Sallie Mae

SLM Corporation
Company type	Public
Industry	Consumer banking, Student loans
Founded	1972
Headquarters	Newark, United States
Area served	United States
Key people	Jonathan Witter (CEO), Carter Franke (Chairperson)
Products	Private education loans, digital resources and planning tools for students, banking products, credit cards
Website	salliemae.com

SLM Corporation—widely recognized as Sallie Mae and initially established as the Student Loan Marketing Association—is a publicly listed American company focused on consumer banking services. Originating in the early 1970s as a government-sponsored organization managing federal education loans, it transitioned to private ownership and concentrated its efforts on private student loans.

The company’s primary operations include the origination, servicing, and collection of private education loans. Additionally, Sallie Mae provides digital resources and planning tools for college-bound students. Historically, it handled federally guaranteed student loans under the Federal Family Education Loan Program (FFELP) and administered federal student loans on behalf of the Department of Education. Presently, Sallie Mae oversees assets exceeding $12.97 billion connected to private student lending.

On April 30, 2014, Sallie Mae separated its loan servicing division and a majority of its loan portfolio into Navient Corporation, which has since become the leading federal student loan servicer and a key debt collector for the Department of Education.

History

Founded in 1972 as a government-sponsored enterprise (GSE), the Student Loan Marketing Association began its privatization process in 1997, culminating in 2004 when Congress revoked its federal charter, ending its government affiliation. The firm now offers private education loans that are neither issued, insured, nor guaranteed by any government agency.

In 1999, Sallie Mae purchased Nellie Mae Corporation for $320 million. Nellie Mae had been created in 1981 by the Massachusetts state government to serve as a secondary market for federally guaranteed student loans. Funds from this acquisition established an endowment for the Nellie Mae Education Foundation, which operates independently from Sallie Mae today.

Sallie Mae made a maximum contribution of $250,000 toward President George W. Bush’s second inauguration in 2005.

In August 2006, the company acquired Upromise, a firm specializing in college savings rebates; Upromise was subsequently sold to loyalty marketing company Prodege in May 2020.

On April 16, 2007, an investor consortium led by J.C. Flowers & Co. proposed acquiring Sallie Mae for approximately $25 billion to take it private with ownership divided among private equity firms and major banks. However, this transaction was terminated in September 2007 due to legislative reforms introduced by the College Cost Reduction and Access Act and tightened credit conditions following the 2007 financial crisis. Sallie Mae ceased related litigation after securing $31 billion in financing that included Bank of America in early 2008.

During 2008, SLM received government assistance through repurchasing FFEL private loans.

On April 6, 2009, Sallie Mae declared plans to bring back 2,000 jobs to the United States by relocating call center functions from overseas locations.

Following legislative changes mandating direct federal lending to students, Sallie Mae announced workforce reductions totaling 2,500 employees on March 31, 2010.

The company relocated its headquarters from Reston, Virginia, to Newark, Delaware on July 1, 2010.

On September 17, 2010, Sallie Mae acquired $28 billion worth of federally insured loans from Citigroup’s Student Loan Corporation as Citigroup exited the student lending sector.

In 2013, SLM Corporation was established as Sallie Mae’s operating entity. On February 25, 2014, Sallie Mae introduced Navient to oversee federal student loan servicing. By April 30 of that year, Sallie Mae formally separated from Navient to concentrate on private student loans along with banking products and credit cards tailored for students and their families.

Jonathan Witter—previously associated with Hilton—was named CEO in March 2020.

In April 2021, Sallie Mae joined forces with Mpower Financing to broaden higher education opportunities for international students and those protected under DACA.

Corporate information

Sallie Mae's main headquarters is located in Newark, Delaware, with branch offices situated in New Castle, Delaware; Newton, Massachusetts; Indianapolis, Indiana; Salt Lake City, Utah; and Sterling, Virginia.

Corporate board

Albert Lord held the positions of vice chairman and CEO until his retirement in 2013. Having joined Sallie Mae in 1981, he was appointed CEO in 1995 and was instrumental in guiding the company through its privatization. On May 29, 2013, Jack Remondi took over the CEO role.

Since June 2020, Carter Franke has served as chairperson of Sallie Mae's board. Prior to her tenure, Raymond J. Quinlan assumed the chairmanship after joining the board in 2014, succeeding Anthony P. Terracciano, the former president of First Union Corporation (currently Wells Fargo). Quinlan was CEO from May 2014 until March 2020, at which point Jonathan Witter succeeded him.

Awards

In 2004, Sallie Mae earned recognition as one of BusinessWeek's Top 15 Corporate Philanthropists and was honored as the leading local corporate philanthropist by the Washington Business Journal in 2005.

Controversies

A 2006 episode of 60 Minutes examined Sallie Mae’s business operations critically, featuring Senator Elizabeth Warren’s objections to its combined roles as both lender and loan collector.

In February 2007, New York Attorney General Andrew Cuomo launched an inquiry into Sallie Mae and other lenders over allegations of misleading lending practices. By April that year, Sallie Mae consented to amend its lending policies according to a new code of conduct and contributed $2 million toward educating prospective college students about borrowing choices.

In October 2007, Sallie Mae requested student information from the State University of New York system under the Freedom of Information Act, an action expected to face legal opposition.

A class-action lawsuit filed in December 2007 accused Sallie Mae of discriminatory practices against African American and Hispanic private student loan applicants by imposing higher fees and interest rates along with insufficient disclosure of loan terms. Similar issues had been highlighted by Cuomo earlier that year. The lawsuit was resolved in 2011 with Sallie Mae donating $500,000 to the United Negro College Fund and covering $1.8 million in legal fees.

In January 2008, SLM Corporation agreed to a $35 million settlement related to inadequate loss reserves on non-traditional loans.

A False Claims Act suit initiated in 2009 alleged that Sallie Mae and other parties overbilled the U.S. government; this controversy became widely known as the "9.5 scandal."

In February 2014, Illinois Attorney General Lisa Madigan commenced an investigation into Sallie Mae’s debt collection and loan servicing methods.

A federal lawsuit filed by former employee Michael Zahara in 2005 accused Sallie Mae of deliberately granting forbearance to increase student loan debt balances. The case was dismissed in 2009 after Zahara’s attorney withdrew due to complications linked to Zahara’s extortion arrest and failure to obtain replacement counsel.

Subsidiaries

Sallie Mae Bank
SLM Financial Corporation

Additional resources

External resources