The reality is that, much like that red wine stain on the rug, Sallie Mae student loans aren’t likely to evaporate into thin air. That’s because Sallie Mae is a private lender now.
And despite what you may have heard, there is currently no such thing as private student loan forgiveness.
Forgiveness is limited to federal education loans, and even then, the options are few. There are federal student loan forgiveness programs for those who go into public service or teaching. But other than that, it’s extremely difficult to cancel student loans.
Table of Contents
• Can Older Sallie Mae Loans Be Forgiven?
• What If You Don’t Qualify for Loan Forgiveness?
• Are There Alternatives to Private Student Loan Forgiveness?
• Can You Refinance Sallie Mae Student Loans?
Can Older Sallie Mae Loans Be Forgiven?
If you’re confused about whether your Sallie Mae loans are private or federal, it may be because the company has evolved over the years.
Though Sallie Mae, aka SLM Corp., no longer services federal loans, that wasn’t always the case.
Sallie Mae was created in 1972 as the Student Loan Marketing Association, a government-sponsored enterprise that serviced federal education loans. Even though it became privatized in 2004, the company continued to service federal loans made under the Federal Family Education Loan (FFEL) Program until that program ended in 2010. Then, in 2014, Sallie Mae split into two companies: SLM Corp. and Navient Corp and shifted its federal student loans to Navient.
So, if you have an older loan — one that originated before 2014 — it may have been a federal loan that started out with Sallie Mae and then moved on to Navient. And if that’s the case, you may be able to apply for Sallie Mae loan forgiveness.
Applying can be complicated, and you may have to consolidate your loans into a Federal Direct Consolidation Loan as part of the process.
You can see if your old debt is a federal education loan by visiting the Federal Student Aid website. If it is, and you want to seek loan forgiveness, you’ll eventually make your application to the government.
Keep in mind that Navient shifted federal student loan accounts to Aidvantage, a division of Maximus Federal Services, after Navient cut ties with the Department of Education in late 2021.
You can contact your current student loan servicer for information on how to get started.
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What If You Don’t Qualify for Loan Forgiveness?
If federal student loan forgiveness seems like a long shot for you, don’t despair — you also may want to look into deferment or forbearance. These strategies allow qualifying borrowers to temporarily reduce or stop their federal student loan payments. However, depending on the type of federal loan you have, interest may continue to accrue while payments are paused, which could increase the overall cost of the loan.
Looking for a more long-term solution? An income-based repayment plan can offer qualified applicants another way to lower federal student loan payments. The four options limit how much money you put towards student loans each month based on family size and discretionary income (the difference between your annual income and 150% of the poverty guideline for your family size and state of residence).
You can contact your loan servicer for assistance with federal loan repayment. If you don’t know who your servicer is, you can find out by visiting your Federal Student Aid dashboard or calling 800-433-3243.
đź’ˇ Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
Are There Alternatives to Private Student Loan Forgiveness?
Although there currently is no such thing as Sallie Mae private student loan forgiveness, there are alternatives available to borrowers struggling to manage their private loans.
Private lenders don’t offer income-driven repayment plans. But if you feel comfortable calling Sallie Mae (or any lender) directly, you could ask about other repayment plans they might offer or what ideas they might have for your situation. At the very least, it doesn’t hurt to learn more about your loans.
And some lenders, including Sallie Mae, offer deferment and forbearance for those who qualify.
The timeline and cost for each of these programs may vary by lender. Sallie Mae, for example, may require a “good faith payment” to go into forbearance. You may also be able to press pause on payments up to 48 months with a deferment specifically for returning to college, going to graduate school, entering into a law clerkship, and several other special circumstances. Something else to consider if you’re thinking about deferment or forbearance is that — just as with federal loans — even though the payments are paused, interest may continue to accrue. And this can increase the total cost of the loan.
Recommended: Private Student Loans Guide
Can You Refinance Sallie Mae Student Loans?
If you can’t make any headway with your current repayment plan, you can always look into refinancing student loans.
Though there are advantages to refinancing student loans, there are potential drawbacks to consider. For instance, if you refinance your federal loans through a private lender, you may give up some important benefits, such as access to federal repayment programs.
Sallie Mae doesn’t offer student loan consolidation and refinancing anymore, but you could potentially reduce your interest rate by refinancing your student loans with a different private lender, especially if you have a good credit history and strong potential earnings.
If you’re approved, the new lender will pay off your old loans and issue you one new student loan — hopefully with a lower interest rate. A lower rate can save money on interest payments over the life of the loan, provided that the loan term isn’t extended.
Though you can’t combine federal and private student loans through a federal loan consolidation program, some private lenders will refinance both.
You could extend your loan term if you’re hoping to make your monthly payments more manageable, or you could opt for a shorter loan term to try to get out of debt sooner.
Recommended: Student Loan Consolidation Rates: What to Expect
The Takeaway
Lender Sallie Mae used to offer federal student loans, and if you received one, you may be able to qualify for loan forgiveness. But federal student loan forgiveness can be hard to get — and if you have a private student loan through Sallie Mae, federal forgiveness is not available. There are, however, repayment options, including refinancing your student loans.
It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Does Sallie Mae service federal loans?
Sallie Mae only services private student loans, though that wasn’t always the case. If you have a loan that originated before 2014, it may have been a federal loan that started out with Sallie Mae and then moved to Navient. In early 2022, Navient shifted its federal student loans to a new servicer, Aidvantage.
How do I know whether my student loan is private or federal?
You can visit the Federal Student Aid website; information about your federal loans will be listed in your dashboard.
What student loans are not eligible for forgiveness?
Private student loans are not eligible for federal forgiveness.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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