Monday, July 25, 2011

Sallie Mae Has Some Issues

So be sure to do a little investigation before you get too involved with her. Sallie Mae is, according to the website, "the nation’s No. 1 financial services company specializing in education." This corporation has 23 million customers, provides loans, tuition payment plans and other products to help students pay for college.

Sallie Mae, listed on the New York Stock Exchange, is also big business, managing or serving $238 billion in education loans and administering $37 billion in 529 college savings plans.

I am particularly bothered by one bullet in a recent mailing: "Get the money you need. Borrow up to 100% of your school certified costs of education." There's nothing in this mailing that counsels on the downside of college debt -- particularly what could well be more than $100,000 if indeed a student elects to cover all costs through Sallie Mae loans.

It also does a lot of marketing, with direct-to-student mailings. And a lot of people -- students, parents, co-signers -- have had lots of problems dealing with the company's aggressive collection techniques, as just some rudimentary Googling reveals.

The company also has a tuition refund insurance policy that will give a family back tuition money if an ill student must pull out of college. The policy returns all the money for illness or injury but only 75% for mental health-related withdrawals. Read this article to learn more.

It might not be a bad policy -- the article argues that it may be too generous -- but think carefully before signing up, particularly since mental health issues are the primary reason kids withdraw from college.

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