SLM Corporation
Encyclopedia
SLM Corporation is a publicly traded U.S. corporation whose operations are originating, servicing and collecting on student loans.
Managing more than $180.4 billion in debt for more than 10 million borrowers, the company primarily provided federally guaranteed student loans originated under the Federal Family Education Loan Program
(FFELP). It now provides private student loans. Sallie Mae employs 8,000 individuals at offices nationwide.
terminated its federal charter, ending its ties to the government. The company remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors.
In 2005, Sallie Mae was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush
.
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. Sallie Mae and Upromise plan to market comprehensive financial packages to parents and students, including investment plans, financial aid information, and student loans.
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 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. 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 and the tightening of global credit markets following the 2007 subprime mortgage financial crisis. 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
.
On April 6, 2009, Sallie Mae announced that it will move 2,000 jobs back to the U.S. within the next 18 months as it shifts call center and other operations from overseas.
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.
On July 1, 2010 Sallie Mae announced that it will be moving its headquarters from Reston, Virginia
, to its existing facility in Newark, Delaware
, in 2011.
On September 17, 2010 it was announced that Sallie Mae will acquire federally insured loans from Citigroup
-owned Student Loan Corporation worth $28 billion.
; Lynn Haven, Florida
; Indianapolis, Indiana
; Muncie, Indiana
; Mount Laurel, New Jersey; Wilkes-Barre, Pennsylvania
; Killeen, Texas
, and Whitewater, Wisconsin
, as well as 71 other offices in the United States
.
Sallie Mae is listed on both the Fortune 500
and the Forbes Global 2000
. The company has been recognized as one of the 100 Best Corporate Citizens according to Business Ethics magazine and one of the top 30 companies for executive women by the National Association of Female Executives.
Sallie Mae sponsors The Sallie Mae Fund, a charitable organization with a mission to increase access to higher education for America's students by supporting and starting programs and initiatives that help open doors to higher education. The Sallie Mae Fund prepares families and students for college and provides scholarship funding that focuses on minority, low-income, and "first in the family" students. Since 2001, The Sallie Mae Fund has awarded $10 million in scholarships to help 4,000 students enroll in college. That is $1 donated for every $12,690 under their management.
Through The Fund's work, Sallie Mae was named among BusinessWeeks Top 15 Corporate Philanthropists in 2004. The Washington Business Journal identified the company as the top local corporate philanthropist in 2005.
Sallie Mae won the Ron Brown Award
for Corporate Leadership in 2006. It was honored for three college-access programs developed by The Sallie Mae Fund: Latino College Access Campaign, Project Access: DC, and The Sallie Mae Fund Scholarship Programs.
The Sallie Mae Fund earned the 2007 Insight Award for Customer Advocacy in Financial Services (from Insight Forums, LLC). The award recognizes financial communications initiatives that proactively enable customers to make fully informed choices.
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." On March 12, 2009 the court ruled "dismissal without prejudice" because "the plaintiff has failed to obtain substitute counsel by the deadline." Zahara was seeking new counsel.
A 60 Minutes
segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices. A professor of law at Harvard Law School
, Elizabeth Warren
, who is also an expert on bankruptcy and an outspoken critic of consumer lenders, questioned Sallie Mae's dual role as both lender and collector.
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.http://www.boston.com/business/articles/2007/03/16/d8ntej9o0/ 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.
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. The university involved, the State University of New York
system, is 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, 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. The lawsuit was pending in a Connecticut
Federal Court
. New York
Attorney General
, Andrew Cuomo
, raised similar concerns about possible student loan
redlining
in June 2007.
A False Claims Suit was filed against Sallie Mae by former U.S. Department of Education researcher, Dr. Oberg. The suit alleges that Sallie Mae and other lenders deliberately overcharged the U.S. government. The findings by Oberg were labeled among higher education policy analysts as the 9.5.% Scandal.
Managing more than $180.4 billion in debt for more than 10 million borrowers, the company primarily provided federally guaranteed student loans originated under the Federal Family Education Loan Program
Federal Family Education Loan Program
The Federal Family Education Loan Program was the second largest of the U.S. higher education loan programs . The FFEL was initiated by the Higher Education Act of 1965 and was funded through a public/private partnership administered at the state and local level...
(FFELP). It now provides private student loans. Sallie Mae employs 8,000 individuals at offices nationwide.
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 CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
terminated its federal charter, ending its ties to the government. The company remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors.
In 2005, Sallie Mae was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
.
In August 2006, Sallie Mae acquired Upromise
Upromise
Upromise, Inc. is an American corporation launched in April 2001, that is owned by SLM Corporation, the parent of Sallie Mae. Upromise claims to be the largest private source of college-funding contributions in the United States, with $575 million accrued in members' Upromise "college savings...
, a company that provides rebates to buyers of certain brands, which can be applied to college savings accounts. Sallie Mae and Upromise plan to market comprehensive financial packages to parents and students, including investment plans, financial aid information, and student loans.
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 completed, J.C. Flowers along with private-equity firm Friedman Fleischer & Lowe
Friedman Fleischer & Lowe
Friedman Fleischer & Lowe is a private equity firm, founded in 1998 by Tully Friedman, Spencer Fleischer, David Lowe, and Christopher Masto. The firm makes investments primarily through leveraged buyouts and growth capital investments....
would have owned 50.2% of Sallie Mae, and Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
and JPMorgan Chase would each have owned 24.9%. Sallie Mae would have ceased to be a publicly traded company. 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 and the tightening of global credit markets following the 2007 subprime mortgage financial crisis. 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
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
.
On April 6, 2009, Sallie Mae announced that it will move 2,000 jobs back to the U.S. within the next 18 months as it shifts call center and other operations from overseas.
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.
On July 1, 2010 Sallie Mae announced that it will be moving its headquarters from Reston, Virginia
Reston, Virginia
Reston is a census-designated place in Fairfax County, Virginia, United States, within the Washington, D.C. metropolitan area. The population was 58,404, at the 2010 Census and 56,407 at the 2000 census...
, to its existing facility in Newark, Delaware
Newark, Delaware
Newark is an American city in New Castle County, Delaware, west-southwest of Wilmington. According to the 2010 Census, the population of the city is 31,454. Newark is the home of the University of Delaware.- History :...
, in 2011.
On September 17, 2010 it was announced that Sallie Mae will acquire federally insured loans from Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
-owned Student Loan Corporation worth $28 billion.
Corporate information
Sallie Mae operates servicing centers in Gilbert, ArizonaGilbert, Arizona
-Demographics:As of July 1, 2009, Maricopa Association of Governments, Census 2000. United States Census Bureau. there were 217,521 people, 74,147 housing units, and 3.01 persons per household....
; Lynn Haven, Florida
Lynn Haven, Florida
Lynn Haven is a city in Bay County, Florida, United States, north of Panama City. The population was 18,493 at the 2010 census. It has the smaller population of the two principal cities of the Panama City, Florida - Lynn Haven, Florida Metropolitan Statistical Area. As of 2010, the population...
; Indianapolis, Indiana
Indianapolis, Indiana
Indianapolis is the capital of the U.S. state of Indiana, and the county seat of Marion County, Indiana. As of the 2010 United States Census, the city's population is 839,489. It is by far Indiana's largest city and, as of the 2010 U.S...
; Muncie, Indiana
Muncie, Indiana
Muncie is a city in Center Township, Delaware County in east central Indiana, best known as the home of Ball State University and the birthplace of the Ball Corporation. It is the principal city of the Muncie, Indiana, Metropolitan Statistical Area, which has a population of 118,769...
; Mount Laurel, New Jersey; Wilkes-Barre, Pennsylvania
Wilkes-Barre, Pennsylvania
Wilkes-Barre is a city in the U.S. state of Pennsylvania, the county seat of Luzerne County. It is at the center of the Wyoming Valley area and is one of the principal cities in the Scranton/Wilkes-Barre metropolitan area, which had a population of 563,631 as of the 2010 Census...
; Killeen, Texas
Killeen, Texas
Killeen is a city in Bell County, Texas, The United States. The population was 86,911 at the 2000 census. As of 2009, Killeen had 119,510 people. In 2010 Killeen's population shot to 127,921...
, and Whitewater, Wisconsin
Whitewater, Wisconsin
Whitewater is a city in Jefferson and Walworth Counties in the U.S. state of Wisconsin. Located near the southern portion of the Kettle Moraine State Forest, Whitewater is the home of the University of Wisconsin–Whitewater.-Geography:...
, as well as 71 other offices in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
Sallie Mae is listed on both the Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
and the Forbes Global 2000
Forbes Global 2000
The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world by Forbes magazine. The ranking is based on a mix of four metrics: sales, profit, assets and market value...
. The company has been recognized as one of the 100 Best Corporate Citizens according to Business Ethics magazine and one of the top 30 companies for executive women by the National Association of Female Executives.
Corporate board
Anthony P. Terracciano is Chairman of the Board of Directors. He joined the board in January 2008 following the failed sale of Sallie Mae to J.C. Flowers. Terracciano was formerly President of First Union Corporation (now Wachovia), Chairman and Chief Executive Officer of First Fidelity Bank Corporation, President and Chief Operating Officer of Mellon Bank, Vice Chairman of Chase Manhattan Bank, and non-executive Chairman of both The Dime Bank and Riggs National Corporation. Albert Lord currently holds the positions of Vice Chairman and CEO. Lord joined Sallie Mae in 1981, took over as CEO in 1995, and led the company's privatization.Social responsibility
Corporate Responsibility Officer has named Sallie Mae one of America's "100 Best Corporate Citizens" five times. Corporations (over 1,100 are evaluated) are selected according to community, governance, diversity, and environmental best business practices.Sallie Mae sponsors The Sallie Mae Fund, a charitable organization with a mission to increase access to higher education for America's students by supporting and starting programs and initiatives that help open doors to higher education. The Sallie Mae Fund prepares families and students for college and provides scholarship funding that focuses on minority, low-income, and "first in the family" students. Since 2001, The Sallie Mae Fund has awarded $10 million in scholarships to help 4,000 students enroll in college. That is $1 donated for every $12,690 under their management.
Through The Fund's work, Sallie Mae was named among BusinessWeeks Top 15 Corporate Philanthropists in 2004. The Washington Business Journal identified the company as the top local corporate philanthropist in 2005.
Sallie Mae won the Ron Brown Award
Ron Brown Award
The Ron Brown Award for Corporate Leadership is a U.S. presidential honor to recognize companies "for the exemplary quality of their relationships with employees and communities"...
for Corporate Leadership in 2006. It was honored for three college-access programs developed by The Sallie Mae Fund: Latino College Access Campaign, Project Access: DC, and The Sallie Mae Fund Scholarship Programs.
The Sallie Mae Fund earned the 2007 Insight Award for Customer Advocacy in Financial Services (from Insight Forums, LLC). The award recognizes financial communications initiatives that proactively enable customers to make fully informed choices.
Controversies
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 forbearanceForbearance
In the context of a mortgage process, forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.”...
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
Relator (law)
-Qui Tam action:A Qui Tam Action may be brought by any party against an entity that is fraudulently collecting money from the United States government by filing false claims. The party bringing the suit -- the relator -- must have possession of information substantiating the claim of fraud against...
has been arrested for extortion, the circumstances surrounding that arrest, and Relator’s failure to disclose the arrest to counsel." On March 12, 2009 the court ruled "dismissal without prejudice" because "the plaintiff has failed to obtain substitute counsel by the deadline." Zahara was seeking new counsel.
A 60 Minutes
60 Minutes
60 Minutes is an American television news magazine, which has run on CBS since 1968. The program was created by producer Don Hewitt who set it apart by using a unique style of reporter-centered investigation....
segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices. A professor of law at Harvard Law School
Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...
, Elizabeth Warren
Elizabeth Warren
Elizabeth Warren is an American bankruptcy expert, policy advocate, Harvard Law School professor, and Democratic Party candidate in the 2012 United States Senate election in Massachusetts. She has written several academic and popular books concerning the American economy and personal finance. She...
, who is also an expert on bankruptcy and an outspoken critic of consumer lenders, questioned Sallie Mae's dual role as both lender and collector.
In February 2007, New York Attorney General Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
launched an investigation into alleged deceptive lending practices by student loan providers, including The College Board, EduCap, Nelnet
Nelnet
Nelnet is a Lincoln, Nebraska-based lending conglomerate that deals in the administration and repayment of student loans.-History:Nelnet was founded as the UNIPAC Loan Service Corporation in 1978 and renamed Nelnet in 1996. Its current Chairman & Chief Executive Officer is Michael S. Dunlap...
, Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
, and Sallie Mae.http://www.boston.com/business/articles/2007/03/16/d8ntej9o0/ 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.
On October 10, 2007, documents surfaced showing that Sallie Mae was attempting to use the Freedom of Information Act
Freedom of Information Act (United States)
The Freedom of Information Act is a federal freedom of information law that allows for the full or partial disclosure of previously unreleased information and documents controlled by the United States government. The Act defines agency records subject to disclosure, outlines mandatory disclosure...
to force colleges to turn over students' personal information. The university involved, the State University of New York
State University of New York
The State University of New York, abbreviated SUNY , is a system of public institutions of higher education in New York, United States. It is the largest comprehensive system of universities, colleges, and community colleges in the United States, with a total enrollment of 465,000 students, plus...
system, is expected to decline the request and be forced to defend its position in court.
In December 2007, a class action
Class action
In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued...
lawsuit was brought against Sallie Mae, 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. The lawsuit was pending in a Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
Federal Court
United States federal courts
The United States federal courts make up the judiciary branch of federal government of the United States organized under the United States Constitution and laws of the federal government.-Categories:...
. New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...
, Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...
, raised similar concerns about possible student loan
Student loan
A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...
redlining
Redlining
Redlining is the practice of denying, or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain, often racially determined, areas. The term "redlining" was coined in the late 1960s by John McKnight, a...
in June 2007.
A False Claims Suit was filed against Sallie Mae by former U.S. Department of Education researcher, Dr. Oberg. The suit alleges that Sallie Mae and other lenders deliberately overcharged the U.S. government. The findings by Oberg were labeled among higher education policy analysts as the 9.5.% Scandal.
Subsidiaries
- Academic Management Services Corp. (Acquired 2003)
- Arrow Financial Services (Acquired Majority Interest September 2004)
- First Trust Financial
- General Revenue Corporation (Acquired January 2002)
- GRP Financial Services (Acquired August 2005)
- Nellie Mae (Acquired July 1999)
- Pioneer Credit Recovery Inc.
- Sallie Mae Bank
- Sallie Mae Home Loans
- Sallie Mae Inc.
- SLM Financial Corporation
- Southwest Student Services Corporation (Acquired October 2004)
- Student Assistance Corporation
- Student Loan Finance Association (Acquired November 2004)
- Student Loan Funding (Acquired July 7, 2000)
- Upromise (Acquired August 23, 2006)
Further reading
- Schemo, Diana Jean, "Private Loans Deepen a Crisis in Student Debt", The New York Times, June 10, 2007
- "College, Inc.", PBS FRONTLINE documentary, May 4, 2010