Sallie Mae Posts Loss, Says Can't Lend at a Profit
Sallie Mae , formally known as SLM Corp, posted a first quarter net loss attributable to common shareholders of $132.8 million, or 28 cents a share, compared with net income of $107 million, or 26 cents a share, in the same quarter last year.
Sallie Mae is under pressure from several sides now, and its difficulties threaten to create a full-blown student lending crisis.
The company's financing costs have risen amid the credit crisis. Also, student loan laws passed last year cut subsidies to lenders, pushing many to scale back their lending or to leave the business altogether.
Sallie Mae Chief Executive Albert Lord said in a statement, "It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution."
U.S. legislators are working on crafting laws to help stabilize the student loan market.