Founder of Shark Tank-backed startup Sholly sues buyer Sallie Mae

When Chris Gray sold his Shark Tank start your scholarship search Scholy at Sallie Mae in 2023, thought he had it all. Now it’s suing the student loan giant for wrongful termination, alleging it sold the data its app collected, which includes personal information about minors, without properly informing users.

Gray co-founded the company a decade ago in hopes of helping students more easily find untapped college scholarships. Within two years, he picked up sharks Daymond John and Lori Greiner as investors after one appearance on the show.

With the acquisition, Gray became one of the few black-backed fintech founders to exit their company, despite receiving some feedback that he was “selling out.” “I think it’s one of the first black tech companies to be acquired by a bank, that’s a really big achievement,” he said at that time.

He took a vice president position at Sallie Mae and expects to settle well into his new gig while helping scale Scholly and make it free to use, he told TechCrunch in an exclusive interview.

What happened next is detailed in Gray’s treatment against Sallie Mae in Delaware Superior Court and in a complaint she filed with the Securities and Exchange Commission, which she filed earlier this month.

He claims Sallie Mae fired his employees, including his co-founders, and then went back on promises not to sell user data, according to a TechCrunch review of both filings. He claims the company fired him a year after the acquisition when he tried to raise concerns about data privacy issues. Gray is seeking compensatory and punitive damages in the suit, plus legal fees.

Gray told TechCrunch that before he agreed to the sale, he believed that Sallie Mae would be prohibited from disclosing or selling non-public personal information about Scholly customers to third parties because it was a federal financial institution.

It now claims its buyer circumvented such regulations by placing Scholly in a subsidiary that sells the data — including age, gender, race and other indicators of a person’s financial needs — to third parties, such as universities and advertisers, possibly without the students’ full knowledge.

“I sold Scholly to a regulated bank because I believed it would protect the students who trusted us,” Gray told TechCrunch. “Instead, I’ve watched the company build a non-bank subsidiary to do things the bank itself cannot legally do: sell student data. This is not the company I thought I’d be joining.”

Sallie Mae denied Gray’s claims, calling them “without merit” and declined to answer TechCrunch’s questions about its data privacy practices.

“While we do not comment on pending litigation, it is unfortunate that a former employee is making false allegations about our company after he left nearly two years ago. We intend to vigorously defend ourselves against these allegations that are unfounded or without substance,” Rick Castellano, the company’s vice president of corporate communications, said in an email.

Asked which specific charges were “false,” Castellano declined to comment.

From Alabama to Shark Tank

Gray grew up on a low income in Birmingham, Alabama, with a single mother and two brothers. He felt the barriers to higher education were “real and immediate” for someone like him.

In addition to being expensive, he felt he didn’t have access to information to help him make the right decisions about where to go and how to afford it, a pressure that only worsened after his mother lost her job in the 2008 recession.

“That experience shaped the way I thought about the scholarship system later,” he recalls, saying that he began to see education and scholarship as “an access problem rather than a value problem.”

As a teenager, when it came time to apply for scholarships, she found the process fragmented and inefficient, she said. There was no central search to find opportunities, and when he found a website with scholarship options, there were thousands of listings, but no reliable way to filter to see what he was really eligible for. Not to mention the scams and old listings that still existed on some sites.

However, she applied for about 75 scholarships over the course of seven months using public computers and the Internet at the library and won about $1.3 million in scholarship funding, including from the Bill and Melinda Gates Foundation and the Coca-Cola Scholars Foundation.

He studied economics and entrepreneurship at Drexel University and encountered students facing a familiar roadblock. “Students kept asking for help finding scholarships,” he told TechCrunch. “Funding was there with hundreds of millions of dollars unclaimed each year, but the search process had stopped.”

He began mapping out the eight key criteria that determined scholarship eligibility—age, location, major, GPA, race, gender, field of study and financial need.

“This became the foundation of Scholly’s matching algorithm,” he said.

During his senior year, Gray, along with Nick Pirollo and Bryson Alef, whom he met as Coca-Cola fellows, officially launched Scholly in 2013. For just $0.99 a month, students could use the platform and filter by eligibility criteria. “That price kept the business viable without having to sell data or serve ads,” he said.

Scolley switched to a freemium model after Gray pitched the idea to Shark Tank. The sharks clamored for his idea in what became the “worst match in Shark Tank history,” according to to one of the hosts who invested. Scholly has grown to 5 million users and generated more than $30 million in cumulative revenue, Gray said.

In March 2023, Sallie Mae’s corporate development team contacted Scholly. The bank had just bought the Nitro College scholarship organization a year earlier and was looking to move further into the scholarship and college planning space. “It was a natural fit,” Gray said, about why the student loan institution wanted Scholly.

Sallie Mae bought Scholly in July 2023, brought Gray and his co-founders on board and made Gray vice president of product management.

In addition to promising to “make Scholly free for all students, families and other users,” Sallie Mae CEO Jon Witter he said in 2023 that the acquisition “allows us to leverage and leverage Scholly’s innovative technology to unlock future strategic growth opportunities.”

Sallie Mae vs. “Sallie”

For Gray, the canary in the coal mine came a year after the Schooley acquisition.

He claims in the lawsuit that Sallie Mae fired Scholly’s founding team, including its co-founders, in July 2024. Around the same time, Gray claims he overheard Sallie Mae executives discussing plans to sell Scholly user data in meetings.

Gray claims executives told him his position was safe and the company was simply restructuring. But when he continued to raise further concerns about the possible sale of the Scholly data, he claims in his suit that he was fired before a scheduled meeting with Witter, the CEO, where he planned to discuss those issues.

After his retirement, around December 2024, Sallie Mae launched “Sallie.com”. This site describes itself as an “education solutions company” and became the home of the Scholly platform. It is separate from the Sallie Mae website, where the student loan bank is located.

The Sallie.com website says it is owned by an entity called SLM Education Services, LLC. Gray argues in his lawsuit and the complainant’s complaint that Sallie Mae uses SLM Education Services to sell the personal data Scholly collects because it is not a closely regulated financial services company like the Sallie Mae banking industry.

Sallie.com reveals that it sells the following customer data in its privacy policy to third parties: name, phone number, email addresses, age, race, gender, education records, and geographic location data. The third parties it sells that information to, it says, include ad networks, educational institutions, brands and companies that resell consumer data.

Sallie Mae also pays Sallie “for referring student loan customers.” according to on the “About” page of Sallie.com.

Gray argues in his complaints that the Sallie.com website can easily be confused with the official Sallie Mae website because of similar layouts and “sallie” logos, increasing the risk that students will hand over personal data to what they think is a bank.

Gray’s lawsuit goes on to allege that Sallie Mae used Scholly user data to create something called Backpack Media in March, which it describes as a “first-come, first-served educational media network” that “gives brands effective, scalable access to highly desirable, hard-to-reach audiences – Gen Z, Gen Alpha and those involved in their purchase decisions.” a Sallie press release.

Castellano declined to comment on Backpack Media’s data sources.

This would not be the first time a company associated with Salle Mae has been accused of misleading or deceptive conduct.

A company called Navient, which was spun off from Sallie Mae in 2014, faced restitution orders from the Federal Deposit Insurance Corporation, the Department of Justice and the Department of Education over additional charges. Reported by the Consumer Financial Protection Bureau and reached a $1.85 billion settlement with 39 attorneys general for over what the attorneys general described as predatory student loans.

Gray said he was aware of these past legal issues, but that he doesn’t regret selling Scholly, as it helped make the platform free for every student. In fact, he said, if he could, he would make the same decision to sell all over again.

“But I would bring up the same concerns again,” he said. “Because I believe we should live in a system where an executive can speak up and change the course of a company in accordance with the law and fair business practices.”