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Archive for Thursday, February 20, 1997

SALLIE MAE EXPANDS OFFICE AND SERVICES

February 20, 1997

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Privatization and a successful specialized collection department have opened the door for more employees and services.

Growth in the recovery of delinquent student loans and an opportunity to expand into other market areas will add to the continued success of Sallie Mae nationally and in Lawrence.

"We expect growth in our specialized collection area and are looking at other business ventures beyond the traditional market of student loans," said Elaine Nelson, vice president of operations for the Lawrence offices of Sallie Mae -- the Student Loan Marketing Assn.

The company has Lawrence offices at 2000 Bluffs Dr. and 110 McDonald Dr. It has expanded three times at the 110 Building and recently acquired an additional 6,000 square feet of space there.

How many new jobs will be added is uncertain, Nelson said. The company has grown in Lawrence since 1984 from 12 employees to 565. It is now the fourth largest of six Sallie Mae service centers, ranking behind centers in Florida, Texas and Pennsylvania.

Nelson said Sallie Mae obtained its collection unit, centralized asset recovery group, in 1995. That group buys defaulted student loans from other companies and banks for collection.

Nationally, the U.S. Department of Education reports the default rate on student loans has dropped. But because of higher education costs, Nelson said, loan balances are higher and more dollars are being defaulted on.

Sallie Mae recently submitted a bid for a government contract to collect on student loans for the Department of Education.

"It's still within our area of expertise, just a different approach in handling the loans on a contract basis rather than owning them," Nelson said.

In this process, Sallie Mae steps in once loans are defaulted on and the government is making final attempts to collect.

"We're hoping to hear on the bid anytime," Nelson said.

A privatization process, approved by Congress in September 1995, removes Sallie Mae from restrictions placed on it by its federal charter.

Sallie Mae was founded in 1972 to create a secondary market for federally guaranteed student loans.

"What that means is we buy student loans so lenders have the capital to make more loans," Nelson said.

Ross Kleinman, director of corporate communications at Sallie Mae headquarters in Washington, said the new market areas resulting from privatization could include software administrative systems, consulting services or savings plans for families of students in higher education.

But before the change is final, a reorganization plan will be presented to shareholders on May 15 for approval.

Kleinman said shareholder approval is imminent.

"For much of Sallie Mae's existence, our status as a government-sponsored enterprise (GSE) was very favorable to the company," he said. "However, in recent years, the political risks associated with being a GSE and the increased competition in our marketplace led us to conclude a privatized company would be in the best interests of our shareholders, customers, employees and taxpayers."

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