Student Loan Repayment to Begin for Recent College Graduates

RESTON, Va., Nov. 2 /PRNewswire-FirstCall/ -- As last spring's college graduates near the end of their six-month student loan grace period, now is the time for them to consider repayment options that will help establish financial security and a healthy credit history.

"Your repayment plan drives how much you pay each month and how much you pay over the life of your loan," said Martha Holler, spokeswoman for Sallie Mae. "Building a history of on-time payments can improve your credit score and help you the next time you have to borrow, whether for a house, a car or a graduate degree. And remember, you can prepay our loans at any time without penalty."

Sallie Mae's Loan Repayment Calculator estimates the monthly payment amount and total interest expense under the company's different repayment plans, and to determine which plan makes the most sense for their current financial situation. In addition, customers whose loans are serviced by Sallie Mae can view detailed account information and make payment plan selections when they log into their account at www.SallieMae.com. Sallie Mae offers the following flexible repayment plans to customers:

    --  Standard Repayment:  Available to both federal student loan and
        private student loan customers, this is the least expensive option, as
        it offers the lowest total interest expense. Regular payments of
        principal and interest are made each month, excluding periods of
        deferment and forbearance. The minimum monthly payment is $50.
        Federal Stafford and Federal PLUS loans have a standard repayment term
        of 10 years; Sallie Mae's private Signature Student Loan has a
        standard repayment term of 15 years.

    --  Graduated Repayment:  Available to both federal student loan and
        private Signature Student Loan customers, this plan allows customers
        to make reduced payments that may be as low as "interest only" for up
        to four years, followed by standard payments of principal and interest
        for the remaining repayment term. In some cases, the initial payments
        can be nearly 50 percent lower during the reduced payment period than
        they would be under a standard plan. The reduced payments will,
        however, increase the customer's overall cost over the life of the
        loan.

    --  Extended Repayment:  Customers with more than $30,000 in eligible
        federal student loans may be eligible under federal law to extend
        their repayment term from the standard 10-year term to a 25-year
        repayment term. As above, these customers will pay more in interest
        by extending repayment than they would under standard repayment;
        however, they will be able to reduce their monthly payment amount by
        paying off the loan over a longer term. Extended repayment is also
        available for Sallie Mae private Signature Student Loan customers, and
        repayment terms may extend to 20, 25 or 30 years, depending on loan
        balance.

    --  Income-Sensitive Repayment:  With this plan, federal student loan
        customers may choose a monthly payment amount that is between 4
        percent and 25 percent of their monthly gross income. Federal law
        requires that each payment be large enough to satisfy the loan's
        accruing interest. Payments are adjusted annually to reflect changes
        in income and to ensure payoff over the standard 10-year term. Using
        this option to reduce the monthly payment amount may mean that
        customers will pay more in interest than they would under the standard
        repayment plan.

Additionally, Sallie Mae customers may also take advantage of Upromise Loan Link to help pay down education bills. Upromise allows students and families to save money for education by earning rewards on everyday purchases from participating companies and accumulating savings for college. With Upromise Loan Link, customers can link their Sallie Mae loan account to their Upromise account and use their Upromise rewards to automatically transfer savings to help pay down eligible Sallie Mae-serviced student loans. Visit www.salliemae.com/upromise to learn more and to enroll.

Sallie Mae advises customers to weigh the benefits and drawbacks of consolidating their federal student loans. Recent legislative changes created fixed interest rates for Federal Stafford and PLUS loans (6.8 percent and 8.5 percent, respectively), eliminating the need to consolidate federal student loans as a way to lock in interest rates. By consolidating, customers stand to lose the flexibility to prepay individual loans as well as the borrower benefits offered as part of their Stafford or Graduate PLUS loans. Even if customers opt against consolidation, Sallie Mae will combine billing statements, ensuring them the convenience of a single monthly payment.

Sallie Mae's Private Consolidation Loan is a fee-free option for customers with private education loans -- either from Sallie Mae or another lender -- that combines eligible loans into one new loan and potentially lowers the monthly payment amount by extending the repayment term to up to 30 years, depending on the loan amount. Interest rates are variable and based on the customer's or cosigner's credit history. More than 75 percent of Sallie Mae's private consolidation loan customers lowered their interest rate when they consolidated their private student loans.

In addition, recently passed higher education legislation has authorized changes to federal student loan repayment for certain customers:

    --  Delayed Repayment for Military Personnel:  The legislation eliminates
        a three-year limitation on loan deferment for certain members of the
        armed forces, allows deferments until 180 days after the borrowers are
        demobilized and allows borrowers in the military to receive the
        benefit regardless of when the loan was originated. In addition,
        active duty reservists and retired service members who are called to
        active duty while enrolled in college are now eligible for loan
        deferment during the 13 months after they complete their service.
        According to federal law, the deferment expires if they enroll in
        school again.

    --  Income-Based Repayment:  Effective July 1, 2009, an additional loan
        repayment plan will be offered, in accordance with federal law, to
        Stafford loan, Graduate PLUS loan and certain federal consolidation
        loan customers who qualify for a partial financial hardship. Payments
        on eligible loans will be limited to 15 percent of the amount by which
        the customer's and the customer's spouse's income exceeds 150 percent
        of the poverty line applicable to the borrower's family size, divided
        by 12. Unpaid interest and principal will be capitalized on eligible
        loans, and any outstanding balance will be forgiven after 25 years of
        repayment.

SLM Corporation (NYSE: SLM) , commonly known as Sallie Mae, is the nation's leading provider of saving- and paying-for-college programs. The company manages $160 billion in education loans and serves nearly 10 million student and parent customers. Through its Upromise affiliates, the company also manages $19 billion in 529 college-savings plans, and 8 million members have joined Upromise to help save for college with rewards on purchases at nearly 70,000 places. Sallie Mae and its subsidiaries offer debt management services as well as business and technical products to a range of business clients, including higher education institutions, student loan guarantors and state and federal agencies. More information is available at www.salliemae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

Company News On-Call: http://www.prnewswire.com/comp/827187.html /