UPDATE: Sallie Mae To Create 2,000 Jobs In Next 18 Months

  (Updates with the company's CEO saying that the move would cost the company about $35 million) 
   DOW JONES NEWSWIRES 
 

SLM Corp. (SLM) said it plans to create 2,000 jobs by returning its overseas operations to the U.S.

The move comes as the company has been seeking a new role in student lending and grappling with an inability to access traditional funding sources because of tight credit markets.

The largest U.S. student lender, known as Sallie Mae, said it will hire call center, information technology and operations support workers across the company over the next 18 months.

"The current economic environment has caused our communities to struggle with job losses," Chief Executive Albert Lord said. "They need jobs, and we will put 2,000 of them into U.S. facilities as soon as we possibly can."

Asked in an interview on CNBC how much it would cost, he said, "Well, I will tell you that it will not be inexpensive. It's probably roughly $35 million." He didn't give further details.

Asked if this meant that Sallie Mae would no outsource jobs, he said, "It would be foolhardy for me to tell you that I won't ever do anything again."

Sallie Mae's shares were up about 1.&% at $5.44 at 9:41 a.m. The stock is off about 40% so far this year as of Friday's close.

The company has been dealing with a budget proposal from the Obama administration that would diminish the role of private lenders in federal student loans. Investors have worried that the Virginia-based company will lose a major source of income if the proposal is adopted.

Sallie, which makes private and federal student loans, gets nearly one-third of its income from the federal student loans it makes for the government. It had $34 billion in private loans at the end of the fourth quarter and $146 billion in federal student loans.

Sallie Mae said last month it was replacing its private loan with a shorter-term one that requires borrowers to make monthly interest payments while they are in school. The new loan, which is already available, will help borrowers reduce the total amount of interest they pay, although the additional requirements could make it even harder for some borrowers to get a loan.

The interest-only requirement is likely to push private loans - which often come with higher interest rates than federal loans - out of reach for more borrowers. But the new structure could make it easier for Sallie Mae to sell bundles of the loans as securities to investors, which could, in turn, make more loans available for borrowers.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry,[e-mail]