Sallie Mae, also known as SLM Corp (NASDAQ:SLM), has announced today that it will officially split into two companies, each of which will be publicly traded. The company’s board appointed president and COO John F. Remondi as CEO of the new company. He takes the place of Albert L. Lord, who is currently Sallie Mae’s vice chairman and CEO. Lord is planning to retire even earlier than originally expected.

Sallie Mae

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Sallie Mae’s Two New Companies

SLM Corp (NASDAQ:SLM) will split its education loan management division and its consumer banking business into two entities. The company said the split will enhance both companies’ growth potential over the long term while also unlocking value.

The company’s board said during Remondi’s time at Sallie Mae, he implemented a number of strategic initiatives, including the company’s privatization and move away from being a government-sponsored entity. The board said it believed that he is the best choice to head up this next major transition for the company.

Details On Sallie Mae’s Separation

According to this morning’s release, the private education loan business at Sallie Mae, which includes Sallie Mae Bank and the current private education loans held by the company, will continue to operate using the Sallie Mae name. Joseph DePaulo, who is currently Sallie Mae’s executive vice president for banking and finance, will become the company’s CEO.

It is expected that the separation will be done through a tax-free common stock distribution to shareholders of SLM Corp (NASDAQ:SLM). Company officials are still working out the final details, like plans for distribution of the company’s assets to the two new companies.

Current Financial Information For Sallie Mae

Based on financial information as of the end of March, it’s expected that the assets of Sallie Mae’s education loan management business will consist of about $118.1 billion in FFELP loans, $31.6 billion in private education loans, $7.9 billion in other assets earning interest and the company’s established education loan servicing platform. The board said that in aggregate, the education loan management business will own about 95 percent of the assets currently owned by Sallie Mae and keep the company’s senior debts.

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Sallie Mae’s consumer banking business is expected to end up with about $9.9 billion in total assets made up mostly of private education loans and related platforms, as well as other investments and cash, plus the Sallie Mae Upromise Rewards program.