Sallie Mae Responds to CBS Evening News

Mar 20, 2007, 01:00 ET from Sallie Mae

    RESTON, Va., March 20 /PRNewswire/ -- Sallie Mae sent the following
 letter to CBS Evening News last night in response to its recent broadcast
 and Web site articles on student lenders:
     (Logo: )
     Wendy Krantz
     CBS Evening News
     524 W 57th St
     New York, NY 10019-2924
     Dear Ms. Krantz:
     Your March 16 broadcast and Web site articles on student lenders
 included a number of inaccuracies and critical factual omissions.
     Your Web article reported an allegation attributed to Senator Kennedy's
 office that Sallie Mae was asked to pay for travel to Paris by Dr. Larry
 Burt, financial aid director from the University of Texas-Austin, and his
 wife. This is patently false. Sallie Mae was never asked to pay for any
 such trip, nor did we, nor was anyone from Sallie Mae on such a trip. Dr.
 Burt is a respected financial aid professional. Sullying the reputations of
 this gentleman and our company is reckless. Those involved owe Dr. Burt and
 Sallie Mae an apology.
     Dr. Burt has served in the past on our company's advisory committees of
 financial aid professionals. These committees, which include Sallie Mae
 customers and non-customers, provide vital feedback to us on how best to
 improve the products and services we provide students, families and
 schools. Dr. Burt was not paid for his consulting; Sallie Mae only
 reimbursed him for his travel expenses, as we did for all school
 representatives who served on our advisory committee.
     The University of Texas-Austin has 19 lenders on its preferred lender
 list, and processed loans from 154 different lenders last year. This
 clearly encourages competition among lenders, which improves services and
 reduces borrower cost. The university's lender list (available at
 is a model of disclosure, and states clearly that students are free to
 choose any lender they wish, and that neither the school nor its employees
 receive benefits from referring students to any lender. The University also
 makes clear that lenders were selected for meeting a minimum set of service
 requirements and for their competitive repayment discounts.
     Sallie Mae's market share at the University of Texas-Austin has varied
 between 5 and 7 percent for the past five years, and is currently at 6
 percent. By comparison, our overall market share in the state of Texas is
 11 percent.
     CBS' stories implied that students are disadvantaged by lender lists
 such as those at the University of Texas and elsewhere. The opposite is
     Congress sets the rates on guaranteed student loans -- currently a
 fixed 6.8 percent for undergraduates. Competition among lenders drives that
 cost down further. This academic year alone, private-sector lenders will
 provide more than $1 billion in origination fee and interest rate
 reductions. In fact, students who attend an institution that features
 private-sector lenders will save, on average, more than $2,000 than those
 who attend schools that use the government's Direct Lending program. Those
 students have only one choice, and it is inferior.
     CBS also highlighted one company -- MyRichUncle -- as a victim and an
 expert. Unfortunately, CBS failed to report the background on this company.
     -- MRU began its life six years ago as a protein bar company named Dr.
        Protein.  It later changed its business to a CD manufacturing company,
        before morphing into a student lender.
     -- MRU has spent millions of dollars of its shareholders' money on
        expensive ads attacking the integrity of financial aid directors and
     -- MRU's chief executive officer, Edward McGuinn, is also the CEO of
        eLottery, an Internet gambling company that filed for bankruptcy in
        2001.  Mr. McGuinn is listed as the highest-paid executive at MRU in
        its most recent SEC proxy filings.
     -- eLottery, under Mr. McGuinn's leadership, paid disgraced lobbyist Jack
        Abramoff's firm more than $700,000 to lobby against an Internet
        gambling ban.  According to newspaper articles, eLottery also paid
        $25,000 at Abramoff's direction to a nonprofit entity where he was a
        board member which went to cover expenses for Congressman Delay to go
        on a golfing trip in Scotland.  These actions became the subject of
        Congressional investigations and major media stories.
     -- MRU was recently criticized throughout the financial aid community for
        an advertising campaign on the Princeton Review's Web site that falsely
        touted MRU as the preferred lender for hundreds of schools.
     With this as backdrop, no one should be surprised by MRU's tactics.
 Indeed, MRU's loans are more expensive for the vast majority of borrowers.
 As stated previously, the vast majority of lenders pay the federal
 origination fee for all of their Stafford student loan borrowers. MRU does
 not offer any up-front discount of origination fees. Instead, MRU offers
 discounts that less than 10 percent of students will ever earn. In
 marketing terms, this is known as "bait and switch." Financial aid
 administrators are too sophisticated to succumb to this marketing
     If MRU had the best products, they would have won the hearts of
 financial aid administrators. Clearly this open and competitive marketplace
 has rejected MRU's offerings. No wonder that financial aid associations at
 the national, regional and local levels have written MRU to express disgust
 with their tactics. Financial aid directors, acting on the best interests
 of their students, have rejected this company.
     What is surprising is that CBS would tarnish the reputation of the
 financial aid community and present MRU as an industry expert without
 performing research. We would hope that CBS would do more thorough
 reporting on such an important subject. Your viewers -- and students --
 deserve better.
     We await your response.
     Tom Joyce
     VP, Corporate Communications
     CC:  Senator Edward Kennedy
          Tim Fitzpatrick, CEO, Sallie Mae
          Leslie Moonves, President & CEO, CBS Corporation
          Rick Kaplan, Executive Producer, CBS Evening News
     SLM Corporation (NYSE:   SLM), commonly known as Sallie Mae, is the
 nation's leading provider of saving- and paying-for-college programs. The
 company manages $142 billion in education loans and serves nearly 10
 million student and parent customers. Through its Upromise affiliates, the
 company also manages $15 billion in 529 college-savings plans, and assists
 7.5 million members with automatic savings through rebates on everyday
 purchases. Sallie Mae and its subsidiaries offer debt management services
 as well as business and technical products to a range of business clients,
 including higher education institutions, student loan guarantors and state
 and federal agencies. More information is available at SLM Corporation and its subsidiaries are not
 sponsored by or agencies of the United States of America.

SOURCE Sallie Mae