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Sallie Mae buyout not as bad; loan rates should see decrease

My initial reaction to the headlines announcing that student-loan provider Sallie Mae is being bought out by private investors was to write a column about how terrible privatization is for students because of the potential for interest rates to rise.After all, I typically am very much for the government regulation of social programs. But, after I did my research on this topic, I realized that privatizing one of the nation’s largest student loan companies may not be such a bad thing.

My main concern was the impact that the $25 billion buyout of Sallie Mae would have on TCU students. So I asked Melet Leafgreen, assistant director for loan programs, what her take on the issue was. Have a look at how you can get loans from bridging loan company and make it easier for yourself.

Her response was that she did not believe the privatization would have any significant impact on TCU students.

“The interest rates on federal programs will continue to be mandated by law, and the interest rates on private loans are unlikely to change since Sallie Mae must compete for business with all other lenders in the private loan marketplace,” she said.

Leafgreen also said she does not believe that privatizing Sallie Mae will have any impact whatsoever on scholarship amounts.

I asked Wes Waggoner, director of freshman admission, whether he thought that the privatization of Sallie Mae would have any impact on admissions in the future.

Waggoner said that a student’s ability to pay is something admissions pays attention to.

He said that if the rates rise, it may play a role in who chooses to apply to TCU, but the real question is whether privatizing Sallie Mae will affect students’ ability to pay.

“When looking at education, families are savvy enough to know that they are making a four-year commitment,” Waggoner said. “Financial aid does a good job of educating families.”

According to a recent Reuters article, the $25 billion buyout comes at a time when Sallie Mae and other student loan providers are under investigation for offering kickbacks to universities for steering business their way.

According to the article, Sallie Mae settled with New York Attorney General Andrew Cuomo for $2 million, though the company did not admit any wrongdoing on its part but promised to change some of its lending practices.

Privatizing Sallie Mae will probably not result in rocketing rates on student loans. In fact, it more than likely means rates will decrease, and the company will become more efficient as it is forced to compete in the market with other student loan companies.

The good news is, regardless of what happens, TCU financial aid is there to help students find the support they need to finance their education, and I have faith that if rates on student loans from Sallie Mae do rise, TCU will help students find lower-interest lenders.

Talia Sampson is a junior news-editorial journalism and international relations major from Moorpark, Calif. Her column appears Thursdays.

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