Sallie Mae posts $36 million loss, cuts full-year earnings outlook
Key Facts
Sallie Mae reported a loss attributable to common shareholders of $36 million in the third quarter of 2026, according to its official earnings presentation, as provisions and expenses rose. The diluted loss per share was $0.19, against expectations for a profit. Before the announcement, Investing had cited analyst estimates for earnings per share of $0.17 and revenue of $457.3 million for the period. The company attributed the loss primarily to "provisions and expenses" associated with new loan growth, according to its earnings release. Sallie Mae and its subsidiaries are not U.S. government agencies and are not sponsored by the U.S. government, according to its filing with the Securities and Exchange Commission.
The earnings presentation showed both main sources of income declining year on year, although their performance differed from the previous quarter. Net interest income totaled $339 million in the third quarter, compared with $373 million in the corresponding period of 2025. It rose, however, from $333 million in the second quarter of 2026. Non-interest income fell to $36 million from $68 million in the previous quarter and $173 million a year earlier. On funding, the company said its cost edged down to 4.21%, compared with 4.24% a year earlier, partly reflecting an extension of the tenor of fixed-rate funding.
Among expense items, provisions for credit losses rose to $214 million in the third quarter, according to the official earnings presentation. The company had recorded provisions of $126 million in the second quarter of the same year. Provisions also exceeded the $179 million recorded in the third quarter of the previous year. Non-interest expenses rose to $221 million from $195 million in the previous quarter. On an annual basis, these expenses increased from $180 million, with both expenses and provisions rising quarter on quarter and year on year.
The increase in costs coincided with a quarterly record for private education loan originations, according to the company. These loans totaled about $3.4 billion in the third quarter of 2026. That represented growth of 15% from the corresponding period of the previous year. In the graduate student segment, originations rose 119% year on year. Sallie Mae said the average of the higher FICO credit score between the borrower and co-signer at approval for new loans was 757, an improvement from the corresponding period.
In portfolio performance, the delinquency rate among loans in repayment rose to 4.2% on September 30, 2026. The company compared that with 3.7% on June 30 of the same year and 4.0% on September 30, 2025. Net loan charge-offs totaled about $90 million in the third quarter, according to the earnings presentation. Meanwhile, the allowance for credit losses as a percentage of private education loan exposure fell to 5.89% from 5.93% a year earlier. Collection pressures had already featured in the second-quarter earnings disclosure, when the company cited the impact of third-party debt settlement practices on loan charge-offs.
For 2026, Sallie Mae now targets diluted earnings per share of between $1.95 and $2.05, according to its updated guidance. That compares with a previous range of $3.10 to $3.20 per share. The company had published that range with its second-quarter results on July 23, 2026, according to its filing with the Securities and Exchange Commission. It also raised its forecast for net loan charge-offs for the year to between $400 million and $420 million, from a previous range of $365 million to $385 million. The company scheduled its third-quarter earnings call for October 22, 2026, at 5:30 p.m. Eastern Time.