Weekend Update

We were out of town for a few days but now back. What have you missed? Here's a summary:

1. Rumors of Sallie Mae being purchased by the Blackstone Group, JP Morgan, and/or possibly others. Our assesement is that such a transaction will not materially impact the industry, Sallie Mae's arrogance, or the earth's rotation. Sallie Mae will merely have a new owner. Blackstone is a private equity firm whose net income is larger than most countries GDP in the world. And Chase bought Collegiate Funding Services not too long ago to compliment their growing student loan business.

2. According to the Dept of Education, student loan companies have been mining the National Student Loan Database. We find this curious, as NSLDS has two interfaces: one for students, and one for student finance participants. In either case, the loan info can only be displayed one record at a time. And even with this severe restriction, no one screen or view details a borrowers entire perspective. It's not easy to mine NSLDS given the interfaces that the Dept of Ed offers. Which leads us to the conclusion that some lenders have been granted access to the raw data. Moreover, the Department of Education is again failing to police their own regulations. So yes, with absolutely no enforcement, there will indeed be rogue lenders that blatantly challenge the system. It certainly doesn't justify the actions of these lenders.

3. Article in Friday April 13, 2007 Wall Street Journal that details the revolving door between student loan industry employment and Department of Education employment. There's a whole slew of folks that have been going back and forth for a number of years. We're very concerned about all this. The damage has most likely already been done, but we don't think we'll see a whole bunch of this continuing.