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Putnam says he was very active in this stage of getting Sallie Mae off the ground personally persuading Harvard and other universities to buy stock in the early days. "I was just acting as a public citizen," Putnam recalls adding, "I said it's is a good thing. Let's make...
Thus the fledgling Sallie Mae moved into 1974 with $25 million of capital backing on the $1 billion worth of student loans that it already had purchased. Then as now most of the loans Sallie Mae owns were Guranteed Student Loans made by the Department of Education to college students. Depending on when students took out the loan they pay 7,8 or 9 percent interest after they get out of college and the government pays the interest while the student is in school...
...Over the first five years we grew to be a $500 million corporation, which is relatively small. During that time we were profitable, but by no means really profitable," Fox explains. While Sallie Mae busily built a fairly sophisticated marketing network and financial system, the company also was operating under fairly rigid conservative banking practice...
...Sallie Mae was already positioned for this new demand for student credit and in the five years from 1977 to 1982 blossomed from being a $500 million company to a $5 billion one an incredible growth for any business...
...balance sheet had become debt heavy Fox says that by 1983, Sallie Mae's capital base had grown to about $100 million while the debt of the corporation was nearing $7.5 billion. "We had a corporation that had 75 units of debt for each unit of capital, which is about four times what most commercial banks have," Fox says...