The Top 10 Things You Don’t Know About Sallie Mae

Learn more about the campaign | Sallie Mae: Buying Influence at What Cost?The Student Debt CliffALEC’s Legislative Agenda on Higher Education

Throughout the Great Recession, only one type of household debt grew: student debt. In April 2012, student debt surpassed the $1 trillion mark,i and now students owe on average nearly $27,000 by the time they graduate.ii As student debt and student loan defaults escalate at an unsustainable pace, private student loan lenders continue to increase their profit margins. Sallie Mae is the largest private student loan lender and one of the chief profiteers off of student debt, yet it faces minimal public scrutiny and accountability. Below are 10 critical facts about Sallie Mae that exemplify the need for increased regulation in the private student loan industry.

1. Sallie Mae is a publicly traded corporation, accountable to shareholders – not the government or students. Originally created as a government-sponsored enterprise in 1972, Sallie Mae transitioned to operating as a fully-privatized bank lender between 1997 and 2004.iv Sallie Mae now operates as a massive financial institution with a stake in several states’ 529 savings plans.v

2. Sallie Mae owns $162.5 billion of student debt,vi or nearly 20 percent of all student debt in the country. Sallie Mae is the largest private profiteer off of student debt, with more than 25 million customers. Since 2010, the company has increased its private student loan portfolio by 45 percent.vii

3. Twenty percent of individuals with Sallie Mae loans defaulted from 2009 to 2012 after entering forbearance, and 11.4 percent defaulted after leaving forbearance and trying to make payments.viii Sallie Mae has a history of hiding its true default rate numbers, and the Senate Committee on Health, Education, Labor and Pensions (HELP) singled out the company for manipulating default rates for students at for-profit colleges.ix In 2007, company shareholders filed a class action lawsuit over this practice of pushing students into forbearance as a way to delay defaults on loans that were granted despite borrowers’ clear inability to pay them off.x

4. From 2007 to 2011, Sallie Mae CEO Albert Lord has received more than $35 million in total compensation.xi Sallie Mae’s senior management team, composed of five executives, received more than $20 million in compensation in 2011.xii

5. Sallie Mae made $84 million in revenue in 2012 from Department of Education servicing contracts.xiii Sallie Mae services 4.3 million students’ loans through two U.S. Department of Education contractsxiv – and gets paid well for doing it. Taxpayers are currently financing a federal student loan system where Sallie Mae gets an 11 percent commission of the entire amount of a loan for every loan it rehabilitates, regardless of the monthly payment size. In recent years, Sallie Mae has enjoyed an even-higher 16 percent commission rate.xv

6. Sallie Mae spent $16 million on federal lobbying from 2008 to 2012.xvi The New York Times described Sallie Mae’s federal lobbying efforts as “aggressive,” and detailed how the corporation tried to block student loan reform by influencing federal regulators and Congress.xvii

7. Sallie Mae had 63 registered lobbyists in nine states between 2005 and 2011.xviii This influence can be quantified in states across the country that have continued to divest in public higher education, with only two states increasing funding for higher education since 2008.xix A lack of state funding has driven students to be more dependent than ever on private lenders, including Sallie Mae.

8. Sallie Mae is one of the newest members of the controversial American Legislative Exchange Council (ALEC).xx In November 2012, Sallie Mae gave a presentation at an ALEC conference called: “Best Practices for Debt Collection and Tax Amnesty.xxi” ALEC has been widely criticized for promoting controversial legislation such as voter ID laws, “right-to work” laws, and pro-gun “stand your ground” laws.xxii It faced widespread public attention and criticism in 2012, when hundreds of corporations ended their ties with ALEC – the same year that Sallie Mae joined the extremist group.xxiii

9. The Consumer Financial Protection Bureau (CFPB) has received more than 1,500 complaints about Sallie Mae.xxiv Sallie Mae alone totaled nearly half of the 3,485 total complaints submitted about student loans to the agency since March 2012.

10. Sallie Mae has faced class action lawsuits nearly every year since being privatized. The suits have accused the corporation of racistxxv and discriminatory predatory lendingxxvi practices against minorities and low-income borrowers. Sallie Mae settled all of these cases outside of court, and is now facing a new class action lawsuit for providing loans that their executives described as “predictably uncollectible.”xxvii

If you’re a borrower struggling with Sallie Mae, please visit the Consumer Financial Protection Bureau or the National Consumer Law Center to explore your options for regulatory or legal recourse.


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i“Too Big to Fail: Student debt hits a trillion”: http://www.consumerfinance.gov/blog/too-big-to-fail-student-debt-hits-a-trillion/
ii “Average Student Debt Climbs to $26,600 for Class of 2011″: http://projectonstudentdebt.org/files/pub/Release_SDR12_101812.pdf
iii “Meet 5 Big Lenders Profiting From the $1 Trillion Student Debt Bubble (Hint: You Know Some of Them Already)”: http://www.alternet.org/story/153200/meet_5_big_lenders_profiting_from_the_%241_trillion_student_debt_bubble_%28hint%3A _you_know_some_of_them_already%29?page=0%2C1&paging=off
iv “Treasury Announces Successful Privatization of Sallie Mae”: http://www.treasury.gov/press-center/press-releases/Pages/js2173.aspx
v Sallie Mae website: https://www.salliemae.com/529-plans/default.aspx
vi Sallie Mae 2012 10-K, page 29: https://www.salliemae.com/assets/about/investors/shareholder/annual-reports/201210K.pdf
vii Sallie Mae 2012 10-K, page 7: https://www.salliemae.com/assets/about/investors/shareholder/annual-reports/201210K.pdf
viii Sallie Mae 2012 10-K, page 71: https://www.salliemae.com/assets/about/investors/shareholder/annual-reports/201210K.pdf
ix “For Profi t Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success”: http://www.help.senate.gov/imo/media/for_profit_report/PartI-PartIII-SelectedAppendixes.pdf
x SLM Venture v SLM Corporation and Albert Lord: (Part 1) http://higheredwatch.newamerica.net/sites/newamerica.net/files/articles/sallie%20mae%20private%20loan%20case%20part%201.pdf
/ (Part 2) http://higheredwatch.newamerica.net/sites/newamerica.net/files/articles/sallie%20mae%20private%20loan%20case%20part%202.pdf
xi Sallie Mae proxies, 2007-2012: https://www.salliemae.com/about/investors/stockholderinfo/secfilings/default.aspx
xii Sallie Mae proxy, 2011: http://www.sec.gov/Archives/edgar/data/1032033/000119312512161831/d286524ddef14a.htm
xiii Sallie Mae 2012 10-K, page 9: https://www.salliemae.com/assets/about/investors/shareholder/annual-reports/201210K.pdf
xiv Sallie Mae 2012 10-K, page 9: https://www.salliemae.com/assets/about/investors/shareholder/annual-reports/201210K.pdf
xv “Obama Cuts Student-Debt Collector Commissions to Aid Borrowers”: http://www.bloomberg.com/news/2013-03-19/obama-cuts-student-debt-collector-commissions-to-aid-borrowers.html
xvi Open Secrets: http://www.opensecrets.org/lobby/clientsum.php?id=D000022253&year=2012
xvii “Lobbying Imperils Overhaul of Student Loans”: http://www.nytimes.com/2010/02/05/us/politics/05loans.html?pagewanted=all&_r=0xviii National Institute on Money in State Politics
xix “Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years to Come” http://www.cbpp.org/cms/?fa=view&id=3927
xx “After a Controversial Year, ALEC Convenes in Washington; Damage Control at Top of Agenda”: http://www.prwatch.org/news/2012/11/11885/after-controversial-year-alec-convenes-washington-damage-control-top-agenda
xxi Agenda, ALEC Nov. 2012 Conference: http://www.prwatch.org/files/TFPTF.jpeg
xxii “ALEC Has Pushed The NRA’s “Stand Your Ground” Law Across The Nation”: http://mediamatters.org/blog/2012/03/21/alec-has-pushed-the-nras-stand-your-ground-law/186459
xxiii “Wal-Mart latest to leave conservative advocacy group ALEC” http://articles.latimes.com/2012/may/31/business/la-fi-mo-walmart-alec-20120531
xxiv CFPB Consumer Complaint Database: https://data.consumerfinance.gov/dataset/Student-loan-complaints/c8k9-ryca
xxv Rodriguez vs. Sallie Mae: http://www.newamerica.net/files/sallie%20mae%20lawsuit.pdf
xxvi “An Unsettling Settlement in Class Action Lawsuit Challenging Sallie Mae’s Subprime Lending Practices”: http://higheredwatch.newamerica.net/blogposts/2012/an_unsettling_settlement_in_sallie_mae_class_action_lawsuit-68684
xxvii “Firm Files Suit Against Sallie Mae On Behalf of For-Profit College Students” http://www.wolflegal.com/wolf-legal-sues-sallie-mae/

20 Responses to “The Top 10 Things You Don’t Know About Sallie Mae”

  1. Richard Porter says:

    My husband received student loans though sallie May. He has been ill for year and has has to keep putting it off. now he has neuropathy in all of his body, arms legs fingers feet and is diabetis with dka which is deadly. He has been one to get pulmonary embolisms 5 of them, sepsis 4x in 6 month and now he is having seizures that he has seizures 2 in one day that stopped his heart and his breathing and broke several bones in his bac k. he went in with good intentions to pay them. He has paid but all but a little over 5,000 but he cannot even aford his mediction or dr visits because of no dr insurance nd over 200.ooo in hospital bills. He is filing for disability but they have harrassed him endlessley can you help him? He is unable to work and it is non of his fault. He paid whenever he could ..Please let us know where to go, I am on disability myself and his son is autistic and requires treatment. We need help

    Email is lisalport@yahoo.com Lisa Porter

  2. JSH says:

    Don’t do anything until his disability is approved. When it is approved, fill out the necessary paperwork. Sallie Mae can’t deny a disabled person.

  3. Virginia Zerpa says:

    Disability is one of the criteria that meets student loan debt discharge. Google it and you will find the answer you need. As JSH said, wait for the disability to be approved so you have the paperwork to start the student loan discharge process.

  4. J.Smittie says:

    So I have an issue that many people are probably having. I attended Mountain State University from 2010-12 and was informed in July 2012 that the school was closing down because they lost their accreditation. From the day I received that notice, I was unable to enroll for the following semester. I tried to have my student loans forgiven/discharged because the school closed down while I attended. My loan provider informed me that the school closed down effective DEC 31, 2012, and since I was not enrolled within 90 days of that closing date, I could not have the loans forgiven/discharged. I have had a hard time explaining my situation to the department of education and sally mae and am now waiting, 2 weeks so far, for a return call from a representative from the Ombudsman’s office. I believe my loans should be forgiven/discharged because I attended school right up till the time they told me they were closing down. I don’t know what the school did in the last 6 months of operation. I have not found any info about how many people actually graduated in that last class offered. do I have a case for loan discharge/forgiveness?

  5. A. Signorelli says:

    Sallie lied to my wife about her private student loans. They told her while she was in school that she had the 3 individual loans. They said the minute she graduated they would consolidate them and release the do signers, Surprise not true, now they say they don’t consolidate private loans. She had hour cut atnworkmduringnthemfinacial crash and called them to see what could be done. She informed them she may not be able to pay. Their exact words were we don’t care because if you default the government pays us.

  6. Very descriptive article, I loved that bit. Will there be
    a part 2?

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  9. Amy says:

    I need some help with Sallie Mae also. I filled out their forms for forbearance/deferment back in October and emailed the forms to them. I received two notices from them, the first around 2 weeks later, stating that they were backed up and were working on it, and that they would let me know just as soon as they could whether or not the request would be approved.
    Meanwhile, I have other loans through another lender. I contacted them to let them know I am currently out of work. They suggested I apply for an income-based repayment plan, and they were very up front about it, and told me to go to the Dept of Ed’s website and fill out the request. The Dept of Ed would then send the request to any lender(s) I wanted. I clicked on both my lenders (including Sallie Mae) and had the DOE send them the requests.
    I heard almost immediately from my other lender that my request has been approved. I have yet to hear ANYTHING from Sallie Mae. To top it off, now they are sending me emails and calling my house with their automated messages stating my government loans are now overdue. I have sent them 2 emails through their website telling them I will do nothing until they respond to the 2 requests they were sent.
    Can you tell me what I should do now?? They STILL have not responded to me, and it is useless to call them because I cannot get through to a human being.
    Thanks!

  10. Beef says:

    ALEC an ‘extremist’ organization? Seriously?
    You lost all your cred on that one.

  11. My name is Laura Thacker. I attended St Pete College who robbed me of my degree and put my loans into collection WHILE I WAS STILL ENROLLED.

    Their current director of FA is Todd Anthony Smith. Both his previous jobs were at the student loan dumps where people went out in handcuffs.

    I am in the process of beginning to sue them.

    If you can offer or need any help and would like to share files or information I WILL be publicizing this matter as it moves forward (scribd and website) and I will share as I have limited time to do otherwise, PUBLICLY, every item and document I utilize.

    There were AT MINIMUM fifty people who stand to profit from this debt, engaged in the illicit theft of my VERY HARD EARNED DEGREE and the illegal collection of this illegal debt.

    FDCPA .. a good start.
    And thanks HERE for all your hard work !

    lauramthacker@yahoo.com

    Also involved with him were Gwen Reed, Antonio Seay who tried to push me to consolidate my loans and Michael Bennett and the President of the college HIMSELF, William D. Law of LeMoyne IL, TX and some other dump he was preznit at. The value of that degree is about that of a hot dog stand napkin. BECAUSE I discovered that they are ALSO handing out degrees to students who ABSOLUTELY DO NOT have the credentials nor have they earned the credits. This was told TO ME TO MY FACE by a person they conferred a degree on. At the time she was stalking my son. After that, REED’s ASSUMED RELATIVE state rep REED had a guy following me around in a pickup truck (AT MY HOME THEY KNOW WHERE YOU LIVE AND STALK YOU THERE) with the tags REP 59 which was the state rep number of her ancient relative Betty Reed AT THAT TIME.

    So you know … these people will hunt you down at your home, stalk you and steal your degree. It’s NOT just profit. It’s CRIMINAL and they shoe-horn students in whom they believe they can then COLLECT AGAINST.

  12. Representative Betty Reed – Florida House of Representatives
    http://www.myfloridahouse.gov/…/Representatives/…‎
    Florida House of Represe…
    Representative Betty Reed. District 61. Democrat. Email Your Representative Sponsored Bills Newsletter. Capitol Office … Florida State PTA, past board member
    Google+ page · Be the first to review
    2109 E Palm Ave, Tampa, FL 33605
    (813) 241-8024
    Betty Reed – Wikipedia, the free encyclopedia
    en.wikipedia.org/wiki/Betty_Reed‎
    Wikipedia
    Jump to Florida House of Representatives – When incumbent State Representative Arthenia Joyner … Reed ran to succeed her in the 59th District, which …
    Florida Representative Betty Reed (D) | LobbyTools
    public.lobbytools.com/index.cfm?type=legislators&id=367‎
    … bio, committee assignments and bills filed by Florida Representative Betty Reed. … betty.reed@myfloridahouse.gov … Florida State PTA, past Board member

    I have a VERY VERY clear copy and several videos of the face and tag of the mean little man or big man as he was always in his pickup truck FOLLOWING ME OFF THE RAMP TO MY HOME FROM ST PETE COLLEGE IN ANOTHER COUNTY… she was stalking me while she was NOT helping me straighten out a matter which they caused. Another of them who worked with the lady who sent our house into illegal foreclosure also knows all the details and participated in the targeting.

    It finally struck me THAT ALL OF THIS centers around a mob activity: ILLEGAL DEBT COLLECTION. Enhanced by stalking, following, chasing you and destroying your life, GPA, FA and credit. If I could not prove it, it would NOT be said.

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