The SLM Student Loan Trust is not a new phenomenon. More than 60 student loan funds have been set up since 2006, with the first emerging in 2000. The SLM fund has received a lot of 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 accredited into the lender’s school loan program and enable students to realize financial aid more quickly. In this blog post, we debunk 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 closing 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 started appearing in 2006 and 61 trusts have been created since then. The first set of trusts was created when the Ministry of Education relaxed the 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 such as DeVry, the University of Phoenix, and ITT Tech. SLM trusts are not completely unknown either. They have received a lot of attention recently as they are now the most common type of student loan fund. But they are only the largest form of trust in the student loan space because they are the only form 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 trusts were a better option than a standard loan, each 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 poor option.
This is simply not true. All trusts, including SLM trusts, are beneficial if used properly. Proper use involves first qualifying for the trust and then using it properly. As with all student loans, if you can pay it off, you should. However, SLM trusts have the unique advantage of allowing you to repay your student loan while still retaining 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 features 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 may qualify for an SLM trust, but you will have to work with a lender other than Sallie Mae. The same applies if you have a co-signed loan. SLM trusts are not a bad option and they can be a good option for some borrowers.
It is 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 cost of the trust, but they all come down to the same thing: the amount you need to use the trust. To determine the price of your trust, you need to know your expected annual payment amount, the type of repayment plan you want, 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 cost of a trust is not the same as the cost of using the trust. The price is what you need to use the trust. The price is how much you 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 to use an SLM trust. Although you must be current on your loans to use an SLM trust, you do not need to have them consolidated. SLM trusts work with direct loans and FFEL loans. This means that 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 up-to-date on your loans to qualify.
You can only use an SLM Trust if you were a Corinthian student.
This is a common misconception. The Ministry of Education created the rules around student loan funds and determining eligibility. The DOE did not make an exception for Corinthian students. There are cases where you may be eligible to use trusts even if you do not have direct loans. You may be able to use an SLM trust even if you have, for example, FFEL loans. If you were a student at a school that had an SLM trust, then you can use this trust. You do not need to have been a Corinthian student to use an SLM trust. You just need to be able to prove that you were a student at a school that had an SLM trust.
Bottom line
SLM trusts are not a new phenomenon. They are simply the most common form of trust in the student loan space because Sallie Mae created them and Sallie Mae is the largest student loan lender. SLM trusts are not a bad option and may be a good 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 are available to a wide range of borrowers. In fact, they can be used by any borrower who is up to date on their loans and can prove they were a student at a school that had an SLM trust.