DATE: March 23, 2006
CONTACT: Gus Wales
PHONE: (225) 922-2029
FAX: (225) 922-0790
State Seeks to Prevent Sallie Mae from Discriminating Against Louisiana’s Students
On Wednesday, March 22, the Louisiana Student Financial Assistance Commission voted to take legal action to force Sallie Mae, Inc., to provide equal benefits to all students in Louisiana who borrow from Sallie Mae or one of its affiliated banks. On March 13, Sallie Mae announced that, starting July 1, 2006, it will pay the 1% federal fee required to be deducted from federal student loans, but only if the loans are guaranteed by USA Funds, headquartered in Indianapolis, Indiana. In school year 2004-2005, more than $830 million in student loans were guaranteed for Louisiana students.
Sallie Mae’s contract with the Commission requires Sallie Mae to promote the Commission’s guarantee for student loans and requires Sallie Mae to provide students whose loans are guaranteed by the Commission the same benefits it provides to students using other guarantors. To ensure that all students are treated equally, the Commission authorized its Executive Director, Jack Guinn, and Louisiana Attorney General Charles C. Foti, Jr., to take all necessary legal actions, including restraining orders, injunctions and suits.
“It is not right for a giant, publicly traded, out-of-state, Fortune 500 company to discriminate against some of Louisiana’s student borrowers, just because of who guarantees their loan,” explained Commission Chairman, F. Travis Lavigne, Jr. “Sallie Mae has refused to honor its promise to treat all students in Louisiana the same.”
The Commission is a state agency composed of 21 members, representing Louisiana’s pre-kindergarten through college decision makers. The Commission uses the money earned from its administration of the student loan program in Louisiana to pay most of the costs of administering the state’s college student aid programs, including START, the state’s college savings program, and TOPS.
“When loans are guaranteed by the Commission, the money stays in Louisiana to benefit Louisiana’s students and taxpayers,” explains Lavigne. “But when loans are guaranteed by USA Funds or other guarantors, money leaves Louisiana.”
“When Financial Aid Officers start packaging aid for next year’s college students, we hope to ensure that Sallie Mae provides equal loan benefits to all of Louisiana’s students,” Lavigne added.
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