Sallie Mae announces lower interest rates on graduate student loans.
If students need help paying for graduate school, they can turn to the U.S. Department of Education (ED), which offers Direct PLUS Loans. According to ED's website, these loans have a fixed interest rate of 7.9%, as well as a 4% origination fee. While many students will use PLUS Loans as they work toward a master's degree, education finance company Sallie Mae offers another option.
Through Sallie Mae, students can receive help paying for graduate school using Smart Option Student Loans. In a recent press release, the company announced that it will lower its interest rates for graduate students who choose this loan option.
What Will Change?
Sallie Mae's changes to its Smart Option Student Loans for graduate degree seekers will go into effect on April 1. From that point on, those who choose this loan option can select either variable or fixed rates with no origination or prepayment penalties. The variable rate range will extend from 2.25 to 7.5%, while the fixed rate range will run from 5.75 to 8.875%.
According to Sallie Mae, these are not the only advantages to choosing its Smart Option Student Loans, as students can also receive tuition insurance and on-time payment rewards.
Which Student Loans are Best for Graduate Students?
While there are many benefits to receiving a student loan from Sallie Mae, The New York Times recently pointed out that the loans do not include some of the borrower protections that are in place with federal loans. For this reason, graduate students need to make sure they think carefully during their loan search.
"Just as graduate students apply to a variety of graduate schools and carefully consider their offers of admissions and financial aid, they should also thoroughly research their loan options," said Charlie Rocha, Sallie Mae's senior vice president, in the press release. "Well-qualified applicants and those who expect to repay their student loans quickly may benefit from a lower-cost, no-fee private education loan."
In an interview with the Times, Rocha further explained which type of student may benefit from a Sallie Mae loan, and who might be better off seeking federal financial assistance.
Rocha said that graduate students who plan to work in the public or nonprofit sector may feel more comfortable with the protections and flexibility federal loans offer. Meanwhile, those who are pursuing a Master of Business Administration degree could receive higher salaries, which is why choosing Sallie Mae loans, and their lower interest rates, could be a better option.