Who’s Profiting from Student Loans?

Wednesday, November 30, 2011
When students borrow money for college, and often saddle themselves with enormous debts, they wind up taking out loans with one of five major lenders in the U.S. A trillion-dollar business, it has been a source of profit for the big five.
 
The biggest player in the student-loan industry is the SLM Corporation, aka Sallie Mae. Originally a government-sponsored enterprise created in 1972, Sallie Mae went fully private in 2004. Just four years later, it had to be bailed out by the federal government when its version of “subprime” loans to borrowers attending for-profit colleges or trade schools left SLM saddled with unpaid debts.
 
But Sallie Mae wound up solvent, and even earned profits totaling more than $320 million after the rescue. It was even strong enough to pay $1.2 billion for the right collect payment on $28 billion  of Citigroup’s federally-backed student loans after the bank decided to get out of the business.
 
Second to the SLM Corporation is Wells Fargo. It was the fourth largest lender, but after it bought up Wachovia (No. 3) at the end of 2008, the bank took over the No. 2 spot, with more than $10 billion in student loans. The good news is that Wells Fargo is now offering fixed-rate loans for students. The bad news is that the rates can go up to 14.25%.
 
About $4.2 billion worth of student loans held by Citigroup’s Student Loan Corporation was snatched up at the end of 2010 by Discover Financial Services, the company behind Discover Card and now third largest lender.
 
Rounding out the list are Nebraska-based NelNet and Wall Street titan JPMorgan Chase.
-Noel Brinkerhoff, David Wallechinsky
 

Student Loan Debt Reaches $1 Trillion (by Noel Brinkerhoff, AllGov) 

Comments

Arron Jake 8 years ago
student loans have never been required to get a college degree, if there is anyone victimizing students it’s the people telling our children they will never go anywhere in life if they don't get a college degree right out of high school. first off, it is possible to live a long successful life and never have completed college (if you doubt that i can introduce you to my grandmother). secondly no person should pursue an education they cannot afford. for-profit schools are not preying on unsuspecting children, our problem is the idea that one should only pay for what one can afford (minimize all loans/debit) is not modeled or prioritized by our society (if the federal government doesn't do it, why should i). so i’ll solve this problem right now: students, don’t take a loan that will be difficult to repay, put off school a little longer and pay for your education with as much cash as possible. there, problem solved. http://www.onlinecheck.com/business_loans.html business loans

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