Sallie Mae Securities Class Action, Investors Allege CEO and CFO Hid Student Loan Delinquency Spike

Sallie Mae investors filed a federal securities fraud class action lawsuit in December 2025, alleging the company’s top executives told investors that rising student loan delinquencies were a normal seasonal pattern — then an independent analyst report revealed they were actually running nearly five times worse than seasonal norms. The lawsuit was filed against SLM Corporation (Sallie Mae) on behalf of investors who purchased or acquired Sallie Mae securities between July 25, 2025 and August 14, 2025. No settlement exists. The case is in active litigation in New Jersey federal court.

Quick Facts

What Actually Happened? The Story in Plain English

Sallie Mae, based in Newark, Delaware, originates and services private education loans for families and students. It is the largest private student lender in the United States, with a loan portfolio of over $21 billion. Millions of American students and their families rely on Sallie Mae to fund college tuition every year.

Here is the sequence of events that led to the lawsuit:

Step 1 — The Reassurance (July 25, 2025): Late in July 2025, Sallie Mae CFO Peter M. Graham told investors that the company was observing delinquency rates that “really are following the normal seasonal trends we would expect in the business.” That statement — made publicly during the class period — forms the foundation of the lawsuit.

Step 2 — The Report That Contradicted Everything (August 14, 2025): On August 14, 2025, investment bank TD Cowen issued a report flagging that overall July 2025 delinquencies were up 49 basis points month-over-month — significantly worse than the typical seasonal increase of just 10 basis points for July, driven by a 45 basis point spike in early-stage delinquencies. In plain English: Sallie Mae’s loan delinquencies jumped nearly five times harder than what a normal July looks like.

Step 3 — The Stock Drop: Following the TD Cowen report, the price of SLM stock fell by approximately 8%. Investors who bought shares during the class period — relying on the CFO’s reassurances — were sitting on sudden losses.

Step 4 — The Bad News Kept Coming: In October 2025, Sallie Mae reported Q3 results showing delinquency rates continuing to rise, and analysts expressed concern that credit quality was deteriorating. By December 2025, the company issued multi-year earnings guidance that fell well below consensus expectations, triggering another sharp stock drop.

Step 5 — The Lawsuit: Investors filed Zappia v. SLM Corporation in December 2025, arguing that the bad news was not a surprise — it was knowable earlier, and executives chose to reassure the market rather than disclose the risk.

What Does the Lawsuit Allege?

According to the lawsuit, Sallie Mae concealed from investors a spike in loan delinquencies and the true cause of that increase. The complaint alleges that early-stage delinquencies were rising significantly, even as defendants told investors that such increases were normal for the season and emphasized the effectiveness of the company’s improved loss mitigation strategies.

The complaint places particular emphasis on Sallie Mae’s Q2 2025 Form 10-Q. Plaintiffs allege the filing failed to disclose known adverse trends as required under Item 303 of Regulation S-K. Instead, the company attributed higher delinquencies to benign program refinements and emphasized enhanced mitigation efforts. Plaintiffs argue that these disclosures, combined with affirmative statements about seasonality, created a misleading picture of risk.

The inclusion of Sarbanes-Oxley Act (SOX) certifications is cited as further evidence — the executives signed off on the accuracy of these filings, personally certifying to investors that the disclosures were complete and accurate. Plaintiffs argue those certifications were knowingly or recklessly false given what the executives allegedly knew about actual delinquency data at the time.

Defendants include Sallie Mae itself, CEO Jonathan Witter, and CFO Peter Graham. Plaintiffs allege that the individual defendants had access to real-time delinquency data and exercised control over public statements, SEC filings, and earnings calls.

What Laws Were Allegedly Violated?

• Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 — The federal anti-fraud statute that prohibits any person from making false statements or omitting material facts in connection with the purchase or sale of securities. This is the core claim in virtually every securities fraud class action filed in U.S. federal court.
  
• Section 20(a) of the Securities Exchange Act of 1934 — Holds “controlling persons” — such as a CEO or CFO — jointly liable for securities violations committed by those under their control. This is why both Witter and Graham are named individually alongside the company.
  
• Item 303 of SEC Regulation S-K — Requires publicly traded companies to disclose known trends or uncertainties that are reasonably likely to have a material impact on revenues, expenses, or liquidity. The complaint alleges Sallie Mae’s Q2 2025 filing failed to disclose these known adverse delinquency trends as required under this regulation.
  
• Sarbanes-Oxley Act (SOX) CEO/CFO Certifications — Requires the CEO and CFO to personally certify the accuracy of financial filings. Plaintiffs cite these certifications as evidence the executives stood behind the accuracy of the disclosures — and therefore knew what they contained.

Who Is Affected?

• You may be affected if you purchased or acquired SLM Corporation (NASDAQ: SLM or SLMBP) securities between July 25, 2025 and August 14, 2025, inclusive.
• You may be affected if you relied on Sallie Mae’s public statements about delinquency trends being normal when making your investment decision.
• You may be affected if you suffered a financial loss when SLM stock dropped approximately 8% following the TD Cowen report on August 14, 2025.
• You may be affected if you held SLM shares through subsequent drops in October and December 2025, when the company’s Q3 results and multi-year guidance triggered additional declines.
• You may not be affected if you purchased SLM stock before July 25, 2025 or after August 14, 2025 — the lawsuit’s class period is narrow and covers only those three weeks.

No action is required right now. Save your brokerage statements, trade confirmations, and account statements showing all SLM purchases and sales between July 25 and August 14, 2025 — these documents will be essential to any future claim.

What Is Sallie Mae Saying?

Sallie Mae has not issued a public statement directly addressing the securities class action as of March 14, 2026. The company typically responds through formal court filings rather than press releases in securities litigation.

In its Q3 2025 earnings release, Sallie Mae CEO Jonathan Witter stated the company was “particularly pleased with our strong credit performance, lower net charge-offs, stabilization in late-stage delinquencies, and continued lower levels of loan modification enrollments compared to the prior year.” Sallie Mae’s formal legal defense — once filed — is expected to argue that the CFO’s statements about seasonality were accurate and made in good faith based on information available at the time, and that the subsequent TD Cowen report reflected external analysis rather than information Sallie Mae concealed.

AllAboutLawyer.com will update this article when Sallie Mae files its formal answer or motion to dismiss.

Legal Context: Why This Case Matters Beyond SLM

This lawsuit follows a well-worn pattern in financial sector securities fraud cases. When a company’s business model depends on a single critical metric — in Sallie Mae’s case, student loan delinquency rates — and executives make public statements characterizing that metric as normal, investors rely on those characterizations when buying stock. If the metric later proves to have been worse than disclosed, securities fraud liability can attach.

This case is not about a missed forecast. It is about timing, disclosure, and trust. Seasonal explanations can soothe markets — until they don’t. For Sallie Mae shareholders, the lawsuit asks whether rising delinquencies were framed as seasonal when they were, in fact, structural.

This is one of a growing number of financial services securities class actions. AllAboutLawyer.com’s coverage of the DiDi Global $740 million securities class action settlement — where investors alleged the company concealed regulatory risk before its IPO — shows how these cases can ultimately resolve. You can also review our coverage of the Rivian $250 million securities settlement for a detailed breakdown of how securities fraud settlements pay out to investors once they are approved.

What Happens Next?

• The lead plaintiff deadline of February 17, 2026 has passed. The court will now appoint the investor with the largest financial losses and most adequate legal representation as lead plaintiff to manage the case on behalf of all class members.
• Once a lead plaintiff is appointed, the court will set a schedule for an amended consolidated complaint — the single unified complaint that will replace all individually filed cases and define the scope of the litigation going forward.
• Sallie Mae will then file either a formal answer or a motion to dismiss the complaint. Motions to dismiss in securities fraud cases typically argue that the plaintiffs failed to meet the heightened pleading standards required by the Private Securities Litigation Reform Act of 1995 (PSLRA).
• If the case survives dismissal, both sides enter discovery — during which SLM’s internal delinquency reports, executive communications, and real-time data from the class period will be central battlegrounds.
• Class certification — the court formally approving this as a class action on behalf of all affected investors — will be sought after discovery progresses.
• Securities fraud class actions of this type typically take two to four years from filing to resolution through settlement or trial.

This page will be updated as the case develops.

Important Case Dates

Frequently Asked Questions

Is the Sallie Mae securities lawsuit real and legitimate?

 Yes. The lawsuit, Zappia v. SLM Corporation a/k/a Sallie Mae, is pending in the U.S. District Court for the District of New Jersey under case number 2:25-cv-18834. It is a matter of public federal court record verifiable through the PACER system. Multiple nationally recognized plaintiffs’ firms are involved, including Robbins Geller Rudman & Dowd LLP — one of the country’s largest securities litigation firms.

I bought Sallie Mae stock. Can I file a claim right now? 

No individual claims process is open yet. No settlement has been reached. The lead plaintiff deadline of February 17, 2026 has passed, but you do not need to be lead plaintiff to participate in a class action or eventually receive compensation if a settlement is reached. Save your brokerage records from the July 25 – August 14, 2025 class period now.

What is the class period and why does it matter?

 The class period is July 25, 2025 through August 14, 2025, inclusive. This is the window during which plaintiffs allege Sallie Mae’s public statements were false or misleading. Only investors who purchased SLM securities during those specific three weeks are members of the class and potentially eligible for compensation if a settlement or judgment is obtained.

Do I need my own lawyer to participate? 

No. In a securities class action, the lead plaintiff and class counsel represent all class members automatically. You do not need to retain individual legal counsel to participate. Most securities class action attorneys work on a contingency basis — no upfront fees.

What happens if the case settles?

 If a settlement is reached, the court will approve a distribution plan and all eligible class members — investors who bought SLM stock during the class period and suffered losses — will receive formal notice with instructions on how to file a claim. Settlement amounts in securities cases of this type typically represent a fraction of the total investor losses alleged.

Will I get notified if there is a settlement? 

Yes — if you purchased SLM stock through a brokerage, your broker will typically notify you when a securities class action settlement is approved and a claims process opens. You can also monitor AllAboutLawyer.com and the court docket at PACER for updates.

What does Sallie Mae say about the delinquency claims?

During the Q3 2025 earnings call, Sallie Mae’s CFO acknowledged that early-stage delinquencies had ticked up, but stated the company did not view the trend as troubling and emphasized the performance of its loan modification programs. The company has not issued a formal legal response to the securities lawsuit as of March 14, 2026.

What were the delinquency numbers exactly? 

According to TD Cowen’s August 14, 2025 report, July 2025 delinquencies were up 49 basis points month-over-month — compared to a typical seasonal increase of just 10 basis points for July — driven by a 45 basis point spike in early-stage delinquencies. In practical terms, that means the loan book was deteriorating at nearly five times the normal seasonal rate at the same time executives were telling investors the trends were normal.

Sources & References

• Sallie Mae Q3 2025 Official Earnings Release — SEC.gov

Last Updated: March 14, 2026

This article is for informational purposes only and does not constitute legal advice. Allegations in a complaint are not findings of fact. All parties are presumed innocent unless and until proven otherwise in court.

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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