Sallie Mae 2009 Annual Report Download - page 137

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)
1. Organization and Business
SLM Corporation (the “Company”) is a holding company that operates through a number of subsidiaries.
The Company was formed 37 years ago as the Student Loan Marketing Association, a federally chartered
government-sponsored enterprise (the “GSE”), with the goal of furthering access to higher education by acting
as a secondary market for student loans. In 2004, the Company completed its transformation to a private
company through its wind-down of the GSE. The GSE’s outstanding obligations were placed into a Master
Defeasance Trust Agreement as of December 29, 2004, which was fully collateralized by direct, noncallable
obligations of the United States.
The Company’s primary business is to originate and hold student loans by providing funding, delivery
and servicing support for education loans in the United States through its participation in the Federal Family
Education Loan Program (“FFELP”) and through offering non-federally guaranteed Private Education Loans.
The Company primarily markets its FFELP Stafford and Private Education Loans through on-campus financial
aid offices.
The Company has expanded into a number of fee-based businesses, most notably its Asset Performance
Group (“APG”), which is presented as a distinct segment in accordance with the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 280, “Segment Reporting.” The
Company’s APG business segment provides a wide range of accounts receivable and collections services
including student loan default aversion services, defaulted student loan portfolio management services,
contingency collections services for student loans and other asset classes, and accounts receivable management
and collection for purchased portfolios of receivables that are delinquent or have been charged off by their
original creditors as well as sub-performing and non-performing mortgage loans. In 2008, the Company
concluded that its APG purchased paper business no longer produced a mutual strategic fit. The Company
sold its international Purchased Paper— Non-Mortgage business in the first quarter of 2009. The Company
sold all of its assets in the Purchased-Paper—Mortgage/Properties business in the fourth quarter of 2009. The
Company continues to wind down the domestic side of its Purchased Paper—Non-Mortgage business.
The Company also earns fees for a number of services, including student loan and guarantee servicing,
and for providing processing capabilities and information technology to educational institutions as well as
529 college savings plan program management, transfer and servicing agent services, and administration
services through Upromise Investments, Inc. (“UII”) and Upromise Investment Advisors, LLC (“UIA”). The
Company also operates a consumer savings network through Upromise, Inc. (“Upromise”). References in this
Annual Report to “Upromise” refer to Upromise and its subsidiaries, UII and UIA.
On April 16, 2007, the Company announced that a buyer group (“Buyer Group”) led by J.C. Flowers &
Co. (“J.C. Flowers”), Bank of America, N.A. and JPMorgan Chase, N.A. had signed a definitive agreement
(“Merger Agreement”) to acquire the Company (the “Proposed Merger”) for approximately $25.3 billion or
$60.00 per share of common stock. On January 25, 2008, the Company, Mustang Holding Company Inc.
(“Mustang Holding”), Mustang Merger Sub, Inc. (“Mustang Sub”), J.C. Flowers, Bank of America, N.A. and
JPMorgan Chase Bank, N.A. entered into a Settlement, Termination and Release Agreement (the “Agree-
ment”). Under the Agreement, the lawsuit filed by the Company on October 8, 2007, related to the Proposed
Merger, as well as all counterclaims, was dismissed and the Merger Agreement dated April 15, 2007, among
the Company, Mustang Holding and Mustang Sub was terminated on January 25, 2008.
On February 26, 2009, the Obama Administration (the “Administration”) issued their 2010 fiscal year
budget request to Congress which included provisions that called for the elimination of the FFELP program
and which would require all new federal loans to be made through the Direct Student Loan Program
(“DSLP”). On September 17, 2009 the House of Representatives passed H.R. 3221, the Student Aid and Fiscal
Responsibility act (“SAFRA”), which was consistent with the Administration’s 2010 budget request to
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