Carolyn Lottah

Carolyn Lottah with Bank of America inquired about the potential impact of the postponement of wage garnishment and treasury offset on Sallie Mae's in-school and private student loan performance. She also sought guidance on modeling first-half versus second-half origination growth, considering the estimated $5 billion opportunity from Grad PLUS reforms. Additionally, Lottah questioned the expected volumes for strategic partnerships and loan sales in 2026, seeking context against investor forum numbers, and asked about the impact of the held-for-sale (HFS) book on the balance sheet, its expected size, and its influence on Net Interest Margin (NIM) throughout 2026. Finally, she inquired if excess loan sales in 2025 and 2026 would materially change the seasoning of the portfolio.

Answer

CEO Jon Witter clarified that while many Sallie Mae customers have federal loans, most federal loan customers do not have Sallie Mae private student loans, suggesting a minimal impact from federal policy changes. CFO Pete Graham explained that the incremental PLUS volume for 2026 is expected to be relatively modest, included in current guidance, and will step up measurably over the next two to three years. Graham detailed that the first strategic partnership has a minimum commitment of $2 billion in new originations, with roughly 30% of monthly originations designated for sale, and the HFS book's absolute amount would vary quarterly, peaking in Q4. He noted that while new originations going off-book would cause a slower replenishment, the shift in portfolio seasoning would be at the margins, not a dramatic change.