Sallie Mae 2013 Annual Report Download - page 9

• Average tuition and fees at four-year public institutions and four-year private institutions were $8,893 and
$30,094, respectively for Academic Year (“AY”) 2013-2014 and have increased at a compound annual
growth rate of 6.7 percent and 4.7 percent, respectively, since AY 2003-2004.2
• There has been a 48 percent increase in borrowing from federal loan programs since AY 2007-2008. In
AY 2012-2013, borrowing from federal loan programs, according to the College Board, totaled $101.5
billion, an increase of 136 percent since AY 2002-2003.3A substantial portion of this increase was driven
by the creation of the Grad PLUS program in 2006 and increases in federal borrowing limits in 2007 and
2008. The College Board also reported that, over the same time period, federal grants increased 198
percent to $47 billion. In AY 2012-2013, borrowing from Private Education Loan programs increased to
an estimated $7.2 billion, up 13 percent over the previous year; an increase of 3 percent as compared to
AY 2002-2003 levels.2
Tuition and fees represent only a portion of total costs of attendance. Utilizing consistent data from
available public sources with regard to room and board, books and supplies and transportation costs, we have
estimated total costs of college attendance have grown from approximately $324 billion for AY 2007-2008 to
$438 billion for AY 2012-2013.3
We face competition for Private Education Loans from a group of the nation’s larger banks and local credit
unions.
Implications of the Spin-Off
If the Spin-Off occurs, SLM BankCo and its subsidiaries will continue to originate, finance and service
Private Education Loans and earn revenue on the Private Education Loan portfolio held by SLM BankCo and its
affiliates. By agreement, NewCo will not originate Private Education Loans prior to 2019. On a pro forma basis
as of December 31, 2013 and as currently proposed as part of the Spin-Off, SLM BankCo will retain
approximately $6.5 billion of our Private Education Loan portfolio, and NewCo will continue to service and
collect on its own portfolio of education loans, as well as on those owned by numerous banks, credit unions and
non-profit education lenders.
During a transition period, NewCo and its affiliates will assist SLM BankCo in the servicing and collections
on the Private Education Loans held by SLM BankCo and its affiliates. It is currently anticipated that NewCo
will also continue to service Private Education Loans owned by SLM BankCo with respect to individual
borrowers who also have Private Education Loans which are owned by NewCo. NewCo will also service and
collect on SLM BankCo’s portfolio of FFELP Loans. For additional information, see the section titled “SLM
BankCo’s Post-Separation Relationship with NewCo.”
Business Services Segment
We are currently the largest holder, servicer and collector of loans made under the previously existing
FFELP, and the majority of our income has been derived, directly or indirectly, from our portfolio of FFELP
Loans and servicing we have provided for FFELP Loans. In 2010, Congress passed legislation ending the
origination of education loans under FFELP. The terms and conditions of existing FFELP Loans were not
affected by this legislation. Our FFELP Loan portfolio will amortize over approximately 20 years. The fee
income we have earned from providing servicing and contingent collection services on such loans will similarly
decline over time. For a full description of FFELP, see Appendix A “Description of Federal Family Education
Loan Program.” We also provide servicing, loan default aversion and defaulted loans collection services on
2Source: The College Board—Trends in College Pricing 2013. ©2013 The College Board. www.collegeboard.org.
Cost of attendance is in current dollars and includes tuition, fees and on-campus room and board.
3Extrapolated from various materials produced by U.S. Department of Education, College Board, McKinsey &
Company, MeasureOne, National Student Clearing House, Company Analysis.
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