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May 21, 2010

Sallie Mae letting 100 go in July

Layoffs follow lending changes

By Andrew M. Seder aseder@timesleader.com
Times Leader Staff Writer
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HANOVER TWP. – One hundred customer service workers at the Sallie Mae center in Hanover Township have been informed that they’ll lose their jobs July 16.

The news wasn’t unexpected. Just last month the Reston, Va.-based student lending and loan processing company announced that 2,500 total workers will be let go by the end of 2011, including all 1,200 workers at the company’s centers in Killeen, Texas, and Panama City, Fla.

An e-mail to The Times Leader from someone whose family members work at the Hanover Township facility said the announcement was made Thursday. Employees will be given a severance package of four months’ salary.

A Sallie Mae official who asked not to be identified confirmed that information and added that workers will be urged to apply for other jobs within the company at the suburban Wilkes-Barre center and at other centers across the country.

Conwey Casillas, Sallie Mae’s vice president of public affairs, said, “The company’s focused on our future and our future in Pennsylvania is highly dependent on the amount of direct loans we service.”

He declined to discuss the layoffs or comment changes in student lending approved by Congress and signed into law by President Barack Obama in March and its direct impact on the announcement made Thursday.

That bill, tacked on to the health care reform legislation, changed the federal student loan program by stripping the middleman role in student lending away from private lenders.

The change is expected to save at least $60 billion. But it will also mean a drastic reshaping of Sallie Mae, the nation’s largest student lender.

Sallie Mae will continue servicing student loans because it’s one of four companies that won contracts with the Education Department for handling payments and collections for about $550 billion in outstanding federally backed loans. The department said these companies also will service future loans.

The company released its first quarter earnings report on April 21, reporting net income on a core earnings basis of $212 million.

On a generally accepted accounting principles basis, first-quarter 2010 net income was $240 million. That compared with a loss of $21.4 million, or 10 cents per share, in the first quarter of 2009.

Sallie Mae wrote a record $7.7 billion in federal student loans in the first quarter of this year, up 16 percent from the first quarter of 2009. Its shares closed Thursday at 10.42.

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