NYSE Profile of the
SLM Corporattion
SLM Corporation, also known as Sallie Mae, is engaged in education
finance. SLM Corporation is a holding company that operates through a
number of subsidiaries. The Company's primary business is to originate
and hold student loans. The Company provides funding, delivery and
servicing support for education loans in the United States through its
participation in the Federal Family Education Loan Program (FFELP) and
through offering non-federally guaranteed Private Education Loans. Sallie
Mae primarily markets its FFELP Stafford and Private Education Loans
through on-campus financial aid offices. The Company provides an array
of credit products and related services to the higher education and
consumer credit communities and others through two primary business
segments: Lending business segment and Asset Performance Group
Business Segment (APG) business segment.
The Market Impact on Sallie Mae from Siblings' Issues
July 13, 2008
Overview of Sallie Mae
The Student Loan Marketing Association (also known as Sallie
Mae) was originally created in 1972 as a government-sponsored
enterprise (GSE) like Fannie Mae and Freddie Mac.  And just like
Fannie Mae and Freddie Mac, Sallie Mae began privatizing its
operations in 1997 with an initial public offering, a process it
completed at the end of 2004 when Congress terminated its
federal charter, ending its ties to the US federal government.  The
company remains the country's largest originator of federally
insured student loans.  Through its specialized subsidiaries and
divisions, Sallie Mae also provides debt management services as
well as business and technical products to a range of business
clients, including colleges, universities and loan guarantors.
The Market Impact on Sallie Mae from Siblings' Issues
You can say that Sallie Mae is related to Fannie Mae and Freddie Mac in name only.  Yes, they are both from the GSE family, but they are
very different types of businesses.  When these three companies became public, they shed their ties with the US federal government.  
They no longer have the federal guarantee of bankruptcy protection, hence, they are publicly traded corporations.  But it is important to
understand the debt instruments that Sallie Mae offer.  The student loan can not be defaulted on like the mortgage.  So Fannie Mae and
Freddie Mac are having troubles in today's market because of the credit crisis caused by the subprime mortgage meltdown.  Mortgages
can be defaulted on, which impact the amount of capital that Fannie Mae and Freddie Mac have to purchase new mortgages from banks.  

This raises the question of why is Sallie Mae getting hammered if their debt instruments will be repaid.  The answer is that Fannie Mae
and Freddie Mac will take some of Sallie Mae's capital budget because they need to be bailed-out.  When Sallie Mae's budget is reduced,
they cannot repurchase as many loans, and their growth will slow.  Growth is what drives the stock price, and Sallie Mae has had to cut
future forecasts because of a lack of capital and reduced subsidies.  

Sallie Mae will not be able to grow at its previous strong pace, but remains a solid company.  How long it takes Sallie Mae to recover
depends on what happens with its siblings.  If they are bailed out by the American taxpayers, Sallie Mae will rally because they will not
have their budget cut as large as currently forecasted.  But if there is no bailout, Sallie Mae will hurt for years.  
Links to Related Content
Analysis of Fannie Mae & Freddie Mac's Impact on the Credit Crisis