What was Sallie Mae's proposal?

On Dec. 14, 2004, Sallie Mae submitted a formal proposal (PDF, 53 kb) to the board of directors of the Pennsylvania Higher Education Assistance Agency (PHEAA) proposing a partnership between Sallie Mae and PHEAA designed to lower the cost of borrowing for students, improve services for schools, and save money for Pennsylvania taxpayers. The partnership would have generated $1 billion for Commonwealth taxpayers. We believed our proposal would also have injected real competition into the state's student loan industry, driving better products, services and pricing to schools, students and families.

Without any discussion with Sallie Mae, the offer was rejected through a press release issued by PHEAA on Dec. 27, 2004. On Feb. 17, 2005, the Pennsylvania House of Representatives Committee on Appropriations held a hearing to discuss Sallie Mae's proposal for Pennsylvania.

Sallie Mae's proposal price was contingent upon a financial review, and always had an expiration date. On Aug. 31, 2005, Sallie Mae sent a letter (PDF, 182 kb) to PHEAA indicating that its original $1 billion proposal had expired.

Sallie Mae continues to support an open and fair student loan marketplace in Pennsylvania that offers students the lowest-cost loans and schools the best services, and ensures that every available public dollar goes to help students pay for college. While Sallie Mae's proposal to PHEAA was not accepted, we are pleased that it has opened a discussion and dialogue on how best to serve Pennsylvania students and families. We are also pleased that an asset valuation is currently being conducted at the direction of the House Appropriations Committee to provide more detail about PHEAA's current economics, including its exposure to 9.5% loans. In addition, Sallie Mae supports legislation introduced by representatives Mike Turzai (R-Allegheny) and Kevin Blaum (D-Luzerne) on Oct. 6, 2005 that would separate control over both the loan and grants programs.