Chairman Feese, Chairman Evans and Members of the Committee,
I am June McCormack, Executive Vice President at Sallie
Mae. On behalf of Sallie Mae's 10,000 employees, particularly
my 700 colleagues who live and work in Northeastern Pennsylvania
at our WilkesBarre Loan Servicing Center, thank you for
the opportunity to testify today about Sallie Mae's proposed
partnership with the Pennsylvania Higher Education Assistance
Authority, known to everyone as PHEAA.
I am here today, not only as the senior executive at Sallie
Mae with responsibility for our loan servicing center in
Pennsylvania, but as someone who was part of an. organization
- the USA Group - - that was approached five years ago by
Sallie Mae with a partnership proposal similar to. the one
Sallie Mae has proposed to PHEAA. While I can certainly
identify with the anxiety that some feel about changing
the way that PHEAA does business, I can attest to the fact
that the collaboration between Sallie Mae and USA Group,
has left us our organizations stronger competitively and
positioned both organizations far better to meet the future
needs of students, schools and taxpayers.
In my testimony, I will provide the Committee with some
background on the student loan program,. provide detail
on Sallie Mae's proposal, and explain how our proposal would
unlock the value that today is trapped inside of PHEAA and,
more importantly, enhance that value as well. I will also
share with you Sallie Mae's success with our partners and
how these partnerships have created lasting value for students,
schools and taxpayers. I am pleased that you will have the
opportunity to hear from some of the beneficiaries of our
partnerships on the next panel.
The Federally Guaranteed Student Loan Program
In 1965, the Congress created one of the most successful
federal programs in our nation's history - the federal student
loan program. For 40 years, this unique public private partnership
has made the dream of college a reality for more than 50
million students and their families.
Today, the guaranteed student loan program - - the Federal
Family Education Loan Program (FFELP) - - represents the
largest federal source financial aid to students seeking
postsecondary education. Today's interest rate for undergraduate
borrowers under this program is at an all time low of 3.37%.
The size of the FFELP market has nearly doubled nationally
over the last 10
years with student loan originations growing from $23 billion
in fiscal year 1994 to $45 billion in fiscal year 2004.
Federal student borrowing in Pennsylvania represents $3.3
billion of that total. PHEAA and its lenders controlled
$2.6 billion, or 78% of FFELP market in Pennsylvania.
The federal government's competing student loan program
totaled $14 billion nationally in fiscal 2004 but very little
of that was in Pennsylvania. Only 2% of all federal student
loans in Pennsylvania were made by the federal direct student
loan program (less than $80 million).
Competition in the student loan business is generally driven
by banks and other lenders' attempts to gain access to schools'
"preferred lender lists," which are presented
to students and their parents when they are ready to arrange
financing for college. By using preferred lender lists,
schools effectively function as gatekeepers to student loan
providers. While most FFELP terms are set by federal statute,
lenders differentiate themselves in several ways, including
loan pricing (origination fee discounts and/or rewards for
repayment behavior), loan delivery technology and service
quality, and ancillary products and services, including
non-guaranteed private loans that are often needed to supplement
FFELP loans.
Schools, lenders, guaranty agencies (which serve as the
first line insurer on behalf of the federal government),
secondary markets, loan servicers and the U.S. Department
of Education (ED) work together as part of the FFELP financing
cycle. Guaranty agencies (which can be state agencies or
non-profits) provide insurance to lenders against FFELP
defaults. The guaranty agencies are, in turn, reinsured
by ED. Both the lenders and the guaranty agencies retain
some financial risk which serves as an incentive to avert
defaults.
The level of sophistication required to deliver guarantor
services (including loan origination, default prevention
and collections) has risen dramatically over the last 10
years. Federal funds that are allocated to guarantors have
declined, while school and. borrower demand for better products
and services has increased substantially. In response to
the increased costs associated with the maintenance and
development of guarantor servicing systems, more than half
of all guarantors have chosen to contract their systems
work, and, in many cases, their "back room" operations
as well. Significant economies of scale can be achieved
through such arrangements.
Secondary markets provide liquidity to the student loan
market through the purchase of student loans from other
lenders. Some secondary markets (such as PHEAA) have decided
to become lenders. In addition, some secondary markets,
including PHEAA, have the ability to issue taxexempt bonds,
which can provide extra income to fund substantial borrower
benefits (through discounts or rebates). In 1996, Congress
authorized non-profit secondary markets to convert to for-profit
status and a number of such organizations have pursued this
course over the past decade.
FFELP is subject to periodic legislative reauthorizations
as well as other legislative and regulatory changes. Reauthorization
of the Higher Education Act (HEA), which governs FFELP,
is currently pending in Congress. A number of proposals
have been introduced that would alter program rules and
economics, increasing competitive pressure among guaranty
agencies, lenders and loan servicers.
Sallie Mae
Congress created Sallie Mae in 1972, when the student loan
program was still in its infancy, to serve as a secondary
market, provide liquidity for banks and to encourage them
to participate in the student loan program. As the student
loan marketplace has grown and evolved over time, so has
Sallie Mae. Our initial role as a loan secondary market
and servicer kept us focused on banks as our primary customer.
In the 1990s, we expanded that focus to include a school-based
strategy that emphasized loan delivery. In 1996, at the
company's urging, Congress enacted legislation to permit
shareholders of Sallie Mae to reorganize as a fully private-sector
entity, a process that concluded in December 2004. Having
undergone the transition from governmentsponsored agency
to an ordinary state-chartered corporation opened new doors
for us and gives us an appreciation for the challenges -
and opportunities -- facing PHEAA.
Sallie Mae is the nation's leading private sector provider
of higher education financing managing over $107 billion
in student loans and more than 7 million customers. Our
primary business is providing and servicing federally guaranteedd
student loans as well as non-guaranteed "private loans"
to help families meet the remaining gap in education costs.
Nationally, we represent approximately 25% of the student
loan business. We also offer comprehensive information and
resources to assist students, parents, guidance counselors,
and college administrators through the financial aid process.
Sallie Mae also provides debt-management services, as well
as other "processing," administrative and consulting
services to a range of clients, including colleges, universities,
banks, secondary markets, loan guarantors, state agencies
and the federal government.
Sallie Mae has had a longstanding commitment to Pennsylvania.
We recently celebrated the 17th anniversary of our loan
servicing center in Wilkes-Barre, which was built at a time
when PHEAA and Sallie Mae had an extensive business relationship.
The servicing center; which was our first full service center,
employs more than 700 Pennsylvanians, making it one of the
largest employers in Northeastern Pennsylvania. As a valuable
contributor to the local economy, Sallie Mae provided more
than $32 million in salaries, benefits, taxes and charitable
contributions to Pennsylvania in 2004 and of course, the
economic impact of our center in northeastern Pennsylvania
is multiples of that number. Our Pennsylvania employees
perform a range of "back-office" services for
student loan borrowers around the country. Our Pennsylvania
team processes 2.2 million student loan payments each month
and handles more than 14.4 million pieces of correspondence
and records updates each year. We are proud of the job that
they do on behalf of students nationwide and look forward
to putting those talents to work for more students in Pennsylvania.
Today, Sallie Mae serves nearly 300 colleges and universities
in Pennsylvania. During the last year, we provided approximately
$750 million in student loans to help Pennsylvania students
pursue a higher education. Our commitment to the Commonwealth
is reflected in our Pennsylvania Rewards program, which
offers the lowest cost student loans in the Commonwealth.
Compared to other lenders in the Commonwealth, Sallie Mae's
Pennsylvania Rewards program will save an average borrower
nearly $220 over the life of their loan.
You have heard a lot about Sallie Mae in recent weeks -
much of it has been negative and most of it inaccurate.
The truth is that we take very seriously our obligation
to serve students, families, schools, employees and taxpayers.
We would not enjoy the success we have achieved if Sallie
Mae were the company our detractors, have described us to
be. Indeed, numerous national observers have recognized
Sallie Mae's record of accomplishment and excellence:
Fortune magazine named Sallie Mae one of its "Most
Admired Companies."
Forbes magazine named Sallie Mae one of the "Best Managed
Diversified Financial Companies in America."
Business Ethics magazine ranked Sallie Mae among the "100
Best Corporate Citizens."
Business Week magazine ranked Sallie Mae in the top 15 cash
givers in their list of "Top Corporate Philanthropists."
Working Mother magazine named Sallie Mae one of the "Top.
100 Companies for Working Moms."
Washingtonian magazine and Indianapolis Monthly list Sallie
Mae as a "Great Place to Work."
Greater Wilkes-Barre Chamber/College Misericordia Annual
Diversity Award for excellence in promoting diversity and
diversity topics in an area business.
The National Association of Female Executives listed Sallie
Mae as one of the "Top 30 Companies for Executive Women.
GovernanceMetrics International gave Sallie Mae a perfect
"10" score for corporate governance. Of 1,600
global companies ranked, only 17 received this rating.
The U.S. Department of Education gave Sallie Mae its "Exceptional
Performance" designation for meeting or exceeding government
standards in administering loans under the Federal Family
Education Loan Program.
About PHEAA
As you know, PHEAA is an independent public corporation
created by the Pennsylvania General Assembly in 1963. PHEAA's
principal headquarters are in Harrisburg and they also maintain
offices in California, West Virginia and Delaware. Its mission
is "to improve higher education opportunities for Pennsylvanians."
Pennsylvania represents 6% of the student loan market. PHEAA
controls over 80% o of all student loan volume in the state
and derives virtually all of its income from participation
in the FFELP. As a state agency, PHEAA does not pay taxes
on its earnings and is able to avail itself of low-cost
tax-exempt funding for its loan portfolio. PHEAA performs
a number of commercial functions in support of student lending
within and outside of Pennsylvania: loan originations, funding,
loan servicing, guarantee servicing and collections.
By combining these commercial functions with its, agency
role as administrator of the state higher education grants
program, PHEAA has garnered a near monopoly share of the
Pennsylvania student loan market. Unlike elsewhere in the
country, PHEAA - not the colleges and universities - serve
as the gatekeeper for the federal student loan program.
The question for the legislature is whether this virtual
monopoly status benefits Pennsylvania taxpayers, schools
and students over the long term, or whether it is possible
to create a better economic proposition for higher education
in Pennsylvania that strengthens lender choice and competition
at the school and borrower level.
PHEAA's public financial statements for the last several
years suggest PHEAA has not returned to the taxpayer value
commensurate with the market control it enjoys. As of June
30, 2004 (the end of its most recent fiscal year), PHEAA
had accumulated nearly $400 million in surplus
assets that remain "locked" within the agency.
Even though PHEAA created this substantial nest egg, it
chose to add nearly $70 million to this total in FY 2004
rather than return it to the Commonwealth's citizens.
PHEAA claims credit for providing $100 million annually
in financial benefits and "free" programs and
services to the taxpayers of Pennsylvania. While we applaud
PHEAA for its many fine programs, we believe the Committee
should understand that the vast majority of these benefits
are commonly provided today across the country as part of
the competitive student loan marketplace (see Exhibit I).
Indeed, two-thirds of these PHEAA benefits (fee waivers
and loan forgiveness) are essentially common forms of price
discounting. The proposed partnership by Sallie Mae would
not take away any of these benefits, but would add a substantial
infusion of cash. Even with PHEAA's recently announced "Higher
Education Grants Initiative," maintaining the status
quo would still offer the Commonwealth less than it would
receive under Sallie Mae's offer. PHEAA's initiative appears
to promise $265 million in new funding over the next five
years, which falls far short of the $1 billion offered in
the Sallie Mae proposal, the difference could, fund a broad
range of higher education or other Commonwealth priorities
(see Exhibits II and III).
Moreover, PHEAA's financial condition - and ability to fund
benefits over the long term - is at risk if the following
trends are not reversed:
Between fiscal years 2001 and 2004, PHEAA's operating costs
rose nearly 14% per year while non-interest revenue grew
by only 8% per year. This disproportionate growth in PHEAA's
cost structure consumes money that could otherwise be spent
to benefit the Pennsylvania public.
For their most recent fiscal year, PHEAA spent roughly $208
million to operate its student loan businesses (excluding
grants administration), originating roughly $3 billion in
new loans. In the same period, Sallie Mae spent approximately
$500 million to operate its comparable student loan businesses,
originating roughly $18 billion in new loans, while servicing
an outstanding portfolio of $107 billion.
In FY 2004, PHEAA reported spending $16 million w administer
approximately $420 million in grants. By contrast, Florida
spent just over $4 million to administer nearly the same
amount in grants.
As of September 30, 2004, the U.S. Department of Education
(ED) ranked PHEAA 22°d out of 36th among state agencies
in terms of their performance in collecting defaulted student
loans. PHEAA's lower level performance reduces its compensation
from the federal government, which in turn reduces resources
available in Pennsylvania. Sallie Mae manages the defaulted
collection portfolio for five guarantors, four of which
rank among ED's top 10 collectors. (to view this on ED's
website go to:
http://www.fsacollections.ed.uov/contractors/ga/stats/11282004.htm"TARGET="_blank
http://www.fsacollections.ed.uov/contractors/ga/stats/11282004.htm
click on: GA.Recovery.report.FY04.xls).
Much of PHEAA's recent financial success is temporary and
at risk. As of June 20, 2004, nearly 40% of PHEAA's loan
portfolio received excessive federal subsidies on so-called
"9.5%" loans, which appear to generate rou . hly
two-thirds of PHEAA's $161 million in interest income. These
subsidies have been the subject of much controversy in Congress
and are very likely to be phased out as part of the upcoming
reauthorization of the Higher Education Act.
Sallie Mae's Proposed Public-Partnership for Pennsylvania
Over the years, Sallie Mae and PHEAA have worked together
in many ways. Sallie Mae has provided funding and credit
enhancements for the agency, while PHEAA, for over 20 years,
serviced student loans for Sallie Mae. The relationship
changed course in the last four to five years, as PHEAA
became an increasingly aggressive competitor in Pennsylvania.
In an effort to resume our working relationship, Sallie
Mae has made a number of proposals to work more closely
with PHEAA. Our most recent proposal and the topic of today's
hearing, was a proposal to create a new partnership between
our two entities. The proposal was designed to bring greater
efficiencies to PHEAA that would in turn generate increased
revenues to support PHEAA's mission-related activities
Under the broad terms of our proposed partnership for Pennsylvania:
Sallie Mae would purchase PHEAA's assets, including its
student loan portfolios and the rights to future loans originated
or purchased by PHEAA, and enter into a rolling five-year
contract under which Sallie Mae would, as a vendor to PHEAA,
provide operations support and services. In return, Pennsylvania
would receive approximately $1 billion over five years.
Economic arrangements for "out years" (after year
5) would be negotiated annually.
To maximize the value available under the transaction, PHEAA
will need to maintain some tax-exempt financings, while
committing the earnings streams from these portfolios to
Sallie Mae.
PHEAA's third-party servicing businesses would be acquired
by Sallie Mae as part of the transaction.
Each year PHEAA would set targets relating to school marketing
and lender partnerships (including the "Keystone"
program).
To capture available operating efficiencies, Sallie Mae
would gradually integrate PHEAA's current operating platforms
in such areas as loan originations, loan servicing, guarantee
servicing, and collections with those of Sallie Mae, thereby
generating cost efficiencies, upgrading technology and improving
service levels to schools and borrowers.
PHEAA would retain policy control over existing grant, loan
forgiveness, and philanthropic programs within the bounds
of the current economic scope of these programs. The Commonwealth
and PHEAA could also choose to expand the investment in
these programs from the transaction proceeds.
PHEAA would retain its current legal structure and brand
name. It would remain a FFELP guarantee agency under contract
with ED. PHEAA would continue to originate loans under its
name, committing to sell new loans to Sallie Mae.
PHEAA's independent board of directors and a streamlined
management team would remain in place to oversee Sallie
Mae's performance.
Sallie Mae would keep employment levels in the Commonwealth
at or above the approximately 2,800 persons employed by
the two entities today. It is worth noting that Sallie Mae
has increased employment by 6,500 jobs since 2001 - all
in states where we compete. Because of the efficiencies
enabled by combining PHEAA's and Sallie Mae's operations,
we know that we can accomplish PHEAA's current work with
fewer employees. than it has today. We can commit to maintaining
the 2,800 person target by redeploying positions within
the Commonwealth to serve the needs of Sallie Mae customers
around the country, in addition to meeting the needs of
PHEAA's existing customers. In fact, we are in the process
of seeking locations to add several hundred jobs to support
our rapidly expanding debt management business, with sites
in Pennsylvania and other states under consideration.
The General Assembly would continue to set the appropriations
levels for education grants and PHEAA would continue to
oversee the Commonwealth's successful grants and loan forgiveness
programs. Sallie Mae would offer Pennsylvanians the same,
or even better, terms on a larger set of loan products,
as well as borrower benefits, including zero origination
fees, low interest rates and a flexible set of repayment
plans. By separating the grant and loan functions, schools
will be free to use whichever loan provider they choose
to do business with, which means more competition for student
loans in Pennsylvania.
The foregoing terms were offered as a way to invite negotiations
and Sallie Mae has indicated its willingness to negotiate
the terms and structure of its proposal. As proposed, we
believe the terms fully and fairly value the PHEAA franchise.
However, we are open to discussions regarding alternative
structures and valuations and, in any event, would need
to conduct standard due diligence to confirm our business
assumptions and develop a much more detailed set of contractual
arrangements. As it stands, without the benefit of any discussion
with Sallie Mae or, presumably, any independent analysis,
PHEAA rejected Sallie Mae's offer through a statement released
to the press on December 27, 2004.
Why is Sallie Mae's Proposed Partnership Good for Pennsylvania?
PHEAA has argued that "if it broke, why fix it"?
However, our review of PHEAA's public financial statements
for the last several years suggest that PHEAA has not returned
to Pennsylvania students value commensurate with the market
control it enjoys.
Exhibit III summarizes the total projected benefits to Pennsylvanians
of the Sallie Mae proposal over the next five years in comparison
to the status quo under PHEAA. Compared to PHEAA's recent
grants initiative, Sallie Mae is offering more than three
times in incremental cash - than what PHEAA is offering
Pennsylvanians. In addition, a partnership with Sallie Mae
would shift PHEAA's operational, financing, and to Sallie
Mae, "locking in" the benefits for years to come.
The proposed partnership will benefit Pennsylvanians in
several ways:
Increased Funds Available for Students. At a time when government
is doing more with less, entering into this partnership
would increase the amount of public funds available for
educational assistance - either directly to students or
through institutions.
Lower Risks for Taxpayers. By shifting most of the operating
and financial risks of PHEAA to Sallie Mae, Pennsylvania
taxpayers are "locking in" a steady cash flow
for the length of the relationship, and avoiding the very
real potential for sharp reductions in PHEAA's income in
the near future through rising interest rates and expense
levels.
Increased Accountability. A partnership with Sallie Mae
would ensure greater accountability to the General Assembly.
Any contract PHEAA would enter into with Sallie Mae, would
include clear financial commitments and performance measures
to which Sallie Mae would be held. These terms would also
govern how Sallie Mae would be paid.
Increased Competition. Without true competition, little
incentive exists for PHEAA to' innovate or operate efficiently.
Schools and students are the losers. PHEAA's recent offer
of $265 million in new grant funding is a case in point.
Decoupling grants administration and loan programs would
remove what is at least a perception of a link between the
two functions and free schools to make the best choices
for their students.
Some have logically asked, "Once Sallie Mae partners
with PHEAA, how can we be assured that all of the benefits
and programs offered by PHEAA will remain?" In short,
those benefits and programs will remain under PHEAA's control.
PHEAA management and its Board would maintain oversight
over our contract. Sallie Mae's contract with PHEAA would
only be renewed if PHEAA was satisfied with our performance.
Simply put, we would be contractually obligated to deliver
better products and better services to Pennsylvania.
Sallie Mae Has a Track Record of Successful Partnerships
As legislators, it is appropriate for you to ask why Pennsylvania
should alter its approach to student loans, and why you
should partner with Sallie Mae. Our track record offers
some answers.
We are proud of our record of improving performance for
our partners and returning more dollars to those who need
it most - students and their families. Sallie Mae's partners
demand and receive first-class value and service. By building
financial incentives into each arrangement, we also have
"put our money where our mouth is" with our partners
over the last seven years in partnering with more than a
dozen entities. In each transaction, whether we are the
parent company or a third-party vendor, we have greatly
improved student services and enhanced competition.
As I mentioned in my opening remarks, I came to Sallie Mae
from USA Group as a part of one of these transactions and
I see many similarities between Sallie Mae's proposed relationship
with PHEAA and the relationship that Sallie Mae entered
into with USA Group in 2000. At that time USA Group, a not-for-profit
entity that like PHEAA, acted as a loan guarantor, a loan
servicer, and a secondary market. Sallie Mae purchased the
assets, of USA Group and entered into a longterm contractual
relationship to do both guarantor and loan servicing. USA
Funds, the guarantor affiliate of USA Group prior to the
transaction, remains a not-for-profit entity with a governing
board and a staff who oversee all borrower benefits and
policy and compliance matters while monitoring Sallie Mae's
performance. Proceeds from the sale were used to establish
the Lumina Foundation, today one of the nation's largest
private foundations dedicated to higher education. For the
record, I would like to submit copies of the last four years
of annual reports from USA Funds. These reports illustrate
both the independence and success that USA Funds has experienced
as a result of its partnership with Sallie Mae.
Since embarking on this partnership, USA Funds has experienced
tremendous growth. Not only has it maintained its existing
customer base, it has grown new guaranteed loan volume to
a record $9.8 billion as of the end of the academic year
2003-2004. This represents an increase of 52% during the
four-year period of our relationship. Joint investments
by Sallie Mae and USA Funds in technology initiatives have
fueled this success and brought even higher levels of service
to the students, schools, and lenders served by our partnership.
Today, USA Funds' default rate is at its lowest point in
history, benefiting borrowers by ensuring that they have
strong credit records, and the taxpayers by avoiding unnecessary
defaults. Sallie Mae has also helped USA Funds to reduce
its defaulted loan portfolio by 28%. The enhanced collection
services performed by Sallie Mae have generated additional
resources that USA Funds has used to invest in their higher
education mission-related activities.
Other examples of our success in helping our partners grow
include:
Nellie Mae - When Sallie Mae acquired Nellie Mae in 1999,
it originated approximately $385 million in student loans.
By 2004, Nellie Mae originated more than $1.2 billion in
education loans for students and families - an increase
of more than 300 percent.
Student Loan Funding - Student Loan Funding made $25 million
in education loans in 1999 (the year before it was acquired
by Sallie Mae). In the most recent academic year, Student
Loan Funding made $125 million in loans, a five fold increase.
AmSouth - Since becoming the exclusive marketing agent for
AmSouth's education loan division in 2004, Sallie Mae has
helped grow AmSouth's new loan origination volume by more
than 20 percent.
In addition, four of Sallie Mae's guarantor partners rank
among the U.S. Department of Education's top 10 collectors
of defaulted student loans.
As with USA Funds, every additional dollar Sallie Mae helps
our partners to collect enables them to use more funds to
help students and families pay for college. It is also important
to note the money returned to local communities as a direct
result of these partnerships. Our strategic partnerships
have aggregated more than $2.3 billion in funding for five
separate foundations dedicated to improving higher education:
Student Loan Finance Association - $100 million for the
Education Assistance Foundation, a Seattle-based foundation
dedicated to education.
Southwest Student Services - $500 million to the Helios
Education Foundation to fund its mission of education philanthropy,
making it the largest foundation in Arizona.
USA Group - $770 million to the USA Group Foundation (now
known as the Lumina Foundation), a charitable foundation
dedicated primarily to expanding access to education through
research, information and innovation.
Student Loan Funding - $117 million to the Thomas L. Conlan
Education Foundation (known today as the KnowledgeWorks
Foundation), a Cincinnati-based foundation that supports
college access initiatives, school-to-career programs, and
early childhood learning activities across Ohio.
Nellie Mae - $320 million to the Nellie Mae Foundation (known
today as the Nellie Mae Education Foundation), New England's
largest public charity dedicated exclusively to improving
academic achievement for the region's under-served communities.
Conclusion
Sallie Mae and PHEAA have both made important contributions
in furthering their shared mission of increased college
access to all Americans. We believe that through our proposed
partnership, we can make the dream of college more accessible
to all Pennsylvania students.
We hope that you will leave today's hearing with a better
understanding of the benefits our partnership can bring
to the state:
Our proposed partnership with PHEAA will generate more money
for Pennsylvania higher education.
Greater competition in Pennsylvania's student loan business
will improve service and lower the cost of borrowing for
students and families.
Reduced financial risk and greater operating efficiencies
in PHEAA would mean a stronger long term franchise.
Finally, before I close, as the person at Sallie Mae who
has responsibility for our Wilkes-Barre center, I want to
make a personal observation. Sallie Mae made a serious business
proposal to PHEAA. To date, PHEAA has not seriously evaluated
the merits of our proposal, nor have we received a serious
response. Our employees in Wilkes-Barre have been understandably
disturbed at the way Sallie Mae's name has been dragged
through the mud over these past weeks by individuals with
a personal stake in maintaining the status quo regardless
of the benefits that would accrue to Pennsylvanians from
our proposed partnership. While our employees accept that
reasonable people can differ about how best to run Pennsylvania's
student loan program, they cannot understand, nor can I,
why public money - their money, as taxpayers of Pennsylvania
- has been spent on a media campaign designed to convey
negative impressions about the work that they so proudly
perform on behalf of Sallie Mae, schools and students. As
one of my Wilkes-Barre colleagues put it, "Every dollar
spent attacking Sallie Mae is a dollar that cannot be used
to help a young person in Pennsylvania pay for college."
Chairman Feese, Chairman Evans, and members of the Committee,
I am grateful for your willingness to have an honest, open,
and fact-based discussion about how best to serve Pennsylvania's
students, schools, and taxpayers. We hope that today's hearing
could be the starting point in that discussion so that the
merits of our proposal can be fully considered. I look forward
to our continued dialogue and would be happy to answer any
questions you may have.
