SLM Corp., the largest US student lender, has created the position of chief credit officer and hired industry veteran John Hewes to fill it.
Hewes will oversee credit risk management and underwriting policies for private student loans, SLM, of Reston, Va., said yesterday in a statement. Hewes spent the last 22 years at MBNA Corp., the world's largest independent credit-card issuer, where he headed the consumer finance and business lending divisions, SLM said. MBNA was acquired by Bank of America Corp. in 2006.
SLM, known as Sallie Mae, said in January that subsidy cuts for US-guaranteed loans are driving its focus on higher-margin private loans, and that it will become more selective in screening borrowers. Some for-profit education companies, including Corinthian Colleges Inc., have said Sallie Mae halted loans for students deemed high credit risks.
"They want private to be a key growth area, and with private lending, you're taking on the full credit risk," said Richard Hofmann, an analyst with CreditSights Inc. in New York.
Sallie Mae made its move after student lenders were in the past year "blindsided" by an increase in default rates, mostly among nontraditional students at trade schools, in a pattern similar to that in the subprime market for home loans, Hofmann said.
Sallie Mae fell 48 cents to $19.30 on the New York Stock Exchange. The shares have declined 67 percent since July.
Sallie Mae has made several management changes since it named Anthony P. Terracciano chairman in January.
