Sallie Mae Posts $32.261 Million Loss and Cuts 2026 EPS Outlook
Key Facts
Sallie Mae reported an accounting net loss of $32.261 million in the third quarter of 2026, compared with net income of $135.850 million in the same period a year earlier, according to the company’s filing with the U.S. Securities and Exchange Commission. The loss attributable to common stock was $35.904 million, or $0.19 per diluted share. Results came as revenue reached $375 million, down from $404 million a year earlier and below analysts’ estimate of $457.32 million. The company cut its 2026 diluted earnings-per-share outlook to a range of $1.95–$2.05, from $3.10–$3.20 previously. At the same time, private education loan originations reached a quarterly record, putting lending growth alongside credit losses and expenses at the forefront of the quarter’s results.
Sallie Mae said the $0.19 per-share loss was mainly tied to credit loss provisions and expenses associated with the highest year-over-year growth in loan originations in the company’s history. Provisions totaled $213.675 million in the third quarter, compared with $179.462 million a year earlier. Private education loan originations reached $3.4 billion, up 15% year over year, the largest quarterly volume in the company’s history. Graduate loan originations also rose 119%, following changes to the federal PLUS loan program. The chief executive said the company “delivered a record peak season,” noting that the quarter was the largest in its history for loan originations.
On credit quality, net charge-offs were $90 million in the quarter, compared with $78 million in the same period of 2025. The company attributed about $14 million of the annual increase to what it described as non-compliant practices by third-party debt settlement firms. Loans 30 or more days delinquent as a share of loans in repayment were 4.2% on September 30, 2026, compared with 4.0% a year earlier. The company raised its 2026 net charge-off outlook to $400–$420 million, from a previous range of $365 million to $385 million. It kept its private education loan origination growth outlook at 12%–14% and non-interest expense outlook at $750–$780 million.
The chief executive attributed the earnings outlook cut mainly to the decision not to complete a loan sale that had been planned for this year. He said the potential premium from the sale was no longer acceptable amid higher interest rates and market volatility, and that the company preferred to retain the loans rather than complete the transaction under those conditions. He added that meaningful loan sales would be part of the company’s plan for 2027 and beyond. On funding, management announced an initial 3-year strategic partnership with Sixth Street. Sixth Street committed to buying at least $1.5 billion annually of newly originated private education loans, with the first year to include a seed portfolio of $600 million in existing loans.
Management said the partnerships expand Sallie Mae’s capacity to originate loans and provide flexible funding, along with recurring servicing and management fees. This comes as net interest margin rose to 4.85% in the third quarter from 4.75% in the previous quarter, while the cost of funds fell to 4.21% from 4.24% a year earlier. These indicators showed an improvement in margin and funding costs, alongside higher provisions and lower revenue year over year. Shares closed the regular session on October 22 down 4.49%, then fell 3.9% in after-hours trading. In morning trading on October 23, the stock dropped 9.2% to a session low of $19.52 after the results and outlook cut were announced.
The company had announced that its third-quarter results call would be held on October 22, 2026, at 5:30 p.m. Eastern Time, with a live audio webcast and investor slides available. During the call, management said meaningful loan sales were included in its plan for 2027 and beyond. Under its announced terms, the partnership with Sixth Street is initially set to run for 3 years, with an annual commitment to buy new loans and a seed portfolio in its first year. The revised 2026 outlook combines a lower earnings-per-share range with a higher net charge-off range. The company left its estimates for loan origination growth and non-interest expenses unchanged.