Slide 1: ABS Investor Presentation 3Q and YTD September 30, 2007
ABS Investor Presentation 3Q and YTD September 30, 2007 SLM Corporation
Slide 2: Forward-looking statements
This presentation contains forward-looking statements and information that are based on management's current expectations as of the date of this document. When used in this report, the words "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify f
Slide 3: Non-GAAP Financial Measures and additional information
Non-GAAP Financial Measures - The following presentation includes non-GAAP performance measures. A presentation of the most comparable GAAP financial measures and a reconciliation of the non-GAAP performance measures to the most directly comparable GAAP financial measures are included in the our mos
Slide 4: SLM Corporation Overview
SLM Corporation Overview 4 SallieMae
Slide 5: SLM Corporation - Overview
SLM Corporation - Overview #1 originator, servicer and collector of student loans in the U.S. education lending market Fully independent private sector company, traded on the NYSE with a market capitalization of $21 billion(1) $160 billion managed student loan portfolio, 83% of which is U.S. governm
Slide 6: Recent Events
Recent Events September 26, 2007 - J.C. Flowers, Bank of America and JPMorgan Chase announced their intent not to complete the acquisition of SLM on the agreed upon terms September 27, 2007 - New student loan legislation, namely The College Cost Reduction and Access Act of 2007, was signed into law
Slide 7: SLM Business Fundamentals
SLM Business Fundamentals : SallieMae
Slide 8: SLM Core Earnings Revenue Mix
SLM "Core Earnings" Revenue Mix Net interest income from student loans made up 69% of net revenue The remaining 31% of net revenue was derived from fee-generating businesses Asset Performance Group (formerly "DMO") third-party collections activities Guarantor Servicing for student loans Other source
Slide 9: Fundamentals of SLM Business Model Remain Unchanged
Fundamentals of SLM Business Model Remain Unchanged FFELP Stafford and PLUS FFELP Consolidation Private Education Loans Fee-Based Businesses Originated primarily through schools' financial aid offices Marketed under Sallie Mae brands plus those of strategic lender partners Loans originated, serviced
Slide 10: SLM Competitive Advantage and Market Position
SLM Competitive Advantage and Market Position Singular Focus and Scale Vertically Integrated Origination/ Servicing/Collections Strong National and Regional Brands Integrated, Web-Based Technology Largest and Most Experienced Sales Team Breadth of Products and Services $160 B managed loans 10 millio
Slide 11: Private Education Loan Portfolio Trends
Private Education Loan Portfolio Trends Historically, private education loan portfolio net charge-off rates have been much lower than typical for other unsecured consumer credit, such as credit card receivables 2002 2003 2004 2005 2006 YTD 2007 Net Charge-Offs 0.0225 0.0185 0.0192 0.0189 0.0162 0.03
Slide 12: Consistent Earnings and Cash Flow
Consistent Earnings and Cash Flow SLM has generated consistent earnings and cash flow since its inception in 1972 Steady growth in the student loan market, the guaranteed nature of SLM's assets and strict asset and liability management policy protect SLM from economic and interest rate cycles "Core
Slide 13: The U.S. Student Loan Market
The U.S. Student Loan Market 's sallieMae
Slide 14: Sources of Funding for Higher Education in the U.S.
Federal Loans Private Loans Scholarships, Grants Parent/Student Contributions Billions of Dollars 74 22.5 80 52 Source: Based on estimates by Octameron Associates, "Don't Miss Out," 30th Edition; College Board, "2006 Trends in Student Aid"; and Sallie Mae. Includes tuition, room, board, transportati
Slide 15: Higher education enrollment and cost of education
Column 1 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Column 16 1/1/2000 15.312 1/1/2001 15.928 1/1/2002 16.612 1/1/2003 16.901 1/1/2004 17.272 1/1/2005 17.428 1/1/2006 17.647 1/1/2007 17.916 1/1/2008 18.202 1/1/2009 18.48
Slide 16: Private Education Loan Market Growth
Private Education Loan Market Growth Students and parents have increasingly turned to private education loans to fund the gap between student aid, federal loans and the rising cost of education (1) FFELP loan limit for four consecutive years of college. Limits increase on July 1, 2007 from $17,125 t
Slide 17: Federal Student Loan Legislation
Federal Student Loan Legislation
Slide 18: College Cost Reduction and Access Act
College Cost Reduction and Access Act Reduced lender yields on Stafford and Consolidation loans by 55 bp (40 bp for not-for-profit lenders) Reduced lender yields on PLUS loans by 85bp (70 bp for not-for-profit lenders) The new legislation also - Eliminated the Exceptional Performer designation, effe
Slide 19: Adapting to Legislative Change
Adapting to Legislative Change SLM has been able to adapt its business to legislative change, resulting in continued growth and profitability In-school Special Allowance Payment ("SAP") margin2 (bps) Line 3 SLM net income1 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Col
Slide 20: Liquidity and Capital Markets Access
Liquidity and Capital Markets Access
Slide 21: Liquidity
Liquidity At September 30, 2007, SLM maintained enough excess liquidity to fund its operations thru 1Q 2008 without accessing the capital markets - Sources of Primary Liquidity: Available as of Sep 30, 2007 Unrestricted Cash & Investments $11.9B $6.5B CP and Bank Lines 6.5B $6.0B Asset-Backed CP Pro
Slide 22: SLM's ABS Program
SLM’s ABS Program 2 SallieMae GaetllrIS
Slide 23: SLM ABS Issue Characteristics
SLM ABS Issue Characteristics U.S. Government guaranteed collateral (1) Issue size $2.0B to $5.0(+)B Tranches denominated in US$ or Euros 'Aaa/AAA/AAA' rated senior tranches make up 97% of issue structure 20% risk based capital weighting on senior securities in most countries Floating rate tied to 3
Slide 24: SLM ABS Issuance Volume and Portfolio
SLM ABS Issuance Volume and Portfolio 1 Excludes outstandings under SLM's asset-backed commercial paper program. Totals may not add due to rounding 2 Outstandings for total managed portfolio, after deducting loan loss allowance and unamortized discount 3 Based on pricing date SLM is the largest issu
Slide 25: ABS Funding Diversity
SLM 2006 Total Managed ABS Issuance by Currency, Investor Geography and Issue Type SLM's ABS investor base is diversified and global ABS Funding Diversity USD Euro 0.9393 0.0607 Consolidated Stafford/Plus Private Credit 0.68 0.151 0.1689 US Europe Asia Other 0.539 0.394 0.045 0.022 By Currency By In
Slide 26: SLM ABS Structures
SLM ABS Structures 1 Estimated based on a variety of assumptions concerning loan repayment behavior, as more fully described in the related prospectus, which may be obtained at http://www2.salliemae.com/investors/debtasset/slmsltrusts/. Actual average life may vary significantly from estimates. 2 AR
Slide 27: 2006 ABS Issuer Rankings
Note: Totals may not add due to rounding. 2006 ABS Issuer Rankings
Slide 28: Private Credit Student Loan ABS Program
Private Credit Student Loan ABS Program
Slide 29: Sallie Mae's Private Credit Student Loan Program
Sallie Mae's Private Credit Student Loan Program (1) With a co-borrower, maximum aggregate loan indebtedness is permitted to be up to the cost of education less any other aid. (2) Minimum FICO score for the standard program. Prior to July 1, 2001, minimum FICO score for Sallie Mae branded loans was
Slide 30: SLM Private Credit Cumulative ABS Issuance
SLM Private Credit Cumulative ABS Issuance(1) SLM Private Credit Student Loan ABS Issuance SLM Managed Private Credit Loans Outstanding(1) (1) Gross outstandings for total managed portfolio, before deducting loan loss allowance and unamortized discount. 2001 2002 2003 2004 2005 2006 Higher Education
Slide 31: SLM Private Credit ABS Relative Value
SLM Private Credit ABS Relative Value 3/28/2003 4/4/2003 4/11/2003 4/17/2003 4/25/2003 5/2/2003 5/9/2003 5/16/2003 5/22/2003 5/30/2003 6/6/2003 6/13/2003 6/20/2003 6/27/2003 7/3/2003 7/11/2003 7/18/2003 7/25/2003 8/1/2003 8/8/2003 8/15/2003 8/22/2003 8/29/2003 9/5/2003 9/12/2003 9/19/2003 9/26/2003
Slide 32: Upgrades of SLM Private Credit Student Loan ABS
Upgrades of SLM Private Credit Student Loan ABS Due to better-than-anticipated performance of the underlying collateral... In September 2007, Fitch upgraded the ratings of subordinate tranches of SLM's 2002-A Private Credit ABS issue to 'AA+' and 'A+' from their original ratings of 'A' and 'BBB' At
Slide 33: SLM 2007-A Private Credit Student Loan ABS
SLM 2007-A Private Credit Student Loan ABS
Slide 34: SLM Private Credit Student Loan Trust 2007-A
SLM Private Credit Student Loan Trust 2007-A The structure of SLM 2007-A is similar to prior Sallie Mae Private Credit ABS issues (1) Estimated based on a variety of assumptions concerning loan repayment behavior. Actual average life and repayment characteristics may vary significantly from estimate
Slide 35: SLM 2007-A Summary Pool Characteristics
SLM 2007-A Summary Pool Characteristics Loan Programs % Co-Borrower as Obligor Borrower Payment Status Pool Weighted Original Average FICO Score 718 Pool Weighted Current Average FICO Score 710 Average Borrower Indebtedness $13,020 Weighted Average Remaining Term 214 months No Co-Borrower Co-Borrowe
Slide 36: SLM 2007-A FICO Distribution at Loan Origination
SLM 2007-A FICO Distribution at Loan Origination(1) If there is a co-borrower, FICO score represents higher of borrower and co-borrower score. Loans with FICO scores greater than zero and less than 630 is less than 0.2% of the portfolio. Approximately 0.5% of the trust consists of student loans wher
Slide 37: Historical Static Pool Performance
Historical Static Pool Performance SLM Private Credit ABS Trusts thru August 31, 2007
Slide 38: 61- and 90+ Day Delinquent Loans
SLM Private Credit ABS Trusts 61- 90 and 90+ Day Delinquent Loans 61-90 Day Delinquencies 90+ Day Delinquencies
Slide 39: Historical Cumulative Gross Charge-Off Experience
SLM Private Credit ABS Trusts Historical Cumulative Gross Charge-Off Experience (1) For SLM Private Credit Student Loan ABS issued prior to 2005-B, the servicer has the option, but not the obligation, to repurchase loans that become 180+ days delinquent. To date, the servicer has exercised this opti
Slide 40: SLM Private Credit ABS Prepayment Analysis
SLM Private Credit ABS Prepayment Analysis Historical SLM Private Credit ABS CPRs
Slide 41: Additional Information
Additional Information a SallieMae Gaceillry I
Slide 42: Core Earnings Presentation
"Core Earnings" Presentation Used by SLM's management in developing financial plans, tracking results, establishing corporate performance targets and determining incentive compensation Used by equity investors, credit rating agencies and debt capital providers to measure the company's business perfo
Slide 43: GAAP to Core Earnings EPS Reconciliation
GAAP to Core Earnings EPS Reconciliation
Slide 44: SLM Corporation - Summary Financial Performance
2001 2002 2003 2004 2005 2006 Stafford/PLUS 50 47.052 45.524 47 40.658 39.9 Consolidation 17 25.25 34.96 49 65.434 79.6 Private Education 4.416 5.822 8.305 11 16.437 22.6 Growth 0.142 0.14 0.14 0.15 $78 $89 $107 $123 SLM Corporation - Summary Financial Performance 2001 2002 2003 2004 2005 2006 "Core
Slide 45: Additional Information Available at www.salliemae.com
Additional Information Available at www.salliemae.com Additional Information Available at www.salliemae.com
Slide 46: Debt Investor Relations Contact Information
Debt Investor Relations Contact Information Guido van der Ven Vice President, Corporate Finance Sallie Mae, Inc. 36 Leitch Avenue Skaneateles, NY 13152 315-685-9825 guido.e.vanderven@slma.com Leo Subler Vice President, Corporate Finance Sallie Mae, Inc. 12061 Bluemont Way Reston, VA 20190 703-984-55