The Bull Case For SLM (SLM) Could Change Following Strong Q3 Earnings and Loan Growth Surge

• SLM Corporation reported a US$132 million GAAP net income for Q3 2025, driven by a 6% rise in private education loan originations and a reduction in credit loss provisions following a major loan sale.
• This performance reflects SLM’s focus on disciplined capital management and operational strength, highlighted by improved loan portfolio quality and efficient risk controls.
• Next, we'll explore how SLM's increased education loan growth could influence its long-term investment narrative and sector outlook.

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SLM Investment Narrative Recap

To be a shareholder in SLM Corporation, you need to believe in the company's ability to capitalize on the shift of education lending from federal to private markets, maintain sound underwriting, and efficiently manage credit risk as competition intensifies. The recent Q3 2025 news, highlighting strong income and improved loan originations, helps support the company’s capital management narrative but does not materially change the biggest short-term catalyst, which remains the impact of federal student loan policy changes. However, it also doesn't entirely ease concerns about rising competition from new entrants or credit quality volatility in the current environment.

Among SLM’s recent announcements, the ongoing share repurchase program stands out. Repurchasing 2.7 percent of outstanding shares for US$165.86 million in Q3 suggests confidence in both capital returns and management’s approach. This is particularly relevant given current catalysts like the anticipated uplift in private loan originations, as buybacks may help support shareholder value while the company navigates shifting market demand.

In contrast, investors should also be alert to the risk that as private loan growth accelerates, established banks and fintech firms may...

Read the full narrative on SLM (it's free!)

SLM's outlook forecasts $2.0 billion in revenue and $918.9 million in earnings by 2028. This is based on 17.4% annual revenue growth and a $493.6 million increase in earnings from the current $425.3 million level.

Uncover how SLM's forecasts yield a $34.73 fair value, a 29% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community submitted two fair value estimates ranging from US$34.73 to US$58.08 per share. While private loan expansion is a widely discussed catalyst, the real test will be how SLM responds if competition and funding costs start to rise, so consider these diverse outlooks as you form your own opinion.

Explore 2 other fair value estimates on SLM - why the stock might be worth just $34.73!

Build Your Own SLM Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your SLM research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free SLM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SLM's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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