Student Loans are private affairs

By Albert B. Crenshaw

Washington Post Staff Writer

Monday, November 22, 2004;

Page E01



Critics who think mortgage funding giants Fannie Mae and Freddie Mac have it too easy because of their special relationship with the government might want to take look a look at the company called SLM Corp.

The Reston-based company, which is better known as Sallie Mae and makes billions of dollars in student loans every year, was founded with a government charter, much like the charters held by the big mortgage finance companies. But in the late 1990s Sallie Mae agreed to give up its charter and strike out on its own as a fully private company.



The result has been a bigger, more profitable, more dominant company than existed or was even possible when it operated with its federal ties in place.

Profits at the company have soared -- from $384 million in 2001 to $792 million in 2002, and to $1.3 billion last year. The company's stock price has climbed from less than $20 a share in early 2001 to more than $50 last week. Its quarterly stock dividend has jumped from less than 6 cents a share to 19 cents in that period, and the stock split three-for-one last year.

Chief executive Albert L. Lord, the architect of Sallie's Mae's success, has also done well. He received $41.8 million in total compensation, including stock options exercised, last year. President Thomas J. Fitzpatrick received $27.8 million. The two ranked second and fourth, respectively, in total compensation in a Washington Post survey of executive compensation in the region.

"Sallie Mae is the Frankenstein that federal law created and let loose on the marketplace," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers and a longtime critic of the company.



for complete story