SLM Corporation Year-to-Date Loan Originations Climb 19 Percent, Exceed $14 Billion

RESTON, VA – SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported third-quarter 2004 earnings and performance results that include more than $14 billion in preferred channel loan originations year-to-date, a 19-percent increase from the same period in 2003. In the third-quarter 2004, the company originated more than $5.9 billion through its preferred channel, a 17-percent increase from the year-ago quarter.

Preferred channel loan originations, which consist of loans created by the company’s owned or affiliated brands, measure the company’s market share success, indicate future loan acquisition volume, and drive the company’s earnings growth. At quarter’s end, the company’s total managed loan portfolio was $98.3 billion, a 15-percent increase from the same time last year.

“This has been an exciting quarter for Sallie Mae with three strategic business acquisitions — a student loan originator and secondary market, a guarantor servicer and a diversified collection company — that reinforce our core lending and fee income business lines,” said Albert L. Lord, vice chairman and chief executive officer. “We are also very pleased with the pace of our lending activity during this fall’s peak season.”

Sallie Mae reports financial results on a GAAP basis and also presents certain non-GAAP or “core cash” performance measures. The company’s equity investors, credit rating agencies and debt capital providers request these “core cash” measures to monitor the company’s business performance.

Sallie Mae reported third-quarter 2004 GAAP net income of $357 million, or $.80 per diluted share, compared to $480 million, or $1.04 per diluted share, in the year-ago period. GAAP net income for the first three quarters of 2004 totaled $1.3 billion.

“Core cash” net income for the third-quarter 2004 was $219 million, or $.49 per diluted share, down from $228 million, or $.49 per diluted share, in the year-ago period. The third-quarter 2004 results were affected by three, “one-time” items that result in a pre-tax, net charge of $68 million. This included a $103 million charge to repurchase debt held in the company’s government-sponsored enterprise (GSE) as the company nears completion of its privatization process. Also included were a $27 million impairment charge on the company’s portfolio of aircraft leases, and a $62 million reversal of the company’s risk-sharing reserve on federally guaranteed education loans as a result of receiving the Exceptional Performer designation from the U.S. Department of Education. Before these three items, third quarter 2004 “core cash” earnings totaled $.58 per diluted share.

“Core cash” net interest income was $465 million for the quarter and $1.3 billion for the first three quarters of 2004, up from $404 million and $1.2 billion for the same periods last year. “Core cash” other income, which consists primarily of fees earned from guarantor servicing and debt management, was $72 million for the 2004 third quarter, down from $168 million for the year-ago quarter, due mainly to the one-time charges totaling $130 million as described above.

“Core cash” operating expenses were $203 million in the third quarter 2004, up from $199 million in the prior quarter and from $177 million in the year-ago quarter. The rise was primarily due to volume growth and peak season processing.

A description of the “core cash” treatment and a full reconciliation to the GAAP income statement can be found at www.salliemae.com.

Total equity for the company at Sept. 30, 2004, was $2.9 billion, a 10- percent increase from a year ago.

The company will host its regular earnings conference call today at noon. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company’s performance. To participate in the call, individuals should dial (877) 356-5689 (USA and Canada) or (706) 679-0623 (International) starting at 11:45 a.m. EDT.

The conference call will be replayed continuously beginning Thursday, Oct. 21, at 2:30 p.m. EDT and concluding at 11:59 p.m. EDT on Friday, Oct. 29. To hear the replay, dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 9932362.

In addition, there will be a live audio Web cast of the conference call, which may be accessed at http://www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast.

SLM Corporation, commonly known as Sallie Mae, is the nation’s leading provider of education funding, managing more than $98 billion in student loans for more than 7 million borrowers. The company primarily provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP), and offers comprehensive information and resources to guide students, parents and guidance professionals through the financial aid process. Sallie Mae was established in 1973 as a government- sponsored enterprise (GSE) called the Student Loan Marketing Association, and began the privatization process in 1997. Since then, the parent company name has changed, most recently to SLM Corporation. Through its specialized subsidiaries and divisions, Sallie Mae also provides an array of consumer credit loans, including those for lifelong learning and K-12 education, and business and technical products and services for colleges and universities. More information is available at http://www.salliemae.com. SLM Corporation and its subsidiaries, other than the Student Loan Marketing Association, are not sponsored by or agencies of the United States.

Statements in this release referring to expectations as to future market share, the successful consummation of any business acquisitions and other future developments are forward-looking statements, which involve risks, uncertainties and other factors that may cause the actual results to differ materially from such forward-looking statements. Such factors 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, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, and changes in the general interest rate environment. For more information, see the company’s filings with the Securities and Exchange Commission.