The consortium that agreed to acquire Sallie Maesaid on Tuesday it sent a revised proposal to the student lender offering to pay $50 a share in cash plus warrants that could result in an extra payout.
But Sallie Mae responded by saying it expects the buyers to honor their original contract.
The group had agreed to pay $60 a share, or $25 billion, for Sallie Mae in April. Since then, legislation slashing subsidies to student lenders and a serious credit squeeze have jeopardized the deal.
Private equity firm J.C. Flowers said it sent the revised proposal on behalf of the consortium, which also includes JP Morgan Chase, Bank of Americaand private equity firm Friedman Fleischer and Lowe.
In the revised proposal, the consortium said if Sallie Mae performed in line with its own projections, the warrants could result in a payout of more than $7 per share, and if the student lender exceeded its projections, the payout could reach $10 per share.
"I think Sallie was probably looking for closer to $55, but you do have the sweetener if the business is going well ... you should get about $57," said Richard Hofmann, analyst at CreditSights. "I think they (Sallie Mae) might try to come back and get more cash."
The consortium said its proposal to revise the offer expires on October 9.
Sallie Mae shares rose on the news of the revised proposal but then gave up their gains.
"This revised proposal offers full and fair value to the Sallie Mae shareholders in light of the changes that have occurred since the signing of our agreement ... " Christopher Flowers, managing director of J.C. Flowers, said in a letter to Sallie Mae's board.
Sallie Mae refused a week ago to meet with J.C. Flowers to discuss any revisions to the proposed buyout, CNBC's David Faber reported, citing people close to Sallie Mae.
"Sallie Mae said, 'We're not meeting with you. We're refusing to entertain even hearing whatever new offer you want to bring to us,'" Faber said, adding that Sallie Mae insisted on either the original offer or a $900 million breakup fee to get out of the deal.
The consortium has already said it does not expect to complete its acquisition on the terms agreed upon in April.
The original agreement has a breakup fee of $900 million, but if the buyers can prove the new legislation affecting student lenders causes a material adverse change to the transaction, they would not have to pay.
The student lender has maintained the new legislation does not constitute a material adverse change.
"Our contract is with Bank of America and JPMorgan Chase, two of America's largest and strongest banks," said Sallie Mae in a statement on Tuesday. "We expect these banks to honor that contract, not breach the contract."
On September 27, President George W. Bush signed student loan legislation that cuts federal subsidies to lenders such as Sallie Mae, Citigroup , Bank of America and many others.
If the Sallie Mae deal were to fail, it would be the latest casualty among a series of proposed leveraged buyouts to falter following the meltdown in credit markets over the last couple of months.
-- Reuters contributed to this report.