They state:
SLM Corp., commonly known as Sallie Mae, reported second quarter core earnings of $260 million or 48 cents per share, beating the Zacks Consensus Estimate of 42 cents. The results also compared favorably with the prior-year core earnings of $211 million or 39 cents per share.
Favorable results at Sallie Mae were primarily driven by an increase in student loan originations [my emphasis], improved credit quality with declines in student loan delinquencies and operating expenses. The positives were partially offset by lower debt repurchase gains.
Another highlight from this barfy report:
We believe that Sallie Mae’s leading position in the student lending market, its cost curtailment initiatives and the federal student loan assets acquisition [my emphasis] augur well. Sallie Mae successfully accomplished the acquisition of $26 billion in securitized federal student loan assets from The Student Loan Corporation, a Citigroup Inc. (NYSE:C) subsidiary, in December 2010. The acquisition expanded Sallie Mae’s customer base by approximately 1.3 million and promises earnings accretion ahead [my emphasis].
In a word, they acquired a bunch of securitized federal student loan assets, so things are looking great for them. What are securitized federal loans? They are asset-backed securitizations. The Federal Family Education Program (FFELP) loans are the most common. Guess what? They are are guaranteed by the U.S. Department of Education ("DOE") at rates ranging from 95%-98%.
If you - Sallie Mae - know you'll get money from the department, even if a borrower defaults, there is no incentive for you to work with borrowers. Who cares? You'll make the money anyway. Go Sallie Mae! Thanks for turning millions of educated Americans into destitute debtors. Way to crush the American dream!
3 comments:
This morning my niece discovered federal student loan money she never applied for had been put into her university account. Guess they're going to get customers one way or another!
I'm sure this is some local glitch, but with all I read about the student loan business, I couldn't help but wonder otherwise.
I am sure that SLM generously contributes to both Dems and Reps; and in this country, that is what really matters.
They do contribute generously to both parties. I have written about that. You can look these things up here: http://www.opensecrets.org/
The for-profit industry was VERY generous and donated 110k to Rep. George Miller recently.
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