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.")

RELATED FAQS
  1. How does Sallie Mae disburse funds?

    Understand how Sallie Mae operates as a private company and discover about the different ways in which Sallie Mae disburses ... Read Answer >>
  2. Can Sallie Mae loans be forgiven?

    Understand the difference between private and public student loans. Learn if Sallie Mae loans can be forgiven and if other ... Read Answer >>
  3. Are Sallie Mae loans considered federal loans?

    Identify the differences between federal and private student loans, and what Sallie Mae does and doesn't do nowadays. Read Answer >>
Related Articles
  1. Personal Finance

    A College Financial Plan for the Student and Parent

    It’s crucial for parents and students to explore all funding options when planning for college.
  2. Personal Finance

    Fund Your Schooling with PLUS Loans

    Find out what they and are whether you're eligible to apply for these no-maximum loans.
  3. Managing Wealth

    College Students are Failing Financial Literacy

    Financial trends among college students are a cause for concern, prompting a renewed emphasis on financial literacy.
  4. Managing Wealth

    Student Loan Debt: Which States & Schools Cost Most/Least

    Student loan debt affects 43 million Americans. A new report from LendEDU breaks down the most significant borrower trends by state and school.
  5. Personal Finance

    Shocking Spike in Federal Student Loan Defaults

    The cost of college keeps going up and graduates are finding it tough to land good jobs.
  6. Personal Finance

    Why Student Loan Debt Might Be the Next Financial Crisis

    The increasing student loan debt may turn into the next financial crisis in the U.S. Here's why.
  7. Personal Finance

    Is Student Loan Debt The Next Financial Crisis?

    The student loan system is in desperate need of reform, as more and more graduates struggle to find work and pay off their student loans.
  8. Personal Finance

    5 Worst Money Mistakes You Can Make In College

    Watch out for these costly mistakes while in school.
  9. Personal Finance

    How to Fund a College Education

    College is expensive. Luckily, the government, many institutions and private lenders offer ways to help students pay for college.
RELATED TERMS
  1. Nellie Mae

    Nellie Mae is a New England student financial-services firm that ...
  2. Student Debt

    Student debt refers to loans used to pay for college tuition ...
  3. Disbursement

    Disbursement is the act of paying out or disbursing money; examples ...
  4. Stafford Loan

    A Stafford loan is a type of federal, fixed-rate student loan ...
  5. CSS/Financial Aid PROFILE®

    Besides the FAFSA, you may need this online form to apply for ...
  6. Student Loan Forgiveness

    Under certain circumstances, federally backed student loans — ...
Trading Center