Student loan provider SLM Corp. (SLM), commonly known as Sallie Mae, Monday announced that it would bring back its overseas operations to the U.S., creating 2,000 jobs. Sallie Mae said it expects to hire call center, information technology, and operations support positions over the next 18 months.
In a statement, chief executive officer, Albert Lord said, For 37 years, we have been dedicated to helping America's students enhance their lives through an investment in higher education. We also contribute economically to the many communities where we operate our business. The current economic environment has caused our communities to struggle with job losses. They need jobs, and we will put 2,000 of them into U.S. facilities as soon as we possibly can.
The Reston, Virginia-based Fortune 500 company has operations abroad, which Sallie Mae intends to relocate back to the U.S. Sallie Mae employs more than 8,000 people across the country, including Florida, Indiana, Pennsylvania and Texas. The higher cost of employment in the U.S. is reportedly expected to cost the company about $35 million annually. The company moved the jobs overseas about a year back in order to cut costs, as Sallie Mae was struggling under the credit crisis.
In January, Sallie Mae reported a net loss for the fourth quarter, hurt by higher provisions for private loan losses and significant growth in federal student loan originations. Despite dislocation in the credit markets during the third quarter, the company's core student loan businesses were profitable, and its total managed student loan portfolio performed within expectations. The company's managed student loan portfolio totaled $180.39 billion at December 31, 2008, compared to $163.58 billion in the previous year.
Sallie Mae reiterated at that time that it would continue to provide student loans, despite tough economic conditions, primarily due to the federal government's liquidity solutions and a secure source of funding for private student loans through term bank deposits.
However, President Obama's proposal to eliminate the role of private sector in government's college loan program could hurt the company, and it would lose a major source of income if the proposal is adopted. In his budget proposal for 2010 announced in February, Obama asked Congress to shift the entire system to direct government loans and eliminate subsidies to banks. In the current system, students can borrow directly from the government or take out loans from banks and other private lenders that are subsidized by the government. Obama's proposal is expected to save over $4 billion a year.
In a response to this proposal, Sallie Mae said that in 2008, it worked closely with Congress and the Administration to ensure continued access to federal student loans at no increase in cost to taxpayers. The company also stated that it will continue to work with the Administration and Congress as more details emerge in the weeks and months ahead.
Sallie Mae, the nation's leading provider of student loans, primarily provides federal and private student loans for undergraduate and graduate students and their parents. Through its affiliates, the company also manages more than $17.5 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 10 million members and more than $475 million in member rewards.
In Monday's regular trading session, SLM is currently trading at $5.65, up $0.30 or 5.61% on a volume of 3.97 million shares. In the past 52-week period, the stock has been trading in a range of $3.11 to $25.05.
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