424B5 1 d424b5.htm 424B5 424B5
Table of Contents

Prospectus Supplement to Base Prospectus dated June 25, 2008

$4,086,163,000

SLM Student Loan Trust 2008-9

Issuing Entity

 

SLM Funding LLC

Depositor

 

Sallie Mae, Inc.

Sponsor, Servicer and Administrator

 

Student Loan-Backed Notes

 

On August 28, 2008, the trust will issue:

 

Class


   Principal

  

Interest Rate


  

Maturity


Floating Rate Class A Notes

   $ 3,963,579,000    3-month LIBOR plus 1.50%    April 25, 2023

Floating Rate Class B Notes

   $ 122,584,000    3-month LIBOR plus 2.25%    October 25, 2029

 

The trust will make payments primarily from collections on a pool of FFELP student loans. Interest and principal on the notes will be payable quarterly on the 25th day of each January, April, July and October, beginning in October 2008. In general, the trust will pay principal to the class A notes until paid in full, and then to the class B notes until paid in full. Interest on the class B notes will be subordinate to interest on the class A notes and principal on the class B notes will be subordinate to both principal and interest on the class A notes. Credit enhancement for the notes consists of excess interest on the trust student loans, subordination of the class B notes to the class A notes, overcollateralization and the reserve account. In addition, the trust will deposit funds, on the closing date, into the capitalized interest account. These funds will be available only for a limited period of time. The interest rates on the notes are determined by reference to LIBOR. A description of how LIBOR is determined appears under “Additional Information Regarding the NotesDetermination of IndicesLIBOR” in the base prospectus.

 

We are offering the notes through the underwriters at the prices shown below when and if issued. Application has been made for the notes to be listed on the Official List of the Luxembourg Stock Exchange and to be traded on the Luxembourg Stock Exchange’s Euro MTF Market.

 

We are not offering the notes in any state or other jurisdiction where the offer is prohibited.

 

All of the class B notes will be retained by the depositor or its affiliate. This prospectus supplement also covers the resale of the class B notes from time to time by the depositor or its affiliate.

You should consider carefully the risk factors on page S-19 of this prospectus supplement and on page 20 of the base prospectus.

 

The notes are asset-backed securities issued by and are obligations of the issuing entity, which is a trust. They are not obligations of or interests in the sponsor, administrator, servicer, depositor, any seller or any of their affiliates.

 

The notes are not guaranteed or insured by the United States or any governmental agency.

 

     Price to Public

    Underwriting
Discount


    Proceeds to
the Depositor


 

Per Floating Rate Class A Note

   99.59425 %   0.150 %   99.44425 %

Per Floating Rate Class B Note*

   100.00000 %   0.250 %   99.75000 %

* For the amount of class B notes retained by the depositor or its affiliate, the underwriting discount will be 0.10% and proceeds to the depositor will be 99.90% with no selling concession or reallowance.

 

We expect the proceeds to the depositor in respect of the notes to be $4,064,012,826 before deducting expenses payable by the depositor estimated to be $3,627,708 and certain deposits to be made by the trust.

 

Neither the SEC nor any state securities commission has approved or disapproved the securities or determined whether this supplement or the base prospectus is accurate or complete. Any contrary representation is a criminal offense.

 


 

Joint Book-Runners

 

Banc of America Securities LLC   Credit Suisse   

RBC Capital

Markets

  RBS Greenwich Capital

 

 


 

August 22, 2008


Table of Contents

TABLE OF CONTENTS

Prospectus Supplement

 

     Page

Summary of Terms

   S-1

•       Issuing Entity

   S-1

•       Depositor

   S-1

•       Sponsor, Servicer and Administrator

   S-1

•       Indenture Trustee

   S-1

•       Eligible Lender Trustee

   S-1

•       Delaware Trustee

   S-1

•       The Notes

   S-2

•       Dates

   S-2

•       Information About the Trust Student Loans

   S-2

•       Information About the Notes

   S-3

•       Indenture Trustee and Paying Agent

   S-5

•       Luxembourg Paying Agent

   S-5

•       Administrator

   S-5

•       Information About the Trust

   S-5

•       Administration of the Trust

   S-11

•       Termination of the Trust

   S-14

•       Excess Distribution Certificateholder

   S-16

•       Tax Considerations

   S-16

•       ERISA Considerations

   S-17

•       Ratings of the Notes

   S-17

•       Listing Information

   S-17

•       Risk Factors

   S-18

•       Identification Numbers

   S-18

Risk Factors

   S-19

•       The Notes Are Not Suitable Investments For All Investors

   S-19

•        Subordination Of The Class B Notes Results In A Greater Risk Of Loss

   S-19

•        Investors In The Class B Notes Bear Greater Risk Of Loss Because The Priority Of Payment Of Interest And The Timing Of Principal Payments On The Class B Notes May Change Due To The Variability Of Cashflows

   S-20

•        Certain Credit And Liquidity Enhancement Features Are Limited And If They Are Depleted, There May Be Shortfalls In Distributions To Noteholders

   S-20

•       The Characteristics Of The Trust Student Loans May Change

   S-21

•        Your Notes May Have A Degree Of Basis Risk, Which Could Compromise The Trust’s Ability To Pay Principal And Interest On Your Notes

   S-22

•       Certain Actions Can Be Taken Without Noteholder Approval

   S-22

•        The Bankruptcy Of The Servicer Could Delay The Appointment Of A Successor Servicer Or Reduce Payments On Your Notes

   S-22

•        The Trust May Be Affected By Delayed Payments From Borrowers Called To Active Military Service

   S-23

•        Retention Of The Class B Notes By The Depositor Or Its Affiliate May Reduce The Liquidity Of The Class B Notes

   S-23

•       Your Ability To Sell Your Notes May Be Limited

   S-23

Defined Terms

   S-24

Formation of the Trust

   S-24

 

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•       The Trust

   S-24

•       Capitalization of the Trust

   S-26

•       Eligible Lender Trustee

   S-26

•       Delaware Trustee

   S-27

•       Indenture Trustee

   S-28

Use of Proceeds

   S-29

The Trust Student Loan Pool

   S-29

•       General

   S-29

•       Eligible Trust Student Loans

   S-29

•       Additional Sellers

   S-30

•       Certain Expenses

   S-31

•       Characteristics of the Initial Trust Student Loans

   S-31

•        Insurance of Trust Student Loans; Guarantors of Trust Student Loans

   S-32

•       Cure Period for Trust Student Loans

   S-33

•        Consolidation of Federal Benefit Billings and Receipts and Guarantor Claims with Other Trusts

   S-34

•       Third-Party Originators of FFELP Loans

   S-35

Recent Developments

   S-35

Description of the Notes

   S-36

•       General

   S-36

•       The Notes

   S-36

•       Supplemental Purchase Period

   S-39

•       Servicing Compensation

   S-40

•       Distributions

   S-41

•        Distributions Following an Event of Default and Acceleration of the Maturity of the Notes

   S-43

•       Voting Rights and Remedies

   S-44

•       Credit Enhancement

   S-44

•       Potential Future Interest Rate Cap Agreement

   S-46

•       Administration Fee

   S-46

•       Determination of Indices

   S-46

•       Notice of Interest Rates

   S-47

•       Accounts

   S-47

•       Trust Fees

   S-47

•       Optional Purchase

   S-48

•       Auction of Trust Assets

   S-48

Static Pools

   S-49

Prepayments, Extensions, Weighted Average Lives and Expected Maturities of the Notes

   S-50

U.S. Federal Income Tax Consequences

   S-51

ERISA Considerations

   S-52

Accounting Considerations

   S-53

Reports to Noteholders

   S-54

Notice To Canadian Residents

   S-55

•       Resale Restrictions

   S-55

•       Representations of Purchasers

   S-55

•       Rights of Action – Ontario Purchasers Only

   S-55

•       Enforcement of Legal Rights

   S-56

•       Taxation and Eligibility for Investment

   S-56

Notice to Investors

   S-56

Underwriting

   S-57

Listing Information

   S-59

Ratings of the Notes

   S-60

Legal Matters

   S-61

Glossary for Prospectus Supplement

   S-62

Annex A: Characteristics of the Initial Trust Student Loan Pool

   A-1

Exhibit I: Prepayments, Extensions, Weighted Average Lives and Expected Maturities of the Notes

   I-1

 

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TABLE OF CONTENTS

Base Prospectus

 

     Page

Prospectus Summary

   7

Risk Factors

   20

Formation of the Issuing Entities

   41

Use of Proceeds

   43

The Depositor

   43

The Sponsor, Servicer and Administrator

   45

The Sellers

   47

The Student Loan Pools

   48

Sallie Mae’s Student Loan Financing Business

   51

Transfer and Servicing Agreements

   58

Servicing and Administration

   62

Trading Information

   75

Description of the Notes

   76

Additional Information Regarding the Notes

   83

Certain Legal Aspects of the Student Loans

   128

U.S. Federal Income Tax Consequences

   130

European Union Directive on the Taxation of Savings Income

   142

State Tax Consequences

   143

ERISA Considerations

   143

Available Information

   146

Reports to Noteholders

   146

Incorporation of Documents by Reference

   147

The Plan of Distribution

   147

Legal Matters

   150

Appendix A: Federal Family Education Loan Program

   A-1

Appendix B: Undergraduate and Graduate Loan Programs

   B-1

Appendix C: Law Loan Programs

   C-1

Appendix D: MBA Loan Programs

   D-1

Appendix E: Medical Loan Programs

   E-1

Appendix F: Direct-to-Consumer Loan Programs

   F-1

Appendix G: Private Consolidation Loan Program

   G-1

Appendix H: Global Clearance, Settlement and Tax Documentation Procedures

   H-1

 

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THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ATTACHED HERETO

We provide information to you about the notes in two separate sections of this document that provide progressively more detailed information. These two sections are:

 

   

the accompanying prospectus, which begins after this prospectus supplement and provides general information, some of which may not apply to your particular class of notes; and

 

   

this prospectus supplement, which describes the specific terms of the notes being offered.

We have not authorized anyone to provide you with different information.

We sometimes refer to the accompanying prospectus as the base prospectus or the prospectus. You should read both the base prospectus and this prospectus supplement to understand the notes.

For your convenience, we include cross-references in this prospectus supplement and in the base prospectus to captions in these materials where you can find related information.

NOTICE TO INVESTORS

The notes may not be offered or sold to persons in the United Kingdom in a transaction that results in an offer to the public within the meaning of the securities laws of the United Kingdom.

Application has been made for the notes to be listed on the Official List of the Luxembourg Stock Exchange and to be traded on the Luxembourg Stock Exchange’s Euro MTF Market. We cannot assure you that the application will be granted. You should consult with Deutsche Bank Luxembourg S.A., the Luxembourg listing agent for the notes, to determine their status. This prospectus supplement and the base prospectus may be used only for the purposes for which they have been published.

FORWARD-LOOKING STATEMENTS

Certain statements contained in or incorporated by reference in this prospectus supplement and the accompanying base prospectus consist of forward-looking statements relating to future economic performance or projections and other financial items. These statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “expects,” “believes,” “anticipates,” “estimates,” or other comparable words. Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results. Those risks and uncertainties include, among others, general economic and business conditions, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond our control. Because we cannot predict the future, what actually happens may be very different from what is contained in our forward-looking statements.

 

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LOGO

 

vi


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LOGO

 

vii


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SUMMARY OF TERMS

This summary highlights selected information about the notes. It does not contain all of the information that you might find important in making your investment decision. It provides only an overview to aid your understanding and is qualified by the full description of the information contained in this prospectus supplement and the attached base prospectus. You should read the full description of this information appearing elsewhere in this document and in the base prospectus to understand all of the terms of the offering of the notes.

ISSUING ENTITY

SLM Student Loan Trust 2008-9, which is a Delaware statutory trust. It was formed on April 29, 2008, under a trust agreement dated as of April 29, 2008. Its principal address is in care of The Bank of New York Mellon Trust Company, National Association, 10161 Centurion Parkway, Jacksonville, Florida 32256. We sometimes refer to the issuing entity as the trust.

DEPOSITOR

SLM Funding LLC, which is a Delaware limited liability company. Its principal address is 12061 Bluemont Way, V3419, Reston, Virginia 20190.

SPONSOR, SERVICER AND ADMINISTRATOR

Sallie Mae, Inc., which is a Delaware corporation. Its principal address is 12061 Bluemont Way, Reston, Virginia 20190.

Sallie Mae, Inc. is an affiliate of the depositor and each seller.

INDENTURE TRUSTEE

Deutsche Bank Trust Company Americas, which is a New York banking corporation. Its principal trust address is 60 Wall Street, New York, New York 10005.

ELIGIBLE LENDER TRUSTEE

The Bank of New York Mellon Trust Company, National Association, formerly known as The Bank of New York Trust Company, N.A., which is a national banking association. It is the eligible lender trustee under the trust agreement, and will hold legal title to the assets of the trust. It maintains an address at 10161 Centurion Parkway, Jacksonville, Florida 32256.

DELAWARE TRUSTEE

BNY Mellon Trust of Delaware, formerly known as BNYM (Delaware), which is a Delaware banking corporation. The Delaware trustee will act in the capacities required under the Delaware Statutory Trust Act and under the trust agreement. Its principal Delaware address is 100 White Clay Center, Route 273, Newark, Delaware 19711.

 

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THE NOTES

The trust is offering the following classes of notes, which are debt obligations of the trust:

 

 

Floating Rate Class A Student Loan-Backed Notes in the amount of $3,963,579,000; and

 

 

Floating Rate Class B Student Loan-Backed Notes in the amount of $122,584,000.

We sometimes refer to the class A notes and class B notes as the notes.

DATES

The closing date for this offering is August 28, 2008.

The information about the initial trust student loans in this prospectus supplement is calculated and presented as of August 14, 2008. We refer to this date as the statistical cutoff date.

The cutoff date for the pool of initial trust student loans will be the closing date. We sometimes refer to this date as the initial cutoff date.

The trust will be entitled to receive all collections and proceeds on the initial trust student loans on or after the closing date.

A quarterly distribution date for the notes is the 25th day of each January, April, July and October, beginning in October 2008. If any January 25, April 25, July 25 or October 25 is not a business day, the quarterly distribution date will be the next business day.

Interest and principal will be payable to holders of record as of the close of business on the record date, which is the day before the related quarterly distribution date.

A monthly allocation date will be the 25th calendar day of each month or the next succeeding business day if such 25th day is not a business day.

The supplemental purchase period for purchasing additional trust student loans with funds on deposit in the supplemental purchase account begins on the closing date and ends on September 12, 2008.

INFORMATION ABOUT THE TRUST STUDENT LOANS

The notes will receive payments primarily from collections on (1) the initial trust student loans acquired by the trust on the closing date and (2) any additional trust student loans acquired by the trust from time to time during the supplemental purchase period.

We refer to the pool of student loans purchased by the trust on the closing date as the initial trust student loans; we refer to any student loans purchased by the trust during the supplemental purchase period as the additional trust student loans; and we refer to the initial trust student loans and the additional trust student loans, collectively, as the trust student loans.

The trust may acquire additional trust student loans during the supplemental purchase period from amounts on deposit in the supplemental purchase account. The cutoff dates for these additional trust student loans will be the dates those loans are purchased by the

 

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trust (which we refer to as “subsequent cutoff dates”). The trust will be entitled to receive all collections and proceeds on these additional trust student loans on and after their respective subsequent cutoff dates.

INFORMATION ABOUT THE NOTES

Interest Payments. Interest will accrue generally on the outstanding principal balance of each class of notes during three-month accrual periods and will be paid on each quarterly distribution date.

Generally, each accrual period for the notes begins on a quarterly distribution date and ends on the day before the next quarterly distribution date. The first accrual period for the notes, however, will begin on the closing date and end on October 26, 2008, the day before the first quarterly distribution date.

Each class of notes will bear an annual interest rate equal to the sum of three-month LIBOR (except for the first accrual period) and the applicable spread listed in the table below:

 

Class

   Spread

Class A

   plus 1.50%

Class B

   plus 2.25%

LIBOR for the first accrual period will be determined by the following formula:

x + [ 28 / 29 * (y-x)]

where:

x = one-month LIBOR, and

y = two-month LIBOR.

The administrator will determine LIBOR as specified under “Additional Information Regarding the Notes—Determination of Indices—LIBOR” in the base prospectus. The administrator will calculate interest on the notes based on the actual number of days elapsed in each accrual period divided by 360.

Principal Payments. Principal will be payable on each quarterly distribution date in an amount generally equal to the principal distribution amount for that quarterly distribution date.

Priority of Principal Payments. We will pay principal sequentially on each quarterly distribution date as follows:

 

 

first, the class A noteholders’ principal distribution amount to the class A notes, until their principal balance is reduced to zero; and then

 

 

second, the class B noteholders’ principal distribution amount to the class B notes, until their principal balance is reduced to zero.

See “Description of the Notes—Distributions” in this prospectus supplement for a more detailed description of principal payments. See also “Description of the Notes—Distributions Following an Event of Default and Acceleration of the Maturity of the Notes” in this prospectus supplement for a description of the cashflows on each quarterly distribution date following the occurrence of an event of default and an acceleration of the maturity of the notes.

 

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Maturity Dates. Each class of notes will mature no later than the date set forth in the table below for that class:

 

Class

   Maturity Date

Class A

   April 25, 2023

Class B

   October 25, 2029

The actual maturity of any class of notes could occur earlier if, for example,

 

 

there are prepayments on the trust student loans;

 

 

the servicer exercises its option to purchase all remaining trust student loans, which will not occur until the first quarterly distribution date on which the pool balance is 10% or less of the initial pool balance; or

 

 

the indenture trustee auctions all remaining trust student loans, which absent an event of default under the indenture, will not occur until the first quarterly distribution date on which the pool balance is 10% or less of the initial pool balance.

The initial pool balance is equal to the sum of: (i) the pool balance as of the closing date and (ii) the amount deposited into the supplemental purchase account on the closing date.

Prepayments, Extensions, Weighted Average Lives and Expected Maturities of the Notes. The projected weighted average life, expected maturity date and percentages of remaining principal balance of each class of notes under various assumed prepayment scenarios may be found in Exhibit I, “Prepayments, Extensions, Weighted Average Lives and Expected Maturities of the Notes,” attached hereto.

Subordination of the Class B Notes. Payments of interest on the class B notes will be subordinate to the payments of interest on the class A notes. In general, payments of principal on the class B notes will be subordinate to the payment of both interest and principal on the class A notes. See “Description of the Notes—The Notes—The Class B Notes—Subordination of the Class B Notes” in this prospectus supplement.

Denominations. All classes of notes will be available for purchase in minimum denominations of $100,000 and additional increments of $1,000. The notes will be available only in book-entry form through The Depository Trust Company, Clearstream, Luxembourg and the Euroclear System. You will not receive a certificate representing your notes except in very limited circumstances.

Security for the Notes. The notes will be secured by the assets of the trust, primarily the trust student loans.

Overcollateralization. On the closing date, the sum of the initial pool balance of the trust and the initial deposits into the capitalized interest account and the reserve account will be approximately 104.17% of the aggregate principal balance of the notes. Overcollateralization is intended to provide credit enhancement for the notes. In general, the amount of overcollateralization is intended to equal the product of (a) the overcollateralization percentage stated above minus 100% and (b) the then current aggregate principal balance of the notes. See “Description of the Notes—Credit Enhancement—Overcollateralization” in this prospectus supplement.

 

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Potential Future Interest Rate Cap Agreement. At any time after the closing date, at the direction of the administrator, the trust may enter into one or more interest rate cap agreements (collectively, the “potential future interest rate cap agreement”) with one or more eligible cap counterparties (collectively, the “potential future cap counterparty”) to hedge some or all of the interest rate risk of the notes. Any payment due by the trust to a potential future cap counterparty would be payable only out of funds available for distribution under clause (j) of “Description of the Notes—Distributions—Quarterly Distributions from the Collection Account” in this prospectus supplement. Any payments received from a potential future cap counterparty would be included in available funds. It is not anticipated that the trust would be required to make any payments to any potential future cap counterparty under any potential future interest rate cap agreement other than an upfront payment and, in some circumstances, a termination payment. See “Description of the Notes—Potential Future Interest Rate Cap Agreement” in this prospectus supplement.

INDENTURE TRUSTEE AND PAYING AGENT

The trust will issue the notes under an indenture to be dated as of the closing date. Under the indenture, Deutsche Bank Trust Company Americas will act as indenture trustee for the benefit of and to protect the interests of the noteholders and will act as paying agent for the notes.

LUXEMBOURG PAYING AGENT

As long as the rules of the Luxembourg Stock Exchange require a Luxembourg paying agent, the depositor will cause one to be appointed for the notes that are listed on the Official List of the Luxembourg Stock Exchange and traded on the Luxembourg Stock Exchange’s Euro MTF Market. Initially, Deutsche Bank Luxembourg S.A. will act as the Luxembourg paying agent.

ADMINISTRATOR

Sallie Mae, Inc. will act as the administrator of the trust under an administration agreement to be dated as of the closing date. Sallie Mae, Inc. is a Delaware corporation and a wholly-owned subsidiary of SLM Corporation. Subject to certain conditions, Sallie Mae, Inc. may transfer its obligations as administrator to an affiliate. See “Servicing and Administration—Administration Agreement” in the base prospectus.

INFORMATION ABOUT THE TRUST

Formation of the Trust

The trust is a Delaware statutory trust.

The only activities of the trust are acquiring, owning and managing the trust student loans and the other assets of the trust, issuing and making payments on the notes, entering into a potential future interest rate cap agreement, if any, and other related activities. See “Formation of the Trust—The Trust” in this prospectus supplement.

 

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The depositor is SLM Funding LLC. It is a Delaware limited liability company whose sole member is SLM Education Credit Finance Corporation. We sometimes refer to SLM Education Credit Finance Corporation as SLM ECFC.

The depositor will acquire the initial trust student loans from one or more of SLM ECFC, Bluemont Funding LLC, Town Center Funding LLC and Town Hall Funding LLC under separate purchase agreements and will subsequently sell them to the trust on the closing date under the sale agreement. We sometimes refer to Bluemont Funding LLC as Bluemont Funding, to Town Center Funding LLC as Town Center Funding and to Town Hall Funding LLC as Town Hall Funding. We also sometimes refer to SLM ECFC, Bluemont Funding, Town Center Funding and Town Hall Funding as a seller or the sellers, as applicable. The sale agreement and purchase agreements will each be dated as of the closing date.

The depositor will acquire any additional trust student loans from one or more of the sellers under additional purchase agreements and will sell them to the trust from time to time during the supplemental purchase period, provided there are sufficient funds on deposit in the supplemental purchase account.

The Bank of New York Mellon Trust Company, National Association, formerly known as The Bank of New York Trust Company, N.A., as interim eligible lender trustee, will hold legal title to the student loans for the depositor under an interim trust agreement.

Its Assets

The assets of the trust will include:

 

 

the trust student loans;

 

 

collections and other payments on the trust student loans;

 

 

funds it will hold from time to time in its trust accounts, including a collection account, a reserve account, a supplemental purchase account, a capitalized interest account, and a floor income rebate account; and

 

 

its rights under any potential future interest rate cap agreement.

The rest of this section describes the trust student loans and trust accounts more fully.

 

 

Trust Student Loans. The trust student loans (including the initial trust student loans and any additional trust student loans) are education loans to students and parents of students made under the Federal Family Education Loan Program, known as the FFELP. Approximately 85.1% of the initial trust student loans by principal balance are Stafford loans, and approximately 14.9% are SLS or PLUS loans. None of the trust student loans are consolidation loans. See “Appendix A—Federal Family Education Loan Program” in the base prospectus for a description of each type of FFELP loan.

 

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Initial Trust Student Loans. The initial trust student loans have been selected from the student loans owned by the sellers, or have been acquired by the related seller from one or more of its affiliates, based on the criteria established by the depositor, as described in this prospectus supplement and the base prospectus.

The depositor will acquire the initial trust student loans from the sellers on the closing date.

As of the statistical cutoff date, the initial trust student loans had a pool balance of approximately $4,175,980,383.

As of the statistical cutoff date, the weighted average annual borrower interest rate of the initial trust student loans was approximately 6.26% and their weighted average remaining term to scheduled maturity was approximately 125 months.

Any special allowance payments on the initial trust student loans are based on the three-month financial commercial paper rate as to approximately 94.61% of the initial trust student loans by principal balance and the 91-day Treasury bill rate as to approximately 5.39% of the initial trust student loans by principal balance. For more details concerning the initial trust student loans, see “Annex A—Characteristics of the Initial Trust Student Loan Pool” attached to this prospectus supplement.

Approximately 71.1% of the initial trust student loans by principal balance are 97% guaranteed, approximately 27.8% of the initial trust student loans by principal balance are 98% guaranteed and approximately 1.1% of the initial trust student loans by principal balance are 100% guaranteed, in each case, with respect to principal and interest by one of the guaranty agencies described in Annex A to this prospectus supplement and reinsured by the Department of Education under the Higher Education Act.

 

 

Significant Guarantor. The guaranty agencies described in Annex A to this prospectus supplement guarantee all of the initial trust student loans. United Student Aid Funds, Inc. guarantees approximately 60.4% of the initial trust student loans by principal balance and California Student Aid Commission guarantees approximately 10.8% of the initial trust student loans by principal balance. No other guarantor guarantees more than 10% of the initial trust student loans. See “The Trust Student Loan Pool—Insurance of Trust Student Loans; Guarantors of Trust Student Loans” in this prospectus supplement. The initial trust student loans are also reinsured by the United States Department of Education.

 

 

Additional Trust Student Loans. From time to time during the supplemental purchase period, the depositor may acquire additional trust student loans from the sellers to the extent that the trust has sufficient funds on deposit in the supplemental purchase account for the purchase of such additional trust student loans.

 

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Each applicable seller will have the right from time to time under the related purchase agreement to sell additional trust student loans to the depositor during the supplemental purchase period. All additional trust student loans purchased by the depositor are required under the sale agreement to be immediately sold to the trust, provided there are sufficient funds on deposit in the supplemental purchase account.

All additional trust student loans will be sold to the trust at a price equal to 100% of the outstanding principal balance of each additional trust student loan, plus accrued interest to be capitalized.

All additional trust student loans purchased by the trust will be required to satisfy certain eligibility criteria as described under “The Trust Student Loan Pool” in this prospectus supplement. We sometimes refer to additional student loans which satisfy the required eligibility criteria as eligible student loans in this prospectus supplement. See “The Trust Student Loan Pool—Eligible Trust Student Loans” in this prospectus supplement.

All additional trust student loans will also be guaranteed by guaranty agencies and reinsured by the United States Department of Education.

 

 

Collection Account. The administrator will establish and maintain the collection account as an asset of the trust in the name of the indenture trustee. The trust will make an initial deposit from the net proceeds of the sale of the notes into the collection account on the closing date. The deposit will be in cash or eligible investments equal to $7,560,000 plus the excess, if any, of the pool balance as of the statistical cutoff date over the pool balance as of the closing date to the extent such excess amount is not deposited into the supplemental purchase account. See “Servicing and Administration—Accounts” in the base prospectus for a more complete description of eligible investments.

The administrator will deposit collections on the trust student loans, interest subsidy payments, special allowance payments and certain other funds into the collection account, all as described in this prospectus supplement and the base prospectus.

 

 

Supplemental Purchase Account. On the closing date, the administrator will establish and maintain the supplemental purchase account as an asset of the trust in the name of the indenture trustee. The trust will make a deposit from the net proceeds of the sale of the notes into the supplemental purchase account on the closing date. The deposit will be in cash or eligible investments equal to the excess, if any, of the pool balance as of the statistical cutoff date over the pool balance as of the closing date, but not to exceed 5% of the pool balance as of the statistical cutoff date. Funds on deposit in the supplemental purchase account will be used to purchase additional trust student loans from time to time during the supplemental purchase period.

 

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Any amounts remaining on deposit in the supplemental purchase account at the end of the supplemental purchase period will be transferred to the collection account on the business day immediately following the end of that period and will be included as a part of available funds on the initial quarterly distribution date. Amounts on deposit in the supplemental purchase account will not be replenished.

 

 

Reserve Account. The administrator will establish and maintain a reserve account as an asset of the trust in the name of the indenture trustee. The trust will make an initial deposit from the net proceeds of the sale of the notes into the reserve account on the closing date. The deposit will be in cash or eligible investments equal to $10,439,951.

Funds in the reserve account may be replenished on each quarterly distribution date by additional funds available after all prior required distributions have been made. See “Description of the Notes—Distributions” in this prospectus supplement.

Amounts remaining in the reserve account on any quarterly distribution date in excess of the specified reserve account balance, after payments described below, will be deposited into the collection account for distribution on that quarterly distribution date.

The specified reserve account balance is the amount required to be maintained in the reserve account. The specified reserve account balance for any quarterly distribution date will be equal to the greater of:

 

   

0.25% of the pool balance as of the end of the related collection period; and

 

   

$4,175,980.

A collection period is the three-month period ending on the last day of March, June, September and December, in each case for the quarterly distribution date in the following month. However, the first collection period will be the period from the closing date through September 30, 2008.

The specified reserve account balance will be subject to adjustment as described in this prospectus supplement. In no event will it exceed the outstanding balance of the notes.

The reserve account will be available on each quarterly distribution date and each monthly allocation date to cover any shortfalls in payments of primary servicing and administration fees, the class A noteholders’ interest distribution amount and the class B noteholders’ interest distribution amount.

 

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In addition, the reserve account will be available:

 

   

on the maturity date for the class A notes and upon termination of the trust, to cover shortfalls in payments of the class A noteholders’ principal and accrued interest to the class A notes; and

 

   

on the maturity date for the class B notes and upon termination of the trust, to cover shortfalls in payments of the class B noteholders’ principal and accrued interest to the class B notes and any carryover servicing fees.

If the market value of the reserve account on any quarterly distribution date is sufficient to pay the remaining principal balance, interest accrued on the notes and any carryover servicing fees, amounts on deposit in that account will be so applied on that quarterly distribution date.

The reserve account enhances the likelihood of payment to noteholders. In certain circumstances, however, the reserve account could be depleted. This depletion could result in shortfalls in distributions to noteholders. See “Description of the Notes—Credit Enhancement—Reserve Account” in this prospectus supplement.

 

 

Capitalized Interest Account. The administrator will establish and maintain a capitalized interest account as an asset of the trust in the name of the indenture trustee. The trust will make an initial deposit from the net proceeds of the sale of the notes into the capitalized interest account on the closing date. The deposit will be in cash or eligible investments equal to $70,000,000.

Funds in the capitalized interest account will be available to cover shortfalls in payments of primary servicing and administration fees, the class A noteholders’ interest distribution amount and the class B noteholders’ interest distribution amount, in that order, after application of funds available in the collection account at the end of the related collection period but before application of the reserve account.

Funds in the capitalized interest account will not be replenished.

All funds remaining on deposit in the capitalized interest account on the October 2009 quarterly distribution date will be transferred to the collection account and included as a part of available funds on that quarterly distribution date.

The capitalized interest account further enhances the likelihood of timely interest payments to noteholders through the October 2009 quarterly distribution date.

 

 

Floor Income Rebate Account. The administrator will establish and maintain a floor income rebate account as an asset of the trust in

 

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the name of the indenture trustee. On or before each monthly allocation date, the administrator will instruct the indenture trustee to transfer from the collection account to the floor income rebate account the monthly accrual of interest paid by borrowers on trust student loans originated on or after April 1, 2006 that exceeds the special allowance support levels applicable to such trust student loans, which we refer to in this prospectus supplement as “floor income.” These deposited amounts will be used to offset the amount of floor income, if any, that is expected to be netted by the Department of Education against the interest subsidy payments and/or special allowance payments otherwise due to the trust for that collection period. At the end of the next succeeding collection period all sums deposited into the floor income rebate account during the previous collection period will be withdrawn on the related quarterly distribution date and become part of available funds on such date.

ADMINISTRATION OF THE TRUST

Distributions

Sallie Mae, Inc., as administrator, will instruct the indenture trustee to withdraw funds on deposit in the collection account, floor income rebate account and, to the extent required, the reserve account and the capitalized interest account on each monthly allocation date and/or quarterly distribution date, as applicable. Available funds will be applied on each applicable quarterly distribution date generally as shown in the chart on the following page of this prospectus supplement.

See “Description of the Notes—Distributions” in this prospectus supplement for a more detailed description of distributions.

 

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LOGO

 

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Transfer of the Assets to the Trust

Under a sale agreement, the depositor will sell the initial trust student loans to the trust. Additional trust student loans, if any, will be sold by the depositor to the trust under additional sale agreements, each of which will be executed pursuant to the terms of the original sale agreement. The eligible lender trustee will hold legal title to the trust student loans on behalf of the trust.

If the depositor breaches a representation under the initial sale agreement regarding an initial trust student loan or an additional sale agreement regarding an additional trust student loan, generally the depositor will have to cure the breach, repurchase or replace that trust student loan or reimburse the trust for losses resulting from the breach.

Each seller will have similar obligations under the purchase agreements. See “Transfer and Servicing Agreements—Purchase of Student Loans by the Depositor; Representations and Warranties of the Sellers” in the base prospectus.

Servicing of the Assets

Under a servicing agreement, Sallie Mae, Inc., as servicer, will be responsible for servicing, maintaining custody of and making collections on the trust student loans. It will also bill and collect payments from the guaranty agencies and the Department of Education. See “Servicing and Administration—Servicing Procedures” and “—Administration Agreement” in the base prospectus. Under some circumstances, the servicer may transfer its obligations as servicer. See “Servicing and Administration— Matters Regarding the Servicer” in the base prospectus.

If the servicer breaches a covenant under the servicing agreement regarding a trust student loan, generally it will have to cure the breach, purchase that trust student loan or reimburse the trust for losses resulting from the breach. See “The Trust Student Loan Pool—Insurance of Trust Student Loans; Guarantors of Trust Student Loans” in this prospectus supplement.

Compensation of the Servicer

The servicer will receive two separate fees: a primary servicing fee and a carryover servicing fee.

The primary servicing fee for any month will equal the sum of the monthly servicing fees for the trust student loans owned by the trust during that month. The monthly servicing fee for a trust student loan will be calculated on a unit basis and will equal (i) $1.50 per month per borrower for trust student loans that are in in-school status, (ii) $2.75 per month per borrower for trust student loans that are in grace status and (iii) $3.25 per month per borrower for all other trust student loans. A trust student loan’s current payment status will be determined as of the last day of each month. In the event a borrower has more than one trust student loan and those loans are in different payment statuses, the monthly servicing fee will be paid at the higher unit rate. In no event, however, will the primary servicing fee for any month exceed 1/12 of 0.90% of the outstanding principal balance of the trust student loans,

 

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calculated as of the closing date or the first day of the preceding calendar month, as the case may be.

The primary servicing fee will be payable in arrears out of available funds and amounts on deposit in the collection account, the capitalized interest account and the reserve account on each monthly allocation date or quarterly distribution date, as applicable, beginning in September 2008. Primary servicing fees due and payable to the servicer will include amounts from any prior monthly allocation dates or quarterly distribution dates, as applicable, that remain unpaid.

The carryover servicing fee will be payable to the servicer on each quarterly distribution date out of available funds.

The carryover servicing fee is the sum of:

 

 

the amount of specified increases in the costs incurred by the servicer;

 

 

the amount of specified conversion, transfer and removal fees;

 

 

any amounts described in the first two bullets that remain unpaid from prior monthly allocation dates or quarterly distribution dates, as applicable; and

 

 

interest on any unpaid amounts.

See “Description of the Notes—Servicing Compensation” in this prospectus supplement.

TERMINATION OF THE TRUST

The trust will terminate upon:

 

 

the maturity or other liquidation of the last trust student loan and the disposition of any amount received upon its liquidation; and

 

 

the payment of all amounts required to be paid to the noteholders.

See “The Student Loan Pools—Termination” in the base prospectus.

Optional Purchase

The servicer may purchase or arrange for the purchase of all remaining trust student loans on any quarterly distribution date on or after the first quarterly distribution date on which the pool balance is 10% or less of the initial pool balance.

The exercise of this purchase option will result in the early retirement of the remaining notes. The purchase price will equal the amount required to prepay in full, including all accrued and unpaid interest, the remaining trust student loans as of the end of the preceding collection period, but not less than a prescribed minimum purchase amount.

This prescribed minimum purchase amount is the amount that would be sufficient to:

 

 

pay to noteholders the interest payable on the related quarterly distribution date; and

 

 

reduce the outstanding principal amount of each class of notes then outstanding on the related quarterly distribution date to zero.

See “The Student Loan Pools—Termination” in the base prospectus.

 

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In addition to the optional purchase right described above, the servicer also will have an option, but not the obligation, to purchase any trust student loan on any date; provided that the servicer may not purchase trust student loans if the aggregate, cumulative principal balance thereof (at the time of purchase) exceeds 2% of the initial pool balance. The purchase price for any trust student loans purchased by the servicer using this option will be equal to the outstanding principal amount of such trust student loans plus accrued and unpaid interest through the date of purchase.

Auction of Trust Assets

The indenture trustee will offer for sale all remaining trust student loans at the end of the first collection period when the pool balance is 10% or less of the initial pool balance.

The trust auction date will be the third business day before the related quarterly distribution date. An auction will be consummated only if the servicer has first waived its optional right to purchase all of the remaining trust student loans as described above. The servicer will waive its option to purchase all of the remaining trust student loans if it fails to notify the eligible lender trustee and the indenture trustee, in writing, that it intends to exercise its purchase option before the indenture trustee accepts a bid to purchase the trust student loans. The depositor and its affiliates, including SLM ECFC and the servicer, and unrelated third parties may offer bids to purchase the trust student loans. The depositor or any affiliate may not submit a bid representing greater than fair market value of the trust student loans.

If at least two bids are received, the indenture trustee will solicit and re-solicit new bids from all participating bidders until only one bid remains or the remaining bidders decline to resubmit bids. The indenture trustee will accept the highest of the remaining bids if it equals or exceeds the higher of:

 

 

the minimum purchase amount described under “—Optional Purchase” above (plus any amounts owed to the servicer as carryover servicing fees); or

 

 

the fair market value of the trust student loans as of the end of the related collection period.

If at least two bids are not received or the highest bid after the re-solicitation process does not equal or exceed that amount, the indenture trustee will not complete the sale. The indenture trustee may, and at the direction of the depositor will be required to, consult with a financial advisor, which may include an underwriter of the notes or the administrator, to determine if the fair market value of the trust student loans has been offered. See “The Student Loan Pools—Termination” in the base prospectus.

The net proceeds of any auction sale will be used to retire any outstanding notes on the related quarterly distribution date.

If the sale is not completed, the indenture trustee may, but will not be under any obligation to, solicit bids for sale of the trust student loans after future collection periods upon terms similar to those described above, including the servicer’s waiver of its option to purchase all of the remaining

 

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trust student loans. The indenture trustee may or may not succeed in soliciting acceptable bids for the trust student loans either on the trust auction date or subsequently.

If the trust student loans are not sold as described above, on each subsequent quarterly distribution date, if the amount on deposit in the reserve account after giving effect to all withdrawals, except withdrawals payable to the depositor, exceeds the specified reserve account balance, the administrator will direct the indenture trustee to distribute the amount of the excess as accelerated payments of note principal.

See “The Student Loan Pools—Termination” in the base prospectus.

EXCESS DISTRIBUTION CERTIFICATEHOLDER

Under the trust agreement, the trust will also issue an excess distribution certificate to the depositor. This excess distribution certificate will represent the ownership of the residual interest in the trust. The depositor intends to transfer the excess distribution certificate to SLM ECFC. At any time thereafter, SLM ECFC may transfer ownership of the excess distribution certificate to another affiliate of SLM Corporation and/or it may be sold to an unaffiliated third party.

Distributions on the Excess Distribution Certificate. The excess distribution certificate will not bear interest and will not have a principal balance. In general, distributions on the excess distribution certificate will be made only after all of the notes have received all amounts due on a quarterly distribution date. See “—Principal Distributions” above and “Description of the Notes—Distributions” in this prospectus supplement.

TAX CONSIDERATIONS

Subject to important considerations described in the base prospectus:

 

 

In the opinion of federal tax counsel for the trust, the notes will be characterized as debt for federal income tax purposes.

 

 

In the opinion of federal tax counsel for the trust, the trust will not be characterized as an association or a publicly traded partnership taxable as a corporation for federal income tax purposes.

 

 

The class A notes will be issued with a de minimis amount of original issue discount for U.S. federal income tax purposes (as discussed in more detail in “U.S. Federal Income Tax Consequences” in this prospectus supplement).

 

 

In the opinion of Delaware tax counsel for the trust, the same characterizations would apply for Delaware state income tax purposes as for federal income tax purposes and noteholders who are not otherwise subject to Delaware taxation on income will not become subject to Delaware tax as a result of their ownership of notes.

See “U.S. Federal Income Tax Consequences” in this prospectus supplement and in the base prospectus.

 

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ERISA CONSIDERATIONS

Subject to important considerations and conditions described in this prospectus supplement and the base prospectus, the notes may, in general, be purchased by or on behalf of an employee benefit plan or other retirement arrangement, including an insurance company general account, only if:

 

 

an exemption from the prohibited transaction provisions of Section 406 of the Employee Retirement Income Security Act of 1974, as amended, and Section 4975 of the Internal Revenue Code of 1986, as amended, applies, so that the purchase and holding of the notes will not result in a non-exempt prohibited transaction; and

 

 

the purchase will not cause a non-exempt violation of any substantially similar federal, state, local or foreign laws.

Each fiduciary who purchases a note will be deemed to represent that an exemption exists and applies to it and that no non-exempt violations of any substantially similar laws will occur.

See “ERISA Considerations” in this prospectus supplement and the base prospectus for additional information concerning the application of ERISA.

RATINGS OF THE NOTES

The notes are required to be rated as follows:

 

 

Class A notes: Highest rating category from at least two of Fitch Ratings, Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

 

Class B notes: One of the two highest rating categories from at least two of Fitch, Moody’s and S&P.

A rating addresses only the likelihood of the timely payment of stated interest and the payment of principal at final maturity, and does not address the timing or likelihood of principal distributions prior to final maturity. See “Ratings of the Notes” in this prospectus supplement.

LISTING INFORMATION

Application has been made for the notes to be listed on the Official List of the Luxembourg Stock Exchange and to be traded on the Luxembourg Stock Exchange’s Euro MTF Market. We cannot assure you that the application will be granted. You should consult with Deutsche Bank Luxembourg S.A., the Luxembourg listing agent for the notes, to determine their status. You can contact the listing agent at 2 Boulevard Konrad Adenauer L-1115, Luxembourg. So long as any class of notes is listed on the Luxembourg Stock Exchange, and its rules so require, notices relating to that class of notes, including if such class is delisted, will be published in a leading newspaper having general circulation in Luxembourg, which is expected to be Luxemburger Wort and/or on the Luxembourg Stock Exchange’s website at: http://www.bourse.lu.

The notes have been accepted for clearing and settlement through Clearstream, Luxembourg and Euroclear.

 

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RISK FACTORS

Some of the factors you should consider before making an investment in the notes are described in this prospectus supplement and in the base prospectus under “Risk Factors.”

IDENTIFICATION NUMBERS

The notes will have the following CUSIP Numbers, ISIN and European Common Codes:

CUSIP Numbers

 

 

Class A Notes: 78445J AA5

 

 

Class B Notes: 78445J AB3

International Securities Identification Numbers (ISIN)

 

 

Class A Notes: US78445JAA51

 

 

Class B Notes: US78445JAB35

European Common Codes

 

 

Class A Notes: 038469258

 

 

Class B Notes: 038469347

 

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RISK FACTORS

You should carefully consider the following factors in order to understand the structure and characteristics of the notes and the potential merits and risks of an investment in the notes. Potential investors must review and be familiar with the following risk factors in deciding whether to purchase any note. The base prospectus describes additional risk factors that you should also consider beginning on page 20 of the base prospectus. These risk factors could affect your investment in or return on the notes.

 

The Notes Are Not Suitable Investments For All Investors    The notes are complex investments that should be considered only by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risk, and tax consequences of an investment, as well as the interaction of these factors.
Subordination Of The Class B Notes Results In A Greater Risk Of Loss    Holders of the class B notes bear a greater risk of loss than do holders of the class A notes because:
  

•       distributions of interest on the class B notes will be subordinate to the payment of interest on the class A notes, and distributions of principal on the class B notes will be subordinate to the payment of both interest and principal on the class A notes; and

  

•       no principal will be paid to the class B noteholders until all principal due to the class A noteholders has been paid in full.

 

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Investors In The Class B Notes Bear Greater Risk Of Loss Because The Priority Of Payment Of Interest And The Timing Of Principal Payments On The Class B Notes May Change Due To The Variability Of Cashflows    Interest on the class B notes generally will be paid prior to principal on the class A notes. However, if after giving effect to all required distributions of principal and interest on the notes on any quarterly distribution date, the outstanding principal balance of the trust student loans, including accrued interest thereon that is expected to be capitalized, and amounts then on deposit in the capitalized interest account (after any distributions of interest from that account) and in the reserve account in excess of the specified reserve account balance, would be less than the outstanding principal balance of the class A notes, interest on the class B notes will be subordinated to the payment of principal on the class A notes on that quarterly distribution date.
   Principal on the class B notes will not begin to be paid until the principal on the class A notes is paid in full. Thus, investors in the class B notes will bear a greater risk of loss than the holders of class A notes. Investors in the class B notes will also bear the risk of any adverse changes in the anticipated yield and weighted average life of their notes resulting from any variability in payments of principal and/or interest on the class B notes.
Certain Credit And Liquidity Enhancement Features Are Limited And If They Are Depleted, There May Be Shortfalls In Distributions To Noteholders    Certain credit and liquidity enhancement features, including the reserve account and the capitalized interest account, are limited in amount. In addition, the capitalized interest account will not be replenished, is available for a limited duration and will not be extended. In certain circumstances, if there is a shortfall in available funds, such amounts may be depleted. This depletion could result in shortfalls and delays in distributions to noteholders.

 

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The Characteristics Of The Trust Student Loans May Change    The statistical information in this prospectus supplement reflects only the characteristics of the initial trust student loans as of the statistical cutoff date. The initial trust student loans actually sold to the trust on the closing date will have characteristics that differ somewhat from the characteristics of the initial trust student loans as of the statistical cutoff date, due to payments received on and other changes in these loans that occur during the period from the statistical cutoff date to the closing date. We do not expect the characteristics of the initial trust student loans actually sold to the trust on the closing date to differ materially from the characteristics of the initial trust student loans as of the statistical cutoff date.
   However, in making your investment decision, you should assume that the actual characteristics of the trust student loans will vary somewhat from the characteristics of the initial trust student loans presented in this prospectus supplement as of the statistical cutoff date.
   Further, certain characteristics of the final pool of trust student loans may vary from the characteristics of the initial pool of trust student loans described in this prospectus supplement due to the acquisition of additional trust student loans during the supplemental purchase period. The only requirement limiting the purchase of additional trust student loans by the trust is that each such trust student loan must satisfy the eligibility criteria described under “The Trust Student Loan Pool” in this prospectus supplement at the time of its sale to the trust.

 

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Your Notes May Have A Degree Of Basis Risk, Which Could Compromise The Trust’s Ability To Pay Principal And Interest On Your Notes    There is a degree of basis risk associated with the notes. Therefore, there is a risk that shortfalls might occur because, among other things, while the effective interest rates of the trust student loans adjust on the basis of specified indices, the interest rates of the notes adjust on the basis of a different index. If a shortfall were to occur, the trust’s ability to pay your principal and/or interest on the notes could be compromised. See “Annex A—Characteristics of the Trust Student Loan Pool—Composition of the Trust Student Loans as of the Statistical Cutoff Date,” which specifies the percentages of trust student loans that adjust based on the three-month commercial paper rate or the 91-day Treasury bill rate, as applicable.
Certain Actions Can Be Taken Without Noteholder Approval    The transaction documents provide that certain actions may be taken based upon receipt by the indenture trustee of a confirmation from each of the rating agencies that the then-current ratings assigned by the rating agencies then rating the notes will not be impaired by those actions. In addition, the indenture provides that following an event of default, the requisite amount of class A notes will be able to accelerate the notes or enforce other remedies without the consent of the class B noteholders.
The Bankruptcy Of The Servicer Could Delay The Appointment Of A Successor Servicer Or Reduce Payments On Your Notes    In the event of default by the servicer resulting solely from certain events of insolvency or the bankruptcy of the servicer, a court, conservator, receiver or liquidator may have the power to prevent either the indenture trustee or the noteholders from appointing a successor servicer or prevent the servicer from appointing a sub-servicer, as the case may be, and delays in the collection of payments on the trust student loans may occur. Any delay in the collection of payments on the trust student loans may delay or reduce payments to noteholders.

 

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The Trust May Be Affected By Delayed Payments From Borrowers Called To Active Military Service    The Higher Education Act, the Servicemembers Civil Relief Act and similar state and local laws provide payment relief to borrowers who enter active military service and to borrowers in reserve status who are called to active duty after the origination of their trust student loans. Recent and ongoing military operations by the United States have increased the number of citizens who are in active military service, including persons in reserve status who have been called or may be called to active duty.
   The Servicemembers Civil Relief Act also limits the ability of a lender in the FFELP to take legal action against a borrower during the borrower’s period of active duty and, in some cases, during an additional three-month period thereafter.
   We do not know how many trust student loans have been or may be affected by the application of these laws. As a result, there may be unanticipated delays in payment and losses on the trust student loans.
Retention Of The Class B Notes By The Depositor Or Its Affiliate May Reduce The Liquidity Of The Class B Notes    Although all of the class B notes will initially be retained by the depositor or its affiliate, all or a portion of the class B notes could be subsequently sold in the secondary market at varying prices from time to time. Accordingly, if a portion of the retained class B notes is sold, the market for the class B notes may be less liquid than would otherwise be the case. Furthermore, if additional portions of the retained class B notes are sold in the secondary market, demand and market price for the class B notes already in the market could be adversely affected.
Your Ability To Sell Your Notes May Be Limited    The current period of general market illiquidity may continue or even worsen and may adversely affect the secondary market for your notes. Accordingly, you may not be able to sell your notes when you want to do so or you may be unable to obtain the price that you wish to receive for your notes and, as a result, you may suffer a loss on your investment.

 

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DEFINED TERMS

In later sections, we use a few terms that we define in the Glossary at the end of this prospectus supplement. These terms appear in bold face on their first use and in initial capital letters in all cases.

FORMATION OF THE TRUST

The Trust

SLM Student Loan Trust 2008-9 is a statutory trust newly formed in accordance with Delaware law on April 29, 2008, under a trust agreement dated as of April 29, 2008. The short-form trust agreement will be amended on the closing date pursuant to an amended and restated trust agreement to be dated the closing date among the depositor, the eligible lender trustee, the Delaware trustee and the indenture trustee. We refer to the short-form trust agreement and the amended and restated trust agreement together as the “trust agreement.”

After its formation, the trust will not engage in any activity other than:

 

   

acquiring, holding and managing the trust student loans and the other assets of the trust and related proceeds;

 

   

issuing the notes;

 

   

making payments on the notes;

 

   

entering into any potential future interest rate cap agreement at the direction of the administrator from time to time and making the payments, including any upfront payments, required thereunder; and

 

   

engaging in other activities that are necessary, suitable or convenient to accomplish, or are incidental to, the foregoing.

The trust was initially capitalized with nominal equity of $100, excluding any amounts to be deposited by the trust into the reserve account, the capitalized interest account, the supplemental purchase account and the collection account. The depositor will use the net proceeds from the sale of the notes to pay to the trust the amounts to be deposited by the trust into the reserve account, the capitalized interest account, the supplemental purchase account and the collection account. The trust will purchase the initial trust student loans from the depositor under a sale agreement to be dated as of the closing date, among the depositor, the trust and the eligible lender trustee. The trust will purchase any additional trust student loans under one or more additional sale agreements to be entered into with the depositor pursuant to the terms of the initial sale agreement. On the closing date, the depositor will use the net proceeds it receives from the sale of the initial trust student loans to the trust to pay the sellers the respective

 

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purchase prices for the initial trust student loans acquired from them under the purchase agreements. Additional trust student loans may be purchased by the depositor from any of the sellers during the supplemental purchase period only to the extent there are sufficient funds on deposit in the supplemental purchase account.

The property of the trust will consist of:

 

   

the pool of trust student loans, legal title to which is held by the eligible lender trustee on behalf of the trust;

 

   

all funds collected on trust student loans, including any special allowance payments and interest subsidy payments, on or after the applicable cutoff date;

 

   

all moneys and investments from time to time on deposit in the Trust Accounts;

 

   

its rights under any interest rate cap agreement entered into from time to time and the related documents;

 

   

its rights under the transfer and servicing agreements, including the right to require the applicable seller, the depositor or the servicer to repurchase trust student loans from it or to substitute student loans under certain conditions; and

 

   

its rights under the guarantee agreements with guarantors.

The sections “Transfer and Servicing Agreements,” “Servicing and Administration” and “The Notes” in the base prospectus contain descriptions of the material provisions of the transaction documents.

The notes will be secured by the property of the trust. The Trust Accounts will be established and maintained in the name of the indenture trustee for the benefit of the noteholders. To facilitate servicing and to minimize administrative burden and expense, the servicer will act as custodian of the promissory notes representing the trust student loans and other related documents.

The trust’s principal offices are in Jacksonville, Florida, in care of The Bank of New York Mellon Trust Company, National Association, as eligible lender trustee, at its address shown below.

 

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Capitalization of the Trust

The following table illustrates the capitalization of the trust as of the closing date, as if the issuance and sale of the securities had taken place on that date:

 

Floating Rate Class A Student Loan-Backed Notes

   $ 3,963,579,000

Floating Rate Class B Student Loan-Backed Notes

     122,584,000

Equity

     100
      

Total

   $ 4,086,163,100
      

Eligible Lender Trustee

The eligible lender trustee is The Bank of New York Mellon Trust Company, National Association (“BNYMTC”), formerly known as The Bank of New York Trust Company, N.A., a national banking association organized under the laws of the United States. It maintains a trust address at 10161 Centurion Parkway, Jacksonville, Florida, 32256. BNYMTC has been, and currently is, serving as eligible lender trustee for numerous securitization transactions and programs involving pools of student loan receivables. BNYMTC is one of the largest corporate trust providers of trust services in securitization transactions.

BNYMTC has provided the information in the prior paragraph. Other than the prior paragraph, BNYMTC has not participated in the preparation of, and is not responsible for, any other information contained in this prospectus supplement or the base prospectus.

The eligible lender trustee will acquire on behalf of the trust legal title to all the initial trust student loans purchased on the closing date and any additional trust student loans acquired during the supplemental purchase period. The eligible lender trustee, on behalf of the trust, has entered into separate guarantee agreements with the guaranty agencies described in this prospectus supplement with respect to the trust student loans. The eligible lender trustee qualifies as an eligible lender and the holder of the trust student loans for all purposes under the Higher Education Act and the guarantee agreements. Failure of the trust student loans to be owned by an eligible lender would result in the loss of guarantor and Department of Education payments on the trust student loans. See “Appendix A—Federal Family Education Loan Program—Eligible Lenders, Students and Educational Institutions” in the base prospectus.

The eligible lender trustee will act on behalf of the excess distribution certificateholder and represent and exercise the rights and interests of the excess distribution certificateholder under the trust agreement. Except as specifically delegated to the administrator in the administration agreement, the eligible lender trustee will also execute and deliver all agreements required to be entered into on behalf of the trust.

 

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The liability of the eligible lender trustee in connection with the issuance and sale of the notes will consist solely of the express obligations specified in the trust agreement and sale agreement. The eligible lender trustee will not be personally liable for any actions or omissions that were not the result of its own bad faith, willful misconduct or negligence. The eligible lender trustee will be entitled to be indemnified by the administrator for any loss, liability or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the performance of its duties under the indenture and the other transaction documents. See “Description of the Notes” in this prospectus supplement and “Transfer and Servicing Agreements” in the base prospectus. Affiliates of the depositor maintain banking relations with the eligible lender trustee.

The eligible lender trustee may resign at any time. The administrator may also remove the eligible lender trustee if it becomes insolvent or ceases to be eligible to continue as eligible lender trustee. In the event of such a resignation or removal, the administrator will appoint a successor. The resignation or removal of the eligible lender trustee and the appointment of a successor will become effective only when a successor accepts its appointment. To the extent expenses incurred in connection with the replacement of the eligible lender trustee are not paid by the successor trustee, the depositor will be responsible for the payment of such expenses.

Delaware Trustee

BNY Mellon Trust of Delaware, formerly known as BNYM (Delaware), will be the Delaware trustee under the trust agreement. The Delaware trustee will act in the capacities required for a Delaware trust under the Delaware Statutory Trust Act. BNY Mellon Trust of Delaware is a Delaware banking corporation with its principal place of business located at 100 White Clay Center, Route 273, Newark, Delaware 19711. BNY Mellon Trust of Delaware has and is currently serving as Delaware trustee for numerous securitization transactions and programs involving pools of student loan receivables.

BNY Mellon Trust of Delaware has provided the information in the prior paragraph for purposes of complying with Regulation AB. Other than the prior paragraph, BNY Mellon Trust of Delaware has not participated in the preparation of, and is not responsible for, any other information contained in this prospectus supplement or the base prospectus.

The liability of the Delaware trustee in connection with the issuance and sale of the notes will consist solely of the express obligations specified in the trust agreement. The Delaware trustee will not be personally liable for any actions or omissions that were not the result of its own bad faith, willful misconduct or negligence. The Delaware trustee will be entitled to be indemnified by the administrator (at the direction of the depositor) for any loss, liability or expense (including reasonable attorneys’ fees and expenses) incurred by it in connection with the performance of its duties under the trust agreement. See “Description of the Notes” in this prospectus supplement and “Transfer and Servicing Agreements” in the base prospectus. The depositor and its affiliates maintain banking relations with the Delaware trustee and/or its affiliates.

 

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The Delaware trustee may resign at any time. The administrator may also remove the Delaware trustee if it becomes insolvent or ceases to be eligible to continue as Delaware trustee. In the event of such a resignation or removal, the administrator will appoint a successor. The resignation or removal of the Delaware trustee and the appointment of a successor will become effective only when a successor accepts its appointment. To the extent expenses incurred in connection with the replacement of the Delaware trustee are not paid by the successor trustee, the depositor will be responsible for the payment of such expenses.

Indenture Trustee

The trust will issue the notes under an indenture to be dated as of the closing date. Under the indenture, Deutsche Bank Trust Company Americas will act as indenture trustee for the benefit of and to protect the interests of the noteholders and will act as paying agent for the notes. Deutsche Bank Trust Company Americas, a banking association organized under the laws of the State of New York, is the indenture trustee. Its address is 60 Wall Street, 26th floor, New York, New York 10005. Deutsche Bank Trust Company Americas has acted as trustee on numerous asset-backed securities transactions involving pools of student loans, including as of December 31, 2007, approximately 56 previous asset-backed securities transactions involving federally-insured student loans that were sponsored by Sallie Mae.

Affiliates of the depositor maintain customary banking relations on arms-length terms with the indenture trustee.

The indenture trustee will act on behalf of the noteholders and represent their interests in the exercise of their rights under the indenture.

To the extent expenses incurred in connection with the replacement of an indenture trustee are not paid by the indenture trustee that is being replaced, the depositor will be responsible for the payment of such expenses.

The indenture trustee will not be personally liable for any actions or omissions that were not the result of its own bad faith, willful misconduct or negligence. The indenture trustee will be entitled to be indemnified by the administrator (at the direction of the trust) for any loss, liability or expense (including reasonable attorneys’ fees) incurred by it in connection with the performance of its duties under the indenture and the other transaction documents. Upon the occurrence of an event of default, and in the event the administrator fails to reimburse the indenture trustee, the indenture trustee will be entitled to receive all such amounts owed from cashflow on the trust student loans prior to any amounts being distributed to the noteholders.

 

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USE OF PROCEEDS

The trust will purchase the initial trust student loans from the depositor under the initial sale agreement in exchange for the issuance of the notes and the issuance of the excess distribution certificate to the depositor.

The depositor will use the net proceeds from the sale of the notes to the underwriters to pay to the trust the initial deposits to the collection account, the capitalized interest account, the supplemental purchase account and the reserve account.

The depositor will then use the proceeds paid to the depositor by the underwriters to pay to the sellers the respective purchase prices due to those sellers for the initial trust student loans purchased by the depositor.

Expenses incurred to establish the trust and issue the notes (other than fees that are due to the underwriters) are payable by the depositor. Expenses to be paid by the depositor are estimated to be $3,627,708. Certain of these expenses will be reimbursed by the underwriters on the closing date.

THE TRUST STUDENT LOAN POOL

General

The eligible lender trustee, on behalf of the trust, will purchase the pool of initial trust student loans from the depositor on the closing date, and the trust will be entitled to collections on and proceeds of the initial trust student loans on and after that date.

Eligible Trust Student Loans

The initial trust student loans were selected from the portfolio of student loans owned by one or more of SLM ECFC, Bluemont Funding, Town Center Funding and Town Hall Funding (each, a “seller”) or their affiliates by employing several criteria, including requirements that each trust student loan as of the statistical cutoff date (and with respect to each additional trust student loan, as of its related subsequent cutoff date, to be specified at the time of its sale to the trust):

 

   

is a FFELP loan that is guaranteed as to at least (1) 100% with respect to trust student loans with an initial date of disbursement prior to October 1, 1993, (2) 98% with respect to trust student loans with an initial date of disbursement prior to July 1, 2006 and on or after October 1, 1993 or (3) 97% with respect to trust student loans with an initial date of disbursement on or after July 1, 2006, of its principal and interest by a guaranty agency under a guarantee agreement and the guaranty agency is, in turn, reinsured by the Department of Education in accordance with the FFELP;

 

   

contains terms in accordance with those required by the FFELP, the guarantee agreements and other applicable requirements;

 

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had its first disbursement prior to October 1, 2007;

 

   

is fully disbursed;

 

   

is not more than 210 days past due;

 

   

does not have a borrower who is noted in the related records of the servicer as being currently involved in a bankruptcy proceeding; and

 

   

has special allowance payments, if any, based on the three-month commercial paper rate or the 91-day Treasury bill rate.

Each additional trust student loan will be selected from portfolios of student loans owned by one of the sellers or an affiliate by employing the criteria listed above (as of the related subsequent cutoff date).

No trust student loan as of the applicable cutoff date was or will be subject to any prior obligation to sell that loan to a third party.

The depositor expects that any additional trust student loans, acquired by the trust following the closing date and prior to the end of the supplemental purchase period will have been sold to the depositor by a seller or one of their affiliates, and such student loans will be owned by a seller, and will be student loans that are eligible to be sold to the trust. Concurrently with the acquisition of any eligible student loans from a seller, the depositor will sell those loans directly to the trust. During the supplemental purchase period the purchase of eligible student loans by the depositor and in turn by the trust will be funded by means of a transfer of amounts on deposit in the supplemental purchase account as described in this prospectus supplement.

Additional Sellers

Bluemont Funding LLC. Bluemont Funding LLC is a Delaware limited liability company whose sole member is SLM Education Credit Finance Corporation. We sometimes refer to Bluemont Funding LLC as Bluemont Funding. Bluemont Funding was formed on January 17, 2008. Bluemont Funding is a limited purpose, bankruptcy remote entity formed to purchase education loans, whether originated under the FFELP or other private credit student loan programs, for re-sale in various securitization transactions. Sallie Mae, Inc. services all loans owned by Bluemont Funding that may be sold to the trust. The Bank of New York Mellon Trust Company, National Association, formerly known as The Bank of New York Trust Company, N.A., acts as interim eligible lender trustee on behalf of Bluemont Funding.

 

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Town Center Funding LLC. Town Center Funding LLC is a Delaware limited liability company whose sole member is SLM Education Credit Finance Corporation. We sometimes refer to Town Center Funding LLC as Town Center Funding. Town Center Funding was formed on January 17, 2008. Town Center Funding is a limited purpose, bankruptcy remote entity formed to purchase education loans, whether originated under the FFELP or other private credit student loan programs, for re-sale in various securitization transactions. Sallie Mae, Inc. services all loans owned by Town Center Funding that may be sold to the trust. The Bank of New York Mellon Trust Company, National Association, formerly known as The Bank of New York Trust Company, N.A., acts as interim eligible lender trustee on behalf of Town Center Funding.

Town Hall Funding LLC. Town Hall Funding LLC is a Delaware limited liability company whose sole member is SLM Education Credit Finance Corporation. We sometimes refer to Town Hall Funding LLC as Town Hall Funding. Town Hall Funding was formed on January 17, 2008. Town Hall Funding is a limited purpose, bankruptcy remote entity formed to purchase education loans, whether originated under the FFELP or other private credit student loan programs, for re-sale in various securitization transactions. Sallie Mae, Inc. services all loans owned by Town Hall Funding that may be sold to the trust. The Bank of New York Mellon Trust Company, National Association, formerly known as The Bank of New York Trust Company, N.A., acts as interim eligible lender trustee on behalf of Town Hall Funding.

Certain Expenses

Expenses incurred in connection with the acquisition of the trust student loans and the establishment of the trust (including the expenses of accountants, underwriters and rating agencies) are paid by Sallie Mae, Inc. and/or the depositor. Such expenses are not paid from proceeds of the sale of the notes.

Characteristics of the Initial Trust Student Loans

The tables contained in Annex A to this prospectus supplement provide a description of specified characteristics of the initial trust student loans as of the statistical cutoff date. The aggregate outstanding principal balance of the initial trust student loans in each of the tables in Annex A includes the principal balance due from borrowers plus accrued interest to be capitalized of $110,588,901 as of the statistical cutoff date.

Unless otherwise specified, all information with respect to the initial trust student loans presented in this prospectus supplement or in Annex A is as of August 14, 2008, which is the statistical cutoff date.

 

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Following the sale of additional trust student loans during the supplemental purchase period to the eligible lender trustee, on behalf of the trust, the aggregate characteristics of the final pool of trust student loans may vary from those shown in Annex A for the initial pool of trust student loans. If the aggregate characteristics of the final pool of trust student loans are materially different from those shown in Annex A, updated information will be provided in the first quarterly servicing report provided by the administrator for the period in which the supplemental purchase period ends.

Insurance of Trust Student Loans; Guarantors of Trust Student Loans

In general, disbursed student loans are guaranteed by the applicable guarantor, and reinsured against default by the Department of Education. The percentage of the guarantee is based upon the date of disbursement of the student loans as follows:

 

Disbursement Date

   Percentage
Guaranteed
 

Prior to October 1, 1993

   100 %

On or after October 1, 1993 but before July 1, 2006

   98 %

On or after July 1, 2006

   97 %

The eligible lender trustee has entered into a separate guarantee agreement with each of the guaranty agencies listed on page A-12 in Annex A to this prospectus supplement, under which each of the guarantors has agreed to guarantee certain of the trust student loans.

Under the Higher Education Amendments of 1992, if the Department of Education has determined that a guaranty agency is unable to meet its insurance obligations, a loan holder may submit claims directly to the Department of Education and the Department of Education is required to pay the full guarantee payment in accordance with guarantee claim processing standards no more stringent than those of the guaranty agency. However, the Department of Education’s obligation to pay guarantee claims directly in this fashion is contingent upon the Department of Education making the determination referred to above. We cannot assure you that the Department of Education would ever make that determination with respect to a guaranty agency or, if that determination were made, whether that determination or the ultimate payment of guarantee claims would be made in a timely manner. See “Appendix A—Federal Family Education Loan Program—Guaranty Agencies under the FFELP” in the base prospectus.

The table on page A-12 of Annex A to this prospectus supplement provides information with respect to the applicable percentage by outstanding principal balance of the initial trust student loans guaranteed by each guarantor.

Some historical information about the guaranty agency that guarantees trust student loans comprising at least 10% of the Initial Pool Balance is also provided beginning on page A-13 in Annex A to this prospectus supplement. For purposes of the tables in Annex A, we refer to this guaranty agency as the Significant Guarantor.

 

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The Department of Education is required to make reinsurance payments to guarantors with respect to FFELP loans in default. This requirement is subject to specified reductions when the guarantor’s claims rate for a fiscal year equals or exceeds certain trigger percentages of the aggregate original principal amount of FFELP loans guaranteed by that guarantor that are in repayment on the last day of the prior fiscal year. See “Appendix A—Federal Family Education Loan Program” to the base prospectus.

Each guaranty agency’s guarantee obligations with respect to any trust student loan is conditioned upon the satisfaction of all the conditions in the applicable guarantee agreement. These conditions include, but are not limited to, the following:

 

   

the origination and servicing of the trust student loan being performed in accordance with the FFELP, the Higher Education Act, the guaranty agency’s rules and other applicable requirements;

 

   

the timely payment to the guaranty agency of the guarantee fee payable on the trust student loan; and

 

   

the timely submission to the guaranty agency of all required pre-claim delinquency status notifications and of the claim on the trust student loan.

Failure to comply with any of the applicable conditions, including those listed above, may result in the refusal of the guaranty agency to honor its guarantee agreement on the trust student loan, in the denial of guarantee coverage for certain accrued interest amounts or in the loss of certain interest subsidy payments and special allowance payments.

Prospective investors may consult the Department of Education Data Books for further information concerning the guarantors.

Cure Period for Trust Student Loans

The sellers, the depositor or the servicer, as applicable, will be obligated to purchase, or to substitute qualified substitute student loans for, any trust student loan in the event of a material breach of certain representations, warranties or covenants concerning the trust student loan, following a period during which the breach may be cured. For purposes of trust student loans the cure period will be 210 days. However, in the case of breaches that may be cured by the reinstatement of the guarantor’s guarantee of the trust student loan, the cure period will be 360 days. In each case the cure period begins on the earlier of the date on which the breach is discovered and the date of the servicer’s receipt of the guarantor reject transmittal form with respect to the trust student loan. The purchase or substitution will be made not later than the end of the 210-day cure period or not later than the 60th day following the end of the 360-day cure period, as applicable.

 

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Notwithstanding the foregoing, if as of the last business day of any month the aggregate principal amount of trust student loans for which claims have been filed with and rejected by a guarantor as a result of a breach by the depositor or the servicer or for which the servicer determines that claims cannot be filed pursuant to the Higher Education Act as a result of that breach exceeds 1% of the Pool Balance, then the servicer or the depositor, as applicable, will be required to purchase, within 30 days of a written request by the indenture trustee, affected trust student loans in an aggregate principal amount so that after the purchases the aggregate principal amount of affected trust student loans is less than 1% of the Pool Balance. The trust student loans to be purchased by the servicer or the depositor pursuant to the preceding sentence will be based on the date of claim rejection, with the trust student loans with the earliest of these dates to be purchased first. See “Servicing and Administration—Servicer Covenants” and “Transfer and Servicing Agreements—Sale of Student Loans to the Trust; Representations and Warranties of the Depositor” and “—Purchase of Student Loans by the Depositor; Representations and Warranties of the Sellers” in the base prospectus.

Consolidation of Federal Benefit Billings and Receipts and Guarantor Claims with Other Trusts

Due to a Department of Education policy limiting the granting of new lender identification numbers, the eligible lender trustee will be allowed under the trust agreement to permit other trusts established by the depositor to securitize student loans to use the Department of Education lender identification number applicable to the trust. In that event, the billings submitted to the Department of Education for interest subsidy and special allowance payments on loans in the trust would be consolidated with the billings for the payments for student loans in other trusts using the same lender identification number and payments on the billings would be made by the Department of Education in lump sum form. These lump sum payments would then be allocated on a loan-by-loan basis among the various trusts using the same lender identification number.

In addition, the sharing of the lender identification number with other trusts may result in the receipt of claim payments from guaranty agencies in lump sum form. In that event, these payments would be allocated among the trusts in a manner similar to the allocation process for interest subsidy and special allowance payments.

The Department of Education regards the eligible lender trustee as the party primarily responsible to the Department of Education for any liabilities owed to the Department of Education or guaranty agencies resulting from the eligible lender trustee’s activities in the FFELP. As a result, if the Department of Education or a guaranty agency were to determine that the eligible lender trustee owes a liability to the Department of Education or a guaranty agency on any student loan included in a trust using the shared lender identification number, the Department of Education or that guaranty agency would be likely to collect that liability by offset against amounts due the eligible lender trustee under the shared lender identification number, including amounts owed in connection with the trust.

 

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In addition, other trusts using the shared lender identification number may in a given quarter incur consolidation origination fees, consolidation loan rebate fees or floor income rebates that exceed the interest subsidy and special allowance payments payable by the Department of Education on the loans in the other trusts, resulting in the consolidated payment from the Department of Education received by the eligible lender trustee under the lender identification number for that quarter equaling an amount that is less than the amount owed by the Department of Education on the loans in the trust for that quarter.

The servicing agreement for the trust and the servicing agreements for the other trusts established by the depositor that share the lender identification number to be used by the trust will require any trust to indemnify the other trusts against a shortfall or an offset by the Department of Education or a guaranty agency arising from the trust student loans held by the eligible lender trustee on the trust’s behalf.

Third-Party Originators of FFELP Loans

With respect to FFELP loans, the identity of the actual originator of any particular student loan is not material, as the requisite underwriting criteria, if any, are in each case prescribed by provisions of the Higher Education Act or the rules and regulations promulgated thereunder.

RECENT DEVELOPMENTS

Changes in Senior Officers. On July 11, 2008, SLM Corporation announced the appointment of Timothy Kitt as senior vice president, corporate finance. In this role, Mr. Kitt will oversee the modeling, structuring and analysis of SLM Corporation’s asset-backed securities. Previously, Mr. Kitt served in a variety of structured finance and capital markets roles at Wells Fargo Home Mortgage and KPMG Peat Marwick LLP. Most recently, he managed Wells Fargo’s asset-backed group responsible for mortgage and student loan product trading, structuring and analytics. Mr. Kitt received a Bachelor of Science degree from University of Virginia’s McIntire School of Commerce.

SLM Corporation also announced that J. Lance Franke, executive vice president, finance, and head of the structured finance group and fixed income investor relations for SLM Corporation, will retire from SLM Corporation, effective early 2009. Beginning in September 2008, his responsibilities will be assumed by Jonathan Clark, senior vice president, corporate finance. Mr. Clark joined SLM Corporation earlier this year after more than 12 years at Credit Suisse where he held various structured finance roles serving several industries, including student loans.

 

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In addition, SLM Corporation announced that Mark Daly, senior vice president, corporate finance, Steve O’Connell, senior vice president, structured finance, and Guido van der Ven, senior vice president, corporate finance, resigned from SLM Corporation, which resignation became effective August 1, 2008, to pursue a joint business venture. In their prior capacities, they were in charge of transaction execution, modeling, structuring and investor relations functions for the sponsor’s asset-backed securities. It is anticipated that Messrs. Daly, O’Connell and van der Ven will provide consulting services to SLM Corporation and its affiliates.

DESCRIPTION OF THE NOTES

General

The notes will be issued under an indenture substantially in the form filed as an exhibit to the registration statement to which this prospectus supplement relates. The following summary describes some terms of the notes, the indenture and the trust agreement. The base prospectus describes other terms of the notes. See “Description of the Notes” and “Additional Information Regarding the Notes” in the base prospectus. The following summary does not cover every detail and is subject to the provisions of the notes, the indenture and the trust agreement.

The Notes

The Class A Notes

Distributions of Interest. Interest will accrue on the outstanding principal balance of the class A notes at the class A interest rate. Interest will accrue during each accrual period and will be payable to the class A noteholders on each quarterly distribution date. Interest accrued as of any quarterly distribution date but not paid on that quarterly distribution date will be due on the next quarterly distribution date together with an amount equal to interest on the unpaid amount at the applicable rate per annum specified in the definition of Class A Note Interest Shortfall in the Glossary. Interest payments on the class A notes for any applicable quarterly distribution date will generally be funded from Available Funds and the other sources of funds for payment described in this prospectus supplement (subject to all prior required distributions). See “—Distributions” and “—Credit Enhancement” in this prospectus supplement. If these sources are insufficient to pay the Class A Noteholders’ Interest Distribution Amount for that quarterly distribution date, the shortfall will be allocated pro rata to the class A noteholders, based upon the total amount of interest then due on their respective notes.

 

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Interest will be payable on the class A notes on each quarterly distribution date. The class A notes will bear an annual interest rate equal to the sum of three-month LIBOR (except for the first accrual period) and 1.50%:

LIBOR for the first accrual period will be determined by the following formula:

x + [ 28 / 29 * (y-x)]

where:

x = one-month LIBOR, and

y = two-month LIBOR.

The administrator will determine LIBOR for each accrual period on the second business day before the beginning of that accrual period, as described under “Additional Information Regarding the Notes—Determination of Indices” in the base prospectus. The first accrual period for the notes will consist of 60 days.

Distributions of Principal. Principal payments will be made to the class A noteholders on each quarterly distribution date in an amount generally equal to the Principal Distribution Amount for that quarterly distribution date, until the principal balance of the class A notes is reduced to zero.

Principal payments on the class A notes will generally be funded from Available Funds and the other sources of funds available for payment described in this prospectus supplement (subject to all prior required distributions). See “—Distributions,” “—Credit Enhancement” and “—The Class B Notes—Subordination of the Class B Notes” in this prospectus supplement.

Amounts on deposit in the reserve account, other than amounts in excess of the Specified Reserve Account Balance, will not be available to make principal payments on the class A notes except at maturity of the class A notes or on the final distribution upon termination of the trust.

Principal payments generally will be applied on each quarterly distribution date in the priorities set forth under “—Distributions” in this prospectus supplement.

The outstanding principal balance of the class A notes will be due and payable in full on their maturity date. The actual date on which the outstanding principal and accrued interest of the class A notes is paid may be earlier than their maturity date, based on a variety of factors as described in “You Will Bear Prepayment and Extension Risk Due To Actions Taken By Individual Borrowers And Other Variables Beyond Our Control” under “Risk Factors” in the base prospectus.

The Class B Notes

Distributions of Interest. Interest will accrue on the outstanding principal balance of the class B notes at the class B interest rate. Interest will accrue during each accrual period and will be payable quarterly to the class B noteholders on each quarterly distribution date. Interest accrued as of any quarterly distribution date but not paid on

 

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that quarterly distribution date will be due on the next quarterly distribution date together with an amount equal to interest on the unpaid amount at the class B interest rate. Interest payments on the class B notes for any quarterly distribution date will generally be funded from Available Funds and the other sources of funds available for payment described in this prospectus supplement (subject to all prior required distributions). See “—Distributions,” “—Credit Enhancement—Reserve Account” and “—The Class B Notes—Subordination of the Class B Notes” in this prospectus supplement.

The annual interest rate for the class B notes with respect to each accrual period will be equal to LIBOR plus 2.25%.

The administrator will determine LIBOR for the class B notes for all accrual periods in the same manner as for the class A notes as described above.

Distributions of Principal. Principal payments will be made to the class B noteholders on each quarterly distribution date after the class A notes have been paid in full, in an amount generally equal to the Class B Noteholders’ Principal Distribution Amount for that quarterly distribution date. Principal payments will generally be funded from Available Funds and the other sources of funds described in this prospectus supplement (subject to all prior required distributions). Amounts on deposit in the reserve account, other than amounts in excess of the Specified Reserve Account Balance, will not be available to make principal payments on the class B notes except at their maturity and on the final distribution upon termination of the trust. See “—Distributions” and “—Credit Enhancement—Reserve Account” in this prospectus supplement.

The outstanding principal balance of the class B notes will be due and payable in full on the class B maturity date. The actual date on which the outstanding principal and accrued interest of the class B notes is paid may be earlier than their maturity date, based on a variety of factors as described in “You Will Bear Prepayment and Extension Risk Due To Actions Taken By Individual Borrowers And Other Variables Beyond Our Control” under “Risk Factors” in the base prospectus.

Subordination of the Class B Notes. On any quarterly distribution date, distributions of interest on the class B notes will be subordinated to the payment of interest on the class A notes and principal payments on the class B notes will be subordinated to the payment of both interest and principal on the class A notes. Consequently, on any quarterly distribution date, Available Funds, amounts on deposit in the reserve account remaining after payment of the primary servicing fee and the administration fee and, through the October 2009 quarterly distribution date, amounts on deposit in the capitalized interest account, will be applied to the payment of interest on the class A notes prior to any payment of interest on the class B notes, and no payments of the principal balance on the class B notes will be made on that quarterly distribution date until the class A notes have received the Class A Noteholders’ Principal Distribution Amount for that quarterly distribution date.

 

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Notwithstanding the foregoing, if:

(1) on any quarterly distribution date following distributions under clauses (a) through (e) under “—Distributions—Quarterly Distributions from the Collection Account” to be made on that quarterly distribution date, without giving effect to any payments from the capitalized interest account to the class B noteholders, the outstanding principal balance of the class A notes, would be in excess of:

 

   

the outstanding principal balance of the trust student loans, plus

 

   

any accrued interest on the trust student loans as of the last day of the related collection period that is expected to be capitalized, plus

 

   

the balance of the capitalized interest account on the quarterly distribution date following those distributions made with respect to clauses (a) through (d) under “—Distributions—Quarterly Distributions from the Collection Account” below, plus

 

   

the balance of the reserve account on the quarterly distribution date following those distributions made under clauses (a) through (e) under “—Distributions—Quarterly Distributions from the Collection Account” below, minus

 

   

the Specified Reserve Account Balance for that quarterly distribution date, or

(2) an event of default under the indenture affecting the class A notes has occurred and is continuing,

then, until the conditions described in (1) or (2) above no longer exist, the amounts on deposit in the collection account and the reserve account will be applied on that quarterly distribution date and each applicable subsequent quarterly distribution date to the payment of the Class A Noteholders’ Distribution Amount before any amounts are applied to the payment of the Class B Noteholders’ Distribution Amount.

Supplemental Purchase Period

During the supplemental purchase period, which is the period beginning on the closing date and ending on September 12, 2008, the eligible lender trustee, on behalf of the trust, will be permitted to purchase additional trust student loans, to the extent that: (1) they are eligible student loans, (2) they are purchased by the depositor from one of the sellers, and (3) there are sufficient amounts on deposit in the supplemental purchase account. The supplemental purchase account will be created with an initial deposit by the trust on the closing date of cash or eligible investments. The initial deposit will equal the excess, if any, of the Pool Balance as of the statistical cutoff date over the Pool Balance as of the closing date, but not to exceed 5% of the Pool Balance as of the statistical cutoff date. This account will not be replenished. The eligible lender trustee will have no obligation to determine whether a loan is an eligible student loan.

 

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Subject to the availability of eligible student loans, the applicable seller will have the right to sell to the depositor additional trust student loans, and subject to the availability of funds in the supplemental purchase account, the depositor will purchase such additional trust student loans, to be sold to the trust, at a price equal to 100% of the sum of (i) the outstanding principal balance of each additional trust student loan and (ii) all accrued interest to be capitalized.

As a condition to any sale, all of the additional trust student loans will be required to satisfy the eligibility criteria as described under “The Trust Student Loan Pool” in this prospectus supplement.

The eligible lender trustee, on behalf of the trust, will purchase from the depositor and the depositor will purchase and sell to the eligible lender trustee, on behalf of the trust, all additional trust student loans purchased from the applicable seller immediately following the purchase of such loans.

Any amounts remaining on deposit in the supplemental purchase account at the end of the supplemental purchase period will be transferred to the collection account on the business day immediately following the end of that period and included as a part of Available Funds for the initial quarterly distribution date.

Servicing Compensation

The servicer will be entitled to receive the servicing fee in an amount equal to the primary servicing fee and the carryover servicing fee as compensation for performing the functions as servicer for the trust. The primary servicing fee for any month will equal the sum of the monthly servicing fees for the trust student loans owned by the trust during that month. The monthly servicing fee for a trust student loan will be calculated on a unit basis and will equal (i) $1.50 per month per borrower for trust student loans that are in in-school status, (ii) $2.75 per month per borrower for trust student loans that are in grace status and (iii) $3.25 per month per borrower for all other trust student loans. A trust student loan’s current payment status will be determined as of the last day of each month. In the event a borrower has more than one trust student loan and those loans are in different payment statuses, the monthly servicing fee will be paid at the higher unit rate. In no event, however, will the primary servicing fee for any month exceed 1/12 of 0.90% of the outstanding principal balance of the trust student loans, calculated as of the closing date or the first day of the preceding calendar month, as the case may be.

The primary servicing fee will be payable in arrears out of Available Funds and amounts on deposit in the collection account, the capitalized interest account and the reserve account on each monthly allocation date or quarterly distribution date, as applicable, beginning in September 2008. Primary servicing fees due and payable to the servicer will include amounts from any prior monthly allocation dates or quarterly distribution dates, as applicable, that remain unpaid.

 

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The carryover servicing fee is the sum of:

 

   

the amount of specified increases in the costs incurred by the servicer;

 

   

the amount of specified conversion, transfer and removal fees;

 

   

any amounts described in the first two bullets that remain unpaid from prior monthly allocation dates or quarterly distribution dates, as applicable; and

 

   

interest on any unpaid amounts.

The carryover servicing fee will be payable to the servicer on each quarterly distribution date out of Available Funds after payment on that quarterly distribution date of clauses (a) through (g) under “—Distributions—Quarterly Distributions from the Collection Account” in this prospectus supplement. The carryover servicing fee will be subject to increase as agreed to by the administrator, the indenture trustee and the servicer to the extent that a demonstrable and significant increase occurs in the costs incurred by the servicer in providing the services to be provided under the servicing agreement, whether due to changes in applicable governmental regulations, guarantor program requirements or regulations, or postal rates.

Distributions

Deposits into the Collection Account. On the closing date, the trust will make an initial deposit into the collection account of cash or eligible investments equal to $7,560,000 plus the excess, if any, of the Pool Balance as of the statistical cutoff date over the Pool Balance as of the closing date, to the extent such excess amount is not deposited into the supplemental purchase account.

On or before the business day immediately prior to each quarterly distribution date, the servicer and the administrator will provide the indenture trustee with certain information as to the preceding collection period, including the amount of Available Funds received from the trust student loans and the aggregate purchase amount of the trust student loans to be purchased from the trust by the sellers, the depositor or the servicer.

The servicer will deposit all payments on the trust student loans and all proceeds of the trust student loans collected by it during each collection period into the collection account within two business days of receipt. The eligible lender trustee will deposit all interest subsidy payments and all special allowance payments on the trust student loans received by it for each collection period into the collection account within two business days of receipt. See “Servicing and Administration—Payments on Student Loans” in the base prospectus.

Monthly Distributions from the Collection Account. On each monthly allocation date that is not a quarterly distribution date, the administrator will instruct the indenture trustee to pay to the servicer the primary servicing fee due for the period from and including the preceding monthly allocation date from amounts on deposit in the collection account.

 

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Quarterly Distributions from the Collection Account. On or before each quarterly distribution date, the administrator will instruct the indenture trustee to make the following deposits and distributions in the amounts and in the order of priority shown below, except as otherwise provided under “—The Notes—The Class B Notes—Subordination of the Class B Notes” and “—The Notes—The Class A Notes—Distributions of Principal” in this prospectus supplement, to the extent of Available Funds for that quarterly distribution date, together with amounts transferred from the capitalized interest account through the October 2009 quarterly distribution date (with respect to clauses (a), (b), (c) and (d) below for that quarterly distribution date), and amounts transferred from the reserve account with respect to that quarterly distribution date:

(a) to the servicer, the primary servicing fee due on that quarterly distribution date;

(b) to the administrator, the administration fee due on that quarterly distribution date and all prior unpaid administration fees;

(c) to the class A noteholders, the Class A Noteholders’ Interest Distribution Amount;

(d) to the class B noteholders, the Class B Noteholders’ Interest Distribution Amount;

(e) the Class A Noteholders’ Principal Distribution Amount to the class A noteholders, until the principal balance of such class is paid in full;

(f) the Class B Noteholders’ Principal Distribution Amount to the class B noteholders, until the principal balance of such class is paid in full;

(g) to the reserve account, the amount, if any, necessary to reinstate the balance of the reserve account to the Specified Reserve Account Balance;

(h) to the indenture trustee, any unpaid fees and expenses including without limitation any indemnity amounts, to the extent such amounts have not been paid by the administrator;

(i) to the servicer, the aggregate unpaid amount of the carryover servicing fee, if any;

(j) to the related potential future cap counterparty under any potential future interest rate cap agreement, the amount of any payment due under such potential future interest rate cap agreement; and

(k) to the excess distribution certificateholder, any remaining amounts after application of the preceding clauses.

Notwithstanding the foregoing, in the event the trust student loans are not sold on the earliest possible trust auction date, on each subsequent quarterly distribution date the administrator will direct the indenture trustee to distribute as accelerated payments of principal on the notes all amounts that otherwise would be paid to the excess distribution certificateholder.

 

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Notwithstanding the foregoing, the administrator will instruct the indenture trustee to reimburse itself for any fees and expenses (including without limitation any indemnity amounts) owed to the indenture trustee under the indenture prior to making any payments under clause (a) through (k) above, to the extent the indenture trustee’s full amount of fees and expenses (including without limitation any indemnity amounts) are not reimbursed by the administrator. Payments to the indenture trustee from the trust shall not exceed $150,000 per annum in the absence of an event of default. However, if there is an event of default on the notes (with no acceleration) as a result of either (i) an uncured default in the observance or performance by the trust of any covenant or agreement, or (ii) an uncured default in the payment of interest on the class B notes, then such payments shall not exceed $150,000 per annum until an acceleration of the notes has occurred.

Distributions Following an Event of Default and Acceleration of the Maturity of the Notes

After any of the following:

 

   

an event of default under the indenture relating to the payment of principal on any class of notes at its maturity date or to the payment of interest on any class of notes which has resulted in an acceleration of the notes,

 

   

an event of default under the indenture relating to an insolvency event or a bankruptcy with respect to the trust which has resulted in an acceleration of the notes, or

 

   

a liquidation of the trust assets following any event of default under the indenture,

the priority of the payment of the notes changes. In particular, payments on the notes on each quarterly distribution date following the acceleration of the notes as provided above will be made in the following order of priority:

FIRST: pro rata, to the indenture trustee, for annual fees and any other amounts due and owing under the indenture, and to the eligible lender trustee and Delaware trustee, for annual fees and any other amounts due and owing under the trust agreement (but, in each case, only to the extent not paid by the administrator or the depositor);

SECOND: to the servicer, the primary servicing fee due on that quarterly distribution date;

THIRD: to the administrator, the administration fee due on that quarterly distribution date and all prior unpaid administration fees;

FOURTH: to the class A noteholders, the Class A Noteholders’ Interest Distribution Amount;

 

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FIFTH: to the class A noteholders, an amount sufficient to reduce the principal balance of the class A notes to zero;

SIXTH: to the class B noteholders, the Class B Noteholders’ Interest Distribution Amount;

SEVENTH: to the class B noteholders, an amount sufficient to reduce the principal balance of the class B notes to zero;

EIGHTH: to the servicer, the aggregate unpaid amount of the carryover servicing fee, if any;

NINTH: to the related potential future cap counterparty under any potential future interest rate cap agreement, the amount of any payment due under such potential future interest rate cap agreement; and

TENTH: to the excess distribution certificateholder, any remaining amounts after application of the preceding clauses.

Voting Rights and Remedies

Noteholders will have the voting rights and remedies described in the base prospectus. The notes will all vote and exercise remedies together as if they were a single class; provided, however, that with respect to exercising the right to accelerate the maturity of the notes, to liquidate collateral, to direct certain other remedies upon an event of default, or to waive an event of default, the class A notes and class B notes will have different rights under the indenture. The indenture also provides that with respect to certain of these matters, the class A notes will be the controlling class while they are outstanding, and then the class B notes will be the controlling class. See “Description of the Notes—The Indenture—Events of Default; Rights Upon Event of Default” in the base prospectus.

Credit Enhancement

Reserve Account. The reserve account will be created with an initial deposit by the trust on the closing date of cash or eligible investments in an amount equal to $10,439,951. The reserve account may be replenished on each quarterly distribution date, by deposit into it of the amount, if any, necessary to reinstate the balance of the reserve account to the Specified Reserve Account Balance from the amount of Available Funds remaining after payment for that quarterly distribution date under clauses (a) through (f) under “—Distributions—Quarterly Distributions from the Collection Account” above.

If the market value of securities and cash in the reserve account on any quarterly distribution date is sufficient to pay the remaining principal balance of and interest accrued on the notes and any carryover servicing fee, these assets will be so applied on that quarterly distribution date.

 

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If the amount on deposit in the reserve account on any quarterly distribution date after giving effect to all deposits or withdrawals from the reserve account on that quarterly distribution date is greater than the Specified Reserve Account Balance for that quarterly distribution date, subject to certain limitations, the administrator will instruct the indenture trustee to deposit the amount of the excess into the collection account for distribution on that quarterly distribution date.

Amounts held from time to time in the reserve account will continue to be held for the benefit of the trust. Funds will be withdrawn from cash in the reserve account on any quarterly distribution date or, in the case of the payment of any primary servicing fee, on any monthly allocation date, to the extent that the amount of Available Funds and the amount on deposit in the capitalized interest account on that quarterly distribution date or monthly allocation date is insufficient to pay any of the items specified in clauses (a), (b), (c) and (d) under “—Distributions—Quarterly Distributions from the Collection Account” above. These funds also will be withdrawn at maturity of a class of notes or on the final distribution upon termination of the trust to the extent that the amount of Available Funds at that time is insufficient to pay any of the items specified in clauses (e) and (f) and, in the case of the final distribution upon termination of the trust, clauses (h), (i), (j) and (k) under “—Distributions—Quarterly Distributions from the Collection Account” above.

The reserve account is intended to enhance the likelihood of timely distributions of interest to the noteholders and to decrease the likelihood that the noteholders will experience losses. In some circumstances, however, the reserve account could be reduced to zero. Except on the final distribution upon termination of the trust, amounts on deposit in the reserve account, other than amounts in excess of the Specified Reserve Account Balance, will not be available to cover any carryover servicing fees. Amounts on deposit in the reserve account will be available to pay principal on the notes and accrued interest at the maturity of the notes, and to pay the carryover servicing fee on the final distribution upon termination of the trust.

Capitalized Interest Account. The capitalized interest account will be created with an initial deposit by the trust on the closing date of cash or eligible investments in an amount equal to $70,000,000. The initial deposit will not be replenished.

Amounts held from time to time in the capitalized interest account will be held for the benefit of the class A noteholders and the class B noteholders, as applicable. If on any quarterly distribution date through the October 2009 quarterly distribution date, the amount of Available Funds is insufficient to pay any of the items specified in clauses (a), (b), (c) and (d) under “—Distributions—Quarterly Distributions from the Collection Account” above, amounts on deposit in the capitalized interest account on that quarterly distribution date will be withdrawn by the indenture trustee to cover such shortfalls, to the extent of funds on deposit therein, and will be allocated in the same order of priority shown under “—Distributions—Quarterly Distributions from the Collection Account” above.

 

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All funds remaining on deposit in the capitalized interest account on the October 2009 quarterly distribution date will be transferred to the collection account and included in Available Funds on that quarterly distribution date.

The capitalized interest account is intended to enhance the likelihood of timely distributions of interest to the noteholders through the October 2009 quarterly distribution date.

Subordination of the Class B Notes. On any quarterly distribution date, distributions of interest on the class B notes will be subordinated to the payment of interest on the class A notes and distributions of principal on the class B notes will be subordinated to the payment of both interest and principal on the class A notes. The subordination of the class B notes provides credit enhancement to the class A notes. See “—The Notes—The Class B Notes—Subordination of the Class B Notes” above.

Overcollateralization. On the closing date, the sum of the Initial Pool Balance of the trust and the initial deposits into the capitalized interest account and the reserve account will be approximately 104.17% of the aggregate principal balance of the notes. Overcollateralization is intended to provide credit enhancement for the notes. In general, the amount of overcollateralization is intended to equal the product of (a) the Overcollateralization Percentage minus 100% and (b) the then current aggregate principal balance of the notes.

Potential Future Interest Rate Cap Agreement

At any time after the closing date, at the direction of the administrator, the trust may enter into one or more interest rate cap agreements (collectively, the “potential future interest rate cap agreement”) with one or more Eligible Cap Counterparties (collectively, the “potential future cap counterparty”) to hedge some or all of the interest rate risk of the notes. Any potential future interest rate cap agreement would contain customary and usual terms for such derivative agreements. Any payment due by the trust to a potential future cap counterparty would be payable only out of funds payable under clause (j) of “—Distributions—Quarterly Distributions from the Collection Account” in this prospectus supplement. Any payments received from a potential future cap counterparty would be included in Available Funds. The trust will enter into a potential future interest rate cap agreement after the closing date only upon receipt of a written confirmation from each rating agency then rating the notes that such potential future interest rate cap agreement will not result in the downgrading of its then current rating of any class of notes. It is not anticipated that the trust would be required to make any payments to any potential future cap counterparty under any potential future interest rate cap agreement other than an upfront payment and, in some circumstances, a termination payment.

 

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Administration Fee

As compensation for the performance of the administrator’s obligations under the administration agreement and as reimbursement for its related expenses, the administrator will be entitled to an administration fee in an amount equal to $20,000 per collection period payable proportionately in arrears on each quarterly distribution date.

Determination of Indices

For a discussion of the determination of LIBOR, day count basis, interest rate determination dates and interest rate change dates applicable to the notes, see “Additional Information Regarding the Notes—Determination of Indices” in the base prospectus.

Notice of Interest Rates

Information concerning the past and current LIBOR and the interest rates applicable to the notes, will be available on the administrator’s website at: http://www.salliemae.com/about/investors/debtasset/slmsltrusts/issuedetails/2008-9.htm or by telephoning the administrator at 1-800-321-7179 between the hours of 9 a.m. and 4 p.m. Eastern time on any business day and will also be available through Reuters Page LIBOR01 or Bloomberg L.P. If any class of notes is listed on the Luxembourg Stock Exchange, the administrator will also notify the Luxembourg paying agent, and will cause the Luxembourg Stock Exchange to be notified, of the current interest rate for each class of notes listed on the exchange prior to the first day of each accrual period.

Accounts

The administrator will establish and maintain in the name of the indenture trustee the collection account, the capitalized interest account, the floor income rebate account, the supplemental purchase account and the reserve account for the benefit of the noteholders.

Funds in each Trust Account will be invested as provided in the indenture in eligible investments. See “Servicing and Administration—Accounts—Eligible Investments” in the base prospectus.

 

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Trust Fees

The table below sets forth the fees payable by or on behalf of the trust.

 

Party                

  

Amount

Servicer(1)

   The primary servicing fee(2) for any month will equal the sum of the monthly servicing fees for the trust student loans owned by the trust during that month. The monthly servicing fee for a trust student loan will be calculated on a unit basis and will equal (i) $1.50 per month per borrower for trust student loans that are in in-school status, (ii) $2.75 per month per borrower for trust student loans that are in grace status and (iii) $3.25 per month per borrower for all other trust student loans. In the event a borrower has more than one trust student loan and those loans are in different payment statuses, the monthly servicing fee will be paid at the higher unit rate. In no event, however, will the primary servicing fee for any month exceed 1/12 of 0.90% of the outstanding principal balance of the trust student loans. In addition, the servicer is entitled to the amount of any carryover servicing fee.

Indenture Trustee(3)

   $5,000 per annum, payable in advance.

Eligible Lender Trustee(4)

   $5,000 per annum, payable in advance.

Administrator(2)

   $20,000 per quarter, payable in arrears.

 

(1) To be paid as described in “—Servicing Compensation” above.
(2) To be paid before any amounts are distributed to the noteholders.
(3) To be paid by the administrator pursuant to a separate agreement with the indenture trustee, and may be paid by the trust if there is an event of default on the notes, and such amount has not previously been paid.
(4) To be paid by the administrator pursuant to a separate agreement with the eligible lender trustee, and may be paid by the trust if there is an event of default on the notes, and such amount has not previously been paid.

Optional Purchase

The servicer may purchase or arrange for the purchase of all remaining trust student loans on any quarterly distribution date on or after the first quarterly distribution date when the Pool Balance is 10% or less of the Initial Pool Balance.

The exercise of this purchase option will result in the early retirement of the remaining notes. The purchase price will equal the amount required to prepay in full, including all accrued interest, the remaining trust student loans as of the end of the preceding collection period, but not less than a prescribed minimum purchase amount.

This prescribed minimum purchase amount is the amount that would be sufficient to:

 

   

pay to noteholders the interest payable on the related quarterly distribution date; and

 

   

reduce the outstanding principal amount of each class of notes then outstanding on the related quarterly distribution date to zero.

 

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See “The Student Loan Pools—Termination” in the base prospectus.

In addition to the optional purchase right described above, the servicer also will have an option, but not the obligation, to purchase any trust student loan on any date; provided that the servicer may not purchase trust student loans if the aggregate, cumulative principal balance thereof (at the time of purchase) exceeds 2% of the Initial Pool Balance. The purchase price for any trust student loans purchased by the servicer using this option will be equal to the outstanding principal amount of such trust student loans plus accrued and unpaid interest through the date of purchase.

Auction of Trust Assets

The indenture trustee will offer for sale all remaining trust student loans at the end of the first collection period when the Pool Balance is 10% or less of the Initial Pool Balance.

The trust auction date will be the third business day before the related quarterly distribution date. An auction will be consummated only if the servicer has first waived its optional right to purchase all of the remaining trust student loans. The servicer will waive its option to purchase all of the remaining trust student loans if it fails to notify the eligible lender trustee and the indenture trustee, in writing, that it intends to exercise its purchase option before the indenture trustee accepts a bid to purchase the trust student loans. The depositor and its affiliates, including SLM ECFC and the servicer, and unrelated third parties may offer bids to purchase the trust student loans. The depositor or any affiliate may not submit a bid representing greater than fair market value of the trust student loans.

If at least two bids are received, the indenture trustee will solicit and re-solicit new bids from all participating bidders until only one bid remains or the remaining bidders decline to resubmit bids. The indenture trustee will accept the highest of the remaining bids if it equals or exceeds the higher of:

 

   

the minimum purchase amount described under “—Optional Purchase” above (plus any amounts owed to the servicer as carryover servicing fees); or

 

   

the fair market value of the trust student loans as of the end of the related collection period.

If at least two bids are not received or the highest bid after the re-solicitation process does not equal or exceed that amount, the indenture trustee will not complete the sale. The indenture trustee may, and at the direction of the depositor will be required to, consult with a financial advisor, which may include an underwriter of the securities or the administrator, to determine if the fair market value of the trust student loans has been offered. See “The Student Loan Pools—Termination” in the base prospectus.

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If the sale is not completed, the indenture trustee may, but will not be under any obligation to, solicit bids for sale of the trust student loans after future collection periods upon terms similar to those described above, including the servicer’s waiver of its option to purchase all of the remaining trust student loans. The indenture trustee may or may not succeed in soliciting acceptable bids for the trust student loans either on the trust auction date or subsequently.

If the trust student loans are not sold as described above, on each subsequent quarterly distribution date, if the amount on deposit in the reserve account after giving effect to all withdrawals, except withdrawals payable to the depositor, exceeds the specified reserve account balance, the administrator will direct the indenture trustee to distribute the amount of the excess as accelerated payments of note principal.

See “The Student Loan Pools—Termination” in the base prospectus.

STATIC POOLS

Information concerning the static pool data of previous FFELP loan securitizations of the sponsor can be found by clicking on the link for this transaction, labeled “2008-9,” on the sponsor’s website at http://www.salliemae.com/about/investors/StaticPoolindex.htm. This webpage presents the static pool data of the sponsor’s previous securitizations involving similar assets in the form of published charts. The information presented with respect to pools that were established prior to January 1, 2006 is not to be deemed a part of this prospectus supplement, the base prospectus or the related registration statement. We caution you that this pool of trust student loans may not perform in a similar manner to student loans in other trusts.

 

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PREPAYMENTS, EXTENSIONS, WEIGHTED AVERAGE LIVES AND EXPECTED MATURITIES OF THE NOTES

The rate of payment of principal on the notes and the yield on the notes will be affected by prepayments on the trust student loans that may occur as described below. Therefore, payments on the notes could occur significantly earlier than expected. Consequently, the actual maturities on the notes could be significantly earlier, average lives of the notes could be significantly shorter, and periodic balances could be significantly lower, than expected. Each trust student loan is prepayable in whole or in part, without penalty, by the borrowers at any time, or as a result of a borrower’s default, death, disability or bankruptcy and subsequent liquidation or collection of guarantee payments with respect thereto. The rate of such prepayments cannot be predicted and may be influenced by a variety of economic, social, competitive and other factors, including as described below. In general, the rate of prepayments may tend to increase to the extent that alternative financing becomes available on more favorable terms or at interest rates significantly below the interest rates applicable to the trust student loans. Prepayments could increase as a result of certain borrower benefit programs, among other factors. In addition, the depositor is obligated to repurchase any trust student loan (or substitute an eligible student loan) as a result of a breach of any of its representations and warranties relating to trust student loans contained in the sale agreement, and the servicer is obligated to purchase any trust student loan pursuant to the servicing agreement as a result of a breach of certain covenants with respect to such trust student loan, in each case where such breach materially adversely affects the interests of the trust in that trust student loan and is not cured within the applicable cure period. See “Transfer and Servicing Agreements—Purchase of Student Loans by the Depositor; Representations and Warranties of the Sellers” and “Servicing and Administration—Servicer Covenants” in the base prospectus. See also “Summary—Termination of the Trust” in this prospectus supplement regarding the servicer’s option to purchase the trust student loans when the Pool Balance is less than or equal to 10% of the Initial Pool Balance and the auction of the trust student loans if the servicer does not exercise such option.

On the other hand, the rate of principal payments and the yield on the notes will be affected by scheduled payments with respect to, and maturities and average lives of, the trust student loans. These may be lengthened as a result of, among other things, grace periods, deferral periods, forbearance periods, or repayment term or monthly payment amount modifications agreed to by the servicer. Therefore, payments on the notes could occur significantly later than expected. Consequently, actual maturities and weighted average lives of the notes could be significantly longer than expected and periodic balances could be significantly higher than expected. The rate of payment of principal on the notes and the yield on the notes may also be affected by the rate of defaults resulting in losses on defaulted trust student loans which have been liquidated, by the severity of those losses and by the timing of those losses, which may affect the ability of the guarantors to make timely guarantee payments with respect thereto. In addition, the maturity of certain of the trust student loans could extend beyond the latest legal maturity date for the notes.

 

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The rate of prepayments on the trust student loans cannot be predicted due to a variety of factors, some of which are described above, and any reinvestment risks resulting from a faster or slower incidence of prepayment of trust student loans will be borne entirely by the noteholders. Such reinvestment risks may include the risk that interest rates and the relevant spreads above particular interest rate indices are lower at the time noteholders receive payments from the trust than such interest rates and such spreads would otherwise have been if such prepayments had not been made or had such prepayments been made at a different time.

Exhibit I, “Prepayments, Extensions, Weighted Average Lives and Expected Maturities of the Notes,” attached to this prospectus supplement, shows, for each class of notes, the weighted average lives, expected maturities and percentages of the original principal amount remaining at certain quarterly distribution dates based on various assumptions.

U.S. FEDERAL INCOME TAX CONSEQUENCES

For a discussion of U.S. federal income tax consequences to holders of the notes, you should refer to the section entitled “U.S. Federal Income Tax Consequences” in the base prospectus.

Furthermore, it is anticipated that the class A notes will be issued with an amount of “original issue discount” (“OID”) that is less than the statutorily defined de minimis amount. Holders who purchase class A notes will include such de minimis OID as capital gain that is recognized as principal payments are made on the class A notes. Specifically, such holders should include in income as capital gain in any taxable year an amount of the de minimis OID in proportion to the percentage of principal payments received on the class A notes in the taxable year.

It is also anticipated that all of the class B notes will be retained by the depositor or its affiliate and from time to time resold by such depositor or its affiliate. Upon the date of resale, the retained class B notes will be deemed reissued as new notes for U.S. federal income tax purposes. To the extent that the purchase price paid on resale is greater than the principal amount of the class B note, the difference will be treated as bond premium. To the extent that the purchase price paid on resale is less than the principal amount of the class B note, and the difference is more than the statutorily defined de minimis amount, the difference will be treated as OID.

For a discussion of the treatment of bond premium and OID (including the exception for de minimis amounts), you should refer to the subsections entitled “Original Issue Discount” and “Amortizable Bond Premium” of the section entitled “U.S. Federal Income Tax Consequences—Tax Consequences to Holders of Notes in General” in the base prospectus.

 

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ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and Section 4975 of the Code impose certain restrictions on employee benefit plans or other retirement arrangements (including individual retirement accounts and Keogh plans) and any entities whose underlying assets include plan assets by reason of a plan’s investment in these plans or arrangements (including certain insurance company general accounts) (collectively, “Plans”).

ERISA also imposes various duties on persons who are fiduciaries of Plans subject to ERISA and prohibits certain transactions between a Plan and its so-called Parties in Interest under ERISA or Disqualified Persons under the Code (“Parties in Interest”). Particularly, the depositor, the servicer, the eligible lender trustee, the indenture trustee, the administrator, any underwriter, or any of their respective affiliates may be the fiduciary for one or more Plans. In addition, because these parties may receive certain benefits from the sales of the notes, the purchase of the notes using Plan assets over which any of them has investment authority should not be made if it could be deemed a violation of the prohibited transaction rules of ERISA and the Code for which no exemption is available.

If the notes were treated as “equity” for purposes of the Plan Asset Regulations, a Plan purchasing the notes could be treated as holding the trust student loans and the other assets of the trust as further described under “ERISA Considerations” in the base prospectus. If, however, the notes are treated as debt for purposes of the Plan Asset Regulations, the trust student loans and the other assets of the trust should not be deemed to be assets of an investing Plan. Although there is little guidance on this, the notes, which are denominated as debt, should be treated as debt and not as “equity interests” for purposes of the Plan Asset Regulations, as further described in the base prospectus. However, acquisition of the notes could still cause prohibited transactions under Section 406 of ERISA and Section 4975 of the Code if a note is acquired or held by a Plan with respect to which any of the trust, the depositor, any underwriter, the eligible lender trustee, the indenture trustee or certain of their respective affiliates is a Party in Interest.

Some employee benefit plans, such as governmental plans described in Section 3(32) of ERISA, certain church plans described in Section 3(33) of ERISA and foreign plans, are not subject to the prohibited transaction provisions of ERISA and Section 4975 of the Code. However, these plans may be subject to the provisions of other applicable federal, state, local or foreign law similar to the provisions of ERISA and Section 4975 of the Code (“Similar Law”). Moreover, if a plan is not subject to ERISA requirements but is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code, the prohibited transaction rules in Section 503 of the Code will apply.

 

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Before making an investment in the notes, a Plan or other employee benefit plan investor must determine whether, and each fiduciary causing the notes to be purchased by, on behalf of or using the assets of a Plan or other employee benefit plan, will be deemed to have represented that:

 

   

the Plan’s purchase and holding of the notes will not constitute or otherwise result in a non-exempt prohibited transaction in violation of Section 406 of ERISA or Section 4975 of the Code which is not covered by a statutory exemption or a class or other applicable exemption from the prohibited transaction rules as described in the base prospectus; and

 

   

the purchase and holding of the notes by any employee benefit plan subject to a Similar Law will not cause a non-exempt violation of that Similar Law.

Before making an investment in the notes, Plan fiduciaries are strongly encouraged to consult with their legal advisors concerning the impact of ERISA and the Code and the potential consequences of the investment in their specific circumstances. Moreover, in addition to determining whether the investment constitutes a direct or indirect prohibited transaction with a Party in Interest and whether exemptive relief is available to cover that transaction, each Plan fiduciary should take into account, among other considerations:

 

   

whether the fiduciary has the authority to make the investment;

 

   

the diversification by type of asset of the Plan’s portfolio;

 

   

the Plan’s funding objective; and

 

   

whether under the fiduciary standards of investment prudence and diversification an investment in the notes is appropriate for the Plan, also taking into account the overall investment policy of the Plan and the composition of the Plan’s investment portfolio.

ACCOUNTING CONSIDERATIONS

Various factors may influence the accounting treatment applicable to an investor’s acquisition and holding of asset-backed securities. Accounting standards, and the application and interpretation of such standards, are subject to change from time to time. Before making an investment in the notes, potential investors are strongly encouraged to consult their own accountants for advice as to the appropriate accounting treatment for their class of notes.

 

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REPORTS TO NOTEHOLDERS

Quarterly and annual reports concerning the trust will be delivered to noteholders. See “Reports to Securityholders” in the base prospectus. These reports also will be available at the office of the Luxembourg paying agent or Luxembourg listing agent for so long as any class of notes is listed on the Luxembourg Stock Exchange. The first of these quarterly distribution reports is expected to be available not later than November 12, 2008. See “Reports to Securityholders” in the base prospectus.

Except in very limited circumstances, you will not receive these reports directly from the trust. Instead, you will receive them through Cede & Co., as nominee of DTC and registered holder of the notes. See “Additional Information Regarding the Notes—Book-Entry Registration” in the base prospectus.

The administrator will not send reports directly to the beneficial holders of the notes. However, these reports may be viewed at the sponsor’s website: http://www.salliemae.com/about/investors/debtasset/slmsltrusts/issuedetails/2008-9.htm. The reports will not be audited nor will they constitute financial statements prepared in accordance with generally accepted accounting principles.

The trust will cause the administrator to file with the SEC all periodic reports required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The reports concerning the trust will be delivered to the holders of the notes upon request, in compliance with applicable securities laws. These reports include (but are not limited to):

 

   

Reports on Form 8-K (Current Report), following the issuance of the series of notes of the trust, including as Exhibits to the Form 8-K the transaction documents;

 

   

Reports on Form 8-K (Current Report), following the occurrence of events specified in Form 8-K requiring disclosure, which are required to be filed within the time-frame specified in Form 8-K related to the type of event;

 

   

Reports on Form 10-D (Asset-Backed Issuer Distribution Report), containing the distribution and pool performance information required on Form 10-D, which are required to be filed 15 days following each quarterly distribution date; and

 

   

Report on Form 10-K (Annual Report), containing the items specified in Form 10-K with respect to a fiscal year and the items required pursuant to Items 1122 and 1123 of Regulation AB under the Exchange Act.

 

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The trust has been assigned a separate Central Index Key by the SEC. Reports filed with respect to the trust with the SEC after the date hereof will be available under the trust’s Central Index Key, which is a serial company number assigned to the file number of the depositor. The trust’s separate Central Index Key is 0001434335.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the notes in Canada is being made only on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of notes are made. Any resale of the notes in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the notes.

Representations of Purchasers

By purchasing notes in Canada and accepting a purchase confirmation a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:

 

   

the purchaser is entitled under applicable provincial securities laws to purchase the notes without the benefit of a prospectus qualified under those securities laws,

 

   

where required by law, that the purchaser is purchasing as principal and not as agent,

 

   

the purchaser has reviewed the text above under “—Resale Restrictions”, and

 

   

the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the notes to the regulatory authority that by law is entitled to collect the information.

Further details concerning the legal authority for this information is available on request.

Rights of Action – Ontario Purchasers Only

Under Ontario securities legislation, certain purchasers who purchase a note offered by this prospectus supplement and base prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the notes, for rescission against us if this prospectus supplement and base prospectus contain a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the

 

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earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the notes. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the notes. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which the notes were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the note as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

Enforcement of Legal Rights

All of our directors and officers as well as any experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of notes should consult their own legal and tax advisors with respect to the tax consequences of an investment in the notes in their particular circumstances and about the eligibility of the notes for investment by the purchaser under relevant Canadian legislation.

NOTICE TO INVESTORS

Each underwriter has represented and agreed that:

 

   

(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell the notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the notes would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 ( the “FSMA”);

 

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it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity, within the meaning of section 21 of the FSMA, received by it in connection with the issue or sale of any notes in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and

 

   

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom.

No action has been or will be taken by the depositor or the underwriters that would permit a public offering of the notes in any country or jurisdiction other than in the United States, where action for that purpose is required. Accordingly, the notes may not be offered or sold, directly or indirectly, and neither this prospectus supplement and the base prospectus, nor any term sheet, circular, prospectus (including any free-writing prospectus or supplement thereto), form of application, advertisement or other material may be distributed in or from or published in any country or jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose hands all or any part of such documents come are required by the depositor and the underwriters to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, sell or deliver notes or have in their possession or distribute such documents, in all cases at their own expense.

UNDERWRITING

The notes listed below are offered severally by the underwriters, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the notes will be ready for delivery in book-entry form only through the facilities of DTC, Clearstream, Luxembourg and Euroclear, as applicable, on or about August 28, 2008 against payment in immediately available funds.

Subject to the terms and conditions in the underwriting agreement dated August 20, 2008 and the pricing agreement to be dated the date hereof, the depositor has agreed to cause the trust to issue to the depositor, the depositor has agreed to sell to each of the underwriters named below, and each of the underwriters has severally agreed to purchase, the principal amounts of notes shown opposite its name:

 

Underwriter

   Class A
Notes
   Class B
Notes

Banc of America Securities LLC

   $ 990,895,000    $ 30,646,000

Credit Suisse Securities (USA) LLC

     990,895,000      30,646,000

Greenwich Capital Markets, Inc.

     990,894,000      30,646,000

RBC Capital Markets Corporation

     990,895,000      30,646,000
             

Total

   $ 3,963,579,000    $ 122,584,000

Except as set forth below, the underwriters have agreed, subject to the terms and conditions of the underwriting agreement, to purchase all of the notes listed above if any of the notes are purchased. The underwriters have advised the depositor that they

 

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propose initially to offer the notes to the public at the prices listed below, and to certain dealers at these prices less concessions not in excess of the concessions listed below. The underwriters may allow and the dealers may reallow concessions to other dealers not in excess of the reallowances listed below. After the initial public offering, these prices and concessions may be changed.

 

     Initial Public
Offering Price
    Underwriting
Discount
    Proceeds to
The
Depositor
    Concession     Reallowance  

Per Class A Note

     99.59425 %     0.150 %     99.44425 %   0.090 %   0.0450 %

Per Class B Note*

     100.00000 %     0.250 %     99.75000 %   0.150 %   0.0750 %
                                    

Total

   $ 4,070,080,778     $ 6,067,952     $ 4,064,012,826      

 

* For the amount of Class B Notes retained by the depositor or its affiliate, the underwriting discount will be 0.10% and proceeds to the depositor will be 99.90% with no selling concession or reallowance.

The prices and proceeds shown in the table do not include any accrued interest. The actual prices and proceeds will include interest, if any, from the closing date. The proceeds shown are before deducting estimated expenses in respect of the notes of $3,627,708 payable by the depositor. Certain of these expenses will be reimbursed by the underwriters on the closing date.

The depositor and SLM ECFC have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

The notes are new issues of securities with no established trading market. The seller has been advised by the underwriters that the underwriters intend to make a market in the notes but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the notes.

In the ordinary course of their business, the underwriters and certain of their affiliates have in the past, and may in the future, engage in commercial and investment banking activities with the sellers, the depositor and their respective affiliates. The trust may, from time to time, invest the funds in the trust accounts in eligible investments acquired from the underwriters.

During and after the offering, the underwriters may engage in transactions, including open market purchases and sales, to stabilize the prices of the notes.

The underwriters, for example, may over-allot the notes for the account of the underwriting syndicate to create a syndicate short position by accepting orders for more notes than are to be sold.

In general, over-allotment transactions and open market purchases of the notes for the purpose of stabilization or to reduce a short position could cause the price of a note to be higher than it might be in the absence of those transactions.

One or more of the underwriters or their affiliates may retain a material percentage of any class of notes for its own account. The retained notes may be resold by such underwriter or such affiliate at any time in one or more negotiated transactions at varying prices to be determined at the time of sale.

 

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The depositor or its affiliate will retain all of the class B notes for its own account. Some or all of the retained notes may be resold by the depositor or its affiliate at any time in one or more negotiated transactions at varying prices to be determined at the time of sale. See “Risk Factors—Retention of the Class B Notes by the Depositor or its Affiliate May Reduce the Liquidity of the Class B Notes” in this prospectus supplement.

LISTING INFORMATION

Application has been made for the notes to be listed on the Official List of the Luxembourg Stock Exchange and to be traded on the Luxembourg Stock Exchange’s Euro MTF Market. We cannot assure you that this application will be granted. You should consult with Deutsche Bank Luxembourg S.A., the Luxembourg listing agent for the notes, at 2 Boulevard Konrad Adenauer, L-1115 Luxembourg, phone number (352) 421 22 639, to determine whether the notes are listed on the Luxembourg Stock Exchange. Copies of the indenture, the trust agreement, the forms of the notes, the administration agreement, the servicing agreement and the purchase and sale agreements will be available at the offices of the Luxembourg paying agent or the Luxembourg listing agent. Once the notes have been listed on the Official List of the Luxembourg Stock Exchange, trading may be effected on the Luxembourg Stock Exchange. So long as any class of notes is listed on the Luxembourg Stock Exchange’s Euro MTF Market, and its rules so require, notices relating to that class of notes, including if such class is delisted, will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be Luxemburger Wort) and/or on the Luxembourg Stock Exchange’s website at http://www.bourse.lu. The Luxembourg Stock Exchange will also be advised if any class of notes is delisted.

The notes, the indenture and the administration agreement are governed by the laws of the State of New York. The trust agreement is governed by the laws of the State of Delaware.

As long as the rules of the Luxembourg Stock Exchange require a Luxembourg paying agent, the depositor will cause one to be appointed for the notes for so long as they are listed on the Official List of the Luxembourg Stock Exchange and traded on the Luxembourg Stock Exchange’s Euro MTF Market. Initially, Deutsche Bank Luxembourg S.A. will act as the Luxembourg paying agent with respect to the notes.

If the notes are listed on the Luxembourg Stock Exchange and definitive notes are issued and the rules of the Luxembourg Stock Exchange require a Luxembourg paying and transfer agent, a Luxembourg paying and transfer agent will be appointed and notices will also be published in a leading newspaper having general circulation in Luxembourg (which is expected to be Luxemburger Wort) and/or on the Luxembourg Stock Exchange’s website at http://www.bourse.lu. We will maintain a Luxembourg paying and transfer agent as long as required by the rules of the Luxembourg Stock Exchange.

The notes have been accepted for clearing and settlement through Clearstream, Luxembourg and Euroclear.

 

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As long as the notes are listed on the Luxembourg Stock Exchange, quarterly distribution reports and annual servicing and administration reports concerning the trust and its activities will be available at the office of the Luxembourg paying agent or the Luxembourg listing agent and may be obtained free of charge. The first of these quarterly distribution reports is expected to be available not later than November 12, 2008.

The European Union Transparency Obligations Directive is currently being finalized and may be implemented in a manner that is unduly burdensome for the trust. In particular, the trust may be required to publish financial statements in the European Union prepared in accordance with, or reconciled to, international financial reporting standards. In such circumstances the administrator may decide to seek an alternative listing for the notes on a stock exchange of international standing outside the European Union as the administrator may select after consultation with the underwriters.

As of the date of this prospectus supplement, none of the trust, the eligible lender trustee nor the indenture trustee is involved in any litigation or arbitration proceeding relating to the issuance of the notes. The depositor is not aware of any proceedings relating to the issuance of the notes, whether pending or threatened.

The depositor has taken all reasonable care to confirm that the information contained in this prospectus supplement and the base prospectus is true and accurate in all material respects. In relation to the depositor, the trust, SLM ECFC, Bluemont Funding, Town Center Funding, Town Hall Funding, or the notes, the depositor accepts full responsibility for the accuracy of the information contained in this prospectus supplement and the base prospectus. Having made all reasonable inquiries, the depositor confirms that, to the best of its knowledge, there have not been omitted material facts the omission of which would make misleading any statements of fact or opinion contained in this prospectus supplement or the base prospectus, when taken as a whole.

The depositor confirms that there has been no material adverse change in the assets of the trust since August 14, 2008, which is the statistical cutoff date, and the date of the information with respect to the assets of the trust set forth in this prospectus supplement.

RATINGS OF THE NOTES

It is a condition to the issuance and sale of the class A notes that they be rated in the highest investment rating category by at least two of Fitch, Moody’s and S&P. It is a condition to the issuance and sale of the class B notes that they be rated in one of the two highest investment rating categories by at least two of those rating agencies. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency.

 

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A rating addresses only the likelihood of the timely payment of stated interest and the payment of principal at final maturity, and does not address the timing or likelihood of principal distributions prior to final maturity.

LEGAL MATTERS

Michael E. Sheehan, Senior Vice President and General Counsel of SLM Corporation, or any Deputy General Counsel or Associate General Counsel of Sallie Mae, Inc., acting as counsel to the sellers, the servicer, the administrator and the depositor, and McKee Nelson LLP, New York, New York, as special counsel to the sellers, the trust, the servicer, the administrator, the sponsor and the depositor, will give opinions on specified legal matters for the sellers, the trust, the servicer, the administrator, the sponsor and the depositor.

Shearman & Sterling LLP will give opinions on specified federal income tax matters for the trust. Richards, Layton & Finger, P.A., as Delaware counsel for the trust, will give opinions on specified legal matters for the trust, including specified Delaware state income tax matters.

Cadwalader, Wickersham & Taft LLP and Shearman & Sterling LLP also will give opinions on specified legal matters for the underwriters.

 

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GLOSSARY FOR PROSPECTUS SUPPLEMENT

Adjusted Pool Balance” means, for any quarterly distribution date,

 

   

if the Pool Balance as of the last day of the related collection period is greater than 40% of the Initial Pool Balance, then the Adjusted Pool Balance shall be the sum of the Pool Balance, Capitalized Interest and the Specified Reserve Account Balance for that quarterly distribution date, or

 

   

if the Pool Balance as of the last day of the related collection period is less than or equal to 40% of the Initial Pool Balance, then the Adjusted Pool Balance shall be the sum of the Pool Balance and Capitalized Interest.

Available Funds” means, as to each quarterly distribution date or monthly allocation date, as applicable, the sum of the following amounts received with respect to the related collection period or, in the case of a monthly allocation date, the applicable portion of these amounts:

 

   

all collections on the trust student loans, including any guarantee payments received on the trust student loans, but net of:

 

  (1) any collections in respect of principal on the trust student loans applied by the trust to repurchase guaranteed loans from the guarantors under the guarantee agreements,

 

  (2) all amounts required by the Higher Education Act to be paid to the Department of Education or to be repaid to borrowers, whether or not in the form of a principal reduction of the applicable trust student loan, on the trust student loans for that collection period, including floor income rebate fees, and

 

  (3) amounts deposited into the floor income rebate account during the related collection period;

 

   

any interest subsidy payments and special allowance payments with respect to the trust student loans during that collection period;

 

   

all proceeds of the liquidation of defaulted trust student loans which were liquidated during that collection period in accordance with the servicer’s customary servicing procedures, net of expenses incurred by the servicer related to their liquidation and any amounts required by law to be remitted to the borrower on the liquidated student loans, and all recoveries on liquidated student loans which were written off in prior collection periods or during that collection period;

 

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the aggregate purchase amounts received during that collection period for those trust student loans repurchased by the depositor or purchased by the servicer or for trust student loans sold to another eligible lender pursuant to the servicing agreement;

 

   

the aggregate purchase amounts received during that collection period for those trust student loans repurchased by the sellers;

 

   

the aggregate amounts, if any, received from the sellers, the depositor or the servicer, as the case may be, as reimbursement of non-guaranteed interest amounts, or lost interest subsidy payments and special allowance payments, on the trust student loans pursuant to the sale agreement or the servicing agreement;

 

   

amounts received by the trust pursuant to the servicing agreement during that collection period as to yield or principal adjustments;

 

   

any interest remitted by the administrator to the collection account prior to that quarterly distribution date or monthly allocation date;

 

   

investment earnings for that quarterly distribution date earned on amounts on deposit in each Trust Account;

 

   

amounts transferred from the reserve account in excess of the Specified Reserve Account Balance as of that quarterly distribution date;

 

   

amounts on deposit in the floor income rebate account that were deposited into such account during the collection period preceding that collection period;

 

   

all amounts received by the trust from any potential future cap counterparty, or otherwise under any potential future interest rate cap agreement, for deposit into the collection account for that quarterly distribution date;

 

   

on the initial quarterly distribution date, the collection account initial deposit and any amounts transferred into the collection account from the supplemental purchase account following the end of the supplemental purchase period; and

 

   

on the October 2009 quarterly distribution date, all funds then on deposit in the capitalized interest account that are transferred into the collection account on that quarterly distribution date;

provided that if on any quarterly distribution date there would not be sufficient funds, after application of Available Funds, as defined above, and application of amounts available from the capitalized interest account and the reserve account, to pay any of the items specified in clauses (a), (b), (c) and (d) under “Description of the Notes—Distributions—Quarterly Distributions from the Collection Account” in this prospectus

 

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supplement (but excluding clause (d), and including clause (e), if a condition exists as described in either (1) or (2) under “Description of the Notes—The Notes—The Class B Notes—Subordination of the Class B Notes” in this prospectus supplement), then Available Funds for that quarterly distribution date will include, in addition to Available Funds as defined above, amounts on deposit in the collection account, or amounts held by the administrator, or which the administrator reasonably estimates to be held by the administrator, for deposit into the collection account which would have constituted Available Funds for the quarterly distribution date succeeding that quarterly distribution date, up to the amount necessary to pay those items, and Available Funds for the succeeding quarterly distribution date will be adjusted accordingly.

Capitalized Interest” means for any quarterly distribution date through and including the October 2009 quarterly distribution date:

 

   

if neither of conditions (1) and (2) described under “Description of the Notes—The Notes—The Class B Notes—Subordination of the Class B Notes” in this prospectus supplement are in effect, the amount on deposit in the capitalized interest account on the quarterly distribution date following those distributions with respect to clauses (a), (b), (c) and (d) under “Description of the Notes—Distributions—Quarterly Distributions from the Collection Account” in this prospectus supplement, or

 

   

if either of conditions (1) or (2) described under “Description of the Notes— The Notes—The Class B Notes—Subordination of the Class B Notes” above is in effect, the excess, if any, of (x) the amount on deposit in the capitalized interest account on the quarterly distribution date following those distributions with respect to clauses (a), (b) and (c) under “Description of the Notes—Distributions—Quarterly Distributions from the Collection Account” in this prospectus supplement over (y) the Class B Noteholders’ Interest Distribution Amount.

Class A Note Interest Shortfall” means, for any quarterly distribution date, the excess of:

 

   

the amount of interest that was payable on the preceding quarterly distribution date to the class A notes, over

 

   

the amount of interest actually distributed with respect to the class A notes on that preceding quarterly distribution date,

plus interest on the amount of that excess, to the extent permitted by law, at the interest rate applicable for the class A notes from that preceding quarterly distribution date to the current quarterly distribution date.

Class A Noteholders’ Distribution Amount” means, for any quarterly distribution date, the sum of the Class A Noteholders’ Interest Distribution Amount and the Class A Noteholders’ Principal Distribution Amount for that quarterly distribution date.

 

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Class A Noteholders’ Interest Distribution Amount” means, for any quarterly distribution date, the sum of:

 

   

the amount of interest accrued at the class A note interest rate for the related accrual period on the outstanding balance of the class A notes on the applicable immediately preceding quarterly distribution date (or in the case of the initial quarterly distribution date, the closing date) after giving effect to all principal distributions to class A noteholders on preceding quarterly distribution dates; and

 

   

the Class A Note Interest Shortfall for that quarterly distribution date.

Class A Noteholders’ Principal Distribution Amount” means, for any quarterly distribution date, the Principal Distribution Amount for that quarterly distribution date; provided that the Class A Noteholders’ Principal Distribution Amount will not exceed the outstanding principal balance of the class A notes.

In addition, on the class A maturity date, the principal required to be distributed to the class A noteholders will include the amount required to reduce the outstanding balance of the class A notes to zero.

Class B Note Interest Shortfall” means, for any quarterly distribution date, the excess of:

 

   

the amount of interest that was payable on the preceding quarterly distribution date to the class B notes, over

 

   

the amount of interest actually distributed with respect to the class B notes on that preceding quarterly distribution date,

plus interest on the amount of that excess, to the extent permitted by law, at the interest rate applicable for the class B notes from that preceding quarterly distribution date to the current quarterly distribution date.

Class B Noteholders’ Distribution Amount” means, for any quarterly distribution date, the sum of the Class B Noteholders’ Interest Distribution Amount and the Class B Noteholders’ Principal Distribution Amount for that quarterly distribution date.

Class B Noteholders’ Interest Distribution Amount” means, for any quarterly distribution date, the sum of:

 

   

the amount of interest accrued at the class B note interest rate for the related accrual period on the outstanding balance of the class B notes on the immediately preceding quarterly distribution date (or in the case of the first quarterly distribution date, the closing date) after giving effect to all principal distributions to class B noteholders on preceding quarterly distribution dates, and

 

   

the Class B Note Interest Shortfall for that quarterly distribution date.

 

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Class B Noteholders’ Principal Distribution Amount” means, for any quarterly distribution date, the excess of:

 

  (1) the Principal Distribution Amount for that quarterly distribution date, over

 

  (2) the Class A Noteholders’ Principal Distribution Amount for that quarterly distribution date;

provided that the Class B Noteholders’ Principal Distribution Amount will not exceed the outstanding principal balance of the class B notes.

In addition, on the class B maturity date, the principal required to be distributed to the class B noteholders will include the amount required to reduce the outstanding principal balance of the class B notes to zero.

Clearstream, Luxembourg” means Clearstream Banking, sociéte anonyme, or any successor thereto.

DTC” means The Depository Trust Company, or any successor thereto.

Eligible Cap Counterparty” means an entity engaged in the business of entering into derivative instrument contracts that meets the then published criteria of the rating agencies for a cap counterparty to be eligible to provide interest rate caps to transactions similar to this transaction, or that otherwise satisfies the Rating Agency Condition.

Euroclear” means the Euroclear System in Europe, or any successor thereto.

FFELP” means the Federal Family Education Loan Program.

Fitch” means Fitch Inc., also known as Fitch Ratings, or any successor rating agency.

Initial Pool Balance” means the sum of the Pool Balance of the initial trust student loans as of the closing date and the amount deposited into the supplemental purchase account on the closing date.

Moody’s” means Moody’s Investors Service, Inc., or any successor rating agency.

Overcollateralization Percentage” means approximately 104.17%, calculated to equal the sum of the Initial Pool Balance and the initial deposits into the capitalized interest account and the reserve account, each as of the closing date, divided by the aggregate outstanding principal balance of the notes as of the closing date.

 

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Pool Balance” means, for any date, the aggregate principal balance of the trust student loans on that date, including accrued interest that is expected to be capitalized, as such balance has been reduced through such date by:

 

   

all payments received by the trust through that date from borrowers, the guaranty agencies and the Department of Education;

 

   

all amounts received by the trust through that date from repurchases of the trust student loans by any of the sellers, the depositor or the servicer;

 

   

all liquidation proceeds and Realized Losses on the trust student loans liquidated through that date;

 

   

the amount of any adjustments to balances of the trust student loans that the servicer makes under the servicing agreement through that date; and

 

   

the amount by which guarantor reimbursements of principal on defaulted trust student loans through that date are reduced from 100% to such other applicable percentages as are required by the risk sharing provisions of the Higher Education Act.

Principal Distribution Amount” means as to each quarterly distribution date, the amount by which (a) the aggregate outstanding principal balance of the notes immediately prior to such distribution date exceeds (b) the Adjusted Pool Balance for that quarterly distribution date divided by the Overcollateralization Percentage.

Rating Agency Condition” means the written confirmation or reaffirmation, as the case may be, from each rating agency then rating the notes that any intended action will not result in the downgrading of its then-current rating of any class of notes.

Realized Loss” means the excess of the principal balance, including any interest that had been or had been expected to be capitalized, of any liquidated student loan over liquidation proceeds for a student loan to the extent allocable to principal, including any interest that had been or had been expected to be capitalized.

S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor rating agency.

Significant Guarantor” means the guaranty agency that guarantees trust student loans comprising at least 10% of the Initial Pool Balance of the initial trust student loans as of the statistical cutoff date.

 

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Specified Reserve Account Balance” means, for any quarterly distribution date, the greater of:

 

  (a) 0.25% of the Pool Balance as of the close of business on the last day of the related collection period; and

 

  (b) $4,175,980;

provided that in no event will that balance exceed the sum of the aggregate outstanding principal balance of the notes.

Trust Accounts” means, collectively, the collection account, the reserve account, the capitalized interest account, the supplemental purchase account and the floor income rebate account.

 

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ANNEX A

 

CHARACTERISTICS OF

THE INITIAL TRUST STUDENT LOAN POOL

 

The initial trust student loans were selected from the portfolio of student loans owned by SLM ECFC, Bluemont Funding, Town Center Funding, Town Hall Funding or one of their affiliates by employing several criteria, including requirements that each trust student loan as of the statistical cutoff date (and with respect to each additional trust student loan, as of its related subsequent cutoff date, to be specified at the time of its sale to the trust):

 

  ·  

is a FFELP loan that is guaranteed as to at least (1) 100% with respect to trust student loans with an initial date of disbursement prior to October 1, 1993; (2) 98% with respect to trust student loans with an initial date of disbursement prior to July 1, 2006 and on or after October 1, 1993 or (3) 97% with respect to trust student loans with an initial date of disbursement on or after July 1, 2006, of its principal and interest by a guaranty agency under a guarantee agreement and the guaranty agency is, in turn, reinsured by the Department of Education in accordance with the FFELP;

 

  ·  

contains terms in accordance with those required by the FFELP, the guarantee agreements and other applicable requirements;

 

  ·  

had its first disbursement prior to October 1, 2007;

 

  ·  

is fully disbursed;

 

  ·  

is not more than 210 days past due;

 

  ·  

does not have a borrower who is noted in the related records of the servicer as being currently involved in a bankruptcy proceeding; and

 

  ·  

has special allowance payments, if any, based on the three-month commercial paper rate or the 91-day Treasury bill rate.

 

Unless otherwise specified, all information with respect to the initial trust student loans is presented herein as of August 14, 2008, which is the statistical cutoff date.

 

The following tables provide a description of specified characteristics of the initial trust student loans as of the statistical cutoff date. The aggregate outstanding principal balance of the initial trust student loans in each of the following tables includes the principal balance due from borrowers, plus accrued interest to be capitalized of $110,588,901 as of the statistical cutoff date.

 

The distribution by weighted average interest rate applicable to the initial trust student loans on any date following the statistical cutoff date may vary significantly from the information shown in the following tables as a result of variations in the effective rates of interest applicable to the initial trust student loans and in rates of principal reduction. Moreover, the information below about the weighted average remaining term to maturity of the initial trust student loans as of the statistical cutoff date may vary significantly from the actual term to maturity of any of the initial trust

 

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student loans as a result of prepayments or the granting of deferment and forbearance periods.

 

The following tables also contain information concerning the total number of loans and the total number of borrowers in the portfolio of initial trust student loans.

 

Percentages and dollar amounts in any table may not total 100% or the initial trust student loan balance, as applicable, due to rounding.

 

COMPOSITION OF THE INITIAL TRUST STUDENT LOANS AS OF THE STATISTICAL CUTOFF DATE

 

Aggregate Outstanding Principal Balance

  $ 4,175,980,383  

Aggregate Outstanding Principal Balance—Treasury Bill

  $ 224,892,312  

Percentage of Aggregate Outstanding Principal Balance—Treasury Bill

    5.39 %

Aggregate Outstanding Principal Balance—Commercial Paper

  $ 3,951,088,071  

Percentage of Aggregate Outstanding Principal Balance—Commercial Paper

    94.61 %

Number of Borrowers

    493,479  

Average Outstanding Principal Balance Per Borrower

  $ 8,462  

Number of Loans

    1,023,311  

Average Outstanding Principal Balance Per Loan—Treasury Bill

  $ 2,262  

Average Outstanding Principal Balance Per Loan—Commercial Paper

  $ 4,277  

Weighted Average Remaining Term to Scheduled Maturity

    125 months  

Weighted Average Annual Borrower Interest Rate

    6.26 %

 

We determined the weighted average remaining term to maturity shown in the table from the statistical cutoff date to the stated maturity date of the applicable initial trust student loan without giving effect to any deferment or forbearance periods that may be granted in the future. See Appendix A to the base prospectus.

 

The weighted average annual borrower interest rate shown in the table is exclusive of special allowance payments. The weighted average spread for special allowance payments to the 91-day Treasury bill rate was 2.98% as of the statistical cutoff date.

 

For these purposes, the 91-day Treasury bill rate is the weighted average per annum discount rate, expressed on a bond equivalent basis and applied on a daily basis, for direct obligations of the United States with a maturity of thirteen weeks, as reported by the U.S. Department of the Treasury.

 

The weighted average spread for special allowance payments to the three-month commercial paper rate was 2.03% as of the statistical cutoff date. See “Federal Family Education Loan Program—Special Allowance Payments” in Appendix A to the base prospectus.

 

For these purposes, the three-month commercial paper rate is the average of the bond equivalent rates of the three-month commercial paper (financial) rates in effect for each of the days in a calendar quarter as reported by the Federal Reserve in Publication H.15 (or its successor) for that calendar quarter.

 

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DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

BORROWER INTEREST RATES

AS OF THE STATISTICAL CUTOFF DATE

 

Interest Rate


   Number of
Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

3.51% to 4.00%

   113,705    $ 410,998,230    9.8 %

4.01% to 4.50%

   189,068      569,021,658    13.6  

5.01% to 5.50%

   73,444      194,784,804    4.7  

5.51% to 6.00%

   7,758      22,488,437    0.5  

6.51% to 7.00%

   591,727      2,447,414,510    58.6  

7.51% to 8.00%

   4,604      8,292,252    0.2  

8.01% to 8.50%

   42,720      522,388,687    12.5  

Equal to or greater than 8.51%

   285      591,806    *  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  


* Represents a percentage greater than 0% but less than 0.05%.

 

We determined the interest rates shown in the table above using the interest rates applicable to the initial trust student loans as of the statistical cutoff date. Because most of the initial trust student loans bear interest at variable rates of interest that reset annually effective as of July 1 of each year, and because, as a general matter, loans with different interest rates are likely to be repaid at different rates, this information will not remain applicable to the initial trust student loans in the future. See Appendix A to the base prospectus.

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

OUTSTANDING PRINCIPAL BALANCE PER BORROWER

AS OF THE STATISTICAL CUTOFF DATE

 

Range of Outstanding

Principal Balance


   Number of
Borrowers

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

Less than $5,000.00

   211,901    $ 584,390,393    14.0 %

$5,000.00—$9,999.99

   160,131      1,117,871,863    26.8  

$10,000.00—$14,999.99

   51,546      615,159,933    14.7  

$15,000.00—$19,999.99

   27,985      492,015,545    11.8  

$20,000.00—$24,999.99

   19,113      414,619,187    9.9  

$25,000.00—$29,999.99

   6,140      167,910,655    4.0  

$30,000.00—$34,999.99

   4,386      142,034,312    3.4  

$35,000.00—$39,999.99

   3,237      122,078,632    2.9  

$40,000.00—$44,999.99

   3,240      136,197,386    3.3  

$45,000.00—$49,999.99

   1,613      76,990,347    1.8  

$50,000.00—$54,999.99

   888      46,537,669    1.1  

$55,000.00—$59,999.99

   552      31,755,128    0.8  

$60,000.00—$64,999.99

   649      40,504,332    1.0  

$65,000.00—$69,999.99

   314      21,202,478    0.5  

$70,000.00—$74,999.99

   240      17,433,427    0.4  

$75,000.00—$79,999.99

   281      21,809,240    0.5  

$80,000.00—$84,999.99

   231      19,071,833    0.5  

$85,000.00—$89,999.99

   197      17,300,197    0.4  

$90,000.00—$94,999.99

   203      18,828,294    0.5  

$95,000.00—$99,999.99

   112      10,919,826    0.3  

$100,000.00 and above

   520      61,349,706    1.5  
    
  

  

Total

   493,479    $ 4,175,980,383    100.0 %
    
  

  

 

 

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DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

SCHOOL TYPE AS OF

THE STATISTICAL CUTOFF DATE

 

School Type


   Number
of Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

4-year Institutions

   790,494    $ 3,562,804,878    85.3 %

2-year Institutions

   169,743      442,860,875    10.6  

Proprietary/Vocational

   63,062      170,299,106    4.1  

Unidentified

   12      15,525    *  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  


* Represents a percentage greater than 0% but less than 0.05%.

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

DELINQUENCY STATUS AS OF

THE STATISTICAL CUTOFF DATE

 

Number of Days Delinquent


   Number
of Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

0 to 30

   931,210    $ 3,899,331,050    93.4 %

31 to 60

   32,976      106,464,686    2.5  

61 to 90

   19,464      57,955,936    1.4  

91 to 120

   14,168      39,701,387    1.0  

121 to 150

   9,980      28,391,691    0.7  

151 to 180

   8,630      24,999,077    0.6  

181 to 210

   6,883      19,136,557    0.5  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  

 

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DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS

BY REMAINING TERM TO SCHEDULED MATURITY

AS OF THE STATISTICAL CUTOFF DATE

 

Number of Months

Remaining to

Scheduled Maturity


   Number of
Loans


   Aggregate
Outstanding
Principal Balance

   Percent of Pool by
Outstanding

Principal Balance

 

0 to 3

   1,564    $ 333,307    *  

4 to 12

   13,808      5,536,628    0.1 %

13 to 24

   23,004      18,021,036    0.4  

25 to 36

   24,112      28,422,646    0.7  

37 to 48

   23,533      34,953,120    0.8  

49 to 60

   25,327      45,263,571    1.1  

61 to 72

   22,051      46,589,066    1.1  

73 to 84

   22,076      55,030,007    1.3  

85 to 96

   26,516      78,657,095    1.9  

97 to 108

   49,671      208,235,450    5.0  

109 to 120

   237,056      1,019,234,099    24.4  

121 to 132

   258,816      1,243,491,093    29.8  

133 to 144

   139,218      669,424,247    16.0  

145 to 156

   76,885      363,640,168    8.7  

157 to 168

   44,088      200,754,538    4.8  

169 to 180

   21,505      93,831,309    2.2  

181 to 192

   9,845      44,897,408    1.1  

193 to 204

   4,236      19,665,595    0.5  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  


* Represents a percentage greater than 0% but less than 0.05%.

 

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DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS

BY CURRENT BORROWER PAYMENT STATUS

AS OF THE STATISTICAL CUTOFF DATE

 

Current Borrower Payment Status


   Number
of Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

In-School

   323,654    $ 1,468,820,554    35.2 %

Grace

   152,427      690,875,673    16.5  

Deferment

   82,478      407,836,444    9.8  

Forbearance

   68,109      276,238,612    6.6  

Repayment

                  

First year in repayment

   259,183      987,811,882    23.7  

Second year in repayment

   45,572      178,903,337    4.3  

Third year in repayment

   19,316      57,168,560    1.4  

More than 3 years in repayment

   72,572      108,325,322    2.6  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  

 

Current borrower payment status refers to the status of the borrower of each initial trust student loan as of the statistical cutoff date. The borrower:

 

  ·  

may still be attending school—in-school;

 

  ·  

may be in a grace period after completing school and prior to repayment commencing—grace;

 

  ·  

may have temporarily ceased repaying the loan through a deferment or a forbearance period; or

 

  ·  

may be currently required to repay the loan—repayment.

 

See Appendix A to the base prospectus.

 

The weighted average number of months in repayment for all initial trust student loans currently in repayment is approximately 12.0, calculated as the term to maturity at the commencement of repayment less the number of months remaining to scheduled maturity as of the statistical cutoff date.

 

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SCHEDULED WEIGHTED AVERAGE REMAINING MONTHS IN

STATUS OF THE INITIAL TRUST STUDENT LOANS BY

CURRENT BORROWER PAYMENT STATUS AS OF THE

STATISTICAL CUTOFF DATE

 

     Scheduled Remaining Months in Status

Current Borrower Payment Status


   In-School

   Grace

   Deferment

   Forbearance

   Repayment

In-School

   19.5    6.0          120.0

Grace

      2.9          119.5

Deferment

         15.6       114.7

Forbearance

            4.4    113.6

Repayment

               104.0

 

We have determined the scheduled weighted average remaining months in status shown in the previous table without giving effect to any deferment or forbearance periods that may be granted in the future. See Appendix A to the base prospectus.

 

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GEOGRAPHIC DISTRIBUTION OF THE INITIAL TRUST STUDENT

LOANS AS OF THE STATISTICAL CUTOFF DATE

 

State


   Number
of Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

Alabama

   25,900    $ 100,962,148    2.4 %

Alaska

   1,158      4,086,164    0.1  

Arizona

   30,898      118,765,597    2.8  

Arkansas

   6,717      23,520,073    0.6  

California

   131,055      579,878,770    13.9  

Colorado

   16,305      59,736,883    1.4  

Connecticut

   10,509      53,230,797    1.3  

Delaware

   1,530      7,484,472    0.2  

District of Columbia

   3,866      19,123,547    0.5  

Florida

   99,002      394,563,439    9.4  

Georgia

   27,973      122,865,032    2.9  

Hawaii

   5,207      22,652,981    0.5  

Idaho

   3,650      12,951,784    0.3  

Illinois

   47,727      196,470,121    4.7  

Indiana

   55,578      213,091,179    5.1  

Iowa

   2,924      11,440,501    0.3  

Kansas

   31,055      114,279,324    2.7  

Kentucky

   12,009      40,694,859    1.0  

Louisiana

   17,005      67,971,473    1.6  

Maine

   2,200      9,599,733    0.2  

Maryland

   15,664      75,096,894    1.8  

Massachusetts

   20,574      98,728,058    2.4  

Michigan

   42,000      137,634,382    3.3  

Minnesota

   12,511      44,034,301    1.1  

Mississippi

   14,345      52,192,865    1.2  

Missouri

   27,993      98,129,730    2.3  

Montana

   1,212      4,628,992    0.1  

Nebraska

   2,559      9,887,498    0.2  

Nevada

   8,499      31,839,113    0.8  

New Hampshire

   3,123      15,052,537    0.4  

New Jersey

   29,158      140,187,263    3.4  

New Mexico

   3,221      12,149,119    0.3  

New York

   37,097      186,177,439    4.5  

North Carolina

   16,794      75,970,950    1.8  

North Dakota

   573      2,356,904    0.1  

Ohio

   30,702      126,239,661    3.0  

Oklahoma

   9,983      34,628,354    0.8  

Oregon

   19,003      71,781,481    1.7  

Pennsylvania

   23,434      95,164,082    2.3  

Rhode Island

   2,155      9,143,831    0.2  

South Carolina

   8,567      36,078,585    0.9  

South Dakota

   935      3,833,531    0.1  

Tennessee

   15,055      59,113,094    1.4  

Texas

   67,987      263,787,768    6.3  

Utah

   3,952      17,148,842    0.4  

Vermont

   614      3,094,019    0.1  

Virginia

   27,403      116,612,459    2.8  

Washington

   23,973      89,161,756    2.1  

West Virginia

   3,372      11,815,136    0.3  

Wisconsin

   6,626      26,738,177    0.6  

Wyoming

   1,014      3,548,100    0.1  

Other

   10,945      50,656,585    1.2  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  

 

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We have based the geographic distribution shown in the table on the billing addresses of the borrowers of the initial trust student loans shown on the servicer’s records as of the statistical cutoff date.

 

Each of the trust student loans provides or will provide for the amortization of its outstanding principal balance over a series of regular payments. Except as described below, each regular payment consists of an installment of interest which is calculated on the basis of the outstanding principal balance of the trust student loan. The amount received is applied first to interest accrued to the date of payment and the balance of the payment, if any, is applied to reduce the unpaid principal balance. Accordingly, if a borrower pays a regular installment before its scheduled due date, the portion of the payment allocable to interest for the period since the preceding payment was made will be less than it would have been had the payment been made as scheduled, and the portion of the payment applied to reduce the unpaid principal balance will be correspondingly greater. Conversely, if a borrower pays a monthly installment after its scheduled due date, the portion of the payment allocable to interest for the period since the preceding payment was made will be greater than it would have been had the payment been made as scheduled, and the portion of the payment applied to reduce the unpaid principal balance will be correspondingly less. In addition, if a borrower pays a monthly installment after its scheduled due date, the borrower may owe a fee on that late payment. If a late fee is applied, that payment will be applied first to the applicable late fee, second to interest and third to principal. As a result, the portion of the payment applied to reduce the unpaid principal balance may be less than it would have been had the payment been made as scheduled.

 

In either case, subject to any applicable deferment periods or forbearance periods, and except as provided below, the borrower pays a regular installment until the final scheduled payment date, at which time the amount of the final installment is increased or decreased as necessary to repay the then outstanding principal balance of that trust student loan.

 

Each of the sellers makes available, through the servicer, to borrowers of student loans it holds, payment terms that may result in the lengthening of the remaining term of the student loans. For example, not all of the loans owned by the sellers provide for level payments throughout the repayment term of the loans. Some student loans provide for interest only payments to be made for a designated portion of the term of the loans, with amortization of the principal of the loans occurring only when payments increase in the latter stage of the term of the loans. Other loans provide for a graduated phase in of the amortization of principal with a greater portion of principal amortization being required in the latter stages than would be the case if amortization were on a level payment basis. Each of the sellers also offers, through the servicer, an income-sensitive repayment plan, under which repayments are based on the borrower’s income. Under that plan, ultimate repayment may be delayed up to five years. Borrowers under trust student loans will continue to be eligible for the graduated payment and income-sensitive repayment plans. See “Sallie Mae’s Student Loan Financing Business” in the base prospectus.

 

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The following tables provide certain information about initial trust student loans subject to the repayment terms described in the preceding paragraphs.

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

LOAN TYPE AS OF THE STATISTICAL CUTOFF DATE

 

Loan Type


   Number of
Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

Unsubsidized Stafford Loans

   392,933    $ 1,766,666,414    42.3 %

Subsidized Stafford Loans

   566,851      1,788,455,642    42.8  

SLS Loans

   3,780      10,268,060    0.2  

PLUS Loans

   59,747      610,590,267    14.6  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

REPAYMENT TERMS AS OF

THE STATISTICAL CUTOFF DATE

 

Loan Repayment Terms


   Number of
Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

Level Repayment(1)

   983,299    $ 4,008,400,903    96.0 %

Other Repayment Options(2)

   40,012      167,579,481    4.0  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  


(1) Also includes in-school and grace loans.
(2) Includes, among others, graduated repayment, income sensitive and interest-only period loans.

 

With respect to interest-only loans, as of the statistical cutoff date, there are 3,466 loans with an aggregate outstanding principal balance of $16,898,684 currently in an interest-only period. These interest-only loans represent approximately 0.4% of the aggregate outstanding principal balance of the initial trust student loans. Interest-only periods range up to 48 months in overall length.

 

The servicer, at the request of the sellers or the depositor and on behalf of the trust, may in the future offer repayment terms similar to those described above to borrowers of loans in the trust who are not entitled to these repayment terms as of the statistical cutoff date. If such repayment terms are offered to and accepted by borrowers, the weighted average life of the securities could be lengthened.

 

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The following table provides information about the initial trust student loans regarding date of disbursement.

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

DATE OF DISBURSEMENT AS OF

THE STATISTICAL CUTOFF DATE

 

Disbursement Date


   Number of
Loans

   Aggregate
Outstanding
Principal Balance

   Percent of Pool
by Outstanding
Principal Balance

 

September 30, 1993 and earlier

   26,557    $ 46,394,270    1.1 %

October 1, 1993 through June 30, 2006

   362,496      1,160,200,000    27.8  

July 1, 2006 and later

   634,258      2,969,386,113    71.1  
    
  

  

Total

   1,023,311    $ 4,175,980,383    100.0 %
    
  

  

 

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Guaranty Agencies for the Trust Student Loans.    The eligible lender trustee has entered into a separate guarantee agreement with each of the guaranty agencies listed below, under which each of the guarantors has agreed to serve as guarantor for specified initial trust student loans.

 

The following table provides information with respect to the portion of the initial trust student loans guaranteed by each guarantor.

 

DISTRIBUTION OF THE INITIAL TRUST STUDENT LOANS BY

GUARANTY AGENCY AS OF THE STATISTICAL CUTOFF DATE*

 

Name of Guaranty Agency


  Number
of Loans

  Aggregate
Outstanding
Principal Balance

  Percent of Pool
by Outstanding
Principal Balance

 

American Student Assistance

  25,342   $ 132,684,667   3.2 %

Arizona Educational Loan Program

  516     934,987   **  

California Student Aid Commission

  125,881     448,984,881   10.8  

Colorado Student Loan Program

  675     1,137,787   **  

Connecticut Student Loan Foundation

  5,346     21,981,993   0.5  

Educational Credit Management Corporation

  28,456     97,174,097   2.3  

Finance Authority of Maine

  1,128     3,699,350   0.1  

Florida Bureau of Student Financial Assistance

  12,121     31,317,071   0.7  

Georgia Higher Education Assistance Corp.

  3,632     10,245,419   0.2  

Great Lakes Higher Education Corporation

  11,393     59,913,084   1.4  

Illinois Student Assistance Commission

  22,132     86,783,950   2.1  

Iowa College Student Aid Commission

  683     917,705   **  

Kentucky Higher Education Assistance Authority

  19,315     66,115,042   1.6  

Louisiana Office of Student Financial Assistance

  6,240     22,252,985   0.5  

Michigan Guaranty Agency

  31,620     90,910,876   2.2  

Missouri Student Loan Program

  2,739     8,759,604   0.2  

Montana Guaranteed Student Loan Program

  191     373,210   **  

Nebraska Student Loan Program

  15,290     68,107,320   1.6  

New Jersey Higher Education Student Assistance Authority

  19,307     73,611,941   1.8  

New York State Higher Education Services Corporation

  23,101     95,132,101   2.3  

Northwest Education Loan Association

  25,399     90,709,893   2.2  

Oklahoma Guaranteed Student Loan Program

  7,867     25,390,520   0.6  

Pennsylvania Higher Education Assistance Agency

  10,447     36,172,544   0.9  

Rhode Island Higher Education Assistance Authority

  1,426     5,344,250   0.1  

South Dakota Education Assistance Corporation

  3,203     9,268,672   0.2  

Student Loan Guarantee Foundation of Arkansas

  4,312     13,122,440   0.3  

Texas Guaranteed Student Loan Corporation

  43,089     150,655,276   3.6  

United Student Aid Funds, Inc.

  572,307     2,524,007,786   60.4  

Utah Higher Education Assistance Authority

  153     270,935   **  
   
 

 

Total

  1,023,311   $ 4,175,980,383   100.0 %
   
 

 


* Additional trust student loans may be guaranteed by a guaranty agency not listed.
** Represents a percentage greater than 0% but less than 0.05%.

 

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SIGNIFICANT GUARANTOR

INFORMATION

 

The information shown for the Significant Guarantors relates to all student loans, including but not limited to initial trust student loans, guaranteed by the Significant Guarantors.

 

We obtained the following information from various sources, including from the Significant Guarantors and/or from the Department of Education. None of the depositor, the sellers or the underwriters has audited or independently verified this information for accuracy or completeness.

 

UNITED STUDENT AID FUNDS, INC.

 

United Student Aid Funds, Inc. (“USA Funds”) was organized as a private, nonprofit corporation under the General Corporation Law of the State of Delaware in 1960. In accordance with its Certificate of Incorporation, USA Funds: (i) maintains facilities for the provision of guarantee services with respect to approved education loans made to or for the benefit of eligible students who are enrolled at or plan to attend approved educational institutions; (ii) guarantees education loans made pursuant to certain loan programs under the Higher Education Act of 1965, as amended (“the Act”), as well as loans made under certain private loan programs; and (iii) serves as the designated guarantor for education-loan programs under the Act in Arizona, Hawaii and certain Pacific Islands, Indiana, Kansas, Maryland, Mississippi, Nevada, and Wyoming.

 

USA Funds contracts with Sallie Mae, Inc., a wholly owned subsidiary of SLM Corporation. USA Funds also contracts with Student Assistance Corporation, a wholly owned subsidiary of SLM Corporation. SLM Corporation and its subsidiaries are not sponsored by nor are they agencies of the United States of America.

 

Effective December 13, 2004, USA Funds became the sole member of the Northwest Education Loan Association, a guarantor serving the states of Washington, Idaho and the Northwest.

 

For the purpose of providing loan guarantees under the Act, USA Funds has entered into various agreements (collectively, the “Federal Reinsurance Agreements”) with the U.S. Secretary of Education (the “Secretary”). Pursuant to the Federal Reinsurance Agreements, USA Funds serves as a “guaranty agency” as defined in Section 435(j) of the Act. The Act allows the Secretary, after giving the guaranty agency notice and the opportunity for a hearing, to terminate the Federal Reinsurance Agreements if the Secretary determines that the administrative or financial condition of the guaranty agency jeopardizes the agency’s continued ability to perform its responsibilities under its guaranty agreement, it is necessary to protect the federal financial interest, or to ensure the continued availability of loans to student or parent borrowers.

 

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Reinsurance is paid to USA Funds by the Secretary in accordance with a formula based on the annual default rate of loans guaranteed by USA Funds under the Act and the disbursement date of loans. The rate of reinsurance ranges from 100 percent to 75 percent of USA Funds’ losses on default-claim payments made to lenders. The Higher Education Amendments of 1998 (the “1998 Reauthorization Law”) reduced the reinsurance coverage for loans in default made on or after Oct. 1, 1998, to a range from 95 percent to 75 percent based upon the annual default claims rate of the guaranty agency. Reinsurance on non-default claims remains at 100 percent.

 

The 1998 Reauthorization Law requires guaranty agencies to establish two separate funds, a federal reserve fund (property of the United States) and an agency operating fund (property of the guaranty agency). The federal reserve fund is to be used to pay lender claims and to pay a default-aversion fee to the agency operating fund. The agency operating fund is to be used by the guaranty agency to pay its operating expenses.

 

The 1998 Reauthorization Law requires guaranty agencies to return to the Secretary $250 million in federal reserve funds from fiscal years 2002 to 2007. Each guaranty agency’s share is based on a formula prescribed in the 1998 Reauthorization Law. USA Funds is in compliance with the provisions of the reserve fund requirements of the Act. USA Funds remitted $17.8 million to the Secretary in September 2002, $17.3 million by September 1, 2006, and $17.3 million by September 1, 2007.

 

Effective for all Stafford and PLUS loans that USA Funds guarantees on or after April 1, 2005, USA Funds waived the guarantee fee of up to 1 percent of the principal amount of new loans that federal law permitted a guarantor to assess. During 2006, the U.S. Congress passed the Higher Education Reconciliation Act (HERA) which required all guarantors to collect and deposit into the federal reserve fund a federal default fee of 1% of the principal amount of all Stafford and PLUS loans guaranteed on or after July 1, 2006. USA Funds paid the federal default fee to the federal reserve fund from the operating fund on behalf of the borrower for all PLUS loans made by a lender that paid the federal default fee on behalf of its Stafford borrowers for loans guaranteed by USA Funds from July 1, 2006, through June 30, 2007, and for all PLUS loans guaranteed by USA Funds on or after July 1, 2007, for graduate- and professional-student-borrowers.

 

As of September 30, 2007, USA Funds held assets on behalf of the federal reserve fund of approximately $316 million and net assets of approximately $247 million. Through September 30, 2007, the outstanding, unpaid, aggregate amount of principal and interest on loans that had been directly guaranteed by USA Funds under the Federal Family Education Loan Program was approximately $87 billion. As of September 30, 2007, USA Funds had operating fund assets totaling approximately $845 million including the $316 million held on behalf of the federal reserve fund.

 

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The reserve ratios published by the U.S. Department of Education are based on cumulative assets less liabilities of the federal reserve fund divided by the original principal amount of the outstanding loans guaranteed. Following this formula, the reserve ratio for the federal reserve fund administered by USA Funds for the last five fiscal years was as follows:

 

     Reserve Ratio

 
     Federal Fiscal Year

 

Guarantor


   2003

    2004

    2005

    2006

    2007

 

United Student Aid Funds, Inc.

   0.67 %   0.56 %   0.45 %   0.26 %   0.28 %

 

USA Funds’ “guarantee volume” is the approximate aggregate principal amount of federally reinsured education loans (including subsidized and unsubsidized Stafford and PLUS loans but excluding consolidation loans) guaranteed by USA Funds. For the last five fiscal years, the “guarantee volume” was as follows:

 

Guarantor


  Loans Guaranteed

  Federal Fiscal Year

  ($ in millions)
    2003

  2004

  2005

  2006

  2007

United Student Aid Funds, Inc.

  $ 9,587   $ 9,907   $ 10,724   $ 12,586   $ 15,581

 

USA Funds’ “recovery rate,” which provides a measure of the effectiveness of the collection efforts against defaulted borrowers after the guarantee claim has been satisfied, is determined by dividing the amount recovered from borrowers by USA Funds during the fiscal year by the aggregate amount of default claims paid by USA Funds outstanding at the end of the prior fiscal year. For the last five fiscal years, the “recovery rate” was as follows:

 

     Recovery Rate

     Federal Fiscal Year

Guarantor


   2003

    2004

  2005

  2006

  2007

United Student Aid Funds, Inc.

   30.14 %   35.47%   35.05%   38.03%   40.30%

 

USA Funds’ “claims rate” represents the percentage of federal reinsurance claims paid by the Secretary during any fiscal year relative to USA Funds’ existing portfolio of loans in repayment at the end of the prior fiscal year. For the last five fiscal years, the “claims rate” was as follows:

 

     Claims Rate

 
     Federal Fiscal Year

 

Guarantor


   2003

    2004

    2005

    2006

    2007

 

United Student Aid Funds, Inc.

   1.37 %   1.13 %   1.41 %   1.21 %   2.13 %

 

USA Funds is headquartered in Fishers, Indiana. USA Funds will provide a copy of its most recent annual report upon receipt of a written request directed to its headquarters at P.O. Box 6028, Indianapolis, Indiana 46206-6028, Attention: Director, Corporate Communications.

 

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CALIFORNIA STUDENT AID COMMISSION

 

The California Student Aid Commission (“CSAC”) is the designated state student loan guaranty agency for the State of California (“State”), responsible for the State’s participation in the FFELP pursuant to California Education Code Section 69760 et seq., and Section 428(c) of the Higher Education Act. CSAC’s role as a guaranty agency is to provide a source of credit to assist students in meeting post-secondary education costs while attending eligible institutions of their choice.

 

As authorized under California law, CSAC has established an auxiliary organization in the form of a nonprofit public benefit corporation to provide operational and administrative services related to CSAC’s participation in the FFELP. The auxiliary organization, EDFUND, operates CSAC’s federal student loan guaranty program pursuant to an operating agreement with CSAC. CSAC, as the designated state guaranty agency, continues its oversight of all revenues, expenses, and assets related to its status.

 

CSAC began guaranteeing student loans on April 1, 1979, and as of September 30, 2007, had cumulative principal guarantees outstanding of approximately $29.7 billion.

 

As part of the FFELP, and pursuant to the 1998 Reauthorization Amendments to the Higher Education Act, the State established the Federal Student Loan Reserve Fund, referred to as CSAC’s Federal Fund, and the Student Loan Operating Fund, referred to as CSAC’s Operating Fund. CSAC’s liability pursuant to the FFELP, including for any loan guarantees, is limited solely to the amounts contained in these two funds, and the State has no obligation to replenish these funds if exhausted.

 

As of September 30, 2007, CSAC’s Federal Fund and Operating Fund balances were as follows: CSAC’s Federal Fund had total assets of $126,538,170, total liabilities of $50,117,449 and total fund equity of $76,420,721; and CSAC’s Operating Fund had total assets of $67,901,237, total liabilities of $36,379,875 and total fund equity of $31,521,362.

 

The 1998 Reauthorization Amendments require guaranty agencies to return to the Department of Education $250 million in reserve funds from fiscal years 2002 to 2007, with each agency’s share being based on a formula prescribed in the 1998 Reauthorization Amendments. The Department of Education advised CSAC that its share of this recall is $24,871,909. The first installment payment of $8,456,449 was paid on August 26, 2002. The second installment of $8,207,730 was paid on August 31, 2006 and the final installment of $8,207,730 was paid on August 31, 2007. These payments are disclosed on the financial statements, and have been recognized as liabilities.

 

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Guaranty Volume.    CSAC guaranteed the following amounts for the last five (5) fiscal years ending September 30:

 

     Fiscal Year

     ($ in millions)

     2003

   2004

   2005

   2006

   2007

FFELP Loan Volume

   $ 4,421    $ 5,712    $ 6,577    $ 6,878    $ 6,765

 

The information in the following tables has been provided by CSAC from reports provided by or to the U.S. Department of Education. CSAC has not verified, and makes no representation as to the accuracy or completeness of, the information compiled by the Department of Education or as to any calculations other than as required by federal regulation.

 

Reserve Ratio.    Calculated pursuant to 34 C.F.R. 682.419, CSAC’s reserve ratio (determined by dividing its fund balance by the total amount of loans outstanding) for the last five (5) fiscal years ending September 30 was as follows:

 

     Fiscal Year

 
     2003

    2004

    2005

    2006

    2007

 

Reserve Ratio

   0.25 %   0.25 %   0.25 %   0.25 %   0.26 %

 

Recovery Rate.    Calculated pursuant to 34 C.F.R. 682.409, CSAC’s recovery rate for each of the last five (5) fiscal years ending September 30 was as follows:

 

     Fiscal Year

 
     2003

    2004

    2005

    2006

    2007

 

Recovery Rate

   27.23 %   27.03 %   31.12 %   21.73 %   19.85 %

 

Claims Rate.    Calculated pursuant to 34 C.F.R. 682.404, CSAC’s claims rate for each of the last five (5) fiscal years ending September 30 was as follows:

 

     Fiscal Year

 
     2003

    2004

    2005

    2006

    2007

 

Claims Rate

   2.07 %   2.14 %   2.81 %   3.01 %   3.31 %

 

CSAC is located in Rancho Cordova, California. CSAC’s contact information is 10834 International Drive, Rancho Cordova, CA 95670. CSAC’s web address is www.csac.ca.gov. EDFUND is located in Rancho Cordova, California. EDFUND’s contact information is PO Box 419045, Rancho Cordova, CA 95741. EDFUND’s web address is www.edfund.org.

 

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EXHIBIT I

PREPAYMENTS, EXTENSIONS, WEIGHTED AVERAGE LIVES AND

EXPECTED MATURITIES OF THE NOTES

Prepayments on pools of student loans can be measured or calculated based on a variety of prepayment models. The model used to calculate prepayments is the constant prepayment rate (or “CPR”) model.

The CPR model is based on prepayments assumed to occur at a constant percentage rate. CPR is stated as an annualized rate and is calculated as the percentage of the loan amount outstanding at the beginning of a period (including accrued interest to be capitalized), after applying scheduled payments, that are paid during that period. The CPR model assumes that student loans will prepay in each month according to the following formula:

Monthly Prepayments = Balance After Scheduled Payments x (1-(1-CPR)^ 1/12)

Accordingly, monthly prepayments assuming a $1,000 balance after scheduled payments would be as follows for the percentages of CPR listed below:

 

CPR

   0%    4%    8%    12%    16%

Monthly Prepayment

   $ 0.00    $ 3.40    $ 6.92    $ 10.60    $ 14.42

The CPR model does not purport to describe historical prepayment experience or to predict the prepayment rate of any actual student loan pool. The student loans will not prepay at any constant CPR, nor will all of the student loans prepay at the same rate. You must make an independent decision regarding the appropriate principal prepayment scenarios to use in making any investment decision.

Additional Assumptions

For purposes of calculating the information presented in the tables below, it is assumed, among other things, that:

 

   

the statistical cutoff date for the trust student loans is August 14, 2008;

 

   

the closing date will be August 28, 2008;

 

   

all trust student loans (as grouped within the “rep lines” described below) remain in their current status until their status end date and then move to repayment, with the exception of in-school status loans which are assumed to have a 6-month grace period before moving to repayment, and no trust student loan moves from repayment to any other status;

 

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the trust student loans that are (i) non-subsidized Stafford loans not in repayment status, (ii) subsidized Stafford loans in forbearance status, or (iii) SLS or PLUS loans, have interest accrued and capitalized upon entering repayment;

 

   

the trust student loans that are subsidized Stafford loans and are in in-school, grace or deferment status, have interest paid (interest subsidy payments) by the Department of Education quarterly, based on a quarterly calendar accrual period;

 

   

no delinquencies or defaults occur on any of the trust student loans, no repurchases for breaches of representations, warranties or covenants occur and all borrower payments are collected in full;

 

   

there are government payment delays of 60 days for interest subsidy and special allowance payments;

 

   

index levels for calculation of borrower and government payments are:

 

   

before August 1, 2008, a 91-day Treasury bill rate of 1.91% and on or after August 1, 2008, a 91-day Treasury bill rate of 1.69%;

 

   

a three-month commercial paper rate of 2.71%; and

 

   

a 1-year Treasury bill rate that equals the 91-day Treasury bill rate;

 

   

no funds are deposited into the supplemental purchase account on the closing date;

 

   

distributions begin on October 25, 2008, and payments are made quarterly on the 25th day of every January, April, July and October thereafter, whether or not the 25th is a business day;

 

   

the interest rate for each class of outstanding notes at all times will be equal to:

 

   

class A notes: 4.30%; and

 

   

class B notes: 5.05%;

 

   

an administration fee equal to $20,000 is paid quarterly by the trust to the administrator, beginning in October 2008;

 

   

the monthly servicing fee for a trust student loan will be calculated on a unit basis and will equal (i) $1.50 per month per borrower for trust student loans that are in in-school status, (ii) $2.75 per month per borrower for trust student loans that are in grace status and (iii) $3.25 per month per borrower for all other trust student loans. In the event a borrower has more than one trust student loan and those loans are in different payment statuses, the monthly servicing fee will be paid on a pro rata basis. In no event, however, will the primary servicing fee for any month exceed 1/12 of 0.90% of the outstanding principal balance of the trust student loans;

 

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the reserve account has an initial balance equal to $10,439,951 and at all times a balance equal to the greater of (1) 0.25% of the Pool Balance and (2) $4,175,980;

 

   

the collection account has an initial balance equal to $0;

 

   

the capitalized interest account has an initial balance equal to $70,000,000, and on the October 2009 quarterly distribution date, all remaining funds on deposit in the capitalized interest account will be transferred to the collection account and included in Available Funds on that quarterly distribution date;

 

   

all payments are assumed to be made at the end of the month and amounts on deposit in the collection account, reserve account and capitalized interest account, including reinvestment income earned in the previous month, net of servicing fees, are reinvested in eligible investments at the assumed reinvestment rate of 2.70% per annum through the end of the collection period, and reinvestment earnings are available for distribution from the prior collection period;

 

   

prepayments on the trust student loans are applied monthly in accordance with CPR, as described above;

 

   

an optional redemption by the servicer occurs on the quarterly distribution date immediately following the collection period during which the Pool Balance falls below 10% of the Initial Pool Balance; and

 

   

the pool of trust student loans consists of 2,947 representative loans (“rep lines”), which have been created for modeling purposes from individual trust student loans based on combinations of similar individual student loan characteristics, which include, but are not limited to, loan status, interest rate, loan type, index, margin, rate cap and remaining term.

The following tables have been prepared based on the assumptions described above (including the assumptions regarding the characteristics and performance of the rep lines, which will differ from the characteristics and performance of the actual pool of trust student loans) and should be read in conjunction therewith. In addition, the diverse characteristics, remaining terms and loan ages of the trust student loans could produce slower or faster principal payments than indicated in the following tables, even if the dispersions of weighted average characteristics, remaining terms and loan ages are the same as the assumed characteristics, remaining terms and loan ages.

 

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CPR Tables

The following tables show the weighted average remaining lives, expected maturity dates and percentages of original principal of each class of the notes at various percentages of CPR from the closing date until the optional redemption date.

Weighted Average Lives and Expected Maturities of the Notes

at Various CPR Percentages

 

Weighted Average Life

(years)(1)

   0%      4%      8%      12%      16%

Class A Notes

     6.22      5.31      4.55      3.92      3.40

Class B Notes

   10.41      9.91      9.16      8.41      7.66

 

Expected Maturity Date

                                

Class A Notes

   January 25, 2019      July 25, 2018      October 25, 2017      January 25, 2017      April 25, 2016

Class B Notes

   January 25, 2019      July 25, 2018      October 25, 2017      January 25, 2017      April 25, 2016

 

(1)

The weighted average life of the notes (assuming a 360-day year consisting of twelve 30-day months) is determined by: (1) multiplying the amount of each principal payment on the applicable class of notes by the number of years from the closing date to the related quarterly distribution date, (2) adding the results, and (3) dividing that sum by the aggregate principal amount of the applicable class of notes as of the closing date.

 

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Class A Notes

Percentages Of Original Principal Of The Notes Remaining At Certain

Quarterly Distribution Dates At Various CPR Percentages

 

Quarterly Distribution Date

   0%     4%     8%     12%     16%  

Closing Date

   100 %   100 %   100 %   100 %   100 %

October 2008

   100     100     99     98     98  

October 2009

   95     91     86     82     77  

October 2010

   89     81     74     67     60  

October 2011

   81     71     61     53     45  

October 2012

   72     60     50     41     33  

October 2013

   62     50     39     31     23  

October 2014

   52     40     30     22     16  

October 2015

   41     30     21     14     9  

October 2016

   29     20     13     8     0  

October 2017

   18     11     0     0     0  

October 2018

   8     0     0     0     0  

October 2019

   0     0     0     0     0  

Class B Notes

Percentages Of Original Principal Of The Notes Remaining At Certain

Quarterly Distribution Dates At Various CPR Percentages

 

Quarterly Distribution Date

   0%     4%     8%     12%     16%  

Closing Date

   100 %   100 %   100 %   100 %   100 %

October 2008

   100     100     100     100     100  

October 2009

   100     100     100     100     100  

October 2010

   100     100     100     100     100  

October 2011

   100     100     100     100     100  

October 2012

   100     100     100     100     100  

October 2013

   100     100     100     100     100  

October 2014

   100     100     100     100     100  

October 2015

   100     100     100     100     100  

October 2016

   100     100     100     100     0  

October 2017

   100     100     0     0     0  

October 2018

   100     0     0     0     0  

October 2019

   0     0     0     0     0  

 

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PRINCIPAL OFFICES

ISSUING ENTITY

SLM STUDENT LOAN TRUST 2008-9

10161 Centurion Parkway

Jacksonville, Florida 32256

DEPOSITOR

SLM FUNDING LLC

12061 Bluemont Way

V3419

Reston, Virginia 20190

SPONSOR, SERVICER AND ADMINISTRATOR

SALLIE MAE, INC.

12061 Bluemont Way

Reston, Virginia 20190

 

ELIGIBLE LENDER TRUSTEE

 

THE BANK OF NEW YORK

MELLON TRUST COMPANY,

NATIONAL ASSOCIATION

10161 Centurion Parkway

Jacksonville, Florida 32256

 

DELAWARE TRUSTEE

 

BNY MELLON TRUST OF

DELAWARE

100 White Clay Center

Route 273

Newark, Delaware 19711

 

INDENTURE TRUSTEE AND

PAYING AGENT

DEUTSCHE BANK TRUST

COMPANY AMERICAS

60 Wall Street, 26th Floor

Mailstop NYC60 2606

New York, New York 10005

LUXEMBOURG PAYING AGENT AND LUXEMBOURG LISTING AGENT

DEUTSCHE BANK LUXEMBOURG S.A.

2 Boulevard Konrad Adenauer

L-1115 Luxembourg

LEGAL ADVISORS TO THE DEPOSITOR, THE TRUST, THE SERVICER AND THE ADMINISTRATOR

MCKEE NELSON LLP

One Battery Park Plaza

34th Floor

New York, New York 10004

 

RICHARDS, LAYTON &

FINGER, P.A.

920 King Street

Wilmington, Delaware 19801

 

SHEARMAN & STERLING LLP

801 Pennsylvania Avenue, N.W.

Washington, D.C. 20004 2604

LEGAL ADVISORS TO THE UNDERWRITERS

CADWALADER, WICKERSHAM & TAFT LLP

1201 F Street, N.W.

Suite 1100

Washington, D.C. 20004

 

SHEARMAN & STERLING LLP

801 Pennsylvania Avenue, N.W.

Washington, D.C. 20004 2604

INDEPENDENT PUBLIC ACCOUNTANTS

PRICEWATERHOUSECOOPERS LLP

1800 Tysons Boulevard

McLean, Virginia 22102-4261


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BASE PROSPECTUS

The SLM Student Loan Trusts

The SLM Private Credit Student Loan Trusts

Issuing Entities

Student Loan-Backed Notes

 

 

SLM Funding LLC

Depositor

Sallie Mae, Inc.

Sponsor, Servicer and Administrator

 

 

You should consider carefully the risk factors described in this prospectus beginning on page 20 and in the prospectus supplement that accompanies this prospectus.

The notes described herein represent obligations of the applicable issuing entity only. The notes are not obligations of or interests in the sponsor, administrator, servicer, depositor, any seller or any of their affiliates.

The notes are not guaranteed or insured by the United States of America or any U.S. governmental agency.

This prospectus may be used to offer and sell any series of notes only if it is accompanied by the prospectus supplement for that series.

The Depositor

SLM Funding LLC, a Delaware limited liability company, is the depositor. SLM Education Credit Finance Corporation is the sole member of SLM Funding LLC.

The Notes

The depositor intends to form trusts to issue student loan-backed notes. Each issue of notes will have its own designation. We intend to sell the notes from time to time in amounts, at prices and on terms determined at the time of the offering and sale of the related series of notes. Each series will include one or more classes of notes secured by the assets of the trust for that issue.

A class of notes may:

 

   

be senior or subordinate to other classes in its series; and

 

   

receive payments from one or more forms of credit or cash flow enhancements designed to reduce the risk to investors caused by shortfalls in payments on the related student loans.

Each holder of a class of notes will have the right to receive payments of principal and interest at the rates, on the dates and in the manner described in the applicable supplement to this prospectus.

Trust Assets

The assets of each trust will include:

 

   

education loans to students or parents of students;

 

   

specified types of credit enhancement; and

 

   

other moneys, investments and property, including derivative instruments in some cases.

Each supplement to this prospectus will describe, among other things, the specific amounts, prices and terms of the notes of the related series. The supplements will also provide details of the specific student loans, credit enhancement, derivative instruments and other assets of the related trust.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the notes or determined whether this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

June 25, 2008


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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS

PROSPECTUS AND THE RELATED PROSPECTUS SUPPLEMENT

For each issue, we will provide information to you about the notes in two separate documents that progressively provide more detail:

 

   

this prospectus, including the Appendices hereto, which provides general information, some of which may not apply to your series of notes; and

 

   

the related prospectus supplement, including all Annexes thereto, which describes the specific terms of your series of notes, including:

 

   

the timing of interest and principal payments;

 

   

financial and other information about the student loans and the other assets owned by the trust;

 

   

information about credit enhancement;

 

   

the ratings; and

 

   

the method of selling the notes.

In making any investment decision, you should rely only on the information contained or incorporated in this prospectus and the related prospectus supplement. We have not authorized anyone to provide you with different information. We are not offering the notes in any state or other jurisdiction where the offer is prohibited.

For certain information concerning the notes, we have provided cross-references to captions in this prospectus and the accompanying prospectus supplement. Under each of those captions, further information about the notes is provided. The following table of contents and the table of contents in the related prospectus supplement indicate where these captions are located.

 

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TABLE OF CONTENTS

 

     Page

Prospectus Summary

   7

Principal Parties

   7

The Notes

   8

Assets of the Issuing Entity

   10

Collection Account

   11

Reserve Account

   11

Pre-Funding Account

   12

Capitalized Interest Account

   12

Other Accounts

   12

Pre-funding Period

   12

Revolving Period

   13

Credit and Cash Flow or other Enhancement or Derivative Arrangements

   13

Servicing Agreements

   13

Servicing Fee

   13

Administration Agreement

   14

Administration Fee

   14

Purchase Agreements

   14

Sale Agreements

   14

Representations and Warranties of the Depositor

   14

Representations and Warranties of SLM Education Credit Finance Corporation and the Other Sellers under the Purchase Agreements

   16

Covenants of the Servicer

   16

Optional Purchases

   17

Call Option and Collateral Call

   17

Auction of Trust Assets

   18

Tax Considerations

   18

ERISA Considerations

   19

Ratings

   19

Risk Factors

   20

Because The Notes May Not Provide Regular Or Predictable Payments, You May Not Receive The Return On Investment That You Expected

   20

The Notes Are Not Suitable Investments For All Investors

   20

If A Secondary Market For Your Notes Does Not Develop, The Value Of Your Notes May Diminish

   20

The Issuing Entity Will Have Limited Assets From Which To Make Payments On The Notes, Which May Result In Losses

   20

Private Credit Student Loans May Have Greater Risk Of Default

   21

Past Charge-Off Rates On SLM Corporation’s Private Education Loans May Not Be Indicative Of Future Charge-Off Rates

   21

Interests Of Other Persons In Private Credit Student Loans Could Be Superior To An Issuing Entity’s Interest, Which May Result In Reduced Payments On Your Notes

   22

Risk Of Default By Private Guarantors

   23

You May Incur Losses Or Delays In Payments On Your Notes If Borrowers Default On The Student Loans

   23

If A Guarantor Or Surety Of The Student Loans Experiences Financial Deterioration Or Failure, You May Suffer Delays In Payment Or Losses On Your Notes

   23

The U.S. Department Of Education’s Failure To Make Reinsurance Payments May Negatively Affect The Timely Payment Of Principal And Interest On Your Notes

   24

You Will Bear Prepayment And Extension Risk Due To Actions Taken By Individual Borrowers And Other Variables Beyond Our Control

   24

You May Be Unable To Reinvest Principal Payments At The Yield You Earn On The Notes

   25

 

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     Page

A Failure To Comply With Student Loan Origination And Servicing Procedures Could Jeopardize Guarantor, Interest Subsidy And Special Allowance Payments On The Student Loans, Which May Result In Delays In Payment Or Losses On Your Notes

   26

The Inability Of The Depositor Or The Servicer To Meet Its Repurchase Obligation May Result In Losses On Your Notes

   26

Subordination Of Some Classes Of Notes Results In A Greater Risk Of Losses Or Delays In Payment On Those Notes

   26

The Notes May Be Repaid Early Due To An Auction Sale Or The Exercise Of The Purchase Option. If This Happens, Your Yield May Be Affected And You Will Bear Reinvestment Risk

   27

Incentive Programs May Affect Your Notes

   27

Payment Offsets By FFELP Loan Guarantors Or The U.S. Department Of Education Could Prevent The Issuing Entity From Paying You The Full Amount Of The Principal And Interest Due On Your Notes

   28

A Servicer Default May Result In Additional Costs, Increased Servicing Fees By A Substitute Servicer Or A Diminution In Servicing Performance, Any Of Which May Have An Adverse Effect On Your Notes

   29

The Bankruptcy Of The Servicer Could Delay The Appointment Of A Successor Servicer Or Reduce Payments On Your Notes

   29

The Bankruptcy Of The Depositor, SLM ECFC Or Any Other Seller Could Delay Or Reduce Payments On Your Notes

   29

The Indenture Trustee May Have Difficulty Liquidating Student Loans After An Event Of Default

   30

Future Changes In Law May Adversely Affect Student Loans, The Guarantors, The Depositor, SLM ECFC, Or The Other Sellers And, Accordingly, Adversely Affect Your Notes

   31

The Use Of Master Promissory Notes May Compromise The Indenture Trustee’s Security Interest In The Student Loans

   31

Withdrawal Or Downgrade Of Initial Ratings May Decrease The Prices Of Your Notes

   32

An Issuing Entity May Be Affected By Delayed Payments From Borrowers Called To Active Military Service

   32

Consumer Protection Laws May Affect Enforceability Of Student Loans

   32

Risk of Bankruptcy Discharge of Private Credit Student Loans

   33

Subordinated Noteholders May Not Be Able To Direct The Indenture Trustee Upon An Event Of Default Under The Indenture

   33

In The Event Of An Early Termination Of A Swap Agreement Due To Certain Swap Termination Events, An Issuing Entity May Be Required To Make A Large Termination Payment To Any Related Swap Counterparty

   34

Your Notes Will Have Greater Risk If An Interest Rate Swap Agreement Terminates

   34

Your Notes Will Have Greater Risk If A Currency Swap Agreement Terminates

   35

If The Holder Of The Call Option Or Collateral Call Exercises Its Right, You May Not Be Able To Reinvest In A Comparable Note

   36

 

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     Page

Risks Related To Auction Rate Notes

   36

The Interest Rates On Any Auction Rate Notes Are Subject To Limitations, Which Could Reduce Your Yield

   36

Risks Related To Reset Rate Notes

   37

If A Currency Swap Agreement Terminates, Additional Interest Will Not Be Paid

   37

Even If You Do Not Receive Timely Notices, You Will Be Deemed To Have Tendered Your Reset Rate Notes

   37

If Investments In An Accumulation Account Do Not Perform As Anticipated, Your Notes May Be Downgraded Or You May Suffer A Loss

   38

In The Event That Sums Are Deposited Into A Supplemental Interest Account Or An Investment Reserve Account, Principal Payments To Subordinated Noteholders May Be Delayed, Or Subordinated Noteholders May Suffer A Loss

   39

If The Holder Of The Call Option On The Reset Rate Notes Exercises The Call Option, You May Not Be Able To Reinvest In A Comparable Note

   40

If A Failed Remarketing Is Declared, You Will Be Required To Rely On A Sale Through The Secondary Market If You Wish To Sell Your Reset Rate Notes

   40

If A Failed Remarketing Is Declared, The Failed Remarketing Rate You Will Receive May Be Less Than The Then-Prevailing Market Rate Of Interest

   40

Formation of the Issuing Entities

   41

The Issuing Entities

   41

Eligible Lender Trustee or Trustee

   42

Use Of Proceeds

   43

The Depositor

   44

The Sponsor, Servicer and Administrator

   45

The Sellers

   47

The Student Loan Pools

   48

FFELP Delinquencies, Defaults, Claims and Net Losses

   49

Static Pool Data

   49

Prepayments and Yield

   50

Payment of Notes

   50

Termination

   50

Sallie Mae’s Student Loan Financing Business

   51

Transfer and Servicing Agreements

   59

General

   59

Purchase of Student Loans by the Depositor; Representations and Warranties of the Sellers

   59

Sale of Student Loans to the Trust; Representations and Warranties of the Depositor

   60

Custodian of Promissory Notes

   61

Additional Fundings

   61

Amendments to Transfer and Servicing Agreements

   62

Servicing and Administration

   62

General

   62

Accounts

   63

Servicing Procedures

   65

Payments on Student Loans

   65

Servicer Covenants

   66

Servicing Compensation

   67

Evidence as to Compliance

   68

Matters Regarding the Servicer

   69

Servicer Default

   70

Rights Upon Servicer Default

   70

Waiver of Past Defaults

   71

Administration Agreement

   71

Administrator Default

   72

Rights Upon Administrator Default

   73

Statements to Indenture Trustee and Trust

   73

Evidence as to Compliance

   74

Trading Information

   75

Pool Factors

   76

Description of the Notes

   77

General

   77

 

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     Page

Principal and Interest on the Notes

   77

Call Option on the Notes

   78

Collateral Call

   78

The Indenture

   78

Additional Information Regarding the Notes

   84

Fixed Rate Notes

   84

Floating Rate Notes

   84

Auction Rate Notes

   85

The Reset Rate Notes

   88

Determination of Indices

   107

Distributions

   116

Credit Enhancement and Other Support

   116

General

   116

Subordination of Notes

   117

Reserve Accounts

   117

Capitalized Interest Accounts

   117

Cash Capitalization or Cash Collateral Accounts

   117

Supplemental Interest Accounts

   118

Investment Premium Purchase Accounts

   118

Investment Reserve Accounts

   118

Letters of Credit

   118

Liquidity Agreements

   119

Pool Insurance Policies

   119

Financial Guaranty Insurance Policies or Surety Bonds

   119

Repurchase Bonds

   119

Swap Agreements, Cap Agreements or other Financial or Derivative Instruments;

   119

Insolvency Events

   120

Book-Entry Registration

   120

Reset Rate Notes

   123

Non-U.S. Dollar Denominated Notes

   126

Definitive Notes

   128

List of Noteholders

   129

Reports to Noteholders

   129

Certain Legal Aspects of the Student Loans

   129

Transfer of Student Loans

   129

Consumer Protection Laws

   131

Loan Origination and Servicing Procedures Applicable to Student Loans

   131

Student Loans Generally Not Subject to Discharge in Bankruptcy

   132

U.S. Federal Income Tax Consequences

   132

Tax Characterization of the Trust

   133

Tax Consequences to Holders of Notes In General

   134

Special Tax Consequences to Holders of Non-U.S. Dollar Denominated Notes

   138

Special Tax Consequences to Holders of Auction Rate Notes

   142

Special Tax Consequences to Holders of Reset Rate Notes

   142

European Union Directive On The Taxation Of Savings Income

   144

State Tax Consequences

   145

ERISA Considerations

   145

Available Information

   148

Reports to Noteholders

   148

Incorporation of Documents by Reference

   149

The Plan of Distribution

   149

Legal Matters

   152

Appendix A: Federal Family Education Loan Program

   A-1

Appendix B: Undergraduate and Graduate Loan Programs

   B-1

Appendix C: Law Loan Programs

   C-1

Appendix D: MBA Loan Programs

   D-1

Appendix E: Medical Loan Programs

   E-1

Appendix F: Direct-to-Consumer Loan Programs

   F-1

Appendix G: Private Consolidation Loan Program

   G-1

Appendix H: Global Clearance, Settlement and Tax Documentation Procedures

   H-1

 

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PROSPECTUS SUMMARY

This summary highlights selected information concerning the notes. It does not contain all of the information that you might find important in making your investment decision. You should read the full description of this information which appears elsewhere in this document and in the prospectus supplement for your particular notes.

Principal Parties

 

Issuing Entity

   Each issuing entity will be a Delaware statutory trust to be formed for each series of notes under a trust agreement between the depositor and an eligible lender trustee. We sometimes refer to an issuing entity as a “trust” in this prospectus.

Depositor

   The depositor is SLM Funding LLC, which is a Delaware limited liability company. SLM Education Credit Finance Corporation is the sole member of the depositor. An interim eligible lender trustee specified in the prospectus supplement for your notes will hold legal title to any FFELP loans on our behalf. Where the context involves the holding or transferring of legal title to FFELP loans, references herein to the depositor include the interim eligible lender trustee.
Trustee, Delaware Trustee and Eligible Lender Trustee    For each series of notes, the related prospectus supplement will specify the trustee, the Delaware trustee and/or eligible lender trustee, as applicable, for the related issuing entity. See “Formation of the Issuing Entities—Eligible Lender Trustee or Trustee” in this prospectus.

Sponsor

   The sponsor is Sallie Mae, Inc. We sometimes refer herein to Sallie Mae, Inc. as SMI.

Servicer

   The servicer will be either SMI or another servicer specified in the prospectus supplement for your notes. SMI manages and operates the loan servicing functions for SLM Corporation and its affiliates and certain unrelated parties.
   Under the circumstances described in this prospectus, the servicer may transfer its servicing obligations to other entities. It may also contract with other servicers or sub-servicers. The related prospectus supplement will describe any sub-servicers with whom the servicer has contracted. See “Servicing and Administration—Matters Regarding the Servicer” in this prospectus.

 

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Sellers

   The sellers are SLM Education Credit Finance Corporation and/or other affiliates of the depositor as identified in the related prospectus supplement. We sometimes refer herein to SLM Education Credit Finance Corporation as SLM ECFC.

Originators

   To the extent that non-FFELP loans have been originated by one or more originators not affiliated with SMI or the depositor and constitute a material portion of the related loan pool, the identity of such originators will be disclosed, to the extent known. The requisite information concerning those originators, to the extent available, will be provided in the related prospectus supplement.

Indenture Trustee

   For each series of notes, the related prospectus supplement will specify the indenture trustee for the notes. See “Description of the Notes—The Indenture—The Indenture Trustee” in this prospectus.

Administrator

   The administrator of the issuing entity will be either Sallie Mae, Inc. or a sub-administrator specified in the prospectus supplement for your notes. Under the circumstances described in this prospectus, the administrator may transfer its obligations as administrator to an affiliate. The administrator may also contract with sub-administrators. If there is a sub-administrator, the identity of the sub-administrator will be specified in the prospectus supplement for your notes. The related prospectus supplement will describe any sub-administrators with whom the administrator has contracted. See “Summary of Terms—Administrator” in the related prospectus supplement.
The Notes    Each series of notes will include one or more classes of student loan-backed notes. The notes will be issued under an indenture between the issuing entity and the related indenture trustee. We may offer each class of notes publicly or privately, as specified in the related prospectus supplement.
   The notes will be available for purchase in minimum denominations and additional amounts in excess thereof, as provided in the related prospectus supplement. The depositor may denominate the notes in U.S. Dollars or a non-U.S. Dollar currency as specified in the related prospectus supplement. The notes will be available initially in book-entry form only. Investors who hold the notes in book-entry form will be able to receive definitive notes only in the limited circumstances described in this prospectus or in the related prospectus supplement.

 

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  See “Additional Information Regarding the Notes—Book-Entry Registration” and “—Definitive Notes” in this prospectus.
  Each class of notes will have a stated principal amount and will bear interest at the rate described in the related prospectus supplement. Interest rates may vary between the classes of notes in a particular series. The interest rate may be:
 

•        fixed;

 

•        variable;

 

•        adjustable;

 

•        auction-determined;

 

•        reset rate; or

 

•        any combination of these rates.

 

The related prospectus supplement will specify:

 

•        the stated principal amount of each class of notes; and

 

•        the interest rate for each class of notes or the method for determining the interest rate.

  See “Description of the Notes—Principal and Interest on the Notes” in this prospectus “Summary of Terms—The Notes” and “—Information About the Notes” and in the related prospectus supplement.
  If a series includes two or more classes of notes:
 

•        the timing and priority of payments, seniority, interest rates and/or the method of determining interest rates or amount of payments of principal or interest may differ for each class; or

 

•        payments of principal or interest on a class may or may not be made, depending on whether specified events occur.

  The related prospectus supplement will provide this information.

 

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Assets of the Issuing Entity    The assets of each issuing entity will include a pool of student loans. The loans may be:
  

•        education loans to students or parents of students made under the Federal Family Education Loan Program, known as the FFELP; or

  

•        if so specified in the prospectus supplement, other education loans not made under the FFELP.

   Student loans owned by the issuing entity are called “trust student loans.”
   The assets of each issuing entity will include rights to receive payments made on these student loans and any proceeds related to them.
  

We will purchase the student loans from SLM ECFC or another affiliate of SLM Corporation under one or more purchase agreements. The prospectus supplement for your notes will describe the seller or sellers that sold the loans to us. The student loans will be selected based on criteria listed in the related purchase agreement.

 

We will sell the student loans to the related issuing entity under a sale agreement. The related prospectus supplement will specify the aggregate principal balance of the loans sold to the issuing entity as of the cutoff date specified in that prospectus supplement. The property of each issuing entity will also include amounts on deposit in specific trust accounts. The accounts may include: a collection account, any reserve account, any pre-funding account, any capitalized interest account, any cash capitalization account and any other account identified in the related prospectus supplement. The property of each issuing entity may also include the right to receive payments under any swap agreements entered into by the issuing entity from time to time. See “Formation of the Issuing Entities” in this prospectus.

   Each FFELP loan sold to an issuing entity will be guaranteed as to the payment of principal and interest by a state guaranty agency or a private non-profit guarantor. The percentage of the guarantee will be set forth in the prospectus supplement for your notes. These guarantees are contingent upon compliance with specific origination and servicing procedures, as prescribed by various U.S. federal and guarantor regulations. Each guarantor is reinsured by the U.S. Department of Education for a percentage of claims paid by that guarantor for a given federal fiscal year. The reinsured

 

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   amount depends on a guarantor’s claims experience and the year in which the loans subject to the claims were disbursed. The percentage of the claims paid by a guarantor that are reinsured could change in the future by legislation. See “Appendix A—Federal Family Education Loan Program—Guaranty Agencies under the FFELP” in this prospectus.
   Non-FFELP loans or “private credit student loans” may or may not be insured by a private guarantor or surety. If insured private credit student loans are included in the assets sold to an issuing entity, the issuing entity and the holders of the publicly offered notes related to that issuing entity may or may not have the benefit of the guarantee. If your notes have the benefit of a private guarantee or surety, the related prospectus supplement will describe such private guarantee or surety.
   An issuing entity’s assets may include various agreements with counterparties providing for interest rate swaps, currency swaps, interest rate caps and similar financial contracts. As applicable, these agreements will be described in the related prospectus supplement.

Collection Account

   For each issuing entity, the administrator will establish and maintain one or more accounts to hold all payments made on the trust student loans. We refer herein to each of these accounts collectively as the “collection account.” The collection account will be in the name of the indenture trustee on behalf of the holders of the notes. The collection account will be an asset of the issuing entity. The related prospectus supplement will describe the permitted uses of funds in the collection account and the conditions for their application.

Reserve Account

   The administrator will establish a reserve account for each series. The reserve account will be established in the name of the indenture trustee and will be an asset of the issuing entity. On the relevant closing date, we will make a deposit into the reserve account, as specified in the prospectus supplement. The initial deposit into the reserve account may be supplemented from time to time by additional deposits. The prospectus supplement will describe the conditions and amounts of these additional deposits.
   The prospectus supplement for each issuing entity will describe how amounts in the reserve account will be available to cover shortfalls in payments due on the notes. It will also describe how amounts on deposit in the reserve account in excess of the required reserve account balance will be distributed.

 

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Pre-Funding Account

   The prospectus supplement for your notes will inform you if a portion of the net proceeds of the sale of the notes will be held in a pre-funding account and used to purchase additional student loans. If a pre-funding account is established, it will be in the name of the indenture trustee and will be an asset of the issuing entity. The prospectus supplement will describe the permitted uses of any funds in the pre-funding account, the conditions for their application and the length of time during which additional student loans may be purchased with amounts on deposit in the pre-funding account.

Capitalized Interest Account

   The prospectus supplement for your notes will inform you if the administrator will establish and maintain a capitalized interest account as an asset of the issuing entity. If a capitalized interest account is established, it will be in the name of the indenture trustee. If a capitalized interest account is established, the related issuing entity will make an initial deposit from the net proceeds of the sale of the notes into that account as specified in the related prospectus supplement. This initial deposit will be in the form of either cash or eligible investments.
   Funds in the capitalized interest account will be available to cover shortfalls in payments of primary servicing, administration, auction agent and broker-dealer fees, interest due to senior noteholders and payments due to each swap counterparty (other than any termination payments) pursuant to any swap agreement then in effect. Following such payments and after application of funds available in the collection account, but before application of funds in the reserve account, any funds remaining in the capitalized interest account will be applied towards shortfalls in payments of interest to subordinate noteholders.

Other Accounts

   The prospectus supplement for your notes will also describe any other accounts established for the related issuing entity. These accounts may include cash collateralization accounts, supplemental interest accounts, investment reserve accounts, investment premium purchase accounts, currency accounts, and for any series that contains reset rate notes, one or more accumulation accounts.

Pre-funding Period

   The prospectus supplement for your notes will inform you if there is a pre-funding period and the length of such pre-funding period for the trust to acquire additional student loans with amounts on deposit in the pre-funding account. The length of the pre-funding period will not extend for more than

 

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   one year from the date of issuance of the related series of notes. The portion of the proceeds for the pre-funding account will not involve more than 50% of the proceeds of the offering of the related series of notes. The additional student loans will have the same general characteristics as the original trust student loans in the related pool.

Revolving Period

   The prospectus supplement for your notes will inform you if there is a revolving period and the length of such revolving period for the trust to acquire additional student loans with the cash flows from the related pool of trust student loans. The length of the revolving period will not extend for more than three years from the date of issuance of the related series of notes. The prospectus supplement for your notes will describe the characteristics or selection criteria for the additional trust student loans.
Credit and Cash Flow or other Enhancement or Derivative Arrangements    Credit or cash flow enhancement for any series of notes may include one or more of the items shown under “Additional Information Regarding the Notes—Credit Enhancement and Other Support—General” in this prospectus.
   If any credit or cash flow enhancement applies to an issuing entity or any of the notes issued by that issuing entity, the related prospectus supplement will describe the specific enhancement as well as the conditions for their application. A credit or cash flow enhancement may have limitations and exclusions from coverage. The related prospectus supplement will describe any such limitations or exclusions. See “Additional Information Regarding the Notes—Credit Enhancement and Other Support” in this prospectus.

Servicing Agreements

   The servicer will enter into one or more servicing agreements covering the trust student loans held by each issuing entity. Under the servicing agreement, the servicer will be responsible for servicing, managing, maintaining custody of, and making collections on the trust student loans. In addition, it will file with any guarantor of the trust student loans and the U.S. Department of Education all appropriate claims to collect any guarantee payments or interest subsidy payments and special allowance payments owed on the trust student loans. See “Servicing and Administration” in this prospectus.

Servicing Fee

   The servicer will receive a servicing fee as specified in the related prospectus supplement. It will also receive reimbursement for expenses and charges, as specified in that prospectus supplement. These amounts will be payable monthly.

 

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   The servicing fee and any portion of the servicing fee that remains unpaid from prior dates will be payable before any payments are made on the related notes unless any portion of the servicing fee is expressly subordinated to payments on the notes, as specified in the related prospectus supplement. See “Servicing and Administration—Servicing Compensation” in this prospectus.

Administration Agreement

   Sallie Mae, Inc., in its capacity as administrator, will enter into an administration agreement with each issuing entity, the eligible lender trustee or trustee, as applicable, the servicer and the indenture trustee. Under this agreement, Sallie Mae, Inc. will undertake specific administrative duties for each issuing entity. See “Servicing and Administration—Administration Agreement” in this prospectus.

Administration Fee

   The administrator will receive an administration fee as specified in the related prospectus supplement. It may also receive reimbursement for expenses and charges, as specified in the related prospectus supplement. These amounts will be payable before any payments are made on the related notes, as specified in the related prospectus supplement. See “Servicing and Administration—Administration Agreement” in this prospectus.

Purchase Agreements

   For each issuing entity, the depositor will acquire the related student loans under one or more purchase agreements. We will assign our rights under the purchase agreements to the trustee or eligible lender trustee, as applicable, on behalf of the issuing entity. The issuing entity will further assign these rights to the indenture trustee as collateral for the notes. See “Transfer and Servicing Agreements” in this prospectus.

Sale Agreements

   We will sell the trust student loans to the issuing entity under a sale agreement. The trustee or eligible lender trustee, as applicable, will hold legal title to the trust student loans. The issuing entity will assign its rights under the sale agreement to the indenture trustee as collateral for the notes. See “Transfer and Servicing Agreements” in this prospectus.
Representations and Warranties of the Depositor    Under the sale agreement for each issuing entity, the depositor, as the seller of the loans to the issuing entity, will make specific representations and warranties to the issuing entity concerning the student loans. We will have an obligation to repurchase any trust student loan if the issuing entity is materially and adversely affected by a breach of the depositor’s representations or warranties, unless we can cure

 

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   the breach within the period specified in the applicable prospectus supplement. Alternatively, we may substitute qualified student loans rather than repurchasing the affected loans. Qualified substitute student loans are student loans that comply, on the date of substitution, with all of the representations and warranties made by us in the sale agreement. Qualified substitute student loans must also be substantially similar on an aggregate basis to the loans they are being substituted for with regard to the following characteristics:
  

•        principal balance;

 

•        status—in-school, grace, deferment, forbearance or repayment;

 

•        program type—Unsubsidized Stafford, Subsidized Stafford, PLUS, SLS, Consolidation or non-FFELP loans;

 

•        school type;

 

•        total return; and

 

•        remaining term to maturity.

   Any required repurchase or substitution will occur on the date the next collection period ends after the applicable cure period has expired.
   In addition, the depositor will have an obligation to reimburse the issuing entity for:
  

•        any shortfall between the balance of the qualified substitute student loans and the balance of the loans being replaced, and

 

•        any accrued interest not guaranteed by, or that is required to be refunded to, a guarantor and any program payments lost as a result of a breach of our representations and warranties.

   See “Transfer and Servicing Agreements—Sale of Student Loans to the Trust; Representations and Warranties of the Depositor” in this prospectus.

 

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Representations and Warranties of SLM Education Credit Finance Corporation and the Other Sellers under the Purchase Agreements    In each purchase agreement, the related seller of the student loans will make representations and warranties to the depositor concerning the student loans sold through that purchase agreement. These representations and warranties will be similar to the representations and warranties we made under the related sale agreement. Under each purchase agreement, the related seller will have repurchase, substitution and reimbursement obligations that match our obligations under the sale agreement.
   See “Transfer and Servicing Agreements—Purchase of Student Loans by the Depositor; Representations and Warranties of the Sellers” in this prospectus.

Covenants of the Servicer

   The servicer will agree to service the trust student loans in compliance with the servicing agreement and the Higher Education Act, as applicable. It will have an obligation to purchase from an issuing entity any trust student loan if the issuing entity is materially and adversely affected by a breach by the servicer of any of its covenants concerning that student loan. Alternatively, the servicer will have the right to substitute qualified student loans in those circumstances. Any breach that relates to compliance with the Higher Education Act or the relevant loan program rules, as in effect on such date of determination or the requirements of a guarantor, but that does not affect that guarantor’s obligation to guarantee payment of a trust student loan, will not be considered to have a material adverse effect (for example, any breach by the servicer that is cured within the applicable grace period will not be considered to have a material adverse effect).
   If the servicer does not cure a breach within the grace period specified in the related prospectus supplement, the purchase or substitution will be made on the collection period end date immediately following the expiration of the applicable cure period, or as otherwise described in the related prospectus supplement.
   In addition, the servicer will have an obligation to reimburse the issuing entity for:

 

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•        any shortfall between the aggregate principal balance of the qualified substitute student loans and the aggregate principal balance of the loans being replaced; and

  

•        any accrued interest not guaranteed by, or that is required to be refunded to, a guarantor and any relevant loan program payments lost as a result of a breach of the servicer’s covenants.

   See “Servicing and Administration—Servicer Covenants” in this prospectus.

Optional Purchases

  

Subject to any limitations described in the related prospectus supplement, the servicer or another entity specified in that prospectus supplement may, at its option, purchase, or arrange for the purchase of, all remaining trust student loans owned by an issuing entity on any distribution date when the pool balance of the remaining student loans is 10% or less of the initial pool balance, together with the aggregate initial principal balances of all trust student loans acquired during any applicable pre-funding period, plus accrued interest to be capitalized as of the applicable cutoff dates, or such lesser percentage as set forth in the related prospectus supplement. The exercise of this purchase option will result in the early retirement of the notes issued by that issuing entity. See “The Student Loan Pools—Termination” in this prospectus.

 

In addition, the servicer or another entity specified in the prospectus supplement may have an option to purchase or arrange for the purchase of some of the trust student loans at any time. If the servicer or another entity has this option, the related prospectus supplement will specify the percentage limitation applicable to the option together with the other limitations thereon.

Call Option and Collateral Call

   If specified in the related prospectus supplement, the servicer or one of its affiliates specified in that prospectus supplement may exercise its option to call, in full, one or more classes of notes. If a class of notes has been called, it will either remain outstanding and be entitled to all interest and principal payments on such class of notes under the related indenture, or the servicer or its specified affiliate will deposit an amount into the collection account sufficient to redeem the specified class of notes, subject to satisfaction of the rating agency condition. See “Description of the Notes—Call Option on the Notes” in this prospectus. Each class of reset rate notes will be subject to a call option as described under “Description of

 

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   the NotesThe Reset Rate Notes—Call Option” in this prospectus. In addition, if specified in the related prospectus supplement and provided that the rating agency condition is satisfied, the servicer or one or more of its affiliates will have the right to purchase certain of the trust student loans in an amount sufficient to redeem one or more classes of notes.
   See “Description of the Notes—Collateral Call” in this prospectus.

Auction of Trust Assets

   Subject to any limitations described in the related prospectus supplement, the indenture trustee will offer for sale by auction all remaining trust student loans at the end of the collection period in which their aggregate pool balance is 10% or less of the initial pool balance, together with the aggregate initial principal balances of all trust student loans acquired during any applicable pre-funding period, plus accrued interest to be capitalized as of the applicable cutoff dates, or such lesser percentage as set forth in the related prospectus supplement. An auction will occur only if the entity with the optional purchase right has first waived its optional purchase right. The auction of the remaining trust student loans will result in the early retirement of the notes issued by that issuing entity. See “The Student Loan Pools—Terminationin this prospectus and Summary of Terms—Termination of the Trust—Auction of the Trust Assets” in the related prospectus supplement.

Tax Considerations

   On the closing date for a series, Shearman & Sterling LLP or another law firm identified in the related prospectus supplement, as federal tax counsel to the applicable issuing entity, will deliver an opinion stating that, for U.S. federal income tax purposes:
  

•        the notes of that series will be characterized as debt; and

  

•        the issuing entity will not be characterized as an association or a publicly traded partnership taxable as a corporation.

   In addition, the law firm identified in the related prospectus supplement as Delaware tax counsel to the issuing entity will deliver an opinion stating that:
  

•        the tax characterizations which apply for U.S. federal income tax purposes would apply for Delaware state income tax purposes; and

 

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•        holders of the notes that are not otherwise subject to Delaware state income taxation will not become subject to Delaware state tax as a result of their ownership of the notes.

   By acquiring a note, you will agree to treat that note as indebtedness.
   See “U.S. Federal Income Tax Consequences” and “State Tax Consequences” in this prospectus.

ERISA Considerations

   A fiduciary of any employee benefit plan or other retirement arrangement subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, should carefully review with its legal advisors whether the plan’s purchase or holding of any class of notes could give rise to a transaction prohibited or otherwise impermissible under ERISA or the Internal Revenue Code. See “ERISA Considerations” in this prospectus and in the related prospectus supplement.

Ratings

   All of the notes will be rated in at least one of the four highest rating categories by at least two nationally recognized statistical rating organizations. The prospectus supplement for each issuing entity will specify the ratings for the notes being issued.

 

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RISK FACTORS

You should carefully consider the following risk factors in deciding whether to purchase any notes. You should also consider the additional risk factors described in each prospectus supplement. All of these risk factors could affect your investment in or return on the notes.

 

Because The Notes May Not Provide Regular Or Predictable Payments, You May Not Receive The Return On Investment That You Expected    The notes may not provide a regular or predictable schedule of payments or payment on any specific date. Accordingly, you may not receive the return on investment that you expected.
The Notes Are Not Suitable Investments For All Investors    The notes are complex investments that should be considered only by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risk, and tax consequences of an investment, as well as the interaction of these factors.
If A Secondary Market For Your Notes Does Not Develop, The Value Of Your Notes May Diminish    The notes will be a new issue without an established trading market. While we intend to list the notes on a European exchange if specified in the related prospectus supplement, we do not intend to list the notes on any exchange in the United States. We cannot assure you that a listing on a European exchange will be accepted nor, in any event, that a secondary market for the notes will develop. If a secondary market does not develop, the spread between the bid price and the asked price for your notes may widen, thereby reducing the net proceeds to you from the sale of your notes.
The Issuing Entity Will Have Limited Assets From Which To Make Payments On The Notes, Which May Result In Losses    An issuing entity will not have, nor will it be permitted to have, significant assets or sources of funds other than the trust student loans and the guarantee agreements. If so provided in the related prospectus supplement, the issuing entity may have a reserve account, any other accounts established in the issuing entity’s name, any derivative contracts and other credit or cash flow enhancements.
   Consequently, you must rely upon payments on the trust student loans from the borrowers and guarantors, and, if available, amounts on deposit in the trust accounts, amounts received from derivative counterparties and the other specified credit or cash flow enhancements to repay your notes. If these sources of funds are unavailable or insufficient to make payments on your notes, you may experience a loss on your investment.

 

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Private Credit Student Loans May Have Greater Risk Of Default    Private credit student loans are made to students who may have higher debt burdens than student loan borrowers as a whole. Borrowers of private credit student loans typically have already borrowed up to the maximum annual or aggregate limits under FFELP loans. As a result, borrowers of private credit student loans may be more likely than other student loan borrowers as a whole to default on their payments or have a higher rate of forbearances. Failures by borrowers to pay timely the principal and interest on their private credit student loans or an increase in deferments or forbearances could affect the timing and amount of available funds for any collection period and adversely affect an issuing entity’s ability to pay principal and interest on your notes. In addition, the private credit student loans are not secured by any collateral of the borrowers and are not insured by any FFELP guaranty agency or by any governmental agency. Consequently, if a borrower defaults on a private credit student loan, you will bear the risk of loss to the extent that the reserve account or other specified credit enhancement for your notes is insufficient or unavailable to cover such default.
Past Charge-Off Rates On SLM Corporation’s Private Education Loans May Not Be Indicative Of Future Charge-Off Rates    Sallie Mae, Inc. as the servicer, has agreed to service the trust student loans on the same terms as they service substantially similar loans owned by SLM Corporation and its affiliates. SLM Corporation and its subsidiaries have established forbearance policies for their private credit loans under which they provide to the borrower temporary relief from payment of principal or interest in exchange for a processing fee paid by the borrower, which is waived under certain circumstances. During the forbearance period, generally granted in three-month increments, interest that the borrower otherwise would have paid is typically capitalized at the end of the forbearance term. At December 31, 2007, approximately 14% of SLM Corporation’s managed private credit loans in repayment and forbearance were in forbearance. Forbearance is used most heavily when the borrower’s loan enters repayment; however, borrowers may apply for forbearance multiple times and a significant number of private credit loan borrowers have taken advantage of this option. When a borrower ends forbearance and enters repayment, the account is considered current. Accordingly, a borrower who may have been delinquent in his payments or may not have made any recent payments on his account will be accounted for as borrower in a current repayment status

 

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   when the borrower exits the forbearance period. In addition, past charge-off rates on SLM Corporation’s private credit loans may not be indicative of future charge-off rates because of, among other things, the use of forbearance and the effect of future changes to the forbearance policies. If their forbearance policies prove over time to be less effective on cash collections than they expect or if they limit the circumstances under which forbearance may be granted under their forbearance policies, these changes could have a material adverse effect on the amount of future charge-offs and the ultimate default rate changes.
   In addition, future charge-off rates can be higher than anticipated due to a variety of factors such as downturns in the economy, regulatory or operational changes in debt management operations effectiveness, and other unforeseeable future trends. You will bear the risk of loss if actual future performance in charge-offs and delinquency is worse than estimated.
Interests Of Other Persons In Private Credit Student Loans Could Be Superior To An Issuing Entity’s Interest, Which May Result In Reduced Payments On Your Notes    Another person could acquire an interest in a private credit student loan that is superior to an issuing entity’s interest in that student loan because the promissory notes evidencing private credit student loans will not be segregated or marked as belonging to an issuing entity and will not be held by a third-party custodian on behalf of the indenture trustee. The seller will cause financing statements to be filed with the appropriate governmental authorities to perfect an issuing entity’s interest in the related private credit student loans. The servicer will also mark its books and records accordingly. However, the servicer will continue to hold the promissory notes evidencing private credit student loans. If another party purchases (or takes a security interest in) one or more private credit student loans for new value in the ordinary course of business and obtains possession of those promissory notes evidencing private credit student loans without actual knowledge of the issuing entity’s interests, the new purchaser (or secured party) will acquire an interest in those private credit student loans superior to the interest of the applicable issuing entity.

 

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Risk Of Default By Private Guarantors    If a private guarantor defaults on its guarantee obligations, you will rely solely on payments from the related borrower for payments on the related private guaranteed loan. In these circumstances, you will bear the risk of loss resulting from the failure of any borrower of a private guaranteed student loan to the extent this loss is not covered by the limited credit enhancement provided in the financing structure for your notes.
You May Incur Losses Or Delays In Payments On Your Notes If Borrowers Default On The Student Loans    If a borrower defaults on a trust student loan that is only 98% or 97% guaranteed, the related issuing entity will experience a loss of approximately 2% or 3%, as the case may be, of the outstanding principal and accrued interest on that student loan. If defaults occur on the trust student loans and the credit enhancement described in the related prospectus supplement is insufficient, you may suffer a delay in payment or losses on your notes.
If A Guarantor Or Surety Of The Student Loans Experiences Financial Deterioration Or Failure, You May Suffer Delays In Payment Or Losses On Your Notes    All of the student loans will be unsecured. As a result, the only security for payment of a guaranteed student loan is the guarantee provided by the applicable guarantor or surety. Student loans acquired by each issuing entity may be subject to guarantee or surety agreements with a number of individual guarantors or insurance companies. A deterioration of a guarantor’s or surety’s financial condition and ability to honor guarantee claims could result in a failure of that guarantor or surety to make guarantee or surety payments to the eligible lender trustee in a timely manner, or at all. The financial condition of a guarantor or surety could be adversely affected by a number of factors, including the amount of claims made against that guarantor or surety as a result of borrower defaults.
  

A FFELP guarantor’s financial condition and ability to honor guarantee claims could be adversely affected by a number of other factors including:

  

•        the continued voluntary waiver by the guarantor of the guarantee fee payable by a borrower upon disbursement of a student loan;

  

•        the amount of claims made against that guarantor as a result of borrower defaults;

 

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•        the amount of claims reimbursed to that guarantor from the U.S. Department of Education, which range from 75% to 100% of the guaranteed portion of the loan, depending on the date the loan was made and the historical performance of the guarantor; and

  

•        changes in legislation that may reduce expenditures from the U.S. Department of Education that support federal guarantors or that may require guarantors to pay more of their reserves to the U.S. Department of Education.

   If the financial condition of a guarantor or surety deteriorates, they may fail to make guarantee payments in a timely manner, or at all. In that event, you may suffer delays in payment or losses on your notes.
The U.S. Department Of Education’s Failure To Make Reinsurance Payments May Negatively Affect The Timely Payment Of Principal And Interest On Your Notes    If a FFELP guarantor is unable to meet its guarantee obligations, the issuing entity may submit claims directly to the U.S. Department of Education for payment. The U.S. Department of Education’s obligation to pay guarantee claims directly is dependent upon its determination that the guarantor is unable to meet its guarantee obligations. If the U.S. Department of Education delays in making this determination, you may suffer a delay in the payment of principal and interest on your notes. In addition, if the U.S. Department of Education determines that the FFELP guarantor is able to meet its guarantee obligations, the U.S. Department of Education will not make guarantee payments to the issuing entity. The U.S. Department of Education may or may not make the necessary determination that the guarantor is unable to meet its guarantee obligations. If the U.S. Department of Education determines that the guarantor is unable to meet its guarantee obligations, it may or may not make this determination or the ultimate payment of the guarantee claims in a timely manner. This could result in delays or losses on your investment.
You Will Bear Prepayment And Extension Risk Due To Actions Taken By Individual Borrowers And Other Variables Beyond Our Control    A borrower may prepay a student loan in whole or in part, at any time. The rate of prepayments on the student loans may be influenced by a variety of economic, social, competitive and other factors, including changes in interest rates, the availability of alternative financings and the general economy. Various loan consolidation programs, including those offered by affiliates of the depositor, available to eligible borrowers may increase the likelihood

 

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   of prepayments. In addition, an issuing entity may receive unscheduled payments due to defaults and purchases by the servicer or the depositor. Because a pool may include thousands of student loans, it is impossible to predict the amount and timing of payments that will be received and paid to noteholders in any period. Consequently, the length of time that your notes are outstanding and accruing interest may be shorter than you expect.
   On the other hand, the trust student loans may be extended as a result of grace periods, deferment periods and, under some circumstances, forbearance periods. This may lengthen the remaining term of the student loans and delay principal payments to you. In addition, the amount available for distribution to you will be reduced if borrowers fail to pay timely the principal and interest due on the trust student loans. Consequently, the length of time that your notes are outstanding and accruing interest may be longer than you expect.
   Any optional purchase right, any provision for the auction of the student loans, and, if applicable, the possibility that any pre-funded amount may not be fully used to purchase additional student loans create additional uncertainty regarding the timing of payments to noteholders.
   The effect of these factors is impossible to predict. To the extent they create reinvestment risk, you will bear that risk.
You May Be Unable To Reinvest Principal Payments At The Yield You Earn On The Notes    Asset-backed notes usually produce increased principal payments to investors when market interest rates fall below the interest rates on the collateral—student loans in this case—and decreased principal payments when market interest rates rise above the interest rates on the collateral. As a result, you are likely to receive more money to reinvest at a time when other investments generally are producing lower yields than the yield on the notes. Similarly, you are likely to receive less money to reinvest when other investments generally are producing higher yields than the yield on the notes.

 

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A Failure To Comply With Student Loan Origination And Servicing Procedures Could Jeopardize Guarantor, Interest Subsidy And Special Allowance Payments On The Student Loans, Which May Result In Delays In Payment Or Losses On Your Notes   

The rules under which the trust student loans were originated, including the Higher Education Act or the program rules and surety agreements for private credit student loans, require lenders making and servicing student loans and the guarantors, if any, guaranteeing those loans to follow specified procedures, including due diligence procedures, to ensure that the student loans are properly made, disbursed and serviced.

 

Failure to follow these procedures may result in:

 

•        the U.S. Department of Education’s refusal to make reinsurance payments to the applicable guarantor or to make interest subsidy payments and special allowance payments on the trust student loans; or

 

•        the guarantors’ or sureties’ inability or refusal to make guarantee or insurance payments on the trust student loans.

   Loss of any loan program payments could adversely affect the amount of available funds and the issuing entity’s ability to pay principal and interest on your notes.
The Inability Of The Depositor Or The Servicer To Meet Its Repurchase Obligation May Result In Losses On Your Notes    Under some circumstances, the issuing entity has the right to require the depositor or the servicer to purchase a trust student loan or provide the issuing entity with a substitute student loan. This right arises generally if a breach of the representations, warranties or covenants of the depositor or the servicer, as applicable, has a material adverse effect on the issuing entity, and is not cured within the applicable cure period. We cannot guarantee you, however, that the depositor or the servicer will have the financial resources to make a purchase or substitution. In this case, you will bear any resulting loss.
Subordination Of Some Classes Of Notes Results In A Greater Risk Of Losses Or Delays In Payment On Those Notes    Some classes of notes may be subordinate to other classes of that series. Consequently, holders of some classes of notes may bear a greater risk of losses or delays in payment. The prospectus supplement will describe the nature and extent of any subordination.

 

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The Notes May Be Repaid Early Due To An Auction Sale Or The Exercise Of The Purchase Option. If This Happens, Your Yield May Be Affected And You Will Bear Reinvestment Risk   

The notes may be repaid before you expect them to be if:

 

•        the indenture trustee successfully conducts an auction sale or

 

•        the servicer or other applicable entity exercises its option to purchase all of the trust student loans.

   Either event would result in the early retirement of the notes outstanding on that date. If this happens, your yield on the notes may be affected. You will bear the risk that you cannot reinvest the money you receive in comparable notes at an equal yield.
Incentive Programs May Affect Your Notes    At the present time, the sellers of the trust student loans make available to borrowers various incentive programs. In addition, under the terms of the servicing agreement for your notes, the servicer may make new incentive programs available to borrowers with trust student loans. See “SLM Corporation’s Student Loan Financing Business—Underwriting of Private Credit Loans—Incentive Programs” in this prospectus. These current or future incentive programs may affect payments on your notes.
   For example, if one or more of the incentive programs which offer a principal balance reduction to borrowers are made available to borrowers with trust student loans and a higher than anticipated number of borrowers qualify, the principal balance of the affected trust student loans may repay faster than anticipated.
   Accordingly, your notes may experience faster than anticipated principal payments.
   Conversely, the existence of these incentive programs may discourage a borrower from prepaying an affected trust student loan. If this were to occur, the principal balance of your notes may be reduced over a longer period than would be the case if there were no such incentive program.
   Furthermore, incentive programs may reduce the amount of funds available to make payments on your notes by reducing the principal balances and yield on the trust student loans. In that case, you will bear the risk of any loss not covered by available credit enhancement.

 

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Payment Offsets By FFELP Loan Guarantors Or The U.S. Department Of Education Could Prevent The Issuing Entity From Paying You The Full Amount Of The Principal And Interest Due On Your Notes    The eligible lender trustee may use the same U.S. Department of Education lender identification number for FFELP loans in an issuing entity as it uses for other FFELP loans it holds on behalf of other issuing entities established by us. If it does, the billings submitted by the eligible lender trustee or the servicer to the U.S. Department of Education (for items such as special allowance payments or interest subsidy payments) and the claims submitted to the guarantors will be consolidated with the billings and claims for payments for trust student loans under other issuing entities using the same lender identification number. Payments on those billings by the U.S. Department of Education as well as claim payments by the applicable guarantors will be made to the eligible lender trustee, or to the servicer on behalf of the eligible lender trustee, in a lump sum. Those payments must be allocated by the administrator among the various issuing entities that reference the same lender identification number.
   If the U.S. Department of Education or a guarantor determines that the eligible lender trustee owes it a liability on any trust student loan, including loans it holds on behalf of the issuing entity for your notes or other issuing entities, the U.S. Department of Education or the applicable guarantor may seek to collect that liability by offsetting it against payments due to the eligible lender trustee under the terms of the issuing entity. Any offsetting or shortfall of payments due to the eligible lender trustee could adversely affect the amount of available funds for any collection period and thus the issuing entity’s ability to pay you principal and interest on the notes.
   The servicing agreement for your notes and other servicing agreements of the depositor will contain provisions for cross-indemnification concerning those payments and offsets. Such provisions require one entity to compensate the other or accept a lesser payment to the extent the latter has been assessed for the liability of the former. Even with cross-indemnification provisions, however, the amount of funds available to the issuing entity from indemnification would not necessarily be adequate to compensate the issuing entity and investors in the notes for any previous reduction in the available funds.

 

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A Servicer Default May Result In Additional Costs, Increased Servicing Fees By A Substitute Servicer Or A Diminution In Servicing Performance, Any Of Which May Have An Adverse Effect On Your Notes   

If a servicer default occurs, the indenture trustee or the noteholders in a given series of notes may remove the servicer without the consent of the trustee or eligible lender trustee, as applicable. Only the indenture trustee or the noteholders, and not the trustee or eligible lender trustee, as applicable, have the ability to remove the servicer if a servicer default occurs. In the event of the removal of the servicer and the appointment of a successor servicer, we cannot predict:

 

•        the cost of the transfer of servicing to the successor;

 

•        the ability of the successor to perform the obligations and duties of the servicer under the servicing agreement; or

  

•        the servicing fees charged by the successor.

  

In addition, the noteholders have the ability, with some exceptions, to waive defaults by the servicer.

 

Furthermore, the indenture trustee or the noteholders may experience difficulties in appointing a successor servicer and during any transition phase it is possible that normal servicing activities could be disrupted, resulting in increased delinquencies and/or defaults on the trust student loans.

The Bankruptcy Of The Servicer Could Delay The Appointment Of A Successor Servicer Or Reduce Payments On Your Notes    In the event of default by the servicer resulting solely from certain events of insolvency or the bankruptcy of the servicer, a court, conservator, receiver or liquidator may have the power to prevent either the indenture trustee or the noteholders from appointing a successor servicer or prevent the servicer from appointing a sub-servicer, as the case may be, and delays in the collection of payments on the trust student loans may occur. Any delay in the collection of payments on the trust student loans may delay or reduce payments to noteholders.
The Bankruptcy Of The Depositor, SLM ECFC Or Any Other Seller Could Delay Or Reduce Payments On Your Notes    We have taken steps to assure that the voluntary or involuntary application for relief by SLM ECFC, which is the sole member of the depositor, or any other applicable seller under the United States Bankruptcy Code or other insolvency laws will not result in consolidation of the assets and liabilities of the depositor with those of SLM ECFC and the other sellers. However, we cannot guarantee that our activities will not result in a court concluding that our

 

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   assets and liabilities should be consolidated with those of SLM ECFC or any other seller in a proceeding under any insolvency law. If a court were to reach this conclusion or a filing were made under any insolvency law by or against us, or if an attempt were made to litigate this issue, then delays in distributions on the notes or reductions in these amounts could result.
   SLM ECFC, the other sellers of the student loans and the depositor intend that each transfer of student loans to the depositor will constitute a true sale. If such transfer constitutes a true sale, the student loans and their proceeds would no longer be considered property of SLM ECFC or the other sellers should any such seller become subject to an insolvency law.
   If SLM ECFC or any other seller were to become subject to an insolvency law, and a creditor, a trustee-in-bankruptcy or the seller itself were to take the position that the sale of student loans from the related seller to the depositor should instead be treated as a pledge of the student loans to secure a borrowing of that seller, delays in payments on the notes could occur.
   In addition, if the court ruled in favor of this position, reductions in the amount of payments on the notes could result.
   If the transfer of student loans by SLM ECFC or any other seller to the depositor is treated as a pledge instead of a sale, a tax or government lien on the property of the SLM ECFC or the applicable seller that arises before the transfer of those student loans to the depositor may have priority over that issuing entity’s interest in the student loans.
The Indenture Trustee May Have Difficulty Liquidating Student Loans After An Event Of Default    If an event of default occurs under an indenture, the indenture trustee may sell the trust student loans, without the consent of the noteholders (but only in the event that there has been a payment default on a class of senior notes, and in all other cases, if the purchase price received from the sale of the trust student loans is sufficient to repay all related noteholders in full). However, the indenture trustee may not be able to find a purchaser for the trust student loans in a timely manner or the market value of those loans may not be high enough to make noteholders whole.

 

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Future Changes In Law May Adversely Affect Student Loans, The Guarantors, The Depositor, SLM ECFC, Or The Other Sellers And, Accordingly, Adversely Affect Your Notes    The Higher Education Act or other relevant federal or state laws, rules and regulations may be amended or modified in the future in a manner, including as part of any reauthorization of the Higher Education Act, that could adversely affect the federal student loan programs as well as the student loans made under these programs and the financial condition of the guarantors. Among other things, the level of guarantee payments may be adjusted from time to time. Future changes could affect the ability of SLM ECFC, the other sellers, the depositor or the servicer to satisfy their obligations to purchase or substitute student loans. Future changes could also have a material adverse effect on the revenues received by the guarantors that are available to pay claims on defaulted student loans in a timely manner. We cannot predict whether any changes will be adopted or, if adopted, what impact those changes would have on any issuing entity or the notes that it issues.
The Use Of Master Promissory Notes May Compromise The Indenture Trustee’s Security Interest In The Student Loans    For loans disbursed on or after July 1, 1999, a master promissory note evidences any student loan made to a borrower under the Federal Family Education Loan Program. When a master promissory note is used, a borrower executes only one promissory note with each lender. Subsequent student loans from that lender are evidenced by a confirmation sent to the student. Therefore, if a lender originates multiple student loans to the same student, all the student loans are evidenced by a single promissory note.
   Under the Higher Education Act, each student loan made under a master promissory note may be sold independently of any other student loan made under that same master promissory note. Each student loan is separately enforceable on the basis of an original or copy of the master promissory note. Also, a security interest in these student loans may be perfected either through the secured party taking possession of the original or a copy of the master promissory note, or the filing of a financing statement. Prior to the master promissory note, each student loan made under the Federal Family Education Loan Program was evidenced by a separate note. Assignment of the original note was required to effect a transfer and possession of a copy did not perfect a security interest in the loan.

 

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   It is possible that student loans transferred to the issuing entity may be originated under a master promissory note. If the servicer were to deliver a copy of the master promissory note, in exchange for value, to a third party that did not have knowledge of the indenture trustee’s lien, that third party may also claim an interest in the student loan. It is possible that the third party’s interest could be prior to or on a parity with the interest of the indenture trustee.
Withdrawal Or Downgrade Of Initial Ratings May Decrease The Prices Of Your Notes    The prospectus supplement for your notes will specify the minimum required ratings for the notes. A security rating is not a recommendation to buy, sell or hold securities. Similar ratings on different types of securities do not necessarily mean the same thing. A rating agency may revise or withdraw its rating at any time if it believes circumstances have changed. A subsequent downgrade in the rating on your notes is likely to decrease the price a subsequent purchaser will be willing to pay for your notes.
An Issuing Entity May Be Affected By Delayed Payments From Borrowers Called To Active Military Service    The Higher Education Act, the Servicemembers Civil Relief Act and similar state and local laws provide payment relief to borrowers who enter active military service and to borrowers in reserve status who are called to active duty after the origination of their trust student loans. Recent and ongoing military operations by the United States have increased the number of citizens who are in active military service, including persons in reserve status who have been called or may be called to active duty.
   The Servicemembers Civil Relief Act also limits the ability of a lender in the FFELP to take legal action against a borrower during the borrower’s period of active duty and, in some cases, during an additional three-month period thereafter.
   We do not know how many trust student loans have been or may be affected by the application of these laws. As a result, there may be unanticipated delays in payment and losses on the trust student loans.
Consumer Protection Laws May Affect Enforceability Of Student Loans    Numerous federal and state consumer protection laws, including various state usury laws and related regulations, impose substantial requirements upon lenders and servicers involved in consumer finance. Some states impose finance charge ceilings and other restrictions on certain consumer transactions and require contract disclosures in addition to those required under federal law. These requirements

 

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   impose specific statutory liability that could affect an assignee’s ability to enforce consumer finance contracts such as the student loans. In addition, the remedies available to the indenture trustee or the noteholders upon an event of default under the indenture may not be readily available or may be limited by applicable state and federal laws.
Risk of Bankruptcy Discharge of Private Credit Student Loans    Private credit student loans made for qualified education expenses are generally not dischargeable by a borrower in bankruptcy. Private credit student loans can become dischargeable if the borrower proves that keeping the loans non-dischargeable would impose an undue hardship on the debtor and the debtor’s dependents. In addition, direct-to-consumer loans are disbursed directly to the borrowers based upon certifications and warranties contained in their promissory notes, including their certification of the cost of attendance for their education. This process does not involve school certification as an additional control and, therefore, may be subject to some additional risk that the loans are not used for qualified education expenses. If you own any notes, you will bear any risk of loss resulting from the discharge of any borrower of a private credit student loan to the extent the amount of the default is not covered by the trust’s credit enhancement.
Subordinated Noteholders May Not Be Able To Direct The Indenture Trustee Upon An Event Of Default Under The Indenture    If specified in the related prospectus supplement, and an event of default occurs under the indenture, only the holders of the controlling class of notes, which is defined as the holders of the then outstanding class or classes of the most senior notes, will be able to waive that event of default, accelerate the maturity dates of the notes or direct any remedial action under the related indenture. In this event, the holders of any outstanding subordinated class or classes of notes will not have any rights to direct any remedial action until each more senior class of notes has been paid in full.

 

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In The Event Of An Early Termination Of A Swap Agreement Due To Certain Swap Termination Events, An Issuing Entity May Be Required To Make A Large Termination Payment To Any Related Swap Counterparty    To the extent described in the related prospectus supplement, when a class of notes bears interest at a fixed rate, an issuing entity may enter into one or more interest rate swap agreements to hedge basis risk. If at any time a class of notes is denominated in a currency other than U.S. Dollars, the issuing entity will be required to enter into one or more currency swap agreements with eligible swap counterparties to hedge against currency risk.
   A swap agreement generally may not be terminated except upon the occurrence of enumerated termination events set forth in the applicable swap agreement which will be described in the related prospectus supplement. Depending on the reason for the termination, however, a swap termination payment may be due from either the issuing entity or the related swap counterparty.
   If a termination event under any of these swap agreements occurs and the issuing entity owes the related swap counterparty a large termination payment that is required to be paid pro rata with interest due to the related notes, the issuing entity may not have sufficient available funds on that or future distribution dates to make required payments of interest or principal, and the holders of all classes of notes may suffer a loss.
Your Notes Will Have Greater Risk If An Interest Rate Swap Agreement Terminates    If on any distribution date a payment is due to the issuing entity under an interest rate swap agreement, but the related swap counterparty defaults and the administrator is unable to arrange for a replacement swap agreement, holders of such notes will remain entitled to the established rate of interest and principal, even though the related swap agreement has terminated. If this occurs, amounts available to make payments on the related notes will be reduced to the extent the interest rates on those notes exceed the rates which the issuing entity would have been required to pay to the swap counterparty under the terminated interest rate swap agreement. In this event, the issuing entity may not have sufficient available funds on that or future distribution dates to make required payments of interest or principal to all classes of notes and you may suffer a loss.

 

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Your Notes Will Have Greater Risk If A Currency Swap Agreement Terminates    To the extent described in the related prospectus supplement, when a class of notes is to be denominated in a currency other than U.S. Dollars, the issuing entity will enter into one or more currency swap agreements with eligible swap counterparties to hedge against currency exchange and basis risks. The currency swap agreements will be intended to convert:
  

•        principal and interest payments on the related class of notes from U.S. Dollars to the applicable currency; and

  

•        the interest rate on the related class of notes from a LIBOR-based rate to a fixed or floating rate payable in the applicable currency.

  

Upon an early termination of any currency swap agreement, you cannot be certain that the issuing entity will be able to enter into a substitute currency swap agreement with similar currency exchange terms. If the issuing entity is not able to enter into a substitute currency swap agreement, there can be no assurance that the amount of credit enhancement will be sufficient to cover the currency risk and the basis risk associated with a class of notes denominated in a currency other than U.S. Dollars.

 

In addition, the issuing entity may owe the related swap counterparty swap termination payments that are required to be paid pro rata with the related classes of notes. In this event, there can be no assurance that the amount of credit enhancement will be sufficient to cover the swap termination payments and payments due on your notes and you may suffer loss.

  

If any currency swap counterparty fails to perform its obligations or if the related currency swap agreement is terminated, the issuing entity will have to exchange U.S. Dollars for the applicable currency during the applicable reset period at an exchange rate that may not provide sufficient amounts to make payments of principal and interest to all of the notes in full, including as a result of the inability to exchange U.S. Dollar amounts then on deposit in any related accumulation account for the applicable currency.

 

Moreover, there can be no assurance that the spread between LIBOR and any applicable non-U.S. Dollar

 

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   currency index will not widen. As a result, if a currency swap agreement is terminated and the issuing entity is not able to enter into a substitute currency swap agreement, all of the notes bear the resulting currency risk and spread risk.
   In addition, if a payment is due to the issuing entity under a currency swap agreement, a default by the related swap counterparty may reduce the amount of available funds for any collection period and thus impede the issuing entity’s ability to pay principal and interest on your class of notes.
If The Holder Of The Call Option Or Collateral Call Exercises Its Right, You May Not Be Able To Reinvest In A Comparable Note    If specified in the prospectus supplement for your notes, the servicer will have, or may transfer to certain of its affiliates, the option to call, in full, one or more classes of notes. If this option is exercised, the affected class of notes will either remain outstanding and be entitled to all of the benefits of the related indenture, or the servicer or its specified affiliate will deposit an amount into the collection account sufficient to redeem the affected class of notes, subject to satisfaction of the rating agency condition set forth in the related prospectus supplement for your notes. In addition, if specified in the related prospectus supplement and subject to satisfaction of the rating agency condition, the servicer or one or more of its affiliates will have the right to purchase certain of the trust student loans in an amount sufficient to redeem one or more classes of notes. If the note call option or collateral call option is exercised with respect to your class of notes, you will receive a payment of principal equal to the outstanding principal balance of your notes, less any amounts distributed to you by the issuing entity as a payment of principal on the related distribution date, plus all accrued and unpaid interest on such distribution date, but you may not be able to reinvest the proceeds you receive in a comparable security with an equivalent yield.
Risks Related To Auction Rate Notes    (If auction rate notes are offered in the related prospectus supplement, the following risk factors will apply.)
The Interest Rates On Any Auction Rate Notes Are Subject To Limitations, Which Could Reduce Your Yield    The interest rates on the auction rate notes may be limited by the maximum rate, which will be based on the least of the maximum auction rate, the maximum interest rate, generally 18% per annum, or, in certain circumstances, the auction student loan rate, which is based on the rates of return on the trust student loans, less specified administrative costs. If, for any accrual period, the maximum rate is less than the auction rate determined in

 

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   accordance with the auction procedures, interest will be paid on the auction rate notes at the maximum rate even though there may be sufficient available funds to pay interest at the auction rate.
   For a distribution date on which the interest rate for a class of auction rate notes is equal to the auction student loan rate, the carryover amount will be the excess of (a) the lower of (1) the amount of interest at the auction rate determined pursuant to the auction procedures for the auction rate notes and (2) the amount of interest at the maximum auction rate which would have been applied if the auction student loan rate were not a component of the maximum auction rate over (b) the auction student loan rate. This carryover amount will be allocated to the applicable notes on succeeding quarterly distribution dates, and paid on the succeeding distribution date, only to the extent that there are funds available for that purpose and other conditions are met. It is possible that such carryover amount may never be paid. Any carryover amount not paid at the time of redemption of an auction rate note will be extinguished.
Risks Related To Reset Rate Notes    (If reset rate notes are offered in the related prospectus supplement, the following risk factors will apply.)
If A Currency Swap Agreement Terminates, Additional Interest Will Not Be Paid    To the extent described in the prospectus supplement for your notes, a currency swap agreement supporting payment of reset rate notes denominated in a currency other than U.S. Dollars may provide for the payment to all reset rate noteholders of approximately two business days of interest at the applicable rate resulting from a required delay in the payment of reset date remarketing proceeds through Euroclear and Clearstream, Luxembourg. If a currency swap agreement is terminated, however, the issuing entity, in turn, will make payments in respect of those reset rate notes, but will not make payments for those additional days of interest resulting from the required delay in the payment of reset date remarketing proceeds through Euroclear and Clearstream, Luxembourg.
Even If You Do Not Receive Timely Notices, You Will Be Deemed To Have Tendered Your Reset Rate Notes    Unless notice of the exercise of the call option described below has already been given, the administrator, not less than fifteen nor more than thirty calendar days prior to each remarketing terms determination date, will inform DTC, Euroclear and Clearstream, Luxembourg, as applicable, of the identity of the remarketing agents, whether (1) such

 

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   class of notes will be subject to an automatic tender on the upcoming reset date unless a holder elects not to tender its reset rate notes by timely delivery of a hold notice, or (2) whether such class of notes is subject to mandatory tender by all of the holders regardless of a desire by any noteholders to retain their notes. The administrator also will request that DTC, Euroclear and Clearstream, Luxembourg, as applicable, notify its participants of the contents of such notice given to DTC, Euroclear and Clearstream, Luxembourg, as applicable, inform them of the notices to be given on the remarketing terms determination date and the spread determination date and the procedures that must be followed if any beneficial owner of reset rate notes wishes to retain its notes or inform them of any procedures to be followed in connection with a mandatory tender of such notes.
   Due to the procedures used by the clearing agencies and the financial intermediaries, however, holders of beneficial interests in any class of reset rate notes may not receive timely notifications of the reset terms for any reset date. Despite this potential delay in the distribution of such notices by the related clearing agencies, even though you may not receive a copy of the notice to be delivered on the related remarketing terms determination date, you will be deemed to have tendered your class unless the remarketing agents have received a hold notice, if applicable, from you on or prior to the related notice date. See “Additional Information Regarding the Notes—The Reset Rate Notes—Timeline” in this prospectus for a chart describing the dates related to the entire remarketing process.
If Investments In An Accumulation Account Do Not Perform As Anticipated, Your Notes May Be Downgraded Or You May Suffer A Loss    During any reset period when an accumulation account is being maintained for a class of reset rate notes, the administrator, on behalf of the issuing entity, will invest any funds on deposit in that accumulation account in eligible investments, as defined in the administration agreement. Eligible investments include among other things asset-backed notes and repurchase obligations under repurchase agreements entered into with respect to federally guaranteed student loans that are serviced by the servicer or an affiliate thereof, that satisfy the applicable minimum rating requirements set by the applicable rating agencies and that have an expected maturity date at least one business day before the next reset date for the related class of reset rate notes.

 

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   There can be no assurance that these investments will not default or that they will always retain their initial ratings. Any downgrade in these investments would also likely reduce the market value of such investments. In this event, if the administrator were to have the issuing entity sell such investments prior to their maturity, whether to minimize potential future losses or for any other reason, or if the indenture trustee were to liquidate such investments following an event of default and an acceleration of your notes, you may suffer a loss. Furthermore, there is no certainty that these investments will pay interest and principal at the rates, at the times or in the full amounts owed. As a result, it is possible that, absent sufficient cash flow from the assets of the issuing entity, other than the accumulation account, to offset these losses, you could suffer a loss on your notes.
In The Event That Sums Are Deposited Into A Supplemental Interest Account Or An Investment Reserve Account, Principal Payments To Subordinated Noteholders May Be Delayed, Or Subordinated Noteholders May Suffer A Loss    On and after the date on which the senior notes have been paid in full, or on and after any earlier date described in the related prospectus supplement, your subordinated notes will be entitled to principal distributions. However, if amounts on deposit in an accumulation account for a class of reset rate notes bearing interest at a fixed rate become sufficiently large, it is possible that required deposits into the related supplemental interest account may result in a shortage of available funds, and principal would not be paid to you on that or succeeding distribution dates until there are sufficient available funds.
   In addition, amounts required to be deposited into a related investment reserve account will be funded on each applicable distribution date, to the level necessary to satisfy the rating agency condition, subject to a maximum amount, prior to any distributions of principal to the subordinated notes. If there are insufficient available funds following any such deposit, principal payments to your subordinated notes may be delayed. In addition, if amounts withdrawn from the investment reserve account are insufficient to offset losses on eligible investments, and there are insufficient available funds to both replenish the related accumulation account and make payments of principal to the subordinated noteholders, you may suffer a loss.

 

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If The Holder Of The Call Option On The Reset Rate Notes Exercises The Call Option, You May Not Be Able To Reinvest In A Comparable Note    SLM Corporation will have, or may transfer to certain of its subsidiaries, the option to call, in full, any class of reset rate notes on each related reset date, even if you have delivered a hold notice. If this option is exercised, you will receive a payment of principal equal to the outstanding principal balance of your reset rate notes, less any amounts distributed to you by the issuing entity as a payment of principal on the related distribution date, plus all accrued and unpaid interest on such distribution date, but you may not be able to reinvest the proceeds you receive in a comparable security with an equivalent yield.
If A Failed Remarketing Is Declared, You Will Be Required To Rely On A Sale Through The Secondary Market If You Wish To Sell Your Reset Rate Notes    In connection with the remarketing of your class of reset rate notes, if a failed remarketing is declared, your reset rate notes will not be sold even if you attempted or were required to tender them for remarketing. In this event you will be required to rely on a sale through the secondary market, which may not then exist for your class of reset rate notes, independent of the remarketing process.
If A Failed Remarketing Is Declared, The Failed Remarketing Rate You Will Receive May Be Less Than The Then-Prevailing Market Rate Of Interest    If a failed remarketing is declared, your class of reset rate notes will become subject to the applicable failed remarketing rate. If your class is then denominated in U.S. Dollars, you will receive interest until the next reset date at the related failed remarketing rate of three-month LIBOR plus a related spread. If your class is then denominated in a non-U.S. Dollar currency, you will receive interest until the next reset date at the failed remarketing rate established on the related spread determination date, which will always be a floating rate of interest, or at the related initial failed remarketing rate established for your class of reset rate notes on the closing date, as described in the related prospectus supplement. The failed remarketing rate may differ significantly from the rate of interest you received during any previous reset period, which may have been at a fixed rate or based on an index different than three-month LIBOR or the applicable index established on the spread determination date, or on the related closing date, as applicable, with respect a class of reset rate notes. We cannot assure you that the failed remarketing rate will always be at least as high as the prevailing market rate of interest for similar notes and you may suffer a loss in yield.

 

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FORMATION OF THE ISSUING ENTITIES

The Issuing Entities

The depositor will establish a separate issuing entity, in the form of a Delaware statutory trust, for each series of notes. We sometimes refer to an issuing entity as a “trust.” Each trust will be formed under a trust agreement. It will perform only the following activities:

 

   

acquire, hold, sell and manage trust student loans, the other trust assets and related proceeds;

 

   

enter into one or more swap agreements and/or interest rate cap agreements, from time to time;

 

   

issue the notes;

 

   

make payments on the notes; and

 

   

engage in other incidental or related activities.

Other than issuing the notes or as otherwise specified in the prospectus supplement for your notes, no trust will be permitted to borrow money or make loans to other persons. Unless otherwise specified in a related prospectus supplement, the permitted activities of the trust may be amended only with the consent of a majority of the senior and subordinate noteholders, voting separately; however, the trust agreement may be modified without noteholder consent if an opinion of counsel is provided to the effect that such proposed revisions would not adversely affect in any material respect the interests of any noteholder.

Each trust will have only nominal initial capital. On behalf of each trust, the eligible lender trustee will use the proceeds from the sale of the related notes to purchase the trust student loans.

Following the purchase of the trust student loans, the assets of the trust will include:

 

   

the trust student loans themselves, legal title to which either the trustee or the eligible lender trustee, as applicable, will hold;

 

   

all funds collected on the trust student loans on or after the date specified in the prospectus supplement, including any guarantor, surety or U.S. Department of Education payments;

 

   

all moneys and investments on deposit in the collection account, any reserve account, any pre-funding account and any other trust accounts or any other form of credit enhancement (amounts on deposit in any account may be invested in eligible investments as permitted by the related indenture);

 

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all applicable rights under each applicable swap agreement and/or interest rate cap agreement then in effect;

 

   

rights under the related transfer and servicing agreements, including the right to require the sellers, the depositor or the servicer to repurchase trust student loans from it or to substitute student loans under some conditions; and

 

   

rights under the guarantee or surety agreements with guarantors or insurers.

Each trust and its assets (other than the trust student loans) will be administered by the administrator pursuant to the administration agreement. The servicer will be responsible for the administration of the trust student loans pursuant to the servicing agreement. See “Servicing and Administration” in this prospectus.

The trusts will not own any other assets. The fiscal year of each trust will be a calendar year.

The notes will represent indebtedness of the trust secured by its assets. The excess distribution certificate will represent the beneficial ownership interest of the assets of the trust. To facilitate servicing and to minimize administrative burden and expense, the servicer, directly or through subservicers, will retain possession of the promissory notes and other documents related to the student loans as custodian for the trust and the eligible lender trustee.

The sections “The Transfer and Servicing Agreements,” “Servicing and Administration” and “Prospectus Summary—The Notes” in this prospectus contain descriptions of the material provisions of the transaction agreements. The related prospectus supplement may also contain additional information regarding other material provisions of certain transaction agreements.

Eligible Lender Trustee or Trustee

If the trust student loans for your notes include education loans made under the FFELP, we will specify the eligible lender trustee for that trust in the prospectus supplement for your notes. Each eligible lender trustee for a trust will be the bank or trust company as specified in the related prospectus supplement. It will acquire legal title to all trust student loans made under the FFELP on behalf of that trust and will enter into a guarantee agreement with each of the guarantors of those loans. The eligible lender trustee must qualify as an eligible lender under the Higher Education Act and the guarantee agreements.

In the event that the trust student loans are not FFELP loans, in lieu of an eligible lender trustee, an owner trustee (referred to as the trustee) may be appointed.

We will also specify the Delaware trustee for that trust in the prospectus supplement for your notes. The Delaware trustee’s roles will be limited to those duties required under the Delaware Statutory Trust Act. Unless otherwise provided in the related trust agreement, such roles are limited to fulfilling the provision of the Statutory Trust Act that a Delaware statutory trust shall at all times have at least one trustee, in the case of a natural person, who shall be a

 

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person who is a resident of Delaware or which, in all other cases, has its principal place of business in Delaware, and will accept service of process in Delaware on behalf of the trust.

The eligible lender trustee or trustee will act on behalf of the excess distribution certificateholders and represent their rights and interests in the exercise of their rights under the related trust agreement. Except as specifically delegated to the administrator in the administration agreement, the eligible lender trustee or trustee will also execute and deliver all agreements required to be entered into on behalf of the related trust.

The liability of the trustee or eligible lender trustee in connection with the issuance and sale of any notes will consist solely of its express obligations in the trust agreement and sale agreement. The trustee or eligible lender trustee will not be personally liable for any actions or omissions that were not the result of its own bad faith, fraud, willful misconduct or negligence. The trustee or eligible lender trustee will be entitled to be indemnified by the administrator (at the direction of the depositor) for any loss, liability or expense (including reasonable attorneys’ fees) incurred by it in connection with the performance of its duties under the indenture and the other transaction agreements.

The prospectus supplement will specify the trustee or eligible lender trustee for each series. A trustee or eligible lender trustee may resign at any time. If it does, the administrator must appoint a successor. The administrator may also remove a trustee or eligible lender trustee if such trustee or eligible lender trustee becomes insolvent or ceases to be eligible to continue as trustee. In that event, the administrator must appoint a successor. The resignation or removal of a trustee or eligible lender trustee and the appointment of a successor will become effective only when a successor accepts its appointment. To the extent expenses incurred in connection with the replacement of a trustee or eligible lender trustee, as applicable, are not paid by the applicable trustee or eligible lender trustee that is being replaced or by the applicable successor trustee, the depositor will be responsible for the payment of such expenses.

The prospectus supplement will specify the principal office of each trust and trustee or eligible lender trustee, as applicable.

USE OF PROCEEDS

On the closing date specified in the applicable prospectus supplement, the eligible lender trustee or trustee, on behalf of the trust, will purchase student loans from the depositor and make an initial deposit into the collection account, the reserve account, any capitalized interest account, any cash collateralization account, and any pre-funding account with the net proceeds of sale of the notes. The eligible lender trustee or trustee may also apply the net proceeds for other purposes to the extent described in the related prospectus supplement. We will use the money we receive for general corporate purposes, including purchasing the student loans and acquiring any credit or cash flow enhancement specified in the related prospectus supplement.

 

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THE DEPOSITOR

SLM Funding LLC is the depositor. SLM Education Credit Finance Corporation, which we sometimes refer to as SLM ECFC, is the sole member of SLM Funding LLC. It became the sole member of the depositor on June 29, 2004. Prior to that date, the Student Loan Marketing Association, which was liquidated on December 29, 2004, was the sole member. The depositor was incorporated in Delaware as SLM Funding Corporation on July 25, 1995 and was converted to a limited liability company on December 31, 2002.

The depositor has only limited purposes, which include purchasing student loans from SLM ECFC and other sellers, transferring the student loans to the trusts and other incidental and related activities. Its principal executive offices are at 12061 Bluemont Way, V3419, Reston, VA 20190. Its telephone number is (703) 810-3000.

The depositor has taken steps intended to prevent any application for relief by SLM ECFC, as sole member, under any insolvency law resulting in consolidation of the depositor’s assets and liabilities with those of SLM ECFC. These steps include its creation as a separate, limited-purpose subsidiary with its own limited liability company identity. The depositor’s operating agreement contains limitations including:

 

   

restrictions on the nature of its business; and

 

   

a restriction on its ability to commence a voluntary case or proceeding under any insolvency law without the unanimous affirmative vote of all of its directors.

Among other things, the depositor will maintain its separate limited liability company identity by:

 

   

maintaining records and books of accounts separate from those of its sole member;

 

   

refraining from commingling its assets with the assets of its sole member; and

 

   

refraining from holding itself out as having agreed to pay, or being liable for, the debts of its sole member.

Each transaction agreement will also contain “non-petition” covenants to prevent the commencement of any bankruptcy or insolvency proceedings against the depositor and/or the issuing entity, as applicable, by any of the transaction parties or by the noteholders.

We have structured the transactions described in this prospectus to assure that the transfer of the student loans by its sole member or any other seller to the depositor constitutes a “true sale” of the student loans. If the transfer constitutes a “true sale,” the student loans and related proceeds would not be property of the applicable seller should it become subject to any insolvency law. Although each seller and the depositor will express its intent to treat the conveyance of the related trust student loans as a sale, each seller and the depositor will also grant to the trustee or eligible lender trustee, as applicable, on behalf of the trust, a security

 

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interest in the related trust student loans. This security interest is intended to protect the interests of the noteholders if a bankruptcy court were to characterize the seller’s or the depositor’s transfer of the loans as a borrowing by such seller or the depositor secured by a pledge of the trust student loans. In the event that a bankruptcy court did characterize the transaction as a borrowing by a seller or the depositor, that borrowing would be secured by the trust student loans in which such seller or the depositor granted a security interest to the trustee or eligible lender trustee, as applicable. Each seller and the depositor has agreed to take those actions that are necessary to maintain the security interest granted to the trustee or eligible lender trustee, as applicable, as a first priority, perfected security interest in the trust student loans, including the filing of Uniform Commercial Code financing statements, if necessary.

Upon each issuance of notes, the depositor will receive the advice of counsel that, subject to various facts, assumptions and qualifications, the transfer of the student loans by the applicable seller to the depositor would be characterized as a “true sale” and the student loans and related proceeds would not be property of the applicable seller under the insolvency laws.

The depositor will also represent and warrant that each sale of trust student loans by the depositor to the trust is a valid sale of those loans. In addition, the depositor, the eligible lender trustee and the trust will treat the conveyance of the trust student loans as a sale. The depositor, SLM ECFC and each other seller will take all actions that are required so the trustee or eligible lender trustee will be treated as the legal owner of the trust student loans.

The depositor’s obligations after issuance of a series of notes include the sale of any trust student loans to the related trust to be purchased with amounts on deposit in any pre-funding account, supplemental purchase account and/or add-on consolidation loan account and delivery of certain related documents and instruments, repurchasing trust student loans in the event of certain breaches of representations or warranties made by the depositor, providing tax-related information to the trustee or eligible lender trustee, as applicable, and maintaining the trustee’s or eligible lender trustee’s first priority perfected security interest in the assets of the related trust.

The prospectus supplement for a series may contain additional information concerning the depositor.

THE SPONSOR, SERVICER AND ADMINISTRATOR

Sallie Mae, Inc. acts as the sponsor of the SLM student loan securitization program. Sallie Mae, Inc., which we sometimes refer to as SMI, is a wholly owned subsidiary of SLM Corporation and acts as the principal management company for most of SLM Corporation’s business activities. SMI’s servicing division, Sallie Mae Servicing, manages and operates the loan servicing functions for SLM Corporation and its affiliates. SMI acts as administrator for each trust sponsored by the depositor and its affiliates. As administrator, SMI may delegate or subcontract its duties as administrator, but no delegation or subcontract will relieve SMI of its liability under the administration agreement. Effective as of December 31, 2003, SMI merged with Sallie Mae Servicing L.P. SMI was the surviving entity and succeeded to all of the rights and obligations of Sallie Mae Servicing L.P. SMI is a Delaware corporation and its principal executive offices are at 12061 Bluemont Way, Reston, Virginia 20190. Its telephone number is (703) 810-3000.

 

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SMI is an affiliate of the depositor and each seller.

SMI’s servicing division, Sallie Mae Servicing, services the vast majority of student loans owned by SLM Corporation and its affiliates. Its loan servicing centers are located in Florida, Indiana, Nevada, Pennsylvania and Texas. As servicer, SMI may delegate or subcontract its duties as servicer, but no delegation or subcontract will relieve SMI of its liability under the servicing agreement.

Sallie Mae Servicing has serviced student loans for over 20 years. SMI itself, and as the assignee of the Student Loan Marketing Association, sponsored its first student loan securitization in 1995, called Sallie Mae Student Loan Trust 1995-1.

As of December 31, 2007, SMI and/or SLMA have sponsored 93 student loan securitizations involving 81 FFELP student loan transactions and 12 private education loan transactions. These sponsored trusts have issued, in both public offerings and private placements, an aggregate principal amount of notes greater than $202 billion.

SMI owns no loans. As the sponsor and administrator of the company’s student loan securitization program, SMI selects portfolios of loans from loans owned by its affiliates for sale to the trust. SMI is also chiefly responsible for structuring each transaction.

SLM Corporation and its subsidiaries originate both federally guaranteed student loans which are administered by the U.S. Department of Education, and private education loans, which are not federally guaranteed. SLM Corporation and its subsidiaries manage the largest portfolio of student loans in the industry, serving, as of December 31, 2007, more than ten million borrowers through SLM Corporation’s and its subsidiaries’ ownership and management of approximately $163.6 billion in managed student loans, of which approximately $135.2 billion, or approximately 83%, are federally insured. SMI is also the nation’s largest servicer of student loans, servicing a portfolio of $127.4 billion of FFELP student loans and $32.6 billion of private education loans, as of December 31, 2007.

In addition to federal loan programs, which have statutory limits on annual and total borrowing, SMI and its affiliates sponsor a variety of private education loan programs and purchase loans made under such programs to bridge the gap between the cost of education and a student’s resources. Most of these higher education private education loans are made in conjunction with a FFELP Stafford loan, so they are marketed to schools through the same marketing channels as FFELP loans by the same sales force. In 2004, SMI expanded its direct-to-consumer loan marketing channel with its Tuition Answer(SM) loan program where SMI’s affiliates originate and purchase loans outside of the traditional financial aid process. SMI’s affiliates also originate and purchase alternative private education loans, which are marketed by a subsidiary of SLM Corporation to technical and trade schools, tutorial and learning centers, and private kindergarten through secondary education schools. These loans are primarily made at schools not eligible for Title IV loans. In 2006, SMI began to sponsor a private credit consolidation loan program under which certain SMI affiliates and their lender partners make new loans available to borrowers to combine two or more existing loans into a single loan. In 2005, Sallie Mae announced the formation of Sallie Mae Bank as a Utah industrial loan corporation. Beginning in 2006, Sallie Mae Bank began to originate private education and direct-to-consumer loans.

 

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The prospectus supplement for a series may contain additional information concerning the sponsor, the servicer or the administrator.

THE SELLERS

SLM Education Credit Finance Corporation. SLM Education Credit Finance Corporation (which we refer to as SLM ECFC), formerly known as NM Education Loan Corporation and subsequently as SLM Education Credit Management Corporation, is a wholly-owned subsidiary of SLM Corporation. SLM ECFC was formed on July 27, 1999. It changed its name to SLM Education Credit Finance Corporation on November 19, 2003. SLM ECFC purchases Stafford Loans, SLS Loans and PLUS Loans originated by its affiliates under the FFELP loan program described in “Appendix A—Federal Family Education Loan Program” in this prospectus. It also purchases loans made by these affiliates that are not originated under the FFELP loan program, such as Health Education Assistance Program loans, which the United States Department of Health and Human Services insures directly, loans that are privately insured by entities other than the guarantors and not reinsured by the federal government and loans that are not insured.

SLM Education Loan Corp. SLM Education Loan Corp. is a wholly-owned subsidiary of SLM Corporation. We sometimes refer to SLM Education Loan Corp. as SLM ELC. SLM ELC was incorporated in Delaware on April 29, 1998. SLM ELC originates Stafford Loans, SLS Loans and PLUS Loans under the FFELP loan program described in “Appendix A—Federal Family Education Loan Program” in this prospectus. It also originates consolidation loans. In addition, SLM ELC holds a portfolio of Stafford Loans, SLS Loans, PLUS Loans and consolidation loans which it was assigned or received as a part of a capital contribution from SLM Corporation.

The Other Sellers. If your notes will be secured by student loans being sold to the depositor by an entity other than the sellers described above, which will be an affiliate of the depositor, the prospectus supplement for your notes will provide you details about that other seller.

Third-Party Originators. With respect to FFELP loans, the identity of the actual originator of any particular student loan is not material, as the requisite underwriting criteria are in all cases prescribed by provisions of the Higher Education Act. In addition, to the extent FFELP loans are purchased in secondary market transactions the identities of the related originators are often not available.

To the extent private credit student loans are originated by entities not affiliated with SLM Corporation (and subsequently purchased by one of the sellers), such private credit student loans have been generally underwritten to the criteria specified by the Sallie Mae programs as set forth below under “Sallie Mae’s Student Loan Financing Business.” To the extent trust student loans in a pool are originated by a third-party originator and are not underwritten to the SMI student loan criteria set forth below, if the amount of such trust student loans is 10% or more of the pool, the related prospectus supplement will identify such third-party originator and if the amount of such trust student loans is 20% or more of the pool, the related prospectus supplement

 

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will also identify the originator’s form of organization and, to the extent material, describe such third-party originator’s student loan origination experience and underwriting standards.

The prospectus supplement for a series may also contain additional information concerning the sellers and/or third-party originators.

THE STUDENT LOAN POOLS

The depositor will purchase the trust student loans from SLM ECFC and other sellers described in the prospectus supplement for your notes out of the portfolio of student loans held by that seller. Each pool of trust student loans owned by any issuing entity may contain only FFELP loans, only private credit student loans or a combination of FFELP loans and private credit student loans, as will be specified in the related prospectus supplement.

The trust student loans must meet several criteria, including:

for each loan made under the FFELP:

 

   

The principal and interest of each loan is guaranteed by a guarantor and is reinsured by the U.S. Department of Education under the FFELP.

 

   

Each loan was originated in the United States, its territories or its possessions in accordance with the FFELP.

 

   

Each loan contains terms required by the FFELP and the applicable guarantee agreements.

 

   

Each loan provides for periodic payments that will fully amortize the amount financed over its term to maturity, exclusive of any deferment or forbearance periods.

 

   

Each loan satisfies any other criteria described in the related prospectus supplement.

for each private credit student loan:

 

   

The principal and interest of the loan may be guaranteed or insured by a guarantor or insurer identified in the related prospectus supplement.

 

   

Each loan was originated in the United States, its territories or its possessions in accordance with the rules of the specific loan program.

 

   

Each loan contains terms required by the program and the applicable guarantee agreements.

 

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Each loan provides for periodic payments that will fully amortize the amount financed over its term to maturity, exclusive of any deferment or forbearance periods.

 

   

Each loan satisfies any other criteria described in the related prospectus supplement.

The prospectus supplement for each series will provide information about the student loans in the related trust that will include:

 

   

the composition of the pool,

 

   

the distribution of the pool by loan type, payment status, interest rate basis and remaining term to maturity,

 

   

the borrowers’ states of residence, and

 

   

the percentages of the student loans guaranteed by the applicable guarantors.

FFELP Delinquencies, Defaults, Claims and Net Losses

Information about delinquencies, defaults, guarantee claims and net losses on FFELP loans is available in the U.S. Department of Education’s Loan Programs Data Books, called DOE Data Books. The delinquency, default, claim and net loss experience on any pool of FFELP trust student loans may not be comparable to this information.

Static Pool Data

If specified in the related prospectus supplement, static pool data with respect to the delinquency, cumulative loss and prepayment data for the trusts formed by the depositor, or any other affiliated person specified in the related prospectus supplement, will be made available through a website. The prospectus supplement related to each series for which the static pool data is provided through a website will contain the website address to obtain this information. Except as stated below, the static pool data provided through any website will be deemed part of this prospectus and the registration statement of which this prospectus is a part from the date of the related prospectus supplement.

Notwithstanding the foregoing, the following information will not be deemed part of the prospectus or the registration statement of which this prospectus is a part:

 

   

information regarding prior securitized pools of student loans sold to trusts that were formed by the depositor before January 1, 2006; and

 

   

with respect to information regarding the pool of student loans described in the related prospectus supplement, information about such pool for periods before January 1, 2006.

 

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Copies of the static pool data presented on the website and deemed part of this prospectus may be obtained upon written request by the noteholders of the related series at the address specified in the related prospectus supplement. Copies of information related to any periods prior to January 1, 2006 may also be obtained upon written request.

Static pool data may also be provided in the related prospectus supplement or may be provided in the form of a CD-ROM accompanying the related prospectus supplement. The related prospectus supplement will specify how the static pool data will be provided.

Prepayments and Yield

Prepayments on student loans can be measured relative to a prepayment standard or model. The prospectus supplement for a series of notes will describe the prepayment standard or model, if any, used and may contain tables setting forth the projected weighted average life of each class of notes of that series based on the assumptions stated in the prospectus supplement (including assumptions that prepayments on the student loans included in the related trust are made at rates corresponding to various percentages of the prepayment standard or model specified in that prospectus supplement).

We cannot give any assurance that the prepayment of the trust student loans included in the related trust will conform to any level of any prepayment standard or model specified in the related prospectus supplement. The rate of principal prepayments on pools of student loans is influenced by a variety of economic, demographic, geographic, legal, tax, social and other factors.

The yield to an investor who purchases notes in the secondary market at a price other than par will vary from the anticipated yield if the rate of prepayment on the student loans is actually different than the rate anticipated by the investor at the time the notes were purchased.

The prospectus supplement relating to a series of notes will discuss in greater detail the effect of the rate and timing of principal payments (including prepayments), delinquencies and losses on the yield, weighted average lives and expected maturities of the notes.

Payment of Notes

Upon the payment in full of all outstanding notes of a given series, the eligible lender trustee or trustee, as applicable, will succeed to all the rights of the indenture trustee, on behalf of the holder of the excess distribution certificate.

Termination

For each trust, the obligations of the servicer, the depositor, the administrator, the trustee or eligible lender trustee, as applicable, and the indenture trustee under the transfer and servicing agreements will terminate upon:

 

   

the maturity or other liquidation of the last trust student loan and the disposition of any amount received upon liquidation of any remaining trust student loan, and

 

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the payment to the noteholders of all amounts required to be paid to them.

The servicer or another entity specified in the related prospectus supplement, at its option, may repurchase or arrange for the purchase of all remaining trust student loans as of the end of any collection period if the outstanding pool balance is 10% or less of the initial pool balance, as defined in the related prospectus supplement, together with the aggregate initial principal balances of all trust student loans acquired during any applicable pre-funding period, plus accrued interest to be capitalized as of the applicable cut-off dates. The purchase price will equal the aggregate purchase amounts for the loans as of the end of that collection period. It will not be less than the minimum purchase amount specified in the related prospectus supplement. These amounts will be used to retire the related notes. Upon termination of the trust, any remaining assets of that trust, after giving effect to final distributions to the noteholders, will be transferred to the reserve account and paid as provided in the related prospectus supplement.

The indenture trustee will try to auction any trust student loans remaining in the trust at the end of the collection period preceding the trust auction date specified in the related prospectus supplement. SLM ECFC, any other seller, their affiliates and unrelated third parties may make bids to purchase these trust student loans on the trust auction date; however, SLM ECFC, any other seller or their affiliates may offer bids only if the pool balance at that date is 10% or less of the initial pool balance together with the aggregate initial principal balances of all trust student loans acquired during any applicable pre-funding period plus accrued interest to be capitalized as of the applicable cutoff dates.

SALLIE MAE’S STUDENT LOAN FINANCING BUSINESS

SLM Corporation operates its student loan financing business through several subsidiaries, including SLM ECFC, SLM ELC and Sallie Mae Bank. We sometimes refer to SLM Corporation and its family of subsidiaries as Sallie Mae. These companies originate and/or purchase student loans insured under various federally sponsored programs. These companies purchase Stafford Loans, SLS Loans and PLUS Loans originated under the FFELP, all of which are insured by guarantors and reinsured by the U.S. Department of Education. They also originate and purchase consolidation loans.

These companies also make and/or purchase loans that are not originated under the FFELP, such as Health Education Assistance Program loans, which the United States Department of Health and Human Services insures directly, and loans which are privately insured by entities other than the guarantors and not reinsured by the federal government.

They purchase insured loans from various sources including:

 

   

commercial banks, thrift institutions and credit unions;

 

   

pension funds and insurance companies;

 

   

educational institutions; and

 

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various state and private nonprofit loan originating and secondary market agencies.

These purchases occur at various times including:

 

   

shortly after loan origination;

 

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