UPDATE 1-Sallie Mae sees funding costs falling, shares rise

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NEW YORK, June 5 (Reuters) - SLM Corp's (SLM.N: Quote, Profile, Research, Stock Buzz) vice chairman Jack Remondi said on Thursday the student lender's funding costs are falling and it is returning to the securitization markets, sending its shares up more than 6 percent.

Speaking at an investor conference Remondi said the company expects to pay investors less on its latest $2 billion package of government-backed loans than at any time since the credit crunch began last summer.

He estimated that Sallie Mae, as the company is better known, will pay a lower interest rate of around one percent over London interbank offered rates (Libor), a benchmark rate.

Sallie Mae was the target of a private equity takeover bid that collapsed in part due to regulatory changes that were expected to negatively affect the student lender's growth.

But Remondi expects to see its loan business grow this year because other competitors have scaled down or withdrawn from the market.

"This is an opportunity for us," Remondi said.

The U.S. Education Department agreed to buy up federally- backed student loans last month, allowing Sallie Mae to continue offering government-guaranteed loans.

"The agreement allows us to make loans to all students at all schools," Remondi said.