 | |
| Sallie Mae | |
| Formerly | Student Loan Marketing Association |
| Company type | Public |
| Nasdaq: SLM S&P 400 Component | |
| Industry | |
| Founded | June 23, 1972; 52 years ago (1972-06-23) |
| Headquarters | Newark, Delaware, U.S. |
Key people | |
| Products |
|
| 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 |
SLM Corporation (commonly known asSallie Mae; originally theStudent 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 offeringprivate student loans.
The company's primary business is creating, servicing, and collectingprivate education loans. The company also provides online tools and resources for college planning. Sallie Mae previously originated federally guaranteed student loans under theFederal 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 offersprivate 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 calledNavient Corporation. Navient is the largest servicer of federal student loans and acts as a collector on behalf of the Department of Education.
The Student Loan Marketing Association was originally created in 1972 as agovernment-sponsored enterprise (GSE) and began privatizing its operations in 1997, a process it completed at the end of 2004 whenCongress terminated itsfederal 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 PresidentGeorge 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 companyProdege.[11]
On April 16, 2007, Sallie Mae announced that an investor group led byJ.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 firmFriedman Fleischer & Lowe would have owned 50.2% of Sallie Mae, andBank of America andJPMorgan 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 the2007 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 fromBank of America.[15]
In 2008, SLM was bailed out by the US government through a buy back of FFEL private loans.[16]
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.[17]
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.[18]
On July 1, 2010, Sallie Mae announced that it would be moving its headquarters fromReston, Virginia, to its existing facility inNewark, Delaware.[19]
On September 17, 2010, Sallie Mae acquired federally insured loans fromCitigroup-owned Student Loan Corporation worth $28 billion.[20]
SLM Corporation, the company that operates Sallie Mae, was formed in 2013.[21] 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.[22]
In March 2020, the company announced Jonathan Witter, formerHilton executive, would replace Raymond Quinlan as the new CEO.[23]
Sallie Mae announced a partnership withMpower Financing in April 2021, to expand access to higher education for international andDACA students.[24]
The Sallie Mae corporate headquarters is inNewark, Delaware. Sallie Mae also operates offices inNew Castle, Delaware;Newton, Massachusetts;Indianapolis, Indiana;Salt Lake City, Utah; andSterling, Virginia.
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.[25][26]
Carter Franke is the current chair of Sallie Mae's board of directors, since her appointment in June 2020.[27] 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 ofFirst Union Corporation (now Wells Fargo).[28] Quinlan was also the chief executive office of Sallie Mae from May 2014 until March 2020, when current CEO Jonathan Witter assumed the position.[28]
Through The Fund's work, Sallie Mae was named amongBusinessWeek's Top 15 Corporate Philanthropists in 2004. TheWashington Business Journal identified the company as the top local corporate philanthropist in 2005.[29]
In the early 2010s,Kiplinger's Personal Finance recognized Sallie Mae Bank as the Best Online Savings Account,[30] the Best Money Market Account.[31] “the best place to stash cash,”[32] and the Best Savings Account.[33]
A60 Minutes segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices. SenatorElizabeth Warren, then a professor atHarvard 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.[34]
In February 2007,New York Attorney GeneralAndrew Cuomo launched an investigation into alleged deceptive lending practices by student loan providers, includingThe College Board, EduCap,Nelnet,Citibank, and Sallie Mae.[35] 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.[36][37]
On October 10, 2007, documents surfaced showing that Sallie Mae was attempting to use theFreedom of Information Act to force colleges to turn over students' personal information.[38] The university involved, theState University of New York system, was expected to decline the request and be forced to defend its position in court.
In December 2007, aclass action lawsuit was brought against Sallie Mae in aConnecticut federal court[39] 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 GeneralAndrew Cuomo, raised similar concerns about possiblestudent loanredlining in June 2007.[40] The lawsuit was settled and dismissed in 2011. Under the terms of the settlement, Sallie Mae agreed to make a $500,000 donation to theUnited Negro College Fund[41] and the attorneys for the plaintiffs received $1.8 million in attorneys' fees.[42]
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.[43]
AFalse 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 otherlenders deliberately overcharged the U.S. government.[44] The findings by Oberg were labeled among higher education policy analysts as the 9.5 scandal.[45]
On February 20, 2014,Illinois Attorney GeneralLisa Madigan’s office announced that an investigation into Sallie Mae's debt collection practices and loan servicing practices had been opened.[46]
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 grantingforbearance 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 thatRelator has been arrested for extortion, the circumstances surrounding that arrest, and Relator’s failure to disclose the arrest to counsel."[47][48] On March 12, 2009, the court ruled "dismissal without prejudice" because "the plaintiff has failed to obtain substitute counsel by the deadline."[49]