Sallie Mae Acquires $27 Billion in Federal Student Loan Assets

Jan 3rd, 2011 @ 6:45 AM by Debbie Dragon

Sallie Mae announced today that they completed a deal last week with the Student Loan Corporation, owned by Citibank, to acquire $27 billion in guaranteed federal student loans as well as other related assets. Negotiations for the deal began back in September between the two companies and were finalized on December 31, 2010.

With the addition of these loans, Sallie Mae adds to its student loan customer base an additional 1.3 million loan holders. The company now oversees over $200 billion in federally-funded student loans and in addition, the company personally backs $36 billion of privately-funded student loans. They are the only financial institution in the country that specializes in serving educational needs to customers.

“We are pleased to welcome our new customers and to bring them our first-class customer care, college saving, and online banking offerings to help them achieve their education and financial goals,” said Albert L. Lord, vice chairman and CEO of Sallie Mae.

Sallie Mae leads other lenders in the industry as the company is able to offer their student loan holders perks like lower interest rates and favorable repayment terms. These terms help new graduates transition into managing and paying off their student loan debt. Their Smart Option Private Student loan is the one most often chosen by banks around the country as well as by the National Education Association Member Benefit’s Corporation.

The news of the deal comes on the heels of the company letting 700 employees go, when they closed one of their call centers back in November. Sallie Mae is currently going through a restructuring process and attributes these layoffs (amongst others) to the changes that took place in student loan lending earlier in 2010 when legislation was passed that shifted funding of federally-backed student loans from private lenders to the government. While other companies were also hit with the change, Sallie Mae took the hardest fall.

Sallie Mae has previously stated that as they move ahead, they will need to lay off a total of around 2,500 employees and close many of their 25 locations, leaving under 10 main branches.