SLM Corporation (NASDAQ:SLM), a financial services company primarily engaged in the student lending business, reported robust financial performance for the fourth quarter of 2025, characterized by significant earnings growth and a strategic shift in its loan portfolio management.
The company achieved GAAP net income attributable to common stock of $229 million in Q4 2025 or 1.12 per diluted share compared to $107 million or $0.50 per share in the year-ago quarter. For the full year 2025, GAAP diluted earnings per share reached $3.46.
Key Performance Metrics
The company maintained high-profitability ratios in Q4 2025, reporting a Return on Assets (ROA) of 3.1% and a Return on Common Equity (ROCE) of 42.2%.
The Net Interest Margin (NIM) stood at 5.21% for the quarter, while the Efficiency Ratio improved to 34.6% from 38.5% in Q4 2024. Funding costs also eased, with the cost of funds at 4.14%, down 17 basis points from the prior year.
Loan Originations and Segment Details
SLM Corporation saw steady demand for private education loans:
- Q4 Originations: Reached $1.0 billion, a 4% increase over Q4 2024.
- Full-Year Originations: Totaled $7.4 billion, up 6% from 2024.
- Credit Quality: New Q4 originations maintained high standards with an average FICO score of 756 and a 92% cosign rate.
Segment Strength
- Graduate student origination volume showed significant growth, increasing 15% for the full year 2025 compared to 2024.
Market Trends and Credit Performance
The quarter was marked by a negative provision for credit losses of $19million, largely driven by the release of provisions following a $1 billion loan sale and the transfer of loans to “held for sale” status. While the percentage of loans delinquent for 30+ days rose to 4.0%, up from 3.7% at year-end 2024, management noted that enhanced collections effectiveness has reduced the progression of early-stage delinquencies into charge-offs. The annualized net charge-off rate for Q4 was 2.42%.
Strategic Shift and Capital Allocation
SLM is evolving its strategy toward Strategic Partnerships, selling younger, in-school loans shortly after funding. This shift is expected to increase the percentage of loans in full principal and interest repayment on the balance sheet, which may cause modest mechanical increases in delinquency and charge-off rates without necessarily indicating weakened credit performance.
In terms of capital management, the company paid a 0.13 per share dividend in Q4 and announced a new $500 million share repurchase program for 2026.
FY26 Guidance
The company issued the following guidance for the full year 2026:
- Diluted Earnings Per Share: $2.70 – $2.80.
- Loan Origination Growth: 12% – 14% year-over-year.
- Net Charge-Offs: Expected between $345 million and $385 million.
- Non-Interest Expenses: Projected at $750 million – $780 million