If you remember grammar school math, you’ll understand the reference. By Aunt Sallie we mean dear old Sallie Mae, the biggest fish in the student loan industry. Finally, someone in government noticed something fishy and launched an investigation.
First, lets thank the Huffington Post for their article discussing this, found here. What’s the real deal? It seems Sallie Mae may not have been complying with the Servicemembers Civil Relief Act and they, along with the Department of Education are in the hot seat for it. ED is in trouble for lack of oversight, which isn’t a surprise to me or anyone else in my line of work. If ED did what it was supposed to do, I wouldn’t have have the work I do, nor would there be such a need for people like me. Nor is it a surprise that Sallie Mae is potentially (innocent until proven guilty) committing violations.
What makes this so great? The investigation is being done by the FDIC and DOJ (Dept. of Justice). It will be interesting to see what is uncovered, and what is actually released publicly. If we (advocates and borrowers) are lucky, ED will seriously consider Sallie’s role in the future. Apparently Sallie’s federal contract is up for renewal next June. That could be good if the investigation takes that long, it could be bad if this blows over before then. But as mentioned in the article, Sallie Mae might be too big to fail (same excuse the other banks used for their congressional bailout). Personally, I wouldn’t mind a gutting of the largest (potential) violator. A shake up this big would do the industry good. The little fish might start minding their Ps and Qs.
Will this clean up the industry? Oh, we know better, of course not. BUT it does bring a spotlight onto what is going on, the huge lack of oversight, and a laundry list of other potential issues to be looked into. And maybe, just maybe, we can get Congress to allow private rights of action under the HEA (Higher Education Act). Now that is something that couldn’t be a bad thing; especially given how obvious it is that ED needs help regulating its flock.