When a J.C. Flowers-led group of investors bid $25 billion last week to take over the nation's largest student-loan provider, Sallie Mae
SLC, a lender with a $3.9 billion market cap, is 80% owned by Citibank, a subsidiary of Citigroup
There are other bright spots, too. SLC has almost quadrupled in size since the start of 2000, has paid a quarterly dividend every quarter since 1992, and has upped that amount every year since 2002. And its origination performance has been thriving: The company's managed student loan portfolio grew by 10% to $34.7 billion during the 12-month period ended March 31.
On the other hand, investors should remember that Citibank agreed earlier this month to a $2 million settlement with the New York Attorney General's office pertaining to questionable marketing practices by student-loan providers. So although things are looking fairly good for SLC, there is indeed some risk involved by diving into the $85 billion student loan industry. Fools would be wise to tread carefully.
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Fool contributor Billy Fisher does not own shares of any of the companies mentioned.