This week the Department of Justice levied a $97 million fine against the student debt servicing giant Sallie Mae. The findings of the DOJ’s long investigation revealed a host of bad practices and illegal behaviors at the company, including overcharging on nearly all military service members’ loans, and mishandling borrowers’ payments to maximize late fees and penalties.
The fine is appropriate and offers some sense of justice, but it also feels eerily familiar to the lawsuits levied against the mortgage companies before, during, and after the Great Recession. Time and time again, the Department of Justice, state attorneys general, and regulators all found ample evidence of egregious wrongdoing and rampant fraud, resulting in several multi-million dollar settlements with all the mortgage giants.
Unfortunately, it ended there. There still hasn’t been a single executive of a major bank brought up on criminal charges and held accountable for the actions that caused the housing crisis. There were no structural changes in how the banks operate. These settlements simply became the cost of doing business – and we are still seeing the same reckless and illegal behavior years after they’ve supposedly taken their medicine.
The student loan debt crisis is the next bubble, no different than the mortgage collapse. Our future and our families are at risk. We have been here before – this time, it’s not too late to stop it. Slapping Sallie Mae on the wrist isn’t the answer.
Sallie Mae is a folksy name for the giant SLM Corporation. Contrary to what many assume, Sallie Mae is a for-profit company, it services and collects on student loans. Most student loans are originated by the U.S. Department of Education, which is also making a big profit off of student loans – a reported $41.3 billion last year. If the Department of Education was a corporation it would be the third most profitable in the world, right behind Exxon Mobil and Apple.
The Department of Education has options. Sallie Mae’s contract is coming up soon to be renewed for the next five years. Violating federal law is grounds for termination. Sign our petition telling Secretary of Education Arne Duncan that Sallie’s Mae contract shouldn’t be renewed.
This is a clear example of the federal government having an opportunity to restore the faith of the country. It’s an opportunity to hold giant corporations accountable. If you break the law, even if you’re a giant financial institution, there will be repercussions that are more than just the cost of doing business.
Until corporate executives are put in jail or until lucrative federal contracts are pulled, financial industry giants will continue to consider federal law a mere suggestion.
Please sign our petition here.