The Privatization of Sallie Mae and its Consequences

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Sallie Mae’s s Continuing GrowthCosts of continued expansion:ED IG: Sallie Mae’s s common control of servicingoperations and guaranty agencies creates conflict ofinterest:“The potential for USA Education, Inc., tomanipulate default aversion and collection activitiesis greater than it would be if a separate entityperformed default aversion activities”GAO: common control means that defaulted loanscan be more profitable than performing loans12
Sallie Mae’s s Continuing GrowthNew York State Attorney General onSallie Mae ties to schools:• Sponsoring “advisory boards” comprised of schoolfinancial aid officers, to whom Sallie Mae providedremuneration, travel and lodging fees;• Contracting with 20 schools to provide call-centercenterservices;• Providing “entertainment” to officials at schools withwhich it does loan business; and• Offering opportunity loans to “credit challenged”academically qualified students.13
Page 1 and 2: The Privatization of Sallie Mae and
Page 3 and 4: Sallie Mae as a GSELower capital an
Page 5 and 6: Sallie Mae as a GSE Sallie Mae deve
Page 7 and 8: Privatizing Sallie Mae 1996 Sallie
Page 9 and 10: Sallie Mae’s s TransitionThe comp
Page 11: Sallie Mae’s s Continuing GrowthT
Page 15 and 16: Sallie Mae Today Sallie Mae possess
Page 17: Public Policy ImplicationsThere als

The Privatization of Sallie Mae and its Consequences

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