Student Loan Giant Sallie Mae Cuts 1,000 Jobs; Posts Quarterly Loss

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Sallie Mae, the nation's largest student loan company, has eliminated about 1,000 jobs over the past six months representing about 9 percent of its workforce, the company said yesterday.

The layoffs are part of Sallie Mae's continuing effort to cope with cuts in federal subsidies, the collapse of a planned sale of the company, and an upheaval in the financial markets that has made it costlier for lenders to fund their business.

"Under current conditions ..... loans can only be made at an economic loss," the company said in a news release announcing its financial results for the first three months of 2008.

The Reston-based lender said in January that it was laying off 350 employees as it embarked on an effort to cut operating expenses by 20 percent. In yesterday's report, Sallie Mae said it was "still in the preliminary phase of assessing all potential restructuring activities."

SLM Corp., as it is formally known, said it lost $103.8 million (28 cents per share) during the first quarter, compared with a profit of $116.2 million (26 cents) during the first quarter of 2007. The quarterly loss was driven largely by $363 million of unrealized losses on derivatives, which are financial contracts used to hedge against risk.

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