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Company vying for chance to service loans

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Posted: Thursday, May 21, 2009 12:00 pm | Updated: 8:15 am, Thu Aug 16, 2012.

By Don Bolding

The Cove Herald

Sallie Mae Servicing Corp. officials appear confident of a stable future for their facility in the Killeen Industrial Park despite the Obama administration's push to have the government initiate all student loans.

Local vice president Deborah Sather said the company is still on a short list of six companies bidding to service loans initiated by the government if the Federal Direct Loan Program is established on the proposed date of July 1, 2010. If the company wins that, the facility in Killeen would add about 100 permanent positions to the 375 remaining after previous government regulations forced cuts in profitability that drew the work force down from nearly 1,000.

Sallie Mae's business has been making and then servicing educational loans. Under current proposals, neither they nor any other private concern could initiate loans as of July 2010 but could continue to service loans it already has, plus subsequent loans initiated by the government if it wins that contract.

Some of Sallie Mae's business is seasonal, and Greater Killeen Chamber of Commerce president John Crutchfield said the company is presently looking for about 250 employees in advance of the fall semester.

It has other options, including increasing offers of private loans made from its own money for students and families who need more assistance than grants and federal loans can provide.

During a meeting with a Daily Herald editorial board this week, Sather and officials from Sallie Mae's home office in Virginia said they've begun to see contacts from classes of families who never thought they would need financial aid for college.

"We would encourage people to exhaust their options for government and government-backed loans and grants first," Sather said. "But we can still help them."

Also, Sallie Mae has announced that it is bringing 2,000 call-center jobs back from overseas, and the local facility has a chance of getting a number of those jobs.

Sather said the jobs will cost the company more money here but echoed earlier announcements in saying, "This was just the right thing to do at this time, when so many of our own people are looking for work."

Crutchfield, who also manages the Killeen Economic Development Corp., said Sallie Mae owns a long-vacant building adjoining its active facility in the industrial park that the company has considered selling at various times. He said the company has said the building is definitely off the market at this time.

The chamber conducted a campaign earlier this spring urging local people to contact members of Congress about preserving the private initiation of student loans.

Crutchfield said the campaign increased awareness of the administration's proposal and resulted in massive opposition to the administration's proposal. He said officials at First National Bank Texas and other institutions who make student loans also expressed appreciation, even though the campaign was primarily for Sallie Mae's benefit.

Sallie Mae is friendly toward the emergency Ensuring Continued Access to Student Loans Act, a measure now in force that funds loans directly from the U.S. Treasury with the government owning the loans and collecting the interest, but it wants private sector service providers to continue to originate loans for the government and to allow schools to choose the loan origination and disbursement system that work best for each school's circumstances.

The Obama proposal would cap the number of service providers at six. Sallie Mae would allow an unlimited number and allow state agencies, nonprofit groups and small-scale providers to participate.

Sallie Mae officials said the providers would share in the risk of loan defaults, creating an incentive for finding ways to prevent them. Since there would be more players, the job loss the federal streamlining would cause would be avoided.

But Sallie Mae is expressing confidence it can shore up its position, even if only at the current downsized level.

"The glass is half-full. Sallie Mae has been here a long time, and there's no reason to suppose they won't keep prospering," Crutchfield said.

Contact Don Bolding at dbolding@kdhnews.com or (254) 501-7557.

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