February 27, 2009

Dear Valued Customer:

President Obama's budget proposal released yesterday has already been successful in initiating a healthy dialogue on how to best make college more affordable. It has also sparked many questions about what will ultimately result from his proposals regarding a new construct for federal student loans.

The President's budget proposals represent a welcome opportunity to put the unproductive battle between FFELP and Direct Loans behind us and move to a system that builds on the best features of both programs. As you know, Sallie Mae has consistently applauded the Ensuring Continued Access to Student Loans Act, which was championed by Sen. Edward Kennedy and Rep. George Miller. Congress produced a bipartisan solution that achieves substantial taxpayer savings and ensures uninterrupted access to federal student loans. The President's budget proposals are, in fact, not dissimilar from today's reality, as FFELP loans are currently funded directly by the U.S. Treasury.

The President's budget outline specifically highlights the need for a continued public-private partnership in serving the needs of students: "The Administration's goal is to continue to tap low-cost, stable sources of capital so students are ensured access to loans, while providing high-quality services for students by using private sector companies to originate and service loans."

As Congress debates the President's proposals over the coming months, Sallie Mae and other FFELP lenders will remain squarely focused on the immediate needs of millions of current students and families who rely on federal loans to achieve their dreams of a higher education. Absolutely no changes will take place to impact the processing of loans this year. We remain focused on ensuring continued uninterrupted access to loans. Again, the President's budget overview states: "FFEL processors would continue to receive federal subsidies for new loans originated in the 2009-2010 academic year and prior academic years under the regular FFEL program and the emergency programs established by the Ensuring Continued Access to Student Loans Act of 2008."

This is also an opportunity for the school community to help shape a final legislative solution that prioritizes the needs of students, parents, taxpayers and schools. It is critical that your voice is heard as the budget process begins. The President will deliver to Congress a more detailed proposal in April, when legislators will consider it as part of the budget process. While we all work together to shape the new loan construct, your institution and your students will be best served by prudently waiting until the legislative process is complete before making unnecessary and potentially disruptive loan processing changes.

As more details emerge in the weeks and months ahead, Sallie Mae pledges to continue working side-by-side with you to help the Administration and Congress implement the best solution for students, schools and taxpayers. We are committed to leveraging all of our experience and operational capacity to help the Administration and Congress achieve their objectives of making college more accessible and affordable.

Thank you for your dedication to students and their families. Sallie Mae appreciates the opportunity to serve you and your students now and in the future.

Sincerely,


Barry Feierstein
Executive Vice President
Sallie Mae, Inc.