Slide 1: AFSA Presentation May 20, 2009 SLM Corporation
AFSA Presentation May 20, 2009 SLM Corporation Presented by Jack Remondi Vice Chairman & CFO
Slide 2: Forward Looking Statements
2 Forward Looking Statements This Presentation contains forward-looking statements and information based on management's current expectations as of the date of this presentation. Statements that are not historical facts, including, financial projections, statements about our beliefs or expectations
Slide 3: SLM Corporation
3 SLM Corporation #1 originator of student loans in the U.S. education lending market #1 servicer and collector of students loans in the U.S. currently servicing $184 billion in assets including $9 billion for third parties Fully independent private sector company with scale and a broad franchise, t
Slide 4: SLM Corporation Update
4 SLM Corporation Update Managed student loans outstanding increased to $185 billion in Q1, up 2.7% from year-end 2008 Originated a record $6.6 billion of FFELP loans in Q1, a 10% increase over prior year Private Credit originations decline 40% in Q1 2009 to $1.5 billion from the prior year due to a
Slide 5: Sallie Mae Proposition
5 Sallie Mae Proposition Strong Business Fundamentals Competitive, scale franchise FFELP profitability assured through 2010 Liquidity improving and adequate to meet debt service ED facility provides unlimited funding for new FFELP originations through AY 09/10 Expanding deposit funding - provides fu
Slide 6: Favorable Student Loan Market Trends
6 Higher Education Enrollment (millions) Source: National Center for Education Statistics Note: Total enrollment in all degree-granting institutions; middle alternative projections for 2007 onward Annual Cost of Education ($ thousands) Source: College Board Note: Academic years, average published tu
Slide 7: FFELP Student Loan Market Share
7 FFELP Student Loan Market Share *Notes: Sallie Mae includes all Preferred Channel volume Wells Fargo includes Wachovia volumes Bank of America includes Fleet and LaSalle Bank volumes JP Morgan Chase includes Bank One volumes PNC Bank includes National City Bank volumes Source: http://www.fp.ed.gov
Slide 8: Federal Student Loan Policy Alternatives
Federal Student Loan Policy Alternatives President's Budget Proposal Convert all federal student loans to federal funding by July 2010 Use savings to substantially increase Pell Grants Use private sector firms to originate and service 8
Slide 9: Private Education Loan Market Demand
9 Private Education Loan Market Demand Private education loans help bridge the gap between funding available through government- sponsored programs and the rapidly increasing cost of education Cost of College AY 2008-2009 Based on a Four-Year Term FFELP Limit $31,000 Cost of attendance gap FFELP Lim
Slide 10: Private Credit Originations
10 Private Credit Originations * Source: College Board, Trends in Higher Education Series (2007), 2008 industry data estimated by SLM *
Slide 11: SLM's New Private Education Loan Product
11 SLM's New Private Education Loan Product Launched 3/23/09 Eliminates negative amortization during the school and grace period while reducing the average life from 9.5 years to 5 years Strategies to achieve a 90% cosigned rate have been deployed Repayment term is driven by cumulative amount borrow
Slide 12: Charge-offs driven by Non-Traditional loans
Charge-offs driven by Non-Traditional loans Non-Traditional loans represent less than 14% of the Private Education Loan portfolio Higher quality loans entering repayment in 2009 and 2010 Charge-off Trends - Mix of Traditional vs. Non-Traditional 12
Slide 13: Recession Has Smaller Impact On College Grads
Recession Has Smaller Impact On College Grads 13 Source: U.S. Department of Labor, Bureau of Labor Statistics
Slide 14: Portfolio Quality Improving
Portfolio Quality Improving Non-Traditional charge-off rate is 7x to 8x greater than Traditional 74% of Q109 loan originations had co-borrowers, up from 56% in Q108. Non-cosigned loans charge off at more than twice the rate of cosigned loans Amounts shown above represent the dollar amount of loans t
Slide 15: Capital Markets Developments
15 Capital Markets Developments Completed $5.1 billion FFELP ABS in April Non-DOE conduit eligible collateral Non-TALF eligible collateral Reduced and extended ABCP program Term Extension of 1 year for $22 billion FFELP facility Terminated and paid in full Private Credit facility Extended $1.5 billi
Slide 16: Liquidity Position Update
16 Liquidity Position Update Includes $911 million, $1.6 billion and $2.2 billion at 3/31/09, 12/31/08, and 3/31/08 respectively of cash collateral pledged by derivative counterparties and held by the company in Unrestricted Cash At both March 31, 2009 and December 31, 2008, excludes commitments of
Slide 17: Unencumbered Assets / Unsecured Debt Ratio
17 Unencumbered Assets / Unsecured Debt Ratio YE08 Q109 4/09 YE09 Tangible Unencumbered Assets/Unsecured Debt 94% 88% 99% 104%* * Year End 2009 data represents a forecast
Slide 18: Unsecured Debt Maturities
18 Unsecured Debt Maturities Note: Does not include SLM Bank or Subsidiary funding Remaining unsecured debt maturities in 2009 total $3.8 billion
Slide 19: Free Cash Flow
Free Cash Flow Description 19 Sources of free cash flow include net income, floor income and other cash payments Student Loan Repayments are consistent and predictable Securitization Trusts Generate Free cash flow through servicing fees and the residual Unencumbered assets grow as loans migrate to S
Slide 20: Summary
20 Summary Strong business fundamentals Competitive, scale franchise FFELP profitability assured through 2010 Emerging programs strengthen liquidity and improve profitability
Slide 21: c I M |
c I M | Champions for Higher Education." a sallieMae etl dena
Slide 22: GAAP to "Core Earnings" EPS Reconciliation
22 GAAP to "Core Earnings" EPS Reconciliation
Slide 23: Additional Information Available at www.salliemae.com
23 Additional Information Available at www.salliemae.com Additional Information Available at www.salliemae.com