Sallie Mae Swings to a $32.3 Million Loss and Cuts Its Full-Year Earnings Guide as Charge-Offs Rise

Sallie Mae, formally SLM Corporation, reported third-quarter 2026 results on Thursday for the period ended Sept. 30, 2026, swinging to a net loss of $32.3 million, or $0.19 a share, from a profit of $135.9 million, or $0.63 a share, a year earlier, and cutting its full-year diluted earnings guide to $1.95 to $2.05 from $3.10 to $3.20.

Net interest income was $339 million, down from $373 million a year earlier and below the $359.1 million analysts expected - a shortfall of $20.1 million, calculated by TickerGrove from the reported figure and the single expectation figure used for comparison in this article. The company attributed the loss primarily to provision and expenses related to its highest ever year-over-year originations growth, and the quarter's credit and guidance reset, not the lending volume itself, is the story.

Charge-offs rose 17% as a debt-resolution problem lingered

Third-quarter net charge-offs totaled $90.4 million, up 17% from $77.5 million a year earlier, primarily driven 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. The company said its strategies for managing this population have gained traction, however borrower adoption of these strategies has been slower than anticipated. Beyond charge-offs, delinquencies represented 4.2% of loans in repayment at Sept. 30, 2026, up from 4.0% a year earlier, and the total allowance for credit losses as a percentage of private education loan exposure improved to 5.89% from 5.93%.

Provisions and a collapsed loan-sale gain drove the loss

Provisions for credit losses rose 19% to $214 million from $179 million a year earlier. Total non-interest income fell to $36 million from $173 million, as gains on sales of loans dropped to $3.7 million from $136.0 million, while other income rose to $46 million from $32 million. Non-interest expenses totaled $221 million, a 22% increase from a year earlier, largely attributable to expenses associated with peak season to capture new volume and customers following PLUS reform. The company repurchased 5.1 million shares for $132.2 million in the quarter, and $111 million of capacity remained under its 2026 repurchase program at Sept. 30, 2026.

Graduate lending more than doubled as federal limits reshaped demand

Private education loan originations increased 15% to $3.4 billion, the largest single quarter of originations in the company's history, including 119% growth in graduate loan originations during the first academic year following PLUS reform, as changes to federal student loan programs limited how much graduate students can borrow federally. Origination credit quality remained strong, with the average winning FICO at approval of 757, up from the year-ago quarter, and cosigner rates remained strong at 92%. Chief Executive Jonathan Witter said, "We delivered a record peak season, highlighted by the largest single quarter of originations in the Company's history," and said the company is encouraged by the significant growth in graduate student lending following changes to federal student loan programs.

The full-year guide fell on earnings and credit alike

For the full year 2026, the company now expects diluted earnings per common share of $1.95 to $2.05, down from prior guidance of $3.10 to $3.20, and raised its net charge-off expectation to $400 million to $420 million from $365 million to $385 million, per the outlook table in its results release. Two guideposts did not move: private education loan originations growth stays at 12% to 14%, and non-interest expenses stay at $750 million to $780 million. The split is the point of the quarter - the demand engine, reshaped by federal program limits, is producing record volume, while a concentrated credit problem in one borrower segment is costing more, and resolving more slowly, than the company planned.

Shares fell 5% to $21.76 in after-hours trading on Thursday, as reported that evening. What to watch next is whether fourth-quarter charge-offs track the raised full-year range, whether borrower adoption of the remediation strategies accelerates, and whether graduate volume holds after the peak season that produced the record quarter - the tests that decide whether this guide cut is a one-quarter reset or the start of a longer credit repair.