Scholly Founder Sues Sallie Mae Over Alleged Data Misuse and Wrongful Termination
In a significant legal development within the education technology sector, Christopher Gray, the founder of Scholly—a scholarship search platform that gained prominence after securing investment on Shark Tank—has initiated a lawsuit against Sallie Mae, the student loan corporation that acquired his company in 2023. Gray’s lawsuit, filed in Delaware Superior Court, alleges wrongful termination and accuses Sallie Mae of unethical practices concerning the handling of user data collected by Scholly.
Background on Scholly and Its Acquisition
Scholly was established in 2013 by Christopher Gray, alongside co-founders Nick Pirollo and Bryson Alef. The platform was designed to simplify the scholarship search process for students by providing personalized scholarship recommendations based on various criteria such as gender, state, GPA, and race. The app quickly gained traction, amassing over 5 million users by March 2024 and generating cumulative revenues exceeding $30 million by 2023.
The company’s breakthrough came in 2015 when Gray appeared on the television show Shark Tank, securing a $40,000 investment from investors Lori Greiner and Daymond John. This exposure significantly boosted Scholly’s visibility and user base.
In 2023, Scholly was acquired by Sallie Mae, a prominent student loan provider. The acquisition was seen as a strategic move to integrate Scholly’s scholarship search capabilities with Sallie Mae’s financial services, aiming to offer a comprehensive suite of educational financial tools to students. Post-acquisition, Scholly transitioned to a free model, eliminating the previous $2.99 download fee, thereby increasing accessibility for students seeking scholarships.
Allegations of Data Misuse and Wrongful Termination
According to Gray’s lawsuit, approximately a year after the acquisition, in July 2024, Sallie Mae laid off the Scholly founding team, including his co-founders. Gray alleges that during this period, he became aware of discussions among Sallie Mae executives about plans to sell Scholly user data. This data encompassed sensitive personal information, including names, phone numbers, email addresses, age, race, gender, education records, and geolocation data.
Gray contends that when he raised concerns about these plans, he was assured that his position was secure and that the company was merely undergoing restructuring. However, he claims that after persistently voicing his objections to the potential sale of user data, he was terminated before a scheduled meeting with Sallie Mae’s CEO, Jonathan Witter, where he intended to discuss these issues further.
The Emergence of Sallie.com and Data Privacy Concerns
Following Gray’s departure, in December 2024, Sallie Mae launched a new platform named Sallie.com, described as an education solutions company. This platform became the new home for Scholly’s services and operated separately from Sallie Mae’s primary website, which focuses on student loans.
Sallie.com is owned by an entity called SLM Education Services, LLC. Gray’s lawsuit alleges that Sallie Mae utilized this subsidiary to circumvent the stringent regulations that apply to financial institutions, thereby facilitating the sale of personal data collected by Scholly. The privacy policy of Sallie.com indicates that it sells various customer data to third parties, including ad networks, educational institutions, brands, and data resellers.
Gray argues that the similarity in branding and website design between Sallie.com and Sallie Mae’s main site could lead to confusion among users, potentially causing them to unknowingly consent to the sale of their personal information under the impression that they are interacting with a regulated financial institution.
Introduction of Backpack Media and Further Allegations
In March 2025, Sallie Mae introduced Backpack Media, described as a first-to-market education media network aimed at providing brands with access to younger demographics, including Gen Z and Gen Alpha. Gray alleges that Backpack Media was developed using the personal data collected from Scholly users, further exacerbating concerns about data privacy and ethical business practices.
Sallie Mae’s Response and Historical Context
Sallie Mae has refuted Gray’s allegations, stating that they are prepared to contest the lawsuit vigorously. The company emphasizes its commitment to data privacy and compliance with all applicable regulations.
It’s noteworthy that this is not the first time a Sallie Mae-affiliated entity has faced legal scrutiny. Navient, a company that split from Sallie Mae in 2014, has previously been involved in legal actions concerning overcharges and alleged predatory lending practices. These historical issues add context to the current allegations and raise questions about the company’s data management and ethical standards.
Implications for Data Privacy and Corporate Ethics
This lawsuit underscores the critical importance of data privacy and ethical considerations in the technology and financial sectors. The allegations highlight potential vulnerabilities in how user data is handled post-acquisition and the responsibilities of companies to maintain transparency and integrity in their operations.
For businesses, this case serves as a reminder to rigorously evaluate their data management practices, ensure compliance with privacy laws, and uphold ethical standards to maintain trust and avoid legal repercussions.
Conclusion
Christopher Gray’s legal action against Sallie Mae brings to the forefront significant issues regarding data privacy, corporate ethics, and the responsibilities of companies handling sensitive user information. As the case progresses, it will likely prompt broader discussions about the ethical obligations of corporations in the digital age and the measures necessary to protect consumer data.
