From its headquarters in , Indiana, USA Group, Inc., known originally as USA Funds, was a nationwide guarantor of federally sponsored education loans. It served as a parent company for five affiliates: USA Funds, Inc.; USA Services, Inc.; Education Loan Servicing Center (ELSC); Secondary Market Services, Inc. (SMS); and USA Enterprises, Inc. .
Businessman and political leader, , a founder College Life Insurance Company in 1946, initiated the idea of making loans to college students from a nongovernmental, voluntary association. The idea appealed to him as a way not only to expand his company’s services to college students but also as a means to teach them the proper use of credit. Convinced that an umbrella organization should be formed under which each state could have its own college loan fund, on July 8, 1960, Burkhart and two others incorporated United Student Aid Funds (USA Funds) as a tax-exempt educational nonprofit to attract large, deductible financial donations from banks and colleges.
While a small group of dedicated, male volunteers fanned out across the country to develop relationships and solicit funds, Burkhart loaned a College Life employee, State Senator W. W. Hill (Dub), to keep loan records on index cards at night in the College Life offices at 34th Street and Central Avenue after serving in the Indiana Senate during the day. USA Funds made its first loan in February 1961 to a chemical engineering student at Wabash College.
Dwight Eisenhower served as honorary chairman from 1962-1969. By 1964 USA Funds had deposits from 600 colleges, contracts with 4,000 banks, and annual loan disbursements of $10 million. In 1965 President Lyndon Johnson called for an expanded federal role in student finance, convinced that student loans would be a good way for the federal government to expand educational opportunity while giving states and small local banks more ways to serve families. The Higher Education Act of 1965 launched the national guaranteed student loan program. States were encouraged to have nonprofit or state agencies with capacity to cover students’ financial needs, and seed funds were available to participating states. By that time, USA Funds already administered student loans in 29 states, either directly or through contracts.
Burkhart and others committed to the independent sector opposed government involvement, so considerable conflict and competition occurred between USA Funds and the U.S. Department of Education. However, given its years of experience in making student loans and its relationships with colleges and banks across the country, USA Funds was in a strong position to manage the federal process for states by providing an entrepreneurial back-office operation. USA Funds finally signed a direct federal contract in 1977. While corporate offices had existed in various locations from New York to California, operations were consolidated in Indianapolis in 1976. Burkhart continued serving on the board until the early 1980s.
Over the next 20 years, technology revolutionized the student loan process along with all financial services. In the early days of personal computers, a USA Funds employee designed a program that allowed a college financial aid officer to underwrite a student’s loan at her desk. The information was electronically transmitted to a financial institution, and funds flowed back to the school, replacing Dub Hill’s index cards. The company routinely reinvested revenues that exceeded costs into sophisticated technology, a dynamic workforce, and the creation of additional student loan services.
By 1993, USA Funds had guaranteed $13 billion in education loans to more than 3 million customers. USA Services assisted 12 states, including Indiana, in administering education loan programs. ELSC serviced education loans, totaling over $485 million in 1992. SMS, incorporated in 1986, bought and sold student loan portfolios for a national network of lenders. USA Enterprises, the only for-profit affiliate, marketed America’s Tuition Plan, a method of budgeting higher education expenses. USA Group affiliates processed one in three student loan guarantees in the United States. Together, they served more than 6 million students nationwide.
In 1991, USA Group moved from leased office space in Marion County to its newly constructed national headquarters in Fishers. Designed by the , the complex featured a 15,000-square-foot daycare center that served 185 children of employees. More than 1,300 of the company’s over 2,000 employees were located at the Fishers complex. An additional 500 occupied offices in . USA Group also had offices in 13 other states.
In 2000, shortly after the death of Burkhart in 1999, Sallie Mae Corporation acquired USA Group. By 2014, Sallie Mae spun all of its loan services out into a separate company: Navient, which is the nation’s largest loan processer for federal student loans. The company utilizes the former USA Group headquarters in Fishers as one of its five offices. Muncie, Indiana, serves as another Navient location, as well as Wilmington, Delaware; Reston, Virginia; and Wilkes-Barre, Pennsylvania.
The sale of USA Group also yielded sales proceeds of $400 million in cash and $370 million in Sallie Mae stock. was created with the proceeds. Within a few months, the value of its stock holdings rose exponentially, endowing Lumina with the $1.3 billion it continues to use in support of access to higher education. USA Funds spun off under separate management and eventually morphed into , which now has more than $1.6 billion in assets it uses to strengthen connections between education and employment.
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