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Largest US student lender to move 2,000 outsourced jobs back to the United States to mollify Obama administration
By Finfacts Team
Apr 7, 2009 - 3:36:24 AM
President Obama speaks to the Turkish Grand National Assembly, Ankara, on Monday April 06, 2009
The largest US student lender, the SLM Corporation commonly known as Sallie Mae, on Monday announced that it will create 2,000 jobs by returning its overseas operations to the US. Specifically, Sallie Mae will hire call center, information technology, and operations support positions across the United States by returning outsourced jobs. The move is an attempt to alter Obama administration plans to reduce the role of private lenders in federal student loans.
“For 37 years, we have been dedicated to helping America’s students enhance their lives through an investment in higher education,”said Albert L. Lord, Chief Executive Officer, as if the move was motivated by patriotism. “We also contribute economically to the many communities where we operate our business. The current economic environment has caused our communities to struggle with job losses. They need jobs, and we will put 2,000 of them into US facilities as soon as we possibly can.”
Sallie Mae expects to hire these employees over the next 18 months. The company currently has operations in 20 locations in the US and employs more than 8,000 people there.
Asked in an interview on CNBC how much it would cost, he said, "Well, I will tell you that it will not be inexpensive. It's probably roughly $35 million." He didn't give further details.
A spokeswoman said the company will pull jobs from India, Mexico and the Philippines. CEO Albert Lord held a press conference attended by Rep. Paul Kanjorski and Sen. Robert Casey, both Democrats from Pennsylvania, where the new jobs will be located. "We have reversed our decision to move people offshore," Lord said at a press conference at the company's facility in Wilkes-Barre, Pennsylvania, which will gain 600 new jobs.
The company is responding to a budget proposal from the Obama administration that would diminish the role of private lenders in federal student loans. Investors have worried that the company will lose a major source of income if the proposal is adopted.
Sallie, which makes private and federal student loans, gets nearly one-third of its income from the federal student loans it makes for the government. It had $34 billion in private loans at the end of the fourth quarter and $146 billion in federal student loans.
Asked if this meant that Sallie Mae would not outsource jobs again, he said, "It would be foolhardy for me to tell you that I won't ever do anything again."
Last week, the Consumer Warning Network signalled the rise in protectionism as unemployment spikes, in a public warning: "Sallie Mae routs payments, complaints and applications for these government-subsidized loans -- containing sensitive personal and financial information -- to processing centers in Bangalore and Pune, India. Calls about collections and loan originations are also passed to centers in India, as well as Baguio, Philippines.
The outsourcing of Sallie Mae's student loan servicing has prompted numerous complaints from students about their difficulty in dealing with foreign operators and an increased concern over the safety of their personal, confidential information. Offshore call and processing centers, particularly those in India, are regularly accused of selling personal and financial information.
In the midst of these practices, Sallie Mae is fighting to get yet another lucrative government contract to handle more federal student loan servicing. Six companies are currently vying for a 10-year contract to service all federal student loans.
It's difficult to put a price tag on the contract, but the Department of Education estimates the loan servicing fees to be more than $200 million a year in revenue, according to Michael Whisler, the administrator overseeing the bidding process.
For this contract, there is no requirement to keep jobs in the United States; however, it does require "all personnel" to complete a federal background check clearance, based on their position risk level."
