We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sallie Mae cuts 2026 EPS guidance to $1.95-$2.05 from $3.10-$3.20 and raises charge-off estimates.
Lower loan-sale gains, rising delinquencies and higher net charge-offs weigh on SLM's earnings outlook.
SLM's loan originations grew 9.6%; graduate loan originations surged 64.7% in the first nine months of 2026.
Sallie Mae (SLM - Free Report) has significantly lowered its 2026 earnings guidance while raising its net charge-off expectations, reflecting evolving credit conditions and changes in its loan-sale strategy.
SLM anticipates earnings per share of $1.95-$2.05 for 2026, down from the previously stated $3.10-$3.20. The lower outlook indicates a 36.5% reduction at the midpoint. Meanwhile, SLM raised its 2026 net charge-off forecast to $400-$420 million from $365-$385 million.
What's Behind SLM's Revised Outlook?
The reduced earnings outlook primarily reflects management's decision to forgo an additional planned whole-loan sale in 2026 amid unfavorable market conditions. During the first nine months of 2026, Sallie Mae sold $4.07 billion in private education loans compared with $3.94 billion in the year-ago period. However, gains on loan sales declined to $165 million from $324 million. While the decision to retain loans limits near-term gains, it could support recurring interest income and improve long-term profitability.
Credit-related challenges have also intensified. During the first nine months of 2026, net charge-offs increased 17.7% year over year to $292 million from $248 million. Delinquencies increased to 4.2% of loans in repayment as of Sept. 30, 2026, from 4% a year earlier.
SLM's profitability also weakened. During the first nine months of 2026, GAAP earnings declined to $1.68 per share from $2.35 in the prior-year period. Net income attributable to common stock decreased to $323 million from $500 million, while net interest income fell 6.8% to $1.05 billion. Lower gains on loan sales and reduced net interest income weighed on earnings.
What Lies Ahead for SLM Stock?
Despite near-term challenges, Sallie Mae's lending business continues to demonstrate growth. The company's expanding lending franchise, strategic partnerships and disciplined capital management provide opportunities for sustained growth.
During the first nine months of 2026, private education loan originations increased 9.6% year over year to $7.01 billion from $6.39 billion. Graduate loan originations surged 64.7% to $957 million, reflecting growing demand for private education financing following federal student loan reforms. The company reaffirmed its private education loan origination growth outlook of 12-14% for 2026.
However, elevated charge-offs, lower gains on loan sales and declining profitability remain concerning. For investors, the effectiveness of SLM's revised recovery strategies, stabilization of credit performance and conversion of robust origination growth into sustainable earnings will be key factors to monitor.
SLM Price Performance & Zacks Rank
The company’s shares have lost 20.9% in the past six months against the industry’s 3.5% rise.
How SLM Stacks Up Against Its Peers in Terms of Asset Quality
Capital One Financial (COF - Free Report) : Asset quality remains a key risk for COF because of its significant exposure to credit card and auto lending. During the first nine months of 2026, net charge-offs increased 14% year over year to $10.61 billion from $9.27 billion. However, COF’s net charge-off rate declined 12 basis points (bps) to 3.13%. Provision for credit losses fell 40% year over year to $9.97 billion. As of Sept. 30, 2026, the allowance for credit losses, as a percentage of loans held for investment, stood at 4.92%, down 29 bps year over year.
Ally Financial (ALLY - Free Report) : Asset quality remains a central risk for ALLY’s earnings profile, given its substantial exposure to auto lending. During the first nine months of 2026, net charge-offs declined 2.7% year over year to $1.23 billion from $1.27 billion. However, provision for credit losses increased 44% year over year to $1.43 billion from $990 million. As of Sept. 30, 2026, ALLY’s allowance for loan losses stood at $3.68 billion, up 6.4% year over year.
View the Zacks #1 Rank List
Image: Bigstock
SLM Cuts 2026 EPS Outlook, Raises Charge-Off Forecast: What's Ahead?
Key Takeaways
Sallie Mae (SLM - Free Report) has significantly lowered its 2026 earnings guidance while raising its net charge-off expectations, reflecting evolving credit conditions and changes in its loan-sale strategy.
SLM anticipates earnings per share of $1.95-$2.05 for 2026, down from the previously stated $3.10-$3.20. The lower outlook indicates a 36.5% reduction at the midpoint. Meanwhile, SLM raised its 2026 net charge-off forecast to $400-$420 million from $365-$385 million.
What's Behind SLM's Revised Outlook?
The reduced earnings outlook primarily reflects management's decision to forgo an additional planned whole-loan sale in 2026 amid unfavorable market conditions. During the first nine months of 2026, Sallie Mae sold $4.07 billion in private education loans compared with $3.94 billion in the year-ago period. However, gains on loan sales declined to $165 million from $324 million. While the decision to retain loans limits near-term gains, it could support recurring interest income and improve long-term profitability.
Credit-related challenges have also intensified. During the first nine months of 2026, net charge-offs increased 17.7% year over year to $292 million from $248 million. Delinquencies increased to 4.2% of loans in repayment as of Sept. 30, 2026, from 4% a year earlier.
SLM's profitability also weakened. During the first nine months of 2026, GAAP earnings declined to $1.68 per share from $2.35 in the prior-year period. Net income attributable to common stock decreased to $323 million from $500 million, while net interest income fell 6.8% to $1.05 billion. Lower gains on loan sales and reduced net interest income weighed on earnings.
What Lies Ahead for SLM Stock?
Despite near-term challenges, Sallie Mae's lending business continues to demonstrate growth. The company's expanding lending franchise, strategic partnerships and disciplined capital management provide opportunities for sustained growth.
During the first nine months of 2026, private education loan originations increased 9.6% year over year to $7.01 billion from $6.39 billion. Graduate loan originations surged 64.7% to $957 million, reflecting growing demand for private education financing following federal student loan reforms. The company reaffirmed its private education loan origination growth outlook of 12-14% for 2026.
However, elevated charge-offs, lower gains on loan sales and declining profitability remain concerning. For investors, the effectiveness of SLM's revised recovery strategies, stabilization of credit performance and conversion of robust origination growth into sustainable earnings will be key factors to monitor.
SLM Price Performance & Zacks Rank
The company’s shares have lost 20.9% in the past six months against the industry’s 3.5% rise.
Image Source: Zacks Investment Research
Currently, SLM carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How SLM Stacks Up Against Its Peers in Terms of Asset Quality
Capital One Financial (COF - Free Report) : Asset quality remains a key risk for COF because of its significant exposure to credit card and auto lending. During the first nine months of 2026, net charge-offs increased 14% year over year to $10.61 billion from $9.27 billion. However, COF’s net charge-off rate declined 12 basis points (bps) to 3.13%. Provision for credit losses fell 40% year over year to $9.97 billion. As of Sept. 30, 2026, the allowance for credit losses, as a percentage of loans held for investment, stood at 4.92%, down 29 bps year over year.
Ally Financial (ALLY - Free Report) : Asset quality remains a central risk for ALLY’s earnings profile, given its substantial exposure to auto lending. During the first nine months of 2026, net charge-offs declined 2.7% year over year to $1.23 billion from $1.27 billion. However, provision for credit losses increased 44% year over year to $1.43 billion from $990 million. As of Sept. 30, 2026, ALLY’s allowance for loan losses stood at $3.68 billion, up 6.4% year over year.