The founder of Scholly sold his scholarship app to Sallie Mae. He says they fired him for asking why they were selling students’ data.

Christopher Gray built Scholly to help students like himself find scholarships. He grew up in Birmingham, Alabama, became the first in his family to attend college after winning $1.3 million in scholarships to Drexel University, and turned that experience into a mobile app that matched students with financial aid based on their profiles. The app reached five million users, appeared on Shark Tank in 2015 where Lori Greiner and Daymond John both invested, and became the number one download in both app stores. In 2023, Sallie Mae, the student lending company whose name is synonymous with the American student debt crisis, acquired Scholly. Now Gray is suing his acquirer in Delaware Superior Court and has filed a whistleblower complaint with the Securities and Exchange Commission, alleging that Sallie Mae laid off his co-founders, fired him when he raised concerns about data privacy, and is selling the personal information of Scholly’s users, including minors, to third parties. The data allegedly being sold includes students’ age, gender, race, and financial status. The company that bought an app designed to reduce students’ financial burden is accused of monetising their most sensitive information instead.

The acquisition

Sallie Mae acquired Scholly in 2023 as part of a broader strategy to reposition itself beyond its core student lending business into what it framed as student financial wellness. The acquisition gave Sallie Mae access to five million users, overwhelmingly students and their families, who had voluntarily provided detailed personal and financial information in exchange for scholarship matching. For Scholly’s users, the app represented a tool built by someone who understood their situation: a first-generation college student who had navigated the scholarship system himself and automated the process for others. For Sallie Mae, the acquisition represented a distribution channel into a demographic that would eventually need student loans, though the company positioned the deal publicly as a commitment to helping students find free money before borrowing.

Gray has previously spoken publicly about the acquisition in positive terms, advising founders on building companies with AI and discussing how the deal led to increased financial support for historically Black colleges and universities. The relationship appeared intact through early 2024. According to the lawsuit, the deterioration began in July 2024, when Sallie Mae laid off the Scholly founding team, including Gray’s co-founders. Gray alleges that around the same time, he heard Sallie Mae executives discuss plans for selling Scholly user data in meetings. When he raised concerns about data privacy, the company fired him approximately one year after the acquisition closed. The filing characterises his termination as retaliation for objecting to practices he believed violated the commitments Sallie Mae made to Scholly’s users.

The allegations

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The lawsuit and SEC whistleblower complaint centre on two claims: wrongful termination and the alleged sale of user data without adequate disclosure. Gray alleges that Sallie Mae sold data collected through the Scholly app, including personal information about minors, to third parties without properly informing users. The data categories allegedly sold, age, gender, race, and financial status, are among the most sensitive categories of personal information, particularly when they belong to minors who signed up for a scholarship search tool rather than a data marketplace. Gray is seeking back pay, punitive damages, and legal costs. Sallie Mae has denied the allegations and says it will fight the lawsuit.

The case sits at the intersection of several forces reshaping the technology industry. Startup acquisitions in the tech sector frequently follow a pattern in which the acquiring company absorbs the startup’s user base and technology while dismantling the team that built it. The economics are simple: the users and their data are the asset, not the founders or the product vision. When the acquiring company’s business model depends on monetising exactly the kind of data the startup collected, the founder’s vision of what the data was for becomes an obstacle rather than an asset. Gray’s lawsuit alleges he became that obstacle when he objected to a use of his users’ data that contradicted the implicit contract between Scholly and its community: that students would share their personal information in exchange for scholarship matches, not to be sold to third parties by the country’s largest private student lender.

The context

Sallie Mae has a history of regulatory and legal trouble over its treatment of borrowers. The Department of Justice reached a $60 million settlement with the company over allegations of charging service members excess interest. The FDIC settled with Sallie Mae over unfair and deceptive practices. Borrowers have separately accused the company of racial discrimination in lending. The company split into Navient, which services federal loans, and Sallie Mae, which focuses on private lending and banking, in 2014, partially to distance the private lending operation from the regulatory baggage of the federal loan portfolio. The Scholly acquisition was part of the new Sallie Mae’s attempt to build a more positive brand in the student finance space, offering tools and resources rather than just debt. If Gray’s allegations are true, the rebranding was cosmetic: the company acquired a tool beloved by students and used it as a data pipeline rather than a service.

Founders do not always get the ending they envisioned when they sell their companies. The power dynamic shifts irreversibly at the moment of acquisition. The founder who built the product, recruited the users, and defined the mission becomes an employee whose authority extends only as far as the acquirer permits. When the acquirer’s business model conflicts with the founder’s original mission, the founder either accommodates or leaves. Gray alleges he was not given the choice to accommodate. He was fired for raising the concern. The case will be decided in Delaware Superior Court, and the SEC will evaluate the whistleblower complaint independently. But the broader question the lawsuit raises is whether the millions of users who shared their personal data with Scholly, an app built by a Black first-generation college student who won $1.3 million in scholarships and wanted to help others do the same, understood that their information would end up in the hands of the company most associated with the debt those scholarships were supposed to prevent.