Dispute Clouds Revival of Student-Loan Market

The U.S. Department of Education and SLM Corp., the mammoth student lender known as Sallie Mae, are embroiled in a contract dispute that could delay efforts to shore up the student-loan market.

The hostilities revolve around who will be paid to process student loans that the Education Department buys from private lenders. After getting congressional approval in May, the department announced it would begin buying the loans to pump liquidity into the market, which has suffered in the credit squeeze.

Sallie Mae filed a protest last month with the U.S. Government Accountability Office over the department’s decision to steer its new loan-processing business to Affiliated Computer Services Inc., without seeking competitive bids. Affiliated, a Dallas-based company, has provided other loan-processing services to the department since 1993. Read full story. (Wall Street Journal)



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