A Three Part Series by Truth in Corporate Justice LLC
October 27, 2006
Distributed by Worldwide Free Release Press™
TCJ SPECIAL SERIES
Part Two of Three
THE TAXPAYERS EDUCATE…SALLIE MAE GETS TO DICTATE
This story is fiction. It could have happened. Is it happening? Perhaps, but all of the characters and the story are not in any way a portrayal of an actual family that we know of nor are any of the characters’ names the actual identities of any person. The only identifiable people are celebrities and politicians whose names are used in every day life. This is fiction meant for the American taxpayer and for those who are trying to repay their Sallie Mae (NYSE:SLM) federally secured loans. Please read more about current events about Sallie Mae at the end including news of its third quarter 39 percent fall in earnings and other news as well. Call 800/610-4998 to comment or e-mail [email protected] . As the price of education skyrockets and the government has lowered the amount a family can earn in order to apply for a Pell Grant, they have left these people to use high interest rate credit cards for their education, take on extra jobs, not have time to study and end up in a less expensive two-year community college. But we will revisit that after this story.
“Wake up Sallie, I Think I’ve got something to Say to You”
John could no longer ignore the creaking sound that sprang from his knee every time he stood up too quickly. At first, he thought it was an imagined symptom of premature old age and concern over his daughter’s medical school tuition. He realized that he would soon be adding one more pill to his daily regiment. Now a mysterious assortment of vitamins, supplements and medications was as much a part of his morning as a cup of coffee and a hot shower. He no longer relied on the calendar to tell him what day it was, all he had to do was look at his pill box and see which batch of remedies was next in line. But was there a pill to pay for his daughter’s medical school tuition?
Still, the creak and the pain didn’t deter him from hurrying into his backyard, looking up into the sky and seeing a 737 climbing into the clouds. Even at the age of sixty-two he still felt a sense of pride whenever he saw an airplane. After all, Dayton, his hometown, had also been the home of the Wright brothers. The small Ohio city had shrunk the entire world.
John grew up in the “Gem City” and had spent his entire life in or around the Dayton area. He served his country honorably in the Vietnam War, after which he returned home and took a job with General Motors. He had worked at GM for over thirty years, doing all he could to put his two sons through Ohio State. He now just looked forward to spending New Year’s down in Port St. Lucie, Florida, where he had a timeshare for two weeks each winter. He and Mary often joked that they never wanted to be far from a place called Miami.
John was shocked when, in 1999, General Motors spun off its Delphi Division into its own company with its own independent pension plan. It was as if all his years of hard labor had been for nothing. One hundred and fifty thousand Delphi workers were ripped from the company they called their own (and still do) and left to take early retirement or go down with the company. Delphi declared bankruptcy on October 8, 2005.
Following that fateful October day, John’s life had been rocked by a sense of financial instability at a time when he thought he would be comfortable. Mary complained that he was often in a lousy mood and he knew that she was right. John remembered the little cardboard wheel GM gave out in 1984 to show the workers that if they put 12 to 15 percent of their salary into GM stock, they would have a million dollars by retirement. Perhaps he had a fraction of that if he was lucky.
Today, his daughter Susan was coming home. Susan had been a “surprise;” born seven years after the couple’s second son. The eldest child, Arthur, had been a solid student, a member of the debate club and the cross-country running team captain. He was now thirty-seven, the manager of the Days Inn Dayton, and married with three kids of his own. David, the middle child was a handsome man who, at the age of thirty-four, had yet to meet the right girl. He waited tables at the elegant Dayton Hilton restaurant and kept late hours out with the boys at a new sports bar. Then there was Susan. She was the baby. She had graduated first in her high school class and proceeded on to Dartmouth College with a full merit scholarship. Thereafter she got her masters in psychology and spent four years working at a school; for autistic children. Her experience with autistic children confirmed her desire to enter the medical profession.
Having graduated Dartmouth with a 3.82 GPA, she had her choice of almost any medical school. She had narrowed the list down to Harvard, Columbia and Georgetown. John was quite concerned with her choices—the tuition bills would be enormous. He believed it was his duty to pay for his daughter’s education, but the schools on her list were out of his league. Other plans would have to be made. He believed she would be disappointed, and he was disappointed in himself. Further, he did not want to go into debt at this stage in his life.
“It’s a Hard Knock Life”
Susan knew the depth of the problems at her father’s company. It was a hard knock life. Vietnam must have been an oasis for him compared to Delphi retirement hell. She was practical and realistic about her situation and had already called a Sallie Mae representative about a loan. Albeit she had little contact with her family, she portrayed herself as being more concerned about her family than she was about herself. Unbeknownst to her parents, however, Susan had worked as a cocktail waitress during college. The Hanover Strip Steak was more than happy to employ her, even on a limited basis. Her green eyes and mysterious smile ensured that the male customers lingered at the bar. She did not appreciate the drunken pickup lines or the tight-fitting uniform, but her merit scholarship only covered tuition.
As Susan approached her family’s house, driving her Oldsmobile Alero, she could see her parents waiting for her on the front steps. She pulled up to the modest home she had been raised in and was greeted with hugs and kisses. The home seemed smaller. She had not been home for one year. David came out to join them. Susan looked at her brother and stated, “David, I am having one of my yearly premonitions. We will have a therapy session later. Dad, did your knee just snap?”
“Oh don’t pay attention to that, it does it all the time. I guess I have to give up my dream of playing with the Cavs,” he joked as he led her into the house. “LeBron will have to go on without me.”
“Who is that?” David asked as they all went inside.
As Susan looked around the den, she realized that not one item had moved since she had last been home. Come to think of it, she couldn’t remember ever seeing it different. It had always been the same, and this realization was comforting and yet disquieting. The four of them sat down in the family room. John was eager to hear about her interviews, especially the one in Georgetown. He was curious as to what Washington was like; it had been decades since he had visited the banks of the Potomac.
“Susan, remember our trip to Washington when you were in the fourth grade?”
“John, don’t,” Mary protested.
“We were stuck in horrendous traffic, the cars were going nowhere, and then suddenly the guy in the car ahead of us got out of his car and relieved himself in the river. What a riot!”
“John, we also saw the Lincoln Memorial, the Capitol, the Library of Congress, yet all you can talk about is the man going…”
“Mary, you never like any of my stories. Every time I bring up the Embassy in Saigon…”
“Georgetown was a lot of fun, but as for our nation’s capital, it’s actually a bit like L.A,” Susan interjected in hopes of ending the argument she had heard her parents have a thousand times before.
The observation was enough to catch David’s interest. “What do they say, ‘D.C. is Hollywood for ugly people?’”
“Actually, there was an article in a Capital paper that listed the Hill’s fifty most beautiful people and, get this, our congressman was 19th and one of his aides was second. The girls were just beautiful, but the guys were just so-so. Probably friends of the editor. Oh, and David, perhaps you meant West Hollywood.”
“Oh that John Boehner! I knew he would make us proud,” Mary blurted. “The top twenty, that’s impressive.”
John was less amused, “Yeah, that’s wonderful. He has nice blue eyes, but what happened to my pension? What is Boehner doing about that?”
“John,” Mary directed, “let’s keep the conversation soft. Its dinner time, so no talk about money.” Her voice brightened as she turned to her daughter, “Susan, I made your favorite: Salisbury steak with a side of mushroom green beans topped with Durkee fried onions and macaroni and cheese to boot.”
Throughout the meal the family discussed the weather, the latest addition to Oprah’s Book Club and the possibility of the neighbor’s wife having an affair. The tone was pleasant and disinterested, but beneath it was an unspoken agitation. Susan sensed her father’s unease, and, as was her nature, she internalized his frustration. She continued to direct her “concern” about her brother.
The phone rang. Mary got up to answer. “David, its Former Congressman Foley for you.”
“Again?” exclaimed David. “That’s the fourth time he’s called today.”
Seizing the opportunity, Susan grabbed her purse and went to the hall bathroom. She splashed some cold water on her face and examined herself in the mirror. “Everything is okay,” she whispered. “Don’t let it get to you.” She repeated the mantra over and over, and each time she felt a little less confident. She reached into her purse and pulled out a valium to help ease her anxiety. There was only a slight hesitation before she popped the pill into her mouth and returned to the kitchen.
The table had been cleared and Mary was busy fixing dessert.
“Oh Mom, I don’t think I could eat another bite.”
“Well, it’s a special occasion, and for special occasions there should always be a cake. Don’t worry dear; it’ll take me a little while longer to do the icing. Why don’t you join your father and David in the den? They are watching ‘American Idol’.”
“I’m reading the paper honey”, John exclaimed as he would never admit to watching reality television.
John had returned to his chair, his eyes focused unconvincingly on the newspaper. Actually, he was just holding the paper above his face to mask his enjoyment of the show. He put his paper down and apologized, “Susan, I have been desperately seeking a way to tell you this… I’m so sorry, but you can’t go to Georgetown. I just can’t afford it. I…”
Susan abruptly broke in, “Dad, relax. I’ve got it all worked out with Sallie Mae.”
John scratched his head, “Who the hell is Sallie Mae? Is she one of those rich kids you met at Dartmouth? “
Sallie Mae was neither a sorority sister nor a benefactor in the mold of Martha Stewart, but rather a government-sponsored enterprise. Its proper name was SLM Corporation and it traded publicly on the New York Stock Exchange as NYSE:SLM.
“Dad, think of it this way, you already paid for my medical school.” Truth be told, John was preoccupied with his worries, but he was pretty sure he would have remembered cutting her a check. Susan continued, “Listen carefully. I will go and borrow money for tuition and I’ll even get a new Upromise Debit MasterCard (NYSE: MA) which is also owned by Sallie Mae. When it’s all said and done, my loans, with accrued interest, will be about a quarter million dollars. Perhaps minus a $200.00 credit from the generous people at MasterCard and Upromise. I’ll have until six months after graduation to start paying that back. I know I won’t make a lot during residency, but my earning potential will be great. I’ll try to pay the loan back, but the beauty of it is I really don’t have to. You already paid Sallie Mae! You see, Sallie Mae loans, for the most part, are federally secured.”
“Papa Don’t Preach”
“Federally secured? What does that mean?” He couldn’t believe what she was telling him.
“If I should default on my loan and not pay it in time, then the government will step in and pay not only the principle, but the accrued interest as well.”
“Now that just doesn’t add up,” John was convinced he was missing something. “Where does the money come from?”
“Well, from your pocket.”
“No way!” he replied.
“Way,” she retorted. “Dad, over your thirty-plus years at GM, I mean Delphi…I mean GM…you know what I mean, anyway, you earned an average of about $40,000 a year. And you paid your federal income tax like every good American, right?” Discussion of GM and Delphi usually sent John into a tirade, but he was too confused to be angry.
“Of course I did. I’ve always fulfilled my civic duties. I’ve paid every penny of my taxes, I never tried to get out of jury duty, and while some pretty-eyed politicians were at home resting their backs, I was on the rooftop of the American Embassy in Saigon and barely escaped with my life! I remember when Henry Kissing…”
“Vietnam. I wasn’t even born during that war and look at all the success stories that don’t even mention it. Clinton, Bush and Boehner all got out of the war. Perhaps if you had played the game better you would have been at college with a sore back instead of running through the mosquito-infested jungles of Mui Bai Bung.”
“Susan!” John exclaimed, “I fought in Vietnam so you could enjoy the luxuries of this great democracy.”
“Do not preach to me about civic duties, papa! I was a candy striper at Children’s Hospital.”
“Cake’s ready,” Mary hollered desperately from the kitchen. Mary, with a concerned look, always knew how to pull John out of talk about the war.
“I’m sorry, dad. All I meant to say was that your tax dollars have already helped make Sallie Mae one of the best performing stocks in the last two years. It even exceeded the Standard & Poor’s 500 Index average. It would be foolish not to take this loan.”
John retorted, “Well I am standard and I am poor!”
John contemplated this for a few moments while Susan gazed at him intently. The whole idea made him feel uncomfortable. Though he had many moments of doubt in his sixty-two years, he always felt certain that he approached life in an honorable fashion. Still, Susan wanted medical school more then anything else in the world, and despite her condescension, she craved her father’s moral support and approval of her decisions.
“What about your credit?” he asked, racking his brain for every possible consequence a quarter million dollar debt could incur.
“Credit? What credit?” Susan stammered. “A few late payments on your credit card and your credit score goes in the basement anyway. Dad, are you aware that the Supreme Court of the United States has held that your social security benefits can be taken from you for collection purposes if you default on your Sallie Mae loan? Imagine if you fall behind on your GM auto loan. I do not think the federal government would guarantee that.”
“You are right on that one. But the social security thing concerns me a great deal, Susan,” replied John.
“Dad, social security will be gone by the time I get to retirement. It will probably be eaten away by Sallie Mae. Therefore, the best thing I can do is maximize my earning potential now. Besides, if Sallie Mae is a public company, what are the shareholders for anyway? They get dividends. They purchase shares of stocks and they have equity. What have you contributed? You have paid your taxes and part of that tax money paid Sallie Mae loans that were the defaulted loans of students! And its worse.”
“Worse?” John mused.
“Yes. After the federal government has paid off these defaulted loans, principle and interest, Sallie Mae has a subsidiary company that comes in and gets to act as the collection agency for the federal government getting up to 25% percent of the money it collects. Imagine where that money could go: back to the taxpayer, to help others get higher educations, give added benefits to our men and women in the armed services or even into social security.”
“Well, Susan, we can agree on that. You mean that while our boys and girls are fighting a war over in the Middle East, my tax money is funding defaulted loans of college students? So the students’ credit is ruined, my tax dollars are wasted and then I have no pension. You have to go to this public company and get a loan; if you do not pay it off I then pay it through my taxes. Why don’t “We the People” decide how this money is spent? The federal government answers to us. Why should we let Sallie Mae dictate our lives and interfere with our God given right to the pursuit of happiness?”
“Well dad, you do have power and every American citizen has it. It’s the power of the vote. Dad, John Boehner opposed expanding access to the military’s TRICARE health insurance program to thousands of Reservist and National Guard members and he also voted against giving every service member serving in Iraq and Afghanistan a $1,500 bonus! Yet he will allow the federal government to pay a public company accrued interest from a student loan debt owed to a public company! Imagine: what if we all defaulted on our loans. I wonder if Congress would have the guts to stand up to its voters on this one. Oh, I forgot to mention, our Congressman from this 8th District of Ohio and House Majority Leader has received $200,000 from Sallie Mae lobbyists.” John sighed, “So I fought democracy while Boehner laid on his back?”
“I’m going out” yelled David as Paula Abdul finished her flaming baton “Tribute to Blondie”.
Susan jumped up and yelled, “David wait for me! I want to come with you!”
“Susan” Mary exclaimed, “It isn’t appropriate for you to go out with your older brother and the guys to that sports bar.”
“Mom I am going over to Hal Burton’s house to say hello to his family. David, I will analyze you on the way over.” David looked at her and replied, “Why don’t you look in the mirror Susan? I mean, I listened to your story about being abducted by some natives in the Amazon jungle and I never told anyone. Analyze that!”
If that was anything that you can imagine, disagree with or if you have any comment, or opinion, write to us at [email protected] Please tell us anything that you think. All opinions are welcome.
On October 19, 2006, SLM Corporation announced that its earnings fell 39 percent due to pre-tax net losses on derivative and hedging activities. Although they increased their amount of loans outstanding, that was basically inconsequential as compared to the money they make off of their investments. Too bad. This past quarter, the money they invested with, in part, your tax dollars, did not go very well. That caused the quarterly loss.
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