NEWARK, Del. (AP) — Sallie Mae has coined the name Navient for the new loan management and servicing company it plans to split off this spring.
Known formally as SLM Corp., Sallie Mae, the largest U.S. student lender, said the name is a step toward completing its plan to split into two publicly traded companies: the loan management company and a consumer banking business.
The consumer banking company, which will keep the Sallie Mae name, will make student loans, offer savings accounts and sell insurance. It will have around $10 billion in assets.
The Newark, Del., company announced the plan to break into two last May. 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.
Sallie Mae said last year that the breakup will enable each company to be a leader in its respective business. By focusing separately on the two different areas, the companies will perform better, John Remondi, Sallie Mae's president and CEO, said in a telephone interview Tuesday.
Remondi will become president and CEO of Navient.
Navient is expected to service about $300 billion in student loans, the company said. Sallie Mae now services roughly that amount, which represents about one-third of all student loans outstanding in the U.S.
Both companies will trade on the Nasdaq stock exchange.
Student loan debt in the U.S. totals more than $1 trillion and is growing faster than credit card debt. Student debt has been a drag on the economy as recent graduates are forced to choose between paying down their school loans and buying a house or a car.