SLM Holding Corp. is expected to announce a high-tech delivery system Monday designed finally to make it a big player in the student loan origination market.

The holding company for Sallie Mae is going after its competition, particularly the government's direct-lending program.

SLM executive vice president Paul Carey said Thursday that the company's new system will reduce the time it takes to process a loan to a matter of minutes, and will let schools track loan approvals through the Internet.

Those technological advances, Mr. Carey said, are designed to lure colleges away from the federal direct-loan program and from any private- sector lenders that are not Sallie Mae partners.

"The panacea is for the company to originate loans itself, which it is quietly doing now and which it should significantly ramp up in 1999," said Thomas O'Donnell, who covers the company for Salomon Smith Barney in New York. "Sallie Mae's primary aim is to turn schools away from the government's direct-loan program."

SLM was created in August to be the parent of Sallie Mae, the secondary market maker for student loans. Once a government-sponsored enterprise, the company was privatized Aug. 1, 1997.

Monday's planned announcement is the company's first big step into loan originations since chief executive officer Albert Lord won control of the company more than a year ago and pledged to "turn up the heat" on competitors.

Mr. Carey would not say what share of the more than $30 billion of annual student loans Sallie Mae aims to control. It has bought $6 billion of student loans this year, but its own underwriting has been "nominal," he said.

The new product "is focused on taking away volume from the direct- lending program and from our competitors, not from our partners," Mr. Carey said.

That point is critical because Sallie Mae's bread and butter remains buying packages of student loans from the banks that underwrite them. But banks have moved into that arena as well, stealing some of Sallie Mae's securitization business.

John E. Dean, special counsel to the Consumer Bankers Association on student lending issues, said Sallie Mae's new system is "potentially disruptive to their existing relationships." But he added: "Banks are not going to see this as the end of the world."

The stakes are high for SLM.

Its stock price is down 13% on the year, mostly due to uncertainty over the Higher Education Amendments of 1998. Before a compromise was reached among Congress, the White House, and the banking industry, a cut in the rates that banks could charge on student loans had threatened a mass exodus from the student lending program. But legislation signed Oct. 7 by President Clinton gives a subsidy to lenders that is expected to keep most of them in the market.

SLM has other problems, however. It sold no student loans during the third quarter as investors shied away from asset-based securities. Its third-quarter earnings, announced last Friday, were off 24% from the year earlier.

But Salomon's Mr. O'Donnell said he is cautiously optimistic about SLM. He has rated the company a "speculative buy."

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