Sallie Mae 2011 Annual Report Download - page 158

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Borrowings (Continued)
per loan. Under the Participation Program, ED provided short-term liquidity to FFELP lenders by purchasing
participation interests in pools of FFELP Loans. FFELP lenders were charged a rate equal to the preceding
quarter commercial paper rate plus 0.50 percent on the principal amount of participation interests outstanding.
Loans eligible for the Participation or Purchase Programs were limited to FFELP Stafford or PLUS Loans, first
disbursed on or after May 1, 2008 but no later than July 1, 2010, with no ongoing borrower benefits other than
permitted rate reductions of 0.25 percent for automatic payment processing. In October 2010, we sold $20.4
billion of loans to ED and paid off $20.3 billion of advances outstanding under the Participation Program. This
program is no longer in effect and is not available as a source of funding.
Also pursuant to ECASLA, on January 15, 2009, ED announced they would purchase eligible FFELP
Stafford and PLUS Loans from a conduit vehicle established to provide funding for eligible student lenders (the
“ED Conduit Program”). Loans eligible for the ED Conduit Program must be first disbursed on or after
October 1, 2003, but not later than July 1, 2009, and fully disbursed before September 30, 2009, and meet certain
other requirements, including those relating to borrower benefits. The ED Conduit Program was launched on
May 11, 2009 and accepted eligible loans through July 1, 2010. The ED Conduit Program expires on January 19,
2014. Funding for the ED Conduit Program is provided by the capital markets at a cost based on market rates,
with us being advanced 97 percent of the student loan face amount. If the conduit does not have sufficient funds
to make the required payments on the notes issued by the conduit, then the notes will be repaid with funds from
the Federal Financing Bank (“FFB”). The FFB will hold the notes for a short period of time and, if at the end of
that time, the notes still cannot be paid off, the underlying FFELP Loans that serve as collateral to the ED
Conduit will be sold to ED through a put agreement at a price of 97 percent of the face amount of the loans. Our
intent is to term securitize the loans in the facility before the facility expires. Any loans that remain in the facility
as of the expiration date will be sold to ED at a price of 97 percent of the face amount of the loans. As of
December 31, 2011, approximately $21.4 billion face amount of our Stafford and PLUS Loans were funded
through the ED Conduit Program.
Asset-Backed Financing Facilities
FFELP ABCP Facility
During the first quarter of 2008, we entered into two new asset-backed financing facilities (the “2008 Asset-
Backed Financing Facilities”) to fund FFELP and Private Education Loans. In 2009, the FFELP facilities were
subsequently amended and reduced and the Private Education facility was retired. On January 15, 2010, we
terminated the 2008 Asset-Backed Financing Facilities for FFELP and entered into new multi-year ABCP
facilities (the “FFELP ABCP Facility”) which will continue to provide funding for our FFELP Loans.
On January 14, 2011, we amended the FFELP ABCP Facility extending the step-down dates and final term
of the facility. The amendment extended the scheduled maturity date to January 10, 2014 and increased the
facility size to $7.5 billion, which reflected a $2.5 billion increase over the previously scheduled facility
reduction. We paid an extension fee of $2 million. The usage fee for the amended FFELP ABCP Facility
remained unchanged at 0.50 percent over the applicable funding rate. In addition, the amended facility extended
the step-down dates to $5.0 billion on January 13, 2012 and to $2.5 billion on January 11, 2013.
On January 13, 2012, we amended the FFELP ABCP Facility extending the step-down dates on the amount
available for borrowing and the final maturity date of the facility, which will continue to provide funding for our
FFELP Loans. The facility amount is now $7.5 billion, reflecting an increase of $2.5 billion over the previously
scheduled facility reduction. The scheduled maturity date of the facility is January 9, 2015. We paid an extension
fee of $2 million. The usage fee for the facility remains unchanged at 0.50 percent over the applicable funding
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