Paying for College Blog

Student Lenders Not Immune to Crisis of Confidence in Financials

For those wondering how the student lenders performed on a day when the Dow Jones Industrials dropped 500 points (a 4.4% drop), the answer is not so marvelously.   Keep in mind, as you look at the figures below that the financial sector of the S&P500 overall fell 9.74% as investors fled this sector of the market. 

Here is how the student loan industry fared today, 9/15/08:

Company	9/15 Price Change
Nelnet	Down 5.68%
Student Loan Corporation	Down 9.90%
First Marblehead	Down 14.15%
Sallie Mae	Down 14.48%
My Rich Uncle	Down 35.71%

SLA Student Loan Index Rises 13% in August to 52.2

So, what is Mr. Market telling us about the outlook for student loan companies?  The SLA Student Loan Index, an equally weighted index of the five publicly held "pure-play" student loan companies rose 13% in August driven by strong stock price gains at First Marblehead and Nelnet.   As a quick reminder, this index was launched in early July 2008 to provide a barometer of investor sentiment about the industry.  The components of this index are Sallie Mae (SLM), Student Loan Corporation (STU), Nelnet (NNI), First Marblehead (FMD) and MRU Holdings (UNCL)

While these five companies vary greatly based on their focus (First Marblehead is focused on securitizations of private loans while Sallie Mae is a vertically integrated provider of FFEL and private loans) and their size (Sallie Mae has a market cap. over $9 billion while MRU is just north of $70 million), this index provides some insights on both the individual prospects of companies and also the overall direction of the industry.

Here is the highlights of how the index has recently performed: