Sallie Mae to Cut 350 Jobs, with More Possibly Coming

Student loan giant Sallie Mae said late last week it will be eliminating about 350 jobs – primarily in call centers – as it tries to cut costs in the face of dwindling federal subsidies and mounting fallout over its aborted takeover attempt last year, according to the Washington Post.

The cuts represent about 3 percent of Sallie’s 11,000-strong workforce. Although no timetable was made immediately clear, a spokesman for the company told the Post employees that were being laid off were notified Thursday and Friday of last week.

Customer service call centers in Fishers, Ind., Wilkes Barre, Pa., and Killeen, Texas were the hardest hit by the cuts. One of Sallie’s subsidiaries, Student Assistance Corporation, runs a default aversion program in the Indiana location that employs collectors.

C.E. Andrews, president of Sallie Mae, told employees in an email that he aims to reduce operating costs by 20 percent by the year 2010. Part of the reduction in costs will involve jobs cuts, he conceded, in addition to cuts in travel expenses, postage, and other areas.

Sallie Mae had a roller-coaster year in 2007. The company entered the year performing very well and attracted the eyes of a private equity and banking consortium that bid $25 billion in April to buy the student loan provider. The group, which involved Bank of America and JPMorgan Chase, began to have second thoughts on their offer when new federal legislation threatened to cut the government subsidies the firm relies on for revenues.

The consortium ultimately backed down from their $60 per share offer and canceled the deal ("Sallie Mae Says Buyers Will Not Close Deal," Sept. 27, 2007). Sallie Mae’s stock closed at $18.85 on Friday, the victim of a brutal decline since the deal was called off.