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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 17, 2003

SLM CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation)		File No. 001-13251 (Commission File Number)		52-2013874 (IRS Employer Identification Number)
11600 Sallie Mae Drive, Reston, Virginia				20193
(Address of principal executive offices)				(zip code)

Registrant's telephone number, including area code: (703) 810-3000

Not Applicable
(Former name or former address, if changed since last report)

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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(a)

Financial Statements of Businesses Acquired:






Not applicable.



(b)

Pro Forma Financial Information:






Not applicable.



(c)

Exhibits:

99.1  Press Release dated July 17, 2003

99.2  Additional Information Available on the Registrant's Website

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Item 9. Regulation FD Disclosure

        The following information is furnished pursuant to Item 12, "Disclosure of Results of Operations and Financial Condition."

        On July 17, 2003, SLM Corporation issued a press release with respect to its earnings for the fiscal quarter ended June 30, 2003, which is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Additional information for the quarter, which is available on the Registrant's website at www.salliemae/investor/corpreports.html, is furnished as Exhibit 99.2.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		SLM CORPORATION
		By:	/s/  C.E. ANDREWS       Name: C.E. Andrews Title: Executive Vice President, Accounting and Risk Management

Dated: July 17, 2003

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SLM CORPORATION

Form 8-K

CURRENT REPORT

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press Release dated July 17, 2003
99.2		Additional Information Available on the Registrant's Website

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SIGNATURES
SLM CORPORATION Form 8-K CURRENT REPORT EXHIBIT INDEX

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Exhibit 99.1

		N E W S    R E L E A S E
FOR IMMEDIATE RELEASE		Media Contacts: Tom Joyce 703/810-5610 Stephanie Cassidy 703/810-6810		Investor Contacts: Jeff Heinz 703/810-7751 Nam Vu 703/810-7723

SLM CORPORATION LOAN ORIGINATIONS RISE 20 PERCENT,
DRIVING CONTINUED EARNINGS GROWTH

Company's Preferred Channel Loans Reach $6.8 billion;
Total Managed Portfolio Exceeds $83 Billion

RESTON, Va., July 17, 2003—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported second-quarter 2003 earnings and performance results that include a 20 percent increase in preferred channel loan originations from the same period one year ago. The company's preferred channel loan origination activity for the first half of 2003 grew to $6.8 billion, up from $5.6 billion for the first half of 2002.

        Preferred channel loan originations consist of loans created by the company's owned or affiliated brands. These loans are a key measure of Sallie Mae's market share success and, as an indicator of future loan acquisition volume, drive the company's earnings growth. The company's total managed loans portfolio grew 10 percent from second quarter of 2002, and now exceeds $83 billion.

        "We posted another solid quarter, with strong growth in our preferred channel originations," said Albert L. Lord, vice chairman and chief executive officer. "The demand for and value of higher education continues to surge. This, combined with Sallie Mae's service, products, technology and people gives me great confidence in our future."

        Sallie Mae reports financial results on a GAAP basis and also presents certain non-GAAP or "core cash" performance measures. The company's equity investors, credit rating agencies and debt capital providers request these "core cash" measures to monitor the company's business performance.

        Sallie Mae reported second-quarter 2003 GAAP net income of $373 million, or $.80 per diluted share, compared to $126 million, or $.26 per diluted share, in the year-ago period. GAAP net income for the first half of 2003 totaled $789 million compared to $548 million in 2002.

        "Core cash" net income for the quarter was $210 million, or $.44 per diluted share, up from $179 million or $.37 per diluted share in the year-ago quarter. "Core cash" net interest income was $393 million for the quarter, a 12-percent increase from the year-ago quarter's $350 million.

        "Core cash" other income, which consists primarily of fees earned from guarantor servicing and debt management, was $137 million for the 2003 second quarter, down from $147 million for the prior quarter and up from $124 million for the year-ago quarter. "Core cash" operating expenses were $183 million, up from $173 million in the prior quarter, and $162 million in the year-ago quarter, primarily due to acquisition costs and seasonal expenses related to preparing for third-quarter "peak" enrollment season.

        A description of the "core cash" treatment and a full reconciliation to the GAAP income statement can be found at www.salliemae.com.

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Sallie Mae        •        11600 Sallie Mae Drive        •        Reston, Va 20193        •        www.salliemae.com

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        Total equity for the company at June 30, 2003, was $2.4 billion, an increase of $441 million from a year ago. Tangible capital stood at 1.81 percent of managed assets, as compared to 1.56 percent as of June 30, 2002. In addition, the company continues to make progress toward the wind-down of its government-sponsored enterprise (GSE) subsidiary. As of June 30, 64 percent of managed student loans are funded through non-GSE sources, as compared with 58 percent in the prior quarter.

        In May, the company announced a three-for-one stock split in the form of a stock dividend of two additional shares for every one share already outstanding effective June 20, 2003 for shareholders of record on June 6, 2003.

        The company will host its regular earnings conference call today at noon. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company's performance. Individuals interested in participating should call the following number today, July 17, 2003, starting at 11:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International). The conference call will be replayed continuously beginning Thursday, July 17, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, July 24. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 1088640. In addition, there will be a live audio Web cast of the conference call, which may be accessed at www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast.

***

Statements in this release referring to expectations as to future market share, the successful consummation of any business acquisitions and other future developments are forward-looking statements, which involve risks, uncertainties and other factors that may cause the actual results to differ materially from such forward-looking statements. Such factors include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission.

***

SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the nation's leading provider of education funding, managing more than $83 billion in student loans for more than seven million borrowers. The company primarily provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP), and offers comprehensive information and resources to guide students, parents and guidance professionals through the financial aid process. Celebrating its 30th anniversary this year, the company opened its doors in May 1973 as a government-sponsored enterprise (GSE) called the Student Loan Marketing Association, and began the privatization process in 1997. Since then, Sallie Mae's parent company name has changed, most recently to SLM Corporation. Through its specialized subsidiaries and divisions, the company also provides an array of consumer credit loans, including those for lifelong learning and K-12 education, and business and technical outsourcing services for colleges and universities. More information is available at http://www.salliemae.com. SLM Corporation and its subsidiaries, other than the Student Loan Marketing Association, are not sponsored by or agencies of the United States.

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Sallie Mae        •        11600 Sallie Mae Drive        •        Reston, Va 20193        •        www.salliemae.com

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SLM CORPORATION
Supplemental Earnings Disclosure
June 30, 2003
(Dollars in millions, except earnings per share)

		Quarters ended									Six months ended June 30,
		June 30, 2003			March 31, 2003			June 30, 2002			2003			2002
Net income		$	373		$	417		$	126		$	789		$	548
"Core cash" net income			210			203			179			413			350
Diluted earnings per common share*		$	..80		$	..88		$	..26		$	1.68		$	1.14
"Core cash" diluted earnings per common share*			.44			.43			.37			.87			.72
Net interest margin			2.12	%		2.00	%		2.42	%		2.06	%		2.38	%
"Core cash" net interest margin			1.78			1.78			1.76			1.78			1.74
Return on assets			2.91	%		3.41	%		1.04	%		3.15	%		2.25	%
"Core cash" return on assets			.93			.97			.89			.95			.88
Student loan spread			2.41	%		2.26	%		2.58	%		2.33	%		2.58	%
"Core cash" student loan spread			1.93			1.93			1.87			1.93			1.87
Average on-balance sheet student loans		$	44,173		$	44,159		$	42,268		$	44,166		$	42,312
Average off-balance sheet student loans			37,811			35,228			32,250			36,527			31,326
Average managed student loans		$	81,984		$	79,387		$	74,518		$	80,693		$	73,638
Ending on-balance sheet student loans, net		$	42,993		$	43,281		$	43,357
Ending off-balance sheet student loans, net			40,121			37,438			32,200
Ending managed student loans, net		$	83,114		$	80,719		$	75,557
Ending managed FFELP student loans, net		$	76,093		$	74,221		$	70,507
Ending managed private credit student loans, net			7,021			6,498			5,050
Ending managed student loans, net		$	83,114		$	80,719		$	75,557

*

In May 2003, the Company announced a three-for-one stock split in the form of a stock dividend of an additional two shares for every one share already outstanding effective June 20, 2003 for shareholders of record on June 6, 2003. All share and per share amounts have been updated to reflect the payment of this dividend retroactively.

Sallie Mae reports "core cash" earnings, which the Company believes provides additional insights into its business. The differences between GAAP and "core cash" earnings calculations are explained below.

1)

Securitization: Under GAAP, certain securitization transactions are accounted for as sales of assets. "Core cash" earnings present all securitization transactions as long-term non-recourse financings. The upfront "gains" on sale from securitization as well as ongoing "servicing and securitization revenue" presented by GAAP are excluded from "core cash" earnings and replaced by the interest income and interest expense as they are earned or incurred on the securitized loans.

2)

Floor income: The Company earns floor income on its student loan portfolio in certain declining interest rate environments. The timing and amount (if any) of floor income are uncertain and in excess of expected spreads, and therefore the Company excludes such income from "core cash" earnings.

3)

SFAS No. 133: The Company employs certain hedging transactions to match the interest rate characteristics of its managed assets and liabilities. These hedging transactions (generally called

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derivatives) are financially prudent and create effective economic hedges, but not all qualify for "hedge treatment" under GAAP's SFAS No. 133 and therefore, the derivative side must be marked-to-market through earnings with no offsetting mark-to-market of the hedged item. "Core cash" earnings exclude the periodic unrealized gains and losses caused by the one-sided valuations, and recognize the economic effect of these hedges, which results in any cash paid or received being recognized ratably as an expense or revenue over the hedged item's life.

4)

Other items: "Core cash" earnings exclude the amortization of acquired intangibles, as well as gains and losses on certain sales of securities and derivative contracts.

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SLM CORPORATION
Consolidated Balance Sheets
(In thousands, except per share amounts)

		June 30, 2003			March 31, 2003			June 30, 2002
Assets
Federally insured student loans (net of allowance for losses of $60,291, $58,404 and $60,204, respectively)		$	38,680,567		$	38,340,112		$	38,307,135
Private credit student loans (net of allowance for losses of $160,350, $174,177 and $167,262, respectively)			4,312,886			4,941,225			5,050,199
Academic facilities financings and other loans			1,177,178			1,139,617			1,044,401
Cash and investments			7,190,775			4,839,651			5,051,552
Retained interest in securitized receivables			2,985,777			2,481,318			1,670,113
Goodwill and acquired intangible assets			583,676			579,365			579,596
Other assets			3,251,914			2,012,488			2,184,457
Total assets		$	58,182,773		$	54,333,776		$	53,887,453
Liabilities
Short-term borrowings		$	24,619,758		$	23,825,598		$	29,210,779
Long-term notes			28,049,326			25,240,729			20,400,855
Other liabilities			3,147,517			3,023,193			2,351,124
Total liabilities			55,816,601			52,089,520			51,962,758
Commitments and contingencies*
Stockholders' equity
Preferred stock, par value $.20 per share, 20,000 shares authorized: 3,300; 3,300; and 3,300 shares, respectively, issued at stated value of $50 per share			165,000			165,000			165,000
Common stock, par value $.20 per share, 1,125,000 shares authorized: 638,983; 630,283; and 616,546 shares, respectively, issued			127,797			126,057			123,309
Additional paid-in capital			1,359,082			1,232,473			892,106
Accumulated other comprehensive income, net of tax			689,220			596,693			505,635
Retained earnings			3,386,218			3,094,050			2,548,861
Stockholders' equity before treasury stock			5,727,317			5,214,273			4,234,911
Common stock held in treasury at cost: 188,491; 175,680; and 152,544 shares, respectively			3,361,145			2,970,017			2,310,216
Total stockholders' equity			2,366,172			2,244,256			1,924,695
Total liabilities and stockholders' equity		$	58,182,773		$	54,333,776		$	53,887,453

*

Commitments to purchase loans, lines of credit, letters of credit, and academic facilities financing letters of credit were $33.3 billion, $.4 billion, $2.1 billion, and $45.5 million, respectively, at June 30, 2003.

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SLM CORPORATION
Consolidated Statements of Income
(In thousands, except per share amounts)

			Quarters ended									Six months ended June 30,
			June 30, 2003			March 31, 2003			June 30, 2002			2003			2002
Interest income:
	Student loans		$	451,589		$	436,250		$	534,390		$	887,839		$	1,068,641
	Academic facilities financings and other loans			19,290			20,206			22,101			39,496			48,417
	Investments			42,034			28,261			42,465			70,295			79,875
Total interest income				512,913			484,717			598,956			997,630			1,196,933
Interest expense				246,727			244,089			311,030			490,816			627,630
Net interest income				266,186			240,628			287,926			506,814			569,303
Less: provision for losses				36,449			42,545			27,550			78,994			47,787
Net interest income after provision for losses				229,737			198,083			260,376			427,820			521,516
Other income:
	Gains on student loan securitizations			314,220			305,803			13,759			620,023			58,019
	Servicing and securitization revenue			137,057			137,479			180,057			274,536			374,739
	Losses on sales of securities, net			(26,660	)		(81,560	)		(36,501	)		(108,220	)		(125,608	)
	Derivative market value adjustment			(29,546	)		114,366			(176,954	)		84,820			111,397
	Guarantor servicing fees			32,810			40,992			36,320			73,802			66,826
	Debt management fees			52,684			58,813			41,509			111,497			89,375
	Other			53,575			48,630			45,031			102,205			88,645
Total other income				534,140			624,523			103,221			1,158,663			663,393
Operating expenses				189,867			179,365			167,942			369,232			334,743
Income before income taxes				574,010			643,241			195,655			1,217,251			850,166
Income taxes				201,316			226,692			69,654			428,008			301,821
Net income				372,694			416,549			126,001			789,243			548,345
Preferred stock dividends				2,875			2,875			2,875			5,750			5,750
Net income attributable to common stock			$	369,819		$	413,674		$	123,126		$	783,493		$	542,595
Basic earnings per common share			$	.82		$	.91		$	.27		$	1.72		$	1.17
Average common shares outstanding				452,174			456,581			462,907			454,365			464,886
Diluted earnings per common share			$	..80		$	..88		$	..26		$	1.68		$	1.14
Average common and common equivalent shares outstanding				465,132			469,696			475,846			467,402			477,439

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SLM CORPORATION
Pro-Forma "Core Cash"
Consolidated Statements of Income
(In thousands, except per share amounts)

			Quarters ended									Six months ended June 30,
			June 30, 2003			March 31, 2003			June 30, 2002			2003			2002
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest income:
	Managed student loans		$	754,300		$	742,343		$	818,575		$	1,496,643		$	1,623,624
	Academic facilities financings and other loans			19,290			20,206			22,101			39,496			48,417
	Investments			43,892			29,243			41,598			73,135			80,278
Total managed interest income				817,482			791,792			882,274			1,609,274			1,752,319
Managed interest expense				424,274			419,342			531,869			843,616			1,068,323
Net managed interest income				393,208			372,450			350,405			765,658			683,996
Less: provision for losses				29,150			31,606			35,184			60,756			62,033
Net managed interest income after provision for losses				364,058			340,844			315,221			704,902			621,963
Other income:
	Guarantor servicing fees			32,810			40,992			36,320			73,802			66,826
	Debt management fees			52,684			58,813			41,509			111,497			89,375
	Other			51,134			47,407			46,103			98,541			88,919
Total other income				136,628			147,212			123,932			283,840			245,120
Operating expenses				183,283			172,737			162,320			356,020			323,507
Income before income taxes				317,403			315,319			276,833			632,722			543,576
Income taxes				107,841			112,029			97,507			219,870			193,892
"Core cash" net income				209,562			203,290			179,326			412,852			349,684
Preferred stock dividends				2,875			2,875			2,875			5,750			5,750
"Core cash" net income attributable to common stock			$	206,687		$	200,415		$	176,451		$	407,102		$	343,934
"Core cash" basic earnings per common share			$	.46		$	.44		$	.38		$	.90		$	.74
Average common shares outstanding				452,174			456,581			462,907			454,365			464,886
"Core cash" diluted earnings per common share			$	.44		$	.43		$	.37		$	.87		$	.72
Average common and common equivalent shares outstanding				465,132			469,696			475,846			467,402			477,439

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SLM CORPORATION
Pro-Forma "Core Cash"
Reconciliation of GAAP Net Income to "Core Cash" Net Income
(In thousands)

			Quarters ended									Six months ended June 30,
			June 30, 2003			March 31, 2003			June 30, 2002			2003			2002
			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP net income			$	372,694		$	416,549		$	126,001		$	789,243		$	548,345
"Core cash" adjustments:
	Net interest income on securitized loans			195,991			167,065			220,572			363,056			428,708
	Floor income on managed loans			(103,128	)		(73,095	)		(190,745	)		(176,223	)		(372,851	)
	Provision for losses on securitized loans			7,299			10,939			(7,634	)		18,238			(14,246	)
	Gains on student loan securitizations			(314,220	)		(305,803	)		(13,759	)		(620,023	)		(58,019	)
	Servicing and securitization revenue			(137,057	)		(137,479	)		(180,057	)		(274,536	)		(374,739	)
	Losses on sales of securities, net			4,373			72,291			17,814			76,664			104,509
	Amortization of acquired intangibles			6,716			6,772			5,786			13,488			11,572
	Net impact of derivative accounting			84,090			(67,392	)		229,893			16,698			(29,595	)
	Other			(671	)		(1,220	)		(692	)		(1,891	)		(1,929	)
Total "core cash" adjustments				(256,607	)		(327,922	)		81,178			(584,529	)		(306,590	)
Net tax effect (A)				93,475			114,663			(27,853	)		208,138			107,929
"Core cash" net income			$	209,562		$	203,290		$	179,326		$	412,852		$	349,684

(A)

Such tax effect is based upon the Company's marginal tax rate for the respective period.

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SLM CORPORATION LOAN ORIGINATIONS RISE 20 PERCENT, DRIVING CONTINUED EARNINGS GROWTH
SLM CORPORATION Supplemental Earnings Disclosure June 30, 2003 (Dollars in millions, except earnings per share)
SLM CORPORATION Consolidated Balance Sheets (In thousands, except per share amounts)
SLM CORPORATION Consolidated Statements of Income (In thousands, except per share amounts)
SLM CORPORATION Pro-Forma "Core Cash" Consolidated Statements of Income (In thousands, except per share amounts)
SLM CORPORATION Pro-Forma "Core Cash" Reconciliation of GAAP Net Income to "Core Cash" Net Income (In thousands)

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SLM CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
SECOND QUARTER 2003
(Dollars in millions, except per share amounts)

        The following supplemental information should be read in connection with SLM Corporation's (the "Company") press release of second quarter 2003 earnings, dated July 17, 2003.

        Statements in this Supplemental Financial Information release, which refer to expectations as to future developments, are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks, uncertainties and other factors that may cause the actual results to differ materially from such forward-looking statements. Such factors include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations and from changes in such laws and regulations; changes in the demand for educational financing or in financing preferences of educational institutions, students and their families; and changes in the general interest rate environment. For more information, see our filings with the Securities and Exchange Commission ("SEC").

        Definitions for capitalized terms in this document can be found in the Company's 2002 Form 10-K filed with the SEC on March 27, 2003.

        In May 2003, the Company announced a three-for-one stock split in the form of a stock dividend of an additional two shares for every one share already outstanding effective June 20, 2003 for shareholders of record on June 6, 2003. All share and per share amounts, for all periods presented, reflect the payment of that dividend.

        Certain reclassifications have been made to the balances as of and for the quarter and six months ended June 30, 2002, to be consistent with classifications adopted for 2003.

SECOND QUARTER HIGHLIGHTS

        In addition to evaluating our financial information based on generally accepted accounting principles ("GAAP"), management, credit rating agencies, lenders and analysts also evaluate us on certain non-GAAP-based performance measures, which we refer to as "core cash" performance measures. Under these "core cash" performance measures, management analyzes the student loan portfolio on a Managed Basis and treats securitization transactions as financings versus sales. As such, the securitization gain on sale and subsequent servicing and securitization revenue are eliminated from income, and net interest income from securitized loans is recognized.

        When calculating these "core cash" performance measures we eliminate the benefit of Floor Income and use pre- Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," accounting for our derivative transactions, whereby we treat our derivatives as effective hedges and eliminate the derivative market value adjustment from our income statement. These "core cash" performance measures also eliminate the net benefit of Floor Income. We also exclude certain transactions that management does not consider part of our core business, such as gains or losses on certain sales of securities and derivative contracts, and the amortization of acquired intangible assets.

        A detailed presentation and discussion of "core cash" results of operations including a reconciliation of GAAP net income to "core cash" net income is included herein under "Core Cash" Results of Operations. The following key measurements are presented on a "core cash" basis for the

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quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002 except for GAAP diluted earnings per share.

		Quarters ended									Six months ended
		June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
GAAP diluted earnings per share		$	.80		$	.88		$	.26		$	1.68		$	1.14
"Core cash" diluted earnings per share		$	.44		$	.43		$	.37		$	.87		$	.72
Managed student loan spread			1.93	%		1.93	%		1.87	%		1.93	%		1.87	%
Managed net interest margin			1.78	%		1.78	%		1.76	%		1.78	%		1.74	%
"Core cash" fee and other income		$	137		$	147		$	124		$	284		$	245
"Core cash" operating expenses		$	183		$	173		$	162		$	356		$	323
Managed student loan acquisitions		$	4,807		$	5,348		$	4,462		$	10,155		$	8,981
Preferred Channel originations		$	1,899		$	4,922		$	1,583		$	6,821		$	5,613
Loans securitized		$	6,760		$	6,322		$	1,497		$	13,082		$	5,030
Managed student loans outstanding, net		$	83,114		$	80,719		$	75,557		$	83,114		$	75,557

        The main drivers of the growth in our "core cash" earnings include the growth in the Managed student loan portfolio, higher student loan spreads and increasing fee and other income versus the second quarter of 2002. In the second quarter of 2003, we reported "core cash" diluted earnings per share ("EPS") of $.44, which was a 19 percent increase over the second quarter of 2002 and a 2 percent increase over the prior quarter's "core cash" EPS.

        The growth in our Managed student loans outstanding is an important driver of future earnings growth. In the second quarter of 2003, our Managed student loan portfolio grew by $2.4 billion from $80.7 billion at March 31, 2003 to $83.1 billion at June 30, 2003. This growth in the student loan portfolio was fueled by the $4.8 billion in new student loans acquired in the second quarter of 2003, an 8 percent increase over the $4.5 billion acquired in the second quarter of 2002 and a 10 percent decrease from the $5.3 billion acquired in the first quarter of 2003. The decrease versus the prior quarter is related to seasonal factors in student loan originations and a decrease in incremental consolidations.

        We delayed the processing of most of the Consolidation Loan applications received since April 21, 2003 to allow borrowers to take advantage of the new lower interest rate that took effect on July 1. This negatively impacted our acquisition of Consolidation Loans as we had a net runoff of Consolidation Loans of $246 million, versus $15 million in the first quarter of 2003 and $161 million in the second quarter of 2002. Based on indications of Consolidation Loan activity in the third quarter of 2003, we believe that the net effect of consolidations on our loan portfolio remains stable over time. The Direct Lending program also suspended Consolidation Loan disbursements, which deferred fee income to future periods as discussed below.

        During the second quarter of 2003, our "core cash" student loan spread, which measures the spread on our Managed portfolio of student loans exclusive of Floor Income, was 1.93 percent unchanged from the prior quarter and 1.87 percent in the year-ago quarter. The increase in "core cash" student loan spread from the year-ago quarter was primarily due to the growth in higher yielding private credit student loans and lower premium amortization due to lower premium write-offs on loans consolidated away due to the suspension of loan consolidations by the Direct Lending program and to the longer average life of Consolidated Loans.

        We continue to expand our guarantor servicing and debt management services. These businesses generated revenue of $85 million in the second quarter of 2003, an increase of 10 percent over the year-ago quarter. The 15 percent decrease in guarantor servicing and debt management fee revenue versus the prior quarter is mainly due to seasonal factors in the guarantor servicing business and to the deferral of revenue from the Direct Lending program's suspension of Consolidation Loan

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disbursements. Other income also benefitted from the increase in mortgage fees mainly due to the acquisition of Pioneer Mortgage in the second quarter of 2003.

        "Core cash" operating expenses were $183 million in the second quarter of 2003 versus $173 million in the prior quarter and $162 million in the year-ago quarter. The increase in operating expenses can mainly be attributed to an increase in mortgage origination expenses due to the acquisition of Pioneer Mortgage, increased servicing expenses consistent with the growth in borrowers and seasonal factors, and to severance costs for an information technology outsourcing initiative. When compared to the prior quarter, these increases were partially offset by the $9 million 2003 first quarter charge for servicing adjustments related to an underbilling error.

        We continue to repurchase common shares mainly through the settling of equity forward contracts. We repurchased 12.1 million shares in the second quarter of 2003, which when netted against 5.8 million common share issuances due to the exercise of stock warrants and 2.2 million net common share issuances related to benefit plans reduced common stock outstanding by 4.1 million shares.

        During the second quarter of 2003, we completed four securitizations totaling $6.8 billion that continued to accelerate and diversify our asset-backed securitization program. We completed one securitization of FFELP Stafford/PLUS loans of $1.0 billion, one securitization of private credit student loans of $1.3 billion, and two securitizations of Consolidation Loans totaling $4.5 billion. One of the Consolidation Loan securitizations of $2.3 billion did not meet the criteria of being a qualifying special purpose entity ("QSPE") and is accounted for on-balance sheet as a variable interest entity. As a result, no gain or loss was recorded on this transaction.

RESULTS OF OPERATIONS

        The following table presents the GAAP statements of income for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

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Condensed Statements of Income

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Student loans			$	452		$	436		$	534		$	888		$	1,069
Academic facilities financings and other loans				19			20			22			39			48
Investments				42			29			43			71			80
Total interest income				513			485			599			998			1,197
Interest expense				247			244			311			491			628
Net interest income				266			241			288			507			569
Less: provision for losses				36			43			27			79			47
Net interest income after provision for losses				230			198			261			428			522
Other income:
	Gains on student loan securitizations			314			306			14			620			58
	Servicing and securitization revenue			137			138			180			275			375
	Losses on sales of securities, net			(26	)		(82	)		(37	)		(108	)		(126	)
	Derivative market value adjustment			(29	)		114			(177	)		85			111
	Guarantor servicing fees			33			41			36			74			67
	Debt management fees			52			59			42			111			89
	Other			53			49			45			101			89
Total other income				534			625			103			1,158			663
Operating expenses				190			179			168			369			335
Income before income taxes				574			644			196			1,217			850
Income taxes				201			227			70			428			302
Net income				373			417			126			789			548
Preferred stock dividends				3			3			3			6			6
Net income attributable to common stock			$	370		$	414		$	123		$	783		$	542
Diluted earnings per common share			$	.80		$	.88		$	.26		$	1.68		$	1.14

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On-Balance Sheet Student Loan Spread

        The following table analyzes the reported earnings from student loans on-balance sheet for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

On-Balance Sheet Student Loan Spread Analysis

		Quarters ended									Six months ended
		June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Student loan yields, before Floor Income			4.36	%		4.47	%		5.14	%		4.41	%		5.16	%
Floor Income			.42			.29			.76			.36			.74
Consolidation Loan Rebate Fees			(.46	)		(.50	)		(.39	)		(.48	)		(.37	)
Offset Fees			(.08	)		(.07	)		(.11	)		(.08	)		(.11	)
Borrower benefits			(.08	)		(.08	)		(.07	)		(.08	)		(.07	)
Premium and origination fee amortization			(.06	)		(.10	)		(.26	)		(.08	)		(.26	)
Student loan net yield			4.10			4.01			5.07			4.05			5.09
Student loan cost of funds			(1.69	)		(1.75	)		(2.49	)		(1.72	)		(2.51	)
Student loan spread			2.41	%		2.26	%		2.58	%		2.33	%		2.58	%
Student loan average balance		$	44,173		$	44,159		$	42,268		$	44,166		$	42,312

        The increase in the student loan spread in the second quarter of 2003 versus the prior quarter and the decrease from the second quarter of 2002 was mainly due to the fluctuations in the amount of Floor Income discussed below. The increase in the student loan spread, exclusive of Floor Income, is due primarily to lower student loan premium amortization and to the increase in the percentage of private credit student loans in the on-balance sheet student loan portfolio. The lower premium amortization is driven by the higher percentage of Consolidation Loans, which have a significantly longer average life, lower premium write-offs as less loans consolidated away due to the suspension of the Direct Lending's consolidation program, and the amortization of the loan discount in private credit student loans.

On-Balance Sheet Floor Income

        Treasury bill and commercial paper rates have declined since July 1, 2002, the date when the borrower interest rates on the majority of FFELP Stafford student loans are reset and the date when the interest rate on new Consolidation Loans made during the 12 months after that date is set. As a result we earned $46 million or 42 basis points of Floor Income in the second quarter of 2003, of which $16 million relates to Variable Rate loans and $30 million relates to Fixed Rate loans. In comparison, we realized $81 million or 76 basis points in Floor Income in the year-ago quarter ($52 million from Variable Rate loans and $29 million from Fixed Rate loans), and $32 million or 29 basis points of Floor Income in the prior quarter ($13 million from Variable Rate loans and $19 million from Fixed Rate loans).

Net Interest Margin and Net Interest Income

        The net interest margin for the second quarters of 2003 and 2002 and the first quarter of 2003 was 2.12 percent, 2.42 percent and 2.00 percent, respectively. The fluctuations in the net interest margin are largely driven by the fluctuations in the student loan spread discussed above, particularly the amount of Floor Income.

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        The following table reflects the rates earned on assets and paid on liabilities for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

		Quarters ended
		June 30, 2003					March 31, 2003					June 30, 2002
		Amount			Rate		Amount			Rate		Amount			Rate
Average Assets
Student loans		$	44,173		4.10	%	$	44,159		4.01	%	$	42,268		5.07	%
Academic facilities financings and other loans			1,162		7.13			1,164		7.59			1,358		7.25
Investments			6,041		3.02			4,227		2.88			5,110		3.60
Total interest earning assets			51,376		4.04	%		49,550		3.99	%		48,736		4.98	%
Non-interest earning assets			5,856					5,215					4,679
Total assets		$	57,232				$	54,765				$	53,415
Average Liabilities and Stockholders' Equity
Six-month floating rate notes		$	2,985		1.18	%	$	2,887		1.27	%	$	2,836		1.87	%
Other short-term borrowings			21,573		1.71			22,881		1.52			27,180		2.14
Long-term notes			27,675		2.11			24,081		2.51			19,477		3.15
Total interest bearing liabilities			52,233		1.89	%		49,849		1.99	%		49,493		2.52	%
Non-interest bearing liabilities			2,743					2,832					2,016
Stockholders' equity			2,256					2,084					1,906
Total liabilities and stockholders' equity		$	57,232				$	54,765				$	53,415
Net interest margin					2.12	%				2.00	%				2.42	%

		Six months ended
		June 30, 2003					June 30, 2002
		Amount			Rate		Amount			Rate
Average Assets
Student loans		$	44,166		4.05	%	$	42,312		5.09	%
Academic facilities financings and other loans			1,163		7.36			1,651		6.52
Investments			5,139		2.96			5,126		3.32
Total interest earning assets			50,468		4.02	%		49,089		4.96	%
Non-interest earning assets			5,538					4,796
Total assets		$	56,006				$	53,885
Average Liabilities and Stockholders' Equity
Six-month floating rate notes		$	2,937		1.23	%	$	2,960		1.91	%
Other short-term borrowings			22,223		1.61			28,400		2.18
Long-term notes			25,888		2.30			18,392		3.21
Total interest bearing liabilities			51,048		1.94	%		49,752		2.54	%
Non-interest bearing liabilities			2,787					2,277
Stockholders' equity			2,171					1,856
Total liabilities and stockholders' Equity		$	56,006				$	53,885
Net interest margin					2.06	%				2.38	%

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Securitization Program

        During the second quarter 2003, we completed four securitizations totaling $6.8 billion that continued to accelerate and diversify our asset-backed securitization program. We completed one securitization of FFELP Stafford/PLUS loans, one securitization of private credit student loans, and two securitizations of Consolidation Loans. One of the Consolidation Loan securitizations of $2.3 billion did not meet the requirements of being a QSPE and is accounted for on-balance sheet as a variable interest entity. As a result, no gain or loss was recorded on this transaction. During the first quarter of 2003 we completed four securitizations, one of which did not receive sale treatment. In the second quarter of 2002, we completed one securitization which received sale treatment. The following table summarizes securitization activity for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

		Quarters ended
		June 30, 2003					March 31, 2003					June 30, 2002
		Amount Securitized			Gain %		Amount Securitized			Gain %		Amount Securitized			Gain %
FFELP Stafford/PLUS loans		$	1,005		1.32	%	$	1,256		1.60	%	$	1,497		.92	%
Consolidation Loans			2,251		9.59			2,005		10.86			—		—
Private credit student loans			1,248		6.82			1,005		6.75			—		—
Total securitization sales			4,504		6.98	%		4,266		7.17	%		1,497		.92	%
On-balance sheet securitization of Consolidation Loans			2,256					2,056					—
Total loans securitized		$	6,760				$	6,322				$	1,497

		Six months ended
		June 30, 2003					June 30, 2002
		Amount Securitized			Gain %		Amount Securitized			Gain %
FFELP Stafford/PLUS loans		$	2,261		1.47	%	$	5,030		1.15	%
Consolidation Loans			4,256		10.19			—		—
Private credit student loans			2,253		6.79			—		—
Total securitization sales			8,770		7.07	%		5,030		1.15	%
On-balance sheet securitization of Consolidation Loans			4,312					—
Total loans securitized		$	13,082				$	5,030

        The decrease in the second quarter 2003 gains as a percentage of the portfolio securitized versus the prior quarter was mainly due to a lower estimate of Embedded Fixed Rate Floor Income from the second quarter securitization of Consolidation Loans versus the prior quarter.

        Servicing and securitization revenue, the ongoing revenue from securitized loan pools, includes the interest earned on the Residual Interest asset, the revenue we receive for servicing the loans in the securitization trusts and Embedded Floor Income on securitized student loans not previously included in the gain on sale calculation. Servicing and securitization revenue totaled $137 million or 1.45 percent of the average balance of securitized loans in the second quarter of 2003 versus $138 million or 1.58 percent in the prior quarter and $180 million or 2.24 percent in the corresponding year-ago quarter. Fluctuations in servicing and securitization revenue are generally driven by Floor Income earned on the off-balance sheet student loans in a given period that was not previously recognized in the gain on sale calculation, and by the average balance and mix of the securitized loan portfolio. Floor Income earned through securitization income was $17 million, $105 million and $20 million for the

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quarters ended June 30, 2003 and 2002 and March 31, 2003, respectively. Floor Income earned that was previously recognized in the gain calculation totaled $40 million, none and $21 million for the quarters ended June 30, 2003 and 2002 and March 31, 2003, respectively. Servicing and securitization revenue is reduced by payments on Floor Income Contracts where the offsetting Floor Income was previously recognized in the gain on sale calculation. Such payments totaled $25 million, none and $13 million for the quarters ended June 30, 2003 and 2002 and March 31, 2003, respectively.

Liquidity and Capital Resources

        Total equity was $2.4 billion at June 30, 2003, an increase of $122 million from March 31, 2003. Our tangible capital was 1.81 percent of Managed assets at both June 30, 2003 and March 31, 2003. At June 30, 2003, total capital included the cumulative effect of SFAS No. 133, which reduced capital on a timing basis by 32 percent, offset by a 35 percent increase to capital due to the change in fair value of the Embedded Floor Income component of the Retained Interest.

        We repurchased 12.1 million shares during the second quarter of 2003 through equity forward settlements and open market purchases and issued 5.8 million shares as a result of the exercise of stock warrants and a net 2.2 million shares related to benefit plans. At June 30, 2003, the total common shares that could potentially be acquired over the next four years under outstanding equity forward contracts was 33.1 million shares at an average price of $34.44 per share. We have remaining authority to enter into additional share repurchases and equity forward contracts for 25.7 million shares.

Equity Forward Contracts

        The Financial Accounting Standards Board ("FASB") recently issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which covers the accounting for equity forwards. Under SFAS No. 150, equity forward contracts that allow a net settlement option either in cash or the Company's stock are required to be accounted for in accordance with SFAS No. 133 as derivatives. Those equity forward contracts that require physical settlement only (cash for shares) must be accounted for as a liability. Our existing contracts provide for net share or net cash settlement options, so as a result, we now account for our equity forward contracts as derivatives in accordance with SFAS No. 133 and periodically mark them to market through earnings. In accordance with SFAS No. 150, equity forward contracts that we entered into prior to June 1, 2003 and outstanding at July 1, 2003, will be marked-to-market on July 1, and we will record a gain of $130 million which will be reflected as a "cumulative change in accounting principle." We typically pay a "cost to carry" each month to the counterparty based on LIBOR and a spread or at a fixed interest rate and net of dividends received. This cost will be treated as part of the mark-to-market of the equity forward contracts through earnings. The transition gain was reduced by the cumulative cost of carry on those positions that was previously recognized in additional paid-in capital. In the second quarter of 2003, we recognized a $2.3 million loss for equity forward contracts entered into in the month of June 2003.

Dividend Increase and Stock Split

        In May 2003, the Board of Directors voted to increase our regular quarterly dividend on common stock from the previously announced $.08 per share to $.17 per share. The new dividend was first paid on June 20, 2003 to shareholders of record on June 8, 2003.

        In May 2003, the Board of Directors approved a three-for-one split of our common stock to be effected in the form of a stock dividend. The stock dividend was paid on June 20, 2003, for all shareholders of record on June 6, 2003. All share and per share amounts presented have been updated to reflect this change retroactively.

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Convertible Debentures

        In May 2003, we completed a private offering of $2 billion aggregate principal amount of 32-year unsecured senior convertible debentures that are convertible, under certain conditions, into shares of SLM common stock, at an initial conversion price of $65.98. The investors generally can only convert the debentures if the Company's stock price has appreciated to 130 percent of the conversion price for a prescribed period, or the Company calls the debentures. The convertible debentures bear interest at a floating rate equal to three-month LIBOR minus .05 percent, until July 25, 2007, and cannot be called or put prior to that date. Beginning on July 25, 2007, we may call the debentures and the investors may put the debentures, subject to certain conditions. After year four, the debentures can pay additional contingent interest under certain circumstances. In year four convertible debentures potentially could be dilutive to earnings per share, which would be calculated using the "if converted" method.

Leveraged Leases

        At June 30, 2003, we had investments in leveraged and direct financing leases, net of impairments, totaling $198 million that are general obligations of three commercial airlines and Federal Express Corporation. The aircraft financing business continues to be adversely affected by the slowdown in the commercial aircraft industry that began in early 2001 and was exacerbated by the terrorist attacks of September 11, 2001 and the war in Iraq. While aircraft passenger volume stabilized in the second quarter, the decline in volume since 2001 has resulted in the grounding of a significant number of aircraft. In the second quarter of 2003, we restructured two of our leases with American Airlines and we now account for these as direct financing leases. In connection with this restructuring we wrote down the net asset value of these leases and reduced unearned income by $8 million. There was no effect on current income, but future earnings from these aircraft will be reduced by $8 million. We will continue to monitor these investments given the continued uncertainty surrounding the airline industry. Based on an analysis of the expected losses on certain leveraged leases plus the incremental increase in tax obligations related to forgiveness of debt obligations and/or the taxable gain on the sale of the aircraft, our remaining exposure to the airline industry is $125 million.

"CORE CASH" RESULTS OF OPERATIONS

Explanation of Adjustments to GAAP

        In accordance with the Rules and Regulations of the SEC, we prepare financial statements in accordance with GAAP. As discussed under "Financial Highlights," in addition to evaluating the Company's GAAP-based financial information, management, credit rating agencies, lenders and analysts also evaluate the Company on certain non-GAAP performance measures that we refer to as "core cash" results of operations. A more detailed discussion of each adjustment to GAAP earnings to arrive at "core cash" results of operations follows.

Securitizations

        For those securitizations treated as sales, we record a Residual Interest asset that equals the present value of the estimated future net cash flows from the portfolio of loans sold and, at the same time, we record a gain on the sale calculated as the difference between the fair value and the carrying value of the assets sold. The gain on sale effectively accelerates income recognition of the pool of student loans securitized while the ultimate realization of such income remains dependent on their actual performance over time. Fees earned for servicing the loan portfolios and interest earned on the Residual Interest asset are recognized over the life of the securitization as servicing and securitization revenue. For "core cash" results of operations, we treat securitization transactions as financings and eliminate the securitization gain on sale and subsequent servicing and securitization revenue from

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income. We then recognize the net interest income from securitized loans as if they remained on-balance sheet, so that the performance of the portfolio of loans is measured on a Managed Basis.

Floor Income

        In low interest rate environments when our student loans are earning at the fixed borrower rate and the interest on our floating rate debt is continuing to decline, we earn additional spread income that we refer to as "Floor Income." The timing and amount of Floor Income is uncertain and tied to interest rate fluctuations, so we exclude such income from our "core cash" results of operations.

Derivative Accounting

        SFAS No. 133 requires that changes in the fair value of derivative instruments be recognized currently in earnings unless specific hedge accounting criteria as specified by SFAS No. 133 are met. We believe that our derivatives are effective economic hedges and they are a critical element of our interest rate risk management strategy. However, under SFAS No. 133, some of our derivatives, primarily Floor Income Contracts, Eurodollar futures contracts, and certain basis swaps, are considered ineffective hedges, as further discussed below. In these instances, the derivatives are classified as "trading" derivatives for GAAP purposes and marked-to-market each quarter. The period to period change in the fair value of these derivatives is recorded through the derivative market value adjustment in the income statement with no consideration for the corresponding change in fair value of the hedged item. The derivative market value adjustment is caused by interest rate volatility and changing credit spreads during the period and the volume and term of derivatives not receiving hedge accounting treatment.

        Our Floor Income Contracts are written options. SFAS No. 133's hedge criteria regarding effectiveness when using written options is more stringent than other hedging relationships. Because the paydown of principal of the student loans underlying the Embedded Floor Income in our student loans does not exactly match the change in the notional amount of our written Floor Income Contracts, the written Floor Income Contracts do not qualify as effective hedges under SFAS No. 133. We believe that the Floor Income Contracts effectively fix the amount of Floor Income we will earn over the contract period, thus eliminating the timing and uncertainty associated with Floor Income for that period. Prior to SFAS No. 133, we accounted for Floor Income Contracts as hedges and amortized the upfront cash compensation ratably over the lives of the contracts. Under SFAS No. 133, the upfront payment is deemed a liability and changes in fair value are recorded through income throughout the life of the contract. The changes in the value of Floor Income Contracts is caused by changing interest rates that cause the underlying student loans to earn more or less Floor Income, which is transferred to the counterparties. The change in the market value of the Floor Income Contracts is economically offset by the change in value of the student loan portfolio earning Floor Income, but that offsetting change in value is not recognized under SFAS No. 133.

        Basis swaps are used to convert the floating rate debt from one interest rate index to another to match the interest rate characteristics of the assets. We primarily use basis swaps to change the index of our fixed rate and LIBOR-based debt, to better match the cash flows of our student loan assets that are indexed to commercial paper or the Treasury bill. SFAS No. 133 requires that the change in the cash flows of the hedge effectively offset both the change in the cash flows of the asset and the change in the cash flows of the liability. Our basis swaps hedge variable interest rate risk and do not meet this effectiveness test, because student loans can earn at either a variable or a fixed interest rate depending on market interest rates. We also have basis swaps that economically hedge off-balance sheet instruments that do not meet the SFAS No. 133 effectiveness test. As a result, these swaps are recorded at fair value with subsequent changes in value reflected in the income statement.

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        The following tables present the "core cash" statements of income and the reconciliation of GAAP net income to "core cash" net income for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

"Core Cash" Statements of Income

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Managed student loans			$	754		$	743		$	818		$	1,497		$	1,623
Academic facilities financings and other loans				19			20			22			39			48
Investments				44			29			42			73			81
Total Managed interest income				817			792			882			1,609			1,752
Managed interest expense				424			419			532			843			1,068
Net managed interest income				393			373			350			766			684
Less: provision for losses				29			32			35			61			62
Net Managed interest income after provision for losses				364			341			315			705			622
Other income:
	Guarantor servicing fees			33			41			36			74			67
	Debt management fees			52			59			42			111			89
	Other			52			47			46			99			89
Total other income				137			147			124			284			245
Operating expenses				183			173			162			356			323
Income before income taxes				318			315			277			633			544
Income taxes				108			112			98			220			194
"Core cash" net income				210			203			179			413			350
Preferred stock dividends				3			3			3			6			6
"Core cash" net income attributable to common stock			$	207		$	200		$	176		$	407		$	344
"Core cash" diluted earnings per common share			$	.44		$	.43		$	.37		$	.87		$	.72

Reconciliation of GAAP Net Income to "Core Cash" Net Income

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
GAAP net income			$	373		$	417		$	126		$	789		$	548
"Core cash" adjustments:
	Net interest income on securitized loans			196			167			221			363			429
	Floor income on Managed loans			(103	)		(73	)		(191	)		(176	)		(373	)
	Provision for losses on securitized loans			7			11			(8	)		18			(14	)
	Gains on student loan securitizations			(314	)		(306	)		(14	)		(620	)		(58	)
	Servicing and securitization revenue			(137	)		(138	)		(180	)		(275	)		(375	)
	Losses on sales of securities, net			4			72			18			77			105
	Amortization of acquired intangibles			7			7			6			14			12
	Net impact of derivative accounting			84			(67	)		230			17			(30	)
	Other			(1	)		(1	)		(1	)		(2	)		(2	)
Total "core cash" adjustments				(257	)		(328	)		81			(584	)		(306	)
Net tax effect (A)				94			114			(28	)		208			108
"Core cash" net income			$	210		$	203		$	179		$	413		$	350

(A)

Such tax effect is based upon our marginal tax rate for the respective period.

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        In the second quarter of 2003, we recognized $84 million of net, pre-tax mark-to-market losses due to the net impact of SFAS No. 133 derivative accounting versus $67 million of net, pre-tax gains in the first quarter 2003 and $230 million of net, pre-tax losses in the second quarter 2002. The table below quantifies the impact of SFAS No. 133 derivative accounting on our net income for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002 when compared with the accounting principles employed in all years prior to the SFAS No. 133 implementation. Gains and losses on certain closed derivative positions that previously qualified as hedges were capitalized and amortized over the term of the hedged item. Under SFAS No. 133, these amounts are recorded immediately. The adjustments to "core cash" net income for the net impact of SFAS No. 133 derivative accounting are summarized as follows:

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Reversal of SFAS 133 income statement items:
	Derivative market value adjustment included in other income		$	29		$	(114	)	$	177		$	(85	)	$	(111	)
	Amortization of derivative items included in other comprehensive income at transition			—			—			1			—			1
"Core cash" derivative adjustments:
	Amortization of premiums on Floor Income Contracts cap hedges in net interest income			39			41			32			80			64
	Reversal of amortization of Floor Income Contracts de-designated as effective hedges on December 31, 2000 in net interest income			1			1			3			2			6
	Reversal of impact of Eurodollar futures contracts and Floor Income Contracts in gain/loss on sales of securities, net			21			9			19			30			22
	Amortization of closed Eurodollar futures contracts in net interest income			(6	)		(4	)		(2	)		(10	)		(12	)
Total net impact of SFAS No. 133 derivative accounting			$	84		$	(67	)	$	230		$	17		$	(30	)

        The entire net impact of SFAS No. 133 derivative accounting has been excluded for "core cash" results.

"Core Cash" Student Loan Spread

        The following table analyzes the reported earnings from our portfolio of Managed student loans, which includes loans both on-balance sheet and off-balance sheet in securitization trusts and excludes Floor Income.

		Quarters ended									Six months ended
		June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
"Core cash" student loan yields			4.31	%		4.44	%		5.10	%		4.37	%		5.13	%
Consolidation Loan Rebate Fees			(.35	)		(.34	)		(.25	)		(.34	)		(.24	)
Offset Fees			(.04	)		(.04	)		(.06	)		(.04	)		(.06	)
Borrower benefits			(.12	)		(.11	)		(.11	)		(.11	)		(.12	)
Premium and origination fee amortization			(.11	)		(.16	)		(.28	)		(.14	)		(.27	)
"Core cash" student loan net yield			3.69			3.79			4.40			3.74			4.44
"Core cash" student loan cost of funds			(1.76	)		(1.86	)		(2.53	)		(1.81	)		(2.57	)
"Core cash" student loan spread			1.93	%		1.93	%		1.87	%		1.93	%		1.87	%
Average Balances
On-balance sheet student loans		$	44,173		$	44,159		$	42,268		$	44,166		$	42,312
Securitized student loans			37,811			35,228			32,250			36,527			31,326
Managed student loans		$	81,984		$	79,387		$	74,518		$	80,693		$	73,638

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        The increase in the "core cash" student loan spread in the second quarter of 2003 versus the second quarter of 2002 was due primarily to lower student loan premium amortization and to the increase in the percentage of private credit student loans in the Managed student loan portfolio, partially offset by higher Consolidation Loan Rebate Fees. The lower premium amortization is driven by the significant increase in Consolidation Loans as a percentage of the Managed portfolio of student loans, and the amortization of the loan discount in private credit student loans. Consolidation Loans have a significantly longer average life, which lengthens the premium amortization period. Lower premium expense was also due to lower premium write-offs from Direct Lending as the Direct Lending program suspended disbursements for new consolidations. The second quarter 2003 "core cash" student loan spread also benefited from the increase in Managed private credit student loans of 39 percent over the second quarter of 2002. These loans are subject to much higher credit risk than federally guaranteed student loans and therefore earn higher spreads, which in the second quarter of 2003 was 5.02 percent. The increase in Consolidation Loan Rebate Fees reduced the second quarter of 2003 student loan spread by 10 basis points when compared to the prior year. The prior year's quarterly spread also benefited from higher amortization of upfront payments under Floor Income Contracts.

Allowance for Private Credit Student Loan Losses—Managed Basis

        An analysis of our Managed allowance for loan losses for private credit student loans for the quarters ended June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002 is presented in the following table.

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Balance at beginning of period			$	218		$	194		$	206		$	194		$	193
Provision for Managed private credit student loan losses				27			32			18			59			31
Other				—			7			(44	)		7			(33	)
Charge-offs				(19	)		(17	)		(14	)		(36	)		(26	)
Recoveries				2			2			1			4			2
	Charge-offs, net of recoveries			(17	)		(15	)		(13	)		(32	)		(24	)
Balance at end of period			$	228		$	218		$	167		$	228		$	167
Net charge-offs as a percentage of average Managed private credit student loans (annualized)				.93	%		.93	%		1.05	%		.93	%		1.01	%
Net charge-offs as a percentage of average Managed private credit student loans in repayment (annualized)				1.88	%		1.78	%		1.86	%		1.82	%		1.66	%
Private credit allowance as a percentage of average Managed private credit student loans				3.21	%		3.38	%		3.36	%		3.37	%		3.51	%
Private credit allowance as a percentage of the ending balance of Managed private credit student loans				3.15	%		3.24	%		3.21	%		3.15	%		3.21	%
Private credit allowance as a percentage of Managed private credit student loans in repayment				6.29	%		6.39	%		5.77	%		6.29	%		5.77	%
Average balance of Managed private credit student loans in repayment			$	3,519		$	3,354		$	2,804		$	3,464		$	2,912
Average balance of Managed private credit student loans			$	7,101		$	6,433		$	4,973		$	6,769		$	4,770
Ending balance of Managed private credit student loans			$	7,249		$	6,716		$	5,217		$	7,249		$	5,217

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        For the quarter ended June 30, 2003, the "core cash" allowance for Managed private credit student loans increased by $10 million versus the prior quarter and by $61 million versus the year-ago quarter. The 37 percent increase in the second quarter 2003 allowance versus the year-ago quarter reflects a 35 percent increase in the Managed private credit student loan acquisitions.

Delinquencies—Managed Basis

        The table below shows our private credit student loan delinquency trends for June 30, 2003, March 31, 2003 and June 30, 2002 on a Managed Basis. Delinquencies have the potential to adversely impact earnings if the account charges off and results in increased servicing and collection costs.

			June 30, 2003					March 31, 2003					June 30, 2002
Index
			Balance			%		Balance			%		Balance			%
Loans in-school/grace/deferment (1)			$	3,202				$	2,893				$	2,026
Loans in forbearance (2)				418					413					290
Loans in repayment and percentage of each status:
	Loans current			3,356		92	%		3,118		91	%		2,648		91	%
	Loans delinquent 30-59 days (3)			110		3			136		4			117		4
	Loans delinquent 60-89 days			62		2			72		2			50		2
	Loans delinquent 90 days or greater			101		3			84		3			86		3
Total Managed private credit student loans in repayment				3,629		100	%		3,410		100	%		2,901		100	%
Total Managed private credit student loans				7,249					6,716					5,217
Managed private credit student loan allowance for losses				(228	)				(218	)				(167	)
Managed private credit student loans, net			$	7,021				$	6,498				$	5,050
Percentage of Managed private credit student loans in repayment				50	%				51	%				56	%
Delinquencies as a percentage of Managed private credit student loans in repayment				8	%				9	%				9	%

⁽¹⁾

Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans, e.g., residency periods for medical students or a grace period for bar exam preparation. These amounts include loans for borrowers with in-school forbearance that were previously included as loans in forbearance for hardship and other factors. We reclassified $107 million and $9 million, respectively, of in-school forbearances at March 31, 2003 and June 30, 2002.

⁽²⁾

Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, consistent with the established loan program servicing procedures and policies.

⁽³⁾

The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged-off, and not in-school, grace, deferment or forbearance.

"Core Cash" Other Income

        When compared with GAAP other income, "core cash" other income excludes gains on student loan securitizations, servicing and securitization revenue, the derivative market value adjustment per SFAS No. 133 and certain gains and losses on sales of investment securities and student loans. The following table summarizes the components of "core cash" other income for the quarters ended

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June 30, 2003, March 31, 2003 and June 30, 2002 and for the six months ended June 30, 2003 and 2002.

Guarantor Servicing Fees, Debt Management Fees and Other Income

			Quarters ended									Six months ended
			June 30, 2003			March 31, 2003			June 30, 2002			June 30, 2003			June 30, 2002
Guarantor servicing and debt management fees:
	Guarantor servicing fees		$	33		$	41		$	36		$	74		$	67
	Debt management fees			52			59			42			111			89
Total guarantor servicing and debt management fees			$	85		$	100		$	78		$	185		$	156
Other income:
	Late fees		$	15		$	16		$	14		$	32		$	29
	Third party servicing fees			14			14			14			28			29
	Mortgage and consumer loan fees			15			6			2			21			4
	Other			8			11			16			18			27
Total other income			$	52		$	47		$	46		$	99		$	89

        The $15 million decrease in guarantor servicing and debt management fees in the second quarter of 2003 versus the first quarter of 2003 is mainly due to the seasonal nature of the guarantor servicing business and by the reduction in default portfolio management fees due to the suspension of Consolidation Loan disbursements by the Direct Lending program. We earn default portfolio management fees when defaulted FFELP Stafford loans are consolidated. These fees will be recognized when the loans are processed in the third quarter of 2003. The $7 million increase in these fees versus the year-ago quarter is due to the growth in default portfolio management fees.

        The increase in other income for the second quarter of 2003 versus the prior and year-ago quarters is mainly attributed to an increase in mortgage origination fees due to the acquisition of Pioneer Mortgage in the second quarter of 2003.

"Core Cash" Operating Expenses

        In the second quarter of 2003, "core cash" operating expenses were $183 million versus $162 million in the year-ago quarter and $173 million in the first quarter of 2003. The increase in operating expenses can mainly be attributed to an increase in mortgage origination expenses due to the acquisition of Pioneer Mortgage in the second quarter of 2003, increased servicing expenses consistent with the growth in borrowers and seasonal factors, and severance costs for an information technology outsourcing initiative. These increases were partially offset by the $9 million first quarter of 2003 charge for servicing adjustments related to an underbilling error.

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MANAGED STUDENT LOAN ACQUISITIONS

        The following tables summarize the components of both our on-balance sheet and our Managed student loan acquisitions for the quarters ended June 30, 2003, March 31, 2003 and June 31, 2002 and the six months ended June 30, 2003 and 2002.

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        We purchased and originated $4.8 billion of student loans in the second quarter of 2003 compared with $4.5 billion in the year-ago quarter and $5.3 billion in the prior quarter. In both June 2003 and 2002, we delayed the processing of disbursement for Consolidation Loans to allow borrowers to take advantage of lower interest rates that took effect on July 1. We estimated the net effect on loans acquired was approximately $2.8 billion and $794 million for the quarters ended June 30, 2003 and 2002, respectively. The decrease versus the prior quarter is due to seasonal factors.

        In the second quarter of 2003, our Preferred Channel originations totaled $1.9 billion versus $1.6 billion in the year-ago quarter and $4.9 billion in the prior quarter. The pipeline of loans currently serviced on our servicing systems and committed for purchase by us was $4.4 billion at June 30, 2003 versus $4.0 billion at June 30, 2002 and $6.2 billion at March 31, 2003.

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SLM CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION SECOND QUARTER 2003 (Dollars in millions, except per share amounts)