Sallie Mae 2011 Annual Report Download - page 191

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Segment Reporting (Continued)
diversified strategies to expand demand for our services in and beyond the student loan market. For example, in
2011 we launched Sallie Mae Insurance Services to offer tuition, renters’ and student health insurance to college
students and higher education institutions. We also acquired SC Services & Associates to enhance our ability to
provide collections services to local governments and courts.
Our primary Business Services activities that are not directly related to the FFELP include:
Upromise
Upromise generates revenue by providing program management services for 529 college-savings plans with
assets of $37.5 billion in 31 college-savings plans in 16 states. We also generate transaction fees through our
Upromise consumer savings network, through which members have earned $660 million in rewards by
purchasing products at hundreds of online retailers, booking travel, purchasing a home, dining out, buying gas
and groceries, using the Upromise World MasterCard, or completing other qualified transactions. We earn a fee
for the marketing and administrative services we provide to companies that participate in the Upromise savings
network. We compete for 529 college-savings plan business with a large array of banks, financial services and
other processing companies. We also compete with other loyalty shopping services and companies.
ED Servicing and Collection Contracts
In the second quarter of 2009, ED named Sallie Mae as one of four servicers awarded a servicing contract
(the “ED Servicing Contract”) to service all newly disbursed federal loans owned by ED. The contract spans five
years with one, five-year renewal at the option of ED. We compete for Direct Loan servicing volume from ED
with the three other servicing companies with whom we share the contract. Account allocations are awarded
annually based on each company’s performance on five different metrics: defaulted borrower count, defaulted
borrower dollar amount, a survey of borrowers, a survey of schools and a survey of ED personnel. Pursuant to
the contract terms related to annual volume allocation of new loans, the maximum any servicer could be awarded
is 40 percent of net new borrowers in that contract year. We are focused on our performance to increase our
allocation of new accounts under the ED Servicing Contract. Our share of new loans serviced for ED under the
ED Servicing Contract increased to 26 percent in 2012 from 22 percent in the prior contract year as a result of an
improvement of our performance on the ED scorecard.
Since 1997, we have provided collection services on defaulted student loans to ED customers. The current
contract runs through December 31, 2012, with two one-year renewal options by ED. There are 21 other
collection providers, of which we compete with 16 providers for account allocation based on quarterly
performance metrics. As a consistent top performer, our share of allocated accounts has ranged from six percent
to eight percent for this contract period.
Other
Our Campus Solutions business offers a suite of solutions designed to help campus business offices increase
their services to students and families. The product suite includes electronic billing, collection, payment and
refund services plus full tuition payment plan administration. In 2011, we generated servicing revenue from over
1,100 schools.
At December 31, 2011 and 2010, the Business Services segment had total assets of $912 million and $930
million, respectively.
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