S&P puts Sallie Mae on watch

Standard & Poor's said it placed SLM Corp., or Sallie Mae, on CreditWatch negative.

The watch follows a vote by the U.S. House of Representatives Education and Labor Committee to pass a bill that would eliminate the origination of federal student loans by private lenders after July 2010, according to the agency.

The bill must still be passed by the full House and Senate, and signed by the president in the face of significant industry pressure for modifications, S&P noted.

"However, we believe that the passage of this bill significantly increases the likelihood that private lenders will no longer be able to originate federal student loans after July 2010. We are also concerned that SLM's lackluster performance over the past few quarters will continue to be pressured by increasing provisions for the company's private education loans," S&P analyst Xavier Chavee said in a statement.

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