Lower Loan Losses Boost Sallie Mae

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RESTON, Va. – Student loan giant Sallie Mae reported strong fourth quarter and fiscal year financials yesterday, fueled by lower loan losses, loan sale gains, debt repurchase gains and restructuring costs.

The company reported a 45% surge in fourth quarter net income to $449 million, creating a 66% rise in annual earnings to $530 million.

During the fourth quarter, Sallie Mae, the biggest player in the secondary market for student loans, repurchased $1.3 billion of its own debt with gains of $118 million realized. Debt repurchased in 2010 totaled $4.9 billion and generated gains of $317 million.

With the elimination of the federally guaranteed loan program Sallie Mae continued to grow its private loan business, increasing originations of private education loans by 8% in the fourth quarter to $413 million. Still, origination of private loans was down 28% for the full year to $2.3 billion.

Private loan delinquencies declined to 10.6% in the 2010 fourth quarter from 12.1% in the year-ago quarter. Charge-offs declined to 4.8% in the fourth quarter 2010, from 5.1% in the same quarter last year.

The company now services 3.3 million accounts under the servicing contract with the U.S. Department of Education. During 2010, the company began to provide administrative services to five new states and now administers $34.5 billion in 529 college savings plans on behalf of 16 states.

 

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