US student loan provider Sallie Mae Corp. on Friday filed regulatory documents that will enable it to split into two companies. The move was first announced in May to try to win better stock market valuation for its student-lending business.
Reuters in a report said Sallie Mae plans to split the company into one business made of federally-guaranteed and private student loans as well as its servicing and collection activities. The second business will include its consumer banking and private-education-lending businesses.
The regulatory filing said one Sallie Mae share would translate into one share in each of the two companies after the split, the report stated.
The still unnamed loan company will hold the largest portfolio of education loans through the Federal Family Education Loan Program (FFELP). Under FFELP, private lenders offer student loans backed by the US government, Reuters said.
According to the report, the new loan company's assets will include USD105 billion of FFELP loans, USD32 billion in private education loans and USD7.8 billion in other interest-earnings assets. It will also serve10 million federal loan customers.
Sallie Mae told Reuters that the company expects to complete the spin off by spring next year.
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