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: http://www.newscom.com/cgi-bin/prnh/20030617/SLMLOGO-a )
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
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 --
We await your response.
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
http://www.salliemae.com. SLM Corporation and its subsidiaries are not
sponsored by or agencies of the United States of America.
SOURCE Sallie Mae