NEWARK, Del. (AP) — Student lender Sallie Mae said Tuesday that its board had approved a 20 percent increase to its dividend, to 15 cents from 12.5 cents.

The dividend will be paid out on March 15 to shareholders as of March 1.

The board also authorized a $400 million share buyback plan. The plan does not have an expiration date. Buybacks can return profits to shareholders by making existing stakes worth more. They also offset the effect of using shares to compensate employees.

Last month, the Newark, Del., company formally known as SLM Corp. reported its fourth-quarter profit fell as it set aside more money for bad loans. It also forecast 2013 earnings short of Wall Street expectations.

The company has seen an increase in demand for private loans as higher education costs rise but the weak economy has hindered students' ability to repay their debts.

Sallie Mae's stock is virtually flat for 2013, while the benchmark S&P 500 is up almost 6 percent.

Its shares were up 2 cents at $17.18 in afterhours trading following the dividend announcement. They closed the regular session up 16 cents, or 1 percent, at $17.16 as broader markets gained. The Standard & Poor's 500 index rose 1 percent as well.