Sallie Mae 2011 Annual Report Download - page 130

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
We earn fees in our Campus Solutions business for processing tuition and other payments for our college
and university partners. We recognize this fee income based on contractual arrangements in the period in which
the services are provided which generally occurs when the transaction is processed.
We provide a full complement of administrative services to FFELP Guarantors including guarantee issuance
through July 1, 2010, and account maintenance for Guarantor agencies. The fees associated with these services
are recognized as the services are performed based on contractually determined rates.
We also provide account asset servicing including program management, transfer and servicing agent
services and administration services for various 529 college savings plans. Fees associated with these services are
recognized as the services are performed based on contractually determined rates.
Contingency Revenue
We receive fees for collections of delinquent debt on behalf of clients performed on a contingency basis.
Revenue is earned and recognized upon receipt of the delinquent borrower funds.
We also receive fees from Guarantor agencies for performing default aversion services on delinquent loans
prior to default. The fee is received when the loan is initially placed with us and we are obligated to provide such
services for the remaining life of the loan for no additional fee. In the event that the loan defaults, we are
obligated to rebate a portion of the fee to the Guarantor agency in proportion to the principal and interest
outstanding when the loan defaults. We recognize fees received, net of an estimate of future rebates owed due to
subsequent defaults, over the service period which is estimated to be the life of the loan.
Other Income
Our Upromise subsidiary has a number of programs that encourage consumers to save for the cost of college
education. We have 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 fees based on member purchase volume, either online or in stores depending on the contractual
arrangement with the Participating Company. We recognize revenue as marketing and administrative services are
rendered based upon contractually determined rates and member purchase volumes.
Goodwill and Acquired Intangible Assets
We account for goodwill and acquired intangible assets in accordance with the applicable accounting
guidance. Under this guidance goodwill is not amortized but is tested periodically for impairment. We test
goodwill for impairment annually as of October 1 at the reporting unit level, which is the same as or one level
below a business segment. Goodwill is also tested at interim periods if an event occurs or circumstances change
that would indicate the carrying amount may be impaired.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles — Goodwill and Other (Topic 350),
“Testing Goodwill for Impairment.” This guidance permits us to assess qualitative factors to determine whether it
is “more-likely-than-not” that the fair value of a reporting unit is less than its carrying amount as a basis for
determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350.
The “more-likely-than-not” threshold is defined as having a likelihood of more than 50 percent. If, after assessing
relevant qualitative factors, we conclude that it is “more-likely-than-not” that the fair value of a reporting unit as
of October 1 is less than its carrying amount, we will complete Step 1 of the goodwill impairment analysis. Step
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