SLM (SLM) Q1 2026 Earnings Call Transcript

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Date

Thursday, April 23, 2026 at 5:30 p.m. ET

Call participants

• Chief Executive Officer — Jonathan W. Witter
• Chief Financial Officer — Peter M. Graham
• Head of Investor Relations — Melissa Bernat

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Takeaways

• Diluted EPS -- $1.54, up from $1.40 in the comparable period, reflecting higher shareholder returns.
• Total Loan Originations -- $2.9 billion, a 5% increase attributed to enhanced loan disbursement funnel performance.
• Loan Sales -- $3.3 billion executed, generating $146 million in gains, including $1.3 billion of new origination sales through strategic partnerships and a $2 billion seasoned loan portfolio sale at mid- to high-single-digit gains.
• Net Interest Income -- $375 million, flat year over year, indicating stable revenue from lending activities.
• Net Interest Margin -- 5.29%, up both sequentially and from the prior year, driven by lower funding costs and balance sheet discipline.
• Net Charge-Offs -- $89 million, described as modestly ahead of internal expectations.
• Loans Delinquent 30 Days or More -- 3.98% of loans in repayment, modestly lower than year-end 2025.
• Cosigner Rate -- 95% on new originations, up from 86% five years ago, indicating an increased focus on risk mitigation.
• Average FICO Approval -- 754 on new loans, compared to 750 five years prior.
• Provision for Credit Losses -- Negative $11 million, primarily due to a $131 million reserve release from loan sales, offset by higher commitments and economic updates.
• Reserve Rate -- 6.05% at period end, modestly higher than the previous quarter, reflecting seasonal origination trends.
• Liquidity -- 21.2% of total assets at quarter-end, demonstrating strong cash and equivalents relative to the balance sheet.
• Total Risk-Based Capital -- 13.7%; Common Equity Tier 1 -- 12.4%, indicating solid capital ratios.
• Share Repurchases -- Approximately 12 million shares bought year-to-date at $21.50 average price, representing 6% of year-end 2025 shares outstanding.
• Accelerated Share Repurchase (ASR) -- $200 million program launched during the quarter.
• Cumulative Share Reduction Since 2020 -- Shares outstanding reduced by 58% at $17.15 average price, as part of long-term capital return strategy.
• Efficiency Ratio -- 30.6% for the quarter, reflecting operational cost control amid growth investments.
• Noninterest Expenses -- $171 million compared to $155 million in the prior year, driven by targeted investments in graduate lending programs.
• 2026 Guidance for Diluted EPS -- $3.10 to $3.20, incorporating $500 million repurchase authorization and an incremental $1 billion in loan sales.
• Origination Growth Outlook -- Management anticipates up to 70% origination growth over several years, benefiting from federal reforms in undergrad and graduate lending.
• Strategic Partnerships -- A new partnership is expected to launch before year-end, further expanding capital-light growth avenues.
• Program Management Fees -- The partnership model with KKR and future arrangements are anticipated to build recurring fee-based revenue streams.

Summary

SLM Corporation (NASDAQ:SLM) emphasized its readiness to capture significant growth as federal reforms propel both undergraduate and graduate private loan markets. Management stated, "We have already rolled out several of these enhancements, including our new medical and dental school offerings, with more to come," signaling active portfolio expansion. The company continues to leverage whole loan sales and multi-year strategic partnerships to optimize capital and accelerate share buybacks, demonstrated by execution of a $2 billion seasoned portfolio sale and a $200 million ASR within the quarter. Management noted ongoing strong demand in structured finance channels and explicitly outlined a proactive approach to creating recurring fee-based income via expansion of partnership models. Looking forward, SLM affirmed its 2026 operational outlook apart from EPS revisions related solely to the timing and mechanics of share repurchases and incremental loan sale gains.

• Witter said, "We have sharpened our customer acquisition strategies to extend our market-leading position," highlighting a proactive stance in marketing and origination channels.
• Graham said, "We expect to fully utilize our $500 million share repurchase authorization during calendar year 2026," clarifying capital allocation intentions.
• SLM’s cosigner rate and FICO improvements over five years may indicate both risk selection discipline and a multiyear focus on originations quality.
• Company-reported loan sales use a blend of new origination and seasoned portfolios, which management says "can have a denominator effect" on ratio-based credit metrics during periods of large-scale asset transfers.
• Guidance for incremental growth in graduate loan originations beginning in the back half of 2026 may alter the company’s origination and sale mix as further strategic partnerships scale.

Industry glossary

• ASR (Accelerated Share Repurchase): A structured agreement enabling a company to repurchase shares rapidly from the market through an immediate upfront purchase, often as part of broader capital management.
• Forward Flow Sale: An agreement to systematically sell new loan originations over time to third parties, typically under preset terms, to achieve capital optimization and risk transfer.
• Program Management Fee: Recurring fee income earned for overseeing or servicing assets (e.g., loans) managed for strategic partners, supplementing net interest income.
• Efficiency Ratio: Noninterest expenses as a percentage of total net revenue, used to gauge expense management relative to income generation.
• Seasoned Loan Portfolio Sale: The sale of a block of loans that have already undergone a period of repayment performance, as opposed to newly originated loans.

Full Conference Call Transcript

Jonathan W. Witter: Thank you, Melissa and Erica. Good evening, everyone. Thank you for joining us to discuss SLM Corporation’s first quarter 2026 results. Our performance in the quarter was strong as we continue to reap the benefits of the strategy we have been pursuing for the last several years. Diluted EPS in the first quarter was $1.54 per share, as compared to $1.40 in the year-ago quarter. Loan originations were $2.9 billion, up 5% from the prior-year quarter. These results were driven by strength in our loan disbursement funnel.

Importantly, this performance precedes the expected multiyear growth in both undergrad and graduate lending tied to federal reforms, which we believe could increase our originations by up to 70% over the next several years. We have been actively preparing for this opportunity, driving improvements across our full delivery system—from products and features to enhanced client acquisition strategies and improved servicing and fulfillment capabilities. We have already rolled out several of these enhancements, including our new medical and dental school offerings, with more to come. Our goal is to serve as many students, families, and university partners as possible as the higher education sector navigates this time of change.

Net charge-offs and delinquencies were consistent with or slightly better than our expectations. Net charge-offs were $89 million, driven by continued underwriting discipline and the ongoing optimization of our loss mitigation, collections, and recovery strategies. In 2025, the granting of disaster-related forbearance tied to the California wildfires and the North Carolina floods temporarily suppressed both net charge-offs and delinquencies, creating tougher year-over-year comparisons. Shifting gears, you will remember customers started exiting our new loan program at the end of 2025. I am happy to report that their performance has been slightly better than what we assumed in our loss outlook, although we will need to see several more months of data to develop full confidence in these trends.

These results support our belief that we have built a business and are executing a strategy that is capable of performing in almost any environment. We have sharpened our customer acquisition strategies to extend our market-leading position. We have enhanced our underwriting practices and strengthened our credit and collections capabilities to better support borrowers during times of financial distress. We have built an efficient cost structure with diversified, efficient funding sources that continues to support strong net interest margins. We have developed a strong capital allocation framework by adding strategic partnerships to our existing portfolio loan sale capabilities, giving us greater ability to grow recurring earnings and return capital.

Our belief in our strategy, coupled with the desire to act nimbly and decisively when market opportunities arise, led us to accelerate our already robust capital return program. We executed a $2 billion seasoned loan portfolio sale during the quarter, coupled with a planned 10b5-1 share repurchase plan, and also launched a $200 million ASR—all to take advantage of what we believe to be the disconnect between the premium from our whole loan sales and our equity valuation. Peter will now take you through some additional details. Peter?

Peter M. Graham: Thank you, Jonathan. Good evening, everyone. During the first quarter, we executed $3.3 billion in loan sales, generating $146 million in gains at attractive economics. This included $1.3 billion of planned new origination sales through our strategic partnerships business as well as a $2 billion seasoned loan portfolio sale executed at gains in the mid- to high-single-digit range. As we have done in the past when our equity valuation disconnected from the market value of our loans, we deliberately leaned into our capital flexibility to advance shareholder value.

Following the loan sale, we entered into a $200 million accelerated share repurchase program, and year to date, we have repurchased approximately 12 million shares, 6% of the outstanding shares at year-end 2025, at an average price of $21.50 per share. Since 2020, we have reduced shares outstanding by approximately 58% at an average price of $17.15 per share, underscoring our disciplined approach to long-term value creation. We expect to fully utilize our $500 million share repurchase authorization during calendar year 2026. Strong ongoing investor demand in the structured finance markets continues to support capacity for both seasoned portfolio sales and our strategic partnerships business.

We have already completed meaningful groundwork for our next strategic partnership, which we expect to launch before the end of this year. Turning to earnings, net interest income for the first quarter was $375 million, consistent with the prior-year period. Net interest margin of 5.29% increased both sequentially and year over year, reflecting the benefit of lower funding costs and continued discipline in balance sheet management. As we progress through this year, we expect NIM to moderate modestly, reflecting the higher liquidity we are carrying following the loan sale we executed in March.

We recorded an $11 million negative provision in the first quarter, driven primarily by a $131 million release of reserves associated with loan sales and loans held for sale, partially offset by growth in loan commitments and updates to our economic assumptions. Our reserve rate was 6.05% at the end of the quarter, modestly higher than the prior quarter and reflective of seasonal origination patterns rather than changes in underlying credit performance. Credit quality across new originations remained strong, with cosigner rates increasing to 95% and average FICO approval rising modestly to 754. It is interesting to note that just five years ago, our cosigner rate was 86% and our average FICO approval was 750.

The change reflects a deliberate multiyear and persistent focus on enhancing credit quality. Across the portfolio, delinquency trends were stable. Loans delinquent 30 days or more were 3.98% of loans in repayment at the end of the quarter, modestly lower than at the end of 2025, with later-stage delinquency buckets remaining steady at 1%. Net charge-offs for the quarter were $89 million, modestly ahead of our expectation. First-quarter noninterest expenses were $171 million compared to $155 million in the year-ago period. This increase primarily reflects targeted investments to support growth, particularly across our graduate lending programs, while maintaining a strong efficiency ratio of 30.6% for the quarter. Finally, our liquidity and capital positions remain solid.

We ended the quarter with liquidity of 21.2% of total assets. Total risk-based capital was 13.7% and common equity Tier 1 capital was 12.4%. We continue to believe we are well positioned to grow our business and return capital to shareholders. I will now turn the call back to Jonathan.

Jonathan W. Witter: Thanks, Peter. We are pleased with our first-quarter performance and the momentum it provides for the year ahead. Let me conclude with a few thoughts about the higher education environment and an update on our guidance. We believe students and families continue to see strong value in higher education. Our upcoming How America Plans for College report will show that nearly 90% of those surveyed view higher education as an investment, over 80% believe it is worth the cost, and nearly three-quarters would rather borrow than forgo college. This sentiment is also reflected in improving recent college enrollment trends and FAFSA completion rates that are up almost 20% from this time last year.

Colleges, universities, and other higher education institutions are continuing to innovate to ensure that their students have the skills to compete in the future economy. We see schools integrating AI-related coursework into new and traditional programs. Students are also responding by better aligning their majors and skill sets with those likely needed in an AI-enabled future. The employment picture for recent college grads remains resilient even during times of economic uncertainty. While unemployment among recent graduates temporarily rose last summer, the gap versus historical norms closed in March. Reflecting this confidence, a recent National Association of Colleges and Employers survey indicated employers expect to increase new graduate hiring this academic year by 5.6%.

With this backdrop, we feel well positioned as we look ahead to the balance of the year and beyond. Let me now turn to our 2026 guidance. We expect our diluted earnings per common share for 2026 to be between $3.10 and $3.20. This revised outlook assumes the full utilization of our $500 million share repurchase authorization and roughly $1 billion of incremental loan sales beyond our initial plan. At the same time, we are reaffirming all other elements of our 2026 outlook, including originations growth, net charge-offs, and net interest expense metrics. With that, let us open the call for questions. Thank you.

Operator: Thank you. The floor is now open for questions. We will start our questions today with Terry Ma from Barclays. Please go ahead.

Terry Ma: Hey, thank you. Good evening. So you mentioned we should expect another partnership by year-end. Any kind of early color on how we should think about it? And then as we kind of take a step back with an additional partner, and I think you just mentioned an incremental $1 billion of loan sales, are you transitioning more to a capital-light model and should we expect the balance sheet to shrink a little bit more this year?

Jonathan W. Witter: Yes. Thanks for the question, Terry. On the first part of that, when we launched the inaugural partnership with KKR last year, we indicated that it was our intention to build this into a business. So that has been part of our plan all along. We have started discussions with some of the folks that were involved in our process last year and were not the final partner that we went with. Those are early days but well underway, and we are confident that we will get something done by the end of this year.

In the context of growing the partnerships, I will remind you that the initial KKR partnership was really sized and scoped to deal with our traditional undergrad student loan product. We always knew that we were going to need to expand and grow that to be at scale for the grad opportunity, and we are working on getting ahead of that so that we have something in place well in advance of when the major increase in volume from grad comes online.

Terry Ma: Got it. And then maybe just on credit, it sounds like the borrowers exiting mod are performing a little bit better than expected. Any color on new mods thus far this year—whether or not that is in line with your expectations? And then as we look forward, should we expect the percentage of borrowers in mod to start to come down this year? Any way to think about that?

Jonathan W. Witter: Yes. In the context of the exits, as we said, we are pleased with the early performance and in line with the outlook that we had when we set that charge-off guidance for the year. The absolute value of increased demand will fluctuate as the payment waves come through and depending on the overall size of those payment waves. Nothing really out of the ordinary in that regard for this, and the overall level of mods we believe will begin to stabilize as we move through this year and into next.

Operator: Thank you. Our next question will come from Moshe Ari Orenbuch from TD Cowen. Please go ahead.

Moshe Ari Orenbuch: Great. Thanks. Jonathan, could you talk a little bit about how you see the developing competitive environment in the Grad PLUS market? Saw some announcements this week from one of your major competitors but have not seen that many across the board. Maybe you could add a little finer point on that?

Jonathan W. Witter: Yes, Moshe, happy to. Obviously, I think everyone understands the opportunity that the PLUS reform provides. Different competitors certainly look at the market opportunity and the segments of the market opportunity differently. There are some who have expressed more interest for certain segments than for others. We certainly do expect there to be a heightened level of competition as a new kind of market normal shakes out over the next couple of years. We see a little bit of early evidence of that in things like some of the digital marketing spend. We can see some activity from some players and begin to understand a little bit of the testing and the programs that they are looking to develop.

More importantly, we have tremendous confidence in our incoming position and in the work that we are doing to prepare for this opportunity. The credit models, the relationships with schools, the organic marketing channels that we have really pioneered here over the last five years serve as a really important foundation. All of those will need to be enhanced, grown, and expanded in particular to get after the grad opportunity. While there are a lot of similarities, there are differences. As you heard in my prepared remarks, we are leaving no stone unturned in preparing to compete rigorously.

Whether it is a lot more competitive, modestly more competitive, or not more competitive at all, we feel really great about what we are doing, how we are going to show up, and, most importantly, our ability to serve students, families, and our important university partners, because we know every loan we do is enabling someone’s higher education.

Moshe Ari Orenbuch: Got it. Thanks. Maybe as a follow-up, just on the loan sale process—kudos to you and the team for recognizing to do a loan sale and take advantage of that arbitrage. How do you think about the outlook and balancing the various types of loan sale opportunities as you go forward, probably adding in the potential for an incremental partner that you talked about?

Peter M. Graham: Yes, thanks, Moshe. That is a good question. Just a reminder, the KKR structure—again focused on traditional undergrad product—was sized at a $2 billion per academic year commitment. As we think about this next partnership, we are looking to build upon that to create capacity for loan sales of grad originations and start to build capacity for the real growth in the grad space that will come in 2027–2028. As we get that started, I would expect that we will do it similar to how we did the first transaction, which is enter into a flow agreement but also start the process with some sort of a seasoned portfolio sale.

That is within our expectation for the latter part of this year. In terms of overall balance sheet size, our original guidance and initial plan was a flattish balance sheet. With the shift in our approach on accelerating capital return, as Jonathan said in his prepared remarks, it is probably an incremental $1 billion of loan sales over our original plan. So that would be flat to down-ish overall balance sheet. We will fine-tune that as we see the origination levels coming in during peak and we have a better line of sight to overall levels of growth in the business.

Operator: Thank you. We will go next to Jeffrey David Adelson with Morgan Stanley. Please go ahead.

Jeffrey David Adelson: Hey, good evening, Jonathan and team. I am curious—you made the comment on the recent college graduate unemployment trends headed in the right direction once again, and you brought up the survey of employers intending to increase hiring by about 5.6% this year. How do you think about the benefit of that flowing through to SLM Corporation? Is that something you think can really start to flatten out your delinquency trends, which look like they kind of continue to uptick a little bit at these levels?

Jonathan W. Witter: Maybe a couple of thoughts here, and Peter, jump in if you want to add anything. I am not sure we yet see the unemployment trends and the hiring as a tailwind. What we are really describing is that the slight air pocket that we saw in employment through the course of last summer has normalized. We have talked for a couple of calls now about the resiliency of students and the fungibility of the skills that are afforded by higher education and their ability to figure out a changing employment landscape, and we have seen the evidence of that.

But I am not sure we are in a positive enough territory versus historical norms that I would classify it as a tailwind. In terms of delinquency trends, we are very comfortable with the delinquency rates where they are. As I said in my comments, they are in line with and slightly better than expectations. If you look at the stability of the later-stage delinquency trends, they are where we thought we would be. You always have to be a little bit careful looking at any ratio because there is both a numerator and a denominator. When you sell a couple of billion dollars of loans earlier in the year than you expected, that can have a denominator effect.

Prudence would suggest that be considered in interpreting the results. We feel very solid about where we are from a delinquency perspective.

Jeffrey David Adelson: Okay, great. Thank you. And maybe just a quick follow-up on Grad PLUS. Obviously you are looking for that to start kicking into gear come July. You spoke a lot about how you are preparing for that and your ties to the schools. Maybe just a quick update on what you are seeing on the ground and how you think those expectations are going to play out as you hit the back half of the year, recognizing that it is still pretty early?

Jonathan W. Witter: Yes, Jeff. It is very early; the season really has not started at all yet in the grad segments we are talking about. A couple of thoughts. Our conversations with schools have been extremely positive. As you can appreciate, their number one concern post-PLUS reform was what this would mean for their ability to fill their classrooms and support their students. The work we have done around product design, underwriting, and terms and conditions—as we have gone through that with schools—has been well received. They have been impressed by the customer-back thoughtfulness that we have brought to really thinking about these as new products and new businesses deserving of a fresh set of eyes.

As we have implemented—grad has been a part of our portfolio for a long time, but a small part—we are starting to see impressive and meaningful percentage increases in our performance. Those are super leading indicators and trends based on small sample sizes, but we are seeing it flow through in early origination numbers and the like. We feel good about the guidance we have put out around originations. We have not seen anything that leads us to believe it is not achievable. We are going to continue to soldier away and put ourselves in the best position to win.

Operator: Thank you. We would like to take our next question from Donald Fandetti with Wells Fargo. Please go ahead.

Donald Fandetti: Hi, good evening. I know it is early, but I was wondering if you could talk a little bit about 2027. I think last quarter you provided some thoughts. Obviously you are going to have a higher base here in 2026.

Jonathan W. Witter: I think the only thing I am really prepared to talk about with regard to 2027 is the opportunity that we see from grad. We have sized that as roughly a $5 billion incremental opportunity over time. The way that will size in will be modest this year and then grow more exponentially as we go to 2027 and into 2028. In terms of overall guidance around earnings or anything like that, I would not feel comfortable this early giving any reads on that.

Donald Fandetti: Okay. And I heard the comments on the potential new partner. Obviously there has been a lot of dislocation in private credit. It sounds like you are not seeing any hesitancy or different terms. Is that maybe just because it is a consumer product, or what are your thoughts on the future demand from private credit?

Peter M. Graham: Yes, I think there have been pockets of private credit that have been challenged. Even within the structured finance or ABF part of private credit, there have been areas where there have been frauds or other issues. That has really caused more of a flight to quality, and we have a very high-quality asset type that still has very strong demand, particularly in the consumer space, given the ability for us to provide duration as well as high yield and low losses. We have continued to see strong demand both for our own funding securitizations and for the securitizations that we do on behalf of the loan buyers.

They have been well subscribed and well priced, and we expect that to continue. In the context of beginning the dialogue for setting up next partnerships, we have had great engagement from interested parties and feel like the market demand is still really there for our product.

Operator: We will take our next question from Sanjay Harkishin Sakhrani. Please go ahead.

Sanjay Harkishin Sakhrani: Thank you. Jonathan, maybe put a finer point on some of the initiatives you have and the step-up in expenses in 2026. It sounds like you feel pretty good about it. How do we see it unfold and measure it as we look across this year and next? I know Peter talked about a step-up in originations next year from the opportunity, but how do we see it unfold, and do we get leverage off of that into next year?

Jonathan W. Witter: Sanjay, thanks, and great question. I would refer back to comments I made during the fourth-quarter earnings call. Our view is, yes, expenses are elevated this year—both marketing, as we start to go after the expanded opportunity, and fixed costs around products, systems, customer experience, and the like. What we have committed to and still believe is that the rate of expense growth will moderate this year. We may see a slight uptick in our efficiency ratio, but we actually expect at the end of the growth period for our efficiency ratio to be better than it was at the starting point.

To put rough justice math to it, if we were at a mid-30s efficiency ratio historically, during this time of growth we may get up to the high 30s, which is still a compelling efficiency ratio. If the market evolves the way we think it is going to and if our share evolves the way we think it is going to, by the end of the growth period we would hope to be back down in the low 30s. That is the very definition of operating leverage. We recognize the need to invest against what we think is both a great market opportunity for us and a real need for students and university partners.

We think that is a relatively short invest-ahead-of-the-curve with real leverage coming not very many years after that.

Sanjay Harkishin Sakhrani: Got it. And then, Peter, just so I have the numbers correct in terms of the guidance raise and the fact that you are selling another $1 billion—if you use the 6% or so gain and then the reserve release, it sounds like most of that raise is just the mechanics of the $1 billion being sold at some point in the rest of the year. Any idea on timing? Thanks.

Peter M. Graham: Sure. In the context of the full-year guidance, the increase in the EPS guidance for the full year is roughly split half and half between share count reduction and incremental gain from the incremental loan sale. If you think about the mechanics of what has happened in the first quarter, we really accelerated that through the actions we have taken and have a much lower share count for a longer period during the year. We have not updated any other elements of our original guidance. The impact is really just the incremental loan sale gain and the share count reduction—roughly half and half for the full year.

Operator: Thank you. We will take our next question from Mark Christian DeVries with Deutsche Bank. Please go ahead.

Mark Christian DeVries: Thanks. Jonathan, I believe you indicated that the FAFSA completion rates are up almost 20% from this time last year. Have a sense for what is behind that? Is this a reflection of a significant increase in demand for higher education? Is there something wonky behind that? And if it is demand, what does it say for your conviction around your origination guidance?

Jonathan W. Witter: Yes, Mark, I think it is probably too early to know exactly all the different factors that are driving that rate. If you exclude two years ago when the Department of Education rolled out a new FAFSA form and had a few implementation hiccups along the way, I think what this reflects is a continued steady drumbeat of growth, which matches well with what we have seen around general trends in the percentage of eligible high school seniors who are choosing to go to college. A lot has been made around demographic trends, but the “batting average” of how many people actually go has also been a nice contributor to the growth in enrollment over a period of time.

If I broaden it out and look at our soon-to-be-released survey, because that gives a little more detailed insight, it shows the promise and dream of higher education continues to be key for many students and families. There has been a lot of talk about the changing cost of higher education and whether it is worth it; our survey says pretty conclusively that the vast majority of American families see that it is—understanding the key to job creation, skills, and economic mobility, and the role higher education has played historically and will play going forward. I look forward to the survey coming out—likely next week—with a lot of great data that will give you even more insight into your question.

Operator: Thank you. We will take our next question from Caroline Latta from Bank of America. Please go ahead.

Caroline Latta: Hi, guys. I think you mentioned last quarter that you expect after 2026 that the private education portfolio will impact up to 1% to 2% growth. Has that expectation changed if you were to add another private credit partner, or did that comment contemplate another potential partner?

Peter M. Graham: Thanks, Caroline. In our original low-range planning that formed the basis of our original guidance for this year, we assumed a flattish balance sheet this year and that kind of 1% to 2% growth going into 2027 and getting up to mid-single digits over time. With the change in approach around acceleration of the share repurchase this year, we will probably be a little down this year—call it $1 billion lower than flattish—and we would look to step back into growth over time. I do not think the creation of a new partnership really changes that dynamic.

We still have a broad opportunity around originations growth that would, if we did not do those partnerships or other types of loan sales, drive a much higher rate of balance sheet growth than that. We have lots of different levers we can use to optimize. What it will impact is the mix of seasoned sale versus new origination sale as we step into 2027 and beyond. That is purposeful because the grad opportunity—for which we do not currently have a flow arrangement—will become a much larger portion of our originations as we move into 2027 and then again into 2028. We want to make sure we have a good complement of funding capabilities to meet that need.

Caroline Latta: Great. Thank you. And then, given the buyback this year—if you complete the plan it will be a pretty big step-up—should we be thinking about the cadence of buybacks and capital return further out into 2027 and 2028?

Peter M. Graham: If you look at our original plan, we were targeting roughly 5% to 6% of outstanding share count as part of the buyback within a year. As we start to normalize, that is probably a reasonable benchmark going forward. As always, as market conditions change, if there is an opportunity to do more than that, we would do what we did in the first quarter—accelerate some loan sales and take advantage of that market dislocation.

Operator: Okay. Thank you. We will take our next question from John Hecht with Jefferies. Please go ahead.

John Hecht: Yes, thanks, guys. Maybe relative to our forecast, there was upside EPS and lower OpEx. Can you talk about the cadence on investments in the PLUS program over the year?

Peter M. Graham: Sure. We are getting ready for peak season, which starts in the summer. If you think about the comments we made at year-end when we talked about expenses for this year, of the increase year over year we said roughly a third was an increase around marketing and customer acquisition, and roughly a third was preparation for the opportunity in terms of the things Jonathan talked about around program design, customer experience, and some of the tech changes we will need to enable. That readiness will be more front-loaded before peak, and the marketing spend will be more in the moment in that peak season.

Our staging of expenses and our plan for expenses—we were modestly ahead of plan for the first quarter, but we still feel comfortable with our overall guidance range for the full year.

John Hecht: Okay. And then second question is the evolution of the program management and servicing fees. Was there anything in this quarter with that, and how do we think that grows over the course of this year?

Peter M. Graham: The inaugural partnership that we linked with KKR in the fourth quarter of last year has the program management fee built into it. As we have completed sales of assets into that, those program management fees will start to earn on the AUM, if you will, under management. We did another $1 billion of sales to that partnership in the quarter, and we will continue to build on that. As we grow the next partnership, our anticipation is that something akin to those program management fees will be part of the economics of those deals as well.

Our intent is to continue to build more recurring fee-based revenue over time and give ourselves a different capital allocation capability with these forward flow sales.

Operator: Thank you. We will go next to the line of Richard Barry Shane with JPMorgan. Please go ahead.

Richard Barry Shane: Hey, guys. Thanks for taking my questions this afternoon. I would like to talk a little bit about credit. You provided an update on your net charge-off guidance for the year and reiterated your prior guide. I am curious, when you think about the credit performance of the portfolio, whether it is where it is in your targeted range. Is it within the range? Above? Below? Long term? And to the extent it is varying from the range, is there anything you are doing on the underwriting side to either tighten or widen the credit bucket in order to meet that efficient frontier?

Jonathan W. Witter: Rick, a couple of thoughts—tell me if this gets to your question. We are operating within the long-term credit range that we talked about. We said a couple of years ago we thought the right destination was high 1s to low 2s. We spent time in the fourth-quarter earnings call, when we laid out guidance, doing a crosswalk around that percentage to the charge-off guidance that we have given for this year. The wildcard there was the shift in strategy to sell new originations versus seasoned portfolios and a bit of the distortive effect that had on our legacy ratio. We believe we are operating within that range and feel good about the guidance.

It is important to remember how we got there. Three or four years ago, we started a persistent, purposeful program to look at and adjust the credit buy box to make sure we felt great about originations. The changes had a meaningful impact on origination volume, and one of our great sources of pride was our ability to grow both nominal levels of originations and share while still tightening the credit box during that time. There is still a tail to come—we still have people who took loans as freshmen and sophomores under the old underwriting regime who have not entered full P&I yet and are still coming into their maximum stress period.

In some respects, the full effect has yet to be felt in the portfolio. We feel great about the underwriting changes we have made and how our loss mitigation programs are performing, and we think we are generating the loss profile we would hope for during a time that has been relatively stressed for some borrowers, with the elevated unemployment rate I talked about over the last six months. All in all, we feel really good about these results and look forward to the portfolio continuing to season.

Richard Barry Shane: I appreciate that. Do you provide an average loan-in-repayment number anywhere in the disclosures? The reason I ask is, this quarter when we calculate a net charge-off rate as a function of loans in repayment, I am trying to understand how much that might be distorted by loan sales. Are there seasoned loans in repayment that are part of the pools that you are selling, or should we assume it is predominantly new originations that are less than 12 months seasoned?

Peter M. Graham: All of our portfolio sales are representative samples of the book. The only exclusions are loans that are in later stages of delinquency, which are typically excluded from those pools. As we make portfolio sales, as Jonathan said, that can have an impact depending on when in the quarter or year we make those sales, because it does impact the denominator of some of those ratio calculations. I would also highlight commentary we made in the fourth quarter surrounding our disclosures in the 10-Ks.

Because we calculate most of our loan disclosures on loans held for investment, and we are moving loans to a held-for-sale status in association with these forward flow agreements, that also has a nominal impact on some of the calculations.

Jonathan W. Witter: Just for avoidance of any confusion, Peter laid out in his talking points the new origination sales, which were $1.3 billion. Those are, as the name suggests, new originations. We try to break it out separately and understand the importance of continuing to do that, both for understanding credit metric impacts and premium impacts.

Operator: Thank you. This concludes the Q&A portion of today’s call. I would now like to turn the floor over to Mr. Jonathan W. Witter for closing remarks.

Jonathan W. Witter: Erica, thank you, and thank you to everyone who joined this evening. We appreciate your interest in SLM Corporation and look forward to updating you again when we get together in three months for our second quarter earnings call. With that, Melissa, I will turn it back to you for some closing business.

Melissa Bernat: Thank you all for your time and questions today. A replay of this call and the presentation will be available on the Investors page at salliemae.com. If you have any further questions, feel free to contact me directly. This concludes today’s call.

Operator: Thank you. This concludes the SLM Corporation first quarter 2026 Earnings Conference Call and Webcast. Please disconnect your line at this time, and have a wonderful evening.

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