In 2023, Chris Gray, co-founder of the scholarship search platform Scholly, sold his startup to Sallie Mae, hoping to enhance financial aid accessibility for students. Shortly after the acquisition, Gray’s expectations of a positive collaboration were shattered when he filed a lawsuit against Sallie Mae, claiming wrongful termination and data privacy breaches. He alleges that the company began selling private user data, including sensitive details about minors, without adequate user consent or notification.
Gray founded Scholly to streamline the scholarship application process for students, after personally navigating the fragmented system as a low-income youth. His journey was notably bolstered by his appearance on the investment show Shark Tank, where he secured investments from Daymond John and Lori Greiner. This led to Scholly’s growth, boasting over five million users and generating significant revenue.
Despite being heralded for his achievement as a Black fintech founder, Gray’s relationship with Sallie Mae soured when key employees, including co-founders, were laid off, and he was terminated for expressing concerns over data handling practices. He claims the bank misled him about its intentions regarding user data, leading to distress at the perceived exploitation of students’ private information.
Gray insists that he sold Scholly under the assumption that being acquired by a federally regulated bank would safeguard user data. However, he now contends that Sallie Mae circumvented regulations by creating a separate subsidiary, SLM Education Services, to exploit the data for profit, selling it to third parties like universities and advertisers.
Sallie Mae has refuted Gray’s claims, asserting they lack merit, while maintaining confidentiality regarding specific allegations of misconduct.
Reflecting on his upbringing, Gray stressed the imperative of accessibility in education, stemming from his experiences with his single mother and limited resources in Birmingham, Alabama. His empathy towards students facing financial barriers propelled him to create Scholly, addressing the challenges he himself encountered in securing scholarships.
Following the acquisition and ensuing fallout, Gray expressed no regrets about selling Scholly, stating it ultimately allowed for a more accessible platform for students. He reaffirmed the importance of voicing concerns within companies to promote ethical practices and compliance with the law.
As Gray’s allegations come under scrutiny, the case raises significant questions about data privacy in the education sector and the responsibilities of corporate entities in handling sensitive information. The outcome may have far-reaching implications not only for Gray but also for similar startups navigating partnerships with larger corporations.
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