SLM (SLM) 10-Q 6 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	3 Months Ended Mar. 31, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	SLM CORP
Entity Central Index Key	0001032033
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		4.8
Entity Common Stock, Shares Outstanding (actual number)	485,753,600

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Assets
FFELP Stafford and Other Student Loans (net of allowance for losses of $119,522 and $104,219, respectively)	$47,928,753	$42,978,874
FFELP Stafford Loans Held-for-Sale	16,418,101	9,695,714
FFELP Consolidation Loans (net of allowance for losses of $66,693 and $56,949, respectively)	82,177,664	68,378,560
Private Education Loans (net of allowance for losses of $2,018,676 and $1,443,440, respectively)	35,361,689	22,753,462
Other loans (net of allowance for losses of $77,159 and $73,985, respectively)	334,879	420,233
Investments:
Available-for-sale	746,556	1,273,275
Other	654,503	740,553
Total investments	1,401,059	2,013,828
Cash and cash equivalents	6,840,902	6,070,013
Restricted cash and investments	6,115,399	5,168,871
Retained Interest in off-balance sheet securitized loans	0	1,828,075
Goodwill and acquired intangible assets, net	1,167,599	1,177,310
Other assets	9,767,040	9,500,358
Total assets	207,513,085	169,985,298
Liabilities
Short-term borrowings	41,102,389	30,896,811
Long-term borrowings	157,983,266	130,546,272
Other liabilities	3,671,734	3,263,593
Total liabilities	202,757,389	164,706,676
Commitments and contingencies
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Common stock, par value $.20 per share, 1,125,000 shares authorized: 553,408 and 552,220 shares issued, respectively	110,682	110,444
Additional paid-in capital	5,106,094	5,090,891
Accumulated other comprehensive loss (net of tax benefit of $24,535 and $23,448, respectively)	(42,511)	(40,825)
Retained earnings	72,062	604,467
Total SLM Corporation stockholders' equity before treasury stock	6,621,697	7,140,347
Common stock held in treasury at cost: 67,564 and 67,222 shares, respectively	1,866,020	1,861,738
Total SLM Corporation stockholders' equity	4,755,677	5,278,609
Noncontrolling interest	19	13
Total equity	4,755,696	5,278,622
Total liabilities and equity	207,513,085	169,985,298
Preferred stock
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Total equity	1,375,370	1,375,370
Preferred stock, series A
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock	165,000	165,000
Preferred stock, series B
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock	400,000	400,000
Preferred stock, series C
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock	$810,370	$810,370

1_Consolidated Balance Sheets (

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands	Mar. 31, 2010	Dec. 31, 2009
Assets
Allowance for other student loans losses	$119,522	$104,219
Allowance for consolidation loans losses	66,693	56,949
Allowance for private education loans losses	2,018,676	1,443,440
Allowance for other loans losses	77,159	73,985
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock, par value	0.2	0.2
Preferred stock, shares authorized	20,000	20,000
Common stock, par value	0.2	0.2
Common stock, shares authorized	1,125,000	1,125,000
Common stock, shares issued	553,408	552,220
Tax effect for accumulated other comprehensive loss	$24,535	$23,448
Common stock held in treasury	67,564	67,222
Preferred stock, series A
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock, par value	50	50
Preferred stock, shares issued	3,300	3,300
Preferred stock, series B
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock, par value	100	100
Preferred stock, shares issued	4,000	4,000
Preferred stock, series C
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Preferred stock, liquidation preference	1,000	1,000
Preferred stock, shares issued	810	810
Mandatory convertible preferred stock, dividend rate	0.0725	0.0725

2_Consolidated Balance Sheets (

Consolidated Balance Sheets (Unaudited) Supplemental Information (USD $)
In Thousands	Mar. 31, 2010	Dec. 31, 2009
Supplemental information - significant assets and liabilities of variable interest entities:
FFELP Stafford and Other Student Loans	$47,928,753	$42,978,874
FFELP Consolidation Loans	82,177,664	68,378,560
Private Education Loans	35,361,689	22,753,462
Restricted cash and investments	6,115,399	5,168,871
Other assets	9,767,040	9,500,358
Short-term borrowings	41,102,389	30,896,811
Long-term borrowings	157,983,266	130,546,272
Variable Interest Entity, Primary Beneficiary
Supplemental information - significant assets and liabilities of variable interest entities:
FFELP Stafford and Other Student Loans	62,163,939	51,067,680
FFELP Consolidation Loans	81,460,381	67,664,019
Private Education Loans	23,860,189	10,107,298
Restricted cash and investments	5,724,454	4,596,147
Other assets	4,323,164	3,639,918
Short-term borrowings	33,766,308	23,384,051
Long-term borrowings	$130,114,526	$101,012,628

Consolidated Statements of Inco

Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Interest income:
FFELP Stafford and Other Student Loans	$283,437	$342,816
FFELP Consolidation Loans	523,325	489,362
Private Education Loans	565,154	387,041
Other loans	8,996	16,420
Cash and investments	4,949	5,971
Total interest income	1,385,861	1,241,610
Total interest expense	531,384	1,026,547
Net interest income	854,477	215,063
Less: provisions for loan losses	359,120	250,279
Net interest income (loss) after provisions for loan losses	495,357	(35,216)
Other income (loss) :
Securitization servicing and Residual Interest revenue (loss)		(95,305)
Gains on sales of loans and securities, net	8,653
Gains (losses) on derivative and hedging activities, net	(82,410)	104,025
Contingency fee revenue	80,311	74,815
Collections revenue	21,966	43,656
Guarantor servicing fees	36,090	34,008
Other	190,410	192,458
Total other income	255,020	353,657
Expenses:
Salaries and benefits	150,385	135,142
Other operating expenses	177,635	159,974
Restructuring expenses	26,282	3,773
Total expenses	354,302	298,889
Income (loss) from continuing operations, before income tax expense (benefit)	396,075	19,552
Income tax expense (benefit)	155,795	(5,517)
Net income from continuing operations	240,280	25,069
Loss from discontinued operations, net of tax benefit		(46,174)
Net income (loss)	240,280	(21,105)
Less: net income attributable to noncontrolling interest	140	281
Net income (loss) attributable to SLM Corporation	240,140	(21,386)
Preferred stock dividends	18,678	26,395
Net income (loss) attributable to SLM Corporation common stock	221,462	(47,781)
Net income (loss) attributable to SLM Corporation:
Continuing operations, net of tax	240,140	24,788
Discontinued operations, net of tax		(46,174)
Net income (loss) attributable to SLM Corporation	$240,140	($21,386)
Basic earnings (loss) per common share attributable to SLM Corporation common shareholders:
Continuing operations	0.46
Discontinued operations		-0.1
Total	0.46	-0.1
Average common shares outstanding	484,259	466,761
Diluted earnings (loss) per common share attributable to SLM Corporation common shareholders:
Continuing operations	0.45
Discontinued operations		-0.1
Total	0.45	-0.1
Average common and common equivalent shares outstanding	526,631	466,761
Dividends per common share attributable to SLM Corporation common shareholders

Consolidated Statements of Chan

Consolidated Statements of Changes in Stockholders Equity (Unaudited) (USD $)
In Thousands, except Share data	Preferred stock	Preferred stock, series A	Preferred stock, series A Total Stockholders' Equity	Preferred stock, series A Retained Earnings	Preferred stock, series B	Preferred stock, series B Total Stockholders' Equity	Preferred stock, series B Retained Earnings	Preferred stock, series C	Preferred stock, series C Total Stockholders' Equity	Preferred stock, series C Retained Earnings	Total Stockholders' Equity	Common Stock	Common Stock Shares Outstanding Member	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Stock	Noncontrolling Interest	Total
Beginning Balance, shares at Dec. 31, 2008	8,449,770											534,411,271	467,452,871				(66,958,400)
Beginning Balance at Dec. 31, 2008	$1,714,770										$4,999,070	$106,883		$4,684,112	($76,476)	$426,175	($1,856,394)	$7,270	$5,006,340
Comprehensive income:
Net income (loss)											(21,386)					(21,386)		281	(21,105)
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax											950				950				950
Change in unrealized gains (losses) on derivatives, net of tax											5,409				5,409				5,409
Defined benefit pension plans adjustment											(333)				(333)				(333)
Comprehensive income											(15,360)							281	(15,079)
Cash dividends:
Preferred stock		(2,875)	(2,875)	(2,875)	(2,520)	(2,520)	(2,520)	(20,840)	(20,840)	(20,840)
Restricted stock dividend											(7)					(7)			(7)
Issuance of common shares											2,107	57		2,045			5		2,107
Issuance of common shares, shares												286,846	286,944				98
Issuance of preferred shares														160		(160)
Tax benefit related to employee stock option and purchase plans											(4,495)			(4,495)					(4,495)
Stock-based compensation cost											12,333			12,333					12,333
Repurchase of common shares:
Benefit plans											(3,566)						(3,566)		(3,566)
Benefit plans, shares													(147,058)				(147,058)
Sale of international Purchased Paper - Non-Mortgage business																		(7,257)	(7,257)
Noncontrolling interest - other																		(282)	(282)
Ending Balance at Mar. 31, 2009	1,714,770										4,963,847	106,940		4,694,155	(70,450)	378,387	(1,859,955)	12	4,963,859
Ending Balance, shares at Mar. 31, 2009	8,449,770											534,698,117	467,592,757				(67,105,360)
Beginning Balance, shares at Dec. 31, 2009	8,110,370											552,219,576	484,997,634				(67,221,942)
Beginning Balance at Dec. 31, 2009	1,375,370										5,278,609	110,444		5,090,891	(40,825)	604,467	(1,861,738)	13	5,278,622
Comprehensive income:
Net income (loss)											240,140					240,140		140	240,280
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax											63				63				63
Change in unrealized gains (losses) on derivatives, net of tax											(1,712)				(1,712)				(1,712)
Defined benefit pension plans adjustment											(37)				(37)				(37)
Comprehensive income											238,454							140	238,594
Cash dividends:
Preferred stock		(2,875)	(2,875)	(2,875)	(955)	(955)	(955)	(14,688)	(14,688)	(14,688)
Restricted stock dividend											(11)					(11)			(11)
Issuance of common shares											6,639	238		6,401					6,639
Issuance of common shares, shares												1,188,209	1,188,209
Issuance of preferred shares														160		(160)
Tax benefit related to employee stock option and purchase plans											(3,593)			(3,593)					(3,593)
Stock-based compensation cost											12,235			12,235					12,235
Cumulative effect of accounting change (See Note 1)											(753,856)					(753,856)			(753,856)
Repurchase of common shares:
Benefit plans											(4,282)						(4,282)		(4,282)
Benefit plans, shares													(341,846)				(341,846)
Noncontrolling interest - other																		(134)	(134)
Ending Balance at Mar. 31, 2010	$1,375,370										$4,755,677	$110,682		$5,106,094	($42,511)	$72,062	($1,866,020)	$19	$4,755,696
Ending Balance, shares at Mar. 31, 2010	8,110,370											553,407,785	485,843,997				(67,563,788)

3_Consolidated Statements of Ch

Consolidated Statements of Changes in Stockholders Equity (Unaudited) (Parenthetical) (USD $)
	3 Months Ended Mar. 31, 2010 Preferred stock, series A	3 Months Ended Mar. 31, 2009 Preferred stock, series A
Preferred stock, series A
Cash dividends:
Preferred stock, Dividends per preferred share	0.87	0.87
Preferred stock, series A | Total Stockholders' Equity
Cash dividends:
Preferred stock, Dividends per preferred share	0.87	0.87
Preferred stock, series A | Retained Earnings
Cash dividends:
Preferred stock, Dividends per preferred share	0.87	0.87
Preferred stock, series B
Cash dividends:
Preferred stock, Dividends per preferred share	0.24	0.66
Preferred stock, series B | Total Stockholders' Equity
Cash dividends:
Preferred stock, Dividends per preferred share	0.24	0.66
Preferred stock, series B | Retained Earnings
Cash dividends:
Preferred stock, Dividends per preferred share	0.24	0.66
Preferred stock, series C
Cash dividends:
Preferred stock, Dividends per preferred share	18.13	18.13
Preferred stock, series C | Total Stockholders' Equity
Cash dividends:
Preferred stock, Dividends per preferred share	18.13	18.13
Preferred stock, series C | Retained Earnings
Cash dividends:
Preferred stock, Dividends per preferred share	18.13	18.13

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating activities
Net income (loss)	$240,280	($21,105)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Loss from discontinued operations, net of tax benefit		46,174
Gains on sales of loans and securities, net	(8,653)
Stock-based compensation cost	12,278	13,243
Unrealized (gains)/losses on derivative and hedging activities	(122,044)	(15,273)
Provisions for loan losses	359,120	250,279
Student loans originated for sale, net	(6,722,387)	(6,411,932)
Decrease in restricted cash - other	25,755	35,270
(Increase) decrease in accrued interest receivable	(158,066)	458,024
Increase (decrease) in accrued interest payable	79,833	(284,223)
Adjustment for non-cash loss related to Retained Interest		249,833
Decrease in other assets, goodwill and acquired intangible assets, net	747,834	192,020
Decrease in other liabilities	(3,366)	(60,767)
Cash used in operating activities - continuing operations	(5,789,696)	(5,527,352)
Cash provided by operating activities - discontinued operations		80,299
Total net cash used in operating activities	(5,549,416)	(5,468,158)
Investing activities
Student loans acquired	(2,638,358)	(2,589,083)
Loans purchased from securitized trusts		(2,194)
Reduction of student loans:
Installment payments, claims and other	3,484,121	2,708,857
Proceeds from sales of student loans	75,493	462,311
Other loans - originated		(37,017)
Other loans - repaid	82,688	67,186
Other investing activities, net	80,089	22,718
Purchases of available-for-sale securities	(18,688,583)	(20,521,734)
Proceeds from sales of available-for-sale securities		100,056
Proceeds from maturities of available-for-sale securities	19,182,117	20,726,497
Purchases of held-to-maturity and other securities	(10,458)
Proceeds from maturities of held-to-maturity securities and other securities	39,007	43,994
Increase in restricted cash - on-balance sheet trusts	(52,489)	(344,780)
Net cash provided by investing activities	1,553,627	636,811
Financing activities
Borrowings collateralized by loans in trust - issued	1,544,073	1,330,930
Borrowings collateralized by loans in trust - repaid	(2,099,724)	(1,432,135)
Asset-backed commercial paper conduits, net	(441,723)	682,937
ED Participation Program, net	6,740,199	6,164,514
ED Conduit Program facility, net	368,537
Other short-term borrowings issued		100,002
Other short-term borrowings repaid		(212,720)
Other long-term borrowings issued	1,463,534	1,156,263
Other long-term borrowings repaid	(2,541,703)	(3,024,590)
Other financing activities, net	(247,746)	(905,832)
Excess tax benefit from the exercise of stock-based awards	100
Common stock issued	11
Preferred dividends paid	(18,517)	(26,235)
Noncontrolling interest, net	(363)	(7,988)
Net cash provided by financing activities	4,766,678	3,825,146
Net increase (decrease) in cash and cash equivalents	770,889	(1,006,201)
Cash and cash equivalents at beginning of period	6,070,013	4,070,002
Cash and cash equivalents at end of period	6,840,902	3,063,801
Cash disbursements made (refunds received) for:
Interest	549,075	1,403,858
Income taxes, net	($493,132)	$12,965

Significant Accounting Policies

Significant Accounting Policies
	3 Months Ended Mar. 31, 2010
Significant Accounting Policies [Abstract]
Significant Accounting Policies	1. Significant Accounting Policies Basis of Presentation The accompanying unaudited, consolidated financial statements of SLM Corporation (the Company or Sallie Mae) have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March31, 2010 are not necessarily indicative of the results for the year ending December31, 2010. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in the Companys Annual Report on Form10-K for the year ended December31, 2009 (the 2009 Form 10-K). Reclassifications Certain reclassifications have been made to the balances as of and for the three months ended March31, 2009 to be consistent with classifications adopted for 2010, and had no effect on net income, total assets, or total liabilities. Recently Issued Accounting Standards Transfers of Financial Assets and the Variable Interest Entity (VIE) Consolidation Model In June 2009, the Financial Accounting Standards Board (FASB) issued topic updates to Accounting Standards Codification (ASC)860, Transfers and Servicing, and to ASC810, Consolidation. The topic update to ASC860, among other things, (1)eliminates the concept of a qualifying special purpose entity (QSPE), (2)changes the requirements for derecognizing financial assets, (3)changes the amount of the recognized gain/loss on a transfer accounted for as a sale when beneficial interests are received by the transferor, and (4)requires additional disclosure. The topic update to ASC860 is effective for transactions which occur after December31, 2009. The impact of ASC860 to future transactions will depend on how such transactions are structured. ASC860 relates primarily to the Companys secured borrowing facilities. All of the Companys secured borrowing facilities entered into in 2008 and 2009, including securitization trusts, have been accounted for as on-balance sheet financing facilities. These transactions would have been accounted for in the same manner if ASC860 had been effective during these years. The topic update to ASC810, significantly changes the consolidation model for variable interest entities (VIEs). The topic update amends ASC810 and, among other things, (1)eliminates the exemption for QSPEs, (2)provides a new approach for determining which entity should consolidate a VIE that is more focused on control rather than economic interest, (3)changes when it is necessary to reassess who should consol

Allowance for Loan Losses

Allowance for Loan Losses
	3 Months Ended Mar. 31, 2010
Allowance for Loan Losses [Abstract]
Allowance for Loan Losses	2. Allowance for Loan Losses The Companys provisions for loan losses represent the periodic expense of maintaining an allowance sufficient to absorb incurred losses, net of recoveries, in the held-for-investment loan portfolios. The evaluation of the provisions for loan losses is inherently subjective as it requires material estimates that may be susceptible to significant changes. The Company believes that the allowance for loan losses is appropriate to cover probable losses incurred in the loan portfolios. The following table summarizes the total loan provisions for the three months ended March31, 2010 and 2009. Three Months Ended March31, 2010 2009 Private Education Loans $ 325,022 $ 203,545 FFELP Stafford and Other Student Loans 22,996 34,398 Mortgage and consumer loans 11,102 12,336 Total provisions for loan losses $ 359,120 $ 250,279 Allowance for Private Education Loan Losses The following table summarizes changes in the allowance for loan losses for Private Education Loans for the three months ended March31, 2010 and 2009. Three Months Ended March31, 2010 2009 Allowance at beginning of period $ 1,443,440 $ 1,308,043 Provision for Private Education Loan losses 325,022 203,545 Charge-offs (284,478 ) (138,815 ) Reclassification of interest reserve 10,642 11,681 Consolidation of off-balance sheet trusts(1) 524,050 Allowance at end of period $ 2,018,676 $ 1,384,454 Charge-offs as a percentage of average loans in repayment (annualized) 4.7 % 5.1 % Charge-offs as a percentage of average loans in repayment and forbearance (annualized) 4.4 % 4.7 % Allowance as a percentage of the ending total loan balance 5.3 % 5.9 % Allowance as a percentage of ending loans in repayment 8.2 % 12.3 % Allowance coverage of charge-offs (annualized) 1.7 2.5 Ending total loans(2) $ 38,292,920 $ 23,564,123 Average loans in repayment $ 24,645,633 $ 11,107,102 Ending loans in repayment $ 24,705,990 $ 11,233,368 (1) Upon the adoption of topic updates to ASC810 on January1, 2010, the Company consolidated all of its off-balance sheet securitization trusts. (See Note1, Significant Accounting Policies Recently Issued Accounting Standards - Transfers of Financial Assets and the VIE Consolidation Model for further discussion.) (2) Ending total loans represents gross Private Education Loans, plus the receivable for partially charged-off loans. Private Education Loan Delinquencies The table below presents the Companys Private Education Loan delinquency trend

Investments

Investments
	3 Months Ended Mar. 31, 2010
Investments [Abstract]
Investments	3. Investments A summary of investments and restricted investments as of March31, 2010 and December31, 2009 follows: March31, 2010 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Investments Available-for-sale U.S. Treasury securities $ 2,262 $ $ $ 2,262 Other securities: Asset-backed securities 81,705 245 (1,075 ) 80,875 Commercial paper and asset-backed commercial paper 649,992 649,992 Municipal bonds 9,935 2,055 11,990 Other 1,554 (117 ) 1,437 Total investment securities available-for-sale $ 745,448 $ 2,300 $ (1,192 ) $ 746,556 Restricted Investments Available-for sale U.S. Treasury securities $ 24,835 $ $ $ 24,835 Guaranteed investment contracts 35,006 35,006 Total restricted investments available-for-sale $ 59,841 $ $ $ 59,841 Held-to-maturity Guaranteed investment contracts $ 3,550 $ $ $ 3,550 Total restricted investments held-to-maturity $ 3,550 $ $ $ 3,550 December31, 2009 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Investments Available-for-sale U.S. Treasury securities $ 272 $ $ $ 272 Other securities: Asset-backed securities 110,336 306 (893 ) 109,749 Commercial paper and asset-backed commercial paper 1,149,981 1,149,981 Municipal bonds 9,935 1,942 11,877 Other 1,550 (154 ) 1,396 Total investment securities available-for-sale $ 1,272,074 $ 2,248 $ (1,047 ) $ 1,273,275 Restricted Investments Availabl

Goodwill and Acquired Intangibl

Goodwill and Acquired Intangible Assets
	3 Months Ended Mar. 31, 2010
Goodwill and Acquired Intangible Assets [Abstract]
Goodwill and Acquired Intangible Assets	4. Goodwill and Acquired Intangible Assets Goodwill All acquisitions must be assigned to a reporting unit or units. A reporting unit is the same as or one level below an operating segment. The following table summarizes the Companys historical allocation of goodwill to its reporting units, accumulated impairments and net goodwill for each reporting unit. As of March31, 2010 and December31, 2009 Accumulated (Dollars in millions) Gross Impairments Net Lending $ 412 $ (24 ) $ 388 APG 401 401 Guarantor Servicing 62 62 Upromise 140 140 Other 1 (1 ) Total $ 1,016 $ (25 ) $ 991 Impairment Testing The Company performs goodwill impairment testing annually in the fourth quarter as of a September 30 valuation date or more frequently if an event occurs or circumstances change such that there is a potential that the fair value of a reporting unit or reporting units may be below their respective carrying values. On March30, 2010, President Obama signed into law H.R. 4872, which included the Student Aid and Fiscal Responsibility Act (SAFRA). Effective July1, 2010, the legislation eliminates the authority to provide new loans under FFELP and requires that all new federal loans are to be made through the Direct Student Loan Program (DSLP). The new law does not alter or affect the terms and conditions of existing FFELP loans. The Company is currently in the process of restructuring its operations to reflect this change in law. This restructuring will result in both a significant amount of restructuring expenses incurred as well as a significant reduction of on-going operating costs once the restructuring is complete. See Note12, Restructuring Activities for further details. In connection with the passage of SAFRA legislation on March30, 2010, a trigger event occurred for the Lending, APG and Guarantor Servicing reporting units which requires the Company to assess potential goodwill impairment as of March31, 2010. As part of the impairment assessment, the Company considered the implications of the SAFRA legislation to these reporting units as well as continued uncertainty in the economy and the tight credit markets during the first quarter of 2010. The impairment assessment methodology utilized a discounted cash flow analysis for each reporting unit affected by the new SAFRA legislation. This assessment resulted in estimated fair values of the Companys reporting units in excess of their carrying values at March31, 2010. Accordingly, there was no indicated impairment for these reporting units in the first quarter of 2010. Likewise, in conjunction with the Companys annual impairment assessment in the fourth quarter of 2009, the cash flow projections for the Lending, APG and Guarantor Servicing reporting units were valued assuming the proposed SAFRA legislation

Borrowings

Borrowings
	3 Months Ended Mar. 31, 2010
Borrowings [Abstract]
Borrowings	5. Borrowings The following table summarizes the Companys borrowings as of March31, 2010 and December31, 2009. March31, 2010 December31, 2009 Short Long Short Long (Dollars in millions) Term Term Total Term Term Total Unsecured borrowings $ 4,831 $ 22,214 $ 27,045 $ 5,185 $ 22,797 $ 27,982 Unsecured term bank deposits 1,208 4,202 5,410 842 4,795 5,637 ED Participation Program facility 15,746 15,746 9,006 9,006 ED Conduit Program facility 14,682 14,682 14,314 14,314 ABCP borrowings 3,278 5,000 8,278 8,801 8,801 Securitizations 122,277 122,277 89,200 89,200 Indentured trusts 60 1,505 1,565 64 1,533 1,597 Other(1) 1,159 1,159 1,472 1,472 Total before fair value adjustments 40,964 155,198 196,162 30,883 127,126 158,009 ASC 815 fair value adjustments 138 2,786 2,924 14 3,420 3,434 Total $ 41,102 $ 157,984 $ 199,086 $ 30,897 $ 130,546 $ 161,443 (1) Other primarily consists of cash collateral held related to derivative exposures that are recorded as a short-term debt obligation. As of March31, 2010, the Company had $3.5billion in unsecured revolving credit facilities which provide liquidity support for general corporate purposes. The Company has never drawn on these facilities. These facilities include a $1.9billion revolving credit facility maturing in October 2010 and a $1.6billion revolving credit facility maturing in October 2011. On May5, 2010, the $1.9billion revolving credit facility maturing in October 2010 was terminated. The principal financial covenants in the unsecured revolving credit facilities require the Company to maintain consolidated tangible net worth of at least $1.38billion at all times. Consolidated tangible net worth as calculated for purposes of this covenant was $2.9billion as of March31, 2010. The covenants also require the Company to meet either a minimum interest coverage ratio or a minimum net adjusted revenue test based on the four preceding quarters adjusted Core Earnings financial performance. The Company was compliant with both of the minimum interest coverage ratio and the minimum net adjusted revenue tests as of the quarter ended March31, 2010. The Company has not

Student Loan Securitization

Student Loan Securitization
	3 Months Ended Mar. 31, 2010
Student Loan Securitization [Abstract]
Student Loan Securitization	6. Student Loan Securitization The Company securitizes its FFELP Stafford loans, FFELP Consolidation Loans and Private Education Loan assets. Prior to the adoption of topic updates to the FASBs ASC 810 on January1, 2010, for transactions qualifying as sales, the Company retained a Residual Interest and servicing rights (as the Company retained the servicing responsibilities), all of which were referred to as the Companys Retained Interest in off-balance sheet securitized loans. The Residual Interest was the right to receive cash flows from the student loans and reserve accounts in excess of the amounts needed to pay servicing, derivative costs (if any), other fees, and the principal and interest on the bonds backed by the student loans. As a result of adopting the topic updates to ASC 810, the Company removed the $1.8billion of Residual Interests (associated with its off-balance sheet securitization trusts as of December31, 2009)from the consolidated balance sheet (see Note1, Significant Accounting Policies Recently Issued Accounting Standards - Transfers of Financial Assets and the VIE Consolidation Model for further details). Securitization Activity The following table summarizes the Companys securitization activity for the three months ended March31, 2010 and 2009. The securitizations in the periods presented below were accounted for as financing under ASC 860. Three Months Ended March31, 2010 2009 Loan Loan No. of Amount No. of Amount (Dollars in millions) Transactions Securitized Transactions Securitized Securitizations: FFELP Stafford/PLUS Loans $ $ FFELP Consolidation Loans Private Education Loans 1 1,929 1 2,891 Total securitizations 1 $ 1,929 1 $ 2,891 The following table summarizes cash flows received from or paid to the off-balance sheet securitization trusts during the three months ended March31, 2009. Three Months Ended (Dollars in millions) March31, 2009 Net proceeds from new securitizations completed during the period $ Cash distributions from trusts related to Residual Interests 114 Servicing fees received(1) 58 Purchases of previously transferred financial assets for representation and warranty violations (3 ) Reimbursements of borrower benefits(2) (8 ) Purchases of delinquent Private Education Loans from securitization trusts using delinquent loan call option Purchases of loans using clean-up call option (1) The Company receives annual servicing fees of 90basis points, 50basis points and 70basis points of the outstanding securitized loan balance related to its FFELP Stafford, FFELP Consolida

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Mar. 31, 2010
Derivative Financial Instruments [Abstract]
Derivative Financial Instruments	7. Derivative Financial Instruments Derivative instruments are used as part of the Companys interest rate and foreign currency risk management strategy and include interest rate swaps, basis swaps, cross-currency interest rate swaps, interest rate futures contracts, and interest rate floor and cap contracts with indices that relate to the pricing of specific balance sheet assets and liabilities. (For a full discussion of the Companys risk management strategy and use of derivatives, please see the Companys 2009 Form10-K, Note9, Derivative Financial Instruments, to the consolidated financial statements.) The accounting of the Companys derivatives requires that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The Companys derivative instruments are classified and accounted for by the Company as fair value hedges, cash flow hedges or trading activities. Fair Value Hedges Fair value hedges are generally used by the Company to hedge the exposure to changes in fair value of a recognized fixed rate asset or liability. The Company enters into interest rate swaps to convert fixed rate assets into variable rate assets and fixed rate debt into variable rate debt. The Company also enters into cross-currency interest rate swaps to convert foreign currency denominated fixed and floating debt to U.S.dollar denominated variable debt. Changes in value for both the hedge and the hedged item are recorded to earnings. These amounts offset each other with the net amount representing the ineffectiveness of the relationship. Cash Flow Hedges Cash flow hedges are used by the Company to hedge the exposure to variability in cash flows for a forecasted debt issuance and for exposure to variability in cash flows of floating rate debt. This strategy is used primarily to minimize the exposure to volatility from future changes in interest rates. Gains and losses on the effective portion of a qualifying hedge are accumulated in other comprehensive income and ineffectiveness is recorded immediately to earnings. Trading Activities When instruments do not qualify as hedges, they are accounted for as trading where all changes in fair value of the derivatives are recorded through earnings. In general, derivative instruments included in trading activities include Floor Income Contracts, basis swaps and various other derivatives that do not qualify for hedge accounting under ASC 815. Summary of Derivative Financial Statement Impact The following tables summarize the fair values and notional amounts of all derivative instruments at March31, 2010 and December31, 2009, and their impact on other comprehensive income and earnings for the three months ended March31, 2010 and 2009. Impact of Derivatives on Consolidated Balance Sheet Cash Flow Fair Value Trading Total Hedged Risk Mar.31, Dec.31, Mar.31, Dec.31, Mar.31, Dec.31,

Other Assets

Other Assets
	3 Months Ended Mar. 31, 2010
Other Assets [Abstract]
Other Assets	8. Other Assets The following table provides detail on the Companys other assets at March31, 2010 and December31, 2009. March31, 2010 December31, 2009 Ending % of Ending % of Balance Balance Balance Balance Accrued interest receivable $ 3,261,880 33 % $ 2,566,984 27 % Derivatives at fair value 2,488,862 25 2,783,696 29 Income tax asset, net current and deferred 1,533,540 16 1,750,424 18 APG purchased paper receivables and real estate owned 245,822 3 286,108 3 Benefit and insurance-related investments 474,162 5 472,079 5 Fixed assets, net 323,914 3 322,481 3 Accounts receivable general 967,984 10 807,086 9 Other 470,876 5 511,500 6 Total $ 9,767,040 100 % $ 9,500,358 100 % The Derivatives at fair value line in the above table represents the fair value of the Companys derivatives in a gain position by counterparty, exclusive of accrued interest and collateral. At March31, 2010 and December31, 2009, these balances included $3.0billion and $3.4billion, respectively, of cross-currency interest rate swaps and interest rate swaps designated as fair value hedges that were offset by an increase in interest-bearing liabilities related to the hedged debt. As of March31, 2010 and December31, 2009, the cumulative mark-to-market adjustment to the hedged debt was $(2.9)billion and $(3.4)billion, respectively.

Stockholders' Equity

Stockholders' Equity
	3 Months Ended Mar. 31, 2010
Stockholders' Equity [Abstract]
Stockholders' Equity	9. Stockholders Equity The following table summarizes the Companys common share repurchases and issuances for the three months ended March31, 2010 and 2009. Three Months Ended March31, (Shares in millions) 2010 2009 Common shares repurchased: Benefit plans(1) .3 .1 Total shares repurchased .3 .1 Average purchase price per share $ 12.53 $ 24.25 Common shares issued 1.2 .3 Authority remaining at end of period for repurchases 38.8 38.8 (1) Includes shares withheld from stock option exercises and vesting of restricted stock for employees tax withholding obligations and shares tendered by employees to satisfy option exercise costs. The closing price of the Companys common stock on March31, 2010 was $12.52. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) includes the after-tax change in unrealized gains and losses on available-for-sale investments, unrealized gains and losses on derivatives, and the defined benefit pension plans adjustment. The following table presents the cumulative balances of the components of other comprehensive loss as of March31, 2010, December31, 2009 and March31, 2009. March31, December31, March31, 2010 2009 2009 Net unrealized gains (losses) on investments(1)(2) $ 1,692 $ 1,629 $ (293 ) Net unrealized gains (losses) on derivatives(3) (55,611 ) (53,899 ) (88,577 ) Defined benefit pension plans: Net gain 11,408 11,445 18,420 Total defined benefit pension plans(4) 11,408 11,445 18,420 Total accumulated other comprehensive loss $ (42,511 ) $ (40,825 ) $ (70,450 ) (1) Net of tax expense of $.9million and $.9million as of March31, 2010 and December31, 2009, respectively, and a tax benefit of $.6million as of March31, 2009. (2) Net unrealized gains (losses) on investments includes currency translation gains of $1million, $.8million and $.3million as of March31, 2010, December31, 2009 and March31, 2009, respectively. (3) Net of tax benefit of $32million, $31million and $51million as of March31, 2010, December31, 2009 and March31, 2009, respectively. (4) Net of tax expense of $7million, $7million and $11million as of March31, 2010, December31, 2009 and March31, 2009, respectively.

Earnings

Earnings (Loss) per Common Share
	3 Months Ended Mar. 31, 2010
Earnings (Loss) per Common Share [Abstract]
Earnings (Loss) per Common Share	10. Earnings (Loss) per Common Share Basic earnings (loss) per common share (EPS) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations follows for the three months ended March31, 2010 and 2009. Three Months Ended March31, 2010 2009 Numerator: Net income (loss) from continuing operations attributable to common stock $ 221,462 $ (1,607 ) Adjusted for dividends of convertible preferred stock seriesC(1) 14,688 Net income (loss) from continuing operations attributable to common stock, adjusted 236,150 (1,607 ) Net income (loss) from discontinued operations (46,174 ) Net income (loss) attributable to common stock, adjusted $ 236,150 $ (47,781 ) Denominator (shares in thousands): Weighted average shares used to compute basic EPS 484,259 466,761 Effect of dilutive securities: Dilutive effect of convertible preferred stock seriesC(1) 41,240 Dilutive effect of stock options, nonvested deferred compensation, nonvested restricted stock, restricted stock units and Employee Stock Purchase Plan (ESPP)(2) 1,132 Dilutive potential common shares(3) 42,372 Weighted average shares used to compute diluted EPS 526,631 466,761 Basic earnings (loss) per common share: Continuing operations $ .46 $ Discontinued operations (.10 ) Total $ .46 $ (.10 ) Diluted earnings (loss) per common share: Continuing operations $ .45 $ Discontinued operations (.10 ) Total $ .45 $ (.10 ) (1) The Companys 7.25percent mandatory convertible preferred stock SeriesC was issued on December31, 2007. The mandatory convertible preferred stock will automatically convert on December15, 2010, into between approximately 34million shares and 41million shares of common stock, depending upon the Companys stock price at that time. Depending upon the amount of the mandatory convertible preferred stock outstanding as of that date, the actual number of shares of common stock issued may be less. These instruments were anti-dilutive for the three months ended March31, 2009. (2) Includes the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options, non-vested deferred compensation and restricted stock, restricted stock units, and the outstanding commitment to issue shares under

Other Income

Other Income
	3 Months Ended Mar. 31, 2010
Other Income [Abstract]
Other Income	11. Other Income The following table summarizes the components of Other income in the consolidated statements of income for the three months ended March31, 2010 and 2009. Three Months Ended March31, 2010 2009 Gains on debt repurchases $ 90,081 $ 63,755 Late fees and forbearance fees 41,383 36,712 Asset servicing and other transaction fees 27,892 25,055 Loan servicing fees 19,247 10,046 Foreign currency translation gains, net 847 39,684 Other 10,960 17,206 Total $ 190,410 $ 192,458 The change in other income over the prior period was primarily the result of the gains on debt repurchases and foreign currency translation gains. The Company began repurchasing its outstanding debt in the second quarter of 2008 in both open-market repurchases and public tender offers. The Company repurchased $1.3billion and $144million face amount of its senior unsecured notes for the quarters ended March31, 2010 and 2009, respectively. Since the second quarter of 2008, the Company has repurchased $6.7billion face amount of its senior unsecured notes in the aggregate, with maturity dates ranging from 2008 to 2016. The foreign currency translation gains relate to a portion of the Companys foreign currency denominated debt for which the Company does not receive hedge accounting treatment under ASC815. A partially offsetting loss was recognized during the periods in the gains (losses) on derivative and hedging activities, net line item on the income statement related to the derivatives used to economically hedge these debt instruments.

Restructuring Activities

Restructuring Activities
	3 Months Ended Mar. 31, 2010
Restructuring Activities [Abstract]
Restructuring Activities	12. Restructuring Activities Restructuring expenses of $26million and $4million were recorded in the three months ended March31, 2010 and 2009, respectively. The following details the two restructuring efforts the Company has engaged in: On March30, 2010, President Obama signed into law H.R. 4872, which included SAFRA. Effective July1, 2010, the legislation eliminates the authority to provide new loans under FFELP and requires that all new federal loans are made through the DSLP. The new law does not alter or affect the terms and conditions of existing FFELP loans. The Company is currently in the process of restructuring its operations to reflect this change in law which will result in a significant amount of restructuring costs incurred as well as a significant reduction of operating costs, once the restructuring is complete. In the first quarter of 2010, restructuring expenses associated with this restructuring plan totaled $23million. The Company estimates approximately $35million of additional restructuring expenses will be incurred related to this restructuring plan. The majority of these restructuring expenses are and will be severance costs related to the planned elimination of approximately 2,500 positions, or approximately 30percent of the workforce. In response to the College Cost Reduction and Access Act of 2007 (CCRAA) and challenges in the capital markets, the Company initiated a restructuring plan in the fourth quarter of 2007. This restructuring plan focused on conforming the Companys lending activities to the economic environment, exiting certain customer relationships and product lines, winding down its debt purchased paper businesses, and significantly reducing its operating expenses. This restructuring plan was essentially completed in the fourth quarter of 2009. Under this plan, restructuring expenses of $3million and $4million were recognized in continuing operations in the first quarters of 2010 and 2009, respectively. Restructuring expenses from the fourth quarter of 2007 through the first quarter of 2010 totaled $132million of which $123million was recorded in continuing operations and $9million was recorded in discontinued operations. The majority of these restructuring expenses were severance costs related to the completed and planned elimination of approximately 2,900 positions, or approximately 25percent of the workforce. The Company estimates approximately $4million of additional restructuring expenses will be incurred related to this restructuring plan. The following table summarizes the restructuring expenses incurred during the quarters ended March31, 2010 and 2009 and cumulative restructuring expenses incurred through March31, 2010. Cumulative Three Months Ended Expense(2) as of March31, March31, 2010 2009 2010 Severance costs $ 24,798 $ 1,666 $ 121,098 Lease and other contract termination costs 1,446 675 11,853 Exit and other costs 38 1,432 13,119

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements [Abstract]
Fair Value Measurements	13. Fair Value Measurements The Company uses estimates of fair value in applying various accounting standards for its financial statements. Under GAAP, fair value measurements are used in one of four ways: In the consolidated balance sheet with changes in fair value recorded in the consolidated statement of income; In the consolidated balance sheet with changes in fair value recorded in the accumulated other comprehensive income section of the consolidated statement of changes in stockholders equity; In the consolidated balance sheet for instruments carried at lower of cost or fair value with impairment charges recorded in the consolidated statement of income;and In the notes to the financial statements. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Companys policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads (including for the Companys liabilities), relying first on observable data from active markets. Additional adjustments may be made for factors including liquidity, credit, bid/offer spreads, etc., depending on current market conditions. Transaction costs are not included in the determination of fair value. When possible, the Company seeks to validate the models output with market transactions. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. Classification is based on the lowest level of input that is significant to the fair value of the instrument. The three levels are as follows: Level1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The types of financial instruments included in level1 are highly liquid instruments with quoted prices. Level2 Inputs from active markets, other than quoted prices for identical instruments, are used to determine fair value. Significant inputs are directly observable from active markets for substantially the full term of the asset or liability being valued. Level3 Pricing inputs significant to the valuation are unobservable. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs. During the three months ended March31, 2010, there were no significant transfers of financial instruments between levels. Student Loans

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments and Contingencies [Abstract]
Commitments and Contingencies	14. Commitments and Contingencies On February2, 2010, a putative class action suit was filed by a borrower in U.S. District Court for the Western District of Washington (Mark A. Arthur et al. v. SLM Corporation). The suit complains that Sallie Mae allegedly contacted tens of thousands of consumers on their cellular telephones without their prior express consent in violation of the Telephone Consumer Protection Act, 227 et seq. (TCPA). Each violation under the TCPA provides for $500 in statutory damages ($1,500 if a willful violation is shown). Plaintiffs seek statutory damages, damages for willful violations, attorneys fees, costs, and injunctive relief. On April5, 2010, Plaintiffs filed a First Amended Class Action Complaint changing the defendant from SLM Corporation to Sallie Mae, Inc. Management does not believe that a range of potential exposure is currently estimable. In the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties to pending and threatened legal actions and proceedings including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment and other laws. In certain of these actions and proceedings, claims for substantial monetary damage are asserted against the Company and its subsidiaries. In the ordinary course of business, the Company and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. In connection with formal and informal inquiries in these cases, the Company and its subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of the Companys regulated activities. In view of the inherent difficulty of predicting the outcome of such litigation and regulatory matters, the Company cannot predict what the eventual outcome of the pending matters will be, what the timing or the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. In accordance with ASC450, Contingencies, the Company is required to establish reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. When loss contingencies are not both probable and estimable, the Company does not establish reserves. Based on current knowledge, reserves have not been established for any pending litigation or regulatory matters. Based on current knowledge, management does not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on the consolidated financial position or liquidity of the Company.

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes [Abstract]
Income Taxes	15. Income Taxes Income tax expense from continuing operations was $156million in the first quarter of 2010 compared to income tax (benefit) of $(6)million in the first quarter of 2009, resulting in effective tax rates of 39percent and (28)percent, respectively. The movement in the effective tax rate in the first quarter of 2010 compared with the year-ago period was primarily driven by the impact of state tax rate changes and state law changes recorded in both periods, and the impact of adjustments related to the IRS examination of the Companys 2005 and 2006 U.S.federal income tax returns in the first quarter of 2009. Also contributing to the movement was the impact of significantly higher reported pre-tax income in the first quarter of 2010 and the resulting changes in the proportion of income subject to federal and state taxes. Accounting for Uncertainty in Income Taxes The unrecognized tax benefits changed from $104million at December31, 2009 to $108million at March31, 2010, and accrued interest changed from $7million at December31, 2009 to $8million at March31, 2010. Included in the $108million are $20million of unrecognized tax benefits that if recognized, would favorably impact the effective tax rate.

Segment Reporting

Segment Reporting
	3 Months Ended Mar. 31, 2010
Segment Reporting [Abstract]
Segment Reporting	16. Segment Reporting The Company has two primary operating segments the Lending operating segment and the APG operating segment. The Lending and APG operating segments meet the quantitative thresholds for reportable segments. Accordingly, the results of operations of the Companys Lending and APG segments are presented below. The Company has smaller operating segments including the Guarantor Servicing, Loan Servicing, and Upromise operating segments, as well as certain other products and services provided to colleges and universities which do not meet the required quantitative thresholds. Therefore, the results of operations for these operating segments and the revenues and expenses associated with these other products and services are combined within the Corporate and Other reportable segment. In the first quarter of 2010, the Company changed its methodology to allocate corporate overhead to each business segment. In addition, the Company refined its methodology for allocating information technology expenses. Following these changes, all corporate overhead is allocated to a business segment. Previously, only certain overhead costs were specifically allocated and the rest remained in the Corporate and Other business segment. The segment results for the three months ended March31, 2009 have been updated to reflect these changes in expense allocations. The management reporting process measures the performance of the Companys operating segments based on the management structure of the Company, as well as the methodology used by management to evaluate performance and allocate resources. Management, including the Companys chief operating decision makers, evaluates the performance of the Companys operating segments based on their profitability. As discussed further below, management measures the profitability of the Companys operating segments based on Core Earnings net income. Accordingly, information regarding the Companys reportable segments is provided based on a Core Earnings basis. The Companys Core Earnings performance measures are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Core Earnings net income reflects only current period adjustments to GAAP net income as described below. Unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. The management reporting process measures the performance of the operating segments based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. The Companys operating segments are defined by the products and services they offer or the types of customers they serve, and they reflect the manner in which financial information is currently evaluated by management. Intersegment revenues and expenses are netted within the appropriate financial statement line items consistent with the income statement presentation provided to management. Changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial information. The Companys

Discontinued Operations

Discontinued Operations
	3 Months Ended Mar. 31, 2010
Discontinued Operations [Abstract]
Discontinued Operations	17. Discontinued Operations In the fourth quarter of 2009, the Company sold all of the assets in its Purchased Paper Mortgage/Properties business for $280million, resulting in an after-tax loss of $95million. The Purchased Paper Mortgage/Properties business was considered a Component of the Companys APG reporting unit in accordance with ASC360 as the business comprises operations and cash flows that can be clearly distinguished operationally and for financial reporting purposes, from the rest of the Company. In accordance with ASC205, this Component is presented as discontinued operations as (1)the operations and cash flows of the Component have been eliminated from the ongoing operations of the Company as of December31, 2009, and (2)the Company will have no continuing involvement in the operations of this Component subsequent to the sale. The following table summarizes the discontinued assets and liabilities of Purchased Paper Mortgage/Properties business at March31, 2010 and December31, 2009, respectively. March31, December31, 2010 2009 Assets: Cash and equivalents $ 92 $ 351 Other assets 32,680 34,072 Assets of discontinued operations $ 32,772 $ 34,423 Liabilities: Liabilities of discontinued operations $ 28,776 $ 29,796 At March31, 2010 and December31, 2009, other assets of the Companys discontinued operations consist of a receivable from SLM Corporation associated with the 2009net operating loss generated by its discontinued operations, which has been utilized by SLM Corporation and its subsidiaries in its 2009 consolidated U.S.federal income tax return. At March31, 2010 and December31, 2009, liabilities of the Companys discontinued operations consist primarily of estimated reserves associated with certain recourse and buy-back provisions associated with the asset sale, as well as restructuring liabilities related to severance and contract termination costs. The following table summarizes the discontinued operations for the three months ended March31, 2010 and 2009, respectively. Three Months Ended March31, 2010 2009 Operations: Loss from discontinued operations before income taxes $ $ (72,353 ) Income tax benefit (26,179 ) Loss from discontinued operations, net of taxes $ $ (46,174 )

Legislative Developments

Legislative Developments
	3 Months Ended Mar. 31, 2010
Legislative Developments [Abstract]
Legislative Developments	18. Legislative Developments On March30, 2010, President Obama signed into law H.R. 4872, which included the Student Aid and Fiscal Responsibility Act (SAFRA). Effective July1, 2010, the legislation eliminates the authority to provide new loans under FFELP and requires that all new federal loans are made through the Direct Student Loan Program (DSLP). The new law does not alter or affect the terms and conditions of existing FFELP loans. The Company is currently in the process of restructuring its operations to reflect this change in law. This restructuring will result in both a significant amount of restructuring expenses incurred as well as a significant reduction of on-going operating costs once the restructuring is complete. The following summarizes the expected impact on the Companys business as a result of SAFRA: 1. The Company will no longer originate FFELP loans and therefore will no longer earn revenue on newly originated FFELP loan volume after 2010. The Company earned $284million in revenue in 2009 related to selling FFELP loans to the Department of Education (ED) as part of the Loan Purchase Commitment Program (Purchase Program) and expects to earn approximately $300million of revenue in 2010 related to this program. The Company also earned $40million in 2009 and $23million in the first quarter of 2010 in net interest income on the loans before selling them to ED. The net interest income that the Company earns on its FFELP loan portfolio will decline over time as the FFELP loans on the Companys balance sheet pay down. 2. The Company earns collections revenue on delinquent and defaulted FFELP loans as well as guarantor account maintenance fees which are based on the size of the underlying guarantor portfolio. This revenue totaled $265million in 2009 and $74million in the first quarter of 2010. Because there will no longer be any new FFELP loan originations, this collections revenue and guarantor account maintenance fee revenue will decline over time as the underlying guarantor portfolios wind down. These revenues are recorded in contingency fee revenue and guarantor servicing fees. 3. The Company earns guarantor issuance fees on new FFELP guarantees. This revenue will no longer occur after July1, 2010. This revenue totaled $64million in 2009 and $21million in the first quarter of 2010. This revenue is recorded in guarantor servicing fees. On April15, 2010, Senator Durbin, along with Senators Franken and Whitehouse, introduced S. 3219 and Congressman Steve Cohen introduced H.R. 5043, slightly different bills that would modify the bankruptcy laws with respect to Private Education Loans. Both bills would allow certain Private Education Loans to be discharged in bankruptcy proceedings. S. 3219 would allow for discharge of Private Education Loans made by non-government entities at any point after full disbursement. H.R. 5043 would continue to protect from discharge Private Education Loans made or insured by governmental entities or made by non-profit entities, but would limit dischargeability of other Private Education Loans to future bankruptcies. On May3, 2010, Senator Fra