Student Loan Corp., which saw its core business model eliminated under federal education financing reform, has taken a five-year lease on nearly 19,000 square feet of space in Stamford.
Last December, Citigroup Inc. sold off Student Loan Corp. to Discover Financial Services, while retaining the www.studentloan.com website address previously used by Student Loan Corp. In a Securities and Exchange filing in March, Discover Financial indicated it now classifies Student Loan Corp. as a wholly owned subsidiary.
Student Loan Corp. is now taking a new lease at 750 Washington Blvd. in Stamford. SL Green Realty Corp., a New York City-based company that owns the building among several in Stamford, disclosed the move in its summary of first-quarter transactions.
Under the longtime Federal Family Education Loan Program, or FFELP, Citigroup and Student Loan Corp. had been the No. 2 originator of student loans in the nation for the 2009 fiscal year, trailing only Reston, Va.-based SLM Corp., better known as Sallie Mae.
Those companies came under federal pressure in the credit crisis of 2008 and 2009, after students and schools reported difficulties in obtaining loans. In response, the U.S. Department of Education offered to buy loan portfolios held by banks that were issued as early as October 2003. In March 2010, the Obama administration and Congress eliminated FFELP as part of the Health and Education Reconciliation Act of 2010. The Congressional Budget Office estimated the government would save $87 billion over the next decade by lending money directly instead of guaranteeing loans issued by private sector companies like Sallie Mae and Student Loan Corp.
Citigroup moved fast as it restructured its overall loan portfolio, divesting $27 billion in Student Loan Corp.”™s federal student loans and assets to Sallie Mae, which had been the top FFELP lender, while keeping another $8.7 billion in loans and assets. As such, the ultimate fate of Student Loan Corp. in Stamford had been an open question but with a new lease in hand the company is keeping a major presence here.
Discover Financial bought a total of $4.2 billion in student loans from Citigroup. With about 75 percent of those loans in repayment, the deal helped Discover diversify its own, smaller portfolio of mostly new student loans that had yet to reach repayment status.
With the Citigroup deal behind it, Discover had a record first quarter as measured by earnings, recording a $465 million profit after losing $104 million a year ago.
“We”™ve got some good history there,” said Roy Guthrie, CFO of Discover, in a recent conference call with investment analysts. “I”™d say for our own loans, it”™s a very low percentage have entered repayment. Most of those loans have been acquired in the last three years.”
For its part, Sallie Mae is using the Student Loan Corp. portfolio it acquired as a springboard to hopefully expose students and their families to other products it offers.
“We were really looking at ”¦ expanding the relationships we have with customers on multiple fronts,” said Jack Remondi, CFO of Sallie Mae, in an April conference call. “We”™re going to ”¦ (allow) parents to sign up for a credit card, where the cash-back earnings will go to pay down their children”™s student loan debt. We”™re going to have similar products for our 529 plans ”¦ Just trying to broaden that relationship.”
Editor”™s note: Due to a reporting error, a previous version of this story incorrectly stated that Student Loan Corp. had relocated within Stamford from 680 Washington Blvd.
