SLM Corporation

What they do

SLM originates Private Education Loans that are not made, insured, or guaranteed by any government, serving more families than any other private student loan lender. It originated about $7.4 billion of Private Education Loans in 2025, up 6 percent year over year, and held $20.3 billion of such loans for investment, net, at December 31, 2025. The company also offers FDIC-insured deposit products to fund the balance sheet. The company that operates as Sallie Mae today was formed in late 2013 and separated from Navient on April 30, 2014.

Revenue drivers

• Private Education Loans — Most earnings come from net interest income on the private education loan portfolio, the core business. Originations were about $7.4 billion in 2025 and loans held for investment, net, were $20.3 billion at year-end 2025.
• Loan sales to strategic partners — The company sells loans through whole loan sales and securitizations, retaining servicing and earning fee revenue for program management services on loans sold to strategic partners. In Q2 2026 it sold $420 million of Private Education Loans, including $399 million principal and $21 million capitalized interest.
• Deposit products — FDIC-insured deposit products, concentrated in online high-yield savings, money markets, and certificates of deposit, provide funding for the loan portfolio.
• Servicing — SLM typically retains servicing on loans it sells and earns servicing revenue at prevailing market rates.

Recent performance

Q2 2026 GAAP diluted EPS was $0.29, down from $0.32 a year earlier. Private Education Loan originations rose 4.5 percent from the year-ago quarter, and average loans outstanding, net, were $21.1 billion. Net charge-offs were $113 million, which management attributed primarily to misaligned third-party debt resolution practices affecting a small, high-ability-to-pay segment of borrowers and related recovery-strategy shifts. Delinquencies were 3.72 percent of loans in repayment versus 3.51 percent a year earlier. Non-interest expenses were $195 million, and cost of funds improved to 4.13 percent from 4.22 percent.

Strategy

Management's stated primary focus is driving innovation to maximize sustainable growth and profitability of the core private student loan business. It also aims to grow new lines of business and build the data infrastructure, technology, and talent to compete digitally. The company is scaling an origination expansion initiative and a strategic partnership funding model, which may bring higher marketing, technology, infrastructure, and operational costs. In May 2026 it issued $500 million of unsecured Senior Notes and used proceeds to tender for and discharge $500 million of notes due November 2026. A $200 million accelerated share repurchase concluded in June 2026 with 9.3 million shares repurchased in total, leaving $242 million available under the 2026 program.

Risks

• Product concentration — Core offerings are concentrated in Private Education Loan products, and competition in that market could adversely affect financial position.
• Deposit funding concentration — The deposit base is concentrated in online high-yield savings, money market, and certificate of deposit products, exposing liquidity and funding costs to that channel.
• Credit and allowance adequacy — Defaults could hurt results, and the allowance for credit losses may prove inadequate, requiring a material increase that would affect capital and earnings.
• Interest rate and prepayment exposure — Changes in interest rates and the rate relationship between earning assets and funding, along with loan prepayment rates, could adversely affect results, capital, and liquidity.

Outlook

Management called Q2 2026 a strong quarter and said it is encouraged entering peak season, citing product enhancements, portfolio strength, and growing customer demand. It expects full-year 2026 non-interest expenses to remain consistent with prior expectations and guidance. SLM anticipates that H.R.1's federal student loan changes, effective for new borrowers beginning July 1, 2026, will present opportunities for a gradual positive impact on Private Student Loan origination volume in coming years. It also said the near-term scaling of origination expansion and the strategic partnership funding model may create margin or expense pressure.