Sallie Mae 2008 Annual Report Download - page 18

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Our product offerings are primarily concentrated in loan and savings products for higher education
expenses. This concentration is both a competitive advantage and a risk.
We are a leading provider of saving- and paying-for-college products and programs. This concentration
gives us a competitive advantage in the market place. This concentration also creates risks in our business,
particularly in light of our concentration as a FFELP lender. If population demographics result in a decrease in
college-age individuals, if demand for higher education decreases, the cost of attendance of higher education
decreases, if public support for higher education costs increases, or if the demand for higher education loans
decreases or increases from one product to another, our business could be negatively affected. In addition, if
we introduce new education loan products, there is a risk that those new products will not be accepted in the
marketplace. Because we are not a diversified financial services company, we would not have other product
offerings to offset any loss of business in the education credit market.
We may be adversely affected by deterioration in economic conditions.
A recession or downturn in the economy could make it difficult for us to originate new business, given
the resultant reduced demand for consumer credit. Credit quality may also be impacted as borrowers may fail
to meet their obligations. Adverse economic conditions may result in declines in collateral values. Accordingly,
higher credit-related losses could impact our financial position. In addition, weaker credit quality could limit
funding options, including capital markets activity, which could adversely impact the Company’s liquidity
position.
Item 1B. Unresolved Staff Comments
None.
17