Fitch lowers SLM

Fitch Ratings said it has taken the following rating actions on SLM Corp.: long-term issuer default rating downgraded to BBB- from BBB; short-term issuer default rating affirmed at F3; senior debt downgraded to BBB- from BBB; and short-term debt affirmed at F3; as well as the preferred stock downgraded to BB from BB+.

The outlook is negative.

The agency said that the downgrade reflects the expectation that SLM will continue to transition into a fee-for-service business model with a bank subsidiary that originates higher-risk private education loans.

If pending education legislation is passed in its current form, Fitch noted that it would expect SLM to be a meaningful participant in the servicing and collection of government guaranteed loans under the Department of Education's servicing contract.

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