Wednesday, April 18, 2007

"Taxpayers Pay the Bill for the Sallie Mae Buyout"

Bethany McLean of Fortune gets unusually demonstrative over the Sallie Mae buyout:

"Sallie markets itself as friendly to students ("Helping millions of Americans achieve their dream of a higher education," reads its Web site), but critics have long charged that the opposite is true. Until recently, though, no one - save students and their advocates - seemed to care. When the Democrats took over Congress, they spotted an opportunity, and announced that they would chop the interest rates on student loans, and pay for it in part by reducing subsidies paid to lenders. Sallie, along with the rest of the industry, cried poor - and said that their real concern was not their own profit margins, but the well being of those they serve."

"The deal may also mean that despite Sallie's cries that Congress's cuts will send it and the nation's students to the poorhouse, there is still a ton of profit in its business - enough for it to absorb a significant cut in profits, add to its debt pile, and still make its executives and its new owners even richer. Reportedly the buyers believe that Sallie will benefit from any action Congress takes, because its market share will grow as weaker players fall by the wayside. That's great for all of those parties. Just keep in mind who is paying the bills: Taxpayers and students."

1 comment:

Aaron said...

Makes one wonder why don't we just subsadize educational costs in this country, rather than subsadizing the middle man.