A Sallie Mae executive recently discussed the student loan industry at the Barclays Global Financial Services Conference.
Yesterday, Sallie Mae Executive Vice President and Chief Financial Officer (CFO) Steve McGarry sat down for an interview with Mark DeVries, an analyst at Barclays Capital, as part of the Barclays Global Financial Services Conference.
The full transcript of their conversation was published yesterday by the investment website Seeking Alpha.
Devries himself was a former employee at Sallie Mae and made note that McGarry became the CFO right after he left the student loan company.
McGarry got the conversation started by introducing himself and telling the crowd a little more about Sallie Mae. He notes that Sallie Mae is the leader in the private student loan industry and has a long history in dealing with both federal and private student loans.
According to McGarry, 60 percent of all education finance consumers recognize the Sallie Mae brand. The Sallie Mae CFO stated that the company’s brand recognition is one of their biggest assets.
The Sallie Mae executive noted that the Delaware-based student loan company has the largest sales force in the entire industry. The Sallie Mae sales team reaches more than 2,400 schools and has been able to get Sallie Mae on 97 percent of all the lender lists that exist today.
Sallie Mae’s website is home to a plethora of tools and hints that will help prospective and current students discover grants and scholarships that are available to them. Additionally, there are tools that will help students apply for federal loans and calculate how much debt they must incur to receive their bachelor’s degree.
McGarry then went on to discuss Sallie Mae’s performance so far in 2017. The CFO said the student loan company is on track to meet the high end of their earnings goal, if not exceed it. He also noted that the Sallie Mae loan portfolio has grown by 27 percent. Further, Sallie Mae’s net interest margin (NIM) is very strong when compared to last year. Their current NIM is 594, which is up from 581 at this point last year. The CFO expects a NIM in the high 580s by years end.
The Sallie Mae executive later discussed higher education trends in the U.S. He predicted that the 2022 high school graduating class will only be about 2 percent larger than what the 2017 high school graduating class looked like. So, while there is minimal growth, the percentage of young Americans that receive an education from a college or university is increasing at a steady rate. For example, the number of Americans that have a college degree has increased by 10 percent over the last five years.
Coinciding with the increase in Americans that receive a higher education is the increase in tuition prices across the U.S. McGarry estimated that tuition has increased by 3.5 percent across the board. When you factor in the rise in tuition with the rise in enrollment, the Sallie Mae executive estimated a potential 5 percent increase in total money spent on higher education.
Sallie Mae continues to be one of the leaders in the student loan industry, and recently, the company has been featured in The Student Loan Report for some very good press. In August, Sallie Mae was awarded a $2.16 million grant from the Delaware Council on Development Finance. The company will use that grant to hire 285 new employees and to renovate and occupy a 57,000 square-foot Delaware office.
Also in August, Sallie Mae was recognized for its support of their employees that also serve in the military. They were awarded the Above and Beyond Award, which is given to an employer that goes out of their way to support military service member employees with extraordinary effort and support.
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