Sallie Mae 2007 Annual Report Download - page 164

9. Student Loan Securitization
Securitization Activity
The Company securitizes its student loan assets and for transactions qualifying as sales retains a Residual
Interest and servicing rights (as the Company retains the servicing responsibilities), all of which are referred to
as the Company’s Retained Interest in off-balance sheet securitized loans. The Residual Interest is the right to
receive cash flows from the student loans and reserve accounts in excess of the amounts needed to pay
servicing, derivative costs (if any), other fees, and the principal and interest on the bonds backed by the
student loans. The investors of the securitization trusts have no recourse to the Company’s other assets should
there be a failure of the trusts to pay when due.
The following table summarizes the Company’s securitization activity for the years ended December 31,
2007, 2006 and 2005. Those securitizations listed as sales are off-balance sheet transactions and those listed as
financings remain on-balance sheet.
(Dollars in millions)
No. of
Transactions
Loan
Amount
Securitized
Pre-Tax
Gain
Gain
%
No. of
Transactions
Loan
Amount
Securitized
Pre-Tax
Gain
Gain
%
No. of
Transactions
Loan
Amount
Securitized
Pre-Tax
Gain
Gain
%
2007 2006 2005
Years Ended December 31,
Securitizations sales:
FFELP Stafford/PLUS
loans . . ........ — $ — $ — % 2 $ 5,004 $ 17 .3% 3 $ 6,533 $ 68 1.1%
FFELP Consolidation
Loans . . ........ — — — 4 9,503 55 .6 2 4,011 31 .8
Private Education
Loans . . ........ 1 2,001 367 18.4 3 5,088 830 16.3 2 3,005 453 15.1
Total securitizations
sales. . . ........ 1 2,001 $367 18.4% 9 19,595 $902 4.6% 7 13,549 $552 4.1%
Securitizations
financings:
FFELP Stafford/PLUS
loans
(1)
......... 3 8,955 — — — —
FFELP Consolidation
Loans
(1)
........ 5 14,476 4 12,506 5 12,503
Total securitizations
financings ....... 8 23,431 4 12,506 5 12,503
Total securitizations . . 9 $25,432 13 $32,101 12 $26,052
(1)
In certain securitizations there are terms within the deal structure that result in such securitizations not qualifying for sale treatment
and accordingly, they are accounted for on-balance sheet as variable interest entities (“VIEs”). Terms that prevent sale treatment
include: (1) allowing the Company to hold certain rights that can affect the remarketing of certain bonds, (2) allowing the trust to enter
into interest rate cap agreements after initial settlement of the securitization, which do not relate to the reissuance of third-party bene-
ficial interests or (3) allowing the Company to hold an unconditional call option related to a certain percentage of the securitized
assets.
F-43
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)