Sallie Mae swings to third-quarter loss and cuts 2026 earnings forecast
Originations rose 15% to $3.4 billion, but net charge-offs climbed to $90 million and the company raised its full-year charge-off forecast.
Key takeaways
- SLM Corporation (SLM) reported a third-quarter 2026 net loss of $0.19 per diluted share on Oct. 22, 2026. The company cut its full-year 2026 diluted earnings per share forecast to $1.95 to $2.05 from $3.10 to $3.20 and raised its net charge-off forecast to $400 million to $420 million from $365 million to $385 million.
Sallie Mae, formally SLM Corporation (Nasdaq: SLM), swung to a loss in the third quarter of 2026 and cut its full-year earnings forecast, the company said Thursday in a press release furnished with a regulatory filing.
The company posted a diluted loss of $0.19 per share for the quarter ended Sept. 30, 2026. A year earlier it earned $0.63 per diluted share.
Here's how the company did:
- Diluted loss per share: $0.19, vs. diluted earnings of $0.63 a year earlier
- Net loss: $32 million, vs. net income of $136 million a year earlier
- Net interest income: $339 million, vs. $373 million a year earlier
- Total non-interest income: $36 million, vs. $173 million a year earlier
Provisions for credit losses were $214 million, up from $179 million a year earlier.
Sequentially, the company earned $0.29 per diluted share in the second quarter of 2026, on net income of $59 million.
For the first nine months of 2026, diluted earnings were $1.68 per share, against $2.35 a year earlier.
Private education loan originations rose 15% from the year-ago quarter to $3.4 billion. Graduate loan originations grew 119% during the first academic year following PLUS reform.
CEO Jonathan Witter framed the quarter around loan volume.
“We delivered a record peak season, highlighted by the largest single quarter of originations in the Company’s history,” CEO Jonathan Witter said. “Credit quality of originations remained strong, and we’re encouraged by the significant growth in graduate student lending following changes to federal student loan programs.”
The company said the average winning FICO score at approval was 757, up from a year earlier, and cosigner rates were 92%.
Net charge-offs rose to $90 million from $77.5 million a year earlier. The company attributed the increase primarily to misaligned third-party debt resolution practices affecting a small, high-ability-to-pay segment of borrowers.
The company said those borrowers were progressing straight through delinquency to default, and that it has seen its recovery strategies gain traction. Borrower adoption of those strategies has been slower than anticipated.
Net charge-offs exclude $19.1 million of loans previously charged off by an unconsolidated private education loan securitization. The company purchased those loans during the quarter after exercising optional clean-up calls.
Delinquencies were 4.2% of loans in repayment at Sept. 30, 2026, up from 4.0% a year earlier. The total allowance for credit losses as a percentage of private education loan exposure was 5.89%, compared with 5.93% a year earlier.
The company cut its full-year 2026 guidance. It said recent developments across its business and the broader macroeconomic environment have influenced its outlook for the fourth quarter and full year, and that it does not expect them to affect the long-term success of its strategy.
| Metric | Prior guidance | Updated guidance |
|---|---|---|
| Diluted earnings per common share | $3.10 to $3.20 | $1.95 to $2.05 |
| Private education loan originations growth | 12% to 14% | 12% to 14% |
| Net charge-offs | $365 million to $385 million | $400 million to $420 million |
| Non-interest expenses | $750 million to $780 million | $750 million to $780 million |
The diluted earnings per share forecast is now $1.95 to $2.05, down from $3.10 to $3.20. The net charge-off forecast is $400 million to $420 million, up from $365 million to $385 million.
The originations growth forecast of 12% to 14% and the non-interest expense forecast of $750 million to $780 million are unchanged.
Non-interest expenses were $221 million, up 22% from a year earlier. The company said the increase was largely attributable to expenses associated with peak season, to capture new volume and customers following PLUS reform.
Compensation and benefits rose to $98.4 million from $83.7 million a year earlier. Other operating expenses rose to $116.2 million from $89.4 million.
Total non-interest income fell to $36.1 million. Gains on sales of loans, net, dropped to $3.7 million from $136.0 million a year earlier.
The company's cost of funds was 4.21%, compared with 4.24% a year earlier. It said the lower cost was due in part to actions taken this year to extend the duration of its fixed-rate funding.
The company repurchased 5.1 million shares of common stock for $132.2 million in the third quarter, under Rule 10b5-1 trading plans. For the first nine months, it repurchased 18.1 million shares for $415.6 million, including an accelerated share repurchase.
As of Sept. 30, 2026, $111 million of capacity remained under the 2026 Share Repurchase Program. The company declared a dividend of $0.13 per common share, unchanged from a year earlier.
The company also entered into a strategic partnership with a leading global investment firm. The initial seasoned portfolio loan sale under that partnership was $143 million of private education loans, including $129 million of principal and $14 million of capitalized interest.
Loans held for investment, net of allowance, were $20.6 billion at Sept. 30, 2026, compared with $20.3 billion at Dec. 31, 2025.
The company will discuss the results on an earnings conference call at 5:30 p.m. ET on Oct. 22, 2026.