Sallie Mae, the Unbowed Ho

A clip from TomPaine.com:

Isaiah J. Poole is the executive editor of TomPaine.com. This was written with the research assistance of Eric Lotke.

The sale of Sallie Mae to a group of investors that includes JP Morgan Chase and Bank of America should confirm to members of Congress that it is time to pull the plug on what has been a huge ripoff of taxpayers and college students.

Sallie ŸMae became a valuable enough business to warrant a $25 billion purchase price in part because its lucrative loan portfolio, estimated as high as $142 billion, is guaranteed by the federal government. That guarantee, in turn, ensures what has turned out to be in the past two decades a relatively low-risk investment, as graduating college students get jobs that enable them to repay the loans with few defaults.

But the icing on the cake was the success Sallie Mae had, after directing more than $877,000 to the election campaigns of President Bush and congressional candidates in 2004 and 2006, in getting the Republican-dominated Congress to allow it to charge interest rates on loans that ensured it a fat profit. That profit was fat enough, in fact, for its former board chairman, Albert L. Lord, to collect $228 million worth of salary and stock options in 2005 and for its current chairman, Thomas J. Fitzpatrick, to have received $180 million in total compensation, according to The New York Times .

This is, in other words, Reaganesque obsequiousness to private interests writ large: A public-interest goal—low-cost and widespread access to college tuition financing—turned into a license to print money for high-priced executives and investors, leaving students and taxpayers stuck with the bill. . . .