RESTON, Va., July 23, 2008—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported second-quarter 2008 performance results that include strong growth in student loan originations by the company’s internal lending brands and solid performance by the company’s core student loan businesses.

For the 2008 second quarter, “core earnings” net income totaled $156 million, or $.27 diluted earnings per share. These results include the effect of restructuring-related charges of $53 million ($.08 per diluted share), purchased-paper business losses of $26 million ($.05 per diluted share), and asset-backed financing facilities fees of $109 million ($.15 per diluted share). “Core earnings” net income from the company’s lending business was $175 million in the second-quarter 2008, up from $170 million in the year-ago period.

For the 2007 second quarter, “core earnings” net income totaled $189 million, or $.43 diluted earnings per share.

“Our funding costs have been extraordinarily high throughout 2008,” said Albert L. Lord, vice chairman and CEO. “Recent spread narrowing is encouraging because our earnings potential in 2008 and beyond is largely dependent on future funding costs.”

Student loans originated through Sallie Mae’s internal brands, the most profitable segment of total student loan originations, were $2.7 billion in the second-quarter 2008, up 12 percent from the year-ago quarter’s $2.4 billion. Total student loan originations were $3.3 billion in the 2008 second quarter, compared to $3.6 billion in the year-ago period, the decrease driven by the changing nature of the company’s relationships with external lending partners and a shift from purchasing, to servicing, their loans. The company expects its internal lending brands to represent a growing majority of total student loan originations.

The company’s managed student loan portfolio totaled $171.9 billion at June 30, 2008, compared to $153.2 billion one year ago.

Funding and liquidity improved during the 2008 second quarter: 1) the company issued more than $7 billion in term asset-backed securitization transactions and spreads declined significantly; 2) the company issued $2.5 billion of senior, unsecured notes for the first time since March 2007; and 3) the U.S. Department of Education received Congressional authority to implement a solution to provide liquidity for federal student loans.

Sallie Mae reports financial results on a GAAP basis and also presents certain “core earnings” performance measures. 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. Both a description of the “core earnings” treatment and a full reconciliation to the GAAP income statement can be found here, click on the Second Quarter 2008 Supplemental Earnings Disclosure.

Sallie Mae reported second-quarter 2008 GAAP net income of $266 million, or $.50 diluted earnings per share, compared to net income of $966 million, or $1.03 diluted earnings per share, in the 2007 second quarter. The largest difference between GAAP and “core earnings” second-quarter 2008 earnings per share results is the net impact of derivative accounting which, under SFAS 133, resulted in a $447 million unrealized, mark-to-market, pre-tax gain recognized in GAAP, but not in “core earnings,” results.

The GAAP provision for loan losses was $143 million, down from the year-ago quarter’s $148 million. GAAP net interest income was $403 million for the 2008 second quarter, compared to $399 million in the second-quarter 2007. Under GAAP accounting, the provision for loan losses and net interest income are based only on on-balance sheet loans; the comparable “core earnings” figures are based on total managed loans.

Presentation slides for the conference call discussed below may be accessed here.

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The company will host an earnings conference call tomorrow, July 24 at 8 a.m. EDT. 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 tomorrow, July 24, 2008, starting at 7:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International) and use access code 53880816. The conference call will be replayed continuously beginning at 11 a.m. EDT on Thursday, July 24, 2008, and concluding at midnight on Aug. 7, 2008. To access the replay, please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 53880816. 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 to 45 minutes after the live broadcast.

This press release contains “forward-looking statements” based on management’s current expectations as of the date of this release. 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 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, adverse results in legal disputes, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, limited liquidity, increased financing costs and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission, including the forward-looking statements contained in the company’s Supplemental Financial Information Second Quarter 2008. All information in this release is as of July 23, 2008. The Company does not undertake any obligation to update or revise these forward-looking statements to conform the statement to actual results or changes in the Company’s expectations. 

For more information contact:
Martha Holler (703) 984-5178 (media)
Steve McGarry (703) 984-6746 (investor)
Joe Fisher (703) 984-5755 (investor)