It has been a rough couple days for SLM's stock price as it has dropped 24%, from $4.71 to $3.57, in the last two trading sessions. With all the volatility the markets have seen, I am cautious to place any greater meaning on the drop, however there are some events on the horizon that probably have captured investor's attentions. Here are some of the major questions that may be weighing on the stock:
- Which servicers will be selected to service the FFEL loans that are being sold to the Department of Education through ECASLA?
- Decision is expected in early April with Sallie Mae being one of the six finalists
- Will the Obama budget proposal to eliminate FFELP go through the reconciliation process which would make it easier for passage. The Chronicle of Higher Education reported on this today (from NASFAA News):
"Student-loan companies,
faced with the threat of extinction, are finding a glimmer of hope in
the Senate's budget blueprint for the 2010 fiscal year," The Chronicle of Higher Education
reports. "The spending plan, which will be unveiled later today or
tomorrow, will not instruct the education committees in Congress to
undertake the deficit-cutting process known as budget reconciliation.
The omission could make it harder for Democrats to push through
President Obama's plan to abolish the guaranteed-loan program. That's
because budget-reconciliation bills, unlike regular bills, are
filibuster-proof and require only a simple majority to pass. If the
Senate took up the president's plan through the reconciliation process,
it could pass with only 51 votes."
- Under what terms will Sallie Mae be refinancing their $26 billion
asset-backed commercial paper facility which had been extended two
months to April 28, 2009?
- Sallie Mae has stated that they should be able to bring this facility down significantly, however the first round of TALF passed without a student loan deal and the conduit, which was supposed to be implemented by mid-February, has not been completed.
- What will be the market's reception to the new Sallie Mae Smart Options student loan given its requirement that students will be required to make interest payments during the in-school period?
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