Sallie Mae offers tips on successful student loan payment

NEWARK, Del. - With the due date on the first student loan payment for new college graduates arriving, communication, planning and perseverance are key to success, says Sallie Mae, the nation’s No. 1 financial services company specializing in education.

“The skills that helped you earn your degree are the same skills that will help you successfully pay for your investment,” says Ashley W., who leads a team of repayment counselors at Sallie Mae and is successfully paying her own student loans after graduating from Goldey-Beacom College in Delaware. “Keep in touch with your loan servicer, budget carefully, stick to your plan and ask for help if you need it.”

The good news is that the overwhelming majority of student loan customers successfully pay their loans—thanks to the value of their college degree especially in an economy like this one. According to the latest statistics, young people with a college degree are about two-and-a-half times less likely to be unemployed than those who did not go to college.

Joanne M. from Illinois is one customer who persevered to receive her degree and to pay off her loan. “Not only did I obtain my graduate degree which was a major goal; I also repaid my loans, another major goal,” she said. “In doing both I’ve furthered my career. I recently started and sold a business, and just signed my first million dollar contract for my current employer.”

Sallie Mae offers customers these tips for successfully paying student loans:

Schedule it. For most student loans, the first payment is due approximately six months after graduation. Start now to pay on time. If you made small monthly payments while in school, the good news is that you’ve already developed the habit of making on-time monthly payments. If a different payment date would help you budget, contact your servicer to ask to change your monthly due date.

Pick the payment plan that works for you and your income level. New graduates may have the option of arranging regular monthly payments or minimizing payments initially as they establish their careers. For example, federal student loans offer an income-based repayment plan that today caps student loan payments at 15 percent of discretionary income. Remember that different loans have different options—and the process for applying can be involved—so it’s important to call your loan servicer to explore the best option for you.

Lower your interest rate by signing up for automatic debit. Sallie Mae customers who enroll to make payments via automatic debit may qualify for a .25 percentage point interest rate reduction depending on their loan type and disbursement date. Customers are also encouraged to log in to their accounts to take advantage of new features to model payment plans and make extra payments.

Pay a little extra. By paying more than the minimum on your student loans every month or whenever you can, you can lower the interest you pay over the life of the loan.

Earn rewards to pay down your loan. Through Sallie Mae’s Upromise rewards service, every time you make a qualifying purchase from hundreds of participating companies you can earn a percentage back in rewards that can be used to help pay down your student loans. To date, Sallie Mae customers have automatically transferred $12.7 million of their earned Upromise rewards to help pay extra on their loans.

Use deferments or forbearances as a last resort. Postponing payments can cost you extra if unpaid interest on your loan “capitalizes,” or adds to the balance. Use these options only if absolutely necessary, consider making at least small payments, and catch up as soon as possible.

Stay on top of your email and mail. Whether you signed up for email notifications or receive regular mail, open your student loan notices on a timely basis to ensure you stay informed about your student loans. If you move or change email addresses, be sure to update your contact information.

Ask for help. Above all, if you need extra help, talk to your parents, seek out assistance from your alma mater’s career or financial aid office, call your loan servicer and get in touch with your local accredited nonprofit credit counseling service. In academic year 2009-2010 alone, Sallie Mae’s company-wide default prevention efforts helped 2 million customers resolve past-due accounts and avoid default.


Sallie Mae (NYSE: SLM) is the nation’s No. 1 financial services company specializing in education. Serving 25 million customers, Sallie Mae offers innovative savings tools, tuition payment plans and education loans that promote responsible financial habits and reward success. Through its subsidiaries, the company manages or services $238 billion in education loans and administers $35 billion in 529 college savings plans. Members of its Upromise college savings rewards program have earned $625 million to help pay for college. Sallie Mae is also one of the leading financial service providers for universities and governments at all levels, including supporting $8 billion in ecommerce transactions annually at nearly 1,000 campuses. More information is available at www.SallieMae.com. SLM Corporation and its subsidiaries, commonly known as Sallie Mae, are not sponsored by or agencies of the United States of America.