Sallie Mae's efforts to support Obama's student-loan plan

Thursday, March 4, 2010

Contrary to Education Secretary Arne Duncan's assertions ["Investing in students, not the banks," Washington Forum, Feb. 26], Sallie Mae is not lobbying to preserve today's student-loan program. In fact, our efforts have been focused on supporting the foundation of the president's proposal with a few enhancements that would preserve jobs and deliver a better program for students, schools and taxpayers.

The president's proposal calls for leveraging low-cost Treasury debt and the expertise of private-sector companies to generate savings and deliver superior service. We agree. Our suggestions have been in support of enhancements that would leverage this private-sector expertise to loan delivery and default prevention.

In creating a competitive loan-delivery environment, schools and students could continue to select the solution, including direct lending, that works best for them. Further, they could change service providers should they be unhappy or if their needs change.

The expansion of risk-sharing to all loans better aligns taxpayer, student and servicer interests to prevent defaults. The current mortgage crisis shows how the lack of economic exposure in a mortgage loan led to poor credit decisions, over-borrowing and catastrophic levels of defaults.

Our suggestions emphasize financial literacy and borrower assistance to avoid repeating these types of problems in student loans. The president's proposal, with these improvements, would be a better program for students, schools, taxpayers and, yes, our employees. And it could be passed with bipartisan support.

We stand ready to work with Mr. Duncan to seize this "once in a generation" opportunity.

John Remondi, Reston

The writer is vice chairman and chief financial officer of Sallie Mae.

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