The following information should be read in connection with SLM Corporation's
Annual Report on Form 10-K for the year ended December 31, 2020 (filed with the
Securities and Exchange Commission (the "SEC") on February 25, 2021) (the "2020
Form 10-K"), and subsequent reports filed with the SEC. Definitions for
capitalized terms used in this report not defined herein can be found in the
2020 Form 10-K.

References in this Form 10-Q to "we," "us," "our," "Sallie Mae," "SLM," and the
"Company" refer to SLM Corporation and its subsidiaries, except as otherwise
indicated or unless the context otherwise requires.

This report contains "forward-looking" statements and information based on
management's current expectations as of the date of this report. Statements that
are not historical facts, including statements about our beliefs, opinions, or
expectations and statements that assume or are dependent upon future events, are
forward-looking statements. This includes, but is not limited to: statements
regarding future developments surrounding COVID-19 or any other pandemic,
including, without limitation, statements regarding the potential impact of
COVID-19 or any other pandemic on the Company's business, results of operations,
financial condition, and/or cash flows; our expectation and ability to pay a
quarterly cash dividend on our common stock in the future, subject to the
determination by our Board of Directors, and based on an evaluation of our
earnings, financial condition and requirements, business conditions, capital
allocation determinations, and other factors, risks, and uncertainties; the
Company's 2021 guidance; the Company's three-year horizon outlook; the Company's
expectation and ability to execute loan sales and share repurchases; the
Company's projections regarding originations, net charge-offs, non-interest
expenses, earnings, balance sheet position, and other metrics; any estimates
related to accounting standard changes; and any estimates related to the impact
of credit administration practices changes, including the results of simulations
or other behavioral observations. Forward-looking statements are subject to
risks, uncertainties, assumptions, and other factors that may cause actual
results to be materially different from those reflected in such forward-looking
statements. These factors include, among others, the risks and uncertainties set
forth in Item 1A. "Risk Factors" and elsewhere in our 2020 Form 10-K and
subsequent filings with the SEC; the societal, business, and
legislative/regulatory impact of pandemics and other public heath crises;
increases in financing costs; limits on liquidity; increases in costs associated
with compliance with laws and regulations; failure to comply with consumer
protection, banking, and other laws; changes in accounting standards and the
impact of related changes in significant accounting estimates, including any
regarding the measurement of our allowance for credit losses and the related
provision expense; any adverse outcomes in any significant litigation to which
we are a party; credit risk associated with our exposure to third-parties,
including counterparties to our derivative transactions; and changes in the
terms of education loans and the educational credit marketplace (including
changes resulting from new laws and the implementation of existing laws). We
could also be affected by, among other things: changes in our funding costs and
availability; reductions to our credit ratings; cybersecurity incidents,
cyberattacks, and other failures or breaches of our operating systems or
infrastructure, including those of third-party vendors; damage to our
reputation; risks associated with restructuring initiatives, including failures
to successfully implement cost-cutting programs and the adverse effects of such
initiatives on our business; changes in the demand for educational financing or
in financing preferences of lenders, educational institutions, students, and
their families; changes in law and regulations with respect to the student
lending business and financial institutions generally; changes in banking rules
and regulations, including increased capital requirements; increased competition
from banks and other consumer lenders; the creditworthiness of our customers;
changes in the general interest rate environment, including the rate
relationships among relevant money-market instruments and those of our earning
assets versus our funding arrangements; rates of prepayment on the loans that we
own; changes in general economic conditions and our ability to successfully
effectuate any acquisitions; and other strategic initiatives. The preparation of
our consolidated financial statements also requires us to make certain estimates
and assumptions, including estimates and assumptions about future events. These
estimates or assumptions may prove to be incorrect. All forward-looking
statements contained in this quarterly report on Form 10-Q are qualified by
these cautionary statements and are made only as of the date of this report. We
do not undertake any obligation to update or revise these forward-looking
statements to conform such statements to actual results or changes in our

We report financial results on a GAAP basis and also provide certain non-GAAP
core earnings performance measures. The difference between our "Core Earnings"
and GAAP results for the periods presented were the unrealized, mark-to-fair
value gains/losses on derivative contracts (excluding current period accruals on
the derivative instruments), net of tax. These are recognized in GAAP, but not
in "Core Earnings" results. We provide "Core Earnings" measures because this is
one of several measures management uses when making management decisions
regarding our performance and the allocation of corporate resources. Our "Core
Earnings" are not defined terms within GAAP and may not be comparable to
similarly titled measures reported by other companies. For additional
information, see "-Key Financial Measures" and "-'Core Earnings' " in this

Form 10-Q for the quarter ended September 30, 2021 for a further discussion and
a complete reconciliation between GAAP net income and "Core Earnings."
Through this discussion and analysis, we intend to provide the reader with some
narrative context for how our management views our consolidated financial
statements, additional context within which to assess our operating results, and
information on the quality and variability of our earnings, liquidity, and cash
Impact of COVID-19 on Sallie Mae
During the first quarter of 2020, the outbreak of coronavirus 2019 or COVID-19
("COVID-19") began to spread worldwide and has caused significant disruptions to
the U.S. and world economies. On March 11, 2020, the World Health Organization
declared the COVID-19 outbreak to be a pandemic. Beginning on March 15, 2020,
many businesses closed or reduced hours throughout the U.S. to combat the spread
of COVID-19. Throughout 2020, all 50 states reported cases of COVID-19 and each
implemented various containment efforts, including lockdowns on non-essential
businesses and work from home regimes. As a result of these measures, in early
2020 the unemployment rate increased dramatically. In response, we offered
disaster forbearance to those customers who contacted us and were negatively
affected by COVID-19. The second half of 2020 saw improvements in economic and
consumer trends, but continued waves of new cases of COVID-19 created continued
uncertainty in the economic environment. However, at the end of the fourth
quarter of 2020 and into the first quarter of 2021, the rollout of new vaccines
and the ratification of two additional stimulus laws have resulted in lower
infection rates and significant improvement in the outlook of the economy. The
improved outlook in the economy has contributed to faster prepayment rates and
lower expected credit losses. We have continued to see improved trends in
unemployment rates in 2021 despite the increase in COVID-19 infections from the
Delta variant that occurred in the third quarter of 2021.
In the second quarter of 2021, we communicated our return to office plans to our
team members. Based on the national and local guidelines, we developed a
phased-in approach for returning to the office. Under this phased-in approach,
we opened our offices in early July 2021 for employees who wanted to voluntarily
come to the office. We had planned for a more substantial return to our campuses
in early October; however, with the increase in new cases due to the COVID-19
Delta variant, we postponed a more fulsome return to our offices until the first
quarter of 2022. The return to our offices will include enhanced safety
protocols and processes to provide the best working environment for our team
members and we will implement limited flexible work-from-home schedules for
For the start of the 2021-2022 academic year, the majority of colleges,
universities, and trade schools have returned to in-person classes while
offering full residential options. While these schools have moved away from an
emphasis on hybrid and online policies, some regional reports indicate an
increase in colleges maintaining online classes as a safety precaution, due to
the recent uptick in COVID-19 variant infections.
For some students, going back to school in the fall of 2020 was not an option
because of the pandemic or for other reasons. Therefore, some students took a
"gap year" before returning to school. In 2020, for those students that had
unexpectedly separated from school, we had provided an extension of time, until
the fall of 2021, to re-enroll before beginning their grace period that occurs
upon separation from school and prior to entering full principal and interest
repayment status. At December 31, 2020, $1.0 billion of Private Education Loans
had been granted this extended period of time. Beginning September 30, 2021, we
no longer granted this "gap year" extension.
For further discussion of the impact of the COVID-19 pandemic on the Company,
see Part II. Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Impact of COVID-19 on Sallie Mae" in the
2020 Form 10-K.
The COVID-19 crisis is unprecedented and has had a significant impact on the
economic environment globally and in the U.S. There is a significant amount of
uncertainty as to the length and breadth of the impact to the U.S. economy and,
consequently, on us. Economists expect the impact of COVID-19 on the U.S.
economy to continue to be significant well into 2021. See Part I, Item 1A. "Risk
Factors" in the 2020 Form 10-K for additional discussion regarding the risks
associated with COVID-19.


Financial information and selected ratios

                                                                Three Months Ended                          Nine Months Ended
                                                                   September 30,                               September 30,
(In thousands, except per share data and
percentages)                                                2021                  2020                  2021                  2020

Net income attributable to SLM Corporation
common stock                                           $     71,674         

$ 168,970 $ 850,689 $ 439,990
Diluted earnings per common share attributable to SLM Company

                                     $       0.24          $       0.45          $       2.59          $       1.13
Weighted average shares used to compute diluted
earnings per share                                          304,511               377,918               329,064               389,391
Return on assets(1)                                             1.0  %                2.2  %                3.8  %                1.9  %

Other Operating Statistics (Held for Investment)
Ending Private Education Loans, net                    $ 20,561,961         

$ 20,955,922 $ 20,561,961 $ 20,955,922
End of FFELP loans, net

                                     703,355               743,220               703,355               743,220
Ending total education loans, net                      $ 21,265,316         

$ 21,699,142 $ 21,265,316 $ 21,699,142

Ending Credit Cards, net                               $     16,211          $     10,629          $     16,211          $     10,629

Average education loans                                $ 21,658,098          $ 22,688,683          $ 21,584,629          $ 23,105,216
Average Personal Loans                                 $          -          $    527,204          $          -          $    778,153
Average Credit Cards                                   $     14,894        

$ 11,086 $ 12,821 $ 8,588
__________ (1) We calculate and present our return on assets as the ratio (a) of the numerator of GAAP net income (annualized) to (b) the denominator of average GAAP total assets.


The following discussion and analysis presents a review of our business and
operations as of and for the three and nine months ended September 30, 2021.
Key Financial Measures
Our operating results are primarily driven by net interest income from our
Private Education Loan portfolio, gains and losses on loan sales, provision
expense for credit losses, and operating expenses. The growth of our business
and the strength of our financial condition are primarily driven by our ability
to achieve our annual Private Education Loan origination goals while sustaining
credit quality and maintaining cost-efficient funding sources to support our
originations. A brief summary of our key financial measures (net interest
income; loan sales and secured financings; allowance for credit losses;
charge-offs and delinquencies; operating expenses; "Core Earnings;" Private
Education Loan originations; and funding sources) can be found in Part II,
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in our 2020 Form 10-K.
LIBOR Transition
On July 27, 2017, the United Kingdom's Financial Conduct Authority ("UKFCA"),
which regulates LIBOR, publicly announced that it intends to stop persuading or
compelling banks on the London interbank market to submit LIBOR rates after
2021. On March 5, 2021, ICE Benchmark Administration, as the administrator of
LIBOR, and the UKFCA, as regulator, announced LIBOR settings will no longer be
published for 1 week and 2 month USD LIBOR and all tenors for other currencies
after December 31, 2021, and for the remaining USD settings after June 30, 2023.
The UKFCA does not expect that any

LIBOR settings will become unrepresentative before those dates. U.S. banking and
other global financial services regulators have directed regulated institutions
to cease entering into new LIBOR-based contracts as soon as practicable and in
any event by the end of 2021.
In 2020, we launched a formal cross-functional replacement project with the goal
of ensuring a smooth transition to a replacement index with minimal negative
impact on our customers, investors, and the Company's business, financial
condition, and results of operations.
The project team monitors developments, assesses impacts, proposes plans and,
with the approval of an executive committee, implements changes. The Chief
Financial Officer and/or project team reports status regularly to our Board of
Directors. In 2020, we began issuing certain deposits based on SOFR. In the
second quarter of 2021, we began to issue variable-rate Private Education Loans
that use SOFR as a reference rate. We plan to significantly reduce the number of
contracts that reference LIBOR, either through modification or replacement, by
June 2023.
See Part I, Item 1A. "Risk Factors" in the 2020 Form 10-K for additional
discussion regarding the risks associated with the transition from LIBOR.
Strategic Imperatives
To further focus and align our business and increase shareholder value, we
continue to advance our strategic imperatives. Our focus remains on maximizing
the profitability and growth of our core private student loan business, while
harnessing and optimizing the power of our brand and attractive client base. In
addition, we continue to better inform the external narrative about student
lending and Sallie Mae's role in helping students and families responsibly plan
and pay for college. We maintain a rigorous and predictable capital allocation
and return program to create shareholder value while also driving a mission-led
culture that continues to make Sallie Mae a great place to work.
A full description of these imperatives can be found in Part II, Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our 2020 Form 10-K.
During the first nine months of 2021, we made the following progress on the
above corporate strategic imperatives.
New Servicing Call Center Platform and Rebranded Online Resource Tools
In late March 2021, we migrated our servicing call center to a new integrated
platform that will further our goal to deliver exceptional customer experiences.
This new platform will also allow us to streamline our processes and provide
efficiencies, thereby creating more customer-centric capabilities for our team
members. We also relaunched our online resource to provide a centralized and
simplified site that provides information on tools and resources for school
counselors as they assist students and families plan and pay for college. We are
also creating a suite of confidence inspiring tools and resources as well as
new, innovative partnerships that will provide significant value to our
Introduced new website
We launched to help educate and inform policymakers,
influencers, media, and others about who Sallie Mae is today and illustrate the
important role we continue to play in helping students and families plan and pay
for college. In addition to providing key statistics and information about the
success of our customers, and the important role of private student lenders, the
site also highlights the various tools and resources we provide families to make
an informed decision about higher education. It also features content on the
higher education landscape and our work in helping students complete their
2021 Loan Sales and 2021-A and 2021-C Transactions
During the first nine months of 2021, we sold $3.19 billion of our Private
Education Loans, including $2.99 billion in principal and $195 million in
capitalized interest, to an unaffiliated third party. The transaction qualified
for sale treatment and removed the balance of the loans from our balance sheet
on the respective settlement dates. We remained the servicer of these loans
pursuant to applicable servicing agreements executed in connection with the
sales. These sales resulted in our recognizing a gain of $403 million during the
first nine months of 2021. For additional information regarding these
transactions, see Notes to Consolidated Financial Statements, Note 4, "Loans
Held for Sale" and Note 8, "Borrowings - Unconsolidated VIEs."

2021-B Securitization
On May 19, 2021, we executed our $531 million SMB Private Education Loan Trust
2021-B term ABS transaction, which was accounted for as a secured financing. We
sold $531 million of notes to third parties and retained a 100 percent interest
in the residual certificates issued in the securitization, raising approximately
$529 million of gross proceeds. The Class A and Class B notes had a weighted
average life of 4.26 years and priced at a weighted average LIBOR equivalent
cost of 1-month LIBOR plus 0.77 percent.
2021-D Securitization
On August 18, 2021, we executed our $527 million SMB Private Education Loan
Trust 2021-D term ABS transaction, which was accounted for as a secured
financing. We sold $527 million of notes to third parties and retained a 100
percent interest in the residual certificates issued in the securitization,
raising approximately $525 million of gross proceeds. The Class A and Class B
notes had a weighted average life of 4.22 years and priced at a weighted average
LIBOR equivalent cost of 1-month LIBOR plus 0.69 percent.
Final Settlement of ASR
On January 26, 2021, we completed our ASR with a third-party financial
institution and we received an additional 13 million shares. In total, we
repurchased 58 million shares under the ASR at an average price per share of
$9.01. For additional information regarding this ASR, see Notes to Consolidated
Financial Statements, Note 10, "Stockholders' Equity."
Common Stock Tender Offer
On February 2, 2021, we announced the commencement of a "modified Dutch Auction"
tender offer to purchase up to $1 billion in aggregate purchase price of our
outstanding shares of common stock, par value $0.20 per share. Pursuant to the
Tender Offer, we repurchased 28.5 million shares at a price of $16.50 per share.
The purchase of shares settled on March 16, 2021, for an aggregate cost of
approximately $472 million, including fees and expenses related to the Tender
Offer. We cancelled the 28.5 million shares purchased in connection with the
Tender Offer.
Share Repurchases under our Rule 10b5-1 trading plan
During the nine months ended September 30, 2021, we repurchased 42.6 million
shares of our common stock at a total cost of $804 million under a Rule 10b5-1
trading plan authorized under our share repurchase programs.
In October 2021, our Board of Directors approved a $250 million increase in the
amount of common stock that may be repurchased under our 2021 Share Repurchase
Program, which expires on January 26, 2023. This is in addition to the
$51 million of capacity remaining under the 2021 Share Repurchase Program at
September 30, 2021.
Common Stock Dividend
A 2021 fourth-quarter dividend of $0.11 per share on our common stock has been
declared and will be paid on December 15, 2021 to shareholders of record at the
close of business on December 3, 2021.
Secured Borrowing Facility
On July 30, 2021, we amended and extended the maturity of the Secured Borrowing
Facility, discussed in Notes to Consolidated Financial Statements, Note 8,
"Borrowings."  The Secured Borrowing Facility is a $2 billion secured borrowing
facility, under which the full $2 billion is available for us to draw. Under the
amended Secured Borrowing Facility, we incur financing costs on unused borrowing
capacity and on outstanding advances. The amended Secured Borrowing Facility
extended the revolving period, during which we may borrow, repay and reborrow
funds, until May 17, 2022. The scheduled amortization period, during which
amounts outstanding under the Secured Borrowing Facility must be repaid, ends on
May 17, 2023 (or earlier, if certain material adverse events occur).


————————————————– ——————————

© Edgar online, source Previews