Sallie Mae 2005 Annual Report Download - page 85

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December 31, 2003
FFELP Private Total
PreferredChannel................................ $10,884 $2,901 $ 13,785
Other commitment clients ......................... 344 33 377
Spot purchases ................................... 864 2 866
Consolidations from third parties................... 2,250 — 2,250
Acquisitions from off-balance sheet securitized trusts,
primarily consolidations ......................... 6,156 — 6,156
Capitalized interest, premiums and discounts ......... 1,024 16 1,040
Acquisition of AMS(1) ............................. 1,246 177 1,423
Total on-balance sheet student loan acquisitions ...... 22,768 3,129 25,897
Consolidations to SLM Corporation from off-balance
sheet securitized trusts........................... (6,156) — (6,156 )
Capitalized interest, premiums and discounts—off-
balance sheetsecuritized trusts................... 842 79 921
Total Managed student loan acquisitions............. $17,454 $3,208 $ 20,662
(1) See Note 11, “Acquisitions,” to the consolidated financial statements.
As shown in the above tables, off-balance sheet FFELP loans that consolidate with us become an on-
balance sheet interest earning asset. This activity results in impairments of our Residual Interests in
FFELP securitizations because it shortens the time that the Residual Interest is an earning asset.
For the years ended December 31, 2005, 2004 and 2003, consolidation activity resulted in $26 million
of net run-off, $504 million of net new student loan acquisitions, and $84 million of net run-off,
respectively.
The following table illustrates the amount and rate of the student loan premiums paid.
Years ended December 31,
2005 2004
Volume Rate Premium Volume Rate Premium
Student loan premiums paid:
Sallie Mae brands............ $ 9,074 .35% $ 32 $ 6,197 .36% $ 22
Lender partners ............. 11,819 1.82 215 10,541 1.60 169
Total Preferred Channel...... 20,893 1.18 247 16,738 1.14 191
Other purchases(1) ........... 2,479 3.83 95 8,436 4.60 388
Subtotal basepurchases....... 23,372 1.46 342 25,174 2.30 579
Consolidations .............. 4,672 2.24 105 2,609 2.18 57
Total....................... $28,044 1.59% $ 447 $ 27,783 2.29% $636
(1) Primarily includes spot purchases, other commitment clients, and subsidiary acquisitions.
The increase in the lender partner premium rate from 2004 to 2005 is primarily due to the increase in
zero-fee lending, where we pay an origination fee on behalf of the borrower, and school-as-lender volume.
The borrower origination fee related to zero-fee lending will be gradually phased out by Reauthorization
Legislation from 2007 to 2010. This legislation also ends new schools-as-lender after April 1, 2006 and adds
additional requirements for schools already participating in this program. (See “OTHER RELATED
EVENTS AND INFORMATION—Reauthorization.”)