PERSPECTIVES ON THE STUDENT LOAN MARKET

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1 PERSPECTIVES ON THE STUDENT LOAN MARKET Jack Remondi President & Chief Operating Officer June 13, 2011

2 #1 saving, planning & paying for college company Helped more than 32 million Americans make the dream of college a reality Largest administrator of 529 college savings plans Leading provider of tuition payment plans, private student loans Premier servicer and collector of all types of student loans Fully independent private sector company with scale and a broad franchise, traded on the NYSE 2

3 A BRIEF CORPORATE HISTORY 1965 Congress creates the Guaranteed Student Loan Program Congress establishes, as a GSE, the Student Loan Marketing Association or Sallie Mae 1996 Privatization of Sallie Mae approved by Congress 2004 GSE dissolved, Sallie Mae becomes a fully independent, private sector corporation 2008 Challenging economy; government support of student loan market, many lenders exit 2009 US Department of Education selects Sallie Mae to service federal loans 2010 FFELP eliminated in legislative reform July 2010 Market consolidation continues 3 1 Later renamed the Federal Family Education Loan Program (FFELP).

4 MISSION STATEMENT - THEN As we have for nearly 40 years, Sallie Mae makes investing in the college graduate its top priority. We help students and their families save, plan, and pay for college allowing them to responsibly achieve their dreams. 4

5 MISSION STATEMENT - NOW As we have for nearly 40 years, Sallie Mae makes investing in the college graduate its top priority. We help students and their families save, plan, and pay for college allowing them to responsibly achieve their dreams. 5

6 SALLIE MAE HELPS STUDENTS & FAMILIES SAVE, PLAN & PAY FOR COLLEGE 6

7 7 SAVING FOR COLLEGE

8 8 PLANNING FOR COLLEGE

9 9 PAYING FOR COLLEGE

10 TOTAL COST OF EDUCATION $410 Billion in Academic Year 2010/2011 Family Contributions $189 B Grants $109 B Private Loans $9 B Federal Loans $103 B 10 Grants include federal, state, institutional, private/employer, education tax benefits and work study Source: College Board, U.S. Department of Education & Company analysis

11 HOW AMERICA PAYS FOR COLLEGE 11 Source: 2010 Sallie Mae/Gallup, How America Pays for College, Survey of Parents and Undergraduate Students (18-24 years old)

12 PARENTS & STUDENTS STRONGLY AGREE ON VALUE OF COLLEGE 12 Source: 2010 Sallie Mae/Gallup, How America Pays for College, Survey of Parents and Undergraduate Students (18-24 years old)

13 RELATIONSHIP BETWEEN HIGHER EDUCATION, INCOME, UNEMPLOYMENT 13 Source: U.S. Census Bureau, Current Population Survey, 2010 Annual Social and Economic Supplement. Represents median earnings for a full time, year-round worker over age 25. Unemployment data as of Dec Represents unemployment for civilian noninstitutional population over age 25.

14 SALLIE MAE S APPROACH TO PAYING FOR COLLEGE 1 Use free money first 2 Explore federal student loans 3 Fill any gap with private student loans 14

15 PROMOTING RESPONSIBILITY & TRANSPARENCY Prevent overborrowing School certification Ability-to-pay assessment Offer no-fee loans & competitive interest rates Ensure no surprises Fixed margin Clear terms Time to shop around Ability to cancel Include consumer safeguards 15 Death and disability loan forgiveness Tuition insurance

16 SMART CHOICES COST LESS Sallie Mae Smart Option Student Loan Repayment options that reduce finance charges and promote faster repayment Interest Payments Save 50% in interest charges & pay off 8 years faster Fixed $25 Monthly Payment Save 30% in interest charges & pay off 5 years faster No Minimum Monthly Payment Required Save 17% in interest charges & pay off 3 years faster 16

17 17 DISCLOSURES EXCEED HEOA REQUIREMENTS

18 LEADING PRACTICES YIELD LEADING RESULTS Sallie Mae customers defaulted ~30% less than those in the Direct Loan program Sallie Mae-serviced loans default less than those of other Department of Education servicers Default prevention starts at loan origination Keeping contact with customers Counseling on repayment solutions 18

19 19 Questions?