- Key Insight: Sallie Mae, the nation's preeminent private student lender, is teaming up with a private equity giant as it prepares for a future in which the federal government is retreating from the student loan industry.
- Supporting Data: KKR plans to buy more than $6 billion in student loans from Sallie Mae over the next three years.
- Expert Quote: "We're excited to work with KKR on this first-of-its-kind deal and look forward to growing this into a new business," said Sallie Mae CEO Jon Witter.
America's largest private student lender is teaming up with the world's biggest private equity firm.
SLM Corp., better known as Sallie Mae, announced Monday that it has entered a multiyear partnership with the private equity giant KKR. Under the deal, KKR will buy more than $6 billion in loans from Sallie Mae, which will continue to service them and collect fees from KKR.
The arrangement is designed to expand Sallie Mae's capacity for originating new loans and serving more students, the lender said.
"We're excited to work with KKR on this first-of-its-kind deal and look forward to growing this into a new business," Sallie Mae CEO Jon Witter said in a prepared statement.
KKR was ranked No. 1 this year on the
Under their new partnership, Sallie Mae plans to sell KKR an "initial seed portfolio" of private education loans, the size of which was not disclosed, followed by $2 billion in additional loans per year for at least three years.
The move bolsters Sallie Mae's capacity to fund loans at a moment when the federal government is poised to scale back its own student loan operations, opening up new opportunities for private lenders.
The One Big Beautiful Bill Act, which President Trump signed on July 4, eliminates Grad PLUS loans for graduate students, phases out President Biden's SAVE repayment plan, and imposes new taxes on university endowments, which schools typically use to provide financial aid, among other measures.
These changes are set to take effect over time, beginning in July 2026. A few weeks after the law was passed,
Last month, during Sallie Mae's third-quarter earnings call, Witter reiterated that expectation.
"As we look ahead, we're optimistic about the impact of recent federal reforms and the opportunities they create for our industry and for Sallie Mae to better serve students and families," the CEO said. "As the leading private student lender, Sallie Mae is well positioned to support them through this transition."
During the same call, Witter hinted at the partnership to come, without naming KKR.
"We view this as a strategic step toward unlocking the value of our attractive customer base, setting the stage for sustainable growth of capital-light fee-based revenues," he said.
Sallie Mae declined to be interviewed for this story, as did KKR. But KKR welcomed the new partnership in a prepared statement.
"We're pleased to partner with Sallie Mae, a market leader with a strong track record of disciplined underwriting and servicing performance," said Avi Korn, the firm's managing director and co-head of asset-based finance. "This transaction exemplifies the opportunities we're seeing across our Asset-Based Finance strategy to deploy long-term, flexible capital in support of high-quality, scaled financial institutions."
