Sallie Mae(R) | Pennsylvania

What are the facts?

There has been a lot of talk and attention about what Sallie Mae's proposal was and was not. Here is a table that shows what would have changed under Sallie Mae's proposal and what would have stayed the same.

Activity	PHEAA today	PHEAA under proposed partnership with Sallie Mae
Grant Administration	PHEAA administers state and federal grant programs for students and institutions.	PHEAA would have continued to administer the state's grant program.
Grant Funding	The Pennsylvania General Assembly makes annual appropriations to fund the state grants programs.	The General Assembly would have continued to set the appropriations level for the education grants programs, and could have considered directing some of the proceeds from the Sallie Mae partnership to enhance those programs or fund other higher education priorities.
Policy and Programs	PHEAA sets policies for grants and loan forgiveness programs. PHEAA offers early awareness and financial literacy programs.	PHEAA would have continued to set policies for grants and loan forgiveness programs, including award formulas. Early awareness and financial literacy programs would have continued to be offered.
Loan Guarantee and Servicing	PHEAA performs loan servicing on more than $25 billion in student loans, and administers approximately $25 billion in student loan guarantees.	PHEAA would have contracted with Sallie Mae to perform its loan servicing and guarantor servicing activities. Sallie Mae currently manages more than $123 billion in student loans. Sallie Mae would have serviced PHEAA loans more efficiently, enabling a flow of payments from Sallie Mae to Pennsylvania, which could have been used to benefit Pennsylvania higher education programs or other worthy priorities.
Loan Programs	PHEAA offers the Keystone family of loans that includes Stafford, PLUS, and private loans with zero guarantee fee. PHEAA offers default-prevention services.	Sallie Mae and PHEAA would have offered Pennsylvania the same, or even better, terms on a larger set of loan products, as well as borrower benefits, including zero fees, low interest rates and a flexible set of repayment plans. Sallie Mae would have provided an extensive array of default-prevention services, including the opportunity for deferments, forbearances and debt counseling. Sallie Mae's debt-management expertise would have been applied in a way that maximized default recoveries, returning to the state dollars that could have been used for other education access initiatives.
Legal Structure	PHEAA's board of directors oversees its executive management team.	PHEAA's legal structure would have remained the same.
Governance	PHEAA's 20-member board of directors, comprised primarily of state legislators, oversees the agency's performance. PHEAA also has eight advisory boards and committees.	PHEAA's current corporate governance structure, including an independent board of directors, would have remained in place, and overseen Sallie Mae's performance.
Management	PHEAA has an executive management team that serves under a president and chief executive officer.	A streamlined PHEAA management team would have overseen Sallie Mae's performance.
Employee Numbers	PHEAA employs roughly 2,000 people in the state. Sallie Mae employs roughly 800 people in the state.	Employment levels in Pennsylvania would have remained at, or above, current levels for the two combined entities.
Employee Status	PHEAA's employees are paid by the state.	Some existing PHEAA employees would have remained state employees. New Sallie Mae employees would have worked for a private-sector company and received Sallie Mae's excellent compensation, benefits and stock options package.
Pennsylvania Benefits	PHEAA reports that it provides Pennsylvania $100 million a year in public service benefits.	More than 80% of the $100 million PHEAA referenced represent benefits that any competing guarantor or lender would provide in today's marketplace and are not unique to PHEAA. In addition to providing a comparable set of benefits as PHEAA does today, the Sallie Mae partnership would have provided $1 billion in cash over the next 5 years. Sallie Mae also would have continued to make corporate contributions in the state and pay income taxes, which PHEAA does not.
Competition	PHEAA currently controls 80% of the state's student loan market either directly or through its Keystone Program lenders.	Additional lenders would have had access to Pennsylvania's student loan marketplace, increasing competition and lowering costs to students and families.
Default Collection	PHEAA ranks in the bottom third of student loan guarantors in the amount it collects from defaulted borrowers.	Pennsylvania taxpayers would have seen an increase in returns on defaulted loans. Sallie Mae's clients consistently rank in the top third of guarantors in collection activity.