Yesterday, Sallie Mae sent a letter to CBS News objecting to their coverage of New York Attorney General Andrew Cuomo's investigation that alleges widespread abuse in the use of preferred lender lists. Sallie Mae denied a specific allegations made by the news organization's electronic story concerning University of Texas at Austin Financial Aid Director Larry Burt.

The letter, signed by Tom Joyce, vice president of corporate communications at Sallie Mae, went further stating "CBS also highlighted one company - MyRichUncle - as a victim and an expert. Unfortunately, CBS failed to report the background on this company."

The Sallie Mae letter then presented background information on My Rich Uncle (MRU), challenging their tactics, ethics, and loan products.

The following are excerpts from a letter from the March 19 letter from Sallie Mae:

• "MRU began its life six years ago as a protein bar company named Dr. Protein. It later changed its business to a CD manufacturing company, before morphing into a student lender.

• MRU has spent millions of dollars of its shareholders' money on expensive ads attacking the integrity of financial aid directors and lenders.

• MRU's chief executive officer, Edward McGuinn, is also the CEO of eLottery, an Internet gambling company that filed for bankruptcy in 2001. Mr. McGuinn is listed as the highest-paid executive at MRU in its most recent SEC proxy filings.

• eLottery, under Mr. McGuinn's leadership, paid disgraced lobbyist Jack Abramoff's firm more than $700,000 to lobby against an Internet gambling ban. According to newspaper articles, eLottery also paid $25,000 at Abramoff's direction to a nonprofit entity where he was a board member which went to cover expenses for Congressman Delay to go on a golfing trip in Scotland. These actions became the subject of Congressional investigations and major media stories.

• MRU was recently criticized throughout the financial aid community for an advertising campaign on the Princeton Review's Web site that falsely touted MRU as the preferred lender for hundreds of schools.

"With this as backdrop, no one should be surprised by MRU's tactics. Indeed, MRU's loans are more expensive for the vast majority of borrowers. As stated previously, the vast majority of lenders pay the federal origination fee for all of their Stafford student loan borrowers. MRU does not offer any up-front discount of origination fees. Instead, MRU offers discounts that less than 10 percent of students will ever earn. In marketing terms, this is known as "bait and switch." Financial aid administrators are too sophisticated to succumb to this marketing gimmickry.

"If MRU had the best products, they would have won the hearts of financial aid administrators. Clearly this open and competitive marketplace has rejected MRU's offerings. No wonder that financial aid associations at the national, regional and local levels have written MRU to express disgust with their tactics. Financial aid directors, acting on the best interests of their students, have rejected this company.

"What is surprising is that CBS would tarnish the reputation of the financial aid community and present MRU as an industry expert without performing research. We would hope that CBS would do more thorough reporting on such an important subject. Your viewers - and students - deserve better."

The complete letter is available on the Sallie Mae Web site.

Posted 03/21/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.