consolidate loans? [25:05]
Not at this time. We can recommend services that do.
This is what Sallie Mae does: we help young Americans pay for college and grad school. We’re thoughtful about loan repayment options, and we’re constantly trying to improve our options. We work with financial aid professionals.
How do you recommend students choose between variable and fixed rates? [27:30]
We provide information to help people understand the difference and the pros and cons, and we allow people to make the decision.
Often MBA students prefer the variable rate because they expect to repay it faster, while med students, who’ll borrow for a long time, tend to favor the fixed rate.
When you’re still in school, we encourage people to make payments against the loan when they can – even small payments save money in the long run and reduce the amount of interest that accrues.
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