Sallie Mae 2005 Annual Report Download - page 48

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38
On-Balance Sheet Student Loans
Estimate
Consolidating
Lender Effect on Estimate CPR Accounting Effect
Premium Sallie Mae Term extension Decrease Estimate Adjustment(1)—increase unamortized
balance of premium. Reduced annual
amortization expense going forward.
Premium Other lenders Loan prepaid Increase Estimate Adjustment(1)—decrease unamortized
balance of premium or accelerated
amortization of premium.
Borrower Sallie Mae Term extension N/A Existing Borrower Benefits reserve reversed
Benefits into income—new Consolidation Loan benefit
amortized over a longer term.(2)
Borrower Other lenders Loan prepaid N/A Borrower Benefits reserve reversed into
Benefits income.(2)
(1) As estimates are updated, in accordance with SFAS No. 91, the premium balance must be adjusted from
inception to reflect the new expected term of the loan, as if it had been in place from inception.
(2) Consolidation estimates also affect the estimates of borrowers who will eventually qualify for Borrower Benefits.
Off-Balance Sheet Student Loans
Estimate
Consolidating
Lender Effect on Estimate CPR Accounting Effect
Residual Sallie Mae or Loan prepaid Increase •Reduction in fair market value of
Interest other lenders Residual Interest resulting in either an
impairment charge or reduction in prior
unrealized market value gains recorded
in other comprehensive income.
•Decrease in prospective effective yield
used to recognize interest income.