RESTON, Va. – Student loan giant Sallie Mae reported a $116 million profit yesterday for its third quarter, driven by improved credit markets and a $74 million gain on the repurchase of $1.4 billion of unsecured debt during the period.
The third quarter net compares to a loss of $186 million for the same period last year.
Stabilization in credit markets helped Sallie Mae originate $6.9 billion in federal student loans in the latest quarter, up 25% from a year ago.
But originations of higher-risk private education loans not backed by the government plunged to $893 million from $2.1 billion, a drop Sallie Mae called "significant but not unexpected." Tightened underwriting standards and reduced loan demand amid the recession have severely eroded the private student loan market.
For the first three quarters of the year the nation’s largest provider of student loans reported a $79.8 million loss, compared to an $80.5 million loss for the first nine months last year.
