Sallie Mae Faces Criticism On Student Debt Repayment Plans

It is the hope of every college student that they will leave their undergraduate experience with a degree and a wealth of experiences that will lead to monetary wealth as well. Due to the rising cost of post-secondary education, however, the vast majority of students find themselves needing to crawl above student loan debts before they can begin to work toward autonomous success.

In efforts to reduce this issue, the Obama Administration has recently devoted itself to lowering the federal interest rate on student loans, increasing the Pell Grant's maximum allocation per student, and doubling work study jobs over the next five years.

Yet, many students have loans outside of the federal program, Sallie Mae being one of the largest providers of these personal loans. The company is now facing a great deal of criticism after Steph Gray started an online petition with Change.org, drawing attention to the interest and payback programs that she believe make it unreasonably difficult for students to ever come out from under their debts.

For those with a personal loan, Sallie Mae allows students to declare forbearance on up to three accounts and used to charge a $50 fee for each of these accounts, totaling a possible $150 after a three-month period. After these three months are up, the account holder may ask for an additional three months, but  would incure another $150 charge in the process.

Since Gray's campaign gathered over 110,000 signatures and attracted coverage from the national press, Sallie Mae has changed their policy so that the fee will be put toward paying down the debt. Gray feels that the policy is still unfair though, and in a phone interview said, "Its still a fee that I can't afford to pay right now." She stressed that this is not a personal attack on the company, referring to the 110,000 signatories in saying that this is a common situation, and that the vast numbers of college graduates who are out of work due to the country's 8.3 percent national unemployment rate, should not have this extra burden placed on them. Gray's ultimate campaign goals are to have the fee completely removed and for colleges to be more explicit when referring students to outside loan companies.

Patricia Christel, a spokesperson for Sallie Mae, said to CNBC that the company had been considering such changes "for some time, and the petition confirmed there was an appetite for this modification," but that they feel having a fee of some kind emphasizes "the importance of and commitment to resuming payments." n