Higher Student Loan Rates Propel Sallie Mae

RESTON, Va. -- Student loan giant Sallie Mae announced Thursday that second quarter earnings more than doubled, as students rushed to refinance their loans before the July 1 rise of 2% on rates. Net income for the quarter soared by 144% to $724 million, or $1.61 a share. For the first six months of the yea , net income surged 67% to $858 million, or $2.08 a share. Through the first half of 2006, Sallie Mae has originated $10.8 billion in new student loans, up 13% from the first six months of 2005. At the end of the second quarter the company's loan portfolio, most of it student loans, grew to $130 billion, and its customer base to 10 million borrowers. The company, chartered in 1972 to facilitate a secondary market for student loans originated by credit unions and banks, has expanded since its privatization two years ago to a full-service lender, in direct competition with many of the institutions it was created to serve. It is now the biggest originator of student loans in the country.