Sallie Mae 2000 Annual Report Download - page 6

is now the principal provider of student loan guarantee
services in America. Indeed, with the USA Group merger, the
service picture for our customers is now complete—with
capabilities in place for every aspect of the loan delivery
cycle.
The USA Group agreement provides our newest growth
opportunities and our most immediate management challenge.
For perspective, the acquisition doubled our work force,
added $6 billion of student loans to our portfolio and, on a
full-year basis, expanded our total revenues by nearly 40 per-
cent. The transaction—which grows and diversifies our non-
interest revenue sources—already is accretive to earnings per
share. Integration is proceeding smoothly, beginning with
the consolidation of several servicing centers and the meld-
ing of the companies’ major IT databases and operations.
Beneficiaries of the transaction include our customers and
industry partners. Our largest guarantee service customer,
USA Funds, will benefit from Sallie Mae’s growing customer
base. In addition, the USA Group Foundation (recently
renamed the Lumina Foundation for Education)—the seller in
the transaction—will continue to serve the higher education
community with $1 billion in new capital generated from
the deal.
Yes, the ship has changed course—so where are we
headed? In charting expansive new waters, we will do what
we enjoy to do most: compete to deliver the highest-quality
service. Our resources are unmatched in the industry—
bolstered by an extraordinarily talented sales and servicing
staff, innovative products and a dedicated corporate focus.
As we sail forward with an integrated, enlarged work force,
schools will enjoy even better service levels.
The Board’s goal and my single focus since our election
in 1997 has been to return Sallie Mae to the No. 1 position
in our important industry. Our recent control channel success
has made us a close second to the Federal Direct Loan
Program as the largest loan originator. However, we are not
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Loan Origination: Loan proceeds are
disbursed by the lender and sent either
to the school or directly to borrowers.
Loan Repayment: Six months after
borrowers leave school, loan repayment
begins. The lender collects monthly
payments and bills the government
quarterly for special allowance payments.
Default Aversion: Loan servicers proac-
tively contact borrowers who have fallen
behind on loan payments to prevent the
borrower from defaulting on the loan.
In School: No loan payments on the loan principal
are required if students remain in school at least
half-time. The government pays interest that
accrues on subsidized loans during this period. In
contrast, students are responsible for interest that
accrues while in school on unsubsidized loans.
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LETTER FROM THE VICE CHAIRMAN