Requests for transparency and help with debt relief met with noncommittal lip service and “it’s complicated”
Ori Korin, 202-822-2127 x126
Newark, Del. – Earlier today, 14 students and recent graduates from around the country attended a meeting with newly named Sallie Mae CEO Jack Remondi and other senior executives to talk about the bank’s role in the student debt crisis. The students suggested a number of interventions Sallie Mae might make to help students struggling with crippling student loan debt and requested that the bank disclose more information about their lending practices and political memberships. All of their demands were met with resistance, and the meeting ended with Sallie Mae having agreed to do nothing to better its relationship with student borrowers.
The meeting was a result of a demonstration at last month’s Sallie Mae shareholder meeting, where several students and activists introduced a shareholder resolution demanding transparency from the company and asking for the opportunity to meet with the company’s leadership. In addition to Remondi, Chief Financial Officer Joe DePaulo, Senior Vice President for Public Policy Sarah Ducich, Vice President Lisa Stashik, Director of Social Media Tameka Easter, and Senior Vice President for Corporate Marketing and Communications Martha Holler attended.
Students reported the meeting as cordial, but unproductive. Their full list of requests for the company included: 1) Principal debt relief; 2) Interest rate reduction following the Consumer Financial Protection Bureau’s (CFPB) recommendation; 3) A revised, clean process for loan term extensions; 4) Public disclosure and posting of the loan modification process; 5) Loss sharing on defaulted loans; 6) Disclosure of membership in organizations that write and endorse model legislation and disaffiliation with the American Legislative Exchange Council (ALEC); 7) Disclosure of the roles of senior executives and board members in deciding to which groups the company will belong. Each demand was met with an eventual no.
The executives conceded that their loan process is complicated, and that at in the end, the company is concerned with its own bottom line. “We sometimes get lost in our own lingo,” Remondi said. “You are right, this process at the beginning is like talking a foreign language…and today it’s a lot easier to borrow substantial funds and get yourself in trouble…But if we loan money and you don’t pay us back, how do we pay our bills?” According to their own disclosure reports, Sallie Mae made $939 million in profits in 2012.
The students, representing student associations and labor groups from University of California, University of Massachusetts, University of Oregon, Colorado Student Power Alliance, St. Louis Young Activists United, New York Students Rising, and New Jersey Students United, remain committed to holding Sallie Mae accountable for what they call a history of deliberate policy obfuscation, risky lending, disproportionately high interest rates, and a corporate culture that places profits well above the needs of borrowers.
“We’re really not asking for anything unreasonable,” said Angelica Clarke, a recent graduate of SUNY Albany who is the first person is her family to graduate from college. “We know that the over $160 billion of student debt that Sallie Mae owns isn’t going to be forgiven overnight, but we’re asking the company to work with us to negotiate interest rates and to be transparent about their modification policies. They may have agreed to meet with us, but their willingness to help ended there.”
Student debt has reached an all-time high in the United States, soaring past the $1 trillion mark in April 2012. A July 2012 report from the CFPB indicated the over five percent of private student loans are in currently in default, with even more in delinquency, and the student loan default rate has now increased for the first time in 17 years.