Sallie Mae, under scrutiny from consumer advocates and several lawmakers for how it manages payments for federal student loan borrowers, released new data Tuesday touting the performance of those loans.
The company said that 9.3 percent of the federal direct loans it services were enrolled in an income-based repayment plan at the end of 2013, compared with the previously-released 7.7 percent national rate for all such loans. In addition, Sallie Mae said that the federal loans it serviced were less likely to be in forbearance, comparing the company’s 9.4 percent rate of forbearance with the 11.1 percent rate for all federal direct loan borrowers.
The Education Department has not released such detailed data on how federal direct loan borrowers fare under each of the different loan servicers it hires. Some consumer advocates have charged that loan servicers aren’t doing enough to help struggling borrowers enroll in income-based repayment plans, which allow borrowers to cap their payments as a percentage of their income. Senator Elizabeth Warren of Massachusetts, a Democrat, has specifically called out Sallie Mae’s practices.
Sallie Mae’s release of its data comes as the department is negotiating the renewal of the loan servicing contracts it has with Sallie Mae and the three other main servicers of federal loans.
Under the current contract, the department assigns each of those companies a performance score based on how well, relative to the others, they are keeping borrowers out of default and satisfying different stakeholders. The scores determine how many new loans the department assigns to the companies. Last year, Sallie Mae received the lowest overall score and is therefore receiving the smallest share of new federal loans to manage on behalf of the department. The company performed the second best on the default metrics, but it received the lowest customer satisfaction scores from surveys of students, college financial aid officers, and Education Department employees.
The company’s chief executive officer, John F. Remondi, told investors last year that he is pushing for the department’s allocation methodology to more heavily weight the default metrics.
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- Despite student debt concern, income-based repayment lags
- Obama expands income-based repayment to older borrowers, pushes Democrats’ student loan refinancing bill
- Education Dept. will email 3.5 million student-loan borrowers about income-based repayment
- Two-year default rates for student loans increase again
- Problems plague Education Department debt management process
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