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SLM CORPORATION

12061 BLUEMONT WAY

RESTON, VIRGINIA  20190

C.E. Andrews

Executive Vice President,

Finance, Accounting and Risk Management

703-984-6800

October 3, 2005

VIA E-MAIL,
FACSIMILE, & EDGAR

Ms. Joyce Sweeney

Branch Chief

Securities and Exchange
Commission

100 F Street, N.E.

Washington, D.C.  20549

RE:         SLM
Corporation

Form 10-K
for the Fiscal Year Ended December 31, 2004

Forms 10-Q
for the Quarters Ended March 31, 2005 and June 30, 2005

File No. 1-13251

Dear Ms. Sweeney:

On
behalf of SLM Corporation (the “Company”), submitted below are the Company’s
responses to the comments (the “Comments”) of the staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) set forth in the
Commission’s letter dated September 13, 2005 concerning the above
referenced filings made pursuant to the Securities Exchange Act of 1934 (the “Exchange
Act”).

For
your convenience, the responses set forth below have been placed in the order
in which the Staff presented the Comments and the text of each Comment is
presented in italics before each response.

Comment 1:

Form 10-K
for the fiscal year ended December 31, 2004

Alternative
Performance Measures, pages 61-64

1.                                      Question
8 of the Frequently Asked Questions Regarding the Use of Non-GAAP Financial
Measures indicates that registrants must meet the burden of demonstrating the
usefulness of any measure that excludes recurring items, especially if that
measure is used to evaluate performance.
Tell us in detail why you believe you overcome the burden of supporting
their usefulness.

Response:

Our segment reporting footnotes in
our Form 10-K for the fiscal year ended December 31, 2004 and our
subsequent quarterly reports include information about our operating segments
that is presented on a “core cash” basis – the basis upon which management
evaluates the Company’s performance and allocates Company resources. We
determine a segment’s profitability on a “core cash” basis, which differs from
consolidated operating profit as defined by GAAP by excluding the effects of
certain items attributable to that segment. Our disclosures in the Alternative
Performance Measures section of our MD&A describe and reconcile the
adjustments we make in our segment reporting to these items.(1) We do not
disclose separately in the MD&A section of our periodic reports a
non-GAAP measure that excludes these items.

Because our 2004 fiscal year was
the first year in which more than one of our segments met the quantitative
thresholds for a reportable segment pursuant to SFAS No. 131, we are
continuing to refine and enhance our disclosures regarding these “core cash”
measures.  For example, in our Form 10-Q
for the quarterly period ended June 30, 2005, we include our Alternative
Performance Measures disclosures in the segment discussion in MD&A,
consistent with Q&A 19 of the Frequently Asked Questions Regarding the Use
of Non-GAAP Financial Measures (“FAQ”).(2)
Likewise, consistent with Q&A 19 of the FAQ, we include a cross
reference in the MD&A to the FASB Statement 131-required information in the
financial

(1)           Specifically, we
describe the following “core cash” reconciling adjustments to the following
items:

•                  Securitization –
as with other financial institutions, we present the adjustments necessary to
disclose our results on a “managed basis” by accounting for all securitizations
as long-term non-recourse financings rather than as asset sales as under GAAP;

•                  Derivative
accounting – we disclose the amounts of the periodic unrealized gains and
losses that result from the application of SFAS 133;

•                  Floor income –
we disclose the amount of our floor income and the amortization of the net
premiums associated with the derivative contracts that we enter into to
monetize the floor income; and

•                  Other items – we
disclose the amortization of acquired intangibles.

(2)          The Staff's response in
Q&A 19 of the FAQ states, "Under FASB Statement 131, a company may
determine segment profitability on a basis that differs from consolidated
operating profit as defined by GAAP or excludes the effects of items
attributable to that segment. In this situation, FASB Statement 131 requires
that a footnote to the company's consolidated financial statements provide a
reconciliation. Where a company includes in its MD&A a discussion of
segment profitability determined in such a manner, the company also should
include in the segment discussion in the MD&A a complete discussion of the
reconciling items that apply to the particular segment being discussed."
(emphasis supplied)

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statement footnote to our
consolidated financial statements.  In
addition, using Q&A 8 of the FAQ as guidance, we provide additional
information in our Form 10-Q for the quarter ended June 30, 2005 on
our use of these “core cash” measures, the economic substance of the
presentations and the limitations of “core cash” measures.  We intend to include these additional
disclosures in our future periodic reports, as applicable.  We believe that our periodic reports filed
with the Commission contain disclosures that comply with Q&A 18 and 19 of
the FAQ and meet the burden of demonstrating the usefulness of our non-GAAP
financial measures.

We believe that our disclosures
about our “core cash” measures are appropriate because they address:

1.               The manner in which management uses the non-GAAP
measure to conduct or evaluate its business.

The “core cash” measures are the
measures that management uses to run our business and that our Board of
Directors employs to set performance targets and evaluate management’s
performance. As described on pages 61 to 64 on our annual report on Form 10-K,
we disclose that “core cash” measures are the “primary financial performance
measures used by management to evaluate performance and allocate resources.” As
further disclosed, financial information is reported to management on a “core
cash” basis by reportable segment and management uses these reports to develop
our financial plans and to track results. As further described in our response
to Comment 2, we also disclose that we use core cash measures to establish
corporate performance targets and determine incentive compensation.

2.               The economic substance behind management’s decision
to use such a measure.

Management establishes its budgets
and forecasts on a “core cash” basis because such measures reflect the economic
performance of the aspects of the Company’s business that are most heavily
focused on by management in managing the business and evaluating its
performance.We believe our “core cash” measures accomplish this by eliminating
the temporary volatility in the Company’s performance that arises from certain
items that are primarily affected by factors beyond the control of
management.  For example, while SFAS 133
mark-to-market accounting and the booking of long-term interest-only assets in
connection with securitization gain accounting is an accurate and useful
presentation of our balance sheet, management believes that these point-in-time
estimates of asset and liability value make it difficult for management to
evaluate the ongoing results of operations against the business plan or prior
periods.     Accordingly, management
believes that our “core cash” measures are useful for a complete evaluation of
our results of operations.

In our filings, we describe the
economic substance of each of the adjustments reflected in our “core cash”
presentations:

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•                  We present all securitization transactions on a
Managed Basis, as long-term non-recourse financings, as a result of which the
upfront “gains” on sale from securitization transactions as well as ongoing “servicing
and securitization revenue” presented in accordance with GAAP are excluded from
the “core cash” measures and replaced by the interest income, provision for
loan losses, and interest expense as they are earned or incurred on the
securitization loans.

•                  We exclude periodic unrealized gains and losses
arising primarily in our Lending business segment, and to a lesser degree in
our Corporate and Other business segment, that are caused by the mark-to-market
derivative valuations prescribed by SFAS No. 133 on certain of our
derivatives that we believe are effective economic hedges but that do not
qualify for “hedge treatment” under GAAP or that relate to equity forward
contracts that are required to be accounted for in accordance with SFAS No. 133
as derivatives and are marked-to-market through earnings.  Under our “core cash” measures, we recognize
the economic effect of these hedges, which generally results in any cash paid
or received being recognized ratably as an expense or revenue over the hedged
item’s life.

•                  We exclude Floor Income earned in our Lending
segment when it is not economically hedged, since its timing and amount (if
any) is uncertain and in excess of expected spreads.

•                  We exclude amortization of acquired intangibles that
arises primarily from the acquisition of definite life intangible assets in
connection with our acquisitions.

3.               The material limitations associated with use of the
non-GAAP financial measure as compared to the use of the most directly
comparable GAAP financial measure.

We disclose material limitations
associated with our use of non-GAAP financial measures, both in general and
with respect to specific adjustments reflected in our “core cash”
presentations.  For example, in our Form 10-Q
for the quarterly period ended June 30, 2005, at pages 48 and 49, we
disclose that a limitation on our Managed Basis presentation is that we are
presenting the ongoing spread income on loans that have been sold to a trust
managed by us while excluding the volatility from securitization gains.Further,
we disclose that a limitation of our Floor Income adjustments in our “core cash”
presentations is that it may exclude and thus understate real cash income.

4.               The manner in which management compensates for these
limitations when using the non-GAAP financial measure.

The Company compensates for these
limitations in our periodic reports by disclosing the amount and effect of each
of the adjustments.

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5.               The substantive reasons why management believes the
non-GAAP financial measure provides useful information to investors.

As stated in our disclosures, we
believe these measures provide useful information to investors because the “core
cash” measures are the measures that management uses to run our business, that
our Board of Directors employs to set performance targets and evaluate
management’s performance and that analysts, rating agencies and creditors use
in their evaluation of the Company’s results of operations.  It is important to note that “core cash”
measures concerning securitization and later derivatives were disclosed in
response to certain analysts covering our stock specifically requesting
information to help them better understand our economic results of operation.

Comment 2:

2.                                      Please
tell us and provide us with an example of how you use “core cash” measures in
establishing corporate performance targets and determining incentive
compensation.  Describe how you use your
GAAP financial results in conjunction with this analysis.

Response:

General

As discussed below, we have used a
variety of criteria in establishing corporate performance targets and
determining incentive compensation.  Most
of these criteria are based on our “core cash” measures, although a few are
based either on GAAP measures or operating performance measures that are
neither GAAP nor “core cash” measures.

Corporate Performance Targets

Each
January, the Board of Directors approves the annual business plan for the
Company.  Over the past several years,
these business plans have set targets for:
(1) growth in “core cash” earnings; (2) growth in preferred
channel loan originations(3);(3) the student loan spread; (4) growth
in fee income; (5) operating expense control; (6) capital management;
(7) the successful wind-down of the Company’s government sponsored
enterprise subsidiary, the Student Loan Marketing Association (the “GSE”); and (8) cost
of funds on new corporate debt and ABS issuances.

(3) See our 2004 Annual Report on Form 10-K at pages 4 – 5 (Preferred
channel originations are comprised of: (1) student loans that are originated by
lenders with forward purchase agreements with the Company and are committed for
sale to the Company such that we either own them from inception or acquire them
soon after origination and (2) loans that are originated by internal Company
brands).

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The table below characterizes these performance criteria:

  1.  growth in “core
  cash” earnings

  -

  calculated on a “core cash” basis

  2.  growth in
  preferred channel loan originations

  -

  same on both a GAAP and “core cash” basis

  3.  the student
  loan spread

  -

  calculated on a “core cash” basis

  4.  growth in fee
  income

  -

  same on both a GAAP and “core cash” basis

  5.  operating
  expense control

  -

  calculated on a “core cash” basis

  6.  capital
  management

  -

  calculated on a GAAP basis

  7.  wind-down of
  the GSE

  -

  neither GAAP nor “core cash” basis

  8.  cost of funds
  on new corporate debt and ABS issuances

  -

  neither GAAP nor “core cash” basis

In
setting the plan and tracking the Company’s performance against plan,
management and the Board of Directors calculate performance in accordance with
the Company’s “core cash” measures which are described on pages 61 through
64 of the Company’s 2004 Annual Report on Form 10-K. An example of how a
GAAP measure as adjusted to a “core cash” measure is used in establishing
corporate performance is described below.

The “core
cash” earnings target in the annual plan is based in large part on a key
assumption about the amount of net interest income that will be earned on
student loans.  During the course of the
year, management may determine that some of the Company’s student loan assets
are better financed by securitization transactions than by corporate
borrowing.  Under GAAP, some of these
securitization transactions will be reported as asset sales, converting what
would otherwise be interest income on student loans to gains on sales of those
loans, as well as ongoing servicing and securitization revenues.  In measuring its performance, the Company
uses a “core cash” measure that adjusts the GAAP accounting for these
transactions to a Managed Basis presentation.
The Managed Basis presentation depicts all securitization transactions
as financings, not as sales, and treats the securitized loans as if the loans
continue to be owned by the Company.

Management
and the Board of Directors believe strongly in the Company’s policy of using a “core
cash” measure to adjust for the GAAP accounting treatment for these
securitization transactions for several reasons.  First, under our “core cash” methodology,
every securitization transaction is treated in the same manner – as financings
– while under GAAP some are treated as sales while others are treated as
financings.  Management is not
incentivized to execute securitizations that are accounted for only as
financings or to avoid securitizations that are accounted for as sales.  Second, the adjustments are quantifiable: the
Company simply subtracts the gain on sale and associated servicing and
securitization revenues and treats the assets as owned.  Third, the Company considers securitization
transactions solely as a means to finance its balance sheet; they have not been
used to accelerate income from the sale of assets or reduce the size of the
Company’s balance sheet.  In that regard,
managem