From Business Wire:
“This decision reflects our need to adapt to the massive changes in our business. We have enjoyed nearly 40 years in the D.C. area; however, the objective is to combine the senior management team in a single location. Delaware officials helped make these changes as efficient as possible,” said Albert L. Lord, CEO."
Reuters provided details on the incentives the company would receive for the move:
"Sallie Mae will receive a Delaware state grant equal to 3
percent, or up to $3 million, if it spends $100 million in
capital investments to its new headquarters. The state also offered the company an additional taxpayer
subsidy depending on how many jobs the move creates, according
to an announcement from the Delaware Economic Development
Office."
Meanwhile Dow Jones went further in noting that other non-HQ jobs would also be moving to Delaware:
"SLM Corp. (SLM) will consolidate its operations from a number of states and move "significant resources" to Delaware, according to a person familiar with the matter.
Another person familiar with the matter said the student lender, commonly known as Sallie Mae, would bring 1,500 jobs to the state.
Sallie Mae is expected to announce the move after the closing bell. Affected staff are to be notified this afternoon."
As posted earlier, Sallie Mae executives in March had noted in WSJ article that they would be consolidating operations to 5-7 locations:
"Spokeswoman Martha Holler said in an email that the company estimates at this point it will have to cut 2,500 of its 8,600 current employees and expects to operate about five to seven locations, down from the 25 it runs now."
Given the configuration of their operations, I had expected Newark, DE to be one of the beneficiaries of this consolidation. There were about 700 employees at SLM's Reston HQ based on earlier press reports. I certainly will not be the first to note the irony of this announcement juxtaposed against this press release from the Department of Education:
U.S. DEPARTMENT OF EDUCATION MARKS HISTORIC DAY IN HIGHER EDUCATION
July 1 Changes to Financial Aid Programs Increase Access to Higher Education for Millions of Americans
Federal student aid will increase and become more
accessible for millions of college students and their families under
provisions of the recently passed Health Care and Education
Reconciliation Act of 2010, which take effect today. The biggest and
most important change is the elimination of the bank-based, Federal
Family Education Loan (FFEL) Program. President Obama made the
transition from FFEL to the Direct Loan Program the biggest priority of
his higher education agenda. Students will also see larger Pell Grants
and new help repaying their college loans.
Beginning today, all new federal student loans will be made
through the Direct Loan Program. Under this program, students borrow
directly from the Department of Education instead of banks. This change
will save the federal government $68 billion over the next 11 years,
according to the Congressional Budget Office.
"Today is a historic day for Americans who are pursuing a
college education. We are one step closer to achieving the President's
goal of having the highest proportion of college graduates in the world
by 2020," U.S. Secretary of Education Arne Duncan said. "These changes
will expand educational opportunities for millions of students and
families and will make it easier for them to pay for college."
The House Education and Labor Committee noted the following changes that take effect today:
"For the upcoming academic year, the Pell Grant scholarship will increase to $5,550 and, beginning in 2013 the maximum scholarship will increase with the cost of inflation by linking the scholarship to the Consumer Price Index. Approximately 8 million U.S. students rely on the Pell Grant scholarship each year to help pay for college.
For student borrowers, interest rates on the subsidized federal student loans will decrease from 5.6 percent to 4.5 percent. This is a benefit passed as part of the College Cost Reduction and Access Act."
Budget cuts and trimming the fat. They may spend $100 million but yet lose 2,500 jobs! Doesn't work out in my book.
Thanks for the info.
Posted by: Brian | July 09, 2010 at 07:27 AM