Navient, Sallie Mae Gains on Trump Win ‘False Positive’: Beacon

Navient, Sallie Mae have been gaining post-election, driven by belief change in federal policy will benefit them; likely "false positive," particularly for NAVI, Beacon Policy Advisors writes in note.

  • Still sees Dept. of Education contract to build federal student loan servicing platform being awarded before Obama leaves office, won’t go to NAVI; also sees CFPB Director Richard Cordray bringing enforcement action against NAVI before he’s asked to depart in late January, likely in coordination with over 2 dozen state AGs who’ve been investigating NAVI for years
    • With Trump victory, there’s nothing for Cordray, CFPB to lose; even in likely scenario where CFPB loses much of its power, authority, sees state AGs able to hold NAVI to terms of "Ocwen-like" settlement for years to come
  • SLM gains on belief Trump administration, Republican-held Congress will shift back toward guaranteeing credit risk of bank-based student lending, vs Direct Loan program; sees shift as "possible, but not probable," due to more pressing issues
  • NAVI reverses earlier gains, down as much as 1.4%; SLM down as much as 2.9%
  • Sees any substantive higher education changes via legislation likely to target reducing regulation on for-profit colleges, pushing federal financing of skills-based training, investigating colleges’ use of endowments when claiming to be tax-exempt
  • U.S. for-profit education (USEDU) up as much as 1.5% to highest since Aug. 11
    • Gainers include CPLA, DV, LOPE, APEI, APOL
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