Full Description

SLM Corporation, known as Sallie Mae, is engaged in the business to originate, service and collect student loans. The Company provide funding, delivery and servicing support for education loans in the United States through the participation in the Federal Family Education Loan Program (FFELP) and through the non-federally guaranteed Private Education Loan programs. The Company provides a number of services, including student loan and guarantee servicing, loan default aversion and defaulted loan collections, and providing processing capabilities and information technology to educational institutions, as well as, 529 college savings plan program management, transfer and servicing agent services, and administrative services, through Upromise Investments, Inc. (UII) and Upromise Investment Advisors, LLC (UIA). The Company operates in three business segments: Lending business segment, Asset Performance Group Business Segment (APG) business segment, and Corporate and Other business segment.

Lending business segment

In the lending business segment, the Company originates and acquires both federally guaranteed student loans, which are administered by the United States Department of Education (ED), and Private Education Loans, which are not federally guaranteed. The borrowers use Private Education Loans primarily to supplement federally guaranteed loans in meeting the cost of education. During the year ended December 31, 2008, the Company had a portfolio of 10 million student and parent customers, through the ownership of $180.4 billion in managed student loans of which $147 billion or 81% are federally insured. The Company serves over 6,000 clients, including educational and financial institutions and state agencies. In 2008, the Company is servicing a portfolio of $139 billion of FFELP loans and $39 billion of Private Education loans. The Company also offers specialized loan products to graduate and professional students primarily through the MBA Loans, LAWLOANS, Sallie Mae Medical School Loans and Sallie Mae DENTALoans programs.

Asset Performance Group business segment

In the APG segment, the Company provides accounts receivable and collections services including student loan default aversion services, defaulted student loan portfolio management services, and contingency collections services for student loans and other asset classes. The Company provides default aversion services for five guarantors, including the USA Funds. These services are designed to prevent a default once a borrower’s loan has been placed in delinquency status.

The APG segment manages the defaulted student loan portfolios for six guarantors under long-term contracts. USA Funds, represents approximately 17% of defaulted student loan portfolios in the market. The portfolio management services include selecting collection agencies and determining account placements to those agencies, processing loan consolidations and loan rehabilitations, and managing federal and state offset programs.

The APG segment is also engaged in the collection of defaulted student loans on behalf of various clients including guarantors, federal and state agencies, and schools. It provides collection services for ED and have approximately 10% of the total market for such services. The Company have also collected other debt for credit card issuers, federal and state agencies, and retail clients.

Corporate and other business segment

The Company’s corporate and other business segment includes the aggregate activity of its smaller operating segments, primarily its guarantor servicing, loan servicing, and Upromise operating segments. The segment also includes several smaller products and services, including comprehensive financing and loan delivery solutions to college financial aid offices and students to streamline the financial aid process. Upromise provides a number of programs that encourage consumers to save for college. Upromise has established a consumer savings network which is designed to promote college savings by consumers who are members of this program by encouraging them to purchase goods and services from the companies that participate in the program (Participating Companies).