SLM poised for long-term growth and profitability with strategic developments and loan expansion.

SLM's recent earnings miss was attributed to higher provisions and macroeconomic factors, but the company is expected to benefit from changes in its Plus program, additional loan originations, and a sale of private student loans. This has led to a Buy rating with a price target of $40.00 from TD Cowen analyst Moshe Orenbuch. Barclays also maintained a Buy rating with a $43.00 price target.

SLM Corporation (SLM), a leading provider of private education loans, reported its second-quarter (Q2) 2025 earnings on July 24, 2025. The company's earnings per share (EPS) of $0.32 fell short of analyst expectations by $0.17, representing a 34.6% miss [1]. Revenue of $376.8 million also missed expectations, trailing the $399.5 million forecast.

Key factors contributing to the earnings miss include higher credit provisions and macroeconomic factors. Credit provisions (GAAP) rose sharply to $149 million, up from $17 million in the prior year quarter, primarily due to a more cautious macroeconomic outlook and an increase in the weighted average life of the portfolio [1]. Additionally, net charge-offs increased to 2.36% of average loans in repayment, from 2.19% in Q2 2024, indicating a deterioration in credit quality metrics [1].

Despite the earnings miss, SLM's core lending business showed growth. Private education loan originations reached $686 million, with average private education loans outstanding rising 10% compared to the prior year, reaching $22.6 billion [1]. The company's strategy of focusing on students at four-year institutions and requiring school certification plus cosigners has helped maintain good credit quality and lower delinquencies.

Looking ahead, SLM projects GAAP diluted earnings per share between $3.00 and $3.10 for the full year, with private education loan origination growth of 6–8% and net charge-offs within a range of 2.0–2.2% [1]. Analysts remain optimistic about the company's prospects. TD Cowen analyst Moshe Orenbuch maintained a Buy rating with a price target of $40.00, citing the potential benefits from changes in the Plus program, additional loan originations, and a sale of private student loans [2]. Barclays also maintained a Buy rating with a $43.00 price target.

References:
[1] https://www.nasdaq.com/articles/slm-posts-q2-earnings-miss
[2] https://seekingalpha.com/news/4471966-sallie-mae-outlines-4_5b-5b-annual-origination-opportunity-following-federal-student-loan