Labor Groups Petition Arne Duncan To Dump Sallie Mae
A prominent student group and the nation’s largest labor federation are among organizations with close ties to the White House demanding that the Department of Education terminate its contract with the student loan company formerly known as Sallie Mae.
The AFL-CIO, United States Student Association, American Federation of Teachersand other advocacy groups in recent days have called on their members to sign anonline petition urging Education Secretary Arne Duncan to sever Navient Corp.’s lucrative contract to collect monthly payments on federal student loans after federal authorities accused the company of cheating soldiers. Sallie Mae recently split itself into two companies, Navient and Sallie Mae Bank.
The involvement of the AFL-CIO, an ally of the White House and the Democratic Party, opens a new political front in student advocates’ campaign to force Duncan to hold Navient accountable.
“The Department of Education shouldn't be in business with companies like Sallie Mae that break the law, and I don't want my taxpayer dollars supporting such a company,” the petition states. “I urge you to not turn a blind eye to these disreputable practices. Please take these matters seriously by ending your agency's contract and business dealings with Sallie Mae at once.”
Last week, the Department of Justice and the Federal Deposit Insurance Corp. accused Sallie Mae and its former loan unit, Navient, of intentionally violating the Servicemembers Civil Relief Act for years by overcharging active-duty troops beginning in 2005. The FDIC also said Sallie Mae and Navient illegally processed borrowers’ monthly student loan payments in a way that maximized late fees.
The organizations’ joint petition, which has garnered more than 50,000 signatures and was organized by the nonprofit Jobs With Justice, threatens to ratchet up pressure on Duncan to penalize Navient.
The Education Department last fall told Sallie Mae it intended to renew its contract(now held by Navient), even though federal investigators a few months earlier had discovered evidence that the company had violated the servicemembers law. Breaking the law constitutes a breach of the company’s contract with the Education Department.
Sen. Elizabeth Warren (D-Mass.) has said the Education Department risks becoming a "lapdog" as a result of its lackluster supervision of Sallie Mae. The company has told Labor Groups Petition Arne Duncan To Dump Sallie Mae: