Earnings
Sallie Mae swings to a third-quarter loss and cuts its 2026 profit forecast by more than a third
Record student-loan originations brought higher provisions and costs, while gains from loan sales nearly disappeared.
HedgeWeekly News Desk ·
Sallie Mae posted a net loss of $32.3 million, or 19 cents a diluted share, for the third quarter, against net income of $135.9 million, or 63 cents, a year earlier, according to results the private student lender filed with the SEC on Thursday. The company lowered its full-year 2026 diluted earnings guidance to $1.95 to $2.05 a share from $3.10 to $3.20.
The loss came in what the lender called a record peak season. Private education loan originations rose 15% to $3.4 billion, and graduate originations more than doubled, up 119%, in the first academic year after changes to the federal PLUS loan program. Sallie Mae said the cost of chasing that volume pushed its provision for credit losses to $213.7 million from $179.5 million and lifted non-interest expenses 22% to $220.7 million.
Income from selling loans also dried up. Gains on loan sales fell to $3.7 million from $136.0 million a year earlier, and total non-interest income dropped to $36.1 million from $172.7 million. Net interest income slipped to $339.3 million from $373.0 million. Net charge-offs rose to $90.4 million from $77.5 million, which the company partly linked to third-party debt resolution practices, and delinquencies reached 4.2% of loans in repayment, up from 4.0%.
For investors, the guidance cut matters more than the quarterly loss. Sallie Mae also raised its 2026 net charge-off forecast to $400 million to $420 million from $365 million to $385 million, citing recent developments in its business and the wider economy without detailing them in the release. It kept its 12% to 14% origination growth target and repurchased $132.2 million of stock in the quarter, leaving $111 million under its 2026 programme. The next things to watch are whether credit costs keep rising on the expanded graduate book and whether loan sales to partners resume.