Moody's Affirms SLM Corporation and Sallie Mae Bank Ratings, Outlooks Differ

SLM Corporation, the leading originator and servicer of private student loans in the US, has maintained its strong market position, high profitability levels, and solid capital and liquidity positions at its bank subsidiary, Sallie Mae Bank. Moody's Investors Service has affirmed all of the ratings and assessments of SLM and Sallie Mae Bank, citing the company's dominant market share and consistent loan sales execution. However, the outlook for SLM's long-term issuer and senior unsecured debt ratings remains negative due to concerns over high double leverage and potential regulatory risks.

Key Takeaways:

• SLM Corporation's ratings, including long-term issuer and senior unsecured debt ratings of Ba1, were affirmed by Moody's, reflecting the company's strong franchise and profitability levels.
• Sallie Mae Bank's ratings, including a Baseline Credit Assessment (BCA) of baa3 and adjusted BCA of baa3, were also affirmed, with a stable outlook on its long-term issuer and long-term bank deposit ratings.
• The negative outlook on SLM's long-term issuer and senior unsecured debt ratings reflects high double leverage at the parent company, estimated at 145% as of December 31, 2024.
• Sallie Mae Bank's BCA is positioned two notches below the current baa1 median BCA of rated US regional banks, with a negative one-notch adjustment for business concentration.
• SLM's return on tangible assets was 4.2% (annualized) in Q1 2025 and 2.0% for all of 2024, significantly above US regional banks.
• Sallie Mae Bank's loan credit performance has stabilized over the past couple of years, with an estimated net charge-off rate of 3.4% (annualized) in Q1 2025.
• The stable outlook on Sallie Mae Bank's long-term issuer and long-term bank deposit ratings reflects its continued strong profitability and robust liquidity and regulatory capital ratios.

Statistics:

• SLM's return on tangible assets: 4.2% (annualized) in Q1 2025, 2.0% for all of 2024.
• Sallie Mae Bank's net charge-off rate: 3.4% (annualized) in Q1 2025.
• SLM's double leverage: 145% as of December 31, 2024.
• Sallie Mae Bank's BCA: baa3, with a stable outlook on long-term issuer and long-term bank deposit ratings.
• US regional banks' average return on tangible assets: around 1%.
• Sallie Mae Bank's tangible common equity to risk-weighted assets ratio: above 11%.

Sources:

• Moody's Investors Service, "Moody's Ratings", available at [https://ratings.moodys.com/rmc-documents/432741](https://ratings.moodys.com/rmc-documents/432741).
• Moody's Investors Service, "Rating Methodologies", available at [https://ratings.moodys.com](https://ratings.moodys.com).