The Privatization of Sallie Mae and its Consequences

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Sallie Mae TodaySallie Mae is not a GSE today. Yet some parallelsare striking:• Lower capital and higher leverage than competitors• Ability to grow faster than most competitors• Specialization in designated market without financialdiversification• Dependence on political process and exercise of politicalstrength• Possibility that, if Sallie Mae failed, government might bailout the companyUnlikely that this is reflected in a borrowing advantage14
Sallie Mae Today Sallie Mae possesses:• A commanding presence (“the(dominantfranchise”) ) in the student loan market• Economies of scale, especially in servicing• Close ties to schools and lenders e.g., through technology platforms, andblandishments (e.g., opportunity pools)• Political strength15
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 and 12: Sallie Mae’s s Continuing GrowthT
Page 13: Sallie Mae’s s Continuing GrowthN
Page 17: Public Policy ImplicationsThere als

The Privatization of Sallie Mae and its Consequences

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