Sallie Mae Corp., the nation's largest student loan provider, agreed to a $25 billion buyout that will put split the company into the hands of Bank of America, JPMorgan Chase and two private equity firms.
Solidified over the weekend, the agreement calls for New York City-based J.C. Flowers & Co. and San Francisco-based Freidman Fleischer & Lowe, LLC to own 50.2 percent of the company, for $4.4 billion. Bank of America and JPMorgan Chase will each invest $2.2 billion in Sallie Mae, to own a combined 24.9 stake in the company, according to Sallie Mae's Website.
The agreement comes just five days after Sallie Mae agreed to abide by the Student Loan Code of Conduct, an agreement reached with the New York Attorney General's Office. The pact is a result of investigations into questionable tactics that Sallie Mae employed to secure education loan business through so-called preferred lender programs at colleges and universities, and includes a $2 million payment into a fund devoted to educating education loan applicants about all of their financing options.
Once the deal closes, Sallie Mae's current management will continue to operate the company, and ensure that it adheres to the terms of the agreement.