Sallie Mae vs. College Ave: A Comprehensive Comparison of Student Loan Options
Choosing the right student loan lender is a crucial step in financing higher education. Sallie Mae and College Ave are two prominent names in the private student loan market, each with its own set of features, benefits, and drawbacks. This article provides a detailed comparison of Sallie Mae and College Ave student loans to help students and parents make informed decisions.
Introduction
Federal student loans are a popular choice for many students, but they aren’t the only way to finance your education. Loans from private lenders can help you bridge any gaps you have in your funding while also providing resources to set you up for success after you graduate. Due to the popularity of both lenders, it’s common for students to compare College Ave and Sallie Mae student loans. This guide dives into both Sallie Mae and College Ave and some things to consider to determine which one is right for you.
Company Overviews
Sallie Mae and College Ave both provide student loans to borrowers looking to finance their education. Here’s how the companies break down:
| Sallie Mae | College Ave | |
|---|---|---|
| Fixed APR | 2.89% - 17.49% | 2.89% - 17.99% |
| Variable APR | 4.37% - 16.99% | 4.24% - 17.99% |
| Terms | 10 to 20 years | 5, 8, 10, or 15 years |
| Loan Amounts | Starting at $1,000 up to cost of attendance | Starting at $1,000 up to cost of attendance with some degrees capping out at $150,000 |
| Credit Score | Does not disclose | Does not disclose |
| Forbearance | Deferment and forbearance | Deferment and forbearance |
| Fees | None | None |
Sallie Mae
Sallie Mae is one of the oldest student loan providers on the market and has the best brand recognition as a result. Founded in 1972, the company originally serviced federal student loans but now only offers private student loans.
Sallie Mae is a popular option because it offers loan options to a wide number of students. Loans can be issued to students in undergraduate and graduate programs, including those in medical school and law school. Sallie Mae also offers educational resources that students can use to help them get the most out of their education. This includes a scholarship directory that customers can use to offset the cost of their student loans as well as different non-loan accounts to help you grow your savings. Sallie Mae's private student loan, the Smart Option Student Loan, can be used to cover undergraduate costs up to the total cost of attendance. It offers 10- to 15-year repayment terms.
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That being said, Sallie Mae offers limited repayment options of five, 10, or 15 years for undergraduate loans. This can make repayment challenging especially if your circumstances change during your career.
College Ave
College Ave is a relative newcomer to student loans. The company was founded by former Sallie Mae executives in 2014 with the goal of making it easier for students to get access to student loans. It’s quickly become a favorite among students and parents alike. Its mission has always been straightforward: make student loans simpler and more personal.
Similar to Sallie Mae, College Ave offers a number of lending options for students in undergraduate and graduate programs, as well as students in professional training programs. College Ave gives students the opportunity to see if they prequalify for a loan before actually applying. This can help borrowers evaluate their options without affecting their credit score.
College Ave issues its loans based on how creditworthy an applicant is and their income. To help students qualify, especially undergraduates who may not have a robust credit history, applicants can apply with a cosigner. College Ave offers four repayment options for undergraduates and five options for graduate students to tailor repayment to their budget. These options are designed to give borrowers the chance to repay their loans as quickly as possible.
One major drawback of College Ave is that some of its graduate loans come with a $150,000 limit. If you’re looking for funding to cover an expensive graduate program like business school, College Ave might not provide the funding you need.
Read also: Detailed Review: Sallie Mae and SoFi
Loan Features Comparison
| Feature | Sallie Mae | College Ave |
|---|---|---|
| Autopay Discount | Yes | Yes |
| Loan Terms | 10 to 20 years | 5, 8, 10, or 15 years |
| Minimum Loan Amount | $1,000 | $1,000 |
| Early Payoff Penalty | No | No |
| Late Fees | Yes | Yes |
| Forbearance | Yes | Yes |
| Application/Origination Fees | None | None |
Sallie Mae and College Ave offer similar student loan options with College Ave offering slightly better terms. Borrowers that opt for College Ave have access to lower interest rates, more repayment options, and shorter terms.
There are no penalties for early repayment and neither company charges origination fees. A 0.25% discount is applied when borrowers opt for autopay. The lowest rate options include this discount.
Eligibility Criteria
When comparing Sallie Mae and College Ave student loans, both lenders have similar eligibility requirements. To qualify for a loan from College Ave or Sallie Mae, borrowers will have to meet a number of requirements. Neither company shares specific details about what goes into the approval process or how creditworthiness is defined. Having an income - or applying with a cosigner that has an income - and a good credit score can help you get approved.
Both require borrowers to be U.S. citizens and reside in a state where loans are offered. citizen. College Ave allows any student - or a cosigner - with a Social Security Number to apply. Most students are at least 18 when they head off to college-but not everyone. Some states have a higher age of majority (like 19 or even 21), which can make getting a loan tricky if you’re not quite there yet. Sallie Mae requires you to be the age of majority in your state, which could be a dealbreaker.
Students will also need to be enrolled in a degree-granting school for the loan to be issued. For Sallie Mae, that includes students who are enrolled less than part-time up to full-time students.
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Repayment Flexibility and Options
College Ave offers the most flexible repayment options. Students can choose a term of 5, 8, 10, or 15 years. Payments can be deferred while still in school, but there is also the option to begin repayment while you’re enrolled. This can be full payments, interest-only payments, or a flat payment of $25 a month. This is where College Ave stands out. It gives you four in-school repayment options: deferred, interest-only, fixed payments, or even full principal plus interest while you’re still in school. That last one is rare and powerful. By making some payments while you’re enrolled, College Ave gives students the ability to reduce the cost of the loan over the long term, repaying it faster.
Sallie Mae offers similar repayment options. Students can make interest-only payments, a flat $25 a month payment, as well as deferring. Sallie Mae? You’ll only get three options: deferred, interest-only, or fixed payments. Sallie Mae does not give students the option to make full payments while they're in school which can increase the lifetime cost of the loan.Sallie Mae's Smart Option Student Loan offers three basic repayment options:
- Deferred: With the deferred option, you make no payments while in school and during the grace period after leaving school. After that period of time, you pay principal and interest.
- Fixed: The fixed option requires you to pay $25 per month while you’re in school and during the grace period.
- Interest only: With the interest-only option, you only pay the interest on your loan while in school and during the grace period.
Where Sallie Mae is lacking is in its terms and grace period. The terms are limited to 10 to 15 years. While College Ave offers a grace period between six to 36 months - depending on whether the loan was for undergraduate or graduate studies - Sallie Mae only offers a six month grace period. All of Sallie Mae's graduate loans also cover up to 100 percent of school-certified expenses. Law school loans have a nine-month grace period, dental school loans have a 12-month grace period and medical school loans have a 36-month grace period. Bar exam loans have the option of deferred repayment while you’re in school at least half-time and during the nine-month grace period. All of the loan options, with the exception of residency and bar study loans, are eligible for the three basic repayment options.
Another big difference is when a cosigner is eligible for release from the loan. Let’s be real: Most undergrads will need a cosigner to qualify for a private student loan. That’s true with both lenders. But when it comes to letting your cosigner off the hook? Sallie Mae makes it easier. For students thinking of applying with a cosigner, Sallie Mae is going to be the best option. They give cosigners the ability to be released from the loan after 12 on-time monthly payments. College Ave’s policy isn’t as generous. College Ave requires cosigners to be on the loan until half of it has been repaid. Cosigners have to stay on the loan until halfway through the repayment term. Depending on the loan term this could be anywhere from 2.5 to 7.5 years.
Additional Benefits and Features
When it comes to choosing a private student loan provider, there are other benefits to consider. These benefits can help build financial literacy.
Sallie Mae offers educational resources that students can use to help them get the most out of their education. This includes a scholarship directory to help students find scholarships to help finance their education. Sallie Mae also offers a number of savings products including a money market account, certificates of deposit, and a high yield savings account.
College Ave gives students the opportunity to see if they prequalify for a loan before actually applying. This can help borrowers evaluate their options without affecting their credit score. College Ave also offers a student credit card. This can help borrowers build credit without charging fees or interest.
Application Process and Customer Experience
Both Sallie Mae and College Ave offer a similar application process. To start you’ll need to provide identifying information about yourself and your educational program. This includes your Social Security Number, address, and information about where you’re enrolled and what you’re studying.
Once you provide that you’ll be asked to submit financial information. This includes whether or not you’re employed, how much money you have in your bank account, any financial aid you’ve received, and your housing expenses if you rent or own a mortgage.
If you’re applying with a cosigner, they’ll be asked to provide similar information to verify their identity as well as their financials.
From there you’ll submit your application and Sallie Mae or College Ave will review it. You’ll be notified of approval shortly after you submit. If you don’t get approved right away you might need to provide additional information.
The last part of the loan process is choosing and accepting your loan terms. This is where you’ll be able to choose what type of interest rate you’d like - fixed or variable - and the amount of time you want to repay your loan. After all of that is complete your lender will verify your enrollment and eligibility with your school. Customer reviews reference a pleasant application process and attentive customer service.
Red Flags and Considerations
While private student loans can help bridge any gaps your financial aid doesn’t provide, there are some risks to consider.
For one, private loans often come with much higher rates than federal student loans. While the lowest rates might be appealing, it can be difficult to qualify for the best rates if you don’t have an income or a good credit history. This is one reason why applying with a cosigner can help.
Both companies have poor customer service records but Sallie Mae has the worst. It has a 1-star review on the Better Business Bureau. Complaints include cosigners finding it difficult to get released from loans and borrowers having difficulty receiving payment assistance during periods of financial hardship. Sallie Mae gets an A+ rating from the Better Business Bureau, the highest possible grade, but the reviews on Trustpilot tell a different story. Out of 5 stars, Sallie Mae has an average ranking of 1.3. Out of 57 reviews, 96 percent of commenters left a 1-star rating and 4 percent left a 2-star rating.
College Ave is slightly better with 3.15/5 stars on the Better Business Bureau. The top complaints include being misled about rates and cosigner expectations.
Sallie Mae vs. College Ave: Which is the Best Option?
The best option for student loans ultimately comes down to your financial needs and personal situation. Here are a few scenarios to consider.
Refinancing Student Loans
You might consider refinancing your student loans well after you’ve graduated to take advantage of a lower interest rate. If this is something you’re thinking of doing, College Ave is the better option. They offer refinancing while Sallie Mae does not. Sallie Mae doesn’t offer student loan refinancing, period. SoFi has a similar student loan portfolio to Sallie Mae, offering loans that cover up to the cost of attendance, but SoFi is better for students who plan on refinancing - both undergraduate and graduate refinance loans are available to borrowers who qualify.
Flexible Repayment Options
Both Sallie Mae and College Ave offer flexible repayment options but College Ave offers a bit more flexibility. This includes a wider range of terms, a longer grace period for some graduate degrees, and the ability to make full payments while you’re in school. If you want to help your child pay for school, College Ave is the clear choice. Sallie Mae, by contrast, doesn’t offer a parent-specific loan. If you’re a parent looking to take out a loan in your own name to help your child pay for school, College Ave is the clear choice. Sallie Mae, by contrast, doesn’t offer a parent-specific loan. If you want to help your child, you’d need to cosign a student loan in their name-meaning they remain on the hook, and you’re only sharing responsibility.
Applying with a Cosigner
For students thinking of applying with a cosigner, Sallie Mae is going to be the best option. They give cosigners the ability to be released from the loan after 12 on-time monthly payments. College Ave requires cosigners to be on the loan until half of it has been repaid. Depending on the loan term this could be anywhere from 2.5 to 7.5 years.
Interest Rates
If you’re in a position to qualify for the lowest rates any lender offers-usually because you have excellent credit or a very strong cosigner-College Ave is your best bet. Its starting rates are slightly lower than Sallie Mae’s for both fixed and variable loans. Despite this, Sallie Mae may be the better choice for borrowers looking to save money. Aside from the refinance loans, SoFi's maximum rates are higher than many types of Sallie Mae's student loans. EDvestinU also offers undergraduate and graduate loans with competitive starting rates, but EdvestinU's maximum fixed rate of 10.927% is over six percentage points more than Sallie Mae's highest fixed rate. In addition to offering lower maximum fixed rates, EDvestinU is a better choice for borrowers seeking more flexible repayment terms.
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