NEWARK, Del. (AP) — Sallie Mae's board has unanimously approved the spinoff of its loan management, servicing and asset recovery company from its consumer banking business.
In February Sallie Mae, which is formally known as SLM Corp., announced that business to be spun off would be called Navient.
The Newark, Del., company announced its plan to break into two in May 2013. Sallie Mae used to act as an intermediary and earned fees making student loans backed by the federal government, in addition to making private student loans. But a 2010 law consolidated the federal loan program to save costs and cut private lenders out of the process.
Navient will service nearly $300 billion in student loans and provide customer support to assist 12 million customers in paying their education loans. It will also continue to perform asset recovery for government, higher education and business clients and manage a portfolio of FFELP and private education loans.
A dividend of Navient common stock will be distributed on April 30 to Sallie Mae shareholders of record on April 22. Sallie Mae shareholders will get one share of Navient for each share of Sallie Mae they own as of April 22.
Sallie Mae said it will suspend its common stock dividend payments once the spinoff is complete. It will continue to be responsible for preferred stock dividend payments. Navient's dividend policy will be determined by its board, but is expected to follow Sallie Mae's previous dividend policy for its common shares.
Both companies will trade on the Nasdaq. Navient will trade under the "NAVI" ticker symbol starting on May 1. Sallie Mae will continue to trade under the "SLM" ticker symbol.
Shares of Sallie Mae gained 37 cents, or 1.5 percent, to $25.13 in morning trading on Thursday.