Sallie Mae should change its
name to Bullie Mae
By C. Victoria Patrick
December 16, 2006
Can you imagine the uproar if homeowners were suddenly told that
if they want to re-finance their home, they can't?
Sallie Mae pretends to have the best interests of their customers
at heart, while they covertly work behind the scenes to pass
anti-competitive legislation that will end up costing students
and parents billions of dollars.
For years participants in the federal student loan program have
converted their variable-rate federally guaranteed college loans
into fixed-rate federal consolidation loans, to lock in favorable
interest rates, in much the same way that homeowners do with
their mortgages. And for the same reasons.
But under the new laws effective this past July, the vast majority
who have consolidated will be legally barred from ever re-financing
again, no matter what other lender later offers them a lower
Legally barred from ever refinancing? Hard to believe, but
true. And here's how it happened.
Sallie Mae and most of the other big lenders don't want the lure
of lower rates tempting their customers to switch to competitors.
So, they called upon the Republican leaders, many of whom had
accepted large donations and trips aboard lender jets to luxury
golf resorts and other desirable destinations, and got them to
attempt to hide this ugly anti-competitive legislation in the
Budget Deficit Act of 2006.
When consumer groups such as the American Student Association
began complaining about the proposed no-more-refinancing
law, Sallie Mae lobbyists countered by spreading misinformation
around designed to lead people to believe that a borrower moving
their loan from one lender to another would cost the taxpayers
money needed in other places, when, in fact, the borrower savings
would all come from the smaller lenders' willingness to accept
In the end, Sallie Mae, which, according to Fortune Magazine,
is one of America's most profitable companies, won the battle.
The losers were America's millions of students and parents who
have been denied the opportunity to negotiate lower rates for
themselves in an open market.
Then, adding insult to injury, Sallie Mae, not unlike a football
player spiking a ball after a game-winning touchdown, began celebrating.
Tom Joyce, a Sallie Mae VP, was quoted by USA TODAY as saying,
"The consolidation loan program was never meant to be a
re-financing bonanza for students." But later, his crowing
grew even louder when he told the Orlando Sentinel, "Smaller
corporations will now think twice about getting into the student
The Democrats say they are going to do something about these
issues. They have proposed a 50% cut in student loan interest
rates (Reverse the Raid on Student Aid Act; H.R. 5150 and the
Senate's RSSA Act), and Hillary Clinton's Student Borrower Bill
of Rights (S. 3255) proposes to repeal the laws banning the refinancing
of Federal Consolidation loans and other predatory lending practices,
but there is no guarantee that either of these proposals will
actually become law.
You may voice your opinion on these issues by calling the following
U.S. Senate: (202) 224-4543
U.S. House of Representatives: (202) 226-2068.
It's up to you, now.
C. Victoria Patrick
San Jose, CA
Received December 14, 2006 - Published December 16, 2006
About: Educator, College Administrator,
Financial Adviser (retired)
Note: Comments published
on Viewpoints are the opinions of the writer
and do not necessarily reflect the opinions of Sitnews.
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