IOWA STUDENT LOAN DISCLOSURE FOR SALLIE MAE SMART OPTION STUDENT LOANS THIS IS A NEW LOAN PROGRAM THESE LOANS WERE NOT OFFERED DURING 2008 A. Interest Rate Information Variable Interest Rate Range The range of interest rates that would have been applicable to this type of private educational loan during 2008 if it had been offered then. Formula Used For Calculating Interest Rates On Smart Option Loans As Of February 1, 2009 (Lowest Margin and Highest Margin) Range of Rates That Would Have Been Charged During 2008 If These Loans Had Been Offered Then (Lowest Margin and Highest Margin) Index + 4.000% 4.500% - 7.675% Index + 14.000% 14.500% -17.675% The interest rate on this loan is a variable interest rate based on an index and a margin. Your margin is based on your creditworthiness, the school you attend, whether you have a creditworthy cosigner, and other factors and will be anywhere from 4.000% to 14.000%. The index is the one-month LIBOR rate rounded up to the nearest one-eighth of one percent (0.125%). The index is determined on the most recent business day that is at least two New York and two London business days prior to the 25th day of the month. The lender obtains this information from Reuters. However, the one-month LIBOR rate can also be found on the British Bankers Association web site at http://www.bba.org.uk. If the index changes, the interest rate on this loan will adjust on the 25th day of each month, if the 25th day of the month is a New York business day or, if the 25th day of the month is not a New York business day, on the next New York business day. (Although your note permits the interest rate to adjust if the margin changes, on this loan the margin does not change.) With some variable interest rate loans, the promissory note sets limits on the maximum interest rate that may be charged on the loan. Other than legal limits in the nature of usury or rate ceilings under applicable state or federal law, if any, there are no such limits on the interest rate of this loan. See your promissory note, a copy of which is attached to your application, for details.
B. Loan Fee Information The following fees are associated with this loan: Supplemental Fee at Disbursement 0% 5%. This fee is assessed at disbursement of the loan (or on a pro rata basis, if there is more than one disbursement). Supplemental Fee at Repayment Although your note permits one, there is no supplemental fee at repayment of this loan. Returned Payment Fee - $20.00. This fee is assessed when any payment is returned or refused by your bank for any reason. Late Payment Fee - $5.00 or 5% of the unpaid portion of the payment, whichever is greater. This fee is assessed if payment is more than 15 days late. In School Principal Deferment Fee You may be assessed a deferment fee if at any time during the Principal and Interest Repayment Period you return to school and request a deferment. The amount of the fee, if any, is determined at the time of your request. Residency or Internship Principal Deferment Fee - You may be assessed an deferment fee if at any time during the Principal and Interest Repayment Period you are an eligible health student enrolled in a residency or internship program and you request a deferment. The amount of the fee, if any, is determined at the time of your request. Hardship or Other Forbearance Fee You may be assessed a forbearance fee if at any time you request a forbearance. The amount of the fee, if any, is determined at the time of your request. Other fees may also be assessed on this loan, as described in your promissory note, a copy of which is attached to your application. C. Cosigner Requirements A cosigner is required for this student loan if you have not reached the age of majority in your state of residence (generally if you are less than 18 years of age) or if you are a resident of a foreign country. Cosigners may also affect the interest rate on your loan. If you have a cosigner, you may receive a better interest rate and improve your chances for loan approval. The effect a cosigner has upon the interest rate depends upon the school you attend and on the cosigner s creditworthiness. The more creditworthy the cosigner, the greater potential there is for a lower interest rate. D. Repayment of Loan Information The Interim Period of your loan begins on the day of the first disbursement on your loan and continues while you are in school (the School Period ) and for approximately six months thereafter (the Separation Period ). During the Interim Period, you will be required to make monthly payments of the interest due on your loan. After the Interim Period ends, the Principal and Interest Repayment Period of your loan begins (in the payment charts in Section F, this period is referred to as the P&I Repayment Period ). The Principal and Interest Repayment Period generally begins on the earliest of the following dates: (a) six months after you graduate; (b) six months after you cease to be enrolled in at least half-time study; or (c) if your school is approved for less than half-time enrollment, six months after you cease to meet the requirements for less
than half-time study. During the Principal and Interest Repayment Period, you will be required to make monthly payments of the principal and interest due on your loan. The initial Principal and Interest Repayment Period of the loan depends on your year in school (lst, 2nd, 3nd, 4th or greater) and on the total amount of your outstanding private student loans serviced by the lender; the minimum period is 60 months and the maximum period is 180 months. Additionally, you can prepay the loan in whole or part at any time without penalty. E. Deferment or Forbearance Under certain circumstances you may request a deferment or a forbearance of payments on this loan. However, you will still have to pay off the outstanding balance on your loan once any deferment or forbearance period ends. The lender may grant a deferment or forbearance as follows: In-School Principal Deferment - If at any time during the Principal and Interest Repayment Period you return to school, you may request and the lender in its sole discretion may grant a deferment, for a maximum period of time set by the lender. If you receive a deferment, you may defer making payments of principal and interest. However, you will still be required to make payments of interest during the deferment period. If you request a deferment, then you agree to pay a deferment fee, if the lender chooses to assess one, even if the deferment is not granted. The deferment fee, if any, will be disclosed to you prior to the deferment fee being assessed. Residency or Internship Principal Deferment - If at any time during the Principal and Interest Repayment Period you are an eligible health student enrolled in a residency or internship program, you may request and the lender in its sole discretion may grant a deferment, for a maximum period of time set by the lender. If you receive a deferment, you may defer making payments of principal and interest. However, you will still be required to make payments of interest during the deferment period. If you request a deferment, then you agree to pay a deferment fee, if the lender chooses to assess one, even if the deferment is not granted. The deferment fee, if any, will be disclosed to you prior to the deferment fee being assessed. Hardship or Other Forbearance - At any time, you may request and the lender in its sole discretion may grant a forbearance. If you receive a forbearance during the Interim Period, then you may defer regularly scheduled payments of interest. If you receive a forbearance during the Principal and Interest Repayment Period, then you may defer regularly scheduled payments of principal and interest. However, you may be required to make lesser payments of principal and interest on terms set by the lender. If you request a forbearance, then you agree to pay a forbearance fee, if the lender chooses to assess one, even if the forbearance is not granted. The forbearance fee, if any, will be disclosed to you prior to the forbearance fee being assessed. At the end of the forbearance period any unpaid interest will be added to the outstanding principal balance of your loan. Since interest accrues on the outstanding principal balance, this will increase the cost of the loan.
F. Examples of Total Cost of the Loan Below are examples of the total cost of this type of private student loan for loans with an interest rate of 14.500%, the highest interest rate in effect on February 1, 2009. This interest rate is based on a margin of 14.000% and an index, determined as of January 22, 2009, of 0.500%. The examples all include the payment of interest while in school. Please note, the actual total cost of your loan will vary based on the actual terms of your loan and on any changes to your interest rate. If your interest rate increases, the loan will cost more over time. Private Student Loan With a 5 Year Repayment Plan Supplemental Fee at Disbursement 0%* 3%* 5% Principal Amount (With Supplemental Fee) $10,000.00 $10,300.00 $10,500.00 Amount Disbursed On Behalf Of Borrower $10,000.00 $10,000.00 $10,000.00 Total Interest Paid $10,037.88 $10,338.94 $10,539.60 Total Finance Charges $10,037.88 $10,638.94 $11,039.60 Monthly Interest Payments 1 st Disbursement $60.42 $62.23 $63.44 Monthly Interest Payments 2 nd Disbursement $120.83 $124.46 $126.88 Interest Paid Interim Period $5,921.00 $6,098.00 $6,217.00 Monthly Principal and Interest Payments $235.82 $242.34 $247.05 Interest Paid P& I Repayment Period $4,116.88 $4,240.94 $4,322.60 Repayment Term (Months) 60 60 60 Prepaid Finance Charge $0 $300.00 $500.00 Interest Rate 14.500% 14.500% 14.500% Total Paid $20,037.88 $20,638.94 $21,039.60 Private Student Loan With a 15 Year Repayment Plan Supplemental Fee at Disbursement 0%* 3%* 5% Principal Amount (With Supplemental Fee) $10,000.00 $10,300.00 $10,500.00 Amount Disbursed On Behalf Of Borrower $10,000.00 $10,000.00 $10,000.00 Total Interest Paid $20,499.78 $21,113.05 $21,523.82 Total Finance Charges $20,499.78 $21,413.05 $22,023.82 Monthly Interest Payments 1 st Disbursement $60.42 $62.23 $63.44 Monthly Interest Payments 2 nd Disbursement $120.83 $124.46 $126.88 Interest Paid Interim Period $5,921.00 $6,098.00 $6,217.00 Monthly Principal and Interest Payments $136.55 $140.65 $143.38 Interest Paid P& I Repayment Period $14,578.78 $15,015.05 $15,306.82 Repayment Term (Months) 180 180 180 Prepaid Finance Charge $0 $300.00 $500.00 Interest Rate 14.500% 14.500% 14.500% Total Paid $30,499.78 $31,413.05 $32,023.82 * This fee amount may not be available in conjunction with the assumed interest rate.
G. Additional Terms and Conditions Your loan is subject to all of the terms and conditions of your promissory note. Please read your promissory note carefully; it includes terms under which the interest rate on the loan may change. A copy of your promissory note is attached to your application. In addition, the following terms and conditions apply to certain benefits offered with this loan. Please read these terms; they include terms under which the interest rate on the loan may change. 1. Automatic Debit Discount You will receive a 0.250% reduction in your interest rate if you agree to have your payments on your loan automatically deducted from your bank account. You can elect to make payments via automatic debit through the lender s online account management system. You will lose this benefit if the lender is unable to debit your bank account for any payment. This benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment or forbearance. 2. Electronic Communications Discount You will receive a 0.250% reduction in your interest rate if you provide a valid e-mail address and consent to receive all servicing communications by e-mail. You must elect to receive electronic communications through the lender s online account management system and provide a valid e-mail address within 90 days of the first payment due date. You will lose this benefit if you do not maintain a valid e-mail address, if you do not make all of your payments on time without interruption, or if you withdraw your consent. This benefit lowers your interest rate but does not change the amount of your monthly payment. 3. Cosigner Release A cosigner may be released from liability upon application by a borrower who has successfully completed his or her education, who has a satisfactory history of making principal and interest payments, and who meets the applicable credit criteria at the time of application. The borrower s account must remain current until the request for release is processed and the borrower must be a U.S. citizen or permanent resident at the time the cosigner release is processed. The release of a cosigner is at the sole discretion of Sallie Mae. H. Comparison of Federal and Private Student Loans This loan is a private student loan. It is offered solely by a private lender. This is not a federal or state loan. If you have not exhausted all of your federal student loans, you may want to reexamine your federal lending options. Federal student loans will usually result in a lower interest rate than a private loan. For this reason, private loans should normally only be used after all federal loan options have been exhausted. The interest rates for federal loans are as follows: Stafford Loans 6.8% Interest Rates as of February 1, 2009 Plus Loans 8.5% These rates are fixed interest rates. The rate shown for Stafford Loans is the rate for Unsubsidized Stafford Loans. For additional information about federal loans, including information about the rate for Subsidized Stafford Loans, see Section N(10) of your promissory note, a copy of which is attached to your application. I. Consequences of Loan Default There are serious consequences if you default on this loan, including limitations on discharging the loan in bankruptcy, contained in Section 523(a)(8) of the United States Bankruptcy Code. Under normal circumstances, student loans are not dischargeable in bankruptcy. In order to discharge a loan in bankruptcy, the borrower must prove undue hardship in an adversary proceeding before the bankruptcy court.
There are additional consequences to a default on this loan. Any future disbursements will be cancelled and you will be ineligible for further loans from the lender. The lender will report any late payment history to credit bureaus, which will adversely affect your credit rating and ability to get more credit from other lenders. Interest will continue to accrue on the loan until it is repaid and, if the lender refers your loan to a collection agency or takes legal action to collect the loan, you will incur additional fees as well. J. Lender/Servicer Contact Information Name Sallie Mae Servicing Address P. O. Box 9435 City Wilkes-Barre State PA Zip Code 18773-9435 Phone No. 1-888-2SALLIE (1-888-272-5543) Fax No. 1-850-767-7747 (This is not a toll-free number) Email Address pco@salliemae.com