Sallie Mae CEO Expects Charge Offs To Peak This Year
03 Juni 2009 - 4:13PM
Dow Jones News
SLM Corp. (SLM) said Wednesday it expects student-loan
charge-offs to peak this year, although the company expects
charge-offs to remain at "very high levels" going into next
year.
Speaking at the Keefe Bruyette & Woods Diversified Financial
Services Conference, Sallie Mae Chief Executive Albert Lord said
that while it's difficult to forecast losses, the company's
estimates are based on an evaluation of the number of loans
entering repayment over the next few years.
"Even with charge-off levels where they are, we're able to see
the edge of the forest and we expect that by mid-2010, those
[charge-off] numbers will start to come down," Lord said.
In the first quarter, Sallie Mae reported $203 million for
private education loan losses, and charge-offs of $139 million of
private education loans.
The charge-off rate on Sallie Mae's non-traditional loans, which
are mostly made to adult-education students, is seven times greater
than those on traditional loans, the company said Wednesday.
"Traditional loans have held up very, very well," Lord said.
"Their [charge-off] numbers are up, but still below all other
consumer-asset classes."
Sallie Mae shares are off 30% this year, and closed at $6.16 on
Tuesday. The student-loan industry has been targeted as an area of
reform by President Barack Obama, who wants more loans to come from
the federal government.
-By Joseph Checkler; Dow Jones Newswires; 201-938-4297;
joseph.checkler@dowjones.com