What Is Sallie Mae – Student Loan Marketing Association?

Sallie Mae is a publicly traded U.S. corporation that is the country’s largest originator of federally insured student loans as of 2018. Along with providing student loans, Sallie Mae purchases student loans from original lenders and provides financing to state-based student-loan agencies.

Sallie Mae was formed in 1972 as a federally chartered, government-sponsored enterprise, but as of 2004 it is a completely independent publicly traded company. It trades on the Nasdaq under the ticker symbol SLM.

How Sallie Mae – Student Loan Marketing Association Works

Sallie Mae is formally known as SLM Corporation, which originally operated as the Student Loan Marketing Association. The structure and operations of Sallie Mae have changed drastically since its founding.

It began as a government entity providing federal education loans to students and originating federally guaranteed student loans under the Federal Family Education Loan Program (FFELP). It acted as both a servicer and collector of federal student loans on behalf of the U.S. Dept. of Education. The government charter was later terminated and Sallie Mae went private, beginning the privatization process in 1994 and completing it in 2004. Meanwhile, in 2014 Sallie Mae’s loan-servicing operation and the majority of its loan portfolio were spun off into a separate publicly traded business, known as Navient Corporation.

The company’s primary operations include originating, servicing and collecting of private education loans. Sallie Mae also offers tools and services to prepare students for college, including Upromise Rewards and other planning resources. One of the world’s largest private education loan providers, Sallie Mae employs nearly 2,000 individuals across the U.S. It managed more than $10 billion in assets as of 2016.

Sallie Mae debuted its newest offering, its own parent loan, in 2016. This loan option is similar to products offered by other major private loan companies in the United States. Under Sallie Mae’s parent loan, parents are able to borrow money for college tuition for their student, potentially at a discount from other private loan providers. The annual interest rates for these loans range from 5.12% to 12.87% and approval depends on student and parental qualifications and other factors. Parents have up to 10 years to pay off these loans. Sallie Mae's newest loans offer parents the ability to take out a line of credit at reasonable interest rates and avoid the steep 4.3% upfront fee charged on the line of credit offered through the federal government’s Plus program.