A former CEO of the student loan lender, Sallie Mae, said tuition fees at US universities were “criminal,” but admits he played a role in their rise, according to a forthcoming book.
In an adaptation of “The Debt Trap” by Wall Street Journal reporter Josh Mitchell, due for release August 3, Al Lord, who joined Sallie Mae in 1981, said he first felt the impact of tuition fees when he started paying those fees. one of his grandchildren.
Lord said he paid $ 175 per semester in the 1960s when he attended Pennsylvania State University, a huge difference from the tuition he paid for his grandson, who s ‘was enrolled at the University of Miami several years ago. The college currently charges $ 75,230 for an on-campus undergraduate student, which includes tuition, fees, room and board, transportation, and other expenses.
“It’s criminal,” Lord reportedly said.
He also reportedly paid the school fees for several other grandchildren, at nearly $ 200,000 per person.
“Boy, I’m really glad we saved up for my grandchildren. If the average income is $ 40,000 or $ 50,000 or $ 60,000, I just don’t know how you do it, ”Lord said.
He reportedly acknowledged in the book that he understands that he played a role in encouraging colleges to raise their rates.
According to “The Debt Trap,” after Lord began his first career as CEO of Sallie Mae in 1997, he launched a series of incentives to allow students to take out more loans so that colleges could charge more. Sallie Mae began to bundle student loan packages which were then sold to investors.
Additionally, Lord persuaded schools to ask students to borrow money either from the banks, where Sallie Mae bought her student loans, or from the student lender himself, according to the book. Sallie Mae’s promises that additional funds from private investors would be available for students led her shares to soar thereafter.
In 2007, when Lord took over as CEO, Sallie Mae’s valuation plummeted after guaranteed profits under his program were slashed by Congress, according to the book.
“Our client was almost as much the college as the student,” Lord reportedly said. “It wasn’t my job to lose 100% of the sales for something that could make all the difference. No one was looking for that kind of information from me.