Sallie Mae 2011 Annual Report Download - page 136

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Student Loans (Continued)
As of December 31, 2011 and 2010, 71 percent and 68 percent, respectively, of our student loan portfolio
was in repayment.
Loan Acquisitions and Sales
In December 2008, we sold approximately $494 million (principal and accrued interest) of FFELP Loans to
ED at a price of 97 percent of principal and unpaid interest pursuant to ED’s authority under ECASLA to make
such purchases, and recorded a loss on the sale. Additionally, in early January 2009, we sold an additional $486
million (principal and accrued interest) in FFELP Loans to ED under this program. The loss related to this sale in
January was recognized in 2008 as the loans were classified as held-for-sale. The total loss recognized on these
two sales for the year ended December 31, 2008 was $53 million and was recorded in “Losses on sales of loans
and securities, net” in the consolidated statements of income.
In 2009, we sold to ED approximately $18.5 billion face amount of loans as part of the Purchase Program
(approximately $840 million face amount of loans was sold in the third quarter of 2009, with the remainder sold
in the fourth quarter of 2009). Outstanding debt of $18.5 billion was paid down related to the Participation
Program pursuant to ECASLA in connection with these loan sales. These loan sales resulted in a $284 million
gain. The settlement of the fourth-quarter sale of loans out of the Participation Program included repaying the
debt by delivering the related loans to ED in a non-cash transaction and receipt of cash from ED for $484 million,
representing the reimbursement of a one-percent payment made to ED plus a $75 fee per loan.
In 2010, we sold to ED approximately $20.4 billion face amount of loans as part of the Purchase Program.
These loan sales resulted in a $321 million gain. Outstanding debt of $20.3 billion has been paid down related to
the Participation Program in connection with these loan sales.
On December 31, 2010, we closed on our agreement to purchase an interest in $26.1 billion of securitized
federal student loans and related assets and $25.0 billion of liabilities from the Student Loan Corporation
(“SLC”), a subsidiary of Citibank, N.A. The purchase price was approximately $1.1 billion. The assets purchased
include the residual interest in 13 of SLC’s 14 FFELP loan securitizations and its interest in SLC Funding Note
Issuer related to the U.S. Department of Education’s Straight-A Funding asset-backed commercial paper conduit.
We will also service these assets and administer the securitization trusts. We converted all of the underlying
loans to our servicing platform by October 2011, and had an interim subservicing agreement for Citibank to
service the loans prior to conversion. Because we have determined that we are the primary beneficiary of these
trusts we have consolidated these trusts onto our balance sheet. The transaction was funded by a 5-year term loan
provided by Citibank in an amount equal to the purchase price.
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