RESTON, Va., Oct. 22, 2008—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported that, despite dislocation in the credit markets during the 2008 third quarter, its core student loan businesses were profitable, and its total managed student loan portfolio performed within expectations. The company’s managed student loan portfolio totaled $177.7 billion at Sept. 30, 2008, compared to $159.8 billion one year ago.

Private loan delinquencies increased during the quarter primarily as a result of seasonal factors and the continued weakening of the U.S. economy. To reflect a more conservative outlook over this year and next, Sallie Mae increased its provisions for loan losses.

For the 2008 third quarter, “core earnings” net income totaled $117 million, or $.19 diluted earnings per share. These results include the after-tax effects of restructuring-related expenses of $7 million ($.02 diluted loss per share), purchased-paper business losses of $147 million ($.31 diluted loss per share), and a reduction of premium expense on student loans as a result of prepayment assumption changes of $74 million ($.16 diluted earnings per share). For the 2007 third quarter, “core earnings” net income totaled $259 million, or $.59 diluted earnings per share.

Sallie Mae had a third-quarter 2008 GAAP net loss of $159 million, or $.40 diluted loss per share, compared to a GAAP net loss of $344 million, or $.85 diluted loss per share, in the 2007 third quarter. The third-quarter 2008 GAAP results include the net impact of a $201 million unrealized, mark-to-market, pre-tax loss on certain derivative contracts that are recognized in GAAP, but not in “core earnings,” results.

In addition to presenting certain “core earnings” performance measures, Sallie Mae reports financial results on a GAAP basis. The company's management, equity investors, credit rating agencies and debt capital providers use “core earnings” measures to monitor the company’s business performance. Both a description of the “core earnings” treatment and a full reconciliation to the GAAP income statement can be found here, click on the Third Quarter 2008 Supplemental Earnings Disclosure.

“In the midst of this extraordinary financial crisis, we helped 1.5 million students get the loans they needed to attend college this fall,” said Albert L. Lord, vice chairman and CEO. “Thanks to the actions earlier this year by Congress and the Administration, we have been able to meet our commitment to make federal loans available to every student at every school in the nation.”

The company received $3.6 billion in funding advances from the U.S. Department of Education during the third-quarter 2008 under its new program to provide liquidity for new federal student loans. Early in the quarter, the company completed $6.7 billion in federal student loan term, asset-backed securitization transactions. During the 2008 third quarter, Sallie Mae reduced the commitments under asset-backed commercial paper facilities to $28 billion from $34 billion. The company is confident in its ability to extend these facilities beyond their February 2009 maturity.

Student loans originated through Sallie Mae’s internal brands, the largest segment of total student loan originations, were $6.8 billion in the third-quarter 2008, up 17 percent from the year-ago quarter’s $5.8 billion. The volume of federal student loans originated by the company’s internal brands during the 2008 third quarter grew 51 percent from the year-ago period. Sallie Mae expects its internal lending brands to represent the overwhelming majority of total student loan originations in the future.

Total student loan originations were $7.7 billion in the 2008 third quarter, compared to $8.9 billion in the year-ago period. The decrease was driven by a shift from purchasing to servicing external lender partners’ loans and the effect of tightening private loan underwriting criteria.

The company’s Third Quarter 2008 Supplemental Earnings Disclosure is available on the company's Web site. Presentation slides used during the company's investor conference call may be accessed here no later than the starting time of the conference call.

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The company will host an earnings conference call tomorrow, Oct. 23 at 8 a.m. EDT. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company’s performance. Individuals interested in participating should call the following number tomorrow, Oct. 23 2008, starting at 7:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International) and use access code 66263819. The conference call will be replayed continuously beginning at 11 a.m. EDT on Thursday, Oct. 23, 2008, and concluding at midnight on Nov. 6, 2008. To access the replay, please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 66263819. In addition, there will be a live audio Web cast of the conference call, which may be accessed at www.salliemae.com. A replay will be available 30 to 45 minutes after the live broadcast.

This press release contains “forward-looking statements” based on management’s current expectations as of the date of this release. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, adverse results in legal disputes, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, limited liquidity, increased financing costs and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission, including the forward-looking statements contained in the company’s Supplemental Financial Information Third Quarter 2008. All information in this release is as of Oct. 22, 2008. The Company does not undertake any obligation to update or revise these forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.

For more information contact:
Tom Joyce (703) 984-5178 (media)
Martha Holler (703) 984-5178 (media)
Steve McGarry (703) 984-6746 (investor)
Joe Fisher (703) 984-5755 (investor)