Sallie Mae Posts $35.904 Million Loss and Cuts 2026 Earnings Outlook
Key Facts
On October 22, Sallie Mae reported results for the third quarter ended September 30, 2026, posting a net loss attributable to common stock of $35.904 million. The company said diluted loss was $0.19 per share, compared with net income of $131.856 million and diluted earnings of $0.63 per share in the same period a year earlier. Investing.com reported revenue of $375 million, below analysts’ estimates of $457.32 million. The result also missed analysts’ estimate of earnings of $0.17 per share. The results announcement coincided with the company cutting its annual earnings outlook and raising its charge-off estimate, making its new guidance the focus of investor reaction.
Net interest income fell to $339 million in the third quarter, compared with $373 million a year earlier. At the same time, provisions for credit losses rose to $214 million from $179 million in the year-ago period. Provisions were $126 million in the second quarter of 2026, meaning they also increased in the latest quarter compared with the previous period. The company said net charge-offs reached $90 million, up from their level a year earlier. It attributed the increase primarily to misaligned practices by a third-party debt servicer and slower borrower adoption of its strategies.
On the lending side, the company originated $3.4 billion in private education loans, up 15% from the year-ago quarter. Graduate loan originations grew 119%, according to the company’s statement. But higher lending volume did not prevent non-interest expenses from rising to $221 million, up 22% year over year. The company attributed much of the increase to peak-season expenses as it sought to attract greater loan and customer volume following the repair of the PLUS program. Net gains on loan sales also fell to $3.65 million from $135.958 million a year earlier.
Sallie Mae cut its 2026 diluted earnings-per-share outlook to a range of $1.95–$2.05, from a previous estimate of $3.10–$3.20. In turn, it raised its net charge-off outlook to $400–$420 million, compared with a previous range of $365–$385 million. The company kept its outlook for private education loan originations growth at 12%–14% for the year. Its non-interest expense outlook also remained at $750–$780 million. The revision highlights the growing expected pressure from charge-offs on annual earnings, alongside the company’s continued aim to grow lending.
Credit indicators were mixed at the end of September: delinquencies stood at 4.2% of loans in repayment, compared with 4.0% a year earlier. By contrast, the allowance for losses as a percentage of private education loan exposure improved to 5.89%, from 5.93% in the year-ago period. The company repurchased 5.1 million shares for $132.2 million during the quarter. It also announced a strategic partnership that included an initial sale of an existing $143 million private education loan portfolio. The portfolio included $129 million in loan principal and $14 million in capitalized interest.
In the market, the stock closed down 4.49% on October 22, then fell 3.9% in after-hours trading following the results and annual guidance. The after-hours move came after the company reported a quarterly loss and cut its full-year earnings-per-share outlook. An earlier EL7 report on June 10 had covered concerns about the company’s credit quality and debt charge-offs. Sallie Mae scheduled its third-quarter earnings conference call for October 22 at 5:30 p.m. Eastern time. The quarterly results, credit indicators and annual guidance were among the main topics the company presented in its announcement.