WIXLIB

LETTER FROM THE CEO & PRESIDENTAlbert L. LordThomas J. FitzpatrickVICE CHAIRMAN ANDCHIEF EXECUTIVE OFFICERPRESIDENT ANDCHIEF OPERATING OFFICERTo our Shareholders:On behalf of our 10,000 employees, thank you for your continued confidence in Sallie Mae. Whether youhave been with us from our earlier chapters or more recently learned the Sallie Mae story, you own acompany that has had great success in recent years and is poised for an even brighter future.At the end of 2004, we passed a critical milestone: complet-income from sources beyond the guaranteed student loaning privatization and dissolving our government-sponsoredprogram. This diversification includes income on our pri-subsidiary, the original Sallie Mae. We accomplished thisvate education loans, which now represent 11 percent oftask four years ahead of schedule, thanks to the impressiveour total managed loan portfolio. Like credit-based educa-efforts of our corporate finance and legal teams who puttion lending, our new fee-based businesses also carrytogether more than 100 billion of financing transactions inhealthy margins and growth rates, and fit into our overallthe past few years, managed uncharted regulatory watersbusiness model by adding value to multiple sets of cus-and avoided any fallout on the business activities of thetomer relationships.company. Among the longer-term benefits of our intensiveOn the fee-based business front, we grew earningsand worldwide financing activity is the development of amodestly during an unusually challenging year in guarantorknowledgeable and loyal investor base. These investors’servicing. At the same time, debt-management revenuescontinued demand for our fixed-income securities willincreased more than 30 percent through contingencyhelp contain our funding costs—as our issuance levelscollections for a combination of government, guaranteeare dramatically reduced with the elimination of GSEagency and commercial clients. In the fourth quarter, werefinancing activity.expanded our customer reach and complemented ourAlong the road to privatization, we expanded the Sallieproduct suite and management expertise with the acquisi-Mae franchise and diversified our business lines throughtion of Arrow Financial Services, which specializes in theacquisitions and internal development. In 2004, we continuedpurchase of distressed consumer receivables as well asto diversify our business, substantially increasing ourcontingency placements.2

LETTER FROM THE CEO & PRESIDENTIn our core student lending business, Sallie Mae preferredchannel loan originations exceeded the government’s directloan program originations for the first time in 2004, with 13.7billion in federally guaranteed loans issued, a 14 percentIn 2004, we continued to diversify our business,substantially increasing our income from sourcesbeyond the guaranteed student loan program.increase from 2003, representing a 26 percent market shareat the end of federal fiscal year 2004. Preferred channelloans are originated through Sallie Mae’s owned (32 percent)or affiliated (68 percent) brands, and provide the engine forthe company’s earnings growth and market leadership ineducation finance.Our total preferred channel loan originations includedof this decade. Our internal brands, including Sallie Maemore than 4 billion of private education loans, which repre-Education Trust, Nellie Mae, Student Loan Funding andsents a 32 percent increase over 2003. Clearly, the govern-Academic Management Services (AMS), grew three timesment loan programs are not meeting the needs of our higherfaster in 2004 than the combined JPMorgan Chase/Bank Oneeducation population. Sallie Mae has been able to offer thechannels. With the addition of two new brands in 2004—most attractive “companion” loans in the industry, as wellSouthwest Student Services and Student Loan Financeas stand-alone education loans for consumers who need,Association—strategic partnerships with other lenders suchor prefer, to bypass the government program.as AmSouth, and the largest sales force in the industry, weIn the process, we have moved ourselves closer to a retaillending model and have become less dependent on the twolarge bank affiliations that fueled our growth in the first halfSALLIE MAE 1997are ready for the challenges and opportunities ahead.Our sales efforts are supported by a winning formula forour school customers, students and shareholders alike.SALLIE MAE TODAY Government-sponsored enterprise Fully privatized Wholesale buyer of student loans Retail provider of education credit andrelated services Financed in U.S. agency bond market Financed in the private capital markets Preferred channel originations totaledapproximately 4.7 billion Managed student loans totaling 43.7 billion Preferred channel originationsapproach 18 billion Manages student loans totaling 107.4 billion3

LETTER FROM THE CEO & PRESIDENTIndustry-leading loan delivery technology, broad and flexibleIndeed, with demand for higher education growing,product choice, competitive pricing terms and quality life-of-we stand ready to serve the needs of all post-loan servicing position us well for future market share andearnings growth. Indeed, with demand for higher educationsecondary institutions, from two-year communitygrowing, we stand ready to serve the needs of all post-colleges, to “traditional” four-year schools, to thesecondary institutions, from two-year community colleges,growing for-profit sector.to “traditional” four-year schools, to the growing for-profitsector. This focus on serving customers helped us earnthe “exceptional servicer” designation from the U.S.Department of Education in October 2004, enhancingdefault coverage from 98 percent to 100 percent.Our challenge in the coming years is to complete ourthan 30,000 people attended some 150 free workshopsacross the United States as part of The Fund’s Paying fortransformation from a wholesale secondary market to aCollege tour. And we made a significant contribution to helpretail lender. This includes greater emphasis on our direct-expand charter schools in our nation’s capital.to-consumer channels aimed at parent borrowers looking toThe year 2005 already is proving to be a turning point formeet rapidly escalating tuition costs and college graduatesSallie Mae as a result of Board and management changes.seeking debt consolidation and other financial products.Ed Fox, who led the company from a GSE start-up to a highlyWhile creating a more standard consumer finance relation-regarded Fortune 500 institution, retired from the Board thisship with these customers, we will continue to coordinatemonth. Al is succeeding Ed as Chairman of the Board, andour efforts with the campus-based financial aid office toTim will become Vice Chairman and Chief Executive Officerensure a seamless process and consistent information flow.in June. This succession has been long-planned and reflectsOverall, the education finance industry is growing with avery positively on your Board’s corporate governancelarger number of new and established participants, espe-process. Along with our talented management team andcially on the front end of the business. Direct lendingemployees, we are delighted to lead Sallie Mae into theschools are converting to FFELP to take advantage of pri-next chapter of its history.vate-sector products and services. This year, we expectThank you.Congress to reauthorize the Higher Education Act andreform certain aspects of the program, including loan consolidation, floor income, guarantor collection incentives andinterest subsidies to tax-exempt issuers. We are optimisticALBERT L. LORDthat these changes will result in an even stronger partner-VICE CHAIRMAN ANDship between the government and the private sector andCHIEF EXECUTIVE OFFICERgreater value to American students and taxpayers.Sallie Mae also will continue its efforts to explore waysto close the education access gap faced by many youngTHOMAS J. FITZPATRICKAmericans. In 2004, The Sallie Mae Fund awarded morePRESIDENT ANDthan 2.3 million in scholarships to needy students. MoreCHIEF OPERATING OFFICER4

SALLIE MAE AT A GLANCESLM CORPORATION OFFICERS AND DIRECTORSSALLIE MAE PARTICIPATES IN EVERY STAGE OF THE STUDENT LOAN LIFE CYCLE, FROM ORIGINATION, TO DELIVERY OF FUNDS,TO SERVICING, TO DEBT MANAGEMENT AND BEYOND.STUDENT LOAN PRODUCTSSCHOOL & GUARANTOR SOLUTIONSCONSUMER SERVICESCORPORATE ENTITIESBack Row, Left to Right: Barry L. Williams, Ronald F. Hunt, A. Alexander Porter Jr., Edward A. Fox, Earl A. Goode, Wolfgang Schoellkopf, William M. Diefenderfer III.Front Row, Left to Right: Charles L. Daley, Benjamin J. Lambert III, Ann Torre Grant, Albert L. Lord, Thomas J. Fitzpatrick, Diane Suitt Gilleland, Steven L. Shapiro, Barry A. Munitz.SLM CORPORATIONBOARD OF DIRECTORSSALLIE MAEEXECUTIVE MANAGEMENTCORPORATEINFORMATIONEdward A. Fox*ChairmanAlbert L. Lord†Vice Chairman & CEOAlbert L. Lord†Vice Chairman & CEOThomas J. Fitzpatrick††President & COOSallie Mae Headquarters12061 Bluemont WayReston, VA 20190www.salliemae.comA. Alexander Porter Jr.Lead Independent DirectorC.E. AndrewsExecutive Vice President,Accounting & Risk ManagementCharles L. DaleyDirector, Executive Vice President & SecretaryTEB Associates, Inc.FEDERAL LOANSFINANCIAL AID OFFICE SOLUTIONSEDUCATIONLENDING BRANDSStafford LoansPLUS LoansConsolidation LoansLoan Origination SupportOnline Loan OriginationOnline School PortalOnline Award LettersFAO Support ServicesCollegeAnswer.comParentAnswer.comAcademic Management ServicesCorporation (AMS)Nellie Mae CorporationSallie Mae Education TrustSouthwest Student Services CorporationStudent Loan Finance AssociationStudent Loan Funding Resources, LLCPRIVATE LOANSSignature Student LoansMBA LOANSLAWLOANSMEDLOANSTuition Answer LoansCareer Training LoansK-12 Family Education LoansBUSINESS OFFICE SOLUTIONSTuition Payment PlansReceivables ManagementOutsourced Back Office SolutionsE-CommerceCAMPUS CONSULTING SERVICESNoel-LevitzGUARANTOR SERVICINGUSA Funds ServicesNELA Guarantee ServicesONLINE ACCOUNT MANAGEMENTLIFETIME SERVICESTrueCareers.comSUCCESS by Sallie MaeSallie Mae Home LoansCONSUMER FINANCEWilliam M. Diefenderfer IIIVice Chairman & Co-founderenumerate Solutions, Inc.Thomas J. Fitzpatrick††President & COOMarianne M. KelerExecutive Vice President,Corporate Strategy, Consumer Lendingand AdministrationDiane Suitt GillelandAssociate Professor in Higher EducationUniversity of Arkansas, Little RockJune M. McCormackExecutive Vice President,Servicing & Sales MarketingEarl A. GoodeCommissionerDepartment of AdministrationState of IndianaKevin F. MoehnExecutive Vice President,Sales & OriginationsAnn Torre GrantStrategic & Financial ConsultantSLM Financial CorporationRonald F. HuntAttorneyDEBT MANAGEMENTBenjamin J. Lambert IIISenatorCommonwealth of VirginiaStudent Assistance CorporationGeneral Revenue CorporationPioneer Credit Recovery, Inc.Arrow Financial ServicesRobert S. AutorExecutive Vice President &Chief Information OfficerBarry A. MunitzPresident & CEOThe J. Paul Getty TrustJohn F. RemondiExecutive Vice President,FinanceJohn F. Whorley Jr.Executive Vice President,Debt Management OperationsInvestor RelationsSteve McGarryManaging Director703-984-6746By facsimile: 703-984-5074Corporate SecretaryMary F. EureVice President703-984-6785By facsimile: 703-984-6006Stock Transfer AgentThe Bank of New YorkShareholder RelationsP.O. Box 11258Church Street StationNew York, NY 10286-1258800-524-4458www.stockbny.comIndependent Public AccountantsPricewaterhouse Coopers LLPMcLean, VA 22102-3811www.pwc.com* Retiring May 2005† Chairman, effective March 2005†† Vice Chairman & CEO, effective June 2005Wolfgang SchoellkopfManaging PartnerLykos Capital Management, LLCSteven L. ShapiroCertified Public Accountant &Personal Financial SpecialistAlloy, Silverstein, Shapiro, Adams, Mulford,Cicalese, Wilson & Co.Barry L. WilliamsPresidentWilliams Pacific Ventures, Inc.5

FINANCIAL HIGHLIGHTSOwned-Brand Originations( in millions)Private Loan Originations( in millions) 6,000 5,0005,000A C H I E V E M E N T 3000401Managed Student Loans( in millions)Fee Income( in millions) 120,000 00SLM Corporation20,00012061 Bluemont Way100Reston, Virginia 201900000www.salliemae.comCopyright 2005 SLM Corporation. All Rights Reserved. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.S L M C O R P O R AT I O N A N N U A L R E P O R T 2 0 0 4010203040001020304

STUDENT LOAN PRODUCTS SCHOOL & GUARANTOR SOLUTIONS FEDERAL LOANS Stafford Loans PLUS Loans Consolidation Loans PRIVATE LOANS Signature Student Loans MBA LOANS LAWLOANS MEDLOANS Tuition Answer Loans Career Training Loans K-12 Family Education Loans SLM CORPORATION OFFICERS AND DIRECTORS SLM CORPORATION BOARD OF DIRECTORS Edward A. Fox* Chairman .