When a big public company spins off a division, that is sometimes very good for shareholders. In the case of SLM Corp. (SLM) - better known as Sallie Mae, the student loan giant - it might not get a high grade.
U.S. borrowers owe $1.2 trillion in student-loan debt, including government loans and those from private lenders such as SLM. That surpasses all other kinds of consumer borrowing except for mortgages.
The Newark, Del.-based outfit won't be adding a lot of shareholder value in this transaction, according to a Monday research report issued by the often-bullish brokerage firm Janney Montgomery Scott. Sallie Mae announced late Friday details of its planned split next year, in which it will spin off an entity known as NewCo. It houses Sallie Mae's portfolio of federal and private student loans and its collections and servicing business.