The SLM Student Loan Trust is not a new phenomenon. More than 60 student loan trusts have been created since 2006, with the first emerging in 2000. The SLM trust has gotten much attention recently due to recent changes by the Department of Education that make it easier for schools and lenders to create their own trust, which can help them get accreditation for the lender’s school loan program and enable students to realize financial aid faster. In this blog post, we are debunking some of the common myths and misconceptions about SLM Student Loan Trusts. If you are considering an SLM trust as part of your student loan exit strategy, or if you work with clients who could benefit from an SLM trust, this post will provide you with helpful information on why they are beneficial and what they involve.
SLM trusts are new and unknown.
SLM trusts are not a new phenomenon. The first trusts began to emerge in 2006, and there have been 61 trusts created since that time. The first set of trusts was created when the Department of Education relaxed its rules around how and when a school can lend money to its students. Since then, most of the trusts have been established by large, multi-state schools like DeVry, the University of Phoenix, and ITT Tech. SLM trusts are also not completely unknown. They have gotten a lot of attention recently, as they are now the most common type of student loan trust. But they are only the largest type of trust in the student loan space because they are the only type of trust created by a single lender, Sallie Mae. Like all trusts, an SLM trust does not offer special benefits or protections that a regular loan does not already offer. If trust were a better option than a standard loan, then every lender would create their own trust and there would only be one type of trust. SLM trusts are only new to borrowers who were not already aware of them, as a large percentage of borrowers did not know about them until recently.
SLM trusts are a bad option.
This is simply not true. All trusts, including SLM trusts, are beneficial if they are used properly. Proper use involves first qualifying for the trust and then using it in the right way. As with all student loans, if you can pay it off, you should. However, SLM trusts have the unique benefit of allowing you to pay off your student loan while still keeping your federal student loan benefits. If you have subsidized or subsidized Stafford loans with an interest rate below 6%, you can use an SLM trust to pay off your loan and avoid paying interest on these types of loans. SLM trusts also have unique qualities in that you can use them even if you don’t have Direct Loans and even if you don’t have a co-signer. If you have an FFEL loan, you can qualify for an SLM trust, but you will have to work with a different lender than Sallie Mae. The same is true if you have a co-signed loan. SLM trusts are not a bad option, and they may be a great option for some borrowers.
It’s too expensive to use an SLM trust.
SLM trusts are not “expensive” or “too expensive” — they are simply the price of using an SLM trust. There are several different ways to calculate the price of the trust, but they all come out to be the same thing: the amount you need in order to use the trust. To determine the price of your trust, you will need to know your projected annual payment amount, what type of repayment schedule you would like, and the interest rate you have on your loans. You can then plug these numbers into a calculator to see what trust would cost you. The price of a trust is not the same as the cost of using trust. The price is what you would need in order to use the trust. The cost is how much you will pay each month. You can use the calculator below to see how much the SLM trust would cost you.
You must consolidate to use an SLM trust.
You do not need to consolidate your loans in order to use an SLM trust. While you do need to be current on your loans in order to use an SLM trust, you do not need to have them consolidated. SLM trusts work with Direct Loans and FFEL loans. That means if you only have one of these two types of loans, you can still use an SLM trust. The SLM trust is a loan, so you must be current on your loans in order to qualify.
You can only use an SLM Trust if you were a Corinthian student.
This is a common misconception. The Department of Education created the rules around student loan trusts and determining eligibility. The DOE did not make an exception for Corinthian students. There are cases in which you may be eligible to use trust even if you do not have Direct Loans. You may be able to use an SLM trust even if you have FFEL loans, for example. If you were a student of a school that had an SLM trust, then you can use that trust. You do not have to have been a Corinthian student in order to use an SLM trust. You just need to be able to prove that you were a student of a school that had an SLM trust.
The bottom line
SLM trusts are not a new phenomenon. They are simply the most common type of trust in the student loan space because Sallie Mae created them and Sallie Mae is the largest student loan, the lender. SLM trusts are not a bad option and may be a great option for some borrowers. They offer unique benefits that other types of trusts do not, such as the ability to pay off your loans without paying interest. SLM trusts are not an expensive option, and they are available to a wide range of borrowers. In fact, they can be used by any borrower who is current on their loans and can prove they were a student at a school that had an SLM trust.