Sallie Mae 2010 Annual Report Download - page 226

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rate, ED pays the difference directly to us. This payment is referred to as the Special Allowance Payment or
SAP and the formula used to determine the floating rate is the SAP formula. We refer to the fixed spread to
the underlying index as the SAP spread. For loans disbursed after April 1, 2006, FFELP Loans effectively
only earn at the SAP rate, as the excess interest earned when the borrower rate exceeds the SAP rate (Floor
Income) must be refunded to ED.
Variable rate PLUS Loans and SLS Loans earn SAP only if the variable rate, which is reset annually,
exceeds the applicable maximum borrower rate. For PLUS loans disbursed on or after January 1, 2000, this
limitation on SAP was repealed effective April 1, 2006.
Variable Rate Floor Income — Variable Rate Floor Income is Floor Income that is earned only through
the next date at which the borrower interest rate is reset to a market rate. For FFELP Stafford loans whose
borrower interest rate resets annually on July 1, we may earn Floor Income or Embedded Floor Income based
on a calculation of the difference between the borrower rate and the then current interest rate.
G-5