Updated Policy to Enhance our Support of Students in Need - 2/3/12

Sallie Mae remains mindful of the challenges facing new graduates and loan customers who are struggling to secure meaningful employment in a difficult job market. The purpose of this letter is to share with you information about Sallie Mae loan repayment options and assistance offered to help our private education loan customers avoid delinquency and default and to highlight an update to our forbearance policy.

The reality is that most education loan customers successfully manage their payments particularly since those with college degrees continue to earn more and have higher employment rates than those without, especially in this economy. Still, we recognize that a job search in today's market may take longer than it used to, and we are committed to working with customers to help them navigate difficult financial circumstances and preserve their good credit standing.

Our efforts begin with a concentrated outreach program designed to engage private education loan customers with past due loans and gain an understanding of the individual circumstances they face. Our representatives are equipped with a variety of alternative repayment options - such as reduced monthly payments, interest-only payments, extended repayment schedules, and temporary interest rate reductions - that are scaled to the customer's ability to make more manageable loan payments during periods of demonstrated financial hardship. These programs are highly effective at keeping customers current on their loans, and out of delinquency and default.

We also offer forbearance options that allow customers to temporarily postpone making payments, giving them more time to resolve temporary financial issues. We strongly believe forbearance should only be used as a last resort after careful consideration. For long-term financial issues, we recommend customers take advantage of one of the alternative payment programs described above.

Historically, we have asked customers requesting forbearance on their private education loans to pay a $50 fee per loan (up to a maximum of $150). Our experience has shown requesting this payment combined with educating customers about interest continuing to accrue during the forbearance period reinforces their commitment to forbearance over other repayment options. Simply put, the fee discourages customers from using forbearance when in fact another option could be in their best interest by costing them less in the long run.

Still, we are mindful of recent questions about our private education loan forbearance policy, and we are responding. We are changing, retroactively to Jan. 1, 2012, how we apply the $50-per-loan forbearance fee. Customers will still be asked to make a good-faith payment of $50 per loan (up to a maximum of $150) for forbearance; however, these payments will be applied to the customer's loan(s) after he or she subsequently makes six regularly scheduled payments.

We only succeed when our customers succeed, and our thoughtful approach to servicing education loans has helped more customers avoid default and preserve their good credit. Our default prevention work consistently earns top scores from the U.S. Department of Education, and our private loan default rate has improved six quarters in a row to 3.5%, the lowest since the credit crisis. We believe that thoughtful use of our forbearance policies demonstrates our ongoing investment in our customers' future.

Customers who need assistance can log into their account on SallieMae.com or call customer service at 1-888-2SALLIE. If you have additional questions about our repayment options or policies, you are welcome to contact your Sallie Mae representative.

Thank you for the important work that you do to help increase access to education. We are pleased to serve you.

Sincerely,

Charles P. Rocha
Senior Vice President