SLM Financial - A Sallie Mae Company Sordid Tale of Corporate Greed victimized many consumers Nationwide

A SORDID TALE OF CORPORATE GREED LOAN COMPANY CAUGHT FLEECING STUDENTS IN SEVERAL STATES.

PRESS RELEASE

For Immediate Release

A Sordid Tale of Corporate Greed

Cashing in on its known status as one of the main sources of federally-guaranteed student loans, Sallie Mae has been caught fleecing students in several states. The scam was straightforward: obligate students on non-federally guaranteed student loans for which they would receive no benefit, and then hound them to pay the debts even though by law the debt is unenforceable.

As just one example, students in Virginia who thought they would receive computer training from an entity called Solid Computer Decisions instead ended up being harassed by Sallie Mae to make payments on unenforceable loans.

Through an arrangement with Solid Computer Decisions, Sallie Mae used one of its divisions, SLM Financial, to arrange non-federally guaranteed student loans. The basic loan amounts were normally $10,000.00 to $11,000.00, and SLM Financial then always added an additional fee of several hundred dollars. SLM Financial located out-of-state banks to fund the loans, and made sure that the money was never given directly to the students. Instead, SLM Financial claims that the money was wired directly to Solid Computer Decisions.

The basic scheme was that Solid Computer Decisions was not a real school in Virginia, had no license to be a school in Virginia, and never obtained a license to be a school in Virginia. Sallie Mae had been warned by the Department of Education that Virginia requires each school to be licensed and that it should not be arranging loans for non-licensed schools.

It was specifically informed by the Department of Education's Proprietary Trade School Unit that Solid Computer Decisions was not licensed to operate in Virginia. Despite that specific warning, it continued to obligate Virginia residents on loans purportedly for educational courses at Solid Computer Decisions.

After hundreds of Virginia residents were obligated on these loans, Solid Computer Decisions simply closed it doors. Because of a federal law, each loan contract carried an important consumer protection: the student could raise as a defense to the loan any claim or defense it had against the school.

Although the loans were not federally guaranteed, this consumer protection provision applies to any loan in which the seller of the goods, in this case Solid Computer Decisions, has a business arrangement with the lender. Because of this federal law and the express terms of the loan contracts, Sallie Mae and its lawyers knows that each and every consumer is only obligated on the loans if Solid Computer Decisions would legally be able to enforce payment for its educational services.

When consumers throughout Virginia complained to Sallie Mae, it lied to them and told them that the loans were enforceable against them even though the school closed. To support that misrepresentation, Sallie Mae pointed to a clause in the loan contract that stated the loan would be enforceable even if the student was dissatisfied with the educational services. Sallie Mae is thus trying to use this clause in the loan documents to contradict the required federal consumer protection clause.

Under both Virginia statute law and the Virginia case law regarding contracts, any contract for tuition created by an unlicensed school is unenforceable. The statute, Va. Code Section 22.1-335 merely codifies the Virginia case law that the courts will not enforce a contract created by an entity not licensed to engage in the activity.

Therefore, a s a matter of law, each and every loan contract created by SLM Financial for tuition at Solid Computer Decisions is unenforceable. The federal consumer protection clause in each contract obligates Sallie Mae to recognize every defense the students have against Solid Computer Decisions, and Sallie Mae knows that all the loan contracts are unenforceable.

First Sallie Mae knew not to arrange loans for unlicensed schools but did so anyway, and it now refuses to recognize the very terms of the loan contracts it helped to create.

As a large corporation doing business around the country, Sallie Mae perpetrated this scheme in several states. Through similar arrangements with Solid Computer Decisions, it obligated students on loans in Pennsylvania, Florida, South Carolina, to name a few.

In all of these states, Sallie Mae is forcing people to pay on loans for which they received no benefit and for which they have an absolute defense.

One of the lawyers opposing that effort in Virginia, Tom Domonoske of The Law Office of Dale W. Pittman explains "Like other corporations that have recently been making headlines, Sallie Mae has not shown any regard for its contractual obligations or honesty, and instead seems instead bent on simply squeezing money out of people based on misrepresentations and deceit.

If you can get 500 people each to pay $11,000.00 that they do not owe, that is $5.5 million to help the bottom line."

To further shield its conduct from the public, SLM Financial required that each student sign a binding arbitration agreement and an agreement not be part of any class action.

As explained by Dale Pittman, a Petersburg, Virginia lawyer challenging this conduct, "When a corporation intends on violating federal consumer protection laws on a wide basis and ignoring its contractual duties, an arbitration clause serves to shield that corporation from liability.

Furthermore, the arbitration clause makes it difficult for the consumer to obtain representation and for any group of students to effectively challenge the systemic conduct."

Luckily for some students, a few lawyers have decided to challenge Sallie Mae's conduct despite the arbitration clause. Federal lawsuits have been filed in both Florida and in Virginia.

In Virginia, The Law Office of Dale W. Pittman is representing victims of this fraud and has already filed two individual lawsuits. These lawsuits allege violations of the Truth in Lending Act, the Virginia Consumer Protection Act, and Conspiracy.

They seek statutory damages, actual damages, and punitive damages. In response to the first lawsuit, in-house counsel for Sallie Mae told Mr. Pittman that Sallie Mae would enforce the arbitration agreement and that the arbitration agreement would effectively prohibit punitive damages from being considered.

Apparently, Sallie Mae intends its arbitration agreement to also limit the type of damages that can be sought against it even though this restriction is not in the clause.

According to Pittman, he tried to work a settlement with Sallie Mae and asked it to acknowledge that all loans arranged with Solid Computer Decisions in Virginia were unenforceable.

However, Pittman indicated that, consistent with its prior conduct, Sallie Mae refused this request. At this time, Sallie Mae has offered no legal justification for its refusal to recognize the federal consumer protection clause in each loan contract and continues to force people to pay these unenforceable loans.

Mark
Alexandria, Virginia
U.S.A.

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