Sallie Mae Blames 2,500 Layoffs on Obama's Student Loan Overhaul
Powerhouse student loan provider Sallie Mae says layoffs are imminent as a result of President Obama's new student loan overhaul.
"This legislation will force Sallie Mae to reduce our 8,600-person workforce by 2,500," Conwey Casillas, Vice President of Sallie Mae Public Affairs, said in a statement to Fox News.
Obama was at Northern Virginia Community College in Alexandria on Tuesday to sign the student loan changes into law. The new bill includes a provision for the government to begin directly lending to students, bypassing financial institutions like Sallie May that traditionally have provided the loans. Obama said that such institutions have soaked up billions in subsidies.
"Now, it probably won't surprise you to learn that the big banks and financial institutions hired a army of lobbyists to protect the status quo," Obama said. "In fact, Sallie Mae, America's biggest student lender, spent more than $3 million on lobbying last year alone."
Indeed, Sallie Mae has been outspoken in its opposition to the plan, calling it a "government takeover" just last month.
"The student loan provisions buried in the health care legislation intentionally eliminate valuable default prevention services and private sector jobs at a time when our country can least afford to lose them," Casillas told Fox News.
Sallie Mae was trying to garner support for an alternative, which the company said was roundly rejected.
"We are profoundly disappointed that a reform plan that would have achieved more savings for students was ignored and now thousands of student loan experts will unnecessarily lose their jobs," Casillas said.
But Obama says he's merely looking out for those in need.
"I didn't stand with the banks and the financial industries in this fight. That's not why I came to Washington. And neither did any of the members of Congress who are here today," he said. "We stood with you. We stood with America's students. And together, we finally won that battle."
Obama said the move will save billions, enabling his administration to use the money to improve the quality and affordability of higher education.
Sallie Mae hasn't said exactly when jobs will start getting slashed, but the cuts "will start soon," Casillas said.