Sallie Mae’s 1-2-3 Approach to Paying for College

Financial Literacy

Figuring out how to pay for college can be stressful and complicated. Follow our three-step approach to simplify the process:

1. Start with money you don’t have to pay back.

Look for any savings or income you can put toward your tuition.

  • Savings: In addition to tapping current income, consider a tax-advantaged account like a 529 plan or goal-based savings account that can be used to cover education costs.
  • Scholarships: Millions of scholarships are available for incoming and current college students.
  • Sallie Mae’s Scholarship Search Tool can help you find the scholarships best suited for you.
  • Grants: Colleges as well as federal and state governments provide funds to students that are generally based on need. Complete the Free Application for Federal Student Aid (FAFSA) early to maximize your chances of receiving grants.
  • Work-study: These part-time jobs allow students to earn income while in school. Make sure to submit your FAFSA to be considered for work-study programs.

2. Explore federal loans.

Federal loans are made by the government, available to everyone without assessment of ability to afford, are taxpayer funded and most need to be paid back with interest. Students can apply by completing the FAFSA.

3. Consider a responsible private loan.

Private student loans can bridge the gap between income and savings, scholarships, grants, federal aid, and the cost of attendance.

Private student loans are credit-based and underwritten, meaning the lender assesses the student’s ability to afford a loan before approving it.

Because most students do not have significant credit profile, majority of private student loans require a cosigner to qualify.  

Like the majority of federal student loans, private student loans need to be repaid with interest.

Borrow responsibly

Sallie Mae encourages students and families to start with savings, grants, scholarships, and federal student loans to pay for college.

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Three Ways to Reduce Student Loan Debt


Each year, the amount of student loan debt held by Americans grows. It reached a record-breaking high in 2021 at $1.7 trillion, more than four times its 2005-level of $391 billion

The vast majority — 92% — of this debt is from federal loans. Meaning, less than $1 out of every $10 of student loan debt is a private loan. 

Here are three policy changes the federal government could enact to reform the student loan system and support students and families who need financial assistance:

1. Meaningfully Increase Pell Grants

Pell Grants provide need-based financial assistance to low-income students to help pay tuition, fees, room and board and other expenses. Since grant funding doesn’t need to be repaid —it’s essentially free money — distributing more funds through the Pell Grant would likely mean these students would take on fewer loans. 

Critically, Pell Grants also ensure that the aid goes to the students who need it most, helping to increase access and make the college funding system more equitable.

2. Simplify the FAFSA®

Just 68% of families filled out the FAFSA in the 2020-2021 academic year, according to Sallie Mae® and Ipsos’ “How America Pays for College 2021” research report. That’s the lowest level in the 14-year history of the report. 

In addition, 44% of families who didn’t file believed they wouldn’t qualify for any federal financial aid, and 34% said they missed the deadline, found the application problematic or too complicated, or didn’t have the time. Not completing the FAFSA, however, means families could be leaving thousands of dollars in scholarships, grants, and work study on the table. Lawmakers recently passed a bill that would simplify the form, but more is needed, including better informing students and families about deadlines to submit the form and debunking the perception that income is the only factor the government uses to decide if a student qualifies for federal financial aid.

3. Increase Loan Transparency

Federal student loans are subjected to less rigorous disclosure requirements than private student loans.  The federal borrowing process could be improved to more clearly inform students and families about their specific borrowing plans.

Sallie Mae, a private lender, offers a variety of tools to ensure responsible lending — including a scholarship search tool and a planning calculator — to help limit the debt students need to take on.  

Woman and Teen Talking

Who Sallie Mae Is — and Isn’t


We’re in the business of providing responsible financial tools – and financial literacy  

The Sallie Mae® of today might surprise you. We’re no longer a government student loan servicer — in fact, we’re a completely different business and have been for nearly a decade. Today, we’re a bank offering financing, such as private student loans, and free college planning resources to students and their families.

Sallie Mae is not a federal loan servicer.

The name Sallie Mae has been around since the ‘70s, but the company who uses the name today is actually pretty new.

When Sallie Mae first formed, it was a government-sponsored enterprise servicing federal student loans — or loans made by the government. But in 2014, it split into two separate companies. The Sallie Mae of today took the name and became a consumer banking business. The other company became Navient — a name you may recognize today if you have a federal student loan — which works in the federal loan servicing business. Importantly, the two companies are independent and not associated with one another.

Of the $1.71 trillion outstanding student loan debt in 2021, $1.59 trillion – or 92% – was made and held by the federal government. The remaining 7.61% of student loan debt was held by numerous private lenders, including Sallie Mae.

Sallie Mae is in the business of fair and responsible lending.

Sallie Mae’s approach to loans is shaped by our responsible lending philosophy — that students and families should not be overburdened with loans that they won’t be able to repay. We believe that college should be affordable, equitable, and accessible for all students, and we’re committed to making that a reality. That’s why we believe private loans should be used to fill the gap between resources available to students and the remaining cost of college, and not as a first resort. Simply put, students shouldn’t pay more for college than necessary.

In fact, taking out a private loan is the last step of our three-step approach used to guide students and their families through all of their options. The first step is to find money you won’t have to pay back, or ‘free money’, such as scholarships and grants. The second step is to explore federal student loans by filling out the Free Application for Federal Student Aid (FAFSA®) and gaining access to the $150 billion in federal aid available through the government.

And our fair lending approach works. In 2021 alone, Sallie Mae provided support to more than 420,000 students and families seeking financing for college and graduate studies. In addition, 98% of loans in repayment were managed successfully, and less than 2% of loans defaulted.

Sallie Mae is committed to helping students succeed.

Providing loans is just one part of how Sallie Mae achieves its mission of powering confidence for students. We know how critical financial literacy is to future success, which is why we provide free financial planning tools for anyone to use, whether they’re a Sallie Mae customer or not. 

We guide students and their families by emphasizing financial literacy from day one – before they even take out a loan. Our array of tools and resources to help students plan and pay for college are available for free on our website.   

Examples of our tools include:

  • A free scholarship search tool that matches students with scholarships based on their skills, activities and interests. Last year, it matched 24,000 students with a total of $67 million to cover college costs. We have a version for graduate students, too, home to more than 950,000 scholarships worth up to $1 billion.
  • We provide a variety of financial literacy calculators to help customers understand how to best save and pay, including a college cost calculator, college planning calculator, and student loan payment amount estimator.
  • Our Sallie Mae Fund Bridging the Dream Scholarship Program provides millions of dollars to support low-income and minority students to help improve college access and completion rates in the nation.

If students do decide to take out private student loans with us, we want to make sure they’re informed. We provide clear communications regarding their choices, including the option for undergrad and grad students to make payments while in school. Nearly half of Sallie Mae customers go this route, which helps save on the total cost of their student loans. We also provide consistent communication regarding their loan balances, including an annual statement detailing what they owe.

We know that financing higher education is complex and confusing, but Sallie Mae is here to make sense of it all. That means ensuring students and families feel confident and informed about how to plan and pay for higher education, and if they need to borrow, we’ll provide responsible options that power them throughout their unique journey.

FAFSA is a registered service mark of U.S. Department of Education, Federal Student Aid

New Report: Families Believe in Value of College, but Lack Understanding About Funding Their Education

Financial Literacy

Sallie Mae’s tools aim to demystify the process

Eight in 10 college-bound high school juniors and seniors (81%) view higher education as a path to better opportunities, but only 42% feel confident about financing that education, according “College Confidence: What America Knows About Paying for College,” the latest national study from Sallie Mae and Ipsos, a market research company.

The study examines what college-bound students and their parents understand about financial aid, the FAFSA®, scholarships, and student loans. The research results are based on an online survey Ipsos conducted, in English, with 550 parents of high school juniors or seniors planning on attending college and 585 college-bound juniors or seniors.

Key findings from the study include:

  • Nearly three-quarters of families (74%) have started thinking about how they will cover the cost of higher education by the time their child is a high school junior but fewer than half (44%) are very or somewhat familiar with the FAFSA – the gateway to billions of dollars in scholarships, grants, and federal financial aid.
  • Just 62% of families plan to complete the FAFSA; 29% feeling it’s a waste of time if the family makes too much money.
  • Nearly half of families (45%) believe scholarships are only available for students with exceptional grades or abilities.
  • Half of families (54%) are familiar with financial aid offers but 37% of them don’t know what information is included in those offers.
  • Nearly half (47%) of college-bound families are planning to borrow to pay for college, but many are unclear on what types of aid needs to be paid back. Less than half of college-bound families correctly identified direct subsidized loans (47%), direct unsubsidized loans (46%), and the Parent PLUS loans (41%) as money that needs to be repaid.
  • Only 18% of college-bound families agree that the amount families actually pay is lower than the price advertised by the school.

  • First-generation college families need additional support as they navigate the financial aid process. Only 35% of first-generation families feel very or somewhat confident about it, compared to 54% of experienced families. Critically, while 42% of first-generation families indicate more Pell Grants and need-based financial aid would help them, only 32% definitely plan to submit the FAFSA®.

To help fill these confidence gaps, Sallie Mae offers a variety of free tools and resources to help families make informed decisions about college.  At, they can find tools to calculate college costs, view average financial aid packages from universities around the country, quickly complete the FAFSA and discover scholarships for all kinds of students. The company also recently acquired Nitro College, putting even more free tools and resources in the hands of students and families. The goal of these tools is to help students and families better understand college costs and encourage them to maximize all options before considering a responsible private student loan.

To learn more, visit

Report: Overwhelming Majority of Private Loan Customers Making Regular Payments Again, Defaults at Record Lows

Financial Literacy

The private student loan market has stabilized and returned to pre-pandemic norms, according to a new report from MeasureOne, a consumer analytics company.

The study found that the overwhelming majority of students and families are once again making regular payments, despite the continued economic impacts of the pandemic. More than 98% of private student loans are successfully repaid. The report also concluded fewer students and families are relying on customer relief programs, which became popular options early in the pandemic.

As of June 2021, private student loans — which are fully underwritten to assess creditworthiness and ability to repay — make up 7.61% of the $1.7 trillion student loan market. The remaining 92%, or $1.59 trillion in student loans, are federal student loans made by the federal government.

As the leader in private student lending, Sallie Mae recommends families follow a three-step approach to financing their education:

  1. Start with money you won’t have to pay back. Supplement your college savings and income by maximizing scholarships, grants, and work-study.
  2. Explore federal student loans. We encourage students to explore federal student loan options by completing the FAFSA.
  3. Consider a responsible private student loan. Fill the gap between your available resources and the cost of college. We encourage students to evaluate all anticipated monthly loan payments, as well as how much the student expects to earn in the future, before considering a private student loan.

Sallie Mae is committed to helping students achieve their higher education goals. Through a free suite of tools and resources, including planning calculators, college comparison tools, scholarship searches, and FAFSA support, we help students and families maximize their options before borrowing. By providing the necessary resources to help students and families confidently navigate their higher education journey, Sallie Mae can set them up for a lifetime of success.

Read the full report here.

Why Scholarships are a Critical Tool for Families to Pay for College

Financial Literacy

Paying for college can be a complex, stressful process for American families. Yet, a new study finds students and families may be missing out on a key tool — scholarships — for reducing the amount they need to pay for higher education. According to Sallie Mae’s 2021 How America Pays for College report, 44% of families didn’t use scholarships.

More than three quarters (78%) of those families who didn’t use scholarships didn’t even apply for the funding options. Parents say they didn’t know of any scholarships in general or scholarships that their child would be eligible to receive. Students, though, say they didn’t apply because they didn’t think they’d win. They also point to the time and effort it takes to find scholarships and complete their applications.

Sallie Mae’s scholarships search tool aims to alleviate those burdens. Students fill out a one-time brief profile and are instantly connected with dozens of scholarships they’re eligible for based on various factors including field of study, location, hobbies, and interest. With millions of available scholarships (and therefore free money) up for grabs, there are opportunities for nearly every student. More than 24,000 American students found $67 million in scholarships to pay for college using Sallie Mae’s free scholarship search tool last year. 

The search tool connects students to more than 6 million scholarships that are designed for every kind of student including Star Trek fans, tall students, and those willing to wear a homemade duct tape gown to the prom, and are worth up to $30 billion in funds. There’s also a search tool for graduate students.

The goal of the search tool is to make it easier for students and their families to find and apply for relevant scholarships to reduce the amount they’ll need to borrow to pay for college.

“Every little bit counts. There are scholarships that are big and small, and you don’t necessarily need to be a sports star or a valedictorian to receive them,” said Sallie Mae’s Rick Castellano.

Don’t Leave Free Money on the Table

Applying for scholarships is the first step in Sallie Mae’s 1-2-3 approach to paying for college because they’re funds that never have to be paid back. 

“This is free money. Families should absolutely look for scholarships first, before taking out any loans,” said Castellano. “Every scholarship earned can help make college more affordable for students and families.”

With that in mind, Sallie Mae has its own scholarship program. Its Bridging the Dream Scholarship helps outstanding students from minority and other historically underserved communities attend college. 

Earlier this year, The Sallie Mae Fund expanded its program to support more students. In partnership with Thurgood Marshall College Fund, the Fund will award 75 $10,000 scholarships to high school seniors over the next three years, totaling $750,000.

“This scholarship helps to close racial gaps in higher education, making a more equitable system,” Castellano said. 

Sallie Mae Q&A: Your College Financing Questions Answered

Financial Literacy

It’s time to talk. Americans owe $1.7 trillion in student loans – and more than 92% of that debt is made and held by the federal government.

Higher education lays the foundation for future success, and loans can help make those successes and dreams a reality. But responsible repayment begins with responsible lending – that’s where Sallie Mae® comes in. We clarify the complex world of college financing and help students achieve their education goals. How? Let’s start at the beginning…

How do students pay for college?

Students and families pay for college through a combination of income and savings, scholarships, grants, and loans. After maximizing money that doesn’t need to be paid back, such as scholarships and grants, the next step in the college financing process is to fill out the FAFSA®. The FAFSA opens the door to thousands of dollars in federal, state, and school-based financial aid, including scholarships, grants, work-study, and federal student loans. Sallie Mae offers a tool that can help you fill out the FAFSA in as little as 7 minutes. After completing the FAFSA and evaluating financial aid offers from schools, if families need more to cover remaining costs, they can apply for credit-based private student loans to fill the gap. Private Lenders like Sallie Mae will look at creditworthiness and repayment history before approving loan applications.

How does Sallie Mae help?

Sallie Mae is best known as a private student loan lender, but as an education solution provider, we make it easier to understand, plan for, and finance higher education. We believe college should be affordable, equitable, and accessible for all students.

We offer several free resources like planning calculators and scholarship searches that help students build their plan – and pay for college – with confidence. Our free FASFA application tool helps students apply for financial aid in as little as 7 minutes. If families need more to cover remaining costs, we offer credit-based private student loans. We believe responsible borrowing starts with responsible lending, and make sure our customers will be able to pay back before we lend. In fact, approximately 97% of our customers are successfully managing their payments and a small number, roughly 2% of loans, default annually, a stark contrast from the federal student loan program.

Is Sallie Mae part of the federal government?

No. Sallie Mae is a private student lender – we offer private, credit-based loans.

Our name has been around for decades, but the company we are today is fairly new. Sallie Mae stopped originating federal student loans in 2010. Today, we exclusively offer private loans.

Even before we offer a private student loan, we help student and families build an effective and responsible plan to pay for college with a three-step approach. We advise them to start with free money and then explore federal student loans before considering a private loan.

What’s the difference between Sallie Mae and Navient?

Navient is a company that currently services federal student loans. The federal government issues federal student loans through the US Department of Education, and Navient – along with a handful of other federal servicers like Nelnet and, until recently, PHEEA – collects payment on those loans. The federal government holds 92% of all student loan debt. Federal loans are made to all who apply for them and have different performance characteristics. 40% of federal loans are delinquent within one year.

Sallie Mae, on the other hand, is a private student lender, offering only credit-based, private student loans. Sallie Mae does not originate or service federal student loans. Along with other private lenders, we make up only 8% of all student loans. What’s more, less than 2% of our loans default annually. As a private lender, we’re only successful if our students are successful.

What’s the difference between federal and private student loans?

The federal government is the largest provider of student loans, holding 92% of all student loan debt. Federal student loans are made to all eligible students who apply for them; they are issued directly to students, without underwriting, and, with some exceptions, in limited amounts.

Private student loans, on the other hand, are originated by credit unions, state agencies, and banks like Sallie Mae. They are recommended as supplemental support to students and families who have financed the bulk of their education with income and savings, scholarships and grants, and federal aid. Private student loans are made to students, often with a cosigner, and require an evaluation of creditworthiness before they’re issued.

What is a federal Parent PLUS loan, and how is it different from other federal student loans?

Federal Parent PLUS loans are made to students’ parents rather than to students themselves. Unlike federal student loans, federal PLUS loans are unlimited up to a school’s full cost of attendance, minus any financial aid the borrower’s child has already received. These loans do require a basic credit check.

Federal Parent PLUS loans come with higher origination fees and higher interest rates than other federal student loans. Additionally, repayment for these loans can begin right away. These factors, in conjunction with the unlimited nature of PLUS loans, mean that they can be difficult to pay back.

When and how do students start paying back loans?

Federal student loans are either direct subsidized loans, direct unsubsidized loans, or direct PLUS loans. Federal student loans are available to any eligible student who completes the FAFSA; they are not underwritten and do not assess the ability to repay. Depending on the loan, students can make payments while in school or defer payment until after college although interest will accrue during this time. Many federal student loans offer income-based repayment plans, which allow qualifying borrowers to make monthly payments based on a percentage of the borrower’s salary after college.

If families need more to cover remaining costs, private lenders like Sallie Mae offer credit-based student loans to fill the gap. When students are approved for a private loan, they can choose either a fixed or variable interest rate and from a variety of in-school repayment options that determine how much principal – the original loan amount – and how much interest is paid back each month. Sallie Mae pioneered the option of making small or interest-only in-school payments to reduce total debt and keep overall balances down. More than half of our customers choose to do this. In fact, choosing an in-school payment option may also lead to a more effective interest rate. Students can also choose to defer until six months after leaving school.

It’s critical that students understand their loan and repayment options before making the commitment. That’s why Sallie Mae provides resources and tools for students and families to help them navigate the college financing process. We conduct routine communication with students about their loans while they are in school, long before their first payment is due and provide annual student loan snapshots to help them understand how much they owe and what strategies they can implement to help them pay down faster.

How much do students typically rely on loans to pay for college? 

College financing looks different for everyone and not everyone borrows to pay for college. In fact, roughly 44% of bachelor’s degree recipients from public and private non-profit four-year colleges graduated with no student debt, according to College Board. In the 2020-21 school year, families reported spending an average of $26,373 on college, with borrowed money like loans covering 20% of that. Family income and savings covered over half of these total costs and scholarships covered another quarter.

We believe that responsible borrowing begins with responsible lending, and that we’re only successful when our students are. This approach has proven enormously successful for our borrowers: less than 2% of our loans default annually.

How Sallie Mae is Helping Expand Higher Education Opportunities

Education Landscape

Higher education is a proven pathway to opportunity and economic mobility, but each student’s journey is unique. Up until recently, a traditional path through a two-or four-year degree program has largely been presented as the ideal option for students. The reality is, however, that path may not be right for everyone. In fact, today, roughly 70% of students are considered non-traditional students, according to a 2015 report from the Department of Education. Put simply, college can no longer be viewed as a one-size-fits-all experience.

Evolving outlook on “college”

Trade schools and community colleges are a crucial part of the higher education universe. Providing hyper-focused curriculum over a shorter time, these schools can result in highly skilled professionals with a clear path. From culinary arts to coding, the expansion of career training is helping students who may not want a traditional path earn a degree that will increase their employability through hands-on training. Often, though, these programs have limited resources, and scholarship opportunities remain limited. As a result, students at these schools are left with fewer financing options — a significant barrier for many to attend.

Supporting students on different paths

Sallie Mae is working to make options accessible and ensure more students can pursue and achieve their unique goals. That said, Sallie Mae understands the importance of quality when it comes to career programs. That’s why Sallie Mae administers a rigorous review process to ensure programs will set students up for success upon completion.

For example, Sallie Mae’s partnership with United Airlines Flight Academy is helping change the face of the aviation industry by increasing the number of women and people of color in the training program. The academy aims to train at least 5,000 new pilots by 2030, half of which will be women and people of color. Sallie Mae offers responsible private student loans to help highly qualified students who wouldn’t otherwise be able to access the opportunity.

Student loans aren’t the only piece of the puzzle. Although more limited, there are scholarships out there for students pursuing a professional certificate or training program. For example, The Sallie Mae Fund offers gap scholarships, including to students interested in certificate and training programs in 2021.  

It’s time that higher education better meets the needs of today’s students. Sallie Mae is committed to doing our part, providing tailored support and responsible financing to further expand opportunities in higher education that will yield a future students can feel confident about tomorrow.

Families Continue to Value Higher Ed, but Miss Out on FAFSA, Scholarships

Financial Literacy

Students and families across the country continue to believe in the value of higher education, according to Sallie Mae® and Ipsos’ “How America Pays for College 2021” research report. Nine in ten believe college is an investment in the future, 89% believe a degree will create opportunities, and 81% believe graduates will earn more as a result of their degree.

Given the consensus surrounding the value of higher ed, it makes sense that families are prioritizing their plans for how to pay. More than half of families (58%) report having a plan to pay for all years of college, up from 44% just two years ago. Understanding how families are planning and paying for college helps Sallie Mae uncover more ways to bridge gaps in higher education financing, as well as point students and families to existing resources that could help them.

Here are three things we know about how students and families value, plan, and pay for college today — and how Sallie Mae is helping students make sense of it all.

While more families have a plan to pay, fewer are completing the FAFSA® 

The number of families filling out the FAFSA® continues to decline, which means more families are missing out on important federal financial aid opportunities. Just 68% of families filled out the FAFSA in the 2020-2021 academic year, the lowest level in the 14-year history of “How America Pays for College.”

Some of the most-cited reasons for not completing the FAFSA® include concerns about it feeling too complicated and the time required to complete it.  

To help students, Sallie Mae offers a free FAFSA® filing tool to make the application process faster and easier — in fact, students can file for financial aid in less than seven minutes.

More than half of families using scholarships – but majority of those who don’t have never applied

Scholarships are an effective way to lower the total cost of college — they covered 16% of all education costs last year — but many families are not taking advantage of these opportunities for free money. According to the report, 44% of families didn’t use scholarships to help pay for college. Of those who didn’t use scholarships, 74% didn’t apply. Many families say they don’t know what scholarships are available, and students said they didn’t have time to apply and didn’t think they’d be eligible to win.  

There is no shortage of scholarship opportunities out there, but finding the right ones can be tricky. Sallie Mae’s free scholarship search tool pools more than six million scholarships, worth up to $30 billion in funds. Students fill out a brief profile and are then matched to relevant scholarships based on various factors including field of study, location, hobbies and interests.

Last year, 24,000 students won a scholarship using Sallie Mae’s search tool, covering more than $67 million in college costs.

More families (56%) are making payments on student loans while in school.

The number of families making payments on loans while the student is in school is on the rise, up from 46% last year and 41% the year before. Making loan payments during school helps families save money long-term and lower the total cost of the loan.

To that end, Sallie Mae offers the choice between three in-school repayment plans — deferred payments, fixed monthly payments, and interest-only payments. While everyone’s financial situation is different, these options allow students and their families to make informed decisions about the best path for them.

Preparation is the key to both financial planning and academic success, which is why Sallie Mae is committed to providing students and families with the information and tools needed to be successful on both fronts.

FAFSA is a registered service mark of U.S. Department of Education, Federal Student Aid

Report: Vast Majority of Students and Families Effectively Managing Private Student Loans


The latest Private Student Loan Report from MeasureOne provides a helpful glimpse into the private student loan industry — and some of the findings may surprise you.

Contrary to student debt-related headlines, students and families continue to effectively manage private student loan payments today. In fact, the overwhelming majority are back to making regular payments despite the pandemic, and fewer than 1% of loans are defaulting annually.

Private student lenders have an approach anchored on strong underwriting, assessing the borrowers’ ability to repay. High rates of cosigner participation also help keep delinquency and default rates low. This year was no different, with these rates at their lowest since 2015 — accounting for less than 1% of all private student loans across the industry.  

Private student loans make up approximately 8% of outstanding student loans. The remaining 92% — roughly $1.59 trillion — are federal loans that are owned or guaranteed by the Department of Education. Recent stories have shed more light on some of the issues around federal student loan repayment.

Sallie Mae is committed to helping students achieve their higher education goals — and the last year-and-a-half was no exception. By empowering students with the knowledge, tools, and resources to make smart financial decisions, Sallie Mae can set them up for a lifetime of success and confidence.

Click here to view the full MeasureOne Private Student Loan Report.