SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is a private U.S.[1] entity 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 provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP).[2] Sallie Mae employs 8,000 individuals at offices nationwide.[3]
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 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.[4][5][6]
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 (USD). Had the transaction completed, J.C. Flowers along with private-equity firm Friedman Fleischer & Lowe would have owned 50.2 percent of Sallie Mae, and Bank of America and JPMorgan Chase would each have owned 24.9 percent. Sallie Mae would have ceased to be a publicly traded company.[7] 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.[8] 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.[9]
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.[10]
Corporate information
Sallie Mae operates servicing centers in Gilbert, Arizona; Panama City, 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.
Corporate board
Anthony P. Terracciano is Chairman of the Board of Directors. Mr. Terracciano joined the board in January 2008 following the failed sale of Sallie Mae to J.C. Flowers. Mr. 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. Mr. 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 BusinessWeek's Top 15 Corporate Philanthropists in 2004. The Washington Business Journal identified the company as the top local corporate philanthropist in 2005.[11]
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.
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 forbearance in a purposeful effort to increase total student loan debt. That lawsuit is still ongoing.[12] 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."[13][14]
A 60 Minutes segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices.[4] A professor of law at Harvard Law School, Elizabeth Warren, who is also an expert on bankruptcy and an outspoken critic of consumer lenders, questions Sallie Mae's dual role as both lender and collector.[15]
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.[5] 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.[16]
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.[17] 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 discriminates against African American and Hispanic private student loan applicants by charging them high interest rates and fees. The lawsuit also alleges that Sallie Mae fails to properly disclose private student loan terms to unsuspecting students. The lawsuit is pending in a Connecticut Federal Court.[18] New York Attorney General, Andrew Cuomo, raised similar concerns about possible student loan redlining in June 2007.[19]
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)
See also
References
External links
