Q2 2025 SLM Corp Earnings Call

Second quarter 2025 earnings conference call at this time, all participants have been placed on a listen only mode and the floor will be open for your questions. Following the prepared remarks.

I'd like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star two.

So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.

Lastly, if you should require operator assistance, please press star zero.

Speaker Change: I would now like to turn the call over to Kate delay see senior director and head of Investor Relations. Please go ahead.

Kate Delay: Thank you Kelly good evening and welcome to Sallie Mae's second quarter 2025 earnings call. It is my pleasure to be here today with John Winter, our CEO, Pete Graham, our CFO and Louis Lubrano, managing Vice President of strategic Finance.

Kate Delay: After their prepared remarks, we will open the call for questions.

Before we begin keep in mind, our discussion will contain predictions expectations and forward looking statements.

Kate Delay: Actual results in the future may be materially different from those discussed here due to a variety of factors.

Kate Delay: Listeners should refer to the discussion of those factors in the company's Form 10-Q, and other filings with SEC.

Kate Delay: For Sallie Mae those factors include among others results of operations financial conditions, and our cash flows as well as any potential impacts various external factors on our business we.

Kate Delay: We undertake no obligation to update or revise any predictions expectations are forward looking statements to reflect events or circumstances that occur. After today Thursday July 21 2025.

John Winter: Thank you and now I'll turn the call over to John.

John Winter: Thank you Kate and Chloe good evening, everyone. Thank you for joining us to discuss Sallie Mae's second quarter of 2025 results.

John Winter: I hope you'll take away three key messages today first we delivered solid results in the second quarter and first half of the year.

John Winter: Second recognizing ongoing economic certainties, we believe we have momentum going into the second half of the year.

Unknown Attendee: Welcome to the Sallie Mae second quarter 2025 earnings conference call. At this time, all participants have been placed on a listen only mode and the floor will be open for your questions following the prepared remarks. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two.

John Winter: Third we're optimistic about the long term outlook for private student lending, particularly in light of the recently passed federal student loan reforms.

John Winter: Let's begin with the quarter's results.

For Sally Mae those factors include among others, results of operations, Financial conditions and or cash flows as well as any potential impacts of various external factors on our business.

John Winter: GAAP diluted EPS in the second quarter was 32 cents per share.

John Winter: Loan originations for the second quarter were 686 million roughly in line with the same period last year and slightly below our expectations.

We undertake no obligation to update or revise, any predictions, expectations, or forward-looking statements, to reflect events or circumstances that occur after today, Thursday, July 24th 2025.

John: Thank you. And now I'll turn the call over to John.

John Winter: The second quarter typically represents our lowest origination volume less than 10% of the annual total and includes a higher concentration of non traditional borrowers and programs.

Unknown Attendee: So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.

John: Thank you. Kate and Chloe, good evening everyone. Thank you for joining us to discuss Sally May's second quarter of 2025 results.

Unknown Attendee: Lastly, if you should require operator assistance, please press star zero.

John Winter: A handful of our non traditional school partners faced unique challenges such as short term enrollment caps and disbursement volume shifts to later in the year. We do not expect these factors to have a similar or a significant impact in future quarters.

I hope you'll take away 3 key messages today. First, we delivered solid results in the second quarter and first half of the year.

Kate deLacy: I would now like to turn the call over to Kate deLacy, Senior Director and Head of Investor Relations. Please go ahead. Thank you, Chloe.

John: Second, recognizing ongoing economic certainties. We believe we have momentum going into the second half of the year.

Kate deLacy: Good evening and welcome to Sallie Mae's second quarter 2025 earnings call.

Kate deLacy: It is my pleasure to be here today with John Witter, our CEO, Pete Graham, our CFO, and Melissa Bronaugh, Managing Vice President of Strategic Finance.

John Winter: Looking forward conversations with school partners indicate they are navigating considerable uncertainty as they evaluate impacts from federal lending reforms reductions in grant funding and other recent policy developments.

John: And third, we're optimistic about the long-term outlook for private student, lending, particularly in light of the recently, passed federal student loan reforms

Let's begin with the quarters results.

Kate deLacy: After their prepared remarks, we will open the call for questions. Before we begin, keep in mind our discussion will contain predictions, expectations, and forward-looking statements. Actual results in the future may be materially different from those discussed here due to a variety of factors. Listeners should refer to the discussion of those factors in the company's form 10-Q and other filings with the executive. For Sally Mae, those factors include, among others, results of operations, financial conditions and or cash flows, as well as any potential impacts of various external factors on our business.

John: Gap, diluted EPS in the second quarter was 32 cents per share.

John Winter: While peak volumes are beginning to build these factors may be causing a delayed peak season similar to what we experienced last year. We will continue to monitor this actively and optimize our marketing strategies accordingly.

Loan originations, for the second quarter were 686 million roughly in line with the same period last year year and slightly below our expectations.

John Winter: The credit quality of originations continues to be robust with incremental improvement compared to the second quarter of 2024.

John: The second quarter typically represents our lowest origination volume, less than 10% of the annual total and includes a higher concentration of non-traditional borrowers and programs.

John Winter: Our cosigner rate for the second quarter was 84% up from 80% in the year ago quarter and average FICO at approval rose slightly to $7 54 from $7 52.

Kate deLacy: We undertake no obligation to update or revise any predictions, expectations, or forward-looking statements to reflect events or circumstances that occur after today, Thursday, July 24, 2025.

John: A handful of our non-traditional. School Partners face unique challenges such as short-term enrollment caps and dispersement volume shifts to later in the year.

John: We do not expect these factors to have a similarly significant impact in future quarters.

John Witter: Thank you, and now I'll turn the call over to John. Thank you, Kate and Chloe. Good evening, everyone. Thank you for joining us to discuss Sally May's second quarter of 2025 results. I hope you'll take away three key messages today. First, we delivered solid results in the second quarter and first half of the year. Second, recognizing ongoing economic certainties, we believe we have momentum going into the second half of the year. And third, we're optimistic about the long-term outlook for private student lending, particularly in light of the recently passed federal student loan reform.

John Winter: These indicators reflect continued discipline in our underwriting standards and borrower selection.

John Winter: For the second quarter of 'twenty five we continued our capital return strategy repurchasing two 4 million shares at an average price of $29 42 per share.

John: Looking forward conversations with school. Partners indicate they are navigating considerable uncertainty. As they evaluate, impacts from federal, lending, reforms reductions in grant funding and other recent policy developments.

John Winter: We have reduced the shares outstanding since we began this strategy in 2020 by over 53% at an average price of $16 43.

John: While Peak volumes are beginning to build these factors may be causing a delayed peak season similar to what we experienced last year. We will continue to monitor this actively and optimize our marketing strategies accordingly.

John Winter: We expect to continue programmatically and strategically you're buying back stock throughout the year.

Pete Graham: Before I hand, the call over to Pete I am pleased to share further.

John Witter: Let's begin with the quarter's results. Gap diluted EPS in the second quarter was $0.32 per share. Loan Originations for the second quarter were $686 million, roughly in line with the same period last year and slightly below our expectations. The second quarter typically represents our lowest origination volume, less than 10% of the annual total, and includes a higher concentration of non-traditional borrowers and programs. A handful of our nontraditional school partners faced unique challenges such as short-term enrollment caps and disbursement volume shifts to later in the year. We do not expect these factors to have a similarly significant impact in future quarters.

Pete Graham: This week, we agreed to indicative pricing on a transaction for the sale of $1 8 billion of private education loans. We are encouraged by the price that has been agreed on which is in line with our expectations for the year.

John: The credit quality of originations continues to be robust with incremental Improvement compared to the second quarter of 2024. Our cosigner rate for the second quarter was 84% up from 80% in the year ago quarter and average FICO at approval Rose slightly to 754 from 752.

Pete Graham: As we look ahead to the second half of the year, we will continue to take a disciplined approach to managing balance sheet capacity.

John: These indicators reflect continued discipline in our underwriting, standards and borrower selection.

Pete Graham: Clearly as we prepare for anticipated plus reform.

Pete Graham: And we will remain open to opportunities that support our strategic and financial objectives.

For the second quarter of 25, we can continue our Capital return strategy. Repurchasing 2.4 million shares at an average price of 29.42 cents per share.

Pete Graham: We continue to expect year over year growth in our private student loan portfolio with any additional loan sales evaluated in the context of our broader strategy.

John: We have reduced the shares outstanding. Since we began this strategy in 2020, by over 53%, at an average price of $16.43.

Pete Graham: Involving balance sheet priorities.

John Witter: Looking forward, conversations with school partners indicate they are navigating considerable uncertainty as they evaluate impacts from federal lending reforms, reductions in grant funding, and other recent policy developments. While peak volumes are beginning to build, these factors may be causing a delayed peak season similar to what we experienced last year. We will continue to monitor this actively and optimize our marketing strategies accordingly. The credit quality of Originations continues to be robust, with incremental improvement compared to the second quarter of 2024. Our cosigner rate for the second quarter was 84%, up from 80% in the year-ago quarter, and average FICO at approval rose slightly to $754 from $752.

John: We expect to continue programmatically and strategically buying back stock throughout the year.

Pete Graham: Pete will now take you through some of the additional finance financial highlights of the quarter.

Pete Graham: Yeah.

Thank you Joe good evening everyone.

Speaker Change: Let's continue with a discussion of key drivers of earnings.

John: Before I hand, the call over to Pete, I'm pleased to share that earlier this week. We agreed to indicative pricing on a transaction for the sale of 1.8 billion of private Education Loans.

Pete Graham: For the second quarter of 2023.

Pete Graham: $377 million of net interest income.

Speaker Change: We are encouraged by the price that has been agreed on which is in line with our expectations for the year.

Pete Graham: This is up $5 million from the prior year.

Pete: As we look ahead to the second half of the year.

Pete Graham: Our net interest margin was 531% for the quarter four basis points ahead of the prior quarter.

Speaker Change: We will continue to take a diss.

Pete Graham: This expansion of net interest income is in part due to higher average balances across the portfolio over the first half of the year.

Speaker Change: Approach to managing balance sheet capacity, particularly as we prepare for anticipated, plus reform and will remain open to opportunities that support our strategic and financial objectives.

Pete Graham: These changes to the overall mix of total loss et cetera, Belgium.

Pete Graham: We continue to believe over the long term the low to mid 5% range sort of appropriate inventory.

Pete Graham: Our provision for credit losses was $149 million in the second quarter.

Speaker Change: We continue to expect year-over-year growth and our private students loan portfolio with any additional loan sales evaluated in the context of our broader strategy and of and evolving balance sheet priorities.

John Witter: These indicators reflect continued discipline in our underwriting standards and borrower selection. For the second quarter of 25, we continued our capital return strategy, repurchasing 2.4 million shares at an average price of $29.42 per share. We have reduced the shares outstanding since we began this strategy in 2020 by over 53% at an average price of $16.43. We expect to continue programmatically and strategically buying back stock throughout the year.

From $17 million in the prior year.

Pete will now take you through some of the additional finan financial highlights of the quarter Pete.

Pete Graham: It's worth noting the prior year figure included a $103 million reserve release related to a loan sale that occurred in the second quarter last year.

Pete: Thank you, John. Good evening, everyone.

Pete: Let's continue with the discussion of key drivers of earnings.

Pete Graham: The year over year increase can be attributed to a more cautious macroeconomic outlook.

Pete: For the second quarter of 2025, we are in 377 million of net interest income.

Pete: This is up 5 million dollars from the prior year quarter.

Pete Graham: As well as an increase in the weighted average life portfolio over the prior year.

Pete Graham: Despite the higher provision or allowance as a percentage of private education loan exposure remains stable at 595% slightly below the prior quarter's $5 nine 7%.

Pete: Our net interest margin was 5.31% for the quarter 4 basis points ahead of the prior quarter.

This expansion of net, interest income is in part due to higher average. Balances across the portfolio, over the first half of the year.

John Witter: Before I hand the call over to Pete, I'm pleased to share that earlier this week, we agreed to indicative pricing on a transaction for the sale of $1.8 billion of private education loans. We are encouraged by the price that has been agreed on, which is in line with our expectations for the year. As we look ahead to the second half of the year, we will continue to take a disciplined approach to managing balance sheet capacity, particularly as we prepare for anticipated plus reform, and will remain open to opportunities that support our strategic and financial objectives.

Pete: Changes to the overall mix of total assets on our balance sheet.

Pete Graham: Just five basis points above the year ago quarter.

Pete Graham: The Moody's macroeconomic forecasts that are a key input reserve modeling of softened quarter over quarter.

Pete: We continue to believe over the long term, that low to mid 5% range. It's an appropriate new Target,

Pete Graham: And accordingly, we are maintaining a cautious outlook for the remainder of the year.

Pete: Our provision for credit losses was 149 million in the second quarter.

Pete: Up from 17 million in the prior year quarter.

Pete Graham: Closely monitoring forecast revisions that could influence our assumptions of this.

Pete Graham: Private education loans delinquent 30 days or more were three 5% of loans in repayment of.

Pete: It's worth noting that the prior year figure included, a 103 million Reserve release related to a loan sale that occurred from the second quarter of last year.

Pete Graham: The decrease from the three 6% at the end of the first quarter of 2025.

Pete: The year-over-year increase can be attributed to a more cautious, macroeconomic Outlook.

John Witter: We continue to expect year-over-year growth in our private student loan portfolio with any additional loan sales evaluated in the context of our broader strategy and evolving balance sheet priorities.

Pete Graham: So higher than the three 3%.

Pete: As well as an increase in the weighted average, life of the portfolio, over the prior year.

Pete Graham: We remain pleased with the continued positive performance of our loan modification programs.

Pete Graham: You can see the benefit of these programs within our late stage delinquencies, which have remained flat year over year, despite an almost $2 billion increase.

Pete: Despite the higher provision, our allowance, as a percentage of private education loan exposure remains stable at 5.95%.

Pete Graham: Pete will now take you through some of the additional financial highlights of the quarter. Pete.

Pete Graham: Payments.

Pete: Slightly below the prior quarter's 5.97% and just 5 basis points above the year ago quarter.

Pete Graham: Thank you, John. Good evening, everyone. Let's continue with a discussion of key drivers. For the second quarter of 2025, we earned $377 million of net interest income. This is up $5 million from the prior Our net interest margin was 5.31% for the quarter, four basis points ahead of the prior quarter. This expansion of net interest income is in part due to higher average balances across the portfolio over the first half of the year, as well as changes to the overall mix of total assets on our balance sheet. We continue to believe over the long term that low to mid 5% range is an appropriate NIM target.

Pete Graham: When we look at borrowers who have been in the program for over a year, 80% are consistently making payments.

Pete: The Moody's macroeconomic forecasts that are a key input in our Reserve modeling have softened order of record.

Pete Graham: We're encouraged by the trajectory of these programs, which are performing in line with our expectations as we look towards achieving our long term targets.

Pete: Accordingly. We're maintaining a cautious outlook for the remainder of the year.

Pete: Closely monitoring forecast revisions that could influence our assumptions and estimates.

Pete Graham: Separately, we are looking at the credit performance of the portfolio second quarter demonstrated solid credit quality consistent with our seasonal expectations.

Pete: private Education, Loans delinquent, 30 days, or more or 3.5% of loans and repayment,

Pete Graham: Private education loan charge offs in the second quarter were $94 million representing.

Pete: a decrease from the 3.6% at the end of the first quarter of 2025

Pete Graham: Representing 236% of average loans in repayment.

although higher than the 3.3% at the end of the year ago quarter,

Pete Graham: An increase of 17 basis points compared to the second quarter of 2024.

Pete: We remained pleased with the continued positive performance of our loan, modification programs.

Pete Graham: We attribute this uptick primarily to the impact from our first quarter grant of disaster forbearance related to the California wildfires.

Pete Graham: Our provision for credit losses was $149 million in the second... up from $17 million in the prior year. It's worth noting that the prior year figure included a $103 million dollar reserve release related to a loan sale that occurred in the second quarter of last year. The year-over-year increase can be attributed to a more cautious macroeconomic outlook as well as an increase in the weighted average life of the portfolio over the prior year. Despite the higher provision, our allowance as a percentage of private education loan exposure remains stable at 5.95%, slightly below the prior quarter's 5.97%, and just five basis points above the year ago.

Pete Graham: Some of the borrowers that were granted disaster forbearance in the first quarter were able to return to making payments.

Pete: And see the benefit of these programs within our late stage delinquencies, which have remained flat year over year, despite an almost 2 billion dollar increase in loans and repayment.

Pete Graham: A portion of those borrowers ultimately charged off in the second quarter.

Pete: when we look at borrowers who have been in the programs for over a year, 80% are consistently making payments,

Pete Graham: We view this as a unique event shifted some charge off timing and we remain confident in our full year expectations.

we're encouraged by the trajectory of these programs which are performing in line with our expectations as we look towards achieving our long-term inco targets.

Pete Graham: Year to date, our private education loan charge offs were $2 one 1%.

Pete Graham: Six basis points below prior year.

Pete Graham: Certainly at this point, we have not observed any material signs that recent policy changes.

separately when looking at the credit performance of the portfolio, the second quarter demonstrated, solid credit quality consistent with our seasonal expectations

Pete Graham: Broader economic softness or adversely affecting portfolio.

Pete: Net, private education loan, charge offs in the second quarter were 94 million.

Pete: Representing 2.36% of average loans and repayment.

Pete Graham: Second quarter, noninterest expenses were $167 million compared to $155 million in the prior quarter.

Pete Graham: The Moody's macroeconomic forecasts that are a key input in our reserve modeling have softened quarter over quarter. Accordingly, we're maintaining a cautious outlook for the remainder of the year, closely monitoring forecast revisions that could influence our assumptions and estimates. Private education loans delinquent 30 days or more were 3.5% of loans and repayment, a decrease from the 3.6% at the end of the first quarter of 2025, although higher than the 3.3% at the end of We remain pleased with the continued positive performance of our loan modification programs and see the benefit of these programs within our late-stage delinquencies, which have remained flat year over year, despite an almost $2 billion increase in loans and repayments.

Pete: that increase of 17 basis points compared to the second quarter of 2024,

Pete Graham: $59 million in the year ago quarter.

Pete: We attribute this uptick primarily to the impact from our first quarter Grant of disaster, forbearance related to the California wildfires.

Pete Graham: This is consistent with our expectations for the year, providing a solid foundation as we move into the third.

Pete: While some of the borrowers that were granted disaster forbearance, in the first quarter, were able to return to making payments.

Pete Graham: And finally, our liquidity and capital positions remain strong.

Pete: A portion of those borrowers, ultimately charged off in the second quarter.

Pete Graham: We ended the quarter with a liquidity ratio of 17, 8%.

Pete Graham: And at the end of the second quarter total risk based capital was 12, 8% comp.

Pete: We we view this as a unique event that shifted some charge off timing and we remain confident in our full year, expectations.

Pete Graham: Common equity tier one capital was 11, 5%.

Pete: Year to date our net. Private educational loan charge offs are 2.11%.

Pete Graham: Another measure of loss absorption capacity of the balance sheet is GAAP equity plus loan loss reserves over risk weighted assets.

Pete Graham: Which was a very strong 16, 3%.

Pete: 6 basis points below prior year importantly, at this point we have not observed, any material signs that reset policy changes.

Pete Graham: We continue to believe we are well positioned to grow the business and continue to return capital to shareholders going forward.

Pete: Or broader economic softness or adversely affecting portfolio.

Pete Graham: When we look at borrowers who have been in the programs for over a year, 80% are consistently making money. We're encouraged by the trajectory of these programs, which are performing in line with our expectations as we look towards achieving our long-term NCO target. Separately, when looking at the credit performance of the portfolio, the second quarter demonstrated solid credit quality, consistent with our seasonal expectations. Net private education loan charge-offs in the second quarter were $94 million, representing 2.36% of average loans and repayments. An increase of 17 basis points compared to the second quarter of 2020. We attribute this uptick primarily to the impact from our first quarter grant of disaster forbearance related to the California wildfire.

Joe: I will turn the call back to Joe.

Pete: second quarter, non-interest expenses were 167 million compared to

Joe: Thanks Pete.

Joe: Hope you agree that we have delivered solid results throughout the first half of the year and you share my belief that we are part of that we have positive momentum for the full year of 2025.

Pete: 555 million in the prior quarter and 159 million in the year ago quarter.

Joe: As we look ahead. We are also encouraged by the developments in the broader policy landscape that could shape the future of our industry.

Pete: This is consistent with our expectations for the year providing a solid foundation as we move into the third quarter.

And finally our liquidity and capital positions, remain strong.

Joe: Earlier this month, the president signed HR, one into law, marking a pivotal moment in federal student loan reform.

Pete: We ended the quarter with a liquidity ratio of 17.8%.

Joe: The enacted legislation introduces meaningful changes to the federal student loan system.

Pete: And at the end of the second quarter total risk base Capital was 12.8% and common Equity. Tier 1, Capital was 11.5%.

Joe: <unk> borrowing under the parent plus program and setting new limits on graduate borrowing through the elimination of the Grad plus program.

Another measure of loss absorption capacity of the balance sheet is Gap Equity. Plus, loan loss, reserves over risk, weighted assets,

Pete: Which was a very strong 16.3%.

Joe: The Bill also expands Pell grant eligibility and streamlines federal student loan repayment plans.

Pete Graham: While some of the borrowers that were granted disaster forbearance in the first quarter were able to return to making payments, The portion of those borrowers ultimately charged off in the second... We view this as a unique event that shifted some charge-off timing, and we remain confident in our full-year expectations. Year to date, our net private educational loan charge offs are 2.11%. six basis points below prior year. Importantly, at this point, we have not observed any material signs that recent policy changes or broader economic softness are adversely affecting. Second quarter non-interest expenses were $167 million compared to $155 million in the prior quarter and $159 million in the year ago quarter.

Pete: We continue to believe. We are well, positioned to grow the business and continue to return Capital to share.

To job.

Joe: Altogether the reforms represent a meaningful step towards building a more responsible federal lending program.

Pete: Thanks Pete.

Joe: By Caribbean over borrowing and addressing unsustainable debt levels. The policy has the potential to slow the rising cost of higher education and provide stronger financial protection for families.

Pete: I hope you agree that we have delivered solid results throughout the first half of the year and you share my belief that we have that we have positive momentum for the full year of 2025.

Joe: These limits will take effect on July one 2026 for first time borrowers.

Pete: As we look ahead, we are also encouraged by the developments and the broader policy landscape that could shape the future of our industry.

Joe: Those with existing loans will continue to have access to the plus programs in borrowings under the current untapped limits.

Pete: Earlier this month, the president signed hr1 into law, marking a pivotal moment, in federal student loan reform,

Joe: It is worth noting that this transition may create a small short term impact to originations.

Joe: We are hearing that some schools and borrowers who previously chose private lending options are now opting for federal loans likely to secure access under the current terms.

Pete: Capping borrowing under the parent plus program and set a new limits on graduate borrowing through the elimination of the Grad Plus program.

Pete Graham: This is consistent with our expectations for the year, providing a solid foundation as we move into the new year.

Pete: The bill also expands pel Grant eligibility and streamlines federal student loan repayment plans.

Pete Graham: And finally, our liquidity and capital positions remain strong. We ended the quarter with a liquidity ratio of 17.8%. And at the end of the second quarter, total risk-based capital was 12.8% and common equity tier one capital was 11.5%. Another measure of loss absorption capacity of the balance sheet is gap equity plus loan loss reserves over risk-weighted assets, which was a very strong 16.5%. We continue to believe we are well positioned to grow the business and continue to return capital to shareholders.

Joe: We are keeping a close eye on this trend and believe any near term impact will be more than offset by the longer term benefits of the policy changes.

Pete: Altogether. The reforms represent a meaningful step toward building a more responsible Federal lending program.

Speaker Change: As the leading private student lender. We believe we are uniquely positioned to serve students and families and support our school partners through this period of transition.

Pete: By curbing over borrowing and addressing unsustainable. Debt levels. The policy at the potential to slow the rising cost of higher education, and provide stronger financial protection for families.

Speaker Change: Based on the final legislation, we anticipate that the new federal lending limits could generate an additional four and a half to $5 billion in annual private education loan origination volume for Sallie Mae once the transition from the previous programs are fully realized.

Pete: These limits will take effect on July 1st of 2026 for first-time Borrowers.

Pete: Those with existing loans, will continue to have access to the plus programs and borrowings under the current uncapped limits.

John Witter: I'll turn the call back to John. Thanks, Pete. I hope you agree that we have delivered solid results throughout the first half of the year.

Pete: It is worth noting that this transition May create a small short-term impact to originations

Speaker Change: Because the reforms, especially take effect in July of next year and existing borrowers are grandfathered into the current programs the volume impacts will build over time.

John Witter: And you share my belief that we have that we have positive momentum for the full year of 2025. As we look ahead, we are also encouraged by the developments in the broader policy landscape that could shape the future of our Earlier this month, the President signed H.R. 1 into law, marking a pivotal moment in federal student loan reform. The enacted legislation introduces meaningful changes to the federal student loan system. Capping borrowing under the Parent PLUS Program and setting new limits on graduate borrowing through the elimination of the Grad PLUS Program. The bill also expands Pell Grant eligibility and streamlines federal student loan repayment plans.

Pete: We are hearing that some schools and borrowers. Who previously chose private lending options are now opting for Federal loans?

Pete: Likely to secure access under the current terms.

Speaker Change: As undergraduate degrees typically take about four years to complete we expect to realize approximately one fourth of the incremental volume from parent plus and each academic year after implementation.

Pete: we are keeping a close eye on this trend and believe any near-term impact will be more than offset by the

Speaker Change: Similarly graduate studies last approximately three years on average and so we expect to realize between a third and half of the grad plus incremental volume opportunity each academic year.

Student lender. We believe we are a uniquely positioned to serve students and families and support our school Partners through this period of transition.

Pete: Based on the final legislation.

Speaker Change: It's also important to note that the impact in 2026 will be muted since the changes are not being implemented until the second half of the year.

John Witter: Altogether, the reforms represent a meaningful step toward building a more responsible federal lending program. By curbing overborrowing and addressing unsustainable debt levels, the policy has the potential to slow the rising cost of higher education and provide stronger financial protection for families. These limits will take effect on July 1st of 2026 for first-time borrowers. Those with existing loans will continue to have access to the PLUS programs and borrowings under the current uncapped limits. It is worth noting that this transition may create a small short-term impact to origination. We are hearing that some schools and borrowers who previously chose private lending options are now opting for federal loans likely to secure access under the current term.

Speaker Change: As a result, while we while we anticipate an impact next year.

Pete: We anticipate that the new federal lending limits, could generate an additional 4 and a half to 5 billion in annual? Private education loan origination volume 4, Sally met once the transition from the previous programs are fully realized

Speaker Change: Bigger impacts are expected to be in 2027 and beyond.

Speaker Change: We have engaged in significant readiness planning for this change as part of that planning, we've been evaluating potential funding strategies.

Because the reforms officially take effect in July of next year. And existing borrowers are grandfathered into the current programs. The volume impacts will build over time.

Speaker Change: We are confident we could meet this demand leveraging our current approach balancing moderate balance sheet growth with strategic loan sales to effectively manage this volume.

Pete: As undergraduate degrees typically take about 4 years to complete, we expect to realize approximately 1/4 of the incremental volume from Parent PLUS and each Academic Year after implementation.

Speaker Change: However, as we have mentioned more recently, we are actively exploring new alternative funding partnerships in the private credit space.

Pete: Similarly, Graduate Studies. Last

Speaker Change: This ideally would offer a scalable and efficient structure to support growth, while preserving balance sheet capacity and delivering more predictable returns over time.

Pete: Approximately 3 years on average. And so we expect to realize between a third and half of the Grad Plus incremental volume opportunity, each Academic Year.

Speaker Change: While we are less interested in a simple flow arrangement a structure that allows us to marry capital efficiency with long term predictable earnings wouldn't be attractive.

John Witter: We are keeping a close eye on this trend and believe any near term impact will be more than offset by the longer term benefits of the policy change. As the leading private student lender, we believe we are uniquely positioned to serve students and families and support our school partners through this period of transition. Based on the final legislation, we anticipate that the new federal lending limits could generate an additional $4.5 to $5 billion in annual private education loan origination volume for Sallie Mae once the transition from the previous programs are fully realized. Because the reforms officially take effect in July of next year, and existing borrowers are grandfathered into the current programs, the volume impacts will build over time.

Pete: It's also important to note that the impact in 2026 will be muted since the changes are not being implemented until the second half of the year.

as a result while we while we anticipate,

Pete: In 2027 and Beyond.

Speaker Change: We expect to leverage a combination of these funding options and are evaluating the optimal mix.

We have engaged in significant Readiness planning for the change.

Speaker Change: We remain committed to our strategy of delivering mid to high single digit private student loan portfolio growth supported by loan sales and other structures with a goal of delivering EPS growth in line with recent years.

Pete: Part of that planning, we've been evaluating potential funding strategies.

Pete: We are confident, we could meet this demand leveraging, our current approach balancing moderate balance sheet, growth with strategic loan sales to effectively manage this volume.

Speaker Change: As was the case two years ago. We currently plan to hold an Investor Forum before the close of the year, where we will provide a longer term framework aims to highlight our strategic priorities around anticipated originations growth and optimal funding strategies.

However, as we have mentioned more recently, we are actively exploring new alternative funding Partnerships and the private credit space.

Speaker Change: Let me finish by affirming our guidance for the year.

Pete: This ideally would offer a scalable and efficient structure to support growth while preserving balance sheet capacity, and delivering more predictable returns over time.

John Witter: As undergraduate degrees typically take about four years to complete, we expect to realize approximately one-fourth of the incremental volume from Parent PLUS in each academic year after implementation. Similarly, graduate studies last approximately three years on average, and so we expect to realize between a third and a half of the grad plus incremental volume opportunity each academic year. It's also important to note that the impact in 2026 will be muted since the changes are not being implemented until the second half of the year. As a result, while we anticipate an impact next year, the bigger impacts are expected to be in 2027 and beyond.

Speaker Change: While we continue to closely monitor developments in the higher education landscape and volatility in the broader macroeconomic environment. Our results today reflect the strength of our core business the resilience of our customer base and the disciplined execution of our strategic priorities.

Pete: While we are less interested in a simple forward, flow Arrangement, a structure that allows us to marry Capital efficiency with long-term predictable, earnings would be attractive.

Pete: Respect to leverage a combination of these funding options and are evaluating the optimal mix.

Pete Graham: In addition, we continue to optimize our strategies to maximize our in year performance with that Pete why don't we go ahead and open up the call for some questions.

Pete: We remain committed to our strategy of delivering mid to high single-digit, private student loan portfolio growth supported by loan sales and other structures with a goal of delivering EPS growth in line with recent years.

Speaker Change: The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad.

Speaker Change: At any point. Your question is answered you may remove yourself from the queue by pressing star two.

As was the case 2 years ago, we currently plan to hold an investor Forum before the close of the Year where we will provide a longer term framework. Aims to highlight our strategic priorities around, anticipated originations growth and optimal funding strategies.

John Witter: We have engaged in significant readiness planning for this change. As part of that planning, we've been evaluating potential funding strategies. We are confident we could meet this demand leveraging our current approach, balancing moderate balance sheet growth with strategic loan sales to effectively manage this volume. However, as we have mentioned more recently, We are actively exploring new alternative funding partnerships in the private credit space. This ideally would offer a scalable and efficient structure to support growth while preserving balance sheet capacity and delivering more predictable returns over time. While we are less interested in a simple forward flow arrangement, a structure that allows us to marry capital efficiency with long term predictable earnings would be attractive.

Speaker Change: Again, we ask that you pick up your handset when youre posing your questions to provide optimal sound quality. Thank you.

Rick Shane: Our first question comes from Rick Shane with J P. Morgan Your line is open.

Rick Shane: Hey, guys. Thanks for taking my questions. This afternoon.

Rick Shane: First can we talk a little bit about the loan sale the $1 $8 billion loan sale described in the third quarter.

Let me finish by affirming. Our guidance for the year while we continue to closely monitor developments in the higher education, landscape and volatility in the broader macroeconomic environment. Our results today, reflect the strength of our Core Business, the resilience of our customer base and the disciplined execution of our strategic priorities,

Rick Shane: Can you help us sort of narrow the channel markers in terms of gain on sale margin in 2024 average gain on sale margin was just below 7% first quarter. This year was $9 four where are we sort of in that range for this transaction.

Pete: Kate, why don't we go ahead and open up the call for some questions?

Pete: The floor is now open for questions at this time. If you have a question or comment, please press star 1 on your telephone keypad.

Rick Shane:

Rick Shane: I'd say, we're in line with our.

John Witter: We expect to leverage a combination of these funding options and are evaluating the optimal mix. We remain committed to our strategy of delivering mid- to high-single-digit private student loan portfolio growth supported by loan sales and other structures with a goal of delivering EPS growth in line with recent years.

Rick Shane: Our expectations when we set guidance for this year.

Pete: If at any point, your question is answered. You may remove yourself from the queue, by pressing star 2.

Rick Shane: I think obviously the Reits environments.

Again, we ask that you pick up your handset when you're posing your questions to provide optimal sound quality. Thank you.

Rick Shane: Changed a little bit since we did the first quarter loan sale.

Rick Shane: As a result, the pricings adjusted modestly from.

Speaker Change: Our first question comes from Rick Shane with JP Morgan, your line is open.

Rick Shane: What we obtained earlier in the year, but we're very pleased with.

John Witter: As was the case two years ago, we currently plan to hold an investor forum before the close of the year, where we will provide a longer term framework aimed to highlight our strategic priorities around anticipated originations growth and optimal funding strategies. Let me finish by affirming our guidance for the year. While we continue to closely monitor developments in the higher education landscape and volatility in the broader macroeconomic environment, our results to date reflect the strength of our core business, the resilience of our customer base, and the disciplined execution of our strategic priorities. In addition, we continue to optimize our strategies to maximize our in-year performance.

Rick Shane: With the execution of a transaction.

Rick Shane: Got it Okay and then just two other quick questions here.

Speaker Change: Historically generally speaking you guys have done two loan sales a year there have been years, where you've done more as we think about our 2025 numbers should we assume.

Speaker Change: A sale in the fourth quarter or should we see the $3 8 billion you guys have done.

Rick Shane: Hey guys, thanks for taking my questions, this afternoon. Um first can we talk a little bit about the loan sale? The 1.8 billion loan sale um described in the third quarter um can you help us sort of narrow the channel markers in terms of gain on sale margin in 2024? Average gain on sale margin was just below 7%. First quarter of this year it was 9.4 where are we sort of in that range for this transaction?

Speaker Change: It's sort of the total for the year.

Speaker Change: But I think we will continue to sort of monitor as we go into the latter part of this year, we will see how peak season is shaping up we will look at our results.

Speaker Change: Results of our capital stress testing that we do in the fall and what that implies for a capital.

Unknown Attendee: With that, Pete, why don't we go ahead and open up the call for some questions? The floor is now open for questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when you're posing your questions to provide optimal sound quality. Thank you.

Speaker Change: Capital levels will be carrying into next year.

Speaker Change: We will evaluate.

Speaker Change: Evaluated accordingly.

Speaker Change: Got it and then.

Speaker Change: Last question for me and I apologize for so many but.

Rick Shane: Um, I'd say we're in line with our, um, you know, our our, uh, expectations, when we set guidance for this year. Um, I think, you know, obviously the rates environments, uh, you know, changed a little bit since we did the first quarter loan sale and you know, as a result, you know, the pricing is adjusted, uh, modestly from uh what we attained earlier in the year, but we're very pleased with uh, with the um, with the execution on transaction.

Speaker Change: The net charge off rate for loans and repayment after trending down for four quarters.

Speaker Change: Row ticked up in the <unk>.

Speaker Change: Second quarter on a year over year basis.

Speaker Change: So it's a fairly significant reversal and again you talked a little you alluded to.

Rick Shane: Our first question comes from Rick Shane with J.P. Morgan. Your line is open. Hey, guys, thanks for taking my questions this afternoon. First, can we talk a little bit about the loan sale, the $1.8 billion loan sale described in the third quarter? Can you help us sort of narrow the channel markers in terms of gain on sale margin? In 2024, average gain on sale margin was just below 7%. First quarter this year, it was 9.4. Where are we sort of in that for this transaction?

Speaker Change:

Speaker Change: The forbearance related to the wildfires.

Speaker Change: Got it. Okay. And then just 2 other quick questions. Um historically or generally speaking, you guys have done 2 loan sales a year there have been years where you've done more. Is we think about our 2025 numbers? Should we assume um a sale on the fourth quarter? Or should we see the 3.8 billion? You guys have done. Um, is sort of the total for the year.

Speaker Change: That.

Speaker Change: I'm, having a hard time sort of dimensionalize in or putting.

go into the,

Speaker Change: That particular cohort of borrowers and having that explain the change that we've seen in the loss rate can you help me understand that a little bit better.

Speaker Change: Yes happy to so.

Speaker Change: When there is a FEMA declared national disaster.

Speaker Change: Latter part of this year, we'll see how peak season is shaping up. We'll look at our um results of our Capital stress testing that we do in the fall and what that implies for uh Capital levels will be carrying into next year and we'll, you know, evaluate accordingly.

Speaker Change: We have a series of programs and protocols in place to provide assistance to borrowers.

Speaker Change: <unk> Reactively, if borrowers call in but also in circumstances certain circumstances proactive way recognizing that.

Pete Graham: I'd say we're in line with our, you know, our expectations when we set guidance for this year. I think, you know, obviously, the rates environments, you know, changed a little bit since we did the first quarter loan sale. And, you know, as a result, you know, the pricing's adjusted modestly from what we attained earlier in the year, but we're very pleased with the with the execution of the transaction. Got it. Okay.

Speaker Change: Some borrowers don't have access to communication and we would not want something like a hurricane a wildfire a flood.

Speaker Change: To negatively impact someone's ability to maintain a lending relationship with the company.

Speaker Change: Got it, and then last question for me and I apologize for so many. But, um, the net charge off rate for loans and repayment after trending down for 4, quarters in the in a row, ticked up in the, in the second quarter on a year-over-year basis. Um, it's a, it's a fairly significant reversal. And again, you talked a little, you alluded to um, you know, forbearance related to the wildfires. Um that

Speaker Change: Typically those natural disasters are smaller blips on the radar.

Speaker Change: I'm, I'm having a hard time sort of dimensionalizing or putting

Speaker Change: And things that you would sort of scarcely notice in the context of that timing of net charge offs.

Pete Graham: And then just two other quick questions. Historically, or generally speaking, you guys have done two loan sales a year, there have been years where you've done more. As we think about our 2025 numbers, should we assume a sale on the fourth quarter? Or should we see the 3.8 billion you guys have done is sort of the total for the year? I think we'll continue to sort of monitor as we go into the latter part of this year. We'll see how peak season is shaping up. We'll look at our results of our capital stress testing that we do in the fall and what that implies for capital levels we'll be carrying into next year.

Speaker Change: that particular cohort of borrowers and having that explain the change that we've seen in, uh, the loss rate. Can you help me understand that a little bit better?

Speaker Change: But because we offer a sort of 60 to 90 days forbearance in those cases and it kind of puts customers into stasis you can move.

Speaker Change: Charge offs that would've happened into the first quarter say into the second quarter.

Speaker Change: So that's that's sort of the mechanics of it I think what's unique about the California wildfires is that this was the first time that such a wide area in a densely populated area was impacted and so I think the impact was larger.

Speaker Change: This case than it would have normally been in <unk>.

Speaker Change: More typical natural disaster situation, but we can obviously track the specific customers, who we gave that forbearance to we can understand how they are.

Rick Shane: And we'll, you know, evaluate accordingly. Got it.

Speaker Change: National uh, disaster. You know, we have a series of programs and protocols in place to provide uh assistance to borrowers. Both reactively, if if borrowers call in. But also in circumstances certain circumstances proactively recognizing that uh you know some borrowers, don't have access to communication and we would not want something like a hurricane, a wildfire, a flood uh to negatively impact, someone's ability to maintain a lending relationship with the company. Um, typically those natural disasters are smaller.

Rick Shane: And then last question for me, and I apologize for so many, but the net charge off rate for loans and repayment after trending down for four quarters in a row, kicked up in the second quarter on a year-over-year basis. It's a fairly significant reversal. And again, you alluded to forbearance related to the wildfires.

Speaker Change: Progressing through delinquency, we can sort of anticipate which one's likely would have charged off.

Speaker Change: That was backed out.

Pete Graham: Without the forbearance and we feel very comfortable that the slight uptick that Pete described in his comments was it attributable to that population.

Speaker Change: Okay, great. Thank you very much Jonathan.

Speaker Change: Blips on the radar, um, and things that, you know, you would sort of, you know, scarcely notice in the context of the timing of net charge offs, uh, but because we offer sort of 60 to 90 days forbearance in those cases and it kind of puts customers into stasis, you can move, uh, you know, a charge off, that would have happened into the first quarter, say into the second quarter.

Speaker Change: Well take our next question from Terry MA with Barclays. Your line is open.

John Witter: I'm having a hard time sort of dimensionalizing or putting that particular cohort of borrowers and having that explain the change that we've seen in the loss rate. Can you help me understand that a little bit better? Yeah, Rick, happy to. So when there is a FEMA declared national disaster, you know, we have a series of programs and protocols in place to provide assistance to borrowers, both reactively if borrowers call in, but also in circumstances, certain circumstances proactively, recognizing that, you know, some borrowers don't have access to communication, and we would not want something like a hurricane, a wildfire, a flood, to negatively impact someone's ability to maintain a lending relationship with the company.

Speaker Change: Hey, Thank you good evening.

Speaker Change: So it sounds like the changes.

Speaker Change: To federal lending can potentially create a lot of upside from private market and in turn Sallie Mae that gives you a lot of Optionality, if I kind of go back to the last investor for them you guys kind of laid out a five year plan.

Speaker Change: With high single digit receivables growth and double digit EPS growth.

Speaker Change: With the potential upside like can that potentially kind of change and increase the algorithm like how are you guys thinking about that because you kind of called out the same algorithm before but it seems like there's just a lot more upside to volume overtime.

To we can understand how they, uh, you know, sort of are progressing through delinquency. We can sort of anticipate, which ones likely would have charged off, you know, post, uh, post facto, you know, uh, without the, the forbearance and we feel very comfortable that the, the slight uptick that Pete described in his comments, was it attributable to that population.

Speaker Change: Yeah I think.

Speaker Change: I think the framework, we laid out there is still relevant when they're evaluating this opportunity.

Speaker Change: Great. Thank you very much, Jonathan.

Speaker Change: And again, just kind of reiterating some of the points that John was making we're really talking about a 2027 and beyond sort of a.

John Witter: Typically, those natural disasters are smaller blips on the radar, and things that, you know, you would sort of, you know, scarcely notice in the context of the timing of net charge-offs. But because we offer sort of 60 to 90 days forbearance in those cases, and it kind of puts customers into stasis, you can move, you know, a charge-off that would have happened into the first quarter, say, into the second quarter. And so that's sort of the mechanics of it. I think what's unique about the California wildfires is that this was the first time that such a wide area and a densely populated area was impacted.

Speaker Change: We'll take our next question, from Terry. Ma with Barkley's, your line is open.

Speaker Change: Growth opportunity profile because of the staging.

Speaker Change: But we still have the same sort of mindset around balance sheet growth.

Speaker Change: In light of this sort of a step change in opportunity we might trend towards the higher end of that sort of mid to high single digit growth of the balance sheet again, reflecting constraints of capital an EPS impact of reserving.

Speaker Change: In the period.

John Witter: And so I think the impact was larger in this case than it would have normally been in, you know, a more typical natural disaster situation. But we can obviously track the specific customers who we gave that forbearance to. We can understand how they, you know, sort of are progressing through delinquency. We can sort of anticipate which ones likely would have charged off, you know, post facto, you know, without the forbearance. And we feel very comfortable that the slight uptick that Pete described in his comments was attributable to that population.

Terry MA: Hey, thank you. Good evening. Um, so it sounds like the changes, um, to Federal lending, um, Can potentially create a lot of upside, um, from private market and in turn Sally Mae and it gives you a lot of optionality. If I kind of go back to the last investor Forum. You guys kind of laid out a 5 year plan, um, with high single digit, received was growth and double digit EPS growth. Um, I guess with the potential upside like can that potentially kind of change and increase the algorithm, like how are you guys thinking about that? Because you kind of called out the same algorithm before, but it seems like there's just a lot more upside to volume over time.

Speaker Change: So the.

Speaker Change: Investor appetite for loan sales has continued to remain strong yearend in euro and we don't see any signs of that abating and we're also looking at other types of sort of committed funding arrangements that we might do in the private credit space that will go.

Terry MA: Yeah, I think uh, I think that the framework we laid out there is still relevant when evaluating this opportunity. Um and again just kind of reiterating some of the

Terry MA: Uh, points that John was making. We're really talking about a

Speaker Change: With some other tool in the toolkit to sort of optimize or.

2027 and Beyond, you know, sort of uh, you know, growth opportunity profile because of the staging.

Speaker Change: Or return an ability to.

Speaker Change: Sort of meet as many customers.

Speaker Change: So thats, probably the needs of the customers as well as the schools.

Rick Shane: Great. Thank you very much, Jonathan.

Speaker Change: Got it.

Speaker Change: And then maybe just on credit.

Terry MA: We'll take our next question from Terry Ma with Barclays. Your line is open. Hey, thank you. Good evening. So it sounds like the changes to federal lending can potentially create a lot of upside from private market and in terms of how we may negate a lot of optionality. If I kind of go back to the last investor forum, you guys kind of laid out a five year plan with high single digit receivables growth and double digit EPS growth. I guess with the potential upside, like, can that potentially kind of change and increase the algorithm? Like, how are you guys thinking about that?

Speaker Change: Notice the percentage of borrowers on extended Grace dropped.

Speaker Change: Meaningfully this quarter any kind of color on how those borrowers are trying to performing as they exit.

Terry MA: Um, but we still have the same sort of mindset around balance sheet growth, um, in light of this, you know, sort of Step change and opportunity. We might Trend towards the higher end of that sort of mid to high single-digit growth, uh, of the balance sheet, again, reflecting constraints of capital and EPS impact of reserving. Um, you know, in in the period

Speaker Change: Then maybe just any color on the 30 to 59 day delinquency bucket that it was kind of up meaningfully year over year. Thank you.

The the, uh, investor appetite for loan sales, has continued to sort of remain strong year in and year out. And we don't see any signs of that.

Speaker Change: Yeah I think in.

Speaker Change: In General I would say you know the <unk>.

Speaker Change: <unk> that we're seeing in both delinquencies as well as sort.

Speaker Change: Sort of the grace programs and the like.

Speaker Change: Earlier, following the normal seasonal trends that we would expect from the business.

Speaker Change: We continue to be pleased with the performance of <unk>.

Terry MA: Because you kind of called out the same algorithm before, but it seems like there's just a lot more upside to volume over time.

Speaker Change: Below mud programs.

Terry MA: And you know we're also looking at other types of sort of committed uh funding uh Arrangements that we might do in the private credit space. That will give us another tool in the toolkit, uh, to sort of optimize for, um, for return and ability to, uh, sort of meet as many customers uh, and and, you know, satisfy the needs of the customers as well.

Speaker Change: And success rates there.

Terry MA: Yeah, I think I think that the framework we laid out there is still relevant when evaluating this opportunity. And again, just kind of reiterating some of the points that John was making, we're really talking about a 2027 and beyond, you know, sort of, you know, growth opportunity profile because of the staging. But we still have the same sort of mindset around balance sheet growth. In light of this, you know, sort of step change in opportunity, we might trend towards the higher end of that sort of mid to high single digit growth of the balance sheet, again, reflecting constraints of capital and EPS impact of reserving, you know, in the period.

Terry MA: Got it.

Have not seen any.

Speaker Change: Sort of abnormal trends.

Speaker Change: Yes.

Speaker Change: Sure on boats as they come out of the extended gross program. So variations that we're seeing we're starting to sort of settle into what we think is going to be kind of a new.

Um and then maybe just on credit. Um I know this um the percentage of borrowers on extended Grace dropped, um meaningfully this quarter um any kind of color on how those borrowers are trying to performing as they exit.

Speaker Change: Normal in terms of seasonality.

Terry MA: And then, uh, maybe just any color on these 30 to 59 days delinquency bucket. That's just kind of up meaningfully year over year. Thank you.

Terry MA: Yeah, I think, uh,

Jeff Adelson: Well move next to Jeff Adelson with Morgan Stanley. Your line is open.

Speaker Change: Yeah.

Jeff Adelson: Hey, good evening, thanks for taking my questions.

Jeff Adelson: I just wanted to make sure we understood the newborn up to 5 billion number you put out there on what could potentially come your way.

Terry MA: In general, I would say, you know, the trends that we're seeing in both delinquencies, as well as um, you know, sort of the the grace programs and the like really are following the normal seasonal trends that we would expect in the business.

um, we continue to be pleased with the performance of

Speaker Change: Once you're fully up and running once we sort of lap the existing borrowers staying in the program.

Pete Graham: The investor appetite for loan sales has continued to sort of remain strong year in and year out, and we don't see any signs of that abating. And, you know, we're also looking at other types of sort of committed funding arrangements that we might do in the private credit space that will give us another tool in the toolkit to sort of optimize for return and ability to sort of meet as many customers and, you know, satisfy the needs of the customers as well as the schools. Got it.

Speaker Change: Is it is that based on what you're seeing in today's run rate or is there any sort of expectation for growth.

Speaker Change: Borrower cohort versus what Youre seeing today.

Speaker Change: I guess just given the dynamic you you identified on a third a third a third and a quarter over quarter quarter for parent plus is that a good 28 29 number to be thinking about.

Terry MA: Um the loan mod programs uh you know, and and success rates there. Uh we have not seen any, you know, sort of abnormal trends of increased pressure on folks as they come out of the extended Grace program. So variations that, you know, we're seeing we're starting to sort of settle into what we think is going to be kind of our new

Terry MA: in terms of seasonality,

Speaker Change: Yes, Jeff Let me, let me take a crack at it.

Jeff Aiden: We'll move next to Jeff Aiden with Morgan Stanley. Your line is open.

Speaker Change: First of all we have not assumed in those numbers.

Terry MA: And then maybe just on credit, I noticed the percentage of borrowers on extended grace dropped meaningfully this quarter.

Speaker Change: Any sort of material change to our credit buy box.

Speaker Change: And obviously every year, we optimized our strategy is a little bit we might do some more of that but this is consistent with our current risk appetite and our current credit buy box.

Terry MA: Any kind of color on how those borrowers are kind of performing as they exit? And then maybe just any color on the 30 to 59 day delinquency bucket that is kind of meaningfully year over year.

Speaker Change: We have applied over time to our estimate to our estimates sort of an expectation of sort of the likely growth and average loan size, which we do whenever we do multiyear out year projections.

Pete Graham: Thank you. Yeah, I think, in general, I would say, you know, the trends that we're seeing in both delinquencies, as well as, you know, sort of the grace programs and the like, really are following the normal seasonal trends that we would expect in the business. We continue to be pleased with the performance of the loan mod programs, you know, and success rates there. We have not seen any, you know, sort of abnormal trends of increased pressure on folks as they come out of the extended grace program. So variations that, you know, we're seeing, we're starting to sort of settle into what we think is going to be kind of our new kind of normal in terms of seasonality.

Speaker Change: So you know I'm.

Speaker Change: I'm not sure if that was part of your question as well, but that goes into sort of the mechanics of what we do.

A third and a quarter, a quarter quarter for parent plus um is that a good 2829 number to be thinking about?

Speaker Change: And then yes, I think sort of we tried to lay out the broad parameters, but I think the way that I would think about it is <unk>.

Speaker Change: Next year, we will see sort of a half a year impact on sort of the freshman undergraduate class in the first year set a graduate student class and I think.

Yeah, Jeff let me let me take a crack at it. Um uh first of all we have not assumed in those numbers.

Speaker Change: Based on those average times to complete degree you would expect those to load.

Speaker Change: Over the.

Speaker Change: Sort of that two to three to four year period thereafter so.

Speaker Change: We tried to give you sort of what we think are the basic modeling inputs to that but I think the basic logic of what you laid out is correct.

Jeffrey Adelson: We'll move next to Jeff Adelson with Morgan Stanley. Your line is open. Hey, good evening. Thanks for taking my questions. I just wanted to make sure we understood the four and a half to five billion number you put out there on what could potentially come your way once you're fully up and running, once we sort of lap the existing borrowers staying in the program. Is that based on what you're seeing in today's run rate? Or is there any sort of borrower cohort versus what you're seeing today?

Speaker Change: Okay, Thanks for that and I.

Speaker Change: I guess just to circle back on the private credit exploration here.

Speaker Change: You've laid out how you kind of want to keep the EPS growth in line with where it's been in recent years can you maybe give us any way that you're thinking about the different you know.

Speaker Change: The piano impacts you're may be considering here, which you may be willing to trade off on take rate in order to have a more efficient cost structure more efficient funding structure.

You know, any sort of material change to our credit by box. Um, you know, and obviously every year we optimize our strategies a little bit, we might do some more of that. But this is consistent with our current risk appetite and our current credit buy box. Um, we have applied overtime to our estimate, to our estimates sort of an expectation of sort of the likely growth in average loan size, which, you know, we we do whenever we do multi-year out-year projections. Um, so, you know, I'm I'm not sure if that was part of your question as well, but that goes into, uh, sort of the mechanics of what we did. Um, and then, you know, yes, I think sort of, we tried to lay out the broad parameters, but I think the way that I would think about it is, you know, next year, we will see sort of a half a year impact on, you know, sort of the Freshman undergraduate class and

John Witter: And I guess just given the dynamic you identified on the third, a third, a third, and a quarter, a quarter, a quarter for Parent PLUS, is that a good 28, 29 number to be thinking about? Yeah, Jeff, let me let me take a crack at it. First of all, we have not assumed in those numbers, you know, any sort of material change to our credit buyback. And obviously every year we optimize our strategies a little bit. We might do some more of that, but this is consistent with our current risk appetite and our current credit buy box.

Speaker Change: I mean, the one the one pushback, sometimes we got as you know you've got a really nice gain on sale today would be existing structure. So are you going to have to sacrifice economics to do that or how are you thinking about that thank you.

Jeff Adelson: Yes, Jeff.

Jeff Adelson: Look I mean.

First year instead of graduate student class. And I think, you know, based on those average times to complete degree, you would expect those to load, uh, sort of over the, you know, sort of the 2, to 3, to 4 year period thereafter. So, uh, you know, we tried to give you sort of what we think are the basic modeling inputs to that. But I think the the basic logic of what you laid out is correct,

Jeff Adelson: Couple of thoughts, obviously, I'm not going to go into great detail because.

Jeff Adelson: As we have said we're in ongoing discussions and.

Jeff Adelson: It would be inappropriate and probably counter productive for me to go into too much detail, but I think my view on this is the following.

Okay, thanks for that and um I guess just to to Circle back on the private credit. Um exploration here.

Jeff Adelson: We have a wonderful asset class.

Jeff Adelson: The loans that we produce not only serve an incredibly important.

John Witter: We have applied over time to our estimates sort of an expectation of sort of the likely growth in average loan size, which we do whenever we do multi-year, out-year projections. So, you know, I'm not sure if that was part of your question as well, but that goes into sort of the mechanics of what we do. And then, you know, yes, I think sort of we tried to lay out the broad parameters, but I think the way that I would think about it is, you know, next year we will see sort of a half a year impact on, you know, sort of the freshman undergraduate class and the first year sort of graduate student class.

Jeff Adelson: <unk> function.

Jeff Adelson: But our borrowers are incredibly successful.

Jeff Adelson: You know the sort of losses on the loans are extremely sort of attractive you know as a result of that success.

Jeff Adelson: Is that sort of duration and the sort of structure of those loans is really well suited to structure is that a lot of our private or potential private credit partners might want to explore.

You know, you you've laid out how you you kind of want to keep the EPS growth in line with where it's been in recent years. Can you maybe give us any way that you're thinking about the different? Um, you know, the, the the pnl impacts your maybe considering here, what you're maybe willing to trade off on, take rate in order to, um, you know, have a more efficient cost structure more efficient, funding structure. Uh, I mean the 1 can the 1 Pusher. So are you going to have to sacrifice economics to do that? Or how are you thinking about that? Thank you.

Jeff Adelson: And we are the leading market share player in the space and so when it comes to sort of private student loans and private credit partnerships.

Yeah Jeff. Um look I you know I

Jeff Adelson: I don't think it is at all are again for me to say that I think we are a great partner I think what we offer is really unique and we are in many respects. The last are the only game in town in terms of a really scalable partner, who can who can serve sort of back counterparty.

Speaker Change: Couple of thoughts. Obviously, I'm not going to go into great detail because, you know, as, as we have said, we're an ongoing discussions and, um, you know, I think it would be inappropriate and, and probably counterproductive for me to go into too much detail.

John Witter: And I think, you know, based on those average times to complete degree, you would expect those to load sort of over the, you know, sort of the two to three to four year period thereafter. So, you know, we tried to give you sort of what we think are the basic modeling inputs to that, but I think the basic logic of what you laid out is correct.

Jeff Adelson: Yep.

Jeff Adelson: So.

Jeff Adelson: With that in mind.

Jeff Adelson: I am very open to different financial and economic structures to find this incredibly high quality an important asset.

Speaker Change: But I think my view on this is the following. Um, we have a wonderful asset class, uh, the loans that we produce, not only serve an incredibly important, you know, societal function. Uh, but our borrowers are incredibly successful, uh, you know, the the sort of losses on the loans are extremely sort of attractive, you know, as a result of that success.

Jeffrey Adelson: Okay, thanks for that. And I guess just to circle back on the private credit exploration here, You know, you've laid out how you you kind of want to keep the EPS growth in line with where it's been in recent years. Can you maybe give us any way that you're thinking about the different, you know, the P&L impacts you're maybe considering here, which you're maybe willing to trade off on take rate in order to, you know, have a more efficient cost structure, more efficient funding structure? I mean, the one the one pushback sometimes we get is, you know, you get a really nice gain on sale today with the existing structure.

Jeff Adelson: But my view is we have a really good sense in a really good benchmark of what the lifetime value of these loans are of course, you know discounted back in time.

Jeff Adelson: And I don't see any reason why we shouldn't be willing to accept financial terms that on a lifetime value basis are materially different from what we might get through different avenues now with that said I think we all recognize the volatility that comes from loan sales. There were good questions about that earlier in the call.

Jeff Adelson: By the way I think we've talked at length about the fact that while we love our bank and we loved the growth of our bank balance sheet.

Jeffrey Adelson: So are you going to have to sacrifice economics to do that? Or how are you thinking about that?

Jeff Adelson: It is a more capital.

Speaker Change: You know, the sort of duration. And the the sort of structure of those loans is really well suited to, you know, structures that a lot of our private or potential private credit Partners might want to explore. Um and you know, we are the leading market share player in the space. Um and so when it comes to sort of private student loans and private credit Partnerships, you know I don't think it is at all, arrogant for me to say that. I think we are a great partner. I think what we offer is really unique uh and we are in many respects the last or the only game in town in terms of a really scalable partner who can who can serve uh, sort of back counterparty relationships. So

John Witter: Thank you. Yeah, Jeff. Look, a couple of thoughts. Obviously, I'm not going to go into great detail because, you know, as we have said, we're in ongoing discussions. And, you know, I think it would be inappropriate and probably counterproductive for me to go into too much detail. But I think my view on this is the following. We have a wonderful asset. The loans that we produce not only serve an incredibly important societal function, but our borrowers are incredibly successful. You know, the sort of losses on the loans are extremely sort of attractive, you know, as a result of that success, you know, the sort of duration and the sort of structure of those loans is really well suited to, you know, structures that a lot of our private or potential private credit partners might want to explore.

Jeff Adelson: Intensive way to grow the business, especially when you include that.

Jeff Adelson: The loan loss reserves under Cecil So I do think there is a one plus one equals three opportunity for us to develop a complementary funding sort of partnership here I think thats, what <unk> tried to lay out over time.

Speaker Change: So uh, you know, with that in mind, uh, I am very open to different financial and economic structures to fund. This incredibly high quality and important asset

Jeff Adelson: Think we're a great partner and we think we should expect attractive economics and that partnership as well as potentially providing great value. If it's such a partnership emerged.

Jeff Adelson: Great that's great color. Thanks, Thanks, so much.

Speaker Change: We will take our next question from Moshe Orenbuch with PD Cowen Your line is open.

Jeff Adelson: Yeah.

Speaker Change: Thanks and.

Speaker Change: John It seems to me that if you're talking about a four $5 billion to $5 billion opportunity that would phase in over several years most of it over two to three years.

John Witter: And, you know, we are the leading market share player in the space. And so when it comes to sort of private student loans and private credit partnerships, you know, I don't think it is at all arrogant for me to say that I think we are a great partner. I think what we offer is really unique. And we are in many respects the last or the only game in town in terms of a really scalable partner who can serve sort of that counterparty relationship. So, you know, with that in mind, I am very open to different financial and economic structures to fund this incredibly high quality and important asset.

is a more Capital uh, sort of intensive way to grow the business, especially when you include

Speaker Change: That would probably be consistent with just the normal.

Speaker Change: Expansion that you could expect from your.

Speaker Change: From your normal loan sales, if you wanted to and I understand the comments you've made about seeking other structures I'm. Just wondering if as you do that with some of those structures potentially expand that four and a half to 5 billion by being willing to address some of the areas that you might not.

Uh the loan loss reserves under Cecil. So you know I do think there is a 1 plus 1 equals 3 opportunity for us to develop a complimentary funding

Speaker Change: sort of partnership here. I think that's what Pete's. Tried to lay out over time. Uh, we think we're a great partner and we think we should expect attractive economics in that partnership as well as potentially providing Great Value. If if such a partnership emerged,

Speaker Change: Want to underwrite for your own balance sheet.

Speaker Change: Great. That's that's great color. Thanks, thanks so much. Take care.

Speaker Change: Moshe it's a it's a great question again, so there's no confusion. We did not include anything like a balance sheet expansion in the four $5 billion to $5 billion, we gave you but.

Speaker Change: We'll take our next question from Moshe Orin book with TD Cowen, your line is open.

Speaker Change: Great, thanks. And

Speaker Change: But yes, I mean at the end of the day.

John Witter: But my view is, you know, we have a really good sense and a really good benchmark of what the lifetime value of these loans are. Of course, you know, discounted back in time. And I don't see any reason why we should be willing to accept financial terms that on a lifetime value basis are materially different from what we might get through different avenues. Now, with that said, I think we all recognize the volatility that comes from loan sales. There were good questions about that earlier in the call. By the way, I think we've talked at length about the fact that while we love our bank and we love the growth of our bank balance sheet, you know, it is a more capital sort of intensive way to grow the business, especially when you include the loan loss reserves under CECL.

Speaker Change: No.

Speaker Change: We sort of have gauged, our buy box today off of the economic model defined by our bank.

John it seems to me that if you know you're talking about a 4 and a half to 5 billion dollar opportunity that would phase in over you know several years most of it over 2 to 3 years

Speaker Change: And that bank has a certain capital structure it as a certain loan loss reserve structure. It has a certain expense structure. It has a certain expectation of return on equity and by the way you know how committed I am to capital allocation and strong Rois and so you know that that has led us to what we think is a great answer.

Speaker Change: Where the bank is sort of the stocking horse on how we fund the loans.

Speaker Change: That would probably be consistent with just the normal expansion that you could expect from your, you know, from your normal loan sales if you want it to. And and I understand the comments you made about, you know, seeking other structures. I'm just wondering if as you do that would some of those structures, potentially expand that 4 and a half to 5 billion by being willing to address some of the areas that you might not want to uh, you know, underwrite for your own balance sheet.

Speaker Change: I think it is entirely possible that over time different partnership our partners may come forward different structures may emerge that make other sort of parts of the credit spectrum more attractive to us to originate and just find in a different way.

John Witter: So, you know, I do think there is a one plus one equals three opportunity for us to develop a complementary funding sort of partnership here. I think that's what Pete's tried to lay out over time. We think we're a great partner and we think we should expect attractive economics in that partnership as well as potentially providing great value if such a partnership.

You know? Um, Moshe it's a it's a great question again. Uh, so there's no confusion. We did not include anything like a balance sheet expansion in the 4 and a half 5 billion. We gave you. But uh, but yes, I mean at at the end of the day

Speaker Change: So we've not built any of that and I think it's probably premature for us to conjecture on is that are you know.

You know, we we sort of, you know, have gauge our buy box today off of the economic model, defined by our bank.

Speaker Change: Small big.

Speaker Change: Medium size opportunity and I think candidly, probably too premature for us to.

Jeffrey Adelson: Great. That's great color.

Unknown Attendee: Thanks. Thanks so much. Take care.

Speaker Change: Comment on sort of the timing of any type of expansion, but yes, I think we would certainly be open to that and I think logic would dictate that thats certainly a conceivable outcome.

Moshe Orenbuch: We'll take our next question from Moshe Orenbuch with T.D. Cowan. Your line is open. Great. Thanks. John, it seems to me that if you're talking about a $4.5 to $5 billion opportunity that would phase in over several years, most of it over two to three years, that would probably be consistent with just the normal expansion that you could expect from your normal loan sales if you wanted to. I understand the comments you made about seeking other structures.

Speaker Change: Thanks very much.

And that bank has a certain capital structure, it has a certain loan loss Reserve structure. It has a certain expense structure. It has a certain expectation of return on equity and by the way, you know, how committed I am to Capital allocation and strong Roes. And so, you know, that that has led us to what we think is a great answer where the bank is sort of, the stalking horse on how we fund the loans.

Speaker Change: Well move next to Mark Devries with Deutsche Bank. Your line is open.

Speaker Change: Yes. Thanks.

Speaker Change: Just a couple more clarifying questions on the market opportunity here.

Speaker Change: For the four $5 billion to $5 billion of incremental kind of opportunity you see for Sallie Mae are you assuming kind of a comparable market share of the new addressable market that you've had recently it kind of in the 60% plus range.

John Witter: I'm just wondering if as you do that, would some of those structures potentially expand that $4.5 to $5 billion by being willing to address some of the areas that you might not want to underwrite for your own balance sheet? You know, Moshe, it's a great question. Again, so there's no confusion. We did not include anything like a balance sheet expansion in the four and a half $5 billion we gave you. But, but yes, I mean, at the end of the day, you know, we sort of, you know, have gauged our buy box today off of the economic model defined by our bank.

Speaker Change: Yes.

Speaker Change: Okay simple enough.

Speaker Change: And then as we think about the incremental volume that comes on over and above what you would have.

Speaker Change: Um, I think it is entirely possible that over time, different partnership or Partners may come forward different structures. May emerge that make other sort of parts of the credit Spectrum, more attractive to us to originate, and just Fund in a different way. Um, so we've not built any of that in. I think it's probably premature for us to conjecture on is that a, you know, small big, you know, medium-sized opportunity. And I think candidly, you know, probably 2 premature for

Speaker Change: Planning for originally is there a percentage of that one should think of us.

Speaker Change: You kind of needing to sell versus retain to kind of maintain.

Speaker Change: Us to uh comment on sort of the timing of any type of expansion. But yes, I think we would certainly be open to that and I think logic would dictate that. That's certainly a conceivable outcome.

Speaker Change: Capital Sufficiency going forward.

Speaker Change: Got it. Thanks very much.

Speaker Change: Yeah.

Speaker Change: You said in answering a prior question our framework that we laid out in 2023.

We'll move next to Mark deise with Deutsche Bank, your line is open.

Speaker Change: Mid to high single digit balance sheet growth of the bank and loan sales used a moderate sort of the size of the bank balance sheet.

John Witter: And that bank has a certain capital structure, it has a certain loan loss reserve structure, it has a certain expense structure, it has a certain expectation of return on equity. And by the way, you know how committed I am to capital allocation and strong ROEs. And so, you know, that has led us to what we think is a great answer, where the bank is sort of the stalking horse on how we fund the loan. I think it is entirely possible that over time, different partners may come forward, different structures may emerge that make other parts of the credit spectrum more attractive to us to originate and just fund in a different way.

Speaker Change: With this sizable volume opportunity.

Speaker Change: Thank you could see us potentially pushing the growth rate of the bank are still single digits, but in a kind of higher single digits.

Speaker Change: Yeah, thanks. Um, just a couple more clarifying questions on the market opportunity here um or or for for the 4 and a half to 5 billion of them incremental kind of opportunity to see for for selling. My are you assuming kind of a comparable market share of the new addressable Market that you've had recently come in the 60 percent plus range.

Speaker Change: Yes.

Speaker Change: And continuing to sort of size loan sales or other funding mechanisms.

Speaker Change: Mechanisms that John talked about earlier as the.

Speaker Change: The alternative.

Speaker Change: Funding mechanisms besides the bank.

Speaker Change: Okay. Simple enough um and then as we think about the incremental volume that comes on, you know over and above what you would have or planned for originally, is there a percentage of that volume that we should think of as

Speaker Change: Okay great.

Speaker Change: And then one other question we've been getting from investors is is weather.

Speaker Change: You kind of needing to sell versus retain, the kind of maintain you know, um Capital sufficiency going forward.

Speaker Change: This new kind of expanded opportunity is going to make the market more trying to them all of a sudden.

John Witter: So we've not built any of that in. I think it's probably premature for us to conjecture on, is that a small, big, medium-sized opportunity? And I think, candidly, probably too premature for us to comment on the timing of any type of expansion. But yes, I think we would certainly be open to that. And I think logic would dictate that that's certainly a conceivable outcome. Thanks very much.

Speaker Change: And attract new competitors, maybe John just kind of talk about how you think.

Speaker Change: Yeah. Again, as I I said on, uh, in answering a prior question, you know, our framework that we laid out in 2023 had

Speaker Change: This new broader opportunity ultimately gets distributed in and you know what if any kind of barrier centuries are there that you know.

Speaker Change: Kind of mid to high single-digit, balance sheet growth in the bank and Loan sales used to moderate, you know, sort of the size of the bank balance sheet. I think with this,

Speaker Change: Size of a volume.

Speaker Change: To enable you to really kind of protect your market share.

Mark Devries: Mark Thanks.

Mark Devries: To put it in context, I think rough justice. This probably comes close to sort of doubling maybe not quite that that sort of.

Speaker Change: Opportunity. You know, I think you could see us potentially pushing the, you know, the growth rate of the bank up still single digits. But in, you know, kind of higher sing.

Mark Devries: We'll move next to Mark DeVries with Deutsche Bank. Your line is open. Yeah, thanks. Just a couple more clarifying questions on the market opportunity here. Or for the four and a half to 5 billion of incremental kind of opportunity to see for Sallie Mae, are you assuming kind of a comparable market share of the new addressable market that you've had recently kind of in the 60% plus range? Yes. Okay, simple enough. And then as we think about the incremental volume that comes on, you know, over and above what you would have planned for originally, is there a percentage of that volume that we should think of as you kind of needing to sell versus retain to kind of maintain, you know, capital sufficiency going forward?

Mark Devries: Total market size, depending on what kind of credit discount you want to apply to that.

Speaker Change: And continuing to sort of size loan sales or other funding uh you know mechanisms that John uh talked about earlier as the you know, the the alternative uh you know, funding mechanisms besides the bank.

Mark Devries: So it's a meaningful increase in the overall size of the market when fully implemented.

Speaker Change: um, you know, and then 1 of the questions we've been getting from investors is, you know, is whether

Mark Devries: It is still a very small market when you put it up against other consumer credit classes and so.

Mark Devries: Whether or not that attracts lots of other competitors or just some other competitors.

Mark Devries: I think I think time will tell.

Mark Devries: But I think the more important thing is what we are incredibly confident in our ability to compete and win and help service are important University partners.

This this new kind of expanded opportunity is going to to make the market more attractive, all of a sudden and and attract new competitors. Maybe John just kind of talk about how you think. Um, you know, this new broader opportunity ultimately gets distributed in in, you know what, if any kind of

Barrier centuries are there that, you know, that I think will enable you to really kind of protect your market share.

You know, Mark thanks. Um.

Mark Devries: And these are these students who are looking for access to and completion of their higher education.

Mark Devries: We have really better data and credit insights.

Pete Graham: Yeah, again, as I said on, in answering a prior question, you know, our framework that we laid out in 2023, had a mid to high single digit balance sheet growth of the bank and loan sales used to moderate, you know, sort of the size of the bank balance sheet. I think with this size of a volume opportunity, you know, I think you could see us potentially pushing the, you know, the growth rate of the bank up still single digits, but in, you know, kind of higher single digits, and continuing to sort of size loan sales or other funding, you know, mechanisms that John talked about earlier as the, you know, the, the alternative, you know, funding mechanisms besides Okay, great.

Mark Devries: We have incredibly sort of at scale.

Mark Devries: Systems and marketing engines.

Mark Devries: I think we have school relationships and a reputation with the schools of being a constant and persistent partner that they can count on.

Mark Devries: To support their businesses at volume.

Mark Devries:

Mark Devries: And so you know whether or not it attracts more competition or not I feel great about our ability to compete and win help our university partners be successful and help these students and their families peace in basketball.

Mark Devries: Okay, great. Thank you.

You know, to put it in context, I think rough Justice, you know, this probably, you know, comes close to, to sort of doubling, you know, maybe not quite the, the, the, the sort of, you know, total Market size depending on, you know, what kind of credit discount, uh, you want to apply to that. Um, so, you know, it's a meaningful increase in the overall, sort of size of the market when fully implemented. Um, it is still a very small Market when you put it up against other consumer credit classes and so, you know, whether or not that attracts, you know, lots of other competitors or just some other competitors, you know, I think, I think time will tell I, but I think the more important thing is look, we we uh, are incredibly confident in our ability to compete and win and help service our important University Partners, you know, and these are you know, these

Mark Devries: You know, one of the questions we've been getting from investors is, you know, is whether this new kind of expanded opportunity is going to make the market more attractive all of a sudden and attract new competitors. Maybe, John, just kind of talk about how you think, you know, this new broader opportunity, hopefully, gets distributed. And, you know, what if any kind of barrier centuries are there that, you know, that I think will enable you to really kind of protect your market share?

Speaker Change: Well move next to Michael Kaye with Wells Fargo. Your line is open.

Speaker Change: Students who are looking for access to and completion of their higher education.

Speaker Change: I just had another follow up on a private partnership.

Uh, we have, you know, really better data and credit insights.

Speaker Change: Are you still working on it for <unk>.

Speaker Change: Timing going to get something like that.

Speaker Change: Uh, we have uh, incredibly sort of at scale, uh, systems and, and marketing engines.

Speaker Change: Potentially done with this.

Speaker Change: Before the federal loan reform takes place next year.

Speaker Change: Ideally we would have the fully in place before any of the additional volume comes.

Speaker Change: We started.

Speaker Change: Um, you know, I think we have school relationships and a reputation with the schools of being a constant and persistent partner that they can count on uh to support their businesses at volume.

John Witter: You know, Mark, thanks. You know, to put it in context, I think rough justice, you know, this probably, you know, comes close to sort of doubling, you know, maybe not quite the sort of, you know, total market size, depending on, you know, what kind of credit discount you want to apply to that. So, you know, it's a meaningful increase in the overall sort of size of the market when fully implemented. It is still a very small market when you put it up against other consumer credit classes. And so, you know, whether or not that attracts, you know, lots of other competitors or just some other competitors, you know, I think I think time will tell.

Speaker Change: Thinking about this in the context.

Speaker Change: A supplement to our existing wound sales in context of our existing sort of business.

Speaker Change: Business strategic framework and.

Speaker Change: Savi.

Um, and so you know whether or not it attracts more competition or not. I feel great about our ability to compete and win, help our University Partners, be successful, and help these students and their families, be successful.

Speaker Change: The additional volume opportunity that's now being presented with this reform is.

Speaker Change: Okay, great. Thank you.

Speaker Change: Maybe an accelerant to our efforts in order to be ready.

Speaker Change: We'll continue to work on it we will announce it when we've got.

We'll move next to Michael K with Wells, Fargo, your line is open.

Speaker Change: No.

Speaker Change: And then is that the partnership would this just be these new incremental loans as part of this reform or would this be across like the whole stack of everything you originate including.

Speaker Change: You know the undergrad currently focus on today.

John Witter: But I think the more important thing is, look, we are incredibly confident in our ability to compete and win and help service our important university partners, you know, and these, you know, these students who are looking for access to and completion of their higher education. We have, you know, really better data and credit insights. We have incredibly sort of at scale systems and marketing engines. You know, I think we have school relationships and a reputation with the schools of being a constant and persistent partner that they can count on to support their businesses at volume.

I just had another follow-up on that private partnership, you know, I know you're still working on it but what the the timing goal to get something like this, you know, potentially done with this. Be um before the Federal Loan reform takes place next year.

Speaker Change: Yeah, I think it's broadly and alternative funding mechanisms for all originations over the phone.

Speaker Change: Okay and then.

And then I had another quick question on.

Speaker Change: On the loan modifications and he made a lot of enrollments.

Speaker Change: Uh, yeah. Ideally we would have that fully in place before any of the additional volume comes, you know, uh, we started, uh, you know, thinking about this in the context of um a supplement to our existing loan sales, and context of our existing sort of

Speaker Change: Enrollments in loan mods in the first half of last year.

Speaker Change: So like what are you telling me doing prepare these borrowers when these loan mods and two years from now which will be the first half of next year.

Speaker Change: Again, we've made some tweaks over time to the.

Business strategic framework. And, you know, I would say the the additional volume opportunity that's now being presented with this reform is, you know, maybe in an accelerant to our efforts to in order to be ready. So we'll we'll continue to work on it. We'll announce it when we've got something to announce.

Speaker Change: The <unk>.

Speaker Change: Enrollment mechanisms for the loan Mod programs.

John Witter: And so, you know, whether or not it attracts more competition or not, I feel great about our ability to compete and when help our university partners be successful and help these students and their families. Okay, great.

Speaker Change: Well as you.

Looking at.

And then the the partnership would would this just be these new incremental loans, as part of this reform or would this be a cross? Like the whole stack, everything you originated, including

Speaker Change: Performance.

Speaker Change: Of the borrowers in the programs.

Speaker Change: you know, the undergrad that you currently focus on today,

Speaker Change: And we feel really good about the success rates that we're seeing.

Speaker Change: And feel confident.

Yeah, I think it's it's broadly, an alternative funding mechanism for all all originations of the firm.

Speaker Change: Yes.

Speaker Change: The programs as designed are performing as we would've expected and.

Michael Kaye: Thank you. We'll move next to Michael Kaye with Wells Fargo. Your line is open. I had another follow up on that private partnership. You know, I know you're still working on it. But what's the timing goal to get something like this, you know, potentially done? Would this be before the federal loan reform takes place next year? Yeah, ideally, we would have that fully in place before any of the additional volume comes, you know. We started, you know, thinking about this in the context of a supplement to our existing loan sales in context of our existing sort of business strategic framework, and you know, I would say the the additional volume opportunity that's now being presented with this reform is, you know, maybe an accelerant to our efforts in order to be ready.

Speaker Change: Okay. And then, um,

Speaker Change: We are expecting the also similar to the performance while in program, it's going to be the right sort of glide path to get them back.

And then add another quick question on. Um, um, the loan modifications, you know, you've made a lot of um enrollments and Loan mods in the first half of last year.

Speaker Change: And good payment.

Speaker Change: <unk> won some.

Speaker Change: Once they emerge at the end of the at the end of the temporary Marc.

Speaker Change: So like what do you what's telling me doing to prepare these borrowers? When these loan mods end, you know, 2 years from then which will be the first half of next year

Speaker Change: Okay. Thank you.

Speaker Change: Well take our next question from Sanjay Sac, Ronnie with K B W.

Speaker Change: again, we're um, we we've made some tweaks over time to the um, you know, to the to the

Speaker Change: Your line is open.

Speaker Change: Thank you.

Speaker Change: Going back on credit quality and some of those.

enrollment mechanisms for the loan mod programs, as well as, um, you know, looking at

Speaker Change: California impacts.

Speaker Change: We think about the next couple of quarters do you not expect a significant impact to their specific.

Speaker Change: Data points to sort of give you confidence that you won't see them in just credit have to perform better in the second half versus the first half to sort of hit your targeted range.

Speaker Change: Yeah, again, just kind of reiterating the point that we.

Michael Kaye: We'll continue to work on it. We'll announce it when we've got And then the partnership, would this just be these new incremental loans as part of this reform? Or would this be across like the whole stack, everything you originate, including Absolutely. Absolutely. You know, the undergrad that we currently focus on today.

Speaker Change: We were we were trying to make her illness, we viewed it more as a shift.

Speaker Change: It's going to be the right. Uh, sort of

Speaker Change: Glide path to get them back.

Speaker Change: Quarter to quarter was in the first half of the year.

Speaker Change: You know the.

Speaker Change: When you look at the year to date performance on net charge offs.

Speaker Change: um, you know, in good payment payment patterns once, um, you know, once they emerge at the end of the, at the end of the temporary mod,

Okay, thank you.

Speaker Change: Right in line with.

Speaker Change: Our expectations, maybe even a little a few basis points better.

Michael Kaye: Yeah, I think it's it's broadly an alternative funding mechanism for all originations of the firm. And then... And then I had another quick question on the loan modifications and he's made a lot of enrollments and loan mods in the first half of last year. So, like, what are you, what time are you doing to prepare these borrowers when these loan mobs end, you know, two years from then, which will be the first half of next year? Again, we've made some tweaks over time to the enrollment mechanisms for the loan mod programs, as well as looking at performance of the borrowers in the programs. And we feel really good about the success rates that we're seeing and feel confident that the programs as designed are performing as we would have expected.

Speaker Change: We'll take our next question from Sanjay sakrani with KBW.

Speaker Change: And that gives us confidence in our sort of longer term journey and gives us confidence in terms of reaffirming our guidance for the full year.

Speaker Change: Your line is open.

Speaker Change: Okay.

Thank you. Um, going back on credit quality and some of those um, California impacts.

John Winter: And John just at $4 to 5 billion.

Speaker Change: As as we think about the next couple.

Speaker Change: Do you not?

Speaker Change: Incremental.

Speaker Change: How much of it is grad plus versus parent plus I mean is it probably the bulk of it is grad plus I'm just trying to think about how to dimensionalize that one third quarter.

Speaker Change: Corner Stat that you gave.

Speaker Change: Is there specific um, data points that sort of give you confidence that, you know you won't see them and does credit have to perform better in the second half versus the first half to sort of hit your targeted range.

Speaker Change:

Speaker Change: I am not sure we've divulge those numbers.

Speaker Change: Yeah again just kind of reiterating the point that uh we were we were trying to make around this. We viewed it more as a shift.

Speaker Change: It is two thirds grad plus it is one third parent plus.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: Thank you.

Speaker Change: Yep.

Speaker Change: And that's approximately obviously.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: And well move next to Giuliano Bologna with Compass point your line is open.

Speaker Change: Quarter to quarter within the first half of the year, uh, you know, the when you look at the year to date performance, on that charge offs, it's right in line with you know, our expectations uh maybe even a little a few days points better uh and that gives us confidence in our sort of longer term journey and gives us confidence in terms of reaffirming our guidance for the full year.

Speaker Change: Okay.

Michael Kaye: And we are expecting that also similar to the performance while in-program, it's going to be the right sort of glide path to get them back in good payment patterns once they emerge at the end of the temporary mod.

Speaker Change: Good afternoon, and congrats on the Arizona.

Speaker Change: Maybe jumping off of you just extending on that.

Speaker Change: The topic of this one 5 billion.

Speaker Change: As you just mentioned just on its own two thirds, Brent plus or somewhere in that Zip codes.

Speaker Change: And John just um that 4 to 5 billion uh incremental um how much of it is Grad Plus versus parent plus? I mean, is it probably the bulk of it is Grad? Plus, I'm just trying to think about how to Dimension that 1/3 and quarter stat that you gave.

Speaker Change: When I think about that transition.

um,

Unknown Attendee: Okay, thanks.

Speaker Change: Historically been at eight 9% graduate loan originations from extra sections.

Sanjay Sakhrani: We'll take our next question from Sanjay Sakhrani with KBW. Your line is open. Thank you.

Speaker Change: Having a disproportionate large growth in grad onesie shifts to make sure your balance sheet would you consider selling loans in a different way or selling drugs them separately going forward. That's the way to kind of keep your mix, where it is and then how should we think about those loans on a rounded basis versus kind of your current core loans.

I am not sure. We've we've divulged those numbers. Um, but

Pete Graham: Going back on credit quality and some of those California impacts, as we think about the next couple of quarters, do you not expect a significant impact? Are there specific data points that sort of give you confidence that, you know, you won't see them? And does credit have to perform better in the second half versus the first half to sort of hit your targeted range? Yeah, again, just kind of reiterating the point that we were trying to make around this. We viewed it more as a ship. quarter to quarter within the first half of the year.

Speaker Change: It is 2/3 Grad. Plus it is 1/3 Parent Plus.

Speaker Change: and that's approximately obviously,

Speaker Change: Got it.

Thanks.

Speaker Change: How mature duration or they currently how much lower the yields.

Speaker Change: I'm just thinking about some.

Speaker Change: Some rough parameters on something for the exact numbers here.

Operator: We'll move next to Giuliano bolognia with compass point, your line is open.

Speaker Change: Yeah.

Speaker Change: I'll take a crack at it and John can jump in if he thinks of I've missed any of the key points I think.

Operator: I definitely, you know, grab some of the results, you know, maybe jumping off and just expanding on that um,

Speaker Change: The existing Grad programs, we have are a small part of our book.

Pete Graham: You know, the when you look at the year to date performance on that charge jobs, it's right in line with, you know, our expectations, maybe even a little a few base points better. And that gives us confidence in our sort of longer term journey and gives us confidence in terms of reaffirming our guidance for the full year. Okay.

Speaker Change: And the primary competitor we have currently is the federal program and so you know.

Operator: the topic of this morning and I have to 5 billion um you know, as you just mentioned, it's all 2/3, you know, red plus or somewhere in that zip code,

Speaker Change: As we started looking at trying to size this opportunity.

Speaker Change: Some bureau data about the federal programs, and we tried to parse and understand a little bit about the credit quality of both the parent plus opportunity in the context of underground and the.

Sanjay Sakhrani: And John, just that four to five billion incremental, how much of it is grad plus versus parent plus? I mean, is it probably the bulk of it is grad plus? I'm just trying to think about how to dimensionalize that one third and quarter stat that you gave.

Speaker Change: The opportunity in the ground space.

Speaker Change: Our best view based on that data is done at the credit profile is largely similar to what we've currently been underwriting and other small scale in our existing programs.

Speaker Change: When I think about that transition, you know, historically been 8, 9%, graduate loan, originations from mixed perspectives. And, you know, having, you know, disproportionately large growth in grad, obviously shift to the mix of your balance sheet. Would you consider selling loans in a different way or selling gravel in separately, going forward as a way to kind of keep your your mix where it is. And then, how should we think about those loans on a real good basis versus kind of your current core loans? Like, are they how much short duration are they? How is the, how much, you know, lower the yield be? And just think about some some rough parameters. I was not looking for exact numbers here.

Speaker Change:

Speaker Change: <unk>.

Speaker Change: Quite honestly the grant.

Sanjay Sakhrani: I am not sure we've divulged those numbers, but it is two-thirds grad plus, it is one-third parent plus. Okay, great. Thank you. Yep. And that's approximately, obviously. Got it.

Speaker Change: <unk> is a is a lower loss pro into higher return products. If you think about that.

Speaker Change: These are typically people that.

Speaker Change: Well, they obviously have an undergrad degree, but they've worked for some period of time they have a credit profile.

Speaker Change: Yeah, um, I'll take a crack at it and John can jump in if he thinks I've I've missed any of the key points. I think, you know, the existing grad programs, we have are a small part of our book and the primary competitor we have currently is the federal program. And so

Speaker Change: And there are also.

Speaker Change: you know, as we started looking at trying to size this opportunity,

Speaker Change: We're very committed to pursuing a higher education on the basis of.

Speaker Change: Assuming that that's going to give them a higher earning a career going forward. So I would say broadly is going to perform better.

Giuliano Bologna: And we'll move next to Giuliano Bologna with Compass Point. Your line is open. Good afternoon. Congrats on the results. Maybe jumping off and expanding on the topic of the $4.5 to $5 billion. As you just mentioned, it's all two-thirds grad plus or somewhere in that zip code. Then how should we think about those loans on a relative basis versus your current core loans? How much shorter duration are they? How much lower the yield be? Just think about some rough parameters. I'm not looking for exact numbers here. Yeah, I'll take a crack at it. John can jump in if he thinks I've missed any of the key points.

Speaker Change: And.

Speaker Change: Then.

we got some Bureau data about the federal programs, and we tried to parse and understand a little bit about the credit quality of both, the parent plus opportunity and the context of undergrad and the, um, you know, the opportunity in the grad space.

Speaker Change: The underground those broadly.

Speaker Change: And.

Speaker Change: Depending on the nature of the programs the repayment will be will be different as well and I think.

Speaker Change: The mix there matters, you know business school.

Our best view based on that data is that the credit profile is largely similar to what we've currently been underwriting at a small scale uh in our existing, you know, programs. Um

Speaker Change: Tends to be shorter and probably the payback is quicker for submitted program, which is much more intensive longer course of study higher average balances outstanding and therefore longer repayment period, so until we.

Speaker Change: and you know quite honestly the the grant uh product is a is a lower loss product, a higher return product. If you think about that, you know that these are typically people that

Speaker Change: Have some real sort of underwriting data on the actual.

Speaker Change: You know volumes, it's going to be hard for us to give you a lot more than sort of the benchmarks that we've given so far.

Speaker Change: Have well, they obviously have an undergrad degree but they've worked for some period of time. They have a credit profile. Um and they're also, you know, very committed to pursuing a, you know, higher education on the basis of

Speaker Change: That's very helpful. One thing just to.

Speaker Change: But under something I'm kind of answering a previous question correctly.

Speaker Change: Correctly.

Speaker Change: I think the discussion.

Speaker Change: Uh, assuming that that's going to get them a higher earning, uh, career going forward. So I would say, broadly it's going to perform better, uh, than, um, than than, uh, the, the undergrad. Uh, does broadly. Uh, and

Pete Graham: I think, you know, the existing grad programs we have are a small part of our book. And the primary competitor we have currently is the federal program. And so, you know, as we started looking at trying to size this opportunity, we got some bureau data about the federal programs, and we tried to parse and understand a little bit about the credit quality of both the parent plus opportunity in the context of undergrad, and the, you know, the opportunity in the grad space. Our best view based on that data is that the credit profile is largely similar to what we've currently been underwriting at a small scale in our existing programs. And, you know, quite honestly, the grant product is a lower loss product, a higher return product, if you think about that.

Speaker Change: It sounds like you guys might be.

Speaker Change: Maybe a similar assumption market share was around 60% is that just for the underground or parent plus capture.

Speaker Change: In your prepared remarks, you referred to the ground.

Speaker Change: Roundup Cheetos mango.

Speaker Change: Third to half of the opportunity just want make sure if that's thrown at them looking at them separate 60% underground and third task on my grandson.

Speaker Change: Yeah <unk>.

Speaker Change: <unk> the numbers arent actually all that different so as Pete said you know the primary player in the Grad space has been the federal government, we do do grabbed lending today.

Speaker Change: Will be different as well. And I think, you know, the mix there matters, you know, business school. Um, uh, tends to be shorter and probably the payback is quicker versus a med program, which is much more intensive longer course of study higher average, you know, balances outstanding, and therefore a longer repayment period. So until we, you know, have some real sort of underwriting data on the actual, uh, you know, volumes. It's going to be hard for us to give you a lot more than, you know, sort of the benchmarks that we've given so far.

Speaker Change: The various data providers do provide out or do you provide data out on sort of the level of of private grad loans. So if you look at the interval data yes.

that's very helpful and and 1 thing just to to make sure I um,

Speaker Change: There is about.

Speaker Change: About $927 million a year, that's probably a 2024 kind of number in 2023 'twenty four number and.

Pete Graham: You know, these are typically people that have, well, they obviously have an undergrad degree, but they've worked for some period of time, they have a credit profile, and they're also, you know, very committed to pursuing a, you know, higher education on the career going forward. So I would say broadly, it's going to perform better than the undergrad does broadly. And depending on the nature of the programs, the repayment will be will be different as well. And I think, you know, the mix there matters, you know, business school tends to be shorter and probably the payback is quicker versus a med program, which is much more intensive, longer course of study, higher average, you know, balance is outstanding, and therefore a longer repayment period.

Speaker Change: And we did about $623 million of that so quick math, that's about a 67% market share so actually slightly more than I think what we would have done in the undergraduate space, but I think still in the in the same basic ballpark given that data I think is more directional than.

Speaker Change: I understood, you know, kind of answer a pretty good question. Um, correctly. Um, you know, I think there's a question kind of applying kind of like, you guys might face making a similar assumption market share wise around. 60%, is that just for the undergrad or Parent PLUS capture because in, in the Pres in um, in your prepared remarks, you refer to the grab of the of the grad opportunity, as Daniel about a third to half of the opportunity, just want to make sure that that's the right way to look at it. That's separate. 60% undergrad and the third half on the grad side,

Speaker Change: Absolutely precise.

Speaker Change: So theres not a whole lot of difference in our mind in our current market share, but between grad and undergrad, but I think Pete's point is really right. This is a fundamental sort of change in the way that graduate students and graduate schools will asset fund their higher education.

Speaker Change: Yeah. Uh, interestingly you know, the numbers aren't actually all that different, you know. So as as Pete said, you know, the primary player in the grad space has been uh, the federal government. We do do grad lending today, uh, you know, the various data providers do provide out on or do provide data out on uh, sort of the level of of

Speaker Change: Private grad loan.

Speaker Change: if you look at,

Speaker Change: It allows us to serve customers and sort of compete for business that was simply not available to us before and.

Speaker Change: But we don't see any reason why.

Pete Graham: So until we, you know, have some real sort of underwriting data on the actual, you know, volumes, it's going to be hard for us to give you a lot more than, you know, sort of the benchmarks that we've given so far.

Shouldn't maintain our market share and compete.

Pete Graham: Pete aggressively for that.

Speaker Change: Got it that's very helpful and I appreciate all the answers and I'll.

Pete Graham: I'll jump back into queue.

Pete Graham: This concludes the Q&A portion of today's call I would now like to turn the floor over to Mr. John Winter for closing remarks.

John Witter: That's very helpful. And one thing just to make sure I I understood the answer to a previous question correctly. I think there's a question implying that you guys might be making a similar assumption market share-wise around 60%. Is that just for the undergrad or parent plus capture? Because in your prepared remarks, you refer to the grad opportunity as being about a third to half of the opportunity. I just want to make sure that's the right way to look at it, that it's separate, 60% undergrad and a third to half on the grad side. Yeah, interestingly, you know, the numbers aren't actually all that different, you know, so as Pete said, you know, the primary player in the grad space has been the federal government, we do do grad lending today.

Pete Graham: Well. Thank you everyone for your time and attention today.

Pete Graham: Hopefully you got a sense about sort of the pride, we have taken in our second quarter and first half performance.

Pete Graham: I hope you likewise.

Pete Graham: The momentum that we expect to carry into the second half of the year.

Pete Graham: But really most importantly, I hope you hear in our voice excitement about us being able to work closely with our University partners.

The interval data, you know, there's about, uh, you know, about 927 million dollars a year. That's probably a, you know, 2024 kind of number 2023, 24 number, you know, and and we did about 623 million of that. So, you know, quick math says, that's about a 67% market share. So actually slightly more than I think, what we would have done in the undergraduate space, but I think still in the, in the same basic ballpark given, you know, that data I think is more directional than than, absolutely precise. Um, so there's not a whole lot of difference in our mind in our current market share, but, uh, between grad and undergrad. But I think Pete's point is really right. This is a fundamental sort of change in the way that graduate students and graduate schools will sort of fund their higher education. Um, you know, it allows us to serve customers and sort of compete for business, that was simply not available.

Pete Graham: A new group of students some of them. We've served before some of whom we haven't had to really continue our mission of providing access to and completion of sort of financing for higher education. We think this is a really important and pivotal moment for the company. We think this opens up.

To ask before and uh, but we don't see any reason why.

Speaker Change: We shouldn't maintain, you know, our market share and um, sort of compete aggressively for that.

Speaker Change: That is very helpful and I appreciate all the answers. Thank you. And I'll jump back into

John Witter: You know, the various data providers do provide out on or do provide data out on sort of the level of private grad loans, you know, so if you look at the interval data, you know, there's about, you know, about $927 million a year, that's probably a 2024 kind of number 2023-2024 number, you know, and we did about 623 million of that. So, you know, quick math says that's about a 67% market share, so actually slightly more than I think what we would have done in the undergraduate space, but I think still in the in the same basic ballpark, given, you know, that data, I think is more directional than absolutely precise.

Pete Graham: A.

Pete Graham: And expansive new strategic opportunities for us and we look forward to continuing these discussions in the quarters and years ahead.

You, this concludes the Q&A portion of today's call, I would now like to turn the floor over to Mr. John Witter for closing remarks,

Speaker Change: well, uh,

John Witter: Thank you, everyone, for your time and attention today. Uh, hope

Pete Graham: Recognizing these opportunities and are there.

Speaker Change: hopefully, you got a

Speaker Change: sense about

Pete Graham: Sort of our excitement about pursuing that I hope everyone has a great rest of your day and we'll look forward to talking next quarter, if not before thank you.

Kate Delay: I'll now turn the call back over to Kate.

Kate Delay: Thank you I'll pick a time and questions today, a replay of this call and the presentation will be available on the investors page at Sallie Mae Dot Com. If you have any further questions feel free to contact me directly. This concludes today's call.

Kate Delay: Thank you. This concludes today's Sallie Mae's second quarter 2025 earnings conference call and webcast. Please disconnect. Your line at this time and have a wonderful evening.

Speaker Change: in our second quarter and first half performance. Uh, I hope you likewise uh, sort of sense, the, the momentum that we expect to carry into the second half of the year. But really, most importantly, I hope you hear in our voice the excitement about, uh, us being able to work closely with our University Partners, uh, a new group of students, some of whom we've served before some of whom we haven't, uh, to really continue our mission of providing access to and complete.

John Witter: So there's not a whole lot of difference in our mind in our current market share, but between grad and undergrad, but I think Pete's point is really right. This is a fundamental sort of change in the way that graduate students and graduate schools will sort of fund their higher education. You know, it allows us to serve customers and sort of compete for business that was simply not available to us before, but we don't see any reason why we shouldn't maintain, you know, our market share and sort of compete aggressively for that.

Speaker Change: Sort of financing for higher education.

Uh, we think this is a really important and pivotal moment for the company. Uh, we think this opens up, uh, you know, a

Speaker Change: You know, and and expansive, new strategic opportunities for us and we look forward to continuing these discussions and the quarters and years ahead.

Uh, recognizing

Communities. And

Sort of uh, our excitement about pursuing them. So I hope everyone has a great rest of your day, uh, and we'll look forward to talking next quarter, if not before, thank you.

Giuliano Bologna: That is very helpful, and I appreciate all the answers. Thank you, and I'll jump back into Q.

Unknown Attendee: This concludes the Q&A portion of today's call.

John Witter: I would now like to turn the floor over to Mr. John Witter for closing remarks. Well, thank you everyone for your time and attention today. Hopefully you got a sense about sort of the pride we've taken in our second quarter and first half performance. I hope you likewise sort of sense the momentum that we expect to carry into the second half of the year. But really, most importantly, I hope you hear in our voice the excitement about us being able to work closely with our university partners, a new group of students, some of whom we've served before, some of whom we haven't, to really continue our mission of providing access to and completion of sort of financing for higher education.

I'll now turn the call back over to Kate. Thanks Dan. Thank you all for your time and questions today, a replay of this call and the presentation will be available on the investor stage at Sally May calm. If you have any further questions, feel free to contact me directly. This concludes today's call.

Speaker Change: Thank you this concludes today's Sally May 2nd quarter 2025 earnings conference call and webcast. Please disconnect your line at this time and have a wonderful evening.

John Witter: We think this is a really important and pivotal moment for the company. We think this opens up, you know, an expanse of new strategic opportunities for us. And we look forward to continuing these discussions in the quarters and years ahead, recognizing these opportunities and sort of our excitement about pursuing them. So I hope everyone has a great rest of your day. And we'll look forward to talking next quarter, if not before. Thank you.

Kate deLacy: I'll now turn the call back over to Kate. Thanks, John. Thank you all for your time and questions today. A replay of this call and the presentation will be available on the Investors page at sallymay.com. If you have any further questions, feel free to contact me directly.

Unknown Attendee: This concludes today's call. Thank you.

Unknown Attendee: This concludes today's Sallie Mae second quarter 2025 earnings conference call and webcast. Please disconnect your line at this time and have a wonderful evening.