Sallie Mae 2005 Annual Report Download - page 146

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-24
3. Student Loans (Continued)
December 31, 2004
Year ended
December 31, 2004
Ending
Balance
% of
Balance
Average
Balance
Average
Effective
Interest
Rate
FFELP Stafford and Other Student Loans, net(1) ..... $18,965,634 29% $19,317,260 3.76%
ConsolidationLoans,net.......................... 41,595,805 63 31,773,279 4.30
Private Education loans, net....................... 5,419,611 8 4,794,782 7.00
Total student loans, net(2).......................... $65,981,050 100% $55,885,321 4.34%
(1) The FFELP category is primarily Stafford loans, but also includes federally insured PLUS and HEAL loans.
(2) The total student loan balance includes net unamortized premiums/discounts of $909,417 and $787,696 as of
December 31, 2005 and 2004, respectively.
4. Allowance for Student Loan Losses
The Company’s provisions for loan losses represents the periodic expense of maintaining an allowance
sufficient to absorb losses, net of recoveries, inherent in the student loan portfolios. The evaluation of the
provisions for student loan losses is inherently subjective as it requires material estimates that may be
susceptible to significant changes. The Company believes that the allowance for student loan losses is
appropriate to cover probable losses in the student loan portfolios.
The following table summarizes changes in the allowance for student loan losses for both the Private
Education Loan and federally insured student loan portfolios for the years ended December 31, 2005,
2004, and 2003.
Years ended December 31,
2005 2004 2003
Balance at beginning of period ................................ $ 179,664 $ 211,709 $230,684
Additions
Provisions for student loan losses............................ 178,156 133,123 142,077
Provision for Risk Sharing(1) ................................ 9,537 — —
Recoveries............................................... 19,580 14,138 13,106
Deductions
Reductionsfor student loan sales andsecuritizations .......... (9,928) (35,887) (85,579)
Charge-offs............................................... (157,947) (117,441) (95,445)
Reduction in federal Risk Sharing allowance/provision for
EP designation ......................................... — (32,709 ) —
Other...................................................... — 6,731 6,866
Balance at end of period ..................................... $ 219,062 $ 179,664 $211,709
(1) See “Allowance for FFELP Student Loan Losses” below.