Sallie Mae 2007 Annual Report Download - page 153
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4. Allowance for Loan Losses (Continued)
Allowance for FFELP Student Loan Losses
The following table summarizes changes in the allowance for student loan losses for federally insured
student loan portfolios for the years ended December 31, 2007, 2006, and 2005.
2007 2006 2005
Years Ended December 31,
Allowance at beginning of year.......................... $20,315 $14,950 $ 7,778
Provisions for student loan losses ......................... 89,083 13,907 10,911
Net charge-offs....................................... (21,235) (5,040) (3,739)
Increase/decrease for student loan sales and securitizations ...... 566 (3,502) —
Allowance at end of year .............................. $88,729 $20,315 $14,950
The Company maintains an allowance for Risk Sharing loan losses on its FFELP portfolio. The level of
Risk Sharing has varied for the Company over the past few years primarily due to various legislative changes.
As of December 31, 2007, 38 percent of the on-balance sheet FFELP portfolio was subject to 3 percent Risk
Sharing, 60 percent was subject to 2 percent Risk Sharing and the remainder is not subject to any Risk
Sharing requirement.
The 2007 FFELP provision included $30 million related to the repeal of the EP program (and the
resulting increase in the Company’s Risk Sharing percentage) due to the passage of the CCRAA which was
effective October 1, 2007. These amounts are additional provision expenses required to cumulatively increase
the allowance for loan losses for the increase in the Company’s Risk Sharing percentage related to the
Company’s loans as of September 30, 2007. The FFELP provision also included $19 million related to the
increase in the Company’s default expectations due to an increase in recent delinquencies and charge-offs. The
remaining increase over 2006 primarily relates to an increased rate of provisioning for the Company’s Risk
Sharing exposure in the post-CCRAA environment coupled with the growth in the portfolio.
F-32
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)