Sallie Mae Makes Student Loan Consolidation Available to Current Students

RESTON, Va., May 19 /PRNewswire/ -- Sallie Mae, the nation's No. 1 paying- for-college company, today announced plans to follow recent guidance issued by the U.S. Department of Education to student loan providers that will make more student loan borrowers -- including current students -- eligible to secure today's historically low interest rates through loan consolidation.

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Student loan consolidation helps borrowers manage repayment by combining each of their eligible loans into a single, new, federally guaranteed loan -- a Federal Consolidation Loan -- with a longer repayment term, a fixed interest rate and the convenience of a single monthly payment.

The Higher Education Act permits a Federal Family Education Loan Program (FFELP) borrower to consolidate loans that are in a "grace" or "repayment" status, but not those in an "in-school" status. Guidance issued by the Department of Education on May 16, 2005, however, permits students who are currently enrolled in a FFELP school to enter repayment on their Stafford Loans early, thereby making them eligible for student loan consolidation.

By electing to enter repayment early, borrowers forfeit their grace period, and repayment is scheduled to begin. Based on the student's enrollment status, these loans would then be eligible for an in-school deferment. Borrowers who consolidate their Stafford Loans in a deferment status prior to June 30, 2005 may be eligible to receive an interest rate as low as 2.875 percent. Experts predict that when student loan interest rates reset on July 1, interest rates may rise nearly 2 percentage points higher than current rates: the first student-loan interest-rate increase in five years.

"While entering repayment early is not without its consequences, borrowers who are currently in school may decide that they cannot pass up the opportunity to fix a low interest rate for the life of their loans," said Patricia Scherschel, vice president of loan consolidation for Sallie Mae. "Sallie Mae is happy to accommodate borrowers who are eligible for consolidation, and will work with students and schools to make this process as simple as possible."

Borrowers can complete the necessary steps to request that their loans enter repayment and be consolidated using the deferment interest rate at http://www.smartloan.com/student.

SLM Corporation , commonly known as Sallie Mae, is the nation's No. 1 paying-for-college company, managing nearly $112 billion in student loans for 8 million borrowers. Sallie Mae was originally created in 1972 as a government-sponsored entity (GSE). In 2004, the company terminated its GSE charter, ending its ties to the federal government. Sallie Mae remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, the company also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors. More information is available at http://www.salliemae.com/. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.