Sept. 4, 2007

To Our Valued School Customers:

In the next few weeks, Congress is expected to approve a final budget reconciliation bill that will cut approximately $18 billion from the Federal Family Education Loan Program (FFELP). The final bill will likely contain enhancements for students that would not become effective until July 1, 2008, and lender-specific cuts that could, however, become effective as early as Oct. 1, 2007. We are concerned about the disruption an Oct. 1 implementation date would cause, and we are communicating this concern to legislators. I encourage you to weigh in with your Members of Congress, as well, if you have similar feelings about program changes that would take effect immediately and in the middle of an academic year.

Beyond voicing concern about the effective date of the proposed changes, we will work to balance the significant economic impact of these cuts on our company with our commitment to serve students, parents and higher education institutions. While the legislation will force us to re-evaluate the benefits we can offer to customers, clearly no final decision about our Stafford and PLUS loan borrower benefit programs can be made until the actual legislative changes are known. In the past, we have successfully made FFELP loans the most economically attractive option for students, and we will uphold that tradition. To that end, our current Stafford and PLUS borrower benefits remain in place for now, and I assure you that any modifications would include a thoughtful transition period so as not to burden you or your students with abrupt changes to these programs.

In anticipation of changes affecting the consolidation loan program and the required lead time to implement them, we have taken immediate steps to do what is in the best interest of our customers. Last week we contacted more than 43,000 customers who previously asked that their consolidation application be held until the end of their grace period to request permission to consolidate their loans before Oct. 1, thereby guaranteeing their eligibility for our current money saving benefits. Furthermore, Sallie Mae offered to the 34,000 customers consolidating subsidized Stafford loans to waive the interest that accrues on the subsidized portion of their consolidation loans until the originally scheduled grace period end date.

Helping consumers plan and pay for college is our core business and has been for 35 years. We remain committed to this industry and to our longstanding practice of reducing customers' cost of borrowing, providing a reliable source of financing and delivering outstanding customer service. Throughout our history, we have worked hard to ensure that our goals and schools' goals are aligned in the most critical way: doing what is right by students and families. And that is exactly what we will continue to do.

Should you have any questions, you are welcome to contact me.

Thank you.

Kevin Moehn
Executive Vice President, Sallie Mae