The surprising profits of student loans (Fortune)

[eppur_se_muova]

Sallie Mae's buyers may make a ton of profit. But taxpayers and students will be paying the bill, says Fortune's Bethany McLean.

By Bethany McLean, Fortune editor-at-large
April 16 2007: 5:26 PM EDT

NEW YORK (Fortune) -- Late Sunday night, student loan giant Sallie Mae, or SLM Corp. as the company is officially known, became the latest major American corporation to succumb to the advances of private equity. Sallie will be sold to a consortium of two private equity firms - JC Flowers and Friedman Fleischer & Lowe - and two banks that have their own student loan businesses - JP Morgan (Charts) and Bank of America (Charts) - for some $60 a share, or $25 billion. That represents a premium of almost 50 percent based on Sallie's stock price before word of the deal began to leak.

Already, there's chatter that this deal, should it happen, could signify a top in the private equity mania. The buyout of Sallie, a financial firm that already has a significant amount of debt, is a creative move - creative, of course, being Street parlance for risky and aggressive.

But the buyout of Sallie Mae (Charts) also throws something else into sharp relief. That's the growing distance between billionaires who make more billions doing deals like this, and everyone else.

The potential buyout of Sallie comes at a time when the exponential rise in student debt is hitting the headlines. During the 1990s, the average student-loan debt doubled, according to the College Board; by 2004, the average loan debt was $17,600, says the Center for Economic and Policy Research. Books such as "Strapped" and "Generation Debt" are devoted to the rise in debt, and Internet sites post the sad tales of those whose lives have been destroyed by their student loans. (Check out studentloanjustice.org.)
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more: http://money.cnn.com/2007/04/16/news/companies/pluggedin_mclean_sallie.fortune/index.htm?cnn=yes

[flobee1]

1. step one

-The outsourcing begins to aquire cheap labor
cha-ching
step two
Bush tells people to go back to school to learn another skill-tuitions rise
cha-ching
step three
Bush raises intrest rates on student loans 3 times in one year(at least he did to me)
cha-ching

now this

[Tandalayo_Scheisskopf]

2. This whole megillah...

has everything to do with the incredible rise in college tuitions. At its core, it is about putting people in debt and keeping them there, for life.