Edgar Filing: SLM CORP

e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2011
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number: 001-13251

SLM Corporation

(Exact name of registrant as specified in its charter)


Delaware		52-2013874
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Continental Drive, Newark, Delaware		19713
(Address of principal executive offices)		(Zip Code)

(302) 283-8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class		Outstanding at July 31, 2011

Voting common stock, $.20 par value		514,297,170 shares

SLM CORPORATION

FORM 10-Q
INDEX
June 30, 2011


Part I. Financial Information
	Item 1.	Financial Statements	2
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	86
	Item 4.	Controls and Procedures	93
PART II. Other Information
	Item 1.	Legal Proceedings	94
	Item 1A.	Risk Factors	94
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95
	Item 3.	Defaults Upon Senior Securities	95
	Item 4.	(Removed and Reserved)	95
	Item 5.	Other Information	95
	Item 6.	Exhibits	96
Signatures			97
Glossary⁽¹⁾			98
Exhibit 10.1
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


⁽¹⁾		Definitions for capitalized terms used in this document can be found in the “Glossary” at the end of this document.

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

SLM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per share amounts)
(Unaudited)


	June 30,			December 31,
	2011			2010

Assets
FFELP Loans (net of allowance for losses of $189,024 and $188,858, respectively)	$	142,634,378		$	148,649,400
Private Education Loans (net of allowance for losses of $2,042,603 and $2,021,580, respectively)		35,753,327			35,655,724
Investments
Available-for-sale		82,647			83,048
Other		1,056,762			873,376

Total investments		1,139,409			956,424
Cash and cash equivalents		4,144,734			4,342,327
Restricted cash and investments		6,074,901			6,254,493
Goodwill and acquired intangible assets, net		479,917			478,409
Other assets		10,129,933			8,970,272

Total assets	$	200,356,599		$	205,307,049

Liabilities
Short-term borrowings	$	30,765,693		$	33,615,856
Long-term borrowings		160,765,277			163,543,504
Other liabilities		3,814,390			3,136,111

Total liabilities		195,345,360			200,295,471

Commitments and contingencies
Equity
Preferred stock, par value $.20 per share, 20,000 shares authorized:
Series A: 3,300 and 3,300 shares, respectively, issued at stated value of $50 per share		165,000			165,000
Series B: 4,000 and 4,000 shares, respectively, issued at stated value of $100 per share		400,000			400,000
Common stock, par value $.20 per share, 1,125,000 shares authorized: 528,623 and 595,263 shares issued, respectively		105,725			119,053
Additional paid-in capital		4,114,266			5,939,838
Accumulated other comprehensive loss (net of tax benefit of $17,079 and $25,758, respectively)		(29,636	)		(44,664	)
Retained earnings		417,702			308,839

Total SLM Corporation stockholders’ equity before treasury stock		5,173,057			6,888,066
Common stock held in treasury at cost: 10,474 and 68,320 shares, respectively		170,496			1,876,488

Total SLM Corporation stockholders’ equity		5,002,561			5,011,578
Noncontrolling interest		8,678			—

Total equity		5,011,239			5,011,578

Total liabilities and equity	$	200,356,599		$	205,307,049

Supplemental information — assets and liabilities of consolidated variable interest entities:


	June 30,		December 31,
	2011		2010

FFELP Loans, net	$	140,338,134	$	145,750,016
Private Education Loans, net		25,084,114		24,355,683
Restricted cash and investments		5,846,002		5,983,080
Other assets		4,122,981		3,705,716
Short-term borrowings		23,069,956		24,484,353
Long-term borrowings		139,877,694		142,243,771

Net assets of consolidated variable interest entities	$	12,443,581	$	13,066,371

See accompanying notes to consolidated financial statements.

SLM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share amounts)
(Unaudited)


							Six Months Ended
	Three Months Ended June 30,						June 30,
	2011			2010			2011			2010

Interest income:
FFELP Loans	$	849,275		$	875,962		$	1,726,653		$	1,682,724
Private Education Loans		600,423			575,340			1,204,356			1,140,494
Other loans		5,393			7,254			11,304			16,250
Cash and investments		4,743			6,299			10,082			11,248

Total interest income		1,459,834			1,464,855			2,952,395			2,850,716
Total interest expense		591,427			568,933			1,186,022			1,100,317

Net interest income		868,407			895,922			1,766,373			1,750,399
Less: provisions for loan losses		290,686			382,239			594,091			741,359

Net interest income after provisions for loan losses		577,721			513,683			1,172,282			1,009,040

Other income (loss):
Gains (losses) on sales of loans and securities, net		—			(3,515	)		—			5,138
Gains (losses) on derivative and hedging activities, net		(509,788	)		95,316			(751,670	)		12,906
Servicing revenue		92,600			98,740			190,852			221,012
Contingency revenue		85,617			88,172			163,998			168,484
Gains on debt repurchases		323			91,050			38,226			181,131
Other		3,188			(2,449	)		24,933			11,351

Total other income (loss)		(328,060	)		367,314			(333,661	)		600,022

Expenses:
Salaries and benefits		125,139			139,061			260,580			288,163
Other operating expenses		143,580			170,668			311,339			309,201

Total operating expenses		268,719			309,729			571,919			597,364
Goodwill and acquired intangible assets impairment and amortization expense		6,063			9,710			12,127			19,422
Restructuring expenses		1,594			17,808			5,155			42,612

Total expenses		276,376			337,247			589,201			659,398

Income (loss) from continuing operations, before income tax expense (benefit)		(26,715	)		543,750			249,420			949,664
Income tax expense (benefit)		(9,585	)		198,978			90,126			358,138

Net income (loss) from continuing operations		(17,130	)		344,772			159,294			591,526
Income (loss) from discontinued operations, net of tax expense (benefit)		11,482			(6,954	)		9,752			(13,568	)

Net income (loss)		(5,648	)		337,818			169,046			577,958
Preferred stock dividends		4,052			18,711			7,930			37,389

Net income (loss) attributable to common stock	$	(9,700	)	$	319,107		$	161,116		$	540,569

Basic earnings (loss) per common share:
Continuing operations	$	(.04	)	$	.67		$	.29		$	1.15
Discontinued operations		.02			(.01	)		.02			(.03	)

Total	$	(.02	)	$	.66		$	.31		$	1.12

Average common shares outstanding		523,808			484,832			525,269			484,547

Diluted earnings (loss) per common share:
Continuing operations	$	(.04	)	$	.64		$	.28		$	1.11
Discontinued operations		.02			(.01	)		.02			(.03	)

Total	$	(.02	)	$	.63		$	.30		$	1.08

Average common and common equivalent shares outstanding		523,808			527,391			530,865			527,013

Dividends per common share	$	.10		$	—		$	.10		$	—

See accompanying notes to consolidated financial statements.

SLM CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share and per share amounts)
(Unaudited)


																		Accumulated
	Preferred														Additional			Other									Total
	Stock		Common Stock Shares								Preferred		Common		Paid-In			Comprehensive			Retained			Treasury			Stockholders’			Noncontrolling			Total
	Shares		Issued		Treasury			Outstanding			Stock		Stock		Capital			Income (Loss)			Earnings			Stock			Equity			Interest			Equity

Balance at March 31, 2010		8,110,370		553,407,785		(67,563,788	)		485,843,997		$	1,375,370	$	110,682	$	5,106,094		$	(42,511	)	$	72,062		$	(1,866,020	)	$	4,755,677		$	19		$	4,755,696
Comprehensive income:
Net income (loss)																						337,818						337,818						337,818
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax																			1,615									1,615						1,615
Change in unrealized gains (losses) on derivatives, net of tax																			(2,439	)								(2,439	)					(2,439	)
Defined benefit pension plans adjustment																			2									2						2

Comprehensive income																												336,996						336,996
Cash dividends:
Preferred stock, series A ($.87 per share)																						(2,875	)					(2,875	)					(2,875	)
Preferred stock, series B ($.24 per share)																						(1,014	)					(1,014	)					(1,014	)
Preferred stock, series C ($18.13 per share)																						(14,688	)					(14,688	)					(14,688	)
Issuance of common shares				163,599					163,599					33		3,765												3,798						3,798
Preferred stock issuance costs and related amortization																134						(134	)					—						—
Tax benefit related to employee stock option and purchase plans																(1,212	)											(1,212	)					(1,212	)
Stock-based compensation expense																13,802												13,802						13,802
Repurchase of common shares:
Benefit plans						(211,014	)		(211,014	)															(3,740	)		(3,740	)					(3,740	)
Noncontrolling interest — other																												—			(15	)		(15	)

Balance at June 30, 2010		8,110,370		553,571,384		(67,774,802	)		485,796,582		$	1,375,370	$	110,715	$	5,122,583		$	(43,333	)	$	391,169		$	(1,869,760	)	$	5,086,744		$	4		$	5,086,748

Balance at March 31, 2011		7,300,000		527,493,764		—			527,493,764		$	565,000	$	105,499	$	4,092,334		$	(35,401	)	$	479,655		$	—		$	5,207,087		$	—		$	5,207,087
Comprehensive income:
Net income (loss)																						(5,648	)					(5,648	)					(5,648	)
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax																			1,034									1,034						1,034
Change in unrealized gains (losses) on derivatives, net of tax																			4,731									4,731						4,731
Defined benefit pension plans adjustment																												—						—

Comprehensive income																												117						117
Cash dividends:
Common stock ($.10 per share)																						(52,253	)					(52,253	)					(52,253	)
Preferred stock, series A ($.87 per share)																						(2,875	)					(2,875	)					(2,875	)
Preferred stock, series B ($.26 per share)																						(1,177	)					(1,177	)					(1,177	)
Issuance of common shares				1,129,399					1,129,399					226		12,079												12,305						12,305
Tax benefit related to employee stock option and purchase plans																(2,216	)											(2,216	)					(2,216	)
Stock-based compensation expense																12,069												12,069						12,069
Repurchase of common shares:
Open market						(9,593,603	)		(9,593,603	)															(156,105	)		(156,105	)					(156,105	)
Benefit plans						(880,731	)		(880,731	)															(14,391	)		(14,391	)					(14,391	)
Acquisition of noncontrolling interest																												—			8,678			8,678

Balance at June 30, 2011		7,300,000		528,623,163		(10,474,334	)		518,148,829		$	565,000	$	105,725	$	4,114,266		$	(29,636	)	$	417,702		$	(170,496	)	$	5,002,561		$	8,678		$	5,011,239

See accompanying notes to consolidated financial statements.

SLM CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share and per share amounts)
(Unaudited)


																				Accumulated
	Preferred																Additional			Other									Total
	Stock		Common Stock Shares									Preferred		Common			Paid-In			Comprehensive			Retained			Treasury			Stockholders’			Noncontrolling			Total
	Shares		Issued			Treasury			Outstanding			Stock		Stock			Capital			Income (Loss)			Earnings			Stock			Equity			Interest			Equity

Balance at December 31, 2009		8,110,370		552,219,576			(67,221,942	)		484,997,634		$	1,375,370	$	110,444		$	5,090,891		$	(40,825	)	$	604,467		$	(1,861,738	)	$	5,278,609		$	13		$	5,278,622
Comprehensive income:
Net income (loss)																								577,958						577,958						577,958
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax																					1,678									1,678						1,678
Change in unrealized gains (losses) on derivatives, net of tax																					(4,151	)								(4,151	)					(4,151	)
Defined benefit pension plans adjustment																					(35	)								(35	)					(35	)

Comprehensive income																														575,450						575,450
Cash dividends:
Preferred stock, series A ($1.74 per share)																								(5,750	)					(5,750	)					(5,750	)
Preferred stock, series B ($.48 per share)																								(1,969	)					(1,969	)					(1,969	)
Preferred stock, series C ($36.25 per share)																								(29,376	)					(29,376	)					(29,376	)
Restricted stock dividend																								(11	)					(11	)					(11	)
Issuance of common shares				1,351,808						1,351,808					271			10,166												10,437						10,437
Preferred stock issuance costs and related amortization																		294						(294	)					—						—
Tax benefit related to employee stock option and purchase plans																		(4,805	)											(4,805	)					(4,805	)
Stock-based compensation expense																		26,037												26,037						26,037
Cumulative effect of accounting change																								(753,856	)					(753,856	)					(753,856	)
Repurchase of common shares:
Benefit plans							(552,860	)		(552,860	)																(8,022	)		(8,022	)					(8,022	)
Noncontrolling interest — other																														—			(9	)		(9	)

Balance at June 30, 2010		8,110,370		553,571,384			(67,774,802	)		485,796,582		$	1,375,370	$	110,715		$	5,122,583		$	(43,333	)	$	391,169		$	(1,869,760	)	$	5,086,744		$	4		$	5,086,748

Balance at December 31, 2010		7,300,000		595,263,474			(68,319,589	)		526,943,885		$	565,000	$	119,053		$	5,939,838		$	(44,664	)	$	308,839		$	(1,876,488	)	$	5,011,578		$	—		$	5,011,578
Comprehensive income:
Net income (loss)																								169,046						169,046						169,046
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on investments, net of tax																					715									715						715
Change in unrealized gains (losses) on derivatives, net of tax																					14,105									14,105						14,105
Defined benefit pension plans adjustment																					208									208						208

Comprehensive income																														184,074						184,074
Cash dividends:
Common stock ($.10 per share)																								(52,253	)					(52,253	)					(52,253	)
Preferred stock, series A ($1.74 per share)																								(5,750	)					(5,750	)					(5,750	)
Preferred stock, series B ($.57 per share)																								(2,180	)					(2,180	)					(2,180	)
Issuance of common shares				3,434,058						3,434,058					687			34,553												35,240						35,240
Retirement of common stock in treasury				(70,074,369	)		70,074,369			—					(14,015	)		(1,889,891	)								1,903,906			—						—
Tax benefit related to employee stock option and purchase plans																		(7,295	)											(7,295	)					(7,295	)
Stock-based compensation expense																		37,061												37,061						37,061
Repurchase of common shares:
Open market							(9,593,603	)		(9,593,603	)																(156,105	)		(156,105	)					(156,105	)
Benefit plans							(2,635,511	)		(2,635,511	)																(41,809	)		(41,809	)					(41,809	)
Acquisition of noncontrolling interest																														—			8,678			8,678

Balance at June 30, 2011		7,300,000		528,623,163			(10,474,334	)		518,148,829		$	565,000	$	105,725		$	4,114,266		$	(29,636	)	$	417,702		$	(170,496	)	$	5,002,561		$	8,678		$	5,011,239

See accompanying notes to consolidated financial statements.

SLM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)


	Six Months Ended
	June 30,
	2011			2010

Operating activities
Net income	$	169,046		$	577,958
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
(Income) loss from discontinued operations, net of tax		(9,752	)		13,568
Gains on sale of loans and securities, net		—			(5,138	)
Gains on debt repurchases		(38,226	)		(181,131	)
Goodwill and acquired intangible assets impairment and amortization expense		12,127			19,422
Stock-based compensation expense		37,061			26,097
Unrealized (gains)/losses on derivative and hedging activities		396,238			(444,732	)
Provisions for loan losses		594,091			741,359
Student loans originated for sale, net		—			(10,482,146	)
Decrease in restricted cash — other		53,171			41,403
Decrease (increase) in accrued interest receivable		92,629			(147,462	)
Increase in accrued interest payable		69,825			34,677
Decrease in other assets		215,598			1,369,568
(Decrease) in other liabilities		(224,671	)		(130,832	)

Total adjustments		1,198,091			(9,145,347	)

Total net cash provided by (used in) operating activities		1,367,137			(8,567,389	)

Investing activities
Student loans acquired and originated		(1,817,664	)		(2,661,471	)
Reduction of student loans:
Installment payments, claims and other		6,707,474			4,992,892
Proceeds from sales of student loans		380,965			164,046
Other loans — repaid		29,919			100,860
Other investing activities, net		(202,329	)		(351,700	)
Purchases of available-for-sale securities		(109,616	)		(27,885,519	)
Proceeds from maturities of available-for-sale securities		133,344			28,725,393
Purchases of other securities		(131,195	)		(64,188	)
Proceeds from maturities of other securities		127,944			71,812
Decrease (increase) in restricted cash		137,178			(218,129	)

Cash provided by investing activities — continuing operations		5,256,020			2,873,996

Cash provided by investing activities — discontinued operations		50,935			68,788

Total net cash provided by investing activities		5,306,955			2,942,784

Financing activities
Borrowings collateralized by loans in trust — issued		3,037,617			2,723,345
Borrowings collateralized by loans in trust — repaid		(5,725,474	)		(4,274,591	)
Asset-backed commercial paper conduits, net		(444,957	)		(1,999,582	)
ED Participation Program, net		—			10,849,768
ED Conduit Program Facility, net		(1,728,591	)		1,559,198
Other short-term borrowings repaid		—			(198,183	)
Other long-term borrowings issued		1,966,806			1,463,538
Other long-term borrowings repaid		(4,132,838	)		(4,512,180	)
Other financing activities, net		371,145			247,613
Excess tax benefit from the exercise of stock-based awards		895			355
Common stock issued		—			194
Common stock repurchased		(156,105	)		—
Common dividends paid		(52,253	)		—
Preferred dividends paid		(7,930	)		(37,095	)
Noncontrolling interest, net		—			(749	)

Net cash (used in) provided by financing activities		(6,871,685	)		5,821,631

Net (decrease) increase in cash and cash equivalents		(197,593	)		197,026
Cash and cash equivalents at beginning of period		4,342,327			6,070,013

Cash and cash equivalents at end of period	$	4,144,734		$	6,267,039

Cash disbursements made (refunds received) for:
Interest	$	1,225,041		$	1,144,499

Income taxes paid	$	364,171		$	48,190

Income taxes (received)	$	(21,966	)	$	(499,041	)

See accompanying notes to consolidated financial statements.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


1.	Significant Accounting Policies

Basis of Presentation

The accompanying unaudited, consolidated financial statements of SLM Corporation (“we,” “us,” “our,” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements include the accounts of SLM Corporation and its majority-owned and controlled subsidiaries and those Variable Interest Entities (“VIEs”) for which we are the primary beneficiary, after eliminating the effects of intercompany accounts and transactions. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results for the year ending December 31, 2011 or for any other period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2010 (the “2010 Form 10-K”).

Reclassifications

Certain reclassifications have been made to the balances as of and for the three and six months ended June 30, 2010 to be consistent with classifications adopted for 2011, and had no effect on net income, total assets, or total liabilities.

Recently Issued Accounting Standards

Troubled Debt Restructurings

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-02, Receivables (Topic 310), “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” This new guidance clarifies when a loan restructuring constitutes a troubled debt restructuring. Under the new guidance, student loans for which we have granted certain concessions may now be considered troubled debt restructurings that were previously not and this may require us to increase the amount of our allowance for loan losses as certain types of forbearance usage may be considered a concession. This guidance is effective July 1, 2011, applied retrospectively to January 1, 2011. The most likely effect of implementing this new guidance would be to increase the size of our allowance for losses. At this time we have not completed the estimate of the change in our allowance for loan losses that could result from implementing this new guidance.

Fair Value Measurement and Disclosure Requirements

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820), “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” These amendments (1) clarify the FASB’s intent about the application of existing fair value measurement and disclosure requirements; and (2) change particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. This new guidance is effective prospectively for interim and annual periods beginning after December 15, 2011 and is not expected to have a material impact on our fair value measurements.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses

Our provisions for loan losses represent the periodic expense of maintaining an allowance sufficient to absorb incurred losses, net of expected recoveries, in the held-for-investment loan portfolios. The evaluation of the provisions for student loan losses is inherently subjective as it requires material estimates that may be susceptible to significant changes. We believe that the allowance for student loan losses is appropriate to cover probable losses incurred in the loan portfolios. We segregate our Private Education Loan portfolio into two classes of loans — traditional and non-traditional. Non-traditional loans are loans to (i) borrowers attending for-profit schools with an original Fair Isaac and Company (“FICO”) score of less than 670 and (ii) borrowers attending not-for-profit schools with an original FICO score of less than 640. The FICO score used in determining whether a loan is non-traditional is the greater of the borrower or co-borrower FICO score at origination. Traditional loans are defined as all other Private Education Loans that are not classified as non-traditional.

In determining the allowance for loan losses, we estimate the principal amount of loans that will default over the next two years (two years being the expected period between a loss event and default). In the first quarter of 2011, we implemented a new model to estimate these Private Education Loan defaults. Both the prior model and new model are considered “migration models”. Our prior allowance model (in place through December 31, 2010) segmented the portfolio into categories of similar risk characteristics based on loan program type, school type, loan status, seasoning, underwriting criteria (credit scores) and the existence or absence of a cosigner using school type, credit scores, cosigner status, loan status and seasoning as the primary risk characteristics. Our new model uses these same primary risk characteristics but also further segments the portfolio by the number of months the loan is in its repayment period (seasoning). While our previous allowance process incorporated the impact of seasoning, the new model more directly incorporates this feature. Another change in the new allowance model relates to the historical period of experience that we use as a starting point for projecting future defaults. Our new model is based upon a seasonal average, adjusted to the most recent three to six months of actual collection experience as the starting point and applies expected macroeconomic changes and collection procedure changes to estimate expected losses caused by loss events incurred as of the balance sheet date. Our previous model primarily used a one year historical default experience period and did not include the ability to directly model an economic expectation or collection procedure change. In addition, the previous allowance process included qualitative adjustments for these factors. Our current model places a greater emphasis on the more recent default experience rather than the default experience for older historical periods, as we believe the recent default experience is more indicative of the probable losses incurred in the loan portfolio today. While the model we use as a part of the allowance for loan losses process changed in the first quarter, the overall process for calculating the appropriate amount of allowance for Private Education Loan loss as disclosed in the 2010 Form 10-K has not changed. We believe that the current model more accurately reflects recent borrower behavior, loan performance, and collection performance, as well as expectations about economic factors. There was no adjustment to our allowance for loan loss upon implementing this new default projection model in the first quarter of 2011. In addition, there was no change in how we estimate the amount we will recover over time related to these defaulted amounts.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Allowance for Loan Losses
	Three Months Ended June 30, 2011
				Private Education			Other
	FFELP Loans			Loans			Loans			Total

Allowance for Loan Losses
Beginning balance	$	190,235		$	2,034,318		$	73,797		$	2,298,350
Total provision		22,313			264,938			3,435			290,686
Charge-offs		(20,827	)		(263,580	)		(13,665	)		(298,072	)
Loan sales		(2,697	)		—			—			(2,697	)
Reclassification of interest reserve⁽¹⁾		—			6,927			—			6,927

Ending Balance	$	189,024		$	2,042,603		$	63,567		$	2,295,194

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	133,796		$	52,125		$	185,921
Ending balance: collectively evaluated for impairment	$	189,024		$	1,908,807		$	11,442		$	2,109,273
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans:
Ending balance: individually evaluated for impairment	$	—		$	563,650		$	102,310		$	665,960
Ending balance: collectively evaluated for impairment	$	141,048,220		$	38,093,353		$	192,891		$	179,334,464
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—

Charge-offs as a percentage of average loans in repayment and forbearance (annualized)		.07	%		3.5	%		—	%
Charge-offs as a percentage of average loans in repayment (annualized)		.09	%		3.7	%		—	%
Allowance as a percentage of the ending total loan balance		.13	%		5.3	%		21.5	%
Allowance as a percentage of the ending loans in repayment		.20	%		7.1	%		—	%
Allowance coverage of charge-offs (annualized)		2.3			1.9			1.2
Ending total loans⁽²⁾	$	141,048,220		$	38,657,003		$	295,201
Average loans in repayment	$	94,317,705		$	28,488,734		$	—
Ending loans in repayment	$	94,282,103		$	28,871,968		$	—


⁽¹⁾		Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽²⁾		Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Allowance for Loan Losses
	Three Months Ended June 30, 2010
				Private Education			Other
	FFELP Loans			Loans			Loans			Total

Allowance for Loan Losses
Beginning balance	$	186,215		$	2,018,676		$	78,664		$	2,283,555
Total provision		28,613			349,211			4,415			382,239
Charge-offs		(24,235	)		(335,766	)		(6,553	)		(366,554	)
Loan sales		(1,908	)		—			—			(1,908	)
Reclassification of interest reserve⁽¹⁾		—			10,292			—			10,292

Ending Balance	$	188,685		$	2,042,413		$	76,526		$	2,307,624

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	81,867		$	60,360		$	142,227
Ending balance: collectively evaluated for impairment	$	188,685		$	1,960,546		$	16,166		$	2,165,397
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans:
Ending balance: individually evaluated for impairment	$	—		$	363,370		$	123,223		$	486,593
Ending balance: collectively evaluated for impairment	$	145,932,811		$	37,735,165		$	261,495		$	183,929,471
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—

Charge-offs as a percentage of average loans in repayment and forbearance (annualized)		.10	%		5.1	%		—	%
Charge-offs as a percentage of average loans in repayment (annualized)		.12	%		5.3	%		—	%
Allowance as a percentage of the ending total loan balance		.13	%		5.4	%		19.9	%
Allowance as a percentage of the ending loans in repayment		.23	%		7.9	%		—	%
Allowance coverage of charge-offs (annualized)		1.9			1.5			2.9
Ending total loans⁽²⁾	$	145,932,811		$	38,098,535		$	384,718
Average loans in repayment	$	82,449,191		$	25,178,957		$	—
Ending loans in repayment	$	82,978,473		$	25,721,573		$	—


⁽¹⁾		Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽²⁾		Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Allowance for Loan Losses
	Six Months Ended June 30, 2011
				Private Education			Other
	FFELP Loans			Loans			Loans			Total

Allowance for Loan Losses
Beginning balance	$	188,858		$	2,021,580		$	72,516		$	2,282,954
Total provision		45,435			539,986			8,670			594,091
Charge-offs		(41,140	)		(536,582	)		(17,619	)		(595,341	)
Loan sales		(4,129	)		—			—			(4,129	)
Reclassification of interest reserve⁽¹⁾		—			17,619			—			17,619

Ending Balance	$	189,024		$	2,042,603		$	63,567		$	2,295,194

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	133,796		$	52,125		$	185,921
Ending balance: collectively evaluated for impairment	$	189,024		$	1,908,807		$	11,442		$	2,109,273
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans:
Ending balance: individually evaluated for impairment	$	—		$	563,650		$	102,310		$	665,960
Ending balance: collectively evaluated for impairment	$	141,048,220		$	38,093,353		$	192,891		$	179,334,464
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—

Charge-offs as a percentage of average loans in repayment and forbearance (annualized)		.07	%		3.6	%		—	%
Charge-offs as a percentage of average loans in repayment (annualized)		.09	%		3.8	%		—	%
Allowance as a percentage of the ending total loan balance		.13	%		5.3	%		21.5	%
Allowance as a percentage of the ending loans in repayment		.20	%		7.1	%		—	%
Allowance coverage of charge-offs (annualized)		2.3			1.9			1.8
Ending total loans⁽²⁾	$	141,048,220		$	38,657,003		$	295,201
Average loans in repayment	$	94,907,800		$	28,308,899		$	—
Ending loans in repayment	$	94,282,103		$	28,871,968		$	—


⁽¹⁾		Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽²⁾		Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Allowance for Loan Losses
	Six Months Ended June 30, 2010
				Private Education			Other
	FFELP Loans			Loans			Loans			Total

Allowance for Loan Losses
Beginning balance	$	161,168		$	1,443,440		$	76,261		$	1,680,869
Total provision		51,609			674,233			15,517			741,359
Charge-offs		(45,639	)		(620,244	)		(15,252	)		(681,135	)
Loan sales		(3,602	)		—			—			(3,602	)
Reclassification of interest reserve⁽¹⁾		—			20,934			—			20,934
Consolidation of securitization trusts⁽²⁾		25,149			524,050			—			549,199

Ending Balance	$	188,685		$	2,042,413		$	76,526		$	2,307,624

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	81,867		$	60,360		$	142,227
Ending balance: collectively evaluated for impairment	$	188,685		$	1,960,546		$	16,166		$	2,165,397
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—
Loans:
Ending balance: individually evaluated for impairment	$	—		$	363,370		$	123,223		$	486,593
Ending balance: collectively evaluated for impairment	$	145,932,811		$	37,735,165		$	261,495		$	183,929,471
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—

Charge-offs as a percentage of average loans in repayment and forbearance (annualized)		.09	%		4.8	%		—	%
Charge-offs as a percentage of average loans in repayment (annualized)		.11	%		5.0	%		—	%
Allowance as a percentage of the ending total loan balance		.13	%		5.4	%		19.9	%
Allowance as a percentage of the ending loans in repayment		.23	%		7.9	%		—	%
Allowance coverage of charge-offs (annualized)		2.1			1.6			2.5	%
Ending total loans⁽³⁾	$	145,932,811		$	38,098,535		$	384,718
Average loans in repayment	$	82,443,391		$	24,913,768		$	—
Ending loans in repayment	$	82,978,473		$	25,721,573		$	—


⁽¹⁾		Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽²⁾		Upon the adoption of the new consolidation accounting guidance on January 1, 2010, we consolidated all of our previously off-balance sheet securitization trusts.

⁽³⁾		Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)

The following tables provide information regarding the loan status and aging of past due loans as of June 30, 2011 and December 31, 2010.


	FFELP Loan Delinquencies
	June 30,						December 31,
	2011						2010
(Dollars in millions)	Balance			%			Balance			%

Loans in-school/grace/deferment⁽¹⁾	$	25,718					$	28,214
Loans in forbearance⁽²⁾		21,048						22,028
Loans in repayment and percentage of each status:
Loans current		78,201			82.9	%		80,026			82.8	%
Loans delinquent 31-60 days⁽³⁾		5,149			5.5			5,500			5.7
Loans delinquent 61-90 days⁽³⁾		2,909			3.1			3,178			3.3
Loans delinquent greater than 90 days⁽³⁾		8,023			8.5			7,992			8.2

Total FFELP Loans in repayment		94,282			100	%		96,696			100	%

Total FFELP Loans, gross		141,048						146,938
FFELP Loan unamortized premium		1,776						1,900

Total FFELP Loans		142,824						148,838
FFELP Loan allowance for losses		(189	)					(189	)

FFELP Loans, net	$	142,635					$	148,649

Percentage of FFELP Loans in repayment					66.8	%					65.8	%

Delinquencies as a percentage of FFELP Loans in repayment					17.1	%					17.2	%

FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					18.2	%					18.6	%


⁽¹⁾		Loans for borrowers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for borrowers who have requested extension of grace period during employment transition.

⁽²⁾		Loans for borrowers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making payments due to hardship or other factors.

⁽³⁾		The period of delinquency is based on the number of days scheduled payments are contractually past due.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Private Education Traditional Loan Delinquencies
	June 30,						December 31,
	2011						2010
(Dollars in millions)	Balance			%			Balance			%

Loans in-school/grace/deferment⁽¹⁾	$	6,431					$	7,419
Loans in forbearance⁽²⁾		1,225						1,156
Loans in repayment and percentage of each status:
Loans current		23,964			91.7	%		22,850			91.2	%
Loans delinquent 31-60 days⁽³⁾		759			2.9			794			3.2
Loans delinquent 61-90 days⁽³⁾		433			1.7			340			1.4
Loans delinquent greater than 90 days⁽³⁾		978			3.7			1,060			4.2

Total traditional loans in repayment		26,134			100	%		25,044			100	%

Total traditional loans, gross		33,790						33,619
Traditional loans unamortized discount		(775	)					(801	)

Total traditional loans		33,015						32,818
Traditional loans receivable for partially charged-off loans		629						558
Traditional loans allowance for losses		(1,363	)					(1,231	)

Traditional loans, net	$	32,281					$	32,145

Percentage of traditional loans in repayment					77.3	%					74.5	%

Delinquencies as a percentage of traditional loans in repayment					8.3	%					8.8	%

Loans in forbearance as a percentage of loans in repayment and forbearance					4.5	%					4.4	%

Loans in repayment greater than 12 months as a percentage of loans in repayment⁽⁴⁾					66.7	%					65.2	%


⁽¹⁾		Loans for borrowers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾		Loans for borrowers who have requested extension of grace period generally during employment transition or who have temporarily ceased making payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

⁽³⁾		The period of delinquency is based on the number of days scheduled payments are contractually past due.

⁽⁴⁾		Based on number of months in an active repayment status for which a scheduled monthly payment was due.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)


	Private Education Non-Traditional Loan
	Delinquencies
	June 30,						December 31,
	2011						2010
(Dollars in millions)	Balance			%			Balance			%

Loans in-school/grace/deferment⁽¹⁾	$	785					$	921
Loans in forbearance⁽²⁾		205						184
Loans in repayment and percentage of each status:
Loans current		2,030			74.1	%		2,038			72.6	%
Loans delinquent 31-60 days⁽³⁾		204			7.5			217			7.7
Loans delinquent 61-90 days⁽³⁾		142			5.2			131			4.7
Loans delinquent greater than 90 days⁽³⁾		361			13.2			422			15.0

Total non-traditional loans in repayment		2,737			100	%		2,808			100	%

Total non-traditional loans, gross		3,727						3,913
Non-traditional loans unamortized discount		(86	)					(93	)

Total non-traditional loans		3,641						3,820
Non-traditional loans receivable for partially charged-off loans		511						482
Non-traditional loans allowance for losses		(680	)					(791	)

Non-traditional loans, net	$	3,472					$	3,511

Percentage of non-traditional loans in repayment					73.5	%					71.8	%

Delinquencies as a percentage of non-traditional loans in repayment					25.9	%					27.4	%

Loans in forbearance as a percentage of loans in repayment and forbearance					7.0	%					6.1	%

Loans in repayment greater than 12 months as a percentage of loans in repayment⁽⁴⁾					60.0	%					55.9	%


⁽¹⁾		Loans for borrowers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾		Loans for borrowers who have requested extension of grace period generally during employment transition or who have temporarily ceased making payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

⁽³⁾		The period of delinquency is based on the number of days scheduled payments are contractually past due.

⁽⁴⁾		Based on number of months in an active repayment status for which a scheduled monthly payment was due.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)

The following table provides information regarding accrued interest receivable on our Private Education Loans at June 30, 2011 and December 31, 2010. The table also discloses the amount of accrued interest on loans greater than 90 days past due as compared to our allowance for uncollectible interest. The allowance for uncollectible interest exceeds the amount of accrued interest on our 90 days past due portfolio for all periods presented.


	Accrued Interest Receivable
			Greater than		Allowance for
			90 days		Uncollectible
	Total		Past Due		Interest

June 30, 2011
Private Education Loans — Traditional	$	970,674	$	33,319	$	50,718
Private Education Loans — Non-Traditional		178,013		17,990		36,412

Total	$	1,148,687	$	51,309	$	87,130

December 31, 2010
Private Education Loans — Traditional	$	1,062,289	$	34,644	$	56,755
Private Education Loans — Non-Traditional		208,587		20,270		37,057

Total	$	1,270,876	$	54,914	$	93,812

FFELP Loans are substantially guaranteed as to their principal and accrued interest in the event of default; therefore, the key credit quality indicator for this portfolio is loan status. The impact of changes in loan status is incorporated quarterly into the allowance for loan losses calculation. For Private Education Loans, the key credit quality indicators are school type, FICO scores, the existence of a cosigner, the loan status and loan seasoning. The school type/FICO score are assessed at origination and maintained through the traditional/non-traditional loan designation. The other Private Education Loan key quality indicators can change and are incorporated quarterly into the allowance for loan losses calculation. The following table

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


2.	Allowance for Loan Losses (Continued)

highlights the principal balance (excluding the receivable for partially charged-off loans) of our Private Education Loan portfolio stratified by the key credit quality indicators.


	Private Education Loans
	Credit Quality Indicators
	June 30, 2011					December 31, 2010
(Dollars in millions)	Balance⁽³⁾		% of Balance			Balance⁽³⁾		% of Balance

Credit Quality Indicators
School Type/FICO Scores:
Traditional	$	33,790		90	%	$	33,619		90	%
Non-Traditional⁽¹⁾		3,727		10			3,913		10

Total	$	37,517		100	%	$	37,532		100	%

Cosigners:
With cosigner	$	22,650		60	%	$	22,259		59	%
Without cosigner		14,867		40			15,273		41

Total	$	37,517		100	%	$	37,532		100	%

Seasoning⁽²⁾:
1-12 payments	$	10,793		29	%	$	10,932		29	%
13-24 payments		6,625		18			6,659		18
25-36 payments		4,592		12			4,457		12
37-48 payments		3,267		9			2,891		8
More than 48 payments		5,024		13			4,253		11
Not yet in repayment		7,216		19			8,340		22

Total	$	37,517		100	%	$	37,532		100	%


⁽¹⁾		Defined as loans to borrowers attending for-profit schools (with a FICO score of less than 670 at origination) and borrowers attending not-for-profit schools (with a FICO score of less than 640 at origination).

⁽²⁾		Number of months in active repayment for which a scheduled payment was due.

⁽³⁾		Balance represents gross Private Education Loans.

We offer temporary interest rate reductions to Private Education Loan borrowers who are both experiencing financial difficulties and meet other criteria. At June 30, 2011 and December 31, 2010, approximately $564 million and $444 million, respectively, had qualified at some point for an interest rate reduction modification since the inception of the program in May 2009. These modifications met the criteria of a troubled debt restructuring in accordance with ASC 310-40 Receivables — Troubled Debt Restructurings by Creditors and were individually evaluated for impairment. The allowance for loan losses associated with these loans was $134 million and $114 million at June 30, 2011 and December 31, 2010, respectively. Subsequent to modification, $89 million and $53 million defaulted through June 30, 2011 and December 31, 2010, respectively. At June 30, 2011 and December 31, 2010, approximately $284 million and $257 million, respectively, had qualified for the program and were currently receiving a reduction in their interest rate.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


3.	Borrowings

The following table summarizes our borrowings as of June 30, 2011 and December 31, 2010.


	June 30, 2011						December 31, 2010
	Short		Long				Short		Long
(Dollars in millions)	Term		Term		Total		Term		Term		Total

Unsecured borrowings:
Senior unsecured debt	$	2,464	$	16,787	$	19,251	$	4,361	$	15,742	$	20,103
Brokered deposits		1,550		1,654		3,204		1,387		3,160		4,547
Retail and other deposits		1,487		—		1,487		1,370		—		1,370
Other⁽¹⁾		1,004		—		1,004		887		—		887

Total unsecured borrowings		6,505		18,441		24,946		8,005		18,902		26,907

Secured borrowings:
FFELP Loans securitizations		—		109,524		109,524		—		112,425		112,425
Private Education Loans securitizations		—		21,815		21,815		—		21,409		21,409
ED Conduit Program Facility		22,756		—		22,756		24,484		—		24,484
ABCP borrowings		314		5,000		5,314		—		5,853		5,853
Acquisition financing⁽²⁾		—		1,010		1,010		—		1,064		1,064
FHLB-DM Facility		1,000		—		1,000		900		—		900
Indentured trusts		—		1,125		1,125		—		1,246		1,246

Total secured borrowings		24,070		138,474		162,544		25,384		141,997		167,381

Total before hedge accounting adjustments		30,575		156,915		187,490		33,389		160,899		194,288
Hedge accounting adjustments		191		3,850		4,041		227		2,644		2,871

Total	$	30,766	$	160,765	$	191,531	$	33,616	$	163,543	$	197,159


⁽¹⁾		“Other” primarily consists of cash collateral held related to derivative exposures that are recorded as a short-term debt obligation.

⁽²⁾		Relates to the acquisition of $25 billion of student loans at the end of 2010.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


3.	Borrowings (Continued)

Secured Borrowings

We currently consolidate all of our financing entities that are variable interest entities (“VIEs”) of which we are the primary beneficiary. As a result, these financing VIEs are accounted for as secured borrowings. We consolidate the following financing VIEs as of June 30, 2011 and December 31, 2010:


	June 30, 2011
	Debt Outstanding						Carrying Amount of Assets Securing Debt
	Short		Long				Outstanding
(Dollars in millions)	Term		Term		Total		Loans		Cash		Other Assets		Total

Secured Borrowings — VIEs:
ED Conduit Program Facility	$	22,756	$	—	$	22,756	$	22,802	$	647	$	572	$	24,021
ABCP borrowings		314		5,000		5,314		5,661		77		75		5,813
Securitizations — FFELP Loans		—		109,524		109,524		110,434		3,825		575		114,834
Securitizations — Private Education Loans		—		21,815		21,815		25,084		1,171		753		27,008
Indentured trusts		—		1,125		1,125		1,441		126		13		1,580

Total before hedge accounting adjustments		23,070		137,464		160,534		165,422		5,846		1,988		173,256
Hedge accounting adjustments		—		2,414		2,414		—		—		2,135		2,135

Total	$	23,070	$	139,878	$	162,948	$	165,422	$	5,846	$	4,123	$	175,391

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


3.	Borrowings (Continued)


	December 31, 2010
	Debt Outstanding						Carrying Amount of Assets Securing Debt
	Short		Long				Outstanding
(Dollars in millions)	Term		Term		Total		Loans		Cash		Other Assets		Total

Secured Borrowings — VIEs:
ED Conduit Program Facility	$	24,484	$	—	$	24,484	$	24,511	$	819	$	634	$	25,964
ABCP borrowings		—		5,853		5,853		6,290		94		53		6,437
Securitizations — FFELP Loans		—		112,425		112,425		113,400		3,728		966		118,094
Securitizations — Private Education Loans		—		21,409		21,409		24,355		1,213		690		26,258
Indentured trusts		—		1,246		1,246		1,549		129		15		1,693

Total before hedge accounting adjustments		24,484		140,933		165,417		170,105		5,983		2,358		178,446
Hedge accounting adjustments		—		1,311		1,311		—		—		1,348		1,348

Total	$	24,484	$	142,244	$	166,728	$	170,105	$	5,983	$	3,706	$	179,794

Transactions During the Six Months Ended June 30, 2011

On June 30, 2011, we completed an $825 million Private Education Loan ABS transaction at an all-in LIBOR equivalent cost of one-month LIBOR plus 1.89 percent. This issue has a weighted average life of 4.0 years and an initial overcollateralization of approximately 18 percent.

On May 26, 2011, we completed an $821 million FFELP ABS transaction at an all-in LIBOR equivalent cost of one-month LIBOR plus 1.15 percent. This issue has a weighted average life of 5.8 years and an initial overcollateralization of approximately 3 percent.

On April 26, 2011, we completed a $562 million Private Education Loan ABS transaction at an all-in LIBOR equivalent cost of one-month LIBOR plus 1.99 percent. This issue has a weighted average life of 3.8 years and an initial overcollateralization of approximately 21 percent.

On March 3, 2011, we issued an $812 million FFELP ABS transaction at an all-in LIBOR equivalent cost of one-month LIBOR plus 1.14 percent. This issue has a weighted average life of 5.8 years and initial over-collateralization of approximately 3 percent.

On January 14, 2011, we issued a $2 billion five-year 6.25 percent fixed rate unsecured bond. The bond was issued to yield 6.50 percent before underwriting fees. The rate on the bond was swapped from a fixed rate to a floating rate equal to an all-in cost of one-month LIBOR plus 4.46 percent. The proceeds of this bond were designated for general corporate purposes.

We also repurchase our outstanding unsecured debt in both open-market repurchases and public tender offers. Repurchasing debt helps us to better manage our short-term and long-term funding needs by utilizing current excess liquidity to reduce future obligations related to our unsecured borrowings at favorable pricing.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


3.	Borrowings (Continued)

During the first half of 2011, we repurchased $885 million of debt and realized gains of $38 million for the six months ended June 30, 2011, compared with $2.7 billion and $181 million the six months ended June 30, 2010.

We have $5.2 billion in Private Education Loan securitization bonds outstanding at June 30, 2011, where we have the ability to call the bonds at a discount to par between the fourth quarter of 2011 and 2014. We have concluded that it is probable we will call these bonds at the call date at their respective discount to par. We consider it probable because we believe that these bonds can be refinanced at the call date at or lower than a breakeven cost of funds based on the call discount. As a result, we are accreting this call discount as a reduction to interest expense through the call date. If it becomes less than probable that we will call these bonds at a future date, it will result in our reversing this prior accretion as a cumulative catch-up adjustment. We have accreted approximately $228 million, cumulatively, and $28 million and $56 million in the three and six months ended June 30, 2011 as a reduction of interest expense.

The following table summarizes our securitization activity for the three and six months ended June 30, 2011 and 2010. The securitizations in the periods presented below were accounted for as financings.


	Three Months Ended June 30,								Six Months Ended June 30,
	2011				2010				2011				2010
			Loan				Loan				Loan				Loan
	No. of		Amount		No. of		Amount		No. of		Amount		No. of		Amount
(Dollars in millions)	Transactions		Securitized		Transactions		Securitized		Transactions		Securitized		Transactions		Securitized

Securitizations:
FFELP Stafford/PLUS Loans		—	$	—		1	$	1,211		—	$	—		1	$	1,211
FFELP Consolidation Loans		1		774		—		—		2		1,546		—		—
Private Education Loans		2		1,699		—		—		2		1,699		1		1,929

Total securitizations		3	$	2,473		1	$	1,211		4	$	3,245		2	$	3,140


4.	Derivative Financial Instruments

Our risk management strategy, use and accounting of derivatives has not materially changed from that discussed in our 2010 Form 10-K. Please refer to Note 9, “Derivative Financial Instruments” in our 2010 Form 10-K for a full discussion.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


4.	Derivative Financial Instruments (Continued)

Summary of Derivative Financial Statement Impact

The following tables summarize the fair values and notional amounts of our derivative instruments at June 30, 2011 and December 31, 2010, and their impact on other comprehensive income and earnings for the three and six months ended June 30, 2011 and 2010.

Impact of Derivatives on Consolidated Balance Sheet


		Cash Flow						Fair Value						Trading						Total
	Hedged Risk	June 30,			Dec. 31,			June 30,			Dec. 31,			June 30,			Dec. 31,			June 30,			Dec. 31,
(Dollars in millions)	Exposure	2011			2010			2011			2010			2011			2010			2011			2010

Fair Values⁽¹⁾
Derivative Assets
Interest rate swaps	Interest rate	$	—		$	—		$	972		$	967		$	158		$	200		$	1,130		$	1,167
Cross currency interest rate swaps	Foreign currency and interest rate		—			—			2,768			1,925			100			101			2,868			2,026
Other⁽²⁾	Interest rate		—			—			—			—			3			26			3			26

Total derivative assets⁽³⁾			—			—			3,740			2,892			261			327			4,001			3,219
Derivative Liabilities
Interest rate swaps	Interest rate		(43	)		(75	)		—			—			(291	)		(348	)		(334	)		(423	)
Floor Income Contracts	Interest rate		—			—			—			—			(2,390	)		(1,315	)		(2,390	)		(1,315	)
Cross currency interest rate swaps	Foreign currency and interest rate		—			—			(184	)		(215	)		(1	)		—			(185	)		(215	)
Other⁽²⁾	Interest rate		—			—			—			—			—			(1	)		—			(1	)

Total derivative liabilities⁽³⁾			(43	)		(75	)		(184	)		(215	)		(2,682	)		(1,664	)		(2,909	)		(1,954	)

Net total derivatives		$	(43	)	$	(75	)	$	3,556		$	2,677		$	(2,421	)	$	(1,337	)	$	1,092		$	1,265


⁽¹⁾		Fair values reported are exclusive of collateral held and pledged and accrued interest. Assets and liabilities are presented without consideration of master netting agreements. Derivatives are carried on the balance sheet based on net position by counterparty under master netting agreements, and classified in other assets or other liabilities depending on whether in a net positive or negative position.

⁽²⁾		“Other” includes the fair value of Euro-dollar futures contracts, the embedded derivatives in asset-backed financings, and derivatives related to our Total Return Swap Facility. The embedded derivatives are required to be accounted for as derivatives.

⁽³⁾		The following table reconciles gross positions without the impact of master netting agreements to the balance sheet classification:


	Other Assets						Other Liabilities
	June 30,			December 31,			June 30,			December 31,
(Dollars in millions)	2011			2010			2011			2010

Gross position	$	4,001		$	3,219		$	(2,909	)	$	(1,954	)
Impact of master netting agreements		(858	)		(782	)		858			782

Derivative values with impact of master netting agreements (as carried on balance sheet)		3,143			2,437			(2,051	)		(1,172	)
Cash collateral (held) pledged		(1,003	)		(886	)		993			809

Net position	$	2,140		$	1,551		$	(1,058	)	$	(363	)

The above fair values include adjustments for counterparty credit risk for both when we are exposed to the counterparty, net of collateral postings, and when the counterparty is exposed to us, net of collateral postings. The net adjustments decreased the overall net asset position at June 30, 2011 and December 31, 2010 by $77 million and $72 million, respectively. In addition, the above fair values reflect adjustments for illiquid derivatives as indicated by a wide bid/ask spread in the interest rate indices to which the derivatives

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


4.	Derivative Financial Instruments (Continued)

are indexed. These adjustments decreased the overall net asset position at June 30, 2011 and December 31, 2010 by $112 million and $129 million, respectively.


	Cash Flow				Fair Value				Trading				Total
	June 30,		Dec. 31,		June 30,		Dec. 31,		June 30,		Dec. 31,		June 30,		Dec. 31,
(Dollars in billions)	2011		2010		2011		2010		2011		2010		2011		2010

Notional Values
Interest rate swaps	$	1.1	$	1.6	$	14.0	$	13.5	$	103.1	$	118.9	$	118.2	$	134.0
Floor Income Contracts		—		—		—		—		57.8		39.3		57.8		39.3
Cross currency interest rate swaps		—		—		16.5		17.5		.3		.3		16.8		17.8
Other⁽¹⁾		—		—		—		—		1.4		1.0		1.4		1.0

Total derivatives	$	1.1	$	1.6	$	30.5	$	31.0	$	162.6	$	159.5	$	194.2	$	192.1


⁽¹⁾		“Other” includes Euro-dollar futures contracts, embedded derivatives bifurcated from securitization debt, as well as derivatives related to our Total Return Swap Facility.

Impact of Derivatives on Consolidated Statements of Income


	Three Months Ended June 30,
													Unrealized
							Realized Gain						Gain
	Unrealized Gain						(Loss)						(Loss)
	(Loss) on						on						on Hedged						Total Gain
	Derivatives⁽¹⁾⁽²⁾						Derivatives⁽³⁾						Item⁽¹⁾						(Loss)
(Dollars in millions)	2011			2010			2011			2010			2011			2010			2011			2010

Fair Value Hedges:
Interest rate swaps	$	203		$	437		$	121		$	129		$	(230	)	$	(475	)	$	94		$	91
Cross currency interest rate swaps		173			(1,733	)		83			81			(299	)		1,800			(43	)		148

Total fair value derivatives		376			(1,296	)		204			210			(529	)		1,325			51			239
Cash Flow Hedges:
Interest rate swaps		—			1			(9	)		(15	)		—			—			(9	)		(14	)

Total cash flow derivatives		—			1			(9	)		(15	)		—			—			(9	)		(14	)
Trading:
Interest rate swaps		54			289			17			(6	)		—			—			71			283
Floor Income Contracts		(277	)		(42	)		(202	)		(222	)		—			—			(479	)		(264	)
Cross currency interest rate swaps		16			33			2			2			—			—			18			35
Other		20			12			13			(1	)		—			—			33			11

Total trading derivatives		(187	)		292			(170	)		(227	)		—			—			(357	)		65

Total		189			(1,003	)		25			(32	)		(529	)		1,325			(315	)		290
Less: realized gains recorded in interest expense		—			—			195			195			—			—			195			195

Gains (losses) on derivative and hedging activities, net	$	189		$	(1,003	)	$	(170	)	$	(227	)	$	(529	)	$	1,325		$	(510	)	$	95


⁽¹⁾		Recorded in “Gains (losses) on derivative and hedging activities, net” in the consolidated statements of income.

⁽²⁾		Represents ineffectiveness related to cash flow hedges.

⁽³⁾		For fair value and cash flow hedges, recorded in interest expense. For trading derivatives, recorded in “Gains (losses) on derivative and hedging activities, net.”

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


4.	Derivative Financial Instruments (Continued)


	Six Months Ended June 30,
							Realized Gain						Unrealized
	Unrealized Gain						(Loss)						Gain
	(Loss) on						on						(Loss)						Total Gain
	Derivatives⁽¹⁾⁽²⁾						Derivatives⁽³⁾						on Hedged Item⁽¹⁾						(Loss)
(Dollars in millions)	2011			2010			2011			2010			2011			2010			2011			2010

Fair Value Hedges:
Interest rate swaps	$	5		$	492		$	249		$	249		$	(25	)	$	(538	)	$	229		$	203
Cross currency interest rate swaps		874			(3,081	)		159			182			(1,177	)		3,163			(144	)		264

Total fair value derivatives		879			(2,589	)		408			431			(1,202	)		2,625			85			467
Cash Flow Hedges:
Interest rate swaps		(2	)		—			(23	)		(30	)		—			—			(25	)		(30	)

Total cash flow derivatives		(2	)		—			(23	)		(30	)		—			—			(25	)		(30	)
Trading:
Interest rate swaps		32			400			57			—			—			—			89			400
Floor Income Contracts		(126	)		(23	)		(428	)		(433	)		—			—			(554	)		(456	)
Cross currency interest rate swaps		(1	)		26			4			3			—			—			3			29
Other		23			6			12			(2	)		—			—			35			4

Total trading derivatives		(72	)		409			(355	)		(432	)		—			—			(427	)		(23	)

Total		805			(2,180	)		30			(31	)		(1,202	)		2,625			(367	)		414
Less: realized gains recorded in interest expense		—			—			385			401			—			—			385			401

Gains (losses) on derivative and hedging activities, net	$	805		$	(2,180	)	$	(355	)	$	(432	)	$	(1,202	)	$	2,625		$	(752	)	$	13


⁽¹⁾		Recorded in “Gains (losses) on derivative and hedging activities, net” in the consolidated statements of income.

⁽²⁾		Represents ineffectiveness related to cash flow hedges.

⁽³⁾		For fair value and cash flow hedges, recorded in interest expense. For trading derivatives, recorded in “Gains (losses) on derivative and hedging activities, net.”

Impact of Derivatives on Consolidated Statements of Changes in Stockholders’ Equity (net of tax)


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
(Dollars in millions)	2011			2010			2011			2010

Total losses on cash flow hedges	$	(3	)	$	(11	)	$	(5	)	$	(26	)
Realized losses reclassified to interest expense^(1)(2)(3)		8			10			18			22
Hedge ineffectiveness reclassified to earnings⁽¹⁾⁽⁴⁾		—			(1	)		1			—

Total change in stockholders’ equity for unrealized gains (losses) on derivatives	$	5		$	(2	)	$	14		$	(4	)


⁽¹⁾	Amounts included in “Realized gains (losses) on derivatives” in the “Impact of Derivatives on Consolidated Statements of Income” table above.

⁽²⁾	Includes net settlement income/expense.

⁽³⁾	We expect to reclassify $7 million of after-tax net losses from accumulated other comprehensive income to earnings during the next 12 months related to amortization of cash flow hedges that were hedging debt instruments that are outstanding as of the reporting date.

⁽⁴⁾	Recorded in “Gains (losses) derivatives and hedging activities, net” in the consolidated statements of income.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


4.	Derivative Financial Instruments (Continued)

Collateral

Collateral held and pledged at June 30, 2011 and December 31, 2010 related to derivative exposures between us and our derivative counterparties are detailed in the following table:


(Dollars in millions)	June 30, 2011		December 31, 2010

Collateral held:
Cash (obligation to return cash collateral is recorded in short-term borrowings)⁽¹⁾	$	1,003	$	886
Securities at fair value (not recorded in financial statements)⁽²⁾		1,053		585

Total collateral held	$	2,056	$	1,471

Derivative asset at fair value including accrued interest	$	3,465	$	2,540

Collateral pledged to others:
Cash (right to receive return of cash collateral is recorded in investments)	$	993	$	809
Securities at fair value (recorded in restricted investments)⁽³⁾		13		36

Total collateral pledged	$	1,006	$	845

Derivative liability at fair value including accrued interest and premium receivable	$	933	$	747


⁽¹⁾		At June 30, 2011 and December 31, 2010, $136 million and $108 million, respectively, were held in restricted cash accounts.

⁽²⁾		We do not have the ability to sell or re-pledge these securities. As such, the securities are not recorded in the financial statements.

⁽³⁾		Counterparty has the right to sell or re-pledge securities.

Our corporate derivatives contain credit contingent features. At our current unsecured credit rating, we have fully collateralized our corporate derivative liability position (including accrued interest and net of premiums receivable) of $864 million with our counterparties as of the collateral call date. Further downgrades would not result in any additional collateral requirements, except to increase the frequency of collateral calls. Two counterparties have the right to terminate the contracts with further downgrades. We currently have a liability position with these derivative counterparties (including accrued interest and net of premiums receivable) of $215 million and have posted $239 million of collateral to these counterparties. If the credit contingent feature was triggered for these two counterparties and the counterparties exercised their right to terminate, we would not be required to deliver additional assets to settle the contracts. Trust related derivatives do not contain credit contingent features related to our or the trusts’ credit ratings.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


5.	Other Assets

The following table provides detail on our other assets at June 30, 2011 and December 31, 2010.


	June 30, 2011					December 31, 2010
	Ending		% of			Ending		% of
(Dollars in millions)	Balance		Balance			Balance		Balance

Derivatives at fair value	$	3,143		31	%	$	2,437		27	%
Accrued interest receivable		2,835		28			2,927		33
Income tax asset, net current and deferred		1,511		15			1,283		14
Accounts receivable — general		1,371		14			730		8
Benefit and insurance-related investments		464		5			462		5
Other loans, net		232		2			271		3
Fixed assets, net		225		2			291		4
Purchased paper-related receivables		68		1			96		1
Other		281		2			473		5

Total	$	10,130		100	%	$	8,970		100	%

The “Derivatives at fair value” line in the above table represents the fair value of our derivatives in a net asset position by counterparty, exclusive of accrued interest and collateral. At June 30, 2011 and December 31, 2010, these balances included $3.6 billion and $2.7 billion, respectively, of cross-currency interest rate swaps and interest rate swaps designated as fair value hedges that were offset by an increase in interest-bearing liabilities related to the hedged debt. As of June 30, 2011 and December 31, 2010, the cumulative mark-to-market adjustment to the hedged debt was $(3.9) billion and $(2.7) billion, respectively.


6.	Stockholders’ Equity and Stock-Based Compensation

The following table summarizes our common share repurchases and issuances for the three and six months ended June 30, 2011 and 2010.


					Six Months
	Three Months Ended				Ended
	June 30,				June 30,
(Dollars and shares in millions, except per share data)	2011		2010		2011		2010

Common shares repurchased:
Open market		9.6		—		9.6		—
Benefit plans⁽¹⁾		.9		.2		2.6		.6

Total shares repurchased		10.5		.2		12.2		.6

Average purchase price per share	$	16.28	$	17.72	$	16.18	$	14.51

Common shares issued		1.1		.2		3.4		1.4

Authority remaining at end of period for repurchases⁽²⁾	$	144.1		38.8	$	144.1		38.8


⁽¹⁾	Includes shares withheld from stock option exercises and vesting of restricted stock for employees’ tax withholding obligations and shares tendered by employees to satisfy option exercise costs.

⁽²⁾	In April 2011 we authorized the repurchase of up to $300 million of outstanding common stock in open market transactions, and terminated the previous stock repurchase program which had authorized the repurchase of up to 342.5 million shares.

The closing price of our common stock on the New York Stock Exchange on June 30, 2011 was $16.81.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


6.	Stockholders’ Equity and Stock-Based Compensation (Continued)

In March 2011, we retired all 70 million shares of common stock held in treasury. This retirement decreased the balance in treasury stock by $1.9 billion, with corresponding decreases of $14 million in common stock and $1.9 billion in additional paid-in capital. There was no impact to total equity from this transaction.

In the first quarter, we changed our stock-based compensation plans so that retirement eligible employees would not forfeit unvested stock-based compensation upon their retirement. This change had the effect of accelerating $11 million of future stock-based compensation expenses associated with these unvested stock grants into the current period for those employees who are retirement eligible or who will become retirement eligible prior to the vesting date.

Dividend and Share Repurchase Program

On April 20, 2011, we declared a quarterly dividend of $.10 per share on our common stock, the first since early 2007. The dividend was paid on June 17, 2011, to shareholders of record at the close of business on June 3, 2011. In July 2011, we declared a $.10 per common share dividend to be paid on September 16, 2011. In April 2011, we also authorized the repurchase of up to $300 million of outstanding common stock in open market transactions and terminated all previous authorizations. During the second quarter 2011, we repurchased 9.6 million shares for an aggregate purchase price of $156 million.

SLM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Information at June 30, 2011 and for the three and six months ended

June 30, 2011 and 2010 is unaudited)

(Dollars in thousands, except per share amounts, unless otherwise noted)


7.	Earnings (Loss) per Common Share

Basic earnings (loss) per common share (“EPS”) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations follows for the three and six months ended June 30, 2011 and 2010.

Three Months Ended

Six Months Ended

June 30,

2011

2010

2011

2010

Numerator:

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