The Privatization of Sallie Mae and its Consequences

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Sallie Mae as a GSEEstablished 1972 to provide secondarymarket for guaranteed student loan program• Student loans small and hard to service• Sallie Mae could specialize in student loans anddevelop economies of scaleObtained substantial government benefits• More than other GSEs, e.g., authority to borrowwith explicit federal guarantee and from FFBCBO in 1979: 98% of Sallie Mae resourcessupplied by federal government2
Sallie Mae as a GSELower capital and higher leverage thancompetitorsAbility to grow much faster than competitorsSpecialization in designated market withoutfinancial diversificationDependence on political process;development of political strengthPerception that, if Sallie Mae failed,government would bail out debtholders3
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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
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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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