Sallie Mae 2010 Annual Report Download - page 130

3. Student Loans (Continued)
trust. The transaction was funded by a 5-year term loan provided by Citibank in an amount equal to the
purchase price.
The following table shows the assets and liabilities that were acquired and consolidated on our balance
sheet at fair value on December 31, 2010.
Acquisition on
December 31, 2010
FFELP Stafford Loans ............................................. $11,121,349
FFELP Consolidation Loans......................................... 14,261,989
Loan fair value discount ........................................... (493,907)
FFELP Loans ................................................... 24,889,431
Restricted cash .................................................. 749,139
Other assets ..................................................... 445,517
Total assets ..................................................... $26,084,087
Long-term borrowings — FFELP trusts ................................ $25,608,941
Long-term borrowings — acquisition financing ........................... 1,064,244
Long-term borrowings fair value discount ............................... (659,060)
Long-term borrowings ............................................. 26,014,125
Other liabilities .................................................. 69,962
Total liabilities .................................................. $26,084,087
We offer a variety of Private Education Loans. Private Education Loans can be subdivided into two
general categories: those that are designed to bridge the gap between the cost of higher education and the
amount financed through either federal loans or the borrowers’ resources and loans for career training. For the
majority of the Private Education Loan portfolio, we bear the full risk of any losses experienced and, as a
result, these loans are underwritten and priced based upon standardized consumer credit scoring criteria.
Forbearance involves granting the borrower a temporary cessation of payments (or temporary acceptance
of smaller than scheduled payments) for a specified period of time. Using forbearance in this manner
effectively extends the original term of the loan. Forbearance does not grant any reduction in the total
repayment obligation (principal or interest). While a loan is in forbearance status, interest continues to accrue
and is capitalized to principal when the loan re-enters repayment status. Our forbearance policies include
limits on the number of forbearance months granted consecutively and the total number of forbearance months
granted over the life of the loan. In some instances, we require good-faith payments before granting
forbearance. Exceptions to forbearance policies are permitted when such exceptions are judged to increase the
likelihood of ultimate collection of the loan. Forbearance as a collection tool is used most effectively when
applied based on a borrower’s unique situation, including historical information and judgments. We leverage
updated borrower information and other decision support tools to best determine who will be granted
forbearance based on our expectations as to a borrower’s ability and willingness to repay their obligation. This
strategy is aimed at mitigating the overall risk of the portfolio as well as encouraging cash resolution of
delinquent loans.
Forbearance may be granted to borrowers who are exiting their grace period to provide additional time to
obtain employment and income to support their obligations, or to current borrowers who are faced with a
hardship and request forbearance time to provide temporary payment relief. In these circumstances, a
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SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)