Sallie Mae completes initial placement under U.S. Department of Education-sponsored conduit

RESTON, Va.–SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, announced today that it completed its initial placement under the U.S. Department of Education-sponsored conduit called Straight-A Funding, LLC (the “Conduit”). Sallie Mae’s $750 million portion of the initial funding will settle on May 19, 2009. The company expects the all-in-cost of this initial funding from the Conduit to be approximately 3-month LIBOR plus 5 basis points. The company expects to finance additional, eligible FFELP loans with the Conduit in the ordinary course of business.

The Conduit provides long-term financing for FFELP loans. Loans in the Conduit are financed with new issues of asset-backed commercial paper. Under the Conduit’s terms, as previously-issued commercial paper matures, proceeds from newly-issued commercial paper will be used to pay investors holding the earlier maturities. If necessary, the Federal Financing Bank will provide a short-term liquidity backstop to re-finance maturing commercial paper. The Department of Education will purchase loans from the Conduit in order to allow the Conduit to repay such short-term liquidity loans to the extent required.