Sallie Mae and Navient: What’s the Difference?

Sallie Mae and Navient are prominent names in the student loan industry. While they’re often mentioned together, the companies aren’t interchangeable. They provide similar services to student loan borrowers, but in different fashions.

Make sure that you know the difference between Sallie Mae and Navient before borrowing student loans from either company.

Let’s take a look at what makes each company different.

The history of Sallie Mae and Navient

Today, Navient and Sallie Mae are distinct, separate companies. But they were once under the same umbrella company. When Sallie Mae started in 1972, it serviced federal student loan debt. It eventually took on private student loans, too.

In 2010, Congress passed the Health Care and Education Reconciliation Act, which officially ended the Federal Family Education Loan Program (FFELP). FFELP allowed private financial institutions like Sallie Mae to issue federal student loans — with a federal government guarantee. Once the act was passed, Sallie Mae could no longer service federal student loans.

Sallie Mae launched Navient in 2014 in order to stay involved with federal loan servicing. Under a separate business entity, Navient could assume Sallie Mae’s role and service both federal and private student loans.

It’s important to note that Navient does not directly provide student loans — it’s a loan servicer rather than a lender. This avoids restrictions put in place by the Health Care and Education Reconciliation Act mentioned earlier. Navient is now one of nine companies that services student loans through the Federal Direct Loan program.

Differences between federal and private student loans

As you learn the difference between Navient and Sallie Mae, it’s also helpful to understand the difference between private and federal student loans.

Federal student loans, serviced by Navient, are government-funded and set by law. They include benefits like fixed interest rates, student loan forgiveness, deferment and forbearance programs. They can also be repaid on an income-driven repayment plan. However, federal loan borrowers have no say in who their servicer is.

Lenders like Sallie Mae, establish their own interest rates, loan repayment terms and eligibility requirements. Private student loans are usually more expensive than federal student loans and don’t offer the same borrower protections. Private student loans require a credit check and may also require a cosigner if the primary borrower has a bad or limited credit history. However, unlike federal loans, borrowers can choose their private student loan lender.

What is Navient?

Navient is one of a handful of companies that can service federal student and parent PLUS loans on behalf of the U.S. Department of Education. It also services loans that were under the, now discontinued, FFELP. Navient services federal student loans such as:

• William D. Ford Federal Direct Loan Program
• Direct Subsidized and Unsubsidized Loans
• PLUS Loans for Parents
• PLUS Loans for Graduate Students
• Direct Consolidation Loans

Navient also services private student loans. In 2017, Navient teamed up with Earnest, an educational financing tech company, to offer customers more lending products such as:

• Undergraduate student loans
• Graduate loans
• Medical loans
• Law loans
• Business school loans

Earnest allows borrowers to pay back federal and private student loans on their own terms. Borrowers who have existing Navient-serviced loans can also apply for NaviRefi refinancing. This service, however, is by invitation only.

Navient lawsuits

Navient’s name has become more prominent as the company faces several lawsuits. In January 2017, the Consumer Financial Protection Bureau (CFPB) announced it was suing Navient, “for systematically and illegally failing borrowers at every stage of repayment.”

The CFPB’s charges include failing to correctly apply borrower payments to their accounts, obscuring information consumers needed to maintain lower monthly payments and harming disabled borrowers’ credit, including injured veterans. Since the initial lawsuit in 2017, California, Illinois, Pennsylvania, Washington and Mississippi have also filed suit against Navient.

What is Sallie Mae?

Sallie Mae offers private undergraduate and graduate student loans to help people pay for college. Since they offer private student loans, Sallie Mae encourages students and their families to exhaust all other options before applying. These options include personal college funds, savings, scholarships, grants, work-study programs and federal student loans.

Sallie Mae is a resource that helps college students and their families cover remaining education costs after exploring all other options.

The Smart Option Student Loan (for undergraduates) is the primary private student loan product.

Sallie Mae Smart Option Student Loan

Sallie Mae Smart Option Student Loans help borrowers pay for other school-certified expenses like books, housing and meals. There’s no origination fee or prepayment penalty for a Sallie Mae loan. So, borrowers can make student loan payments as early and as much as they’d like. Smart Option Student Loans also give borrowers the opportunity to lower interest rates by selecting in-school student loan repayment options.

This loan also includes four free months of Chegg Study services. Chegg provides study and homework support anytime, anywhere for any subject.

Private student loans for specific professions

Sallie Mae offers private student loans for just about any type of student. The company’s private student loan products include career training, dental school, medical school, Master of Business Administration (MBA), bar study, medical and dental residencies and more.

Sallie Mae also has a scholarship search tool to help undergraduate and graduate students find as much free tuition money as possible. The company also offers its own scholarships and sweepstakes to help students get money for school.

Sallie Mae vs. Navient: key differences

Both Sallie Mae and Navient can help secure different types of loans to pay for college tuition, books, room and board and more. The key difference between the two is in the conditions and loan terms each organization uses to loan you the funds.

Ideally, secure federal loans before turning to private student loans, because interest rates are potentially lower. Plus, there are options and protections if you encounter difficulty repaying your loans.

As a federal student loan servicer, that’s where Navient can help. If you’ve maxed out your federal loan options, however, you can apply for a Sallie Mae private student loan to help cover the gaps for your cost of attendance.