J.C. Flowers & Co. made a revised offer for SLM Corp., aka Sallie Mae, the largest U.S. student-loan provider. The company, backed by investors including JPMorgan Chase & Co. and Bank of America Corp., made a $50 per share offer, down 17 percent from the $60 a share offer they made in April.

The group of investors made the revised offer after president Bush slashed government subsidies to student loans, which from their standpoint makes the original offer too steep. The $50 per share "appropriately and fairly reflects the new economic and legislative environment that faces the company."

However, Sallie Mae did not react very well. It said it expected the banks involved in the deal to buy it out to honor the deal: "Our contract is with Bank of America and JPMorgan Chase, two of America's largest and strongest banks. We expect these banks to honor that contract, not breach the contract." SLM Corp. says the buyout group has no right to change terms of what had been a roughly $25 billion deal. SLM shares are now trading at about $50 a share.

Flowers has thrown in the new deal performance warrants, the value of which will hinge on SLM's performance over the next five years. They have been evaluated anywhere from 50 cents to $1.19 per share, either way failing to compensate for the $10 per share difference.

J. Christopher Flowers said the revised offer expires Oct. 9 and also said the group of investors "would be willing to consider amending" the "no-shop" provision in the original buyout agreement, which had barred SLM from talking with other potential buyers.

SLM Corporation, commonly known as Sallie Mae, was founded in 1972 as the Student Loan Marketing Association, a government-sponsored enterprise (GSE). It is now managing around $130 billion in debt for more than 10 million borrowers, and employs about 12,000 individuals at offices nationwide. C.E. Andrews is the CEO of Sallie Mae.