Under the terms of the deal, significant negative developments can nullify it. Sallie Mae says the anticipated reduction in earnings does not rise to that level of significance.

If the deal were to fall through, the acquisition agreement between Sallie Mae and the investor group provides for a $900 million breakup fee payable by either side under certain conditions. The investors originally agreed to pay it to Sallie Mae if they walked away from the deal, but now they are saying that the negative circumstances void that obligation.

For months, the drama around what could be one of the world's largest private-equity takeover deals has been punctuated by rancor and disputed claims between the two sides. In the time since the original deal was struck in April, the once-booming private-equity industry has stumbled as an acute squeeze in credit markets has caused investors to balk at financing big deals.

Buyout firms like Flowers which acquire public companies and take them private, restructure them and then sell them a few years later at a profit had been riding a wave of easy credit but recently have found it harder to persuade their bankers to finance takeovers.

Cerberus Capital Management LP in July had to inject more equity into its takeover of Chrysler Group from German automaker Daimler. More recently, The Home Depot Inc. lowered the sale price on its wholesale supply unit by 17 percent to complete its sale to private-equity firms. And two private-equity firms backed out of their $8 billion buyout of upscale audio equipment maker Harman International Industries Inc.

On the Net:

SLM Corp.: http://www.salliemae.com

--Associated Press