SLM Corp., better known as Sallie Mae, has agreed to purchase Southwest Student Services Corp., a Gilbertbased college student loan company, for $500 million, the companies announced Thursday.
The proceeds from the sale will be used to fund a foundation that will launch education philanthropy programs in Arizona and Florida and will rank as the largest education foundation in Arizona. Its activities are expected to focus on higher education.
"This is a great day for students in need in the state of Arizona," said Tom Joyce, vice president of corporate communications for Reston, Va.-based Sallie Mae.
Under the terms of the agreement, Sallie Mae will purchase the stock of Southwest from Helios Education Foundation, the parent organization of Southwest. Not-forprofit Helios will offer grants and other programs that are yet to be determined.
Sallie Mae, a major provider of student financial aid, will acquire Southwest’s student loan portfolio, which totals more than $4.5 billion, its Gilbert-based loan origination and servicing center and its sales and marketing operations.
The deal, which still requires regulatory approval, is expected to close in October.
After completion of the transaction, Southwest will become a wholly owned subsidiary of SLM Corp. and retain its own brand and identity. Vince Roig will continue as chief executive of Southwest. No layoffs are planned for Southwest’s 300-person staff, said Joyce.
"Our intent is to grow the business," he said.
Sallie Mae already has a loan servicing office in Mesa with about 40 employees, and eventually the two offices may be combined, Joyce said.
"Southwest looks forward to continuing our primary mission of making education accessible to all," Roig said. "By combining our reputation and dedication with the resources of Sallie Mae, students, families and our school partners will be the ultimate beneficiaries."
Founded more than 20 years ago, Southwest is involved in originating, funding, acquiring and servicing education loans. The company is among the top 30 originators of federallyguaranteed student loans, issuing more than $300 million annually in loans to students and parents and $1.5 billion in consolidation loans.
It is the nation’s ninth largest holder of federal student loans.
The acquisition of Southwest will give Sallie Mae a greater presence in the Western United States, CEO Thomas J. Fitzpatrick said. In return, Sallie Mae will provide Southwest with more loan products, technology resources and related services such as debt management and collection and services to loan guarantors, Joyce said.
"The real winners in this are the students in need in Arizona, who will have a large foundation to serve their needs, and the schools and colleges that will have a broader set of products to choose from," Joyce said.
Plans for the Helios foundation, which was formed in February, are still being formulated.
The structure of the foundation, including the hiring of staff, will be laid out during the next 12 to 18 months, said Kathleen Harris, vice president of Southwest.