Sallie Mae 2006 Annual Report Download - page 19

advantaged 529 investment options through partnerships with nine states. Upromise offers its rewards service
members the opportunity to link their Upromise account to a participating 529 plan so that their savings can
be transferred automatically into their plan on a periodic basis.
This acquisition broadens our scope in higher education access to include education savings and enhances
our competitive advantage in the student loan industry as the Company builds a relationship with potential
borrowers earlier. The savings earned through Upromise are in addition to other lender-sponsored savings
programs that may include zero origination fees, zero default fee and various repayment status borrower
benefit programs.
REGULATION
Like other participants in the FFELP program, the Company is subject to the HEA and, from time to
time, to review of its student loan operations by ED and guarantee agencies. ED is authorized under its
regulations to limit, suspend or terminate lenders from participating in the FFELP, as well as impose civil
penalties if lenders violate program regulations. The laws relating to the FFELP program are subject to
revision. In addition, Sallie Mae, Inc., as a servicer of federal student loans, is subject to certain ED
regulations regarding financial responsibility and administrative capability that govern all third party servicers
of insured student loans. Failure to satisfy such standards may result in the loss of the government guarantee
of the payment of principal and accrued interest on defaulted FFELP loans. Also, in connection with our
guarantor servicing operations, the Company must comply with, on behalf of its guarantor servicing customers,
certain ED regulations that govern guarantor activities as well as agreements for reimbursement between the
Secretary of Education and the Company’s guarantor servicing customers. Failure to comply with these
regulations or the provisions of these agreements may result in the termination of the Secretary of Education’s
reimbursement obligation.
The Company’s originating or servicing of federal and private student loans also subjects it to federal and
state consumer protection, privacy and related laws and regulations. Some of the more significant federal laws
and regulations that are applicable to our student loan business include:
• the Truth-In-Lending Act;
• the Fair Credit Reporting Act;
• the Equal Credit Opportunity Act;
• the Gramm-Leach Bliley Act; and
• the U.S. Bankruptcy Code.
Our DMO’s debt collection and receivables management activities are subject to federal and state
consumer protection, privacy and related laws and regulations. Some of the more significant federal laws and
regulations that are applicable to our DMO business include:
• the Fair Debt Collection Practices Act;
• the Fair Credit Reporting Act;
• the Gramm-Leach-Bliley Act; and
• the U.S. Bankruptcy Code.
In addition, our DMO business is subject to state laws and regulations similar to the federal laws and
regulations listed above. Finally, certain DMO subsidiaries are subject to regulation under the HEA and under
the various laws and regulations that govern government contractors.
Sallie Mae Bank is subject to Utah banking regulations as well as regulations issued by the Federal
Deposit Insurance Corporation.
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