The Sallie Mae Saga: A Government-Created, Student Debt-Fueled Profit Machine
Student loan debt levels keep growing. There are nearly 39 million borrowers carrying over $1 trillion in federal student loan debt. About $120 billion of federal student loan debt was delinquent in 2012 -- a 30.5 percent increase from fiscal year 2011.
Most borrowers fall behind on student loan payments because they are unable to complete their educations, suffer from serious disabilities, or earn so little money that they cannot afford to repay their loans. The stakes are high for borrowers due to draconian government collection powers, including seizure of earned income tax credits and Social Security payments. Even those who can make some payments face serious damage to their credit reports or ability to get credit for critical purchases such as cars and homes.
Sallie Mae is the biggest player in the student loan market, with connections to every aspect of the student loan industry.
This report examines the role Sallie Mae has played in the student loan market and the many examples of favoritism the federal government extends to protect this ostensibly private entity, and it recommends steps to take to improve the student loan marketplace.