Sallie Mae Privitization Information

The private student loan market has grown more than twelve-fold over the last decade and some of these private loans have interest rates as high as 19 percent. That's far more than any student should have to pay for their education. These lenders have been making money hand over fist. Thanks to excessive federal subsidies, the stock prices of major student loan providers have soared. The stock of Sallie Mae, the largest student loan company, had jumped from $3 a share to more than $40. Just this week, a group of investors announced plans to buy Sallie Mae for $25 billion, and its stock price rose to $55.05.
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken-student_b_46155.html

ONGOING PROBE

Cuomo told reporters his investigation continues into other schools and lenders, including CIT Group's Student Loan Xpress. SLM, the first to reach a settlement with New York, has agreed to cooperate with the ongoing probe.

"To the schools and lenders, you now have a choice: you can either settle with us or the investigation will continue," Cuomo said at a Manhattan press conference.

"The real fraud they will find is the herding of middle- and lower-income kids into all kinds of degree schools, and they come out with $40,000 to $50,000 in loans," said Chanos. "We've only just scratched the surface."
http://www.reuters.com/article/businessNews/idUSN1124543620070411?feedType=RSS&pageNumber=2






Can a Student financial Loan officer truly be 100%objective while accepting financial compensation and other lucrative incentives from lenders?



In recent weeks news reports have documented a range of unethical abuses by student loan companies to gain unfair advantage in marketing their loans to students. I've introduced a bill called the "Student Loan Sunshine Act" to require full disclosure of any and all agreements between lenders and colleges and universities. Lenders would be required to report the terms of their special arrangements with colleges, and they'd be prohibited from offering lavish gifts to financial aid directors and other college employees. The lenders would also have to clearly state the terms and conditions of the loans they offer to students.
For complete Story
http://www.huffingtonpost.com/sen-edward-m-kennedy-/fixing-the-broken-student_b_46155.html


- Lender Gifts

* Lenders who participate in the government's Federal Family Education Loan (FFEL) program also engage in questionable tactics, like offering "educational conferences" at luxury hotels, and offering college officials free entertainment and tickets to sporting events. Many lenders offer their staff to work in financial aid offices during peak loan processing times, print materials for financial aid offices - and even e-mail students on behalf of the financial aid office.

- Preferred Lender Lists

* Most colleges maintain "preferred lender" lists and encourage students to borrow from the list. While some colleges use a rigorous process to ensure that these preferred lenders offer the best loan terms and conditions to students, others don't - and many preferred lender lists don't clearly state why the lenders has earned "preferred" status. Some preferred lender lists don't offer a real choice of lenders at all - because all the names on the list are subsidiaries of the same big lender.
Student Loan Sunshine Act

What are the dark rituals of this "unholy alliance"? When you're accepted to school and apply for loans, your financial aid office is likely to steer you to its "preferred lenders." NYU, for example, advertises 14 private loans, including the "Citibank CitiAssist Loan for NYU Students" and the "Nellie Mae/Sallie Mae Signature Student Loan for NYU Students." Cuomo's office says 90 percent of student borrowers end up choosing from their school's list.

And lenders may pay kickbacks to schools in exchange for sending the business their way. These can include direct cash percentages on loans, all-expense-paid luxury trips for financial aid officers and their spouses, and setting up funds and credit lines for schools to profit from, to operating call centers for understaffed financial aid offices.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html

Mixed in with these scandals are revelations that dozens of universities have inked deals with various lenders to route a percentage of revenue from student loans back to the schools, with the funds often explicitly directed into financial-aid coffers. Congress and at least two states are looking into these inducements, which New York attorney general Andrew Cuomo calls "kickbacks"--a label that seems a tad unfair if the money helps cash-strapped students rather than enrich officials. But with the spotlight now on student loans, critics are clamoring to reform what has become an $85 billion industry.

The roots of today's intrigue date back to 1965, when Uncle Sam began guaranteeing loans to needy students and paying the interest while the borrowers were in college. Because the private sector was still leery of loaning money to kids with no credit history or collateral, the government sweetened the deal by promising lenders a specified interest rate regardless of what student borrowers pay. Add low default rates (due in part to such dire consequences as garnisheed wages and torpedoed credit ratings) as well as soaring tuitions, and--voil????!--lenders are fighting one another to dole out $17 billion in supplemental loans that aren't backed by the government.

The feds tried to cut out the middlemen in 1994 by letting students at participating schools borrow directly from the Treasury. But private lenders have held on to nearly 80% of the market by improving service and offering discounts for such things as on-time repayment. Knowing that many students choose the first entry on a school's list of "preferred lenders," lots of colleges have used these lists to get lower rates for more borrowers, and some lenders have tacked on revenue-sharing deals. "We believed it made good sense to use money that would otherwise go into Citibank's pockets to give more financial aid to N.Y.U. students," New York University spokesman John Beckman said in a statement. His school and five others agreed this month to swear off revenue sharing and repay students nearly $3.3 million.

Other industry tactics also need policing. "I have an invitation in my drawer here to go to the Caribbean for four or five days with my wife, all expenses paid, just to go listen to a student-loan lender," says Dan Davenport, financial-aid director at the University of Idaho, which remains dedicated to direct lending. "There's such big money at stake that people are willing to do many different things to get that piece of the pie."
http://www.time.com/time/magazine/article/0,9171,1609801,00.html




5. A Break for the Unluckiest
Besides the bills already introduced, more student aid reform ideas are likely to get consideration soon. One would involve amnesty for people who've seen defaulted loans double, triple, and quadruple with interest and penalties, growing to amounts too great to repay in this lifetime. Winning this broad relief is a top priority for activist Alan Collinge of Student Loan Justice, who spent this spring crisscrossing the country in an RV, meeting with two-thirds of the 60 legislators on the House and Senate education committees. "They have been very responsive and receptive," Collinge says.

A second area for reform: Getting rid of the bankruptcy exemption. People who run up huge credit card bills or lose their shirts on a business have at least a fighting chance of having those debts cleared through bankruptcy. That's not the case for student loans of any type. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act decreed private student loans can't be forgiven in bankruptcy. The same has been true of FFELP and Direct Loans since 1998. Student advocates would like to get rid of both rules and have the courts treat student loans like other consumer debt.
http://www.villagevoice.com/arts/0715,kamenetz,76309,12.html

I hope these links will help all of us who have been mis-guided and now find ourselves in dire circumstances. Please know that you are not alone and many, many poeple are trying to help those of us who did get stuck in these unfair practices.

I for one, am NOT in favor of doing away with the bankruptcy exemption. Amend it yes, but eliminate it, definately not. The bankruptcy exemption was put into place mostly due to lawyers and other self employed professionals, taking advantage of the loophole. It used to be a running joke in any law school, that third year law students taking out FA knew exactly what what date they could file Bk on their loans. Many physicians were quilty of this too. Back some years ago, on 20/20 or 60 minutes, a physician bragged how he owed $300k on his student loans and had no intention of paying and that he paid cash for his $500k home. That debt was owed to the California Student Aid Commission, I client I was working for at the time. Needless to say, that physician no longer owns that home...CSAC immediately filed suit against him and seized his home

Students must learn to take personal responsiblity for their education. If you cannot afford to go to the private school and live in the dorms 3 states away without taking gobs of federal and private loans to student art history, should the US taxpapers be responsible for paying your bill when you BK?? Student need to start making responsible choices...there is nothing wrong with living at home and going to your local state college, even for the first couple of years to get rid of the general education requirements.

Moondazer,I am in agreement that something needs to be done considering the bankruptcy code. That 2005 version really hurt people down here after two hurricanes devastated our state. A bill was introduced in congress to help us down here,but of course it died a quick quiet death in congress.

I certainly do not, nor would I ever agree that every student should simply obtain loans....and then relinquish thier responsibilty to pay off thier student loan debt via BK. However, if they and thier hard working families were intentionally mislead and informed concerning what was in their best interest....due to obvious deception by their Financail Advisor, Student Counselors, as well as the University. Then yes....I do believe the current laws protecting these practices that are literally robbing lower to middle class hard working poeple should be reformed. And, it does not bother me 1 bit that FA's and student counselors will eventually lose what has apparently been a very lucrative deal for them.

Quote:

I find it hard to understand why you are so opposed to me simply posting truths exposed and published by legitimate publications. And, also of concern to many in our own Congress.

I too am only trying to help the entire situation by helping to inform future borrowers to beware of accepting advice without being very careful to seek out what is truly in their best interest.

I simply posted links to sites where poeple may go and do their own research and hopefully make better informed decisions.

I can see a little on both sides of the argument.But why should a student loan be seen differently from any other debt? Wages can be garnished by going straight to the employer as well, without judgment. In my opinion that is denying due process, and unconstitutional.

Quote:

http://www.nj.com/news/ledger/jersey/index.ssf?/base/news-6/1176697926130470.xml&coll=1

http://www.collegejournal.com/aidadmissions/newstrends/20070416-hechinger.html

http://www.msnbc.msn.com/id/17644168/

Federal Family Education Loan Program at the U.S. Education Department, held at least $100,000 in stock in a student loan company, Student Loan Xpress.
http://chronicle.com/daily/2007/04/2007040601n.htm

Ohio launches probe into student loan industry
http://news.yahoo.com/s/nm/20070413/bs_nm/financial_studentloans_dc

Area Colleges Scrutinizing Financial Aid Practices

By Valerie Strauss
Washington Post Staff Writer
Friday, April 13, 2007; Page B01
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/12/AR2007041202337.html

Student Loans

When Student Lenders Compete, N.Y. Wins
Colleges and college aid officials have been funneling their students to big banks like Sallie Mae and Citibank in exchange for cash, gifts and in-kind benefits, according to a series of recent public investigations, the most energetic of which is being led by New York State Attorney General Andrew Cuomo.

Thus far, the investigations have resulted in the suspension of 10 higher education officials, including Columbia University's director of financial aid, the issuance of almost 100 subpoenas nationwide, and??????? more

http://www.newamerica.net/issues/keywords/student_loans

Please remember that you are not alone simply because you made a mistake in judgement! 80% of all student loans are currently owned by private lenders, and, investigations are continuning into our current administration to just exactly how much they know and just exactly how long they have been aware of these practices!

18 yr. old students and many non-traditional students entering college for the first time depend on their Financail Advisors to advice them! Well, it has become very apparent that yes they were advised....but, not to their benefit! Rather it was the Advisor who benefitted!

I will continue to help in anyway that I can as I find more information into this area!

Many in our Goverment are taking notice of these absolutely deceptive practices.......changes will happen....Don't give up!!