RESTON, Va. – Sallie Mae, the key player in the troubled student loan market, reported a $104 million loss for the first quarter and said it cannot continue lending at a profit amid the credit crunch.
The $85 billion student loan industry is in turmoil now and no single entity is more important than Sallie Mae, which not only competes with credit unions and banks for borrowers, but also securities and services loans for hundreds of the same credit unions and banks.
Sallie Mae posted a first-quarter net loss attributable to common shareholders of $132.8 million, or 28 cents a share, compared with net income of $107 million, or 26 cents a share, in the same quarter last year.
Observers fear the slowing economy will result in higher losses on student loans. Wednesday's results showed a roughly 20% increase in write-offs of bad loans, looking at loans both on and off the company's balance sheet.
Sallie Mae's shares, which have dropped from a peak of $58 per share last summer, fell $1.18 on Wednesday, or 6.8%, to close at $16.26.
