Sallie Mae Stock Drops 9% After Surprise Third-Quarter Loss, Scrapped Loan Sale and Higher Charge-Off Forecast

NEW YORK — Shares of SLM Corp., the private student lender known as Sallie Mae, fell more than 9% in early trading Friday. The company reported an unexpected third-quarter loss, cut its full-year profit forecast and raised its estimate for loans it expects to write off.

The stock fell $2.04 to $19.72, trading above its usual daily volume. It is now down about 21% over the past year and near its 52-week low of $17.77.

The Newark, Delaware-based lender reported an adjusted loss of 19 cents per share for the quarter ended Sept. 30. Analysts had expected a profit of 17 cents. Revenue was $375 million, well short of the roughly $457 million analysts expected.

Loan sale canceled

A large part of the miss came from a strategy change. Sallie Mae usually sells some of the student loans it makes to investors and books a gain on those sales. This year it decided to keep loans it had planned to sell in October.

"We do not anticipate executing our final loan sale for the year, which was previously planned for October," CEO Jon Witter said on a call with analysts Thursday.

Witter said the company believes keeping the loans will pay off over time.

"We determined that we could create more shareholder value by retaining the loans on our balance sheet," he said.

Keeping the loans means the company gives up the immediate gain from a sale. It must also set aside money for possible future losses on those loans.

Higher provisions and charge-offs

The provision for credit losses was $214 million in the quarter. Chief Financial Officer Pete Graham said the provision was "primarily reflecting the impacts of significant originations growth in the period."

Net charge-offs, or loans written off as unlikely to be repaid, were $90 million.

Sallie Mae raised its full-year net charge-off forecast to $400 million to $420 million, from $345 million to $385 million. Witter said some of the increase reflects a larger effect from third-party debt-resolution companies, which negotiate with lenders on behalf of borrowers.

"We are increasing our estimated impact in the year from $25 million to $45 million," Witter said.

Profit forecast cut

The company lowered its 2026 earnings forecast to $1.95 to $2.05 per share.

Net interest income fell $34 million from a year earlier to $339 million. Non-interest expenses rose $40 million to $221 million, partly due to one-time restructuring costs.

"Without these one-time expenses, non-interest expense would have come in at the low end of the range," Graham said.

Loan growth stays strong

Lending activity was strong. Loan originations rose 15% to a record $3.4 billion, and the company reaffirmed its forecast for 12% to 14% origination growth this year. Net interest margin rose to 4.85%, up 0.1 percentage point from the second quarter.

Witter described the quarter as one of "solid operating performance and continued execution against our strategy."

Sallie Mae has been expanding as changes to federal student lending, including new limits on some government loans for graduate students and parents, push more families toward private lenders.

That growth comes with higher upfront costs, since lenders must set aside reserves when loans are made. Rising charge-offs are also drawing attention as some borrowers struggle with high living costs and as federal student loan collections resume.

The company's capital remained solid, with a common equity tier 1 ratio of 11.2%. Liquidity stood at 15% of total assets.

The stock had already fallen 4.5% during Thursday's regular session before results were released after the closing bell.