Today, SallieMae announced they project approx $20 billion in student loans to be originated in the next academic year.  This is pretty good news for those that were worried about the recent credit crunch.  Some feared that this would delay student loans or even prevent some from getting higher education loans.

The loans are issued under the PLUS and Stafford loan programs. These programs are insured by the U.S. government. If SallieMae is unable to resell the loan packages to outside investors – the government will buy them.

Currently, SallieMae manages a portfolio of student loans worth approx. $172 billion.  The stock skyrocketed today by approx 10%. This was excellent news for investors who have seen the stock price do nothing but shrink this year.

This is a direct effect of the bill which was signed in May by President Bush. This enables to Dept of Education to buy those loans and keep the cash flow running for SallieMae. 

Over the past 6 months – many lenders have exited the student loan business altogether. Some are stopping all student loans which aren’t guaranteed by the U.S. Gov.   With this announcement – Colleges and Universities can rest easy that enrollments should be steady.