SLM Corporation Secures $1.5 Billion Annual Funding Agreement with Sixth Street

SLM Corporation announced a three-year strategic agreement with Sixth Street to sell newly originated private education loans. Under the deal, Sixth Street committed to purchasing a minimum of $1.5 billion in these loans annually, starting with an initial seed portfolio of $600 million in seasoned loans. The announcement followed a Q3 earnings call where SLM Corporation lowered its full-year earnings guidance and pulled back on planned whole-loan sales.

The partnership diversifies SLM Corporation's funding options beyond traditional bank deposits. Management chose to retain certain assets instead of executing planned loan sales because capital market prices were below minimum thresholds, allowing the company to capture a 5% net interest margin on those retained assets.