Even in the face of 14,000 activists urging Sallie Mae to break up with ALEC, more news articles exposing their relationship, and my personal phone call this week to Sallie Mae executive Martha Holler asking the company directly to end ties with the powerful “Stand Your Ground,” anti-democratic, pay-to-play front group for right-wing corporate interests… Sallie Mae just won’t quit ALEC.
But that membership has its price. By not formally disclosing its role in ALEC to the Department of Education, Sallie Mae is in breach of its contract with the government.
Since 2009 Sallie Mae has had a contract with the Department of Education to administer federal student loans. Sallie Mae has netted over $300 million in taxpayer money through this lucrative contract while simultaneously lobbying against affordable higher education.1
Join us in demanding that the Department of Education enforce the “conflict of interest” disclosure clause in the contract. Tell U.S. Secretary of Education Arne Duncan to drop Sallie Mae!
Beyond its membership in ALEC, Sallie Mae is also likely in breach of its Department of Education contract because of two major legal violations. This month, public disclosure reports revealed that Sallie Mae has been accused of overcharging active duty service members on their student loan interest rates.2 News reports confirm that federal regulators will file a formal complaint against Sallie Mae for these violations within weeks, and a Department of Justice investigation of Sallie Mae is underway. As if that weren’t enough, Sallie Mae has already faced numerous class action lawsuits alleging predatory and racially discriminatory lending and was issued a cease-and-desist letter from the FDIC for redlining.3
We think the government shouldn’t be in business with a company whose lending practices are shameful and illegal. And even the Secretary of Education agrees. During a meeting earlier this year where students were raising concerns about Sallie Mae, Secretary Duncan personally told us, “We don’t want to do business with people who violate the law.”4
Tell Arne Duncan to live up to his words and terminate the department’s contract with Sallie Mae NOW!
Our urgency is real. In two weeks, students around the country will be arriving on campuses, and soon after they’ll receive information on who will be managing their loans. That means the Department of Education has a narrow window to end its contract with Sallie Mae and reallocate loan administration and collection duties to another bank before the school year begins.
Sallie Mae is supposed to be in the business of making education a reality. Instead the company profiteers off its student borrowers by granting risky loans with high interest rates. Last year, U.S. student debt hit $1 trillion – meanwhile, Sallie Mae cleared $1 billion in profits. So to recap: Sallie Mae is taking advantage of taxpayers, students, members of the military, and people of color.
The government shouldn’t be outsourcing loan administration jobs to a big bank in the first place, and it definitely shouldn’t be awarding contracts worth hundreds of millions of taxpayer dollars to a shady company like Sallie Mae.
Even though its own policies dictate that it should drop Sallie Mae, the Department of Education won’t end this contract without public pressure. So we’re pulling out all the stops. We’re mobilizing a coalition of consumer watchdogs, military and veterans’ advocates, student activists, and labor groups to join us. We’re reaching out to Members of Congress and have put even more journalists on their trail. Can we count on you to encourage the Department of Education to do the right thing and stop doing business with Sallie Mae?
Send your message today to ensure Sallie Mae will be held accountable.
Sophia Zaman
USSA President
1 http://www.usaspending.gov
2 http://www.nytimes.com/2013/08/10/us/sallie-mae-to-be-accused-of-overcharging-military-personnel-on-loans.html?_r=0
3 http://www.fdic.gov/bank/individual/enforcement/2008-08-10.pdf
4 http://www.aft.org/newspubs/news/2013/051413studentdebt.cfm
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