), also known as Sallie Mae, has coined a new name for its loan
management and servicing company - Navient. This is the next step
toward the company's completion of the strategic plan to split
its business into an education loan management business and a
consumer banking business. However, the news failed to have a
significant impact on the share price in the trading session on
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It was in May 2013 that Sallie Mae announced its board of
directors' decision to split the company's present business into
two parts. The decision was driven by suspension of the new
federal student loan origination, in compliance with the
legislation passed by both the Houses as well as the Senate in
2012. This legislation did away with the federal subsidy for the
The split is expected to be completed in the second half of this
year. After the division, Sallie Mae will operate only as a
consumer banking business and will continue to trade under the
Navient, having 6,000 employees and more than $2 billion of
revenues, is expected to help almost 12 million clients to pay
their education loans, on completion of the separation. Moreover,
Navient is expected to service nearly $300 billion in student
loans and aid the government as well as higher education and
business clients in asset recovery. It will also manage a
portfolio of FFELP and private loans.
Navient will be headquartered in Wilmington, Del. and will trade
on the NASDAQ stock exchange under the ticker NAVI. Navient will
operate through offices in Washington, D.C., Indiana, Virginia
and Pennsylvania. Additionally, Pioneer Credit Recovery Inc. and
General Revenue Corp. - Sallie Mae's current debt recovery
subsidiaries - will operate under Navient in New York, New
Jersey, Ohio and Florida.
We believe that Sallie Mae will be able to navigate the
regulatory pressure by splitting itself into two separate
entities. Further, Sallie Mae's leading position in the student
lending market, efforts at diversification and steadily
increasing private student loan originations will be growth
drivers going forward. Moreover, by creating a separate bank, the
company can look forward to finance new streams of loans.
Sallie Mae currently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the same sector include
Discover Financial Services
World Acceptance Corp.
The First Marblehead Corp.
). All of these carry a Zacks Rank #2 (Buy).