Student Loan Corp. swung to a third-quarter loss amid writedowns on loans it expects to sell to Citigroup Inc. and SLM Corp. as part of the carve up of the company's assets.

Discover Financial Services is acquiring the company's private student-loan business for $600 million, with SLM buying a $28 billion portfolio of securitized federal student loans and 80%-owner Citi purchasing $8.7 billion of assets.

A ban started July 1 that prevents private lenders from making federal student loans, essentially forcing them to move from originating loans to servicing them.

Student Loan Corp. reported a loss of $539.6 million, or $26.98 a share, compared with prior-year earnings of $54.8 million, or $2.74 a share. The latest period reflects $562.2 million of writedowns on the loans being sold to Sallie Mae and Citi.

Net interest income fell 32% to $96.9 million while provisions for loan losses increased 88% to $72.9 million.

Shares closed Friday at $29.95 and were inactive premarket. The stock is down 36% this year. Discover's bid is $30 per share.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.