Sallie Mae 2007 Annual Report Download - page 189

17. Commitments, Contingencies and Guarantees (Continued)
and the counterparty subsequently fails to perform according to the terms of its contract with the Company.
The Company also records unrecognized tax benefits in accordance with the FASB’s FIN No. 48.
Commitments outstanding are summarized below:
2007 2006
December 31,
Lines of credit ............................................ $2,035,638 $2,145,624
Unrecognized tax benefits ................................... 175,563 —
$2,211,201 $2,145,624
The following schedule summarizes expirations of commitments to the earlier of call date or maturity
date outstanding at December 31, 2007.
Lines of
Credit
2008 .............................................................. $ 485,680
2009 .............................................................. 478,827
2010 .............................................................. 871,130
2011 .............................................................. 200,001
2012 .............................................................. —
2013 .............................................................. —
Total .............................................................. $2,035,638
In addition, the Company maintains forward contracts to purchase loans from its lending partners at
contractual prices. These contracts typically have a maximum amount the Company is committed to buy, but
lack a fixed or determinable amount as it ultimately is based on the lending partner’s origination activity.
FFELP forward purchase contracts typically contain language relieving the Company of most of its responsi-
bilities under the contract due to, among other things, changes in student loan legislation. These commitments
are not accounted for as derivatives under SFAS No. 133 as they do not meet the definition of a derivative due
to the lack of a fixed and determinable purchase amount. As a result of the legislative changes effective
October 1, 2007, the Company is currently reviewing its forward purchase contracts. At December 31, 2007,
there were $5.4 billion originated loans (FFELP and Private Education Loans) in the pipeline that the
Company is committed to purchase.
Contingencies
On September 11, 2007, the Office of the Inspector General (“OIG”) of ED, confirmed that they planned
to conduct an audit to determine if the Company billed for special allowance payments, under the 9.5 percent
floor calculation, in compliance with the Higher Education Act, regulations and guidance issued by ED. The
audit covers the period from 2003 through 2006, and is currently confined to the Company’s Nellie Mae
subsidiaries. The Company ceased billing under the 9.5 percent floor calculation at the end of 2006. The
Company believes that its billing practices were consistent with longstanding ED guidance, but there can be
no assurance that the OIG will not advocate an interpretation that differs from the ED’s previous guidance.
The OIG has audited other industry participants who billed for 9.5 percent SAP and in certain cases ED has
disagreed with the OIG’s recommendation.
F-68
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)