As the student loan industry faces increased scrutiny and regulation over lending practices, many lenders are branching out into other arenas.
Sallie Mae, perhaps one of the best known student loan providers and servicers, recently began offering deposit accounts in an effort to expand business. The good news is that this can translate into some occasional great deals for consumers who have specific needs.
Sallie Mae Online Savings
Sallie Mae's banking service operates almost identically to most online banking options. Accounts are opened online, and funded online. Checking accounts are not offered, but CDs and high yield savings accounts are. The interest rates for the high yield savings account remains higher than the national average, but comparable to most online banks.
Sallie Mae's high yield savings account is online only, meaning transactions are performed electronically. Contributions and withdrawals are made via ACH through existing checking accounts or direct deposit. Since these are savings accounts, consumers shouldn't have a lot of transaction needs.
Other options include 12, 24, and 36 month CD's. Interest rates fluctuate, but remain competitive.
Upromise Matching
The hook for consumers has been Sallie Mae's ability to connect its UPromise program directly with high yield savings accounts. UPromise uses incentives from national retailers linked with check and credit cards to help fund and pay for college. Participants must sign up separately on the website, and register credit cards to earn rewards.
Sallie Mae offers a decent 10% match on all UPromise contributions, provided two conditions are met. Account holders must either set up an automatic $25 (or more) automatic savings plan to their Sallie Mae account, or maintain a balance of $5,000. For frequent users of the UPromise program, this could be a great way to earn extra cash for college. For those who don't typically participate in the program, however, the hassle could end up being greater than the perks.