Sallie Mae 2009 Annual Report Download - page 205

14. Other Income (Continued)
$5.3 billion face amount of its senior unsecured notes in the aggregate, with maturity dates ranging from 2008
to 2016.
Late Fees and Forbearance Fees
The Company recognizes late fees and forbearance fees on student loans when earned according to the
contractual provisions of the promissory notes, as well as the Company’s expectation of collectability.
Asset Servicing and Other Transaction Fees
The Company’s Upromise subsidiary has a number of programs that encourage consumers to save for the
cost of college education. Upromise has established a consumer savings network which is designed to promote
college savings by consumers who are members of this program by encouraging them to purchase goods and
services from the companies that participate in the program (“Participating Companies”). Participating
Companies generally pay Upromise transaction fees based on member purchase volume, either online or in
stores depending on the contractual arrangement with the Participating Company. Typically, a percentage of
the purchase price of the consumer members’ eligible purchases with Participating Companies is set aside in
an account maintained by Upromise on the behalf of its members. The Company recognizes transaction fee
revenue in accordance with ASC 605, “Revenue Recognition,” as marketing services focused on increasing
member purchase volume are rendered based on contractually determined rates and member purchase
volumes.
Upromise, through its wholly owned subsidiaries, UII, a registered broker-dealer, and UIA, a registered
investment advisor, provides program management, transfer and servicing agent services, and administration
services for various 529 college-savings plans. The fees associated with the provision of these services are
recognized in accordance with ASC 605 based on contractually determined rates which are a combination of
fees based on the net asset value of the investments within the 529 college-savings plans and the number of
accounts for which UII and UIA provide record-keeping and account servicing functions.
15. Restructuring Activities
In response to the College Cost Reduction and Access Act of 2007 (“CCRAA”) and challenges in the
capital markets, the Company initiated a restructuring plan in the fourth quarter of 2007. The plan focused on
conforming the Company’s lending activities to the economic environment, exiting certain customer relation-
ships and product lines, winding down the Company’s debt purchased paper businesses, and significantly
reducing its operating expenses. The restructuring plan is essentially completed and the Company’s objectives
have been met. Restructuring expenses from the fourth quarter of 2007 through the fourth quarter of 2009
totaled $129 million of which $120 million was recorded in continuing operations and $9 million was
recorded in discontinued operations. The majority of these restructuring expenses were severance costs related
to the completed and planned elimination of approximately 2,900 positions, or approximately 25 percent of
the workforce. The Company estimates approximately $5 million of additional restructuring expenses
associated with its current cost reduction efforts will be incurred. On September 17, 2009, the House passed
SAFRA which, if signed into law, would eliminate the FFELP and require that, after July 1, 2010, all new
federal loans be made through the Direct Loan program. The Senate has yet to take up the legislation. If this
legislation is signed into law, the Company will undertake another significant restructuring to conform its
infrastructure to the elimination of the FFELP and achieve additional expense reduction.
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SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)