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Sallie Mae: No Gov't Takeover of College Loans

HANOVER TWP. – The chief executive officer of Sallie Mae – the nation’s leading provider of student loans – said Tuesday he has concerns about his firm’s future, but the company is committed to its Wilkes-Barre operations and he expects to add jobs here.

Al Lord addressed most of the 900 employees at the Hanover Township facility, asking them to sign a petition, contact their elected representatives and become energized in the face of Obama administration plans to shift all student loans into the government-backed direct lending program.

Private lenders such as Sallie Mae are trying to retain their position in the market. However, they are at risk of being cut out of the lending market and thereby being relegated to a much smaller role of servicing the government loans.

On July 21, U.S. Rep. George Miller, D-Calif., introduced a bill that seeks to eliminate government-subsidized private student lending and replace it with loans to students through the Department of Education.

Sallie Mae was one of four companies awarded a loan servicing contract by the Department of Education. If the legislation passes, even with the servicing contract, “We would be about half of our size,” Sallie Mae spokeswoman Martha Holler was quoted as saying in a news story.

Lord said if the legislation doesn’t change, Sallie Mae could face drastic cuts. On a scale of 1 to 10, Lord said his level of concern is “about 7 or 8, but much less in Wilkes-Barre.”

“We remain committed to Wilkes-Barre,” Lord said. “We were here in April to announce 600 new jobs coming here and 300 are here already ahead of schedule and 300 more will be here soon.”

Holler said Sallie Mae agrees with the president’s main objectives: to create better student loan programs for students, schools and taxpayers, and to secure a historic level of savings for Pell Grants.

“With a few enhancements to the administration’s proposal, choice and competition in loan servicing and loan origination can be preserved by affording numerous originators and servicers the opportunity to compete to provide quality service to students,” Holler said.

Sallie Mae has offered a counter proposal to the government’s plan. Lord said all he wants is to have the two proposals placed side-by-side to see which one would be more beneficial.

Holler said more than 30 members of the student loan community — including nonprofit state agencies, stand-alone lenders, loan servicers, consumer banks and nonprofit state-based guaranty agencies and secondary markets — have signed on to “a constructive, alternative proposal.”

In April, Lord made national news when he announced he was bringing back 2,000 jobs from overseas. On Tuesday, he said he plans to return 1,400 more from offshore sites.

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