A:

Sallie Mae is one of the biggest providers of financial aid and student loans in the United States. The company operates as a private firm and offers many loan options for college students. Depending on the option, Sallie Mae loans either go directly to the school or directly to the student.

Private Loans

Sallie Mae only gives private loans to students who have good credit. If a student doesn't have the necessary credit, a parent can cosign on the loan. For private loans, Sallie Mae disburses the full amount of tuition and expenses directly to the student's school.

Financial Aid

Financial aid disbursements also go directly to a student's school. The school then manages those funds by drawing them down to cover tuition costs or associated costs incurred during the loan approval waiting period. After paying all tuition and expenses, the school can disburse any leftover funds directly to the student.

Direct to Student Disbursement

There are some colleges and universities that allow Sallie Mae funds to be disbursed directly to the student. In this case, the school would receive the funds initially and then issue a check, execute an electronic transfer, pay the amount out in cash or sign over the Sallie Mae check to the student or beneficiary. Since Sallie Mae loan checks list both the college and the student as beneficiaries, the signatures of both beneficiaries are required to release the funds in this scenario.

If Sallie Mae disburses funds directly to the school, however, the school has 14 days to apply the funds to a student's account. If a student receives the funds directly, he or she is responsible for paying all college expenses. (See also: 5 Tips to Lower Your Sallie Mae Payments.)

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