Herbie loves Sallie K eith Joseph, meet Sallie Mae. She is
the lucky girl for whom Goldman Sachs has just raised $175 million from investors around the world. In full, Sallie Mae is the Student Loans Marketing Asso- ciation, described as a private organisation sponsored by the United States govern- inent. Sallie does not lend to students. The banks do that. But when young Herbie borrows the money to pay his way through college, his bank, rather than waiting until Herbie can repay the loan (which, with the best of will on all sides, might take years) sells its rights to the loan to Sallie Mae. That suits the bank, which is back in funds, it suits Sallie Mae, which buys the loan on commercial terms, and it suits Herbie. Sir Keith has been wondering how our High Street banks would feel about student loans, and has been received with express- ions of no enthusiasm. Borrowing short and lending long is the road which leads from Lombard Street to Carey Street, and the banks are quite far enough along that road already. They are muttering about Government guarantees, which would en- able them to dump their unwanted custom- ers on the taxpayer's back, as they have with the Small Business Loan Scheme.There is a better answer. Sallie, forth!
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