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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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.

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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.

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

How Sallie Mae Prepares Students to Pay Back Their Loans

Financial Literacy

After years of studying and working hard, millions of college graduates across the nation are transitioning from college to the next chapter of their lives. This could mean new jobs, new cities, or new goals — a cause for celebration, especially considering the obstacles students faced this past year.  

Even after students finish up college, the learning doesn’t stop. Next on the syllabus is setting and maintaining a healthy budget, and for those who borrowed to pay for college (34% of students borrowed last year, according to “How America Pays for College”), that budget will soon include paying back student loans.

To ensure students get started on the right track, Sallie Mae® works to remove the element of surprise from loan payments by beginning clear communication with students and cosigners while they’re in school and throughout the life of their loans.

Staying up to date on student loan status

Students have very busy schedules, which is why Sallie Mae makes it as easy as possible for them to stay up to date on the status of their loans. Students can create an online account or download the Sallie Mae mobile app to get notifications of their upcoming payments due. They can even enroll in auto-debit to ensure their payments are always on time, which can also save them money by lowering their interest rate.

Sallie Mae also sends students and their cosigners a loan summary each year they are in school, including interest accrued. This is especially important for Sallie Mae customers who choose to defer payments on their loan during college, as it helps them keep track of what they’ve borrowed and what they owe. That said, roughly half of Sallie Mae customers choose to make a fixed payment or pay interest on their loans while in school, which can significantly lower the total cost of the loan.

Tools and tips for the six-month separation period

Sallie Mae private student loans come with a six-month separation or grace period for undergraduate programs that begins once a student leaves school, giving them time to find a job and get settled into post-college life. Sallie Mae lets students know at the start of their grace period what their estimated payment amount will be and provides tips on when, where, and how to pay on time.

Sallie Mae also offers tools to help students prepare for repayment, such as a monthly budget worksheet, which helps students create a budget to meet their financial goals. The company also partners with Handshake, a job search tool, to provide students with greater access to career opportunities.

At the end of the day, preparation is key to responsible financial planning. From the moment students take out a loan through the months post-graduation, Sallie Mae helps ensure the next generation of future leaders can not only meet their loan payments, but make strides toward their financial goals.  

Factoring Finance into College Planning

Financial Literacy

The ‘college talk’ should include how to pay for it

College acceptance letters have been delivered to millions of students across the nation. As students weigh their options, they’ll consider campus life and academic quality, but one critical factor in choosing the right college is often rushed at this most consequential moment: how to pay for it.

Even though paying for college represents one of the first significant financial commitments a young person will make, many don’t have comprehensive discussions about how to manage that cost. According to a 2020 survey conducted by Ipsos and Sallie Mae®, 90% of families have discussions about college, but only two-thirds of families actually discuss the financial logistics.

The survey also found that those who plan ahead for college are three times more likely to feel confident about how they will afford it. This is one of the many reasons why Sallie Mae encourages students to discuss their options early and provides free tools to help students and their families navigate the college decision — and financing — process.

Ask questions about the financing process

The college process is constantly changing, and family members and other trusted adults who are looking at financing options with a student might be surprised. What they may recall from their own experiences — whether a few years ago or a few decades ago — has likely changed. An early start will give everyone the time and space to weigh all options.

The best way to begin is by asking questions — and getting answers — about your specific needs. Having a plan will allow you to compare financial aid offers and factor scholarships and grants into your financing formula. Just as important is considering the additional costs beyond tuition. Room and board, books, computers, and transportation can add up very quickly.  

Sallie Mae suggests a three-step approach to help with college financing planning:

  1. Begin with money students won’t have to pay back, such as scholarships, grants, and work-study. These can become critical tools to help students and families make college more affordable because they help reduce the total price tag. Even so, it can be difficult to understand where to find them and how they fit into a student’s greater college financial plan.

    Sallie Mae offers a number of free tools to help students access and understand their options, and you don’t have to be a Sallie Mae loan customer to access them. The free scholarship search tool is one of the most popular tools for students looking for more opportunities. In 2020 alone, 24,000 students were connected to scholarships, covering $67 million in college costs. Families should also utilize planning calculators to get a sense of the bigger paying-for-college picture. Sallie Mae’s planning calculator allows students to enter savings, scholarships, grants and loans and see the full cost of attending a school. 
  2. Explore federal student loan options, which account for about 90% of today’s outstanding college loans. That starts with completing the Free Application for Federal Student Aid (FAFSA®). Unfortunately, too many families skip the FAFSA because they think it’s too complicated or that they won’t qualify for financial aid. This oversight means potentially missing out on thousands of dollars in financial aid. 
  3. Turn to a private student loan to fill the gap. After maximizing scholarships, grants and other federal financial aid, Sallie Mae helps students fill any financing gap by offering private student loans. Often secured with a cosigner, private student loans go through underwriting to ensure customers will be able to manage them successfully. Students and their families are encouraged to evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.

By having the talk about how to pay for college now, students will be better prepared to make informed decisions that will serve them today and for years to come. They will enter their college years with more confidence that the financial obligations they are assuming are prudent and manageable.

It’s why Sallie Mae is working to bridge the knowledge gap in financial literacy — so students can make thoughtful decisions now that will set them up for the life they want.

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

Two People Walking with Books

Three Ways Sallie Mae Helps Students Pay for College — Without Loans

Financial Literacy

Minimizing student loan debt to maximize borrowers’ long-term success

Statistics behind student loans are sobering. Today’s higher education financing system has left 44.7 million borrowers with nearly $1.6 trillion in student loan debt. On average, students took out about $28,800 each to pay for college in the 2018-2019 school year.

Going to college should not burden students or their families with loans they are not able to repay. Preventing these situations requires empowering borrowers with the information, resources, and tools needed to make smart financial decisions about higher education.

From free scholarship search tools to partnerships that yield greater access to finances and know-how, Sallie Mae® aims to help ensure students don’t pay more for higher education than necessary, and graduate from college with only the debt they can reasonably afford to repay.

Here are three ways Sallie Mae helps students and families pay for college — without loans:

Free scholarship search tool

Before applying for loans — whether federal or private — Sallie Mae recommends every student first explore scholarships and grants. In the 2019-2020 academic year, 58% of families used scholarships to pay for college, the second largest source of funding after student loans.

Sallie Mae offers a scholarship search tool to help students find free money for college. The search tool opens doors to more than 6 million scholarship options, worth up to $30 billion in funds based on majors, locations, and even unique topics like slam poetry and technology addiction. Students fill out a brief profile, and in minutes, the tool responds with matches that identify relevant scholarships, their award amounts, application requirements and deadlines.

In 2020, 24,000 students earned at least one scholarship, covering $67 million in college costs.

Financial planning resources

One of the most important, and less addressed, steps to prepare for college is making a plan for how to save and pay for it. We know that smart financial planning is key to students’ future success before, during, and after college. That’s why Sallie Mae’s mission emphasizes the value of financial literacy through its services and helps students prepare responsibly.

With this in mind, Sallie Mae offers a variety of calculators at no cost to help students and their families build their personalized college financial plan, estimate their monthly student loan payments after college, predict future college costs, understand the impact of interest on their loans, and see how much they can potentially save for the future. Importantly, these services are available to everyone — whether they have loans with Sallie Mae or not.

The Sallie Mae Fund Bridging the Dream Scholarship Program

In partnership with the Thurgood Marshall College Fund, Sallie Mae launched The Sallie Mae Fund Bridging the Dream Scholarship Program in 2021, which will provide $3 million in scholarships over the next three years to support nearly 900 minority students and others from historically underserved communities in their pursuit of higher education. The program is an evolution of an initiative launched in 2015, which provided nearly $1 million to high school and graduate students to help them access higher education.

This program aims to ensure more minority, LGBTQ+, low income, and first-generation college students are able to access higher education and complete their degrees. Minority students are less likely to finish college compared to white students (47% completion rate for white students in 4 years compared to 22% and 33% completion rate for Black and Hispanic students in 4 years, respectively).

The Sallie Mae Fund Bridging the Dream Scholarship Program is part of a $4.5 million commitment made to support educational programs that advance social justice, diversity, inclusion, and equality. 

At the end of the day, financing higher education comes down to smart planning and careful preparation. Sallie Mae is committed to bridging the gap for students and their families by helping them better plan and pay for college.