Ecomike
NAXJA# 2091
- Location
- MilkyWay Galaxy
"Mallie Mae, the nation’s largest student lender, is quietly processing student loans in India and the Philippines. These are student loans, subsidized by American taxpayers to help keep college education affordable.
Sallie Mae routes payments, complaints and applications for these government-subsidized loans — containing sensitive personal and financial information — to processing centers in Bangalore and Pune, India. Calls about collections and loan originations are also passed to centers in India, as well as Baguio, Philippines, prompting complaints like this from student borrowers":
http://www.consumerwarningnetwork.com/2009/03/31/sallie-mae-outsourcing/
"Along with its growing stash of money, however, Sallie Mae has amassed a long list of outraged borrowers. Take the class-action suit brought by John Washkoviak of Milwaukee, Wisconsin, and two other named plaintiffs, filed in Washington, DC, District Court, in December 2001.Earlier that year, Washkoviak noticed that Sallie Mae had begun billing him, in 1999, for mounting balances for which it supplied no explanation. As it turned out, the company had charged him late fees and interest without disclosing it. This was accomplished by charging a late fee for each month a balance was past due, even if required monthly installments were paid in a timely fashion in subsequent months. For example, if you had one late payment for which you had been penalized $20, and you didn’t pay it, you would be assessed an additional $20 every month thereafter, even though you continued to make on-time monthly payments. Over the course of a 10-year loan, that could add up to a $2400 bill after making what you thought would be your last payment. The late fees were not listed on borrowers’ bills and, in some instances, the bills actually reflected a late-fee balance of "$00.00." (This was accomplished, the suit alleges, by "pyramiding," or applying part of each monthly payment to late-fee charges, so that technically the fee balance would be zero, but the payment would not cover the balance — which would incur yet another late fee.)Remarkably, many of these actions are legal. As federal-education-policy analyst Barmak Nassirian observes, "federal law facilitates this behavior," and the courts seem to bear him out. The Washkoviak case, for example, which went before DC Superior Court judge James Boasberg— a recent Bush appointee — was dismissed. Why? The judge ruled that both federal truth-in-lending laws and state laws governing "disclosure requirements" and the banning of late-fee pyramiding were "pre-empted" by federal statutes that recognized only the "duplicate regulations" of the HEA in such matters. The trouble is, as attorney Richard O’Reilly wrote in his appeal, since these matters are in fact not regulated by the HEA, student borrowers are left "without any recourse for fraudulent misrepresentations or illegal practices relating to the imposition of late fees."
http://bostonphoenix.com/boston/news_features/top/features/documents/03351782.asp
"But as we’ve learned in spades from the home-mortgage industry, predatory lending isn’t just about the interest rate. The Phoenix reported more than three years ago that Sallie Mae charges excessive and undisclosed late fees, applies aggressive collection tactics, and is unresponsive to complaints (see “Sallie Mae Not”). Congressional committees that oversee banking regulation — notably, that chaired by Massachusetts representative Barney Frank since the midterm elections — have yet to show serious interest in reining in the excesses of the personal-finance industry as a whole. To give student borrowers relief, banking reform also should be undertaken with all due speed, in tandem with the work of Cuomo and company.
The fact is, once they’ve attracted a high volume of borrowers with lowered interest rates made possible by federal support, institutional lenders care little about helping borrowers succeed after graduation. In fact, thanks to the federal government’s subsidies and guarantees, and the fees and trumped-up balances they ring out of borrowers, lenders end up making enormous profits on the backs of the student and the taxpayer.
How enormous? In 2006, the most highly compensated executive in the country was the CEO of Sallie Mae, continuing a multi-year trend, according to the Washington Post. Recently retired company chair Albert Lord is reportedly building his own personal 18-hole golf course just outside of Washington, DC. And this week, Sallie Mae announced that it is being bought for a cool $25 billion.
You can be sure that the new owners — a joint effort of JPMorgan Chase, Bank of America, and two private investment funds — won’t be any less bottom-line oriented. In fact, Forbes.com speculates that Sallie Mae’s new owners are well-positioned to “squeeze” more income out of the loans; the article says that the buyout “seems like a good deal for all concerned,” but that doesn’t seem to include the squeezed borrowers currently holding 10 million Sallie Mae loans worth an estimated $130 billion.
If anyone listened to those borrowers, whether indebted to Sallie Mae or to another private lender, perhaps things would change. That’s why we want to hear from you."
And these bad guys, NelNet seem to have bought Sallie Mae.
http://www.filife.com/companies/nelnet
Sallie Mae routes payments, complaints and applications for these government-subsidized loans — containing sensitive personal and financial information — to processing centers in Bangalore and Pune, India. Calls about collections and loan originations are also passed to centers in India, as well as Baguio, Philippines, prompting complaints like this from student borrowers":
http://www.consumerwarningnetwork.com/2009/03/31/sallie-mae-outsourcing/
"Along with its growing stash of money, however, Sallie Mae has amassed a long list of outraged borrowers. Take the class-action suit brought by John Washkoviak of Milwaukee, Wisconsin, and two other named plaintiffs, filed in Washington, DC, District Court, in December 2001.Earlier that year, Washkoviak noticed that Sallie Mae had begun billing him, in 1999, for mounting balances for which it supplied no explanation. As it turned out, the company had charged him late fees and interest without disclosing it. This was accomplished by charging a late fee for each month a balance was past due, even if required monthly installments were paid in a timely fashion in subsequent months. For example, if you had one late payment for which you had been penalized $20, and you didn’t pay it, you would be assessed an additional $20 every month thereafter, even though you continued to make on-time monthly payments. Over the course of a 10-year loan, that could add up to a $2400 bill after making what you thought would be your last payment. The late fees were not listed on borrowers’ bills and, in some instances, the bills actually reflected a late-fee balance of "$00.00." (This was accomplished, the suit alleges, by "pyramiding," or applying part of each monthly payment to late-fee charges, so that technically the fee balance would be zero, but the payment would not cover the balance — which would incur yet another late fee.)Remarkably, many of these actions are legal. As federal-education-policy analyst Barmak Nassirian observes, "federal law facilitates this behavior," and the courts seem to bear him out. The Washkoviak case, for example, which went before DC Superior Court judge James Boasberg— a recent Bush appointee — was dismissed. Why? The judge ruled that both federal truth-in-lending laws and state laws governing "disclosure requirements" and the banning of late-fee pyramiding were "pre-empted" by federal statutes that recognized only the "duplicate regulations" of the HEA in such matters. The trouble is, as attorney Richard O’Reilly wrote in his appeal, since these matters are in fact not regulated by the HEA, student borrowers are left "without any recourse for fraudulent misrepresentations or illegal practices relating to the imposition of late fees."
http://bostonphoenix.com/boston/news_features/top/features/documents/03351782.asp
"But as we’ve learned in spades from the home-mortgage industry, predatory lending isn’t just about the interest rate. The Phoenix reported more than three years ago that Sallie Mae charges excessive and undisclosed late fees, applies aggressive collection tactics, and is unresponsive to complaints (see “Sallie Mae Not”). Congressional committees that oversee banking regulation — notably, that chaired by Massachusetts representative Barney Frank since the midterm elections — have yet to show serious interest in reining in the excesses of the personal-finance industry as a whole. To give student borrowers relief, banking reform also should be undertaken with all due speed, in tandem with the work of Cuomo and company.
The fact is, once they’ve attracted a high volume of borrowers with lowered interest rates made possible by federal support, institutional lenders care little about helping borrowers succeed after graduation. In fact, thanks to the federal government’s subsidies and guarantees, and the fees and trumped-up balances they ring out of borrowers, lenders end up making enormous profits on the backs of the student and the taxpayer.
How enormous? In 2006, the most highly compensated executive in the country was the CEO of Sallie Mae, continuing a multi-year trend, according to the Washington Post. Recently retired company chair Albert Lord is reportedly building his own personal 18-hole golf course just outside of Washington, DC. And this week, Sallie Mae announced that it is being bought for a cool $25 billion.
You can be sure that the new owners — a joint effort of JPMorgan Chase, Bank of America, and two private investment funds — won’t be any less bottom-line oriented. In fact, Forbes.com speculates that Sallie Mae’s new owners are well-positioned to “squeeze” more income out of the loans; the article says that the buyout “seems like a good deal for all concerned,” but that doesn’t seem to include the squeezed borrowers currently holding 10 million Sallie Mae loans worth an estimated $130 billion.
If anyone listened to those borrowers, whether indebted to Sallie Mae or to another private lender, perhaps things would change. That’s why we want to hear from you."
And these bad guys, NelNet seem to have bought Sallie Mae.
http://www.filife.com/companies/nelnet
