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Sallie Mae Files Lawsuit against Buyers

Oct 10, 2007

by Scholarships.com Staff

On October 8, 2007, Sallie Mae announced its intent to file a lawsuit against the company’s potential buyers, a group of investors led by J.C. Flowers & Company. In April, the student lender agreed to a buyout offer of $60 per share. Since then, the buyers retracted their initial proposal, citing recently passed student loan legislation as reason. 

By signing the College Cost Reduction and Access Act, President Bush agreed to cut student lender subsidies by about $21 billion. Numerous companies, including Sallie Mae, threatened that the cuts would force them to eliminate borrower benefits such as, among other things, on-time payment reductions.

Following the bill’s passage, buyers lowered their initial buyout price to $50 per share. Sallie Mae rejected the offer and filed a $900 million lawsuit for contract termination. Albert L. Lord, the Chairman of Sallie Mae’s Board of Directors stated, “We regret bringing this suit. Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same.”

And don't forget, you should pay for your college education with as much free money as possible! Find as many scholarships and grants as you can before turning to student loans. Visit the Scholarships.com free college scholarship search today where you'll get matched with countless scholarships and grants for which you qualify, then apply and win! It’s that easy!

Posted Under : College News , Student Loans

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