Sallie Mae Disappears Behind Curtain, Emerges as Navient

The name “Sallie Mae” was such a cute way to put a happy name on indentured servitude but like all ideas, it gradually gets old as everyone figures it out. So what’s a corporation to do? Rename itself. Well, wait. That sounds like they just did it. I’m sure they spent a big chunk of change on a naming consultant. Read Laura Northrup’s coverage at the Consumerist for more. Here’s taste:

In a statement, he explained that the new name stands for what the company does. “Helping our customers navigate the path to financial success is everything we stand for,” he said, not realizing how hilarious that sounds to many of the company’s current customers.

One Response to Sallie Mae Disappears Behind Curtain, Emerges as Navient

  1. While Sallie Mae is certainly not one of the good guys, inaccurate headlines such as “Student Loans and Delinquencies Skyrocket” don’t help matters.

    Student loan delinquency is actually lower than delinquency on most other types of consumer debt, except for prime mortgages. Why does a seemingly-innocuous metric such as Percent of Balance 90+ Days Delinquent mask this reality? The answer is the vast majority of education loan (student, parent and consolidation) debt is in the federal student loan programs: Direct, Guaranteed (FFEL), and Perkins. In consumer lending, delinquent debts are charged off, typically after less than six months of delinquency. In federal lending, delinquent debts become defaulted after a year and are NEVER charged off. Uncle Sam has so many collection tools available that there is no reason to charge off.

    How does this mess up the delinquency comparison? For typical consumer loan products (automobile loans, mortgages, credit cards, and personal loans), the definition of delinquency used by Federal Reserve Bank of New York (FRB) includes, at most, accounts 91-180 days delinquent. For federal student loans, it includes accounts 91 days to 20 YEARS delinquent. An apples-to-apples comparison would include only delinquencies 91-180 days delinquent. If that adjustment seems too generous, then 91-360 days delinquent would include the delinquencies and exclude the defaults. In federal student loans, delinquency and default are very different and also differ from how these concepts are used on other types of debts. (As Collinge and others point out, the federal government makes money on defaulted loans, overall.)

    Note that the complete version of the FRB’s Quarterly Report on Household Debt and Credit now discloses on the first page (“Household Debt and Credit Developments in 2013 Q4”) that student loan delinquency actually includes balances “delinquent or in default.”