How to Refinance Sallie Mae Student Loans – Forbes Advisor

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If you took out Sallie Mae student loans to pay for college, you may want to refinance to get better terms than you currently have. Refinancing can help you save money by lowering your interest rate, your monthly payment, or both.

What is Sallie Mae?

Sallie Mae is a consumer banking company that offers savings accounts, credit cards and private student loans. If you’ve exhausted all of your federal aid options, including scholarships, grants, and federal student loans, you can take out private student loans from a lender like Sallie Mae to fill any funding gaps.

Sallie Mae no longer offers refinance on student loans, but you can refinance Sallie Mae loans with other lenders.

Should I refinance my Sallie Mae loans?

Refinancing may be a smart option for many student borrowers, but that 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 may qualify for the lowest interest rate offered by some lenders. But if that doesn’t lower your current interest rate, you might want to wait. Otherwise, you could refinance at a higher rate, making your loan more expensive.
  • You want to consolidate all your loans into one. You might have a few loans from different lenders, which makes it difficult to keep track of your debt. Refinancing will pay off all of your existing loans and combine your debt into one loan, with one payment to be made. This makes it easier to make payments and track your earnings progress.
  • Are not eligible for forgiveness. If you have federal student loans that are on track to be forgiven through the Public Service Loan Forgiveness (PSLF) or are on an income-based repayment (IDR) plan, you lose these benefits if you refinance. The refinance will make all your loans private, and the forgiveness is only available with federal loans.
  • Are comfortable losing federal protections and benefits. In addition to losing the ability to qualify for pardon, you will also miss out on flexible forbearance. In 2020, the government suspended federal student loan repayments and set interest rates at 0%. Payments have still not resumed, more than two years later. But if you refinance now, your new private student loan will not count for Covid-related forbearance.
  • May lower your monthly payment. If you’re struggling to repay your current student loans, refinancing can be a good way to reduce monthly payments. But keep in mind that refinancing means you will lose the ability to enroll in IDR plans if you go that route.
  • You want to change lenders. If you haven’t had a good experience with Sallie Mae as a student lender, you can refinance your student loans to switch lenders. Then you will make payments to your new lender instead of Sallie Mae.

Related: 8 Pros and Cons of Refinancing Federal Student Loans

How to Refinance Sallie Mae Student Loans

If you are considering refinancing your Sallie Mae student loans, you will need to explore other lenders, as Sallie Mae does not offer student loan refinancing. Here’s how to refinance your student loans.

1. Research and compare lenders

Since not all private lenders offer refinancing, you will need to find those that do and see which ones you qualify for. Each lender has different eligibility criteria, so consider which lenders are best for you based on your credit score and income requirements.

Also look for lenders who offer hardship assistance or financial assistance in case you can’t make payments, lower fees, and lower interest rates than what you’re currently paying.

2. Get pre-qualified

Once you find lenders you like, you can prequalify to see if you qualify. Prequalifications do not cause a thorough investigation of your credit, but rather use a soft credit check. This is to see if you qualify for a refinanced loan based on your credit score and self-reported income. You can also view the estimated interest rates you may be entitled to.

3. Complete an application

Once you have found the best lender for your needs, you will complete a full application. Make sure you have prepared the proper paperwork and documents, like tax returns, payslips, and IDs.

4. Continue to make payments while waiting for the transfer

It may take a few days for your application to be 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. Continue to make payments on your Sallie Mae loans until you can confirm the refinance is complete. If you overpay, you will be refunded the amount overpaid.

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.

Find the right lender

Remember that refinancing your student debt makes all your loans private. Compare all your options, including federal repayment plans, before deciding to refinance your Sallie Mae student loans and only refinance your student loans after considering all the risks.

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