Sallie Mae Lowers Earnings Guidance After Third-Quarter Loss

Sallie Mae, formally SLM Corp., lowered its full-year earnings guidance to between $1.95 and $2.05 per share, a significant drop from its previous outlook of $3.10 to $3.20 per share. The company reported a third-quarter loss of $32.3 million, contrasting with the $135.9 million profit it recorded during the same period last year.

This financial downturn resulted from a 17% increase in net charge-offs, which reached $90.4 million. The company attributed these losses primarily to issues with a third-party debt management firm that led some borrowers with a high ability to pay to default on their loans.

Despite the quarterly loss, the company saw growth in other areas. Private education loan originations increased 15% to $3.4 billion. Graduate loan originations more than doubled as the company expanded its lending to graduate students in response to changes in federal borrowing limits.