Sallie Mae Shows Lenders is Lucrative for Lenders

Main Street.com ^ | 6-26-13 | Michael P. Tremoglie

[William Tell 2]

NEW YORK (MainStreet)—When SLM Corp., the largest education financing entity in the country more commonly known as Sallie Mae, announced in January that profits for the fourth quarter of 2012 decreased to $343 million, from $506 million earned in the same quarter in 2011, it was a conspicuous reminder of how lucrative the student loan business is....

[rightwingintelligentsia]

I was going to comment that that was a confusing headline, until I noticed you have a typo. :-)

The first “Lenders” should read “Learning.”

[Vigilanteman]

If any bank operated on the same basis as SallieMae, the government favored crony capitalist student loan virtual monopoly, they would be hauled into congressional hearings and probably be litigated out of business.

Among their abuses are:

• Easy to get, hard to repay loans which make zero effort to distinguish between marketable and unmarketable degrees.
  
• Highly paid senior executives who have little or no accountability.
  
• Interest only loans and hidden fees designed to keep the borrower in debt forever.
  
• Interest rates which are typically two to three times larger than prevailing home loan rates.

  Remember BO bragging about making the student loan business more efficient during his re-election campaign by eliminating the middleman, IOW, competition to the government?

  This is the next bubble waiting to happen-- millions of borrowers saddled with debt which they have little hope of repaying and cannot discharge. A homeowner who is foreclosed, at least, can walk away from the debt through the bankruptcy process.

  The only real long-term solution is to phase out SallieMae and privatize the student loan business. The outline of such a plan to do just that:
  

• Immediate write-off of 30% of outstanding balances, 25% loan forgiveness to the borrower, 5% as a fee to the educational institution where the loan originated to collect the remaining 70%.
  
• Authorize the originating institution to suspend degrees and transcripts on loans that become delinquent or to sell them at a discount to third parties.
  
• Originating institutions still unable to collect or liquidate the loans would be subject to a lien on their endowments, real estate or other assets.
  
• Those which have sold worthwhile marketable degrees would have little to fear. Those which have not maybe deserve to have their asset base reduced accordingly.

  In conjunction with this program, all borrowers which are current on payments after provision #1 kicks in would be able to apply and get an interest rate less than or equal to the rate they are paying on their primary residence. It makes no logical sense to have people paying more than double the rate on student loans than they are paying for mortgage loans secured by real property.

[celmak]

FSL - Feds Sucking Liberty.

[celmak]

OOPS, meant GSE - Government Sucking Liberties.

[celmak]

OOPS again! It’s a GSE - Government Sucking Everyone! Oh well, all the same.

[William Tell 2]

Thanks it is what I get for being in a hurry. Do you know how to correct it?

[William Tell 2]

You got that right. My next piece is going to address some of these.

[William Tell 2]

I think all of them were correct :)

[rightwingintelligentsia]

You have to ping a moderator.