Hoping to support an online petition against Sallie Mae’s practice of penalizing unemployed college graduates who are late on their student loan payments, Berkeley City Council will vote at their Tuesday meeting on whether to send a letter to the corporation discouraging punitive forbearance fees.
The petition, titled “Tell Sallie Mae: Stop the Unemployment Penalty Petition”, criticizes Sallie Mae’s practice of imposing $50 forbearance fees every three months on loans for which payments have been temporarily suspended by graduates facing financial difficulty.
Councilmember Kriss Worthington’s recommendation states that because the city of Berkeley encompasses UC Berkeley, “it is imperative that we (the city) take a leadership role and request Sallie Mae to drop the forbearance fee.”
Before Sallie Mae received the petition, the paid penalties were not refunded to the borrower or put toward repaying the borrower’s loan, as interest charges continued to accumulate. The petition had about 76,000 signatures when petition author Stefanie Gray submitted it to Sallie Mae’s Washington DC office on Feb. 2.
“We have been giving careful consideration to our policy for some time, and we are changing it to apply the good-faith payment to the customers’ balance after they resume a track record of on-time payments,” said Sallie Mae spokesperson Patricia Christel in an email.
But according to Gray, who gathered support for the petition by posting it on Change.org, the change is not enough.
“This is merely a partial victory,” Gray said. “Sallie Mae needs to drop the fee altogether once and for all — no stipulations, and no BS.”
Gray was enthusiastic about the potential support from Berkeley and encouraged the city to step forward on this issue.
“This is fantastic news, and I’m overjoyed to hear it,” Gray said. “So far, I haven’t heard of any other towns that have joined the effort, but I hope that Berkeley will set a precedent for other towns to join in, in solidarity.”
Former CalPIRG State Student Board Chair and UC Berkeley senior Lucas Zucker also expressed enthusiasm for the recommendation.
“I think it’s always great to see when the city is standing up for students and voicing their opinions about the increasing burden of student loans,” Zucker said.
Ultimately, Worthington said he hopes the city’s actions will grab Sallie Mae’s attention as well as the attention of other cities.
“The fact that we are a city government grabs the eye of the bureaucracy,” Worthington said. “Sometimes once we do it … we create a little bit of momentum.”
As of Thursday evening, the petition had gathered about 156,500 signatures online.
The recommendation’s attached letter is addressed to Sallie Mae CEO Albert Lord.
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