Sallie Mae offers many 529 plan options for college savers. But first off, what is Sallie Mae and what is a 529 plan?
“Sallie Mae” is the colloquial name by which the SLM Corporation is most commonly known. Started as a government sponsored enterprise in 1972, Sallie Mae was gradually privatized from 1997 to 2004.
Sallie Mae’s primary business activities are originating, servicing, and collecting student loans. As the largest student lender in the United States, it has over 10 million borrowers who owe more than $180 billion dollars.
Sallie Mae has had more than its share of controversy over the years, with critics contending that its aggressive, arguably deceptive, marketing and cozy relationships with college administrators has been far better for its corporate profits than for the students its loans are supposed to help. It has also been criticized for its attempts to use the Freedom of Information Act to compel colleges to release students’ confidential information.
In 2006, Sallie Mae purchased Upromise Investments, and since then through this unit has managed more than $23 billion in “529 plan” college savings accounts.
529 plans are tax-advantaged financial accounts, most often taking the form of mutual funds, where money can be set aside for a beneficiary to pay for future schooling. The main benefit of a 529 plan is that earnings on the account are tax-free as long as the withdrawals are used for the beneficiary’s educational expenses (tuition, fees, books and other supplies, room and board with certain restrictions, etc.) There can also be certain state tax advantages (plan 529 contributions are not deductible from federal taxes but sometimes are from state taxes), and estate tax advantages.
Many of Sallie Mae’s Upromise 529 plan accounts are in the form of mutual funds, but in 2010 the corporation became the first to also offer 529 plan accounts in the form of retail banking products, including FDIC-insured online high-yield savings accounts and certificates of deposit. The high-yield savings accounts were introduced with an interest rate of 1.35%, several times the prevailing national average for savings accounts.
Through Upromise, Sallie Mae also offers a rewards program. By linking a Upromise 529 plan account to the rewards program, members can earn extra by maintaining certain minimum balances in their accounts and/or making certain minimum size deposits regularly. In addition, members receive rebates on everything from groceries to real estate.
Much more information on all the options available for college savings from Sallie Mae can be found at www.SallieMae.com.