Sallie Mae reduces rates on private student loan programs

The largest private student loan lender in the nation announced Tuesday that the Smart Option student loan rate will be lowered to between 2.88 percent and 10.25 percent. That is down from the 4.38 percent to 12.88 percent range.

Effective Monday, the new rates are based on the current London Interbank Offered Rate, or LIBOR. Under the Smart Option private student loan program, students pay interest while in college and graduate with debt, but with the prospect of paying off the loans faster, claims Sallie Mae.

"Sallie Mae's Smart Option Loan is a favorable option for families who need to fill the gap in their college funding," says Scott M. Kahan, Certified Financial Planner practitioner and president of the wealth management firm Financial Asset Management Corp. in New York City. "By paying the interest while in school, families can save a lot of money and pay off their debt much sooner. This goes a long way in managing your finances responsibly." 

Sallie Mae’s Smart Reward program will allow Smart Option borrower to eliminate 2 percent of their scheduled in-school interest payments by making a series of on-time payments. Cosigners can now be released from the loan in as little as 12 months after the borrower’s graduation for customers who make their payments on time.

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