Posted by: cslfconnects | April 29, 2009

Faces of FFELP – “I Am CSLF”

Proposed legislation threatens to set back the accomplishments of non-profit student loan lender/guarantors like the Connecticut Student Loan Foundation.

For over 40 years, CSLF has promoted access to higher education, helped families find financing for college, and assisted high school guidance professionals to shepherd first-generation and under-served populations into programs to help them discover and fulfill their dreams.

Current media coverage has tended to lump together large lenders and banks with smaller, non-profit companies like CSLF. All companies providing student loans have the potential to serve well and provide good products, but small-scale operations like the Connecticut Student Loan Foundation have always realized the real dividends are service, satisfaction and connection.

So here we are — and this is who we are: mothers, wives, husbands, musicians, mechanics, writers, cyclists, fathers, activists, bakers, readers and crafters.

We live in your town, we’re standing in the same long line at the DMV, our kids sit next to each other in school and we all want the same thing: people who really care about our shared future. That’s the person who answers the phone when you call CSLF.

Help save the Federal Family Education Loan program: click here for more information and learn how you can lend your voice to the fight for student choice and a solution that can work for us all.

“I am CSLF and I’m here to help you.”

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  1. Kudos to the President, the first president who actually had student loans.

    The student loan industry is ripe with greed, arrogance, and corruption. The Sallie Mae CEO has taken nearly a half billion dollars personally as a middleman. He now owns three mansioned estates (annapolis, MD / Harwood, MD / Naples, FL), one with a private 18 hole golf course – although an old photo and the golf course is still under construction, you can see where taxpayer subsidy dollars go via Google Maps at coordinates 38°51’38.52″N, 76°40’4.47″W

    Sallie Mae owns two private jets – they used to own three. The jets are tail numbered N50FD and N188AK.

    You can see these jets at the following links:

    That is where the taxpayer subsidies are going, private golf courses and private jets.

    When a FFELP loan defaults, the taxpayer pays nearly twice the amount of the loan. Sallie Mae is allowed to attach fees, penalties, and crank the interest rate up to above credit card rates. After a period, they capitalize those fees, penalties, and interests and put the loan to the taxpayer for payoff. So, a 20k loan becomes more than 40k cost to the taxpayer. In the direct program, the 40k might still be the receivable, but it does not effect cash flow as we see with the middlemen involved. Why are we funding this madness?

    Let’s not forget the corruption that the subsidies fund. The following student aid administrators got into more than a little hot water for taking kickbacks and other inducements from the student loan industry – most lost their jobs:
    Ellen Frishberg – Johns Hopkins
    Catherine Thomas – USC
    David Charlow – Columbia
    Lawrence Burt – University of Texas
    Walter Cathie – Widener University
    Tim Lehmann – Capella University
    Daniel Pinch – Emerson College

    In 2008, more than 100 Universities were under investigation for more than 90% of their FFELP loans going to one provider. The notion that there is competition in this “market” is ridiculous – the student loan companies pay or induce schools for preferred lender status resulting in nearly all loans at any one school going to one provider. In the above instances, those inducements were to the administrators themselves. From “School as Lender” to call centers to printing – the inducements to schools are great and the payoffs for the middlemen even greater.

    Of course, some in congress receive so much cash from the student loan industry, they will try to derail this improvement. Particularly, Buck McKeon and John Boehner receive the most from the student loan industry. Buck and Boehner have been the champions of the industry for years and are responsible for much of the elimination of competition and stripping of consumer protections for student loans – all to the benefit of the middlemen lenders. There are no student loan companies in Buck or Boehner’s districts and no meaningful employment by student lenders in those districts. This is pure pay for play.

  2. Mr. Lordgreed,
    No one is disputing that there have been some bad actors in the student loan industry, just as in any industry.
    What we are cautioning against is responding by “throwing the baby out with the bathwater”. Let’s not be rash at the expense of the actual, tremendously *good* services that are also provided by the majority of FFELP lenders in local communities.

  3. The student loan industry is made up a large coalition of lenders, including non-profit agencies that administer loans through FFELP – to large for-profit corporations that administer a wide array of loan products and services. To compare Sallie Mae to a state lender/guarantor is like trying to compare David and Goliath. Agencies, such as CSLF, have no shareholders and any profits made through the federal subsidies we receive, were pumped back into our borrower benefits and college access initiatives.

    Regarding the handling of defaults, all FFELP lenders must adhere to federal regulations regarding the handlings of these loans. The real issue is not whether a loan was originated through direct lending or FFELP, but that too many students have taken on too much debt.

    You mention the fact that a hand-full of financial aid officers made some poor decisions and lost their job. There are always a few bad apples. The untold story is that after an exhaustive review of lenders and colleges, that New York’s Attorney General found that the overwhelming majority of financial aid officers did not engage in any unlawful activities.

    I can only guess that you had a horrific experience with Sallie Mae. I wouldn’t bet that if you were in the same situation with a federal direct loan, the outcome would be any different.

  4. Yes, Sallie Mae is one of a handful of the examples of for-profit lenders and servicers who have given the FFEL program a black eye. Don’t forget, many of these for-profit companies make large sums of money from their private student lending, including Sallie Mae – which they will continue to do even if they lose any small amount of revenue that may be received from the FFEL program.

    Non-profit agencies like CSLF, KHEAA, UHEAA, PHEAA, etc. are the types of agencies that provide loans in a fiscally responsible manner. As Amy said, they should not be grouped with the for-profit lenders who have unfortunately given the FFEL program a black eye.

    On a final note, guess who is in the running for a contract in servicing the 100% Direct Loan program…yep, it’s Sallie Mae. It looks like Mr. Lord will still have the last laugh when he completes the aforementioned golf course using OUR tax dollars given through servicing contracts for the Direct Loan program. I can’t wait until we have a government-run monopoly on student loans in the hands of Sallie Mae (the words “monopoly” and “Sallie Mae” should never be in the same sentence)….good thing I already have my degree and won’t need take out anymore loans…

  5. […] of FFELP – "I Am CSLF" Collected by CSLF Apr 28, 2009 from // Event.onDOMReady(function() { // sizeText($(‘video_title’), 475); // }) collect this […]

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