USA Education, Inc., the student loan company known as Sallie Mae, said last week it has signed with GE Financial to offer an array of expanded financial services to its seven-million customers.
The new offerings will include insurance, auto club memberships, legal and health-related plans. The three-year partnership will begin later this year.
Sallie Mae, which was formed as a secondary marketer for guaranteed student loans, has expanded its business in recent years to include, among other things, student loan originations and is now the biggest non-government student lender in the country.
The expansion into new offerings is another sign of mission creep for what was founded as a government sponsored enterprise (GSE), with all the attendant benefits of government sponsorship.
But three years ago Sallie embarked on a privatization plan that will break the binds of government sponsorship, setting it up in direct competition with some of the very partners, like credit unions and banks, that it was sponsored to benefit. One example is the loan origination market.
Sallie was founded to facilitate the secondary market for guaranteed student loans. But its new charter has enabled it to originate loans in competition with credit unions and banks.
Last year, the company originated as much as a third of all the non- government student loans in the country. With a $90-billion portfolio and a customer list of some seven-million borrowers, the company has grown to be a formidable competitor for its former partners.