Sallie Mae 2009 Annual Report Download - page 214

17. Commitments, Contingencies and Guarantees (Continued)
OIG Investigation
On August 3, 2009, the Company received the final audit report of ED’s Office of the Inspector General
(“OIG”) related to the Company’s billing practices for special allowance payments. Among other things, the
OIG recommended that ED instruct the Company to return approximately $22 million in alleged special
allowance overpayments. The Company continues to believe that its practices were consistent with longstand-
ing ED guidance and all applicable rules and regulations and intends to continue disputing these findings. The
Company provided its response to the Secretary on October 2, 2009. The OIG has audited other industry
participants with regard to special allowance payments for loans funded by tax exempt obligations and, in
certain cases, the Secretary of ED has disagreed with the OIG’s recommendations.
Contingencies
In the ordinary course of business, the Company and its subsidiaries are routinely defendants in or parties
to pending and threatened legal actions and proceedings including actions brought on behalf of various classes
of claimants. These actions and proceedings may be based on alleged violations of consumer protection,
securities, employment and other laws. In certain of these actions and proceedings, claims for substantial
monetary damage are asserted against the Company and its subsidiaries.
In the ordinary course of business, the Company and its subsidiaries are subject to regulatory examina-
tions, information gathering requests, inquiries and investigations. In connection with formal and informal
inquiries in these cases, the Company and its subsidiaries receive numerous requests, subpoenas and orders for
documents, testimony and information in connection with various aspects of the Company’s regulated
activities.
In view of the inherent difficulty of predicting the outcome of such litigation and regulatory matters, the
Company cannot predict what the eventual outcome of the pending matters will be, what the timing or the
ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each
pending matter may be.
In accordance with ASC 450, “Contingencies,” the Company is required to establish reserves for litigation
and regulatory matters when those matters present loss contingencies that are both probable and estimable.
When loss contingencies are not both probable and estimable, the Company does not establish reserves.
Based on current knowledge, reserves have not been established for any pending litigation or regulatory
matters. Based on current knowledge, management does not believe that loss contingencies, if any, arising
from pending investigations, litigation or regulatory matters will have a material adverse effect on the
consolidated financial position or liquidity of the Company.
18. Benefit Plans
Pension Plans
As of December 31, 2009, the Company’s qualified and supplemental pension plans (the “Pension Plans”)
are frozen with respect to new entrants and participants with less than ten years of service on June 30, 2004.
No further benefits will accrue with respect to these participants under the Pension Plans, other than interest
accruals on cash balance accounts. Participants with less than five years of service as of June 30, 2004 were
fully vested.
For those participants who continued to accrue benefits under the Pension Plans until July 1, 2009,
benefits were credited using a cash balance formula. Under the formula, each participant has an account, for
F-87
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)