Sallie Mae JPM 2Q26 Earnings Scorecard – Preview

Research evidence excerpt

Sallie Mae JPM 2Q26 Earnings Scorecard – Preview

nt at an industry conference in June (6/10/26).

• SLM flagged outsized charge-offs from a small “high ability-to-pay” cohort being

pushed into default by third-party debt managers exploiting recovery settlements; mgmt.

terminated charge-off recovery sale flow contracts and is raising settlement floors,

implying up to ~$25M recoveries headwind if not restarted by year-end (no meaningful

expense impact).

• Mods program is outperforming expectations (80%+ in-program success and ~80% after

returning to contractual pay).

• SLM flagged an underwriting tailwind: only ~5% of borrowers entering repayment this

year are under old underwriting standards, shrinking further in coming years.

• Grad PLUS retrenchment is opening a bigger private-lending lane: SLM is leaning into

grad (early uptake; expects a ramp next year) and is progressing a second strategic partner

(target by year-end, similar to KKR, likely with a seed portfolio/gain-on-sale) to help

build funding capacity.

• AI risk to grad hiring is overblown, per mgmt – last year’s “grads won’t get jobs” narrative

has been disproven, with companies now actively hiring new grads as “AI natives.”

• New capital rule proposal would lower student-loan risk weights by ~10%, a tailwind to

RWA/capital; mgmt reiterated buyback-led capital return regardless of source of earnings

(balance sheet/partnership fees).

Items Affecting Comparisons:

• 2Q26: None.

• 1Q26: SLM reported core EPS of $1.54, significantly above JPMe of $0.80 and Street

estimate of $1.20. The $0.74 beat versus JPMe was primarily driven by two items:

(1) a $110M favorable provision variance, which we attribute primarily to our

underestimation of the allowance reversals associated with $3.3B of loan sales executed