SLM (SLM) TD Financial Services & Fintech Summit summary

Market and industry trends

• Undergraduate enrollment and loan applications are rising, signaling a return to growth in the education sector.

• FAFSA processing delays have improved, with schools catching up and peak origination season expected to be compressed but not reduced in volume.

• The exit of a major competitor is expected to boost originations above trend this year and next, with disciplined competition anticipated.

• Regulatory focus is shifting toward targeted aid and federal system reform, with bipartisan support for changes post-election.

• State-level free college programs are seen as targeting the most needy, with limited impact on the core customer base.

Credit performance and borrower support

• No significant difference in credit performance between borrowers with and without federal loans; credit guidance remains stable.

• New loan modification and forbearance programs, compliant with OCC guidelines, are showing early success in helping borrowers re-age into performing status.

• Expanded grace and early repayment assistance periods are primarily used by new borrowers, with hardship forbearance stable at about 1%.

• Net charge-off rates are trending toward the high 1% to low 2% range, with positive credit performance in the first and second quarters.

• Expectation of normalized program exits offsetting new inflows by late 2024.

Capital markets and funding

• Strong investor demand for loan sales and ABS funding, with recent transactions oversubscribed and pricing tightened.

• A $1.5 billion loan sale closed before Memorial Day, with secondary securitization pending in Q2.

• Deposit pricing remains middle of the pack, responsive to Fed rate movements and competitor actions.