How Are Sallie Mae Loans Disbursed?

Sallie Mae's private loans are unlike financial-aid loans in that they are only granted to students who have sufficient credit to warrant the disbursement. In most cases, Sallie Mae grants the private loans to parents, who sign on as co-borrowers. Private loans can be requested for the full amount of tuition and expenses and disbursed directly to a school and not to the students or their parents.

Sallie Mae most often disburses the loan directly into the student's school account. The school then draws upon the funds to cover any tuition or related costs accumulated during the waiting period for the loan approval and disbursement. Once the school covers all of the initial costs the student can either opt for the school to issue the remaining funds directly to her, or leave them in the account to cover any additional costs she accrues during the course of the semester. If she leaves the funds in place, the school will pay her what remains at the end of the semester.

Some schools allow a student to request that Sallie Mae disburse the student's funds directly to her and not to the school. In this case the school may either issue a check, send an electronic transfer, pay the student in cash or sign over Sallie Mae's loan check to the student. Because both the school and the student are often listed as beneficiaries on loan checks, the signatures of both may be required to release the funds.

A school has 14 days to apply student-loan funds received from Sallie Mae to the borrower's account. The clock starts either when the school receives the funds or on the first day of classes. This is considered the official date of disbursement.