{"id":3489667,"date":"2026-04-28T15:33:27","date_gmt":"2026-04-28T15:33:27","guid":{"rendered":"https:\/\/techingeek.com\/index.php\/2026\/04\/28\/founder-of-the-shark-tank-backed-startup-scholly-files-a-lawsuit-against-his-acquirer-sallie-mae\/"},"modified":"2026-04-28T15:33:27","modified_gmt":"2026-04-28T15:33:27","slug":"founder-of-the-shark-tank-backed-startup-scholly-files-a-lawsuit-against-his-acquirer-sallie-mae","status":"publish","type":"post","link":"https:\/\/techingeek.com\/index.php\/2026\/04\/28\/founder-of-the-shark-tank-backed-startup-scholly-files-a-lawsuit-against-his-acquirer-sallie-mae\/","title":{"rendered":"Founder of the Shark Tank-backed startup Scholly files a lawsuit against his acquirer Sallie Mae"},"content":{"rendered":"
<\/div>\n
\n

Upon selling his scholarship search startup Scholly, backed by Shark Tank, to Sallie Mae in 2023, Chris Gray felt he had achieved everything. Currently, he is taking legal action against the student loan company for wrongful dismissal and claims it is improperly disclosing his app’s collected data, which includes sensitive information regarding minors, without properly notifying users.\u00a0<\/p>\n

Gray co-founded the enterprise a decade earlier with the intention of aiding students in finding unclaimed college scholarships more efficiently. Within two years, he secured investments from sharks Daymond John and Lori Greiner after his appearance on the program.\u00a0<\/p>\n

With the buyout, Gray became one of the rare Black fintech founders with venture backing to exit their business, despite facing criticism for \u201cselling out.\u201d \u201cBeing one of the first Black tech companies acquired by a bank is a significant achievement,\u201d he expressed at the time.\u00a0<\/p>\n

He accepted a vice president position at Sallie Mae and anticipated a smooth transition into his new role, intending to scale Scholly and make it complimentary, as he mentioned in a unique interview with TechCrunch.<\/p>\n

The events that followed are outlined in Gray\u2019s lawsuit against Sallie Mae, filed in Delaware Superior Court, and a whistleblower report he submitted to the Securities and Exchange Commission, both filed earlier this month.\u00a0<\/p>\n

He accuses Sallie Mae of laying off his staff, including co-founders, and reneging on its commitment not to sell user data, according to a TechCrunch examination of both documents. Gray asserts he was dismissed a year post-acquisition after voicing concerns over data privacy matters. He seeks back wages and punitive damages in the lawsuit, in addition to legal fees.\u00a0<\/p>\n

Gray revealed to TechCrunch that before he agreed to sell, he believed Sallie Mae would be unable to share or sell non-public personal information regarding Scholly customers to outside parties, as it is a federally regulated financial entity.\u00a0\u00a0<\/p>\n

\n
\n

Techcrunch event<\/p>\n

\n

\n\t\t\t\t\t\t\t\t\tSan Francisco, CA<\/span>
\n\t\t\t\t\t\t\t\t\t\t\t\t\t|<\/span>
\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026<\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

He now claims that his acquirer circumvented such regulations by creating a subsidiary for Scholly that is selling data \u2014 including age, gender, race, and other indicators of financial need \u2014 to entities like universities and advertisers, potentially without students being fully informed.\u00a0\u00a0<\/p>\n

\u201cI sold Scholly to a regulated bank because I believed it would safeguard the students who relied on us,\u201d Gray told TechCrunch. \u201cInstead, I witnessed the company forming a non-bank subsidiary to do things the bank itself cannot legally execute: sell student information. That\u2019s not the company I thought I was becoming a part of.\u201d\u00a0\u00a0<\/p>\n

Sallie Mae has rejected Gray\u2019s accusations, labeling them as \u201cwithout merit\u201d and chose not to address TechCrunch\u2019s inquiries regarding its data privacy policies.\u00a0<\/p>\n

\u201cWhile we don\u2019t comment on ongoing litigation, it\u2019s unfortunate a former employee is making unfounded allegations about our company following his exit nearly two years ago. We intend to defend ourselves vigorously against these meritless claims,\u201d stated Rick Castellano, the company\u2019s vice president of corporate communications, in an email.\u00a0\u00a0<\/p>\n

When asked which specific claims were \u201cfalse,\u201d Castellano opted not to respond.\u00a0<\/p>\n

From Alabama to Shark Tank <\/strong><\/h2>\n

Gray was raised in a low-income household in Birmingham, Alabama, alongside his single mother and two siblings. He perceived the obstacles to obtaining higher education as \u201creal and immediate\u201d for someone of his background.\u00a0\u00a0<\/p>\n

In addition to the high costs, he felt he lacked the necessary information to make informed choices regarding education and affordability, a strain that intensified when his mother lost her job during the 2008 recession.\u00a0\u00a0<\/p>\n

\u201cThis experience influenced my perspective on the scholarship system later,\u201d he recalled, stating that he began to see education and scholarships as \u201can access issue rather than a merit issue.\u201d\u00a0\u00a0<\/p>\n

As a teenager, when it was time for him to pursue scholarships, he found the process disjointed and impractical. There was no centralized search available for him to identify opportunities, and when he located a site with scholarship options, it presented thousands of listings without any dependable way to filter what he could qualify for. Plus, there were numerous scams and outdated listings on certain sites.\u00a0\u00a0<\/p>\n

Regardless, he applied for approximately 75 scholarships over a span of seven months utilizing public computers and library internet access, ultimately securing around $1.3 million in scholarships, including from the Bill and Melinda Gates Foundation and the Coca-Cola Scholars Foundation.\u00a0\u00a0<\/p>\n

He pursued economics and entrepreneurship at Drexel University, encountering students facing similar hurdles. “Students were continually requesting assistance in finding scholarships,\u201d he informed TechCrunch. \u201cThe funding was available, with hundreds of millions of dollars going unclaimed each year, yet the search process was flawed.\u201d\u00a0\u00a0<\/p>\n

He began outlining the eight primary criteria that dictated scholarship eligibility \u2014 age, location, major, GPA, race, gender, field of study, and financial need.\u00a0<\/p>\n

\u201cThese criteria formed the basis of Scholly\u2019s matching algorithm,\u201d he stated.\u00a0\u00a0<\/p>\n

During his final year, Gray, together with Nick Pirollo and Bryson Alef, whom he met as Coca-Cola Scholars, officially launched Scholly in 2013. For merely $0.99 a month, students could access the platform and filter based on eligibility requirements. \u201cThat pricing model ensured the business\u2019s sustainability without needing to sell data or run advertisements,\u201d he noted.\u00a0\u00a0<\/p>\n

Scholly transitioned to a freemium model after Gray proposed the concept on Shark Tank. The sharks competed over his idea in what has been named the \u201cworst fight in Shark Tank history,\u201d according to one host who invested. Scholly expanded to 5 million users and generated over $30 million in total revenue, Gray stated.<\/p>\n

In March 2023, Sallie Mae\u2019s corporate development team reached out to Scholly. The bank had just acquired the scholarship organization Nitro College the previous year and was looking to enhance its footing in scholarship and college planning. \u201cIt was a logical alignment,\u201d Gray remarked, explaining why the student loan company was interested in Scholly.\u00a0\u00a0<\/p>\n

Sallie Mae purchased Scholly in July 2023, hiring Gray and his co-founders as employees, with Gray taking on the role of vice president of product management.\u00a0<\/p>\n

In addition to its commitment to \u201cmake Scholly free for all students, families, and additional users,\u201d Sallie Mae CEO Jon Witter remarked in 2023 that the acquisition \u201cenables us to leverage and develop Scholly\u2019s innovative technology to unlock future strategic growth potentials.\u201d\u00a0<\/p>\n

Sallie Mae vs. \u201cSallie\u201d<\/strong>\u00a0<\/h2>\n

For Gray, the warning sign appeared a year after the acquisition of Scholly.\u00a0<\/p>\n

He claims in his lawsuit that Sallie Mae dismissed the Scholly founding team, including his co-founders, in July 2024. Around this time, Gray alleges he overheard Sallie Mae executives discussing intentions to sell Scholly user data during meetings.\u00a0\u00a0<\/p>\n

Gray asserts that executives assured him his job was secure and that it was merely a restructuring process. However, when he raised concerns regarding the potential sale of Scholly data, he states in his suit that he was terminated before a scheduled meeting with Witter, the CEO, to address these issues.\u00a0\u00a0<\/p>\n

After his exit, around December 2024, Sallie Mae launched \u201cSallie.com.\u201d This platform describes itself as an \u201ceducation solutions company,\u201d and serves as the new home for the Scholly platform. It operates separately from the Sallie Mae website, which is dedicated to student loans.\u00a0<\/p>\n

The Sallie.com site indicates it is operated by an entity called SLM Education Services, LLC. Gray argues in his lawsuit and whistleblower report that Sallie Mae is utilizing SLM Education Services to sell the personal data collected by Scholly, as it does not face the same stringent regulations as the Sallie Mae banking division.\u00a0<\/p>\n

Sallie.com\u2019s privacy policy reveals it sells various customer data to third parties, including names, phone numbers, email addresses, ages, races, genders, education records, and geolocation data. The third parties identified for receiving this data include advertising networks, educational institutions, brands, and firms focused on reselling consumer data.\u00a0\u00a0<\/p>\n

Sallie Mae compensates Sallie \u201cfor the referral of student loan customers,\u201d according to the \u201cAbout\u201d page on Sallie.com.\u00a0<\/p>\n

Gray contends in his complaints that the Sallie.com website is easily mistaken for the official Sallie Mae website due to similar designs and \u201csallie\u201d branding, raising the risk that students may inadvertently provide personal information to what they assume is a bank.\u00a0\u00a0<\/p>\n

Gray\u2019s suit further claims that in March, Sallie Mae utilized Scholly user data to develop something known as Backpack Media, which it markets as a \u201cfirst-to-market education media network\u201d that \u201cprovides brands effective, scalable access to highly sought-after, elusive audiences \u2013 Gen Z, Gen Alpha, and those influencing their purchasing choices,\u201d according to a press release from Sallie.\u00a0\u00a0<\/p>\n

Castellano refused to comment on the data sources for Backpack Media.<\/p>\n

This would not mark the first instance where a Sallie Mae-associated company has faced allegations of deceptive or misleading practices.\u00a0\u00a0<\/p>\n

Navient, a company that spun off from Sallie Mae in 2014, has encountered restitution orders from the Federal Deposit Insurance Corporation, the Department of Justice, and the Department of Education for overcharging. It faced lawsuits from the Consumer Financial Protection Bureau and reached a $1.85 billion settlement with 39 state attorneys general over accusations of predatory student loans, according to the attorneys general.<\/p>\n

Gray acknowledges being aware of these prior legal troubles but asserts he does not regret the sale of Scholly as it enabled the platform to be accessible free of charge to every student. In fact, he mentions that if given the chance, he would make the same decision to sell again.<\/p>\n

\u201cYet I would also voice the same concerns once more,\u201d he remarked. \u201cBecause I believe we should exist in a system where an executive can speak up and guide the direction of a company in accordance with the law and ethical business practices.\u201d<\/p>\n<\/div>\n

When you purchase through links in our articles, we may earn a small commission. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

<\/div>\n
\n

Upon selling his scholarship search startup Scholly, backed by Shark Tank, to Sallie Mae in 2023, Chris Gray felt he had achieved everything. Currently, he is taking legal action against the student loan company for wrongful dismissal and claims it is improperly disclosing his app’s collected data, which includes sensitive information regarding minors, without properly notifying users.\u00a0<\/p>\n

Gray co-founded the enterprise a decade earlier with the intention of aiding students in finding unclaimed college scholarships more efficiently. Within two years, he secured investments from sharks Daymond John and Lori Greiner after his appearance on the program.\u00a0<\/p>\n

With the buyout, Gray became one of the rare Black fintech founders with venture backing to exit their business, despite facing criticism for \u201cselling out.\u201d \u201cBeing one of the first Black tech companies acquired by a bank is a significant achievement,\u201d he expressed at the time.\u00a0<\/p>\n

He accepted a vice president position at Sallie Mae and anticipated a smooth transition into his new role, intending to scale Scholly and make it complimentary, as he mentioned in a unique interview with TechCrunch.<\/p>\n

The events that followed are outlined in Gray\u2019s lawsuit against Sallie Mae, filed in Delaware Superior Court, and a whistleblower report he submitted to the Securities and Exchange Commission, both filed earlier this month.\u00a0<\/p>\n

He accuses Sallie Mae of laying off his staff, including co-founders, and reneging on its commitment not to sell user data, according to a TechCrunch examination of both documents. Gray asserts he was dismissed a year post-acquisition after voicing concerns over data privacy matters. He seeks back wages and punitive damages in the lawsuit, in addition to legal fees.\u00a0<\/p>\n

Gray revealed to TechCrunch that before he agreed to sell, he believed Sallie Mae would be unable to share or sell non-public personal information regarding Scholly customers to outside parties, as it is a federally regulated financial entity.\u00a0\u00a0<\/p>\n

\n
\n

Techcrunch event<\/p>\n

\n

\n\t\t\t\t\t\t\t\t\tSan Francisco, CA<\/span>
\n\t\t\t\t\t\t\t\t\t\t\t\t\t|<\/span>
\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026<\/span>\n\t\t\t\t\t\t\t<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

He now claims that his acquirer circumvented such regulations by creating a subsidiary for Scholly that is selling data \u2014 including age, gender, race, and other indicators of financial need \u2014 to entities like universities and advertisers, potentially without students being fully informed.\u00a0\u00a0<\/p>\n

\u201cI sold Scholly to a regulated bank because I believed it would safeguard the students who relied on us,\u201d Gray told TechCrunch. \u201cInstead, I witnessed the company forming a non-bank subsidiary to do things the bank itself cannot legally execute: sell student information. That\u2019s not the company I thought I was becoming a part of.\u201d\u00a0\u00a0<\/p>\n

Sallie Mae has rejected Gray\u2019s accusations, labeling them as \u201cwithout merit\u201d and chose not to address TechCrunch\u2019s inquiries regarding its data privacy policies.\u00a0<\/p>\n

\u201cWhile we don\u2019t comment on ongoing litigation, it\u2019s unfortunate a former employee is making unfounded allegations about our company following his exit nearly two years ago. We intend to defend ourselves vigorously against these meritless claims,\u201d stated Rick Castellano, the company\u2019s vice president of corporate communications, in an email.\u00a0\u00a0<\/p>\n

When asked which specific claims were \u201cfalse,\u201d Castellano opted not to respond.\u00a0<\/p>\n

From Alabama to Shark Tank <\/strong><\/h2>\n

Gray was raised in a low-income household in Birmingham, Alabama, alongside his single mother and two siblings. He perceived the obstacles to obtaining higher education as \u201creal and immediate\u201d for someone of his background.\u00a0\u00a0<\/p>\n

In addition to the high costs, he felt he lacked the necessary information to make informed choices regarding education and affordability, a strain that intensified when his mother lost her job during the 2008 recession.\u00a0\u00a0<\/p>\n

\u201cThis experience influenced my perspective on the scholarship system later,\u201d he recalled, stating that he began to see education and scholarships as \u201can access issue rather than a merit issue.\u201d\u00a0\u00a0<\/p>\n

As a teenager, when it was time for him to pursue scholarships, he found the process disjointed and impractical. There was no centralized search available for him to identify opportunities, and when he located a site with scholarship options, it presented thousands of listings without any dependable way to filter what he could qualify for. Plus, there were numerous scams and outdated listings on certain sites.\u00a0\u00a0<\/p>\n

Regardless, he applied for approximately 75 scholarships over a span of seven months utilizing public computers and library internet access, ultimately securing around $1.3 million in scholarships, including from the Bill and Melinda Gates Foundation and the Coca-Cola Scholars Foundation.\u00a0\u00a0<\/p>\n

He pursued economics and entrepreneurship at Drexel University, encountering students facing similar hurdles. “Students were continually requesting assistance in finding scholarships,\u201d he informed TechCrunch. \u201cThe funding was available, with hundreds of millions of dollars going unclaimed each year, yet the search process was flawed.\u201d\u00a0\u00a0<\/p>\n

He began outlining the eight primary criteria that dictated scholarship eligibility \u2014 age, location, major, GPA, race, gender, field of study, and financial need.\u00a0<\/p>\n

\u201cThese criteria formed the basis of Scholly\u2019s matching algorithm,\u201d he stated.\u00a0\u00a0<\/p>\n

During his final year, Gray, together with Nick Pirollo and Bryson Alef, whom he met as Coca-Cola Scholars, officially launched Scholly in 2013. For merely $0.99 a month, students could access the platform and filter based on eligibility requirements. \u201cThat pricing model ensured the business\u2019s sustainability without needing to sell data or run advertisements,\u201d he noted.\u00a0\u00a0<\/p>\n

Scholly transitioned to a freemium model after Gray proposed the concept on Shark Tank. The sharks competed over his idea in what has been named the \u201cworst fight in Shark Tank history,\u201d according to one host who invested. Scholly expanded to 5 million users and generated over $30 million in total revenue, Gray stated.<\/p>\n

In March 2023, Sallie Mae\u2019s corporate development team reached out to Scholly. The bank had just acquired the scholarship organization Nitro College the previous year and was looking to enhance its footing in scholarship and college planning. \u201cIt was a logical alignment,\u201d Gray remarked, explaining why the student loan company was interested in Scholly.\u00a0\u00a0<\/p>\n

Sallie Mae purchased Scholly in July 2023, hiring Gray and his co-founders as employees, with Gray taking on the role of vice president of product management.\u00a0<\/p>\n

In addition to its commitment to \u201cmake Scholly free for all students, families, and additional users,\u201d Sallie Mae CEO Jon Witter remarked in 2023 that the acquisition \u201cenables us to leverage and develop Scholly\u2019s innovative technology to unlock future strategic growth potentials.\u201d\u00a0<\/p>\n

Sallie Mae vs. \u201cSallie\u201d<\/strong>\u00a0<\/h2>\n

For Gray, the warning sign appeared a year after the acquisition of Scholly.\u00a0<\/p>\n

He claims in his lawsuit that Sallie Mae dismissed the Scholly founding team, including his co-founders, in July 2024. Around this time, Gray alleges he overheard Sallie Mae executives discussing intentions to sell Scholly user data during meetings.\u00a0\u00a0<\/p>\n

Gray asserts that executives assured him his job was secure and that it was merely a restructuring process. However, when he raised concerns regarding the potential sale of Scholly data, he states in his suit that he was terminated before a scheduled meeting with Witter, the CEO, to address these issues.\u00a0\u00a0<\/p>\n

After his exit, around December 2024, Sallie Mae launched \u201cSallie.com.\u201d This platform describes itself as an \u201ceducation solutions company,\u201d and serves as the new home for the Scholly platform. It operates separately from the Sallie Mae website, which is dedicated to student loans.\u00a0<\/p>\n

The Sallie.com site indicates it is operated by an entity called SLM Education Services, LLC. Gray argues in his lawsuit and whistleblower report that Sallie Mae is utilizing SLM Education Services to sell the personal data collected by Scholly, as it does not face the same stringent regulations as the Sallie Mae banking division.\u00a0<\/p>\n

Sallie.com\u2019s privacy policy reveals it sells various customer data to third parties, including names, phone numbers, email addresses, ages, races, genders, education records, and geolocation data. The third parties identified for receiving this data include advertising networks, educational institutions, brands, and firms focused on reselling consumer data.\u00a0\u00a0<\/p>\n

Sallie Mae compensates Sallie \u201cfor the referral of student loan customers,\u201d according to the \u201cAbout\u201d page on Sallie.com.\u00a0<\/p>\n

Gray contends in his complaints that the Sallie.com website is easily mistaken for the official Sallie Mae website due to similar designs and \u201csallie\u201d branding, raising the risk that students may inadvertently provide personal information to what they assume is a bank.\u00a0\u00a0<\/p>\n

Gray\u2019s suit further claims that in March, Sallie Mae utilized Scholly user data to develop something known as Backpack Media, which it markets as a \u201cfirst-to-market education media network\u201d that \u201cprovides brands effective, scalable access to highly sought-after, elusive audiences \u2013 Gen Z, Gen Alpha, and those influencing their purchasing choices,\u201d according to a press release from Sallie.\u00a0\u00a0<\/p>\n

Castellano refused to comment on the data sources for Backpack Media.<\/p>\n

This would not mark the first instance where a Sallie Mae-associated company has faced allegations of deceptive or misleading practices.\u00a0\u00a0<\/p>\n

Navient, a company that spun off from Sallie Mae in 2014, has encountered restitution orders from the Federal Deposit Insurance Corporation, the Department of Justice, and the Department of Education for overcharging. It faced lawsuits from the Consumer Financial Protection Bureau and reached a $1.85 billion settlement with 39 state attorneys general over accusations of predatory student loans, according to the attorneys general.<\/p>\n

Gray acknowledges being aware of these prior legal troubles but asserts he does not regret the sale of Scholly as it enabled the platform to be accessible free of charge to every student. In fact, he mentions that if given the chance, he would make the same decision to sell again.<\/p>\n

\u201cYet I would also voice the same concerns once more,\u201d he remarked. \u201cBecause I believe we should exist in a system where an executive can speak up and guide the direction of a company in accordance with the law and ethical business practices.\u201d<\/p>\n<\/div>\n

When you purchase through links in our articles, we may earn a small commission. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n","protected":false},"author":2,"featured_media":3489668,"comment_status":"open","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3489667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts\/3489667"}],"collection":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/comments?post=3489667"}],"version-history":[{"count":0,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts\/3489667\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/media\/3489668"}],"wp:attachment":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/media?parent=3489667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/categories?post=3489667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/tags?post=3489667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}