SLM (SLM) 8-K Sallie Mae Reports Strong Second-quarter Results

Exhibit 99.1

FOR IMMEDIATE RELEASE	Media Contacts:	Investor Contacts:
	Tom Joyce	Steve McGarry
	703/984-5610	703/984-6746
	Martha Holler	Joe Fisher
	703/984-5178	703/984-5755

SALLIE MAE REPORTS STRONG SECOND-QUARTER RESULTS

• Fee Income Up 23 Percent

• Total Managed Loan Portfolio Exceeds $130 Billion

RESTON, Va., July 20, 2006— SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported second-quarter 2006 earnings and performance results that include $3.2 billion in preferred-channel loan originations, a 14-percent increase from the year-ago quarter’s $2.8 billion.

     The company’s internal lending brands originated $1.8 billion in loans during the 2006 second quarter. This represented 55 percent of all preferred-channel originations issued during the period. Preferred-channel loan originations include loans originated by the company’s internal lending brands and external lending partners.

     “Our internal brand growth remains strong, and our pipeline of new school clients signals a terrific start to the new academic year,” said Tim Fitzpatrick, chief executive officer. “Our fee-based businesses are also performing well. We delivered a solid quarter for our shareholders while continuing to provide increased access to higher education.”

     During the second-quarter 2006, private education loan originations, a segment of preferred-channel originations, grew 32 percent from the year-ago quarter to $1.1 billion, and included more than $124 million of direct-to-consumer loans.

     Year-to-date 2006, the company has originated $10.8 billion through its preferred channel, up 13 percent from the same period last year. Preferred-channel originations in the first half of 2006 include $5.3 billion originated through internal brands and $3.3 billion of private education loan originations.

     At the end of the second-quarter 2006, the company’s total managed student loan portfolio was $130.1 billion, a 12-percent increase from the end of the 2005 second quarter.

     Sallie Mae reports financial results on a GAAP basis and also presents certain “core earnings” performance measures on a basis that differs from GAAP. The company’s management, equity investors, credit rating agencies and debt capital providers use these “core earnings” measures to monitor the company’s business performance.

Sallie Mae • 12061 Bluemont Way • Reston, Va 20190 • www.salliemae.com

     Sallie Mae reported second-quarter 2006 GAAP net income of $724 million, or $1.61 per diluted share, compared to $297 million, or $.66 per diluted share, in the year-ago period. Included in these GAAP results are pre-tax gains on derivative and hedging activities of $123 million in the second quarter 2006, compared to a pre-tax loss of $(106) million in the year-ago quarter, and an increase of $409 million in gains on student loan securitizations.

     “Core earnings” net income for the second quarter 2006 was $320 million, or $.72 per diluted share, up from $279 million, or $.62 per diluted share, in the year-ago quarter. These results include a non-recurring special allowance payment accrued during the second-quarter 2006. The company began expensing stock-based compensation in 2006. Recognizing stock-based compensation expense in both the current and year-ago periods and eliminating the one-time special allowance payment, “core earnings” per diluted share were $.70 in the 2006 second quarter, up from $.60 in the same quarter in 2005, a 17-percent increase.

     For the first half of 2006, “core earnings” net income was $607 million, compared to $535 million in the first half of 2005.

     “Core earnings” net interest income was $602 million for the quarter, a 17-percent increase from the year-ago quarter’s $516 million. “Core earnings” other income, which consists primarily of fees earned from guarantor servicing and collection activity, was $266 million for the 2006 second quarter, up 23 percent from $216 million in the year-ago quarter. “Core earnings” operating expenses were $299 million in the second-quarter 2006, compared to $271 million in the same quarter last year.

     Both a description of the “core earnings” treatment and a full reconciliation to the GAAP income statement can be found at: http://www2.salliemae.com/investors/stockholderinfo/earningsinfo, click on the Second Quarter 2006 Supplemental Earnings Disclosure.

     Total equity for the company at June 30, 2006, was $4.4 billion, up from $3.7 billion a year ago. The company’s tangible capital at June 30, 2006, was 2.19 percent of managed assets, compared to 2.03 percent at the same time last year.

     The company will host its regular earnings conference call today at noon. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company’s performance. Individuals interested in participating should call the following number today, July 20, 2006, starting at 11:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International). The conference call will be replayed continuously beginning Thursday, July 20, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, July 27. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 2203336. In addition, there will be a live audio Web cast of the conference call, which may be accessed at www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast.

***

This press release contains “forward-looking statements” includingexpectations as to future market share, the success of preferred channel originations and future results. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks

Sallie Mae • 12061 Bluemont Way • Reston, Va 20190 • www.salliemae.com

and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, and changes in the general interest rate environment. For more information, see the company’s filings with the Securities and Exchange Commission.

***

SLM Corporation(NYSE:SLM ), commonly known as Sallie Mae, is the nation’s leading provider of education funding, managing more than $130 billion in student loans and serving 10 million customers. Sallie Mae was originally created in 1972 as a government-sponsored entity (GSE) and terminated its ties to the federal government in 2004. The company remains the country’s largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors. More information is available atwww.salliemae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

###

Sallie Mae • 12061 Bluemont Way • Reston, Va 20190 • www.salliemae.com

SLM CORPORATION

Supplemental Earnings Disclosure

June 30, 2006

(Dollars in millions, except earnings per share)

	Quarters ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2006			2006			2005			2006			2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
SELECTED FINANCIAL INFORMATION AND RATIOS
GAAP Basis
Net income	$	724		$	152		$	297		$	875		$	520
Diluted earnings per common share(1)	$	1.61		$	.34		$	.66		$	1.96		$	1.15
Return on assets		3.20	%		.68	%		1.55	%		1.94	%		1.37	%
“Core Earnings” Basis(2)
“Core Earnings” net income	$	320		$	287		$	279		$	607		$	535
“Core Earnings” diluted earnings per common share(1)	$	.72		$	.65		$	.62		$	1.37		$	1.18
“Core Earnings” return on assets		.90	%		.85	%		.90	%		.88	%		.88	%
OTHER OPERATING STATISTICS
Average on-balance sheet student loans	$	80,724		$	82,850		$	70,580		$	81,781		$	69,129
Average off-balance sheet student loans		47,716			42,069			43,791			44,909			42,846
Average Managed student loans	$	128,440		$	124,919		$	114,371		$	126,690		$	111,975
Ending on-balance sheet student loans, net	$	82,279		$	81,645		$	72,831
Ending off-balance sheet student loans, net		47,865			45,225			43,669
Ending Managed student loans, net	$	130,144		$	126,870		$	116,500
Ending Managed FFELP Stafford and Other Student Loans, net	$	41,926		$	42,340		$	47,126
Ending Managed Consolidation Loans, net		69,195			66,662			55,875
Ending Managed Private Education Loans, net		19,023			17,868			13,499
Ending Managed student loans, net	$	130,144		$	126,870		$	116,500

⁽¹⁾   In December 2004, the Company adopted the Emerging Issues Task Force (“EITF”) IssueNo. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share,” as it relates to the Company’s $2 billion in contingently convertible debt instruments (“Co-Cos”) issued in May 2003. EITFNo. 04-8 requires the shares underlying Co-Cos to be included in diluted earnings per common share computations regardless of whether the market price trigger or the conversion price has been met, using the “if-converted” method. The impact of Co-Cos due to the application of EITFNo. 04-8 was to decrease diluted earnings per common share by the following amounts:

	Quarters ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2006			2006			2005			2006			2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Impact of Co-Cos on GAAP diluted earnings per common share	$	(.08	)	$	—	(A)	$	(.02	)	$	(.07	)	$	(.04	)
Impact of Co-Cos on “Core Earnings” diluted earnings per common share	$	(.01	)	$	(.01	)	$	(.02	)	$	(.02	)	$	(.04	)

^(A)   There is no impact on diluted earnings per common share because the effect of the assumed
conversion is antidilutive.

⁽²⁾   See explanation of “Core Earnings” performance measures under “Reconciliation of ‘Core Earnings’ Net Income to GAAP Net Income.”

1

SLM CORPORATION

Consolidated Balance Sheets

(In thousands, except per share amounts)

	June 30,		March 31,		June 30,
	2006		2006		2005
	(unaudited)		(unaudited)		(unaudited)
Assets
FFELP Stafford and Other Student Loans (net of allowance for losses of $6,890; $5,547; and $0, respectively)	$	21,390,845	$	18,882,890	$	22,092,672
Consolidation Loans (net of allowance for losses of $10,090; $9,983; and $5,313, respectively)		54,054,932		53,450,647		44,640,737
Private Education Loans (net of allowance for losses of $251,582; $232,147; and $228,205, respectively)		6,832,843		9,311,164		6,097,102
Other loans (net of allowance for losses of $15,190; $15,081; and $12,764, respectively)		1,050,632		1,114,200		962,017
Cash and investments		6,204,462		4,349,669		3,637,936
Restricted cash and investments		3,489,542		3,065,148		2,422,714
Retained Interest in off-balance sheet securitized loans		3,151,855		2,487,117		2,631,308
Goodwill and acquired intangible assets, net		1,080,703		1,091,301		1,003,427
Other assets		4,650,851		4,013,450		3,270,831
Total assets	$	101,906,665	$	97,765,586	$	86,758,744
Liabilities
Short-term borrowings	$	3,801,266	$	3,362,548	$	4,679,612
Long-term borrowings		90,506,785		87,083,110		75,017,121
Other liabilities		3,229,477		3,555,318		3,336,943
Total liabilities		97,537,528		94,000,976		83,033,676
Commitments and contingencies
Minority interest in subsidiaries		9,369		9,682		73,330
Stockholders’ equity
Preferred stock, par value $.20 per share, 20,000 shares authorized; Series A: 3,300; 3,300; and 3,300 shares, respectively, issued at stated value of $50 per share; Series B: 4,000; 4,000; and 4,000 shares, respectively, issued at stated value of $100 per share		565,000		565,000		565,000
Common stock, par value $.20 per share, 1,125,000 shares authorized: 430,753; 429,329; and 486,706 shares, respectively, issued		86,151		85,866		97,341
Additional paid-in capital		2,440,565		2,364,252		2,035,676
Accumulated other comprehensive income, net of tax		370,204		328,496		473,121
Retained earnings		1,775,948		1,163,570		2,862,730
Stockholders’ equity before treasury stock		5,237,868		4,507,184		6,033,868
Common stock held in treasury at cost: 19,078; 16,599; and 66,532 shares, respectively		878,100		752,256		2,382,130
Total stockholders’ equity		4,359,768		3,754,928		3,651,738
Total liabilities and stockholders’ equity	$	101,906,665	$	97,765,586	$	86,758,744

2

SLM CORPORATION

Consolidated Statements of Income

(In thousands, except per share amounts)

	Quarters ended								Six months ended
	June 30,		March 31,			June 30,			June 30,		June 30,
	2006		2006			2005			2006		2005
	(unaudited)		(unaudited)			(unaudited)			(unaudited)		(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	337,090	$	298,500		$	238,510		$	635,590	$	429,243
Consolidation Loans		841,591		821,335			554,429			1,662,926		1,062,850
Private Education Loans		233,696		241,353			126,809			475,049		256,425
Other loans		23,541		23,307			20,046			46,848		40,199
Cash and investments		124,954		95,810			54,245			220,764		116,294
Total interest income		1,560,872		1,480,305			994,039			3,041,177		1,905,011
Interest expense		1,204,067		1,092,784			664,251			2,296,851		1,228,463
Net interest income		356,805		387,521			329,788			744,326		676,548
Less: provisions for losses		67,396		60,319			78,948			127,715		125,471
Net interest income after provisions for losses		289,409		327,202			250,840			616,611		551,077
Other income:
Gains on student loan securitizations		671,262		30,023			262,001			701,285		311,895
Servicing and securitization revenue		82,842		98,931			149,931			181,773		292,892
Gains (losses) on derivative and hedging activities, net		122,719		(86,739	)		(105,940	)		35,980		(140,191	)
Guarantor servicing fees		33,256		26,907			25,686			60,163		58,226
Debt management fees		90,161		91,612			82,589			181,773		168,341
Collections revenue		67,357		56,681			41,881			124,038		76,764
Other		66,557		68,428			55,748			134,985		118,067
Total other income		1,134,154		285,843			511,896			1,419,997		885,994
Operating expenses		316,602		323,309			287,413			639,911		549,704
Income before income taxes and minority interest in net earnings of subsidiaries		1,106,961		289,736			475,323			1,396,697		887,367
Income taxes		381,828		137,045			176,573			518,873		363,039
Income before minority interest in net earnings of subsidiaries		725,133		152,691			298,750			877,824		524,328
Minority interest in net earnings of subsidiaries		1,355		1,090			2,235			2,445		4,429
Net income		723,778		151,601			296,515			875,379		519,899
Preferred stock dividends		8,787		8,301			3,908			17,088		6,783
Net income attributable to common stock	$	714,991	$	143,300		$	292,607		$	858,291	$	513,116
Basic earnings per common share	$	1.74	$	.35		$	.70		$	2.08	$	1.22
Average common shares outstanding		410,957		412,675			419,497			411,811		420,206
Diluted earnings per common share	$	1.61	$	.34		$	.66		$	1.96	$	1.15
Average common and common equivalent shares outstanding		454,314		422,974			461,900			453,803		462,454
Dividends per common share	$	.25	$	.22		$	.22		$	.47	$	.41

3

SLM CORPORATION

Segment and “Core Earnings”

Consolidated Statements of Income

(In thousands)

	Quarter ended June 30, 2006
						Corporate			Total ‘‘Core					Total
	Lending		DMO			and Other			Earnings”		Adjustments			GAAP
	(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	718,909	$	—		$	—		$	718,909	$	(381,819	)	$	337,090
Consolidation Loans		1,114,355		—			—			1,114,355		(272,764	)		841,591
Private Education Loans		485,429		—			—			485,429		(251,733	)		233,696
Other loans		23,541		—			—			23,541		—			23,541
Cash and investments		169,877		—			659			170,536		(45,582	)		124,954
Total interest income		2,512,111		—			659			2,512,770		(951,898	)		1,560,872
Total interest expense		1,903,523		5,466			1,345			1,910,334		(706,267	)		1,204,067
Net interest income		608,588		(5,466	)		(686	)		602,436		(245,631	)		356,805
Less: provisions for losses		60,009		—			(32	)		59,977		7,419			67,396
Net interest income after provisions for losses		548,579		(5,466	)		(654	)		542,459		(253,050	)		289,409
Fee income		—		90,161			33,256			123,417		—			123,417
Collections revenue		—		67,213			—			67,213		144			67,357
Other income		50,771		—			24,338			75,109		868,271			943,380
Operating expenses(1)		163,162		85,110			50,235			298,507		18,095			316,602
Income before income taxes and minority interest in net earnings of subsidiaries		436,188		66,798			6,705			509,691		597,270			1,106,961
Income tax expense(2)		161,391		24,715			2,480			188,586		193,242			381,828
Minority interest in net earnings of subsidiaries		—		1,355			—			1,355		—			1,355
Net income	$	274,797	$	40,728		$	4,225		$	319,750	$	404,028		$	723,778

(1)	Operating expenses for the Lending, DMO, and Corporate and Other Business segments include $8 million, $2 million, and $4 million, respectively, of stock-based compensation expense due to the implementation of SFAS No. 123(R) in the first quarter of 2006.
(2)	Income taxes are based on a percentage of net income before tax for the individual reportable segment.

4

	Quarter ended March 31, 2006
						Corporate			Total “Core					Total
	Lending		DMO			and Other			Earnings”		Adjustments			GAAP
						(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	649,751	$	—		$	—		$	649,751	$	(351,251	)	$	298,500
Consolidation Loans		1,027,962		—			—			1,027,962		(206,627	)		821,335
Private Education Loans		428,760		—			—			428,760		(187,407	)		241,353
Other loans		23,307		—			—			23,307		—			23,307
Cash and investments		130,461		—			1,323			131,784		(35,974	)		95,810
Total interest income		2,260,241		—			1,323			2,261,564		(781,259	)		1,480,305
Total interest expense		1,659,372		5,156			1,278			1,665,806		(573,022	)		1,092,784
Net interest income		600,869		(5,156	)		45			595,758		(208,237	)		387,521
Less: provisions for losses		74,820		—			19			74,839		(14,520	)		60,319
Net interest income after provisions for losses		526,049		(5,156	)		26			520,919		(193,717	)		327,202
Fee income		—		91,612			26,907			118,519		—			118,519
Collections revenue		—		56,540			—			56,540		141			56,681
Other income		40,572		—			30,009			70,581		40,062			110,643
Operating expenses(1)		161,438		89,513			58,512			309,463		13,846			323,309
Income (loss) before income taxes and minority interest in net earnings of subsidiaries		405,183		53,483			(1,570	)		457,096		(167,360	)		289,736
Income tax expense (benefit)(2)		149,917		19,789			(581	)		169,125		(32,080	)		137,045
Minority interest in net earnings of subsidiaries		—		1,090			—			1,090		—			1,090
Net income (loss)	$	255,266	$	32,604		$	(989	)	$	286,881	$	(135,280	)	$	151,601

(1)	Operating expenses for the Lending, DMO, and Corporate and Other Business segments include $10 million, $3 million, and $5 million, respectively, of stock-based compensation expense due to the implementation of SFAS No. 123(R) in the first quarter of 2006.
(2)	Income taxes are based on a percentage of net income before tax for the individual reportable segment.

5

	Quarter ended June 30, 2005
						Corporate			Total “Core					Total
	Lending(2)		DMO(2)			and Other(2)			Earnings”		Adjustments			GAAP
	(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	582,344	$	—		$	—		$	582,344	$	(343,834	)	$	238,510
Consolidation Loans		666,417		—			—			666,417		(111,988	)		554,429
Private Education Loans		246,948		—			—			246,948		(120,139	)		126,809
Other loans		20,046		—			—			20,046		—			20,046
Cash and investments		77,660		—			859			78,519		(24,274	)		54,245
Total interest income		1,593,415		—			859			1,594,274		(600,235	)		994,039
Total interest expense		1,073,010		3,888			1,361			1,078,259		(414,008	)		664,251
Net interest income		520,405		(3,888	)		(502	)		516,015		(186,227	)		329,788
Less: provisions for losses		14,540		—			(315	)		14,225		64,723			78,948
Net interest income after provisions for losses		505,865		(3,888	)		(187	)		501,790		(250,950	)		250,840
Fee income		—		82,589			25,686			108,275		—			108,275
Collections revenue		—		41,881			—			41,881		—			41,881
Other income		36,136		34			29,243			65,413		296,327			361,740
Operating expenses		140,592		67,496			63,314			271,402		16,011			287,413
Income (loss) before income taxes and minority interest in net earnings of subsidiaries		401,409		53,120			(8,572	)		445,957		29,366			475,323
Income tax expense (benefit)(1)		148,522		19,654			(3,172	)		165,004		11,569			176,573
Minority interest in net earnings of subsidiaries		928		1,199			—			2,127		108			2,235
Net income (loss)	$	251,959	$	32,267		$	(5,400	)	$	278,826	$	17,689		$	296,515

(1)	Income taxes are based on a percentage of net income before tax for the individual reportable segment.
(2)	In the first quarter of 2006, the Company changed its method for allocating certain Corporate and Other expenses to the other business segments. All periods presented have been updated to reflect the new allocation methodology.

6

	Six months ended June 30, 2006
						Corporate			Total “Core					Total
	Lending		DMO			and Other			Earnings”		Adjustments			GAAP
	(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	1,368,660	$	—		$	—		$	1,368,660	$	(733,070	)	$	635,590
Consolidation Loans		2,142,317		—			—			2,142,317		(479,391	)		1,662,926
Private Education Loans		914,189		—			—			914,189		(439,140	)		475,049
Other loans		46,848		—			—			46,848		—			46,848
Cash and investments		300,338		—			1,982			302,320		(81,556	)		220,764
Total interest income		4,772,352		—			1,982			4,774,334		(1,733,157	)		3,041,177
Total interest expense		3,562,895		10,622			2,623			3,576,140		(1,279,289	)		2,296,851
Net interest income		1,209,457		(10,622	)		(641	)		1,198,194		(453,868	)		744,326
Less: provisions for losses		134,829		—			(13	)		134,816		(7,101	)		127,715
Net interest income after provisions for losses		1,074,628		(10,622	)		(628	)		1,063,378		(446,767	)		616,611
Fee income		—		181,773			60,163			241,936		—			241,936
Collections revenue		—		123,753			—			123,753		285			124,038
Other income		91,343		—			54,347			145,690		908,333			1,054,023
Operating expenses(1)		324,600		174,623			108,747			607,970		31,941			639,911
Income before income taxes and minority interest in net earnings of subsidiaries		841,371		120,281			5,135			966,787		429,910			1,396,697
Income tax expense(2)		311,308		44,504			1,899			357,711		161,162			518,873
Minority interest in net earnings of subsidiaries		—		2,445			—			2,445		—			2,445
Net income	$	530,063	$	73,332		$	3,236		$	606,631	$	268,748		$	875,379

(1)	Operating expenses for the Lending, DMO, and Corporate and Other Business segments include $18 million, $5 million, and $9 million, respectively, of stock-based compensation expense due to the implementation of SFAS No. 123(R) in the first quarter of 2006.
(2)	Income taxes are based on a percentage of net income before tax for the individual reportable segment.

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	Six months ended June 30, 2005
						Corporate			Total “Core					Total
	Lending(2)		DMO(2)			and Other(2)			Earnings”		Adjustments			GAAP
	(unaudited)
Interest income:
FFELP Stafford and Other Student Loans	$	1,092,284	$	—		$	—		$	1,092,284	$	(663,041	)	$	429,243
Consolidation Loans		1,247,394		—			—			1,247,394		(184,544	)		1,062,850
Private Education Loans		474,255		—			—			474,255		(217,830	)		256,425
Other loans		40,199		—			—			40,199		—			40,199
Cash and investments		155,848		—			1,804			157,652		(41,358	)		116,294
Total interest income		3,009,980		—			1,804			3,011,784		(1,106,773	)		1,905,011
Total interest expense		1,991,103		7,956			2,771			2,001,830		(773,367	)		1,228,463
Net interest income		1,018,877		(7,956	)		(967	)		1,009,954		(333,406	)		676,548
Less: provisions for losses		69,502		—			(355	)		69,147		56,324			125,471
Net interest income after provisions for losses		949,375		(7,956	)		(612	)		940,807		(389,730	)		551,077
Fee income		—		168,341			58,226			226,567		—			226,567
Collections revenue		—		76,764			—			76,764		—			76,764
Other income		71,898		67			60,872			132,837		449,826			582,663
Operating expenses		274,777		131,412			114,510			520,699		29,005			549,704
Income before income taxes and minority interest in net earnings of subsidiaries		746,496		105,804			3,976			856,276		31,091			887,367
Income tax expense(1)		276,203		39,148			1,471			316,822		46,217			363,039
Minority interest in net earnings of subsidiaries		1,749		2,420			—			4,169		260			4,429
Net income (loss)	$	468,544	$	64,236		$	2,505		$	535,285	$	(15,386	)	$	519,899

(1)	Income taxes are based on a percentage of net income before tax for the individual reportable segment.
(2)	In the first quarter of 2006, the Company changed its method for allocating certain Corporate and Other expenses to the other business segments. All periods presented have been updated to reflect the new allocation methodology.

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SLM CORPORATION

Reconciliation of “Core Earnings” Net Income to GAAP Net Income

(In thousands, except per share amounts)

	Quarters ended									Six months ended
				March 31,			June 30,			June 30,			June 30,
	June 30, 2006			2006			2005			2006			2005
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
“Core Earnings”net income(A)	$	319,750		$	286,881		$	278,826		$	606,631		$	535,285
“Core Earnings” adjustments:
Net impact of securitization accounting		503,083			(62,061	)		107,531			441,022			75,159
Net impact of derivative accounting		164,678			(38,817	)		(10,989	)		125,861			78,623
Net impact of Floor Income		(52,333	)		(52,569	)		(51,084	)		(104,902	)		(93,517	)
Amortization of acquired intangibles		(18,158	)		(13,913	)		(16,092	)		(32,071	)		(29,174	)
Total “Core Earnings” adjustments before income taxes and minority interest in net earnings of subsidiaries		597,270			(167,360	)		29,366			429,910			31,091
Net tax effect(B)		(193,242	)		32,080			(11,569	)		(161,162	)		(46,217	)
Total “Core Earnings” adjustments before minority interest in net earnings of subsidiaries		404,028			(135,280	)		17,797			268,748			(15,126	)
Minority interest in net earnings of subsidiaries		—			—			(108	)		—			(260	)
Total “Core Earnings” adjustments		404,028			(135,280	)		17,689			268,748			(15,386	)
GAAP net income	$	723,778		$	151,601		$	296,515		$	875,379		$	519,899
GAAP diluted earnings per common share	$	1.61		$	.34		$	.66		$	1.96		$	1.15
(A) “Core Earnings” diluted earnings per common share	$	.72		$	.65		$	.62		$	1.37		$	1.18

^(B) Such tax effect is based upon the Company’s “Core Earnings” effective tax rate for the year. The net tax effect results primarily from the exclusion of the permanent income tax impact of the equity forward contracts.

“Core Earnings”

In accordance with the Rules and Regulations of the Securities and Exchange Commission (“SEC”), we prepare financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In addition to evaluating the Company’s GAAP-based financial information, management evaluates the Company’s business segments on a basis that, as allowed under Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” differs from GAAP. We refer to management’s basis of evaluating our segment results as “Core Earnings” presentations for each business segment and we refer to this information in our presentations with credit rating agencies and lenders. While “Core Earnings” are not a substitute for reported results under GAAP, we rely on “Core Earnings” to manage each operating segment because we believe these measures provide additional information regarding the operational and performance indicators that are most closely assessed by management.

Our “Core Earnings” are the primary financial performance measures used by management to evaluate performance and to allocate resources. Accordingly, financial information is reported to management on a “Core Earnings” basis by reportable segment, as these are the measures used regularly by our chief operating decision maker. Our “Core Earnings” are used in developing our financial plans and tracking results, and also in establishing corporate performance targets and determining incentive compensation. Management believes

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this information provides additional insight into the financial performance of the Company’s core business activities. Our “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. “Core Earnings” reflect only current period adjustments to GAAP as described below. Accordingly, the Company’s “Core Earnings” presentation does not represent another comprehensive basis of accounting. A more detailed discussion of the differences between GAAP and “Core Earnings” follows.

Limitations of “Core Earnings”

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, management believes that “Core Earnings” are an important additional tool for providing a more complete understanding of the Company’s results of operations. Nevertheless, “Core Earnings” are subject to certain general and specific limitations that investors should carefully consider. For example, as stated above, unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. Our “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Unlike GAAP, “Core Earnings” reflect only current period adjustments to GAAP. Accordingly, the Company’s “Core Earnings” presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not compare our Company’s performance with that of other financial services companies based upon “Core Earnings.” “Core Earnings” results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, the Company’s board of directors, rating agencies and lenders to assess performance.

Other limitations arise from the specific adjustments that management makes to GAAP results to derive “Core Earnings” results. For example, in reversing the unrealized gains and losses that result from SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” on derivatives that do not qualify for “hedge treatment,” as well as on derivatives that do qualify but are in part ineffective because they are not perfect hedges, we focus on the long-term economic effectiveness of those instruments relative to the underlying hedged item and isolate the effects of interest rate volatility, changing credit spreads and changes in our stock price on the fair value of such instruments during the period. Under GAAP, the effects of these factors on the fair value of the derivative instruments (but not on the underlying hedged item) tend to show more volatility in the short term. While our presentation of our results on a Managed Basis provides important information regarding the performance of our Managed portfolio, a limitation of this presentation is that we are presenting the ongoing spread income on loans that have been sold to a trust managed by us. While we believe that our Managed Basis presentation presents the economic substance of our Managed loan portfolio, it understates earnings volatility from securitization gains. Our “Core Earnings” results exclude certain Floor Income, which is real cash income, from our reported results and therefore may understate earnings in certain periods. Management’s financial planning and valuation of operating results, however, does not take into account Floor Income because of its inherent uncertainty, except when it is economically hedged through Floor Income Contracts.

Pre-Tax Differences between “Core Earnings” and GAAP

Our “Core Earnings” are the primary financial performance measures used by management to evaluate performance and to allocate resources. Accordingly, financial information is reported to management on a “Core Earnings” basis by reportable segment, as these are the measures used regularly by our chief operating decision maker. Our “Core Earnings” are used in developing our financial plans and tracking results, and also in establishing corporate performance targets and determining incentive compensation. Management believes this information provides additional insight into the financial performance of the Company’s core business activities. “Core Earnings” reflect only current period adjustments to GAAP, as described in the more detailed discussion of the differences between GAAP and “Core Earnings” that follows, which includes further detail on each specific adjustments required to reconcile our “Core Earnings” segment presentation to our GAAP earnings.

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1)	Securitization Accounting: Under GAAP, certain securitization transactions in our Lending operating segment are accounted for as sales of assets. Under “Core Earnings” for the Lending operating segment, we present all securitization transactions on a Managed Basis as long-term non-recourse financings. The upfront “gains” on sale from securitization transactions as well as ongoing “servicing and securitization revenue” presented in accordance with GAAP are excluded from “Core Earnings” and are replaced by the interest income, provisions for loan losses, and interest expense as they are earned or incurred on the securitization loans. We also exclude transactions with our off-balance sheet trusts from “Core Earnings” as they are considered intercompany transactions on a Managed Basis.
2)	Derivative Accounting: “Core Earnings” exclude periodic unrealized gains and losses arising primarily in our Lending business segment, and to a lesser degree in our Corporate and Other business segment, that are caused primarily by the one-sidedmark-to-market derivative valuations prescribed by SFAS No. 133 on derivatives that do not qualify for “hedge treatment” under GAAP. Under “Core Earnings,” we recognize the economic effect of these hedges, which generally results in any cash paid or received being recognized ratably as an expense or revenue over the hedged item’s life. “Core Earnings” also exclude the gain or loss on equity forward contracts that under SFAS No. 133 are required to be accounted for as derivatives andmarked-to-market through earnings.
3)	Floor Income: The timing and amount (if any) of Floor Income earned in our Lending operating segment is uncertain and in excess of expected spreads. Therefore, we exclude such income from “Core Earnings” when it is not economically hedged. We employ derivatives, primarily Floor Income Contracts and futures, to economically hedge Floor Income. As discussed above in “Derivative Accounting,” these derivatives do not qualify as effective accounting hedges, and therefore, under GAAP, they aremarked-to-market through the “gains (losses) on derivative and hedging activities, net” line on the income statement with no offsetting gain or loss recorded for the economically hedged items. For “Core Earnings,” we reverse the fair value adjustments on the Floor Income Contracts and futures economically hedging Floor Income and include the amortization of net premiums received (net of Eurodollar futures contracts’ realized gains or losses) in income.
4)	Other items: We exclude the amortization of acquired intangibles.

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