Sallie Mae - Student Loan Marketing Association

There was once a government-sponsored enterprise called the Student Loan Marketing Association. As you could guess, they lent money for student loans. Lent, as in past tense.

In 2004, the Student Loan Marketing Association got a makeover. Move over SLMA...say hello to Sallie Mae, a private lender that’s publicly traded. She’s playing with the big boys now.

Originally, Sallie Mae was created in the 1970s to buy federally guaranteed student loans from banks with Treasury funds. This gave banks even more money to lend out. Eventually, Sallie Mae didn’t need Treasury funds to purchase student debt. Then, in the 1990s, Bill Clinton gave the green light for Sallie Mae to give out loans directly.

By 2004, Sallie Mae was privatized...and she was ruthless. Buying out competitors, taking on subprime loans, and operating the Upromise program (which helps families save for college via cashback rewards).

With privatization comes normal private company risk; the Government wasn't there to cover any deficits, failures, bad management courtesy of the taxpayers' dollars. It didn’t take Sallie Mae long to find herself in the midst of lawsuits. For instance, a 2014 civil suit made Sallie Mae pay $97 million for wrongfully charging military members high interest rates and fees. Of all the people to stick it to...