Magazine article American Banker

Private Student Lenders Got a Huge Boost from Trump's Victory

Magazine article American Banker

Private Student Lenders Got a Huge Boost from Trump's Victory

Article excerpt

Byline: Kevin Wack

No corner of the banking industry has gotten a bigger near-term boost from Donald Trump's election than private student lenders. And that's saying something.

Since Nov. 8, a widely watched index of bank stocks has risen by 21%, to the delight of banking executives and investors. But the celebrations may be particularly boisterous at SLM Corp., the student loan giant known as Sallie Mae.

The Newark, Del.-based firm's stock price has climbed a whopping 59% since Election Day, amid changing perceptions about the regulatory climate for private student lending. "Stocks don't generally move 50% in a month," noted Ed Mills, an analyst at FBR Capital Markets.

U.S. student lending is dominated by the federal government, which accounts for more than 90% of the $1.36 trillion student loan market. But within the private sector, Sallie Mae is considered a bellwether for the industry, since its business focuses heavily on education lending, whereas its main competitors have more diversified banking operations.

Industry analysts said this week that the recent surge in Sallie Mae's stock may be more of a reaction to Hillary Clinton's defeat than it is a reflection of likely policy changes under the Trump administration.

Under a potential Clinton administration, bank lenders might have had to contend with the expansion of federal student loan programs, which are generally where borrowers turn first to finance higher education.

In addition, Clinton campaigned on the idea that community colleges should be free to attend, and that every student should be able to graduate from a public college in their state without taking on debt.

If Democrats had fared better in congressional elections, Sen. Bernie Sanders, a Vermont Independent and a champion of tuition-free college, might have been in line to chair the Senate education committee. …

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