Sallie Mae turns tan on Maui retreat as student debt crisis tops $ 1.6 trillion

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WAILEA, Hawaii – While one in five American adults wonders how they can pay off their entire $ 1.6 trillion in student debt, Sallie Mae executives and sales team members grapple with another question: How should they spend their time between meetings at theirs spend five days? paid trip to the luxurious Fairmont Resort on Wailea Beach, Maui?

Sallie Mae brought more than 100 of his employees to Hawaii in August to celebrate a record year – $ 5 billion in student loans to 374,000 borrowers. The company said it wasn’t worth it for the employees’ families, but some went along with it.

“We said, ‘Hey, look, Maui is a pretty nice place.’ So if you want to stay a few days or bring your family with you, that’s up to you, ”Sallie Mae CEO Ray Quinlan told NBC News at the Fairmont Hotel.

Ray Quinlan, CEO of Sallie Mae, told NBC News that part of the trip was to celebrate a record year with $ 5 billion in revenue.NBC news

Quinlan said in a walk-and-talk with NBC News that the trip to Maui was not an “incentive trip”.

“This is a sales meeting for all of our salespeople,” he said, adding that the publicly traded company has been taking retreat like the Maui Company since its inception in the 1970s to service government education loans.

Since then, the lender’s path has changed and is now offering private loans. In 2014, however, the company split into two: Sallie Mae Bank, which offers personal loans, and Navient, a newly formed spin-off that services and collects loans, including those that Sallie Mae has sold. However, Sallie Mae’s borrowers have said the company doesn’t treat them nearly as well as its sales team.

Paige McDaniel, 39, took out a Sallie Mae state student loan 20 years ago to pay for her bachelor’s degree. Six years later, before Sallie Mae split from Navient, she took out a private loan from the company to pay for her graduate school.

“I thought it was the same loans,” said McDaniel, from the Elizabeth suburb of Denver. A mother of two, she borrowed $ 120,000 for her master’s degree in business administration from Lakeland College to help cover her school living expenses.

The agreement, which included a warning to read before signing, said the interest rate was floating, but she says she doesn’t remember being told that the interest rate on the personal loan was much higher.

After graduation, Sallie Mae expected McDaniel to pay “well over $ 1,500 a month,” she said.

“When I told them I couldn’t afford this, we could make some payment arrangements, they were essentially, ‘Sorry, we’re going to mortgage your house and mortgage your wages if you don’t make those payments,” said McDaniel .

Paige McDaniel, 39, owes $ 304,000 to student loans after taking out a $ 120,000 loan with Sallie Mae 14 years ago.
NBC news

Now McDaniel owes $ 304,000 despite filing bankruptcy to protect her home after failing to make her payments. She hired a lawyer to sue Navient, arguing that bankruptcy should have paid off her debt as it was a private loan.

“There’s no way anyone can get out of it,” said McDaniel. “They just don’t see there are families on the other side. It’s not just my generation because I have the credits, it affects my kids too. How am I going to send them to college?”

McDaniel’s experience isn’t an outlier.

The Illinois attorney general sued Navient and Sallie Mae in 2017, accusing the company of fraudulent subprime lending, failure to offer adequate repayment options, and faulty debt collection practices.

“We are concerned about personal student loans,” said Ashley Harrington, senior policy counsel for student debt at the non-partisan Center for Responsible Lending (CRL). “You don’t have the same protection for borrowers,” she said.

Harrington said private student loans often use subprime lending practices and lend to people who are unlikely to be able to repay them, adding that the problem disproportionately affects black, Latin American, Native American and female students.

Black students in debt cannot afford their loans at five times the price of white undergraduate graduates, according to a 2019 study conducted in part by the CRL.

“Sallie Mae was instrumental in creating a place where we find ourselves in the student debt crisis,” said Harrington, and student debt prevents people from buying houses and starting small businesses, which slows the economy.

Sallie Mae says she is not liable in McDaniel’s lawsuit, and says the current bank was not lending when it closed theirs.

“We believe that Navient – a separate and independent company from Sallie Mae – is responsible for all disputed liabilities,” the company said in a statement to NBC News.

But blaming Navient doesn’t fit with the company’s own advertising. On her website, Sallie Mae touts 43 years of “helping America pay college” – more years than McDaniel even lived.

Navient told NBC News that the AG’s lawsuit was “baseless” and said it had no comment on McDaniel’s case. Citing allegations of making private loans because they knew students would not be able to repay them, the company insisted that all loans were made in “good faith”.

In Hawaii, Sallie Mae’s complaints and controversy seemed lost in the sand.

“So we’ve had good years, we’ve had bad years,” said Quinlan. The conference was, in the eyes of Sallie Mae, “recognition of the hard work” of the sales team.

Beachside, employees planned and strategically for the coming year, were awarded and enjoyed the sun.

“We do this every year,” said Quinlan.

CORRECTION (Oct 17, 2019, 7:00 p.m.): An earlier version of this article misidentified the company that Paige McDaniel is suing. It’s Navient, not Sallie Mae. It was also misrepresented in a caption when McDaniel took out a loan. It was fourteen years ago, not six.

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