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Thursday, February 18,2010

Help cure Sallie Mae's sugar addiction

By Jim Hightower

Sallie Mae is not one of those girls who’re made of “sugar and spice and everything nice.” Well, she is filled with sugar, but it comes from you and me, thanks to a longtime sweetheart deal she has from the federal government.

Sallie is the largest of several corporations that make student loans — this giant issued $22 billion worth of them last year. The sweet part is that all of the loans issued by Sallie Mae and other private lenders are absolutely risk-free for the corporations, because they are fully guaranteed by the feds. When a student defaults, the government steps in and makes the lender whole. No fuss, no loss — heck of a business to be in!

But if you think that’s sweet, get ready for a sugar-induced toothache, because Sallie and company also get a taxpayer subsidy for every college loan they make. Yes, a subsidy for taking no risk! And it’s no token giveaway, for it totals some $8 billion a year, going straight into the corporate coffers.

Gee, isn’t there a better way?

Of course — get rid of the rip-off middlemen (or, in Sallie’s case, middlewoman) and have the government make direct student loans through the colleges. Among many benefits, this would free up that $8 billion-a-year corporate subsidy, which can then be put into grants to help middle- and low-income students go to college.

This is precisely what President Obama has proposed. It’s an idea that makes all kinds of sense and serves the public good — so, naturally, Sallie and her corporate ilk are lobbying furiously to kill it in Congress, hoping to keep the sweet taste of billions of dollars in subsidized profits flowing their way. Sallie Mae alone hired $8 million worth of lobbyists last year to try to defeat the reform.

To help cut off Sallie’s sugar addiction, contact U.S. PIRG: www.uspirg.org.

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Obvious that Mr. Hightower has no idea what he's talking about. Sallie Mae endorses doing away with lender subsidies and having those funds reinvested into other education grants and aid, while maintaining the current student loan process. It is also obvious that Mr. Hightower and other anti-Sallie Mae readers are unaware that Sallie Mae was created by the US government to make student loans and service them. The government put the subsidies in place and has made significant changes to the FFEL program and lender subsidies. What I don't hear or read from Mr. Hightower is how the colleges and universities throughout the country are inflating financial aid. For example, a student taking two classes with books at a community college has roughly $1000.00 in tuition, fees, books, while living at home or own their own off-campus. Lets assume this student also works full time and is ineligible for Subsidized Stafford loans. Schools routinely certify the financial aid for this student to be greater than $1000.00 and I have seen a school certify a $6500.00 Unsubsidized Stafford loan. If you accurately do the math that's $5500.00 more than the student really needs for that semester. And, I haven't even touched on the ridiculous fees and per-hour costs that some schools charge, which get included in Financial Aid that schools establish. These factors are what help to inflate what lenders like Sallie Mae and Direct Lending (yes, they are not excluded here) originate yearly. So Mr. Hightower, don't throw mud at a company that was created by our government just because you have loans that you took out and should not have and now you have a mound full of debt you see no way out of. Instead, get the facts straight and aim your blame for this system on those that truly set the costs.



WOW! I understand the heavy inflation a university puts on students and I aggree a private college over inflates the tution. Let me ask you something Sir, HAVE YOU EVER DEALT WITH SALLIE MAE? Do you understand the techniques they use? Until you do! Keep your dry opions to yourself!!


Sallie uses the techniques allowed by law. If you or anyone else has issues with it they need to look at getting the laws changed. One or two customer service issues doesn't make a company.



i dealt with salliemae and knows alot of people who have federal loan from sallie mae.Sallie mae is guided by federal government.Each Borrower should always consider that Sallie mae loan is part of their bills, but this is not what happening they always take student loan as  least of their priorities.Federal Government have approved to have the loan deferred or use their forbearnce option,as a temporary solution to the problem. But most of the Borrower used to maximized their forbearance and interest capitalized.its too late for them to realized that almost of the balanced doubled because of habitual request for their forberance(postpone payment)



For those who support the criminal acts that Sallie Mae persue, you are obviously some ignorant rich guy who doesn't have to worry about financial problems. You know, it's rich jerks in our country, that has driven our country into a financial collapse. We don't even have, what general populous call, an economy, anymore. I went to ITT to become a computer aided drafter, a architects pawn. After I graduated in 2006, right before the collapse of our economy, I couldn't find a job. I had to default my loans, once I found a subpar job I started paying on my loans. Low and behold my $400 payments a month started grossing to $800 a mon. I called Sallie Mae to let them know, I could no longer afford the high payments, and that I would need to default on my loans once more, as I could no longer afford paying anything at the moment. They expected me to either pay the $800 a month, or pay 3/4 of my total in one lump sum. Needless to say, when I received a notice to pay on my delinquent loan a few months later, the total amount was the same as the initial loan. I was paying $400 a month on only my interest? Looking around other places on the web, you will hear of similiar cases with other people who decided to use Sallie Mae. Which reminds me, when I went to ITT I didn't ask to use Sallie Mae for my student loans, it's all ITT provided. I also, didn't ask for $14,000 per semester, which I saw NONE of the money. So, you ignorant rich fools, who don't have to worry about other people's problems, cause you're so worried about gobbling up all the money for yourself. Think it's time for you to open your eyes, and realize it's people like you, that have driven us to be ran by countries like China and India. Grow up!