Mark Twain was known to grouse about “lies, damned lies and statistics,” so we can only imagine what he would make of the recent manipulation of numbers surrounding Sallie Mae’s purported failure to assist troubled student loan borrowers by offering enrollment in Income Based Repayment. Two different sides of the IBR coin have been publicized – one by Huffington Post and the other by Salle Mae – but which is accurate?
Huffington Post published a piece earlier this month advancing the notion that Sallie Mae has not been effective in informing cash-strapped borrowers about, and enrolling them in, the very advantageous Income Based Repayment program. Here are some of Sallie Mae’s failings according to HuffPo:
• Violations of unfair or deceptive practices laws
• Discriminatory lending practices
• Violations of the Servicemembers Civil Relief Act
• Not encouraging or promoting IBR to struggling borrowers
HuffPo culled documents and estimates provided by the White House to draw their conclusions, but Sallie Mae says the website’s “conclusion is misguided,” although they failed to provide any data to contradict the conclusions. Here’s where the manipulation of numbers gets interesting though. HuffPo criticized Sallie Mae for enrolling only two million borrowers into the beneficial repayment plan. That was on September 3rd.
Exactly two weeks later – on September 17th – Sallie Mae sent out a press release bragging that it had enrolled two million borrowers into Income Based Repayment. That’s right – they were touting the same number HuffPo dissed! So which is it? Is this an impressive number of people assisted or an incredibly underwhelming number of people assisted?
Lies, damned lies and statistics will tell you it’s both (or one, or the other, or perhaps neither).
Issuing a press release that basically says “nuh-huh” isn’t really a defense and doesn’t establish that Sallie Mae is doing the right thing. And a one-sheet PR page doesn’t quantify whether or not they are properly promoting the program, informing eligible borrowers of the existence of the program, and facilitating enrollment.
It all comes down to motive. Why would they not promote the program? Here’s one consideration. After 25 years of payments, remaining balances are written off. If the balances are written off, how much profit does that mean Sallie Mae misses out on? My guess is many millions.
Sallie Mae president John Remondi has admitted that enrolling borrowers in IBR is expensive. With increased expenses up front and the potential for lost interest on forgiven balances on the back end, the lender’s (allegedly) slipshod promotion of the program doesn’t seem that far-fetched.
If Sallie Mae continues on this route and the allegations put forth by CFPB and FDIC are proven out, they may find themselves receiving less of a cut of the student loan market. When you combine HuffPo’s assertions with the allegations presented by FDIC and Consumer Finance Protection Bureau of abuse against borrowers, applicants and our men and women in the Armed Forces, it doesn’t look good for Sallie Mae. Perhaps they can issue a press release simply saying they didn’t do it…