Think that's obscene? Get this: The nation's largest provider of college loans, SLM Corp., is raking in so much cash that a group of investors wants to buy it for $25 billion. If the deal goes through, former CEO Albert L. Lord's share will be $135 million.
What's SLM? You might know it as Sallie Mae, a nickname it acquired when it began more than 30 years ago as a quasi-government agency similar to its banking cousins Fannie Mae and Freddie Mac.
Unlike Freddie and Fannie, Sallie walked out on the government years ago, ostensibly to better serve its clients as a private company. Since then, it has become the money-making machine that two years ago was ready to plunk down $1 billion to take over the Pennsylvania Higher Education Assistance Agency.
The "industry" can't claim it has always been scrupulous in amassing its fortune. Substantiated charges that some of its minions bribed college officials to steer students to specific loan programs have given it a black eye.
The scandal has also spurred Congress to speak up for students. When it returns from summer recess, a conference committee will be set up to reconcile House and Senate bills concerning college loans. Proposed legislation would cut government subsidies to banks and others that make college loans and use the cash to increase the amount of student grants that don't have to be repaid. The House bill would also halve the interest rate on government-backed loans to 3.4 percent.
The bills on Capitol Hill have the "industry" screaming like a baby being denied its bottle. If subsidies are cut, it says, many of the 3,500 lenders making college loans will opt out of the business. The lenders say they also will have to stop providing rate discounts and fee reductions, meaning students will pay more for loans.
