Sallie Mae 2008 Annual Report Download - page 170

8. Student Loan Securitization
The Company securitizes its FFELP Stafford loans, FFELP Consolidation Loans and its Private Education
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.
Securitization Activity
The following table summarizes the Company’s securitization activity for the years ended December 31,
2008, 2007 and 2006. 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
%
2008 2007 2006
Years Ended December 31,
Securitizations — sales:
FFELP Stafford/PLUS
loans . . ............. — $ — $— —% — $ — $ — —% 2 $5,004 $ 17 .3%
FFELP Consolidation
Loans. . ............. — — — — — — — — 4 9,503 55 .6
Private Education Loans . . . . — — — — 1 2,001 367 18.4 3 5,088 830 16.3
Total securitizations —
sales . . ............. — — $— —% 1 2,001 $367 18.4% 9 19,595 $902 4.6%
Securitizations — financings:
FFELP Stafford/PLUS
loans
(1)
.............. 9 18,546 3 8,955 — —
FFELP Consolidation
Loans
(1)
............. — — 5 14,476 4 12,506
Total securitizations —
financings ............ 9 18,546 8 23,431 4 12,506
Total securitizations ....... 9 $18,546 9 $25,432 13 $32,101
(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 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 beneficial interests or (3) allowing the
Company to hold an unconditional call option related to a certain percentage of the securitized assets.
F-50
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)