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Thursday 28 March 2024
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“Sallie Mae” Who are they and how did the Student Loan Giant Start? You will be surprised “A Must Read “

“Sallie Mae” Who are they and how did the Student Loan Giant Start?  You will be surprised “A Must Read “

 

 

 

Sallie Mae is a publicly traded U.S. corporation, whose operations are originating, servicing, and collecting student loans. They are a fortune 500 company.

 

Why is this important to know?    You may have heard on the News and or Social media about The Student Loan Crises that is happening, the cost of attending colleges is at an all time high, hundreds of thousands of students are defaulting on loans and finding out why ? takes some time, but first you must understand what is behind the name “Sallie Mae.”

Congress originally established The Student Loan Marketing Association, or “SLMA” in 1972. The SLMA acronym was pronounced “Sallie Mae” a nick name stuck and became widely recongnized.. Congress Chartered the Student Loan Marketing Association “SLMA” as a Government Sponsored Enterprise (GSE).  Its purpose was to enhance access to education by serving as a secondary market and warehousing facility for student loans.   Congress prohibited  from originationg loans directly to students in the .  Sallie Mae Dominated the Student Loan Market.  

To facilitate ists mission, Congress provided SLMA “student loan marketing association” with benefits not available to other companies.  As a GSE ” government sponsored enterprise” it had access to low funding costs in the “agency” debt market, exemption from most State and local taxes, and low required capitol as compared to banks.  The SLMA built a business on Student Loans, aggressively purchasing them and making warehouse advances to students loan lenders so that by 1990 Sallie Mae held nearly half of the outstanding federal guaranteed student loans. Servicing Student loans was its core competency but it also provided marketing expertise for lenders and expanded its focus to include schools and students.  Sallie Mae was generally successful in managing political risk winning from Congress expanded powers to hold private student loans and other assets.  It succeeded in convincing Congress to increase its Stock, beyond original banks and schools that participated on the federally guaranteed student loan program.  In 1983 non-voting stock became listed and traded on the New York Stock Exchange.  In 1992 Congress allowed all of the stock to convert to voting stock.  Allowing its comon stock to be publicly held and traded with no restrictions was a critical event, which is linked to a primary finding of the report — the inherent conflict of a private company obligated to act in the interest of its shareholders, while at the same time bound to serve a public purpose set by Congress.

The above written paragraphs were taken from a Report called Lessons Learned by the Privitization of Sallie Mae, written for the Department of Treasury in March 2006

In 1996 Congress provided for Sallie Mae’s Charter The GSE or Government Sponsored Enterprise( so many titles gets confusing) to terminate. Giving shareholdrs the choice of dissolving or reorganizing, and winding down on the GSE “Government Sponsored Enterprise”. The shareholders chose to reorganize.

In 2004 Congress ended all ties with Sallie Mae

 

Why was or is it important to know who Sallie Mae is or how they came into existance ?  Well first off when you are in debt to someone, a bank, a lender  you should know alittle bit about who it is your making payments to.  Sallie mae started out in Guaranteed Federal loans but in time successfully marketed to For Profit Schools to do Private student loans,  Read all the posts in this sub title to learn more about what is happening in the Student Loan Business today 2017 update.

You need to know that For Profit Colleges admissions offices are responsible to disclose the types of loans that students qualify for after filling out there FAFSA application. A good number of Addmisions offices have been accused of steering  students to apply for private student loans, and have been accused in many settled and on going lawsuits.  The reason for the steering is KICK BACKS to the Colleges.  The addmissions office is responsible for disclosing the differences associated with the different loan types.

 

Click Here  for lots of good information on Student Loans by The Get Out of Debt Guy this is a website with lots of updates and articles posting in reguards to Student Loan Debt.

 

 

Article to Read from internet on Sallie Mae’s business practices

 

  • Top 10 things you Dont know about Sallie Mae
  • Click Here