While it originated a record amount of student loans, the lender acknowledged that current market conditions will force it to make loans at an economic loss.
"We've been predicting something of a train wreck, with the absence of credit and the explosion of demand for student credit," said Albert Lord, CEO of Sallie Mae. The collision between the demand for higher education borrowings and the shortage of credit is coming much sooner than expected. At first, company officials expected the crisis to unfold sometime between June and August. Based on the current pace at which lenders are leaving the consolidation loan market and the rate of student loan applications, however, that trajectory has changed, Lord said.