Critics of the United States’ student debt crisis took aim at loan corporation Sallie Mae on Friday after NBC News reported on a trip the company’s executives took over the summer to Hawaii to celebrate record-breaking sales in 2018.
NBC reported Thursday night that more than 100 executives and salespeople used some of the profits raked in from 45 million Americans who collectively owe $1.6 trillion in student loans for an all-expenses-paid retreat in Maui in August.
Sallie Mae lent $5 billion last year to 374,000 borrowers. One in five Americans owes student debt, a crisis which has contributed to many young people delaying or forgoing homeownership, starting a small business, and having a family.
Sen. Bernie Sanders (I-Vt.) tweeted that the story of Sallie Mae’s celebration bolstered his argument, central to his 2020 presidential campaign, that all student debt must be canceled.
Cancel all student debt. https://t.co/ZdLC9gaUqY— Bernie Sanders (@BernieSanders) October 18, 2019
Sallie Mae was founded in the 1970s to provide federal student loans, but has since transitioned to a private loan servicer. Critics including the state of Illinois, which sued Sallie Mae in 2017 for deceptive practices, accuse the corporation of using the same subprime lending tactics used by banks before the 2008 financial meltdown—offering loans to people who are unlikely to be able to repay them.
“Sallie Mae had a big part in creating a place where we are in the student debt crisis,” Ashley Harrington, senior policy counsel on student debt at the Center for Responsible Lending, told NBC.
Journalist Heidi N. Moore tweeted that Sallie Mae’s practice of offering private loans with high-interest rates allows the company to collect huge profits while borrowers spend years barely making a dent in their debts, despite regular payments.
Your regular reminder that most if not all of Sallie Mae's terms make it nearly impossible for people to pay down their principal (the actual loan itself) so they spend years just paying off increasing interest on their loans https://t.co/9YTaTIm4zY— Heidi N. Moore (@moorehn) October 18, 2019
“When we talk about Sallie Mae celebrating its ‘profits,’ we are actually talking about the company’s success in creating a business model and payment terms that exploit borrowers, so that loans become a perpetual burden,” Moore tweeted.
Author Chuck Wendig imagined a future where, if left unchecked, Sallie Mae’s extravagant celebrations of its success would be juxtaposed with millions more borrowers facing increasingly dire financial circumstances:
2023: "Sallie Mae throws cocaine-fueled block party for its employees to celebrate $10 billion in sales while those in student debt are allowed to become human furniture for the wealthy, renting themselves as architecture." https://t.co/28JiaF8VDE— Chuck Wendig-Your-Own-Grave (@ChuckWendig) October 18, 2019