Sallie Mae Cuts 2026 Earnings Outlook After Record Originations

The Tip Desk · October 27, 2026 · 3 min read

The lender booked a $0.19 a-share loss as it posted $3.4 billion of originations and lowered full-year diluted earnings guidance to $1.95 to $2.05.

Sallie Mae (SLM), the private student lender, reported a GAAP net loss of $32 million and a diluted loss per common share of $0.19 for the three months ended Sept. 30, 2026, after posting $3.4 billion of Private Education Loan originations, 15% above the year-ago quarter.

That originations pace was the largest single quarter in the company’s history and marked a sharp step-up from 4.5% year-over-year growth in the second quarter. Graduate Loan originations rose 119% in the first academic year after PLUS reform. Chief executive Jonathan Witter said the company delivered a record peak season and that origination credit quality remained strong, with the average winning FICO at approval of 757 and cosigner rates at 92%.

The earnings swing reflected higher provisions, peak-season spending and a sharp decline in non-interest income. Provisions for credit losses rose to $214 million from $126 million in the prior quarter. Net interest income was $339 million. Non-interest expenses totaled $221 million, a 22% increase from the year-ago quarter, which the company attributed largely to costs of capturing new volume and customers after PLUS reform. Total non-interest income fell to $36 million from $173 million a year earlier, as gains on sales of loans dropped to $3.7 million from $136 million and securities posted a $14.0 million loss.

Net charge-offs were $90 million, up from $77.5 million a year earlier. The company said the increase was driven primarily by misaligned third-party debt resolution practices affecting a small, high-ability-to-pay segment of borrowers progressing straight through delinquency to default, and related shifts to recovery strategies. It said strategies for that population had gained traction, though borrower adoption had been slower than anticipated. Delinquencies were 4.2% of loans in repayment. The allowance as a percentage of Private Education Loan exposure improved to 5.89% from 5.93% a year earlier.

Cost of funds was 4.21%, compared with 4.24% in the year-ago quarter, which the company said supported earnings through a lower cost of funds, in part from actions to extend the duration of fixed-rate funding.

The company entered a new strategic partnership with a leading global investment firm that included an initial seasoned portfolio loan sale of $143 million of Private Education Loans, including $129 million of principal and $14 million of capitalized interest. It repurchased 5.1 million shares for $132.2 million in the quarter. For the nine months ended Sept. 30, 2026, it had repurchased 18.1 million shares for $415.6 million, leaving $111 million of capacity under the 2026 Share Repurchase Program.

For full-year 2026, the company cut diluted earnings per common share guidance to $1.95 to $2.05 from $3.10 to $3.20 and raised net charge-off guidance to $400 to $420 million from $365 to $385 million. It left Private Education Loan originations growth at 12% to 14% and non-interest expenses at $750 to $780 million. The company said recent developments across the business and the broader macroeconomic environment had influenced expectations for fourth-quarter and full-year performance, and that it did not expect those items to impact the long-term success of its strategy.