Sallie Mae

Last updated
SLM Corporation
Sallie Mae
FormerlyStudent Loan Marketing Association
Company type
Nasdaq:  SLM
S&P 400 Component
Industry
FoundedJune 23, 1972;51 years ago (1972-06-23)
Headquarters Newark, Delaware, U.S.
Key people
  • Jonathan Witter (CEO)
  • Carter Franke (Chair, Board of Directors)
  • Kerri Palmer (COO)
  • Pete Graham (CFO)
Products
[1] [2] [3]
US$1.89 billion (2021) [4]
US$1.16 billion (2023)
Total assets US$20.4 billion (2023)
Total equity US$2.15 billion (2023)
Website salliemae.com

SLM Corporation (commonly known as Sallie Mae; originally the Student Loan Marketing Association) is a publicly traded U.S. corporation that provides consumer banking. Its nature has changed dramatically since it was set up in the early 1970s; initially a government entity that serviced federal education loans, it then became private and began offering private student loans.

Contents

The company's primary business is creating, servicing, and collecting private education loans. The company also provides online tools and resources for college planning. Sallie Mae previously originated federally guaranteed student loans under the Federal Family Education Loan Program (FFELP) [5] and worked as a servicer and collector of federal student loans on behalf of the Department of Education. The company now offers private education loans and manages more than $12.97 billion in assets.

On April 30, 2014, Sallie Mae spun off its loan servicing operation and most of its loan portfolio into a separate, publicly traded entity called Navient Corporation. Navient is the largest servicer of federal student loans and acts as a collector on behalf of the Department of Education.

History

The Student Loan Marketing Association was originally created in 1972 as a government-sponsored enterprise (GSE) and began privatizing its operations in 1997, a process it completed at the end of 2004 when Congress terminated its federal charter, ending its ties to the government. The company provides private education loans for students and their families. [6] These loans are not made, insured, or guaranteed by any state or federal government. [7]

In 2005, Sallie Mae was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush. [8] [9] [10]

In August 2006, Sallie Mae acquired Upromise, a company that provides rebates to buyers of certain brands, which can be applied to college savings accounts. In May 2020, Upromise was acquired by loyalty marketing company Prodege. [11]

On April 16, 2007, Sallie Mae announced that an investor group led by J.C. Flowers & Co. signed an agreement to purchase Sallie Mae for approximately $25 billion. Had the transaction been completed, J.C. Flowers, along with private-equity firm Friedman Fleischer & Lowe would have owned 50.2% of Sallie Mae, and Bank of America and JPMorgan Chase would each have owned 24.9%. Sallie Mae would have ceased to be a publicly traded company. [12] The deal fell through in September 2007, with the buyers blaming adverse changes to the business's outlook as a result of the College Cost Reduction and Access Act of 2007 [13] and the tightening of global credit markets following the 2007 subprime mortgage financial crisis. [14] Sallie Mae subsequently began legal action, only to drop it in January 2008 upon completion of a $31 billion funding round, including funding from Bank of America. [15]

On April 6, 2009, Sallie Mae announced that it would move 2,000 jobs back to the U.S. within the next 18 months as it shifts call center and other operations from overseas. [16]

On March 31, 2010, Sallie Mae announced the impending layoff of 2,500 employees in response to the signing of new legislation calling for the federal government to lend directly to students, bypassing institutions like Sallie Mae. [17]

On July 1, 2010, Sallie Mae announced that it would be moving its headquarters from Reston, Virginia, to its existing facility in Newark, Delaware. [18]

On September 17, 2010, Sallie Mae acquired federally insured loans from Citigroup-owned Student Loan Corporation worth $28 billion. [19]

SLM Corporation, the company that operates Sallie Mae, was formed in 2013. [20] On February 25, 2014, Sallie Mae announced the launch of Navient, a separate entity for federal student loan servicing. On April 30, Sallie Mae legally separated from Navient, and made its primary focus private student loans, banking products, and credit cards for college students and their families. [21]

In March 2020, the company announced Jonathan Witter, former Hilton executive, would replace Raymond Quinlan as the new CEO. [22]

Sallie Mae announced a partnership with Mpower Financing in April 2021, to expand access to higher education for international and DACA students. [23]

Corporate information

The Sallie Mae corporate headquarters is in Newark, Delaware. Sallie Mae also operates offices in New Castle, Delaware; Newton, Massachusetts; Indianapolis, Indiana; Salt Lake City, Utah; and Sterling, Virginia.

Corporate board

Albert Lord held the positions of vice chairman and CEO until his retirement 2013. Lord joined Sallie Mae in 1981, took over as CEO in 1995, and led the company's privatization. On May 29, 2013, the board announced Jack Remondi as Lord's successor. [24] [25]

Carter Franke is the current chair of Sallie Mae's board of directors, since her appointment in June 2020. [26] Prior to Franke, Raymond J. Quinlan served in the role, having joined the board in 2014 to replace previous chairman Anthony P. Terracciano—formerly president of First Union Corporation (now Wells Fargo). [27] Quinlan was also the chief executive office of Sallie Mae from May 2014 until March 2020, when current CEO Jonathan Witter assumed the position. [27]

Awards

Through The Fund's work, Sallie Mae was named among BusinessWeek's Top 15 Corporate Philanthropists in 2004. The Washington Business Journal identified the company as the top local corporate philanthropist in 2005. [28]

In the early 2010s, Kiplinger's Personal Finance recognized Sallie Mae Bank as the Best Online Savings Account, [29] the Best Money Market Account. [30] “the best place to stash cash,” [31] and the Best Savings Account. [32]

Controversies

A 60 Minutes segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices. Senator Elizabeth Warren, then a professor at Harvard Law School and sharp critic of what she characterizes as unfair lending practices, questioned Sallie Mae's dual role as lender and collector of student loans. [33]

In February 2007, New York Attorney General Andrew Cuomo launched an investigation into alleged deceptive lending practices by student loan providers, including The College Board, EduCap, Nelnet, Citibank, and Sallie Mae. [34] On April 11, 2007, Cuomo ended his investigation of Sallie Mae and announced that Sallie Mae had voluntarily agreed to change its lending standards to satisfy a new code of conduct for student loan practices established by Cuomo, and to donate $2 million (USD) to a fund devoted to educating college-bound students about their loan options. [35] [36]

On October 10, 2007, documents surfaced showing that Sallie Mae was attempting to use the Freedom of Information Act to force colleges to turn over students' personal information. [37] The university involved, the State University of New York system, was expected to decline the request and be forced to defend its position in court.

In December 2007, a class action lawsuit was brought against Sallie Mae in a Connecticut federal court [38] alleging that the company discriminated against African American and Hispanic private student loan applicants by charging them high interest rates and fees. The lawsuit also alleged that Sallie Mae failed to properly disclose private student loan terms to unsuspecting students. New York Attorney General Andrew Cuomo, raised similar concerns about possible student loan redlining in June 2007. [39] The lawsuit was settled and dismissed in 2011. Under the terms of the settlement, Sallie Mae agreed to make a $500,000 donation to the United Negro College Fund [40] and the attorneys for the plaintiffs received $1.8 million in attorneys' fees. [41]

On January 31, 2008, SLM Corporation paid $35,000,000 to settle a lawsuit for failing to adequately reserve for losses in Sallie Mae's non-traditional portfolio. [42]

A False Claims suit was filed against Sallie Mae by former U.S. Department of Education researcher, Dr. Oberg, in 2009. The suit alleges that Sallie Mae and other lenders deliberately overcharged the U.S. government. [43] The findings by Oberg were labeled among higher education policy analysts as the 9.5 scandal. [44]

On February 20, 2014, Illinois Attorney General Lisa Madigan’s office announced that an investigation into Sallie Mae's debt collection practices and loan servicing practices had been opened. [45]

On November 9, 2005, former Sallie Mae employee Michael Zahara filed a federal lawsuit against the company, alleging that it had a pattern and practice of granting forbearance in a purposeful effort to increase total student loan debt. On October 29, 2008, permission was granted to his legal counsel to withdraw from the case, citing "From counsel’s perspective, a breakdown in trust has resulted from the discovery that Relator has been arrested for extortion, the circumstances surrounding that arrest, and Relator’s failure to disclose the arrest to counsel." [46] [47] On March 12, 2009, the court ruled "dismissal without prejudice" because "the plaintiff has failed to obtain substitute counsel by the deadline." [48]

Subsidiaries

See also

Related Research Articles

<span class="mw-page-title-main">Fannie Mae</span> Government-backed financial services company

The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New Deal, the corporation's purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations. Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac.

<span class="mw-page-title-main">Student loan</span> Type of loan for educational expenses

A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy. This article highlights the differences of the student loan system in several major countries.

<span class="mw-page-title-main">ITT Technical Institute</span> Former for-profit technical institute

ITT Technical Institute was a private for-profit technical institute with its headquarters in Carmel, Indiana and many campuses throughout the United States. Founded in 1969 and growing to 130 campuses in 38 states of the United States, ITT Tech was one of the largest for-profit educators in the US before it closed in 2016.

<span class="mw-page-title-main">Freddie Mac</span> American government-sponsored enterprise

The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with its sister organization, the Federal National Mortgage Association, Freddie Mac buys mortgages, pools them, and sells them as a mortgage-backed security (MBS) to private investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. The name "Freddie Mac" is a variant of the FHLMC initialism of the company's full name that was adopted officially for ease of identification.

Bank of America Home Loans is the mortgage unit of Bank of America. It previously existed as an independent company called Countrywide Financial from 1969 to 2008. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender.

A government-sponsored enterprise (GSE) is a type of financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy, to make those segments of the capital market more efficient and transparent, and to reduce the risk to investors and other suppliers of capital. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors: agriculture, home finance and education. Well known GSEs are the Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.

Strada Education Network is a non-profit corporation which assists students into post-secondary education by providing financial support and other help. USA Funds links colleges, universities, proprietary schools, private lenders, students and parents to promote financial access to higher learning. The organization is formerly known as United Student Aid Funds or USA Funds. Strada's headquarters is in Indianapolis, Indiana.

Corinthian Colleges, Inc. (CCi) was a for-profit post-secondary education company in North America. Its subsidiaries offered career-oriented diploma and degree programs in health care, business, criminal justice, transportation technology and maintenance, construction trades, and information technology. A remnant of the schools was owned by ECMC under the Altierus Career College brand until the last three campuses were closed in 2022.

MyRichUncle was a loan product that was marketed to students by the American company MRU Holdings, Inc.. Incorporated March 2, 2000 in Delaware, MyRichUncle entered the student lending market as an originator and holder of private student loans. By 2007, the company was listed on the Naqdaq composite and expanded into holding Federal Family Education Loan Program (FFELP) loans.

The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans are now provided under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education.

A private student loan is a financing option for higher education in the United States that can supplement, but should not replace, federal loans, such as Stafford loans, Perkins loans and PLUS loans. Private loans, which are heavily advertised, do not have the forbearance and deferral options available with federal loans. In contrast with federal subsidized loans, interest accrues while the student is in college, even if repayment does not begin until after graduation. While unsubsidized federal loans do have interest charges while the student is studying, private student loan rates are usually higher, sometimes much higher. Fees vary greatly, and legal cases have reported collection charges reaching 50% of amount of the loan. Since 2011, most private student loans are offered with zero fees, effectively rolling the fees into the interest rates.

A debt buyer is a company, sometimes a collection agency, a private debt collection law firm, or a private investor, that purchases delinquent or charged-off debts from a creditor or lender for a percentage of the face value of the debt based on the potential collectibility of the accounts. The debt buyer can then collect on its own, utilize the services of a third-party collection agency, repackage and resell portions of the purchased portfolio, or use any combination of these options.

<span class="mw-page-title-main">Student loans in the United States</span> Loans incurred to pay for higher education

In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses. With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have to be repaid. Student loans may be discharged through bankruptcy, but this is difficult. Research shows that access to student loans increases credit-constrained students' degree completion, later-life earnings, and student loan repayment while having no impact on overall debt.

Nelnet, Inc., is a United States–based conglomerate that primary focused on financial services including student and consumer loan origination and servicing. Additionally, the company operates an investing arm, an internet bank and owns Allo Fiber, a cable and internet provider. The company is headquartered in Lincoln, Nebraska.

In the fields of mergers and acquisitions and corporate finance, a material adverse change, material adverse event (MAE), or material adverse effect is a change in circumstances that significantly reduces the value of a company. A contract to acquire, invest in, or lend money to a company often contains a term that allows the acquirer, investor, or lender to cancel the transaction if a material adverse change occurs. Where an acquiring company uses its own stock as part of the consideration paid to acquire another company, or in a merger of two companies, the contract may provide that either party to the transaction can cancel it if a material adverse change significantly reduces the value of the other party.

Education Management Corporation (EDMC) was a Pittsburgh, Pennsylvania-based operator of for-profit post-secondary educational institutions in the United States and Canada. The company was founded in 1962. At its peak in 2011, Education Management Corporation operated 110 schools through its higher education divisions: Argosy University, The Art Institutes, Brown Mackie College, and South University, and enrolled 158,300 students.

Earnest is a technology-enabled fintech lender headquartered in San Francisco, California that offers education financing products, including student loan refinancing and private student loans. The company evaluates a person’s full education, employment, and financial profile, in addition to their credit score in order to obtain a complete financial profile of each applicant. This type of credit is referred to as "merit-based lending."

Navient Corporation is an American student loan servicer based in Wilmington, Delaware. Managing nearly $300 billion in student loans for more than 12 million debtors, the company was formed in 2014 by the split of Sallie Mae into two distinct entities: Sallie Mae Bank and Navient. Navient employs 6,000 people at offices across the U.S. As of 2018, Navient services 25% of student loans in the United States.

For-profit higher education in the United States refers to the commercialization and privatization of American higher education institutions. For-profit colleges have been the most recognizable for-profit institutions, and more recently with online program managers, but commercialization has been a part of US higher education for centuries. Privatization of public institutions has been increasing since at least the 1980s.

Prodege, LLC is an American online marketing, consumer polling, and market research company based in El Segundo, California. The company develops consumer rewards and polling programs under various brands including Swagbucks, MyPoints, InboxDollars, CouponCause, Tada, Ysense, Upromise, and Pollfish.

References

  1. ↑ "Sallie Mae Bank CD Rates". Forbes. Retrieved 27 August 2021.
  2. ↑ "Sallie Mae". Sallie Mae. Retrieved 27 August 2021.
  3. ↑ "This credit card will let you earn rewards to pay off your student loans - but is it a good deal?". MarketWatch. Retrieved 27 August 2021.
  4. ↑ "Form 10-K Slm Corp" (PDF). Sallie Mae. Retrieved 31 March 2022.
  5. ↑ "Reuters SLM Corp. Profile". Reuters. Retrieved 2009-10-06.
  6. ↑ Farrington, Robert. "How The Sallie Mae and Navient Split May Help Student Loan Borrowers". Forbes. Retrieved 2021-05-14.
  7. ↑ "Federal Student Aid". studentaid.gov. Retrieved 2021-05-14.
  8. ↑ Drinkard, Jim (2005-01-17). "Donors get good seats, great access this week". USA Today. Retrieved 2008-05-25.
  9. ↑ "Financing the inauguration". USA Today. January 16, 2005. Retrieved 2008-05-25.
  10. ↑ "Some question inaugural's multi-million price tag". USA Today. 2005-01-14. Retrieved 2008-05-25.
  11. ↑ "Daily Research News Online no. 29789 - Prodege Buys Upromise to Expand Panels Offer". www.mrweb.com. Retrieved 2021-06-22.
  12. ↑ "Investor group to buy Sallie Mae for $25 billion". Sallie Mae, Inc. Archived from the original on April 22, 2008. Retrieved July 25, 2014.
  13. ↑ "College Cost Reduction and Access Act" (PDF). U.S. Government Printing Office. September 27, 2007. Retrieved July 25, 2014.
  14. ↑ Wighton, David; Politi, James (September 27, 2007). "JC Flowers team drops Sallie Mae bid". The Financial Times. Archived from the original on 2022-12-10. Retrieved July 25, 2014.
  15. ↑ "Sallie Mae drops takeover lawsuit". BBC News . London: BBC. January 29, 2008. Retrieved July 25, 2014.
  16. ↑ Spalding, Tom (April 6, 2009). "Sallie Mae to add 2,000 jobs in U.S." Indianapolis Star. Retrieved July 25, 2014.
  17. ↑ Chernenkoff, Kelly (March 31, 2010). "Sallie Mae Blames 2,500 Layoffs on Obama's Student Loan Overhaul". FOX News. Retrieved March 31, 2010.
  18. ↑ Hilzenrath, David S. (July 2, 2010). "Sallie Mae to move headquarters from Reston to Delaware, taking hundred of jobs". The Washington Post . Washington DC: WPC. ISSN   0190-8286 . Retrieved July 25, 2014.
  19. ↑ "Citigroup quits student loan business". United Press International. September 18, 2010. Retrieved July 25, 2014.
  20. ↑ "SLM Corporation Form 10-K". Securities and Exchange Commission. Retrieved May 14, 2021.
  21. ↑ Farrington, Robert. "How The Sallie Mae and Navient Split May Help Student Loan Borrowers". Forbes.
  22. ↑ "Sallie Mae announces new CEO". Delaware Business Now. 2020-03-05. Retrieved 2021-07-16.
  23. ↑ "MPOWER Financing Joins Forces With Sallie Mae to Expand High Education Access Specifically For International & DACA Students". www.crowdfundinsider.com. 20 April 2021. Retrieved 2021-07-09.
  24. ↑ “Sallie Mae Appoints Vice Chairman.”, 2 April 2015.
  25. ↑ Mulholland, Sarah (May 29, 2013). "Sallie Mae to Split Into Two Companies as Remondi Named CEO". Bloomberg. Retrieved July 25, 2014.
  26. ↑ "UD webinar focuses on women in the boardroom - DBT". Delaware Business Times. 2020-12-04. Retrieved 2021-06-04.
  27. 1 2 "Sallie Mae names Hilton exec as next CEO". Delaware Business Times. 2020-03-05. Retrieved 2021-06-04.
  28. ↑ Adler, Neil (May 5, 2005). "Sallie Mae tops philanthropy list". Washington Business Journal. Retrieved July 25, 2014.
  29. ↑ “Sallie Mae Simplifies Saving and Banking.”, 13 April 2015.
  30. ↑ “Kiplinger Names Sallie Mae Best Money Market Account.”, 13 April 2015.
  31. ↑ “Sallie Mae Money Market Account Recognized Top Savings Option.”, 13 April 2015.
  32. ↑ “The Best of Everything, 2013.”, 13 April 2015.
  33. ↑ Schorn, Daniel (May 5, 2006). "Sallie Mae's Success Too Costly?". CBS News . New York: CBS. Archived from the original on February 3, 2011. Retrieved July 25, 2014.
  34. ↑ "Boston Globe". Archived from the original on April 30, 2008.
  35. ↑ Basken, Paul (April 12, 2007). "Sallie Mae Will Pay Settlement of $2-Million in New York Investigation of Lenders' Practices". The Chronicle of Higher Education. Archived from the original on June 9, 2021. Retrieved June 9, 2021.
  36. ↑ Glater, Jonathan D. (2007-04-11). "Sallie Mae Agrees to Student Loan Settlement". The New York Times. ISSN   0362-4331 . Retrieved 2021-06-22.
  37. ↑ Burd, Stephen (October 9, 2007). "Sallie Mae Demands SUNY Colleges Turn Over Students' Personal Data". New America Foundation. Archived from the original on October 24, 2008. Retrieved November 17, 2008.
  38. ↑ "Sasha Rodriguez & Cathelyn Gregoire on Behalf of All Persons Similarly Situated vs. Sallie Mae (SLM) Corporation" (PDF). New America Foundation. December 17, 2007. Archived from the original (PDF) on October 6, 2014. Retrieved July 25, 2014.
  39. ↑ Guess, Andy (2007-07-05). "'Redlining' or Reasonable Criterion?". Inside Higher Ed. Retrieved 2009-07-17.
  40. ↑ "SDSD District Version 1.3". United States District Court for the District of Connecticut. Retrieved July 25, 2014.
  41. ↑ "SDSD District Version 1.3". United States District Court for the District of Connecticut. Retrieved July 25, 2014.
  42. ↑ "SLM Corporation (a/k/a Sallie Mae)". Archived from the original on September 21, 2012.
  43. ↑ Field, Kelly (August 15, 2010). "Nelnet to Pay $55-Million to Resolve Whistle-Blower Lawsuit". The Chronicle of Higher Education. Retrieved July 25, 2014.
  44. ↑ The 9.5 Scandal | NewAmerica.net The 9.5 Scandal Archived June 15, 2011, at the Wayback Machine
  45. ↑ "Sallie Mae's Student Lending, Collections Under Multistate Probe". Collections & Credit Risk. February 21, 2014. Archived from the original on February 27, 2014. Retrieved July 25, 2014.
  46. ↑ "United States Of America ex-rel. Michael Zahara, vs. SLM Corporation et al" (PDF). Student Loan Stories. October 29, 2008. Retrieved July 25, 2014.
  47. ↑ "Man jailed in extortion bid against candidate". Las Vegas Review-Journal. July 24, 2008. Retrieved July 25, 2014.
  48. ↑ "Lawsuits Against Salle Mae". PBS. June 19, 2009. Retrieved July 25, 2014.

Further reading

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.