April 22, 2009

To the Editor of The New York Times:

Your editorial, “The Battle Over Student Lending,” was not an accurate reflection of the following facts:

• Many student lenders, including Sallie Mae, support the President’s initiative of “leveraging low cost federal funding to produce ‘savings’” that can be used for more Pell Grants for students.
• Those “savings” are the profit that the government would earn by lending to students at fixed rates of 6.8 to 8.5%.
• The Department of Education has received net payments from lenders. During the last decade, Sallie Mae received $3.7 billion in subsidies and paid fees and taxes totaling $6.5 billion, resulting in $2.8 billion in net payments to the government.

The proposal that we put forth at lawmakers’ request would provide the same or more savings for Pell Grants and would compensate lenders not with subsidies, but on a fee-for-service basis as the President’s proposal would. In addition, it would expand on the President’s proposal by also requiring servicers to share loan default risk, preventing large job losses and eliminating the implementation risk of forcing 75% of schools to shift student loan programs.

For Sallie Mae, it is easy to get behind the President’s objectives to make higher education more accessible and affordable. After all, that has been our mission for 37 years.

Sincerely,

John F. Remondi