Last modified: Thursday, October 9, 2003
IU selects Sallie Mae for student loan servicing
Indiana University has selected Sallie Mae to provide servicing for federally guaranteed and private student loans on the seven campuses that are administered by the university. The agreement will commence in summer 2004 and extend through summer 2005, with options for annual renewals of up to four additional fiscal years.
Some 40,000 loans, representing nearly $280 million, are extended to IU students annually. Several years ago, the university determined that it would no longer use two loan programs, the Federal Direct Lending Program and the Federal Family Education Loan Program (FFELP), and instead use only FFELP for students on all campuses as a means of increasing efficiencies and maximizing services for students. IU officials projected the initial cost savings from moving to a single loan system would be about $1 million. Maintenance of two systems would have cost an additional $500,000 annually.
Earlier this year, the university extended a request for proposals to find one servicer to administer the program for students and their families. The university sought ease in administration and simplicity for student borrowers, as well as a company that would provide the best borrower benefits appropriate for students. Sallie Mae was selected from among eight companies that responded to the request.
"We want to provide our students and parents the best possible services. We believe this arrangement will offer a high quality of loan packages and services," said Judy Palmer, IU vice president and chief financial officer. "We will provide a comprehensive loan program, including private loan alternatives for our students, with very competitive borrower benefits. With one servicer, we'll provide streamlined service for the many students who seek federally guaranteed loans through Indiana University."
If the agreement is extended to 2009, Sallie Mae is expected to process nearly $1.4 billion in loans.