Personal Finance 

The Maes & Macs: Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae

Freddie Mac Fannie Mae Valcano CartoonWith the recent news of Freddie Mac and Fannie Mae being delisted from the NYSE and relegated to the OTC market, I thought it would be interesting to take a look at the four entities that share similar names. Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae sound very similar and while each started as a government sponsored entity (GSE), they’ve taken very different and distinct paths since their creations.

They’re often mistaken for each other and before I researched this, I didn’t know the difference between Freddie Mac and Fannie Mae (does it matter? they both seem f’d). I also didn’t know what Ginnie Mae did, other than being the only one that was explicitly backed by the US government (until recently, Freddie and Fannie were implicitly backed by the USG), and only that Sallie Mae dealt with student loans.

Let’s see what these guys do!
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Sallie Mae Increases Interest Rate to 1.40% APY

Sallie MaeSalle Mae Bank, which recently began offering their Sallie Mae online savings account, recently announced they were increasing their interest rate from 1.25% APY to 1.40% APY, putting it near the top of the interest rate list for high interest savings accounts. With no monthly fees, no minimum balance, daily compounding, and a competitive rate, Sallie Mae Bank has made a big splash in the online bank space despite being around for such a short period of time.

Their CD rates are competitive too, if my memory services me right (as of May 11, 2010):

  • 12-Month: 1.55% APY
  • 36-Month: 2.40% APY
  • 60-Month: 3.00% APY

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Brick and Mortar Bank Myths

In the last few years, I’ve reviewed several online banks from the gray beard ING Direct to the more recent Ally Bank and Sallie Mae. With each review, there invariably are commenters who are totally against online banks and bring up reasons why it’s a mistake to put your money with an online bank.

They cite reason after reason that brick and mortar is better, failing to recognize that the last online bank to fail was Netbank in 2007 (and hundreds of brick and mortar banks have failed since) and that despite all their concerns, online banks are FDIC insured. Well today I’m going to tackle many of these myths head on and show why they are either wrong or grossly exaggerated.

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Sallie Mae Bank Review

Sallie MaeSallie Mae, normally known for their federal and private student loans, is entering the savings account area with a high yield savings account currently offering 1.35% APY with no monthly fees and no minimums. It’s your standard online bank offering with a pretty standard savings account rates. In scanning their list of offerings, the only thing that stands out is their 10% bonus for Upromise earnings, which can be substantial if you’re a big user of Upromise.

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FAFSA State Grant Deadlines

FAFSA FormI was amazed to learn that 25% of families don’t submit a FAFSA, which is the Free Application for Federal Student Aid, because they’re leaving free money on the table for no good reason. For those that do fill it out, be careful to submit it before your state’s deadline for state grants! The FAFSA deadline is June 30th but many states have earlier deadlines for state specific grants.

Best part about grants? It’s money you don’t have to repay!

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Sallie Mae Reporting Error Lowers Equifax Credit Scores

Oops Sallie Mae Dropped My Equifax Credit ScoreIf you have a student loan from Sallie Mae and recently opted for graduated or extended repayment plans, Sallie Mae probably reported your recent loan payment as a partial payment to Equifax and they marked it as delinquent. If all that happened, your Equifax credit score, one of the most important numbers of your adult life, took a big hit as a result of that reporting error (or “glitch,” as they would say) by Sallie Mae. Sallie Mae, based out of Reston, Virginia, happens to be the largest student lender in the United States and this mistake has caused a significant drop in credit scores, as many as a hundred points!

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