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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31, 1998 or
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/_/ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
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SLM FUNDING CORPORATION
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formerly known as SALLIE MAE FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
(Originator of the Sallie Mae Student Loan Trust 1995-1,
the Sallie Mae Student Loan Trust 1996-1,
the SLM Student Loan Trust 1996-2,
the SLM Student Loan Trust 1996-3,
the SLM Student Loan Trust 1996-4,
the SLM Student Loan Trust 1997-1,
the SLM Student Loan Trust 1997-2,
the SLM Student Loan Trust 1997-3,
the SLM Student Loan Trust 1997-4,
the SLM Student Loan Trust 1998-1
and the SLM Student Loan Trust 1998-2)
DELAWARE 33-95474/333-2502/333-24949/333-44465 23-2815650
- ---------------------------- ------------------------------------- -------------------
(State or other Jurisdiction (Commission File Numbers) (I.R.S. employer
of Incorporation) Identification No.)
777 TWIN CREEK DRIVE
KILLEEN, TEXAS 76543
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(Address of principal executive offices)
(817) 554-4500
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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No documents are incorporated by reference into this Form 10-K.
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant: None.
1
This Annual Report on Form 10-K is filed in reliance upon (1) certain no-action
letters issued by the Office of Chief Counsel, Division of Corporate Finance of
the Securities and Exchange Commission stating that the Division will not object
if periodic reports filed by the registrant pursuant to Sections 13 and 15(d) of
the Securities and Exchange Act of 1934 are filed in the manner set forth in
such letters and the requests for such letters and (2) the Registrant's filing
letter accompanying the Registrant's Current Report on Form 8-K filed with the
Commission on or about November 6, 1995 in which the Registrant described the
manner in which it intended to file such periodic reports.
PART I.
ITEM 2. PROPERTIES.
The property of the Sallie Mae Student Loan Trust 1995-1, the Sallie Mae Student
Loan Trust 1996-1, the SLM Student Loan Trust 1996-2, the SLM Student Loan Trust
1996-3, the SLM Student Loan Trust 1996-4, the SLM Student Loan Trust 1997-1,
the SLM Student Loan Trust 1997-2, the SLM Student Loan Trust 1997-3, the SLM
Student Loan Trust 1997-4, the SLM Student Loan Trust 1998-1 and the SLM Student
Loan Trust 1998-2 (collectively, the "Trusts") consists solely of pools of
education loans to students and parents of students made under the Federal
Family Education Loan Program, all funds collected in respect thereof and monies
on deposit in certain trust accounts. For more information regarding the
property of the Trusts, see the Annual Statements of Compliance (the "Annual
Statements of Compliance") attached as Exhibit 19.1 hereto, required by Section
3.2 of (i) those certain Administration Agreements, dated as of October 26,
1995, March 6, 1996, April 26, 1996, July 9, 1996, October 3, 1996 and March 20,
1997, by and among the respective Trusts, the Student Loan Marketing Association
(the "Administrator"), Chase Manhattan Bank USA, National Association, not in
its individual capacity but solely as Trustee (the "Eligible Lender Trustee"),
Sallie Mae Servicing Corporation (the "Servicer"), SLM Funding Corporation (the
"Registrant") and Bankers Trust Company, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee") and (ii) that certain
Master Administration Agreement, dated as of May 1, 1997, between the Registrant
and the Administrator, as variously amended or supplemented (collectively, the
"Administration Agreements").
ITEM 3. LEGAL PROCEEDINGS.
The Registrant knows of no material pending legal proceedings involving the
Registrant or its property.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Nothing to report.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
At December 31, 1998, the Registrant was a beneficial owner of the Trusts'
Floating Rate Student Loan-Backed Certificates ("Certificates"), and there was
one (1) registered holder of the Certificates, CEDE & Co., as nominee of The
Depository Trust Company ("DTC"). There were thirty-six (36)
2
persons registered on the books of DTC as record owners of Certificates. There
is no established trading market for the Certificates.
ITEM 7. OTHER RELATED EVENTS AND INFORMATION.
On February 1, 1999, President Clinton submitted his Fiscal Year 2000 budget
proposal to Congress. The budget proposes achieving significant cost savings
from the student loan programs, principally from the Federal Family Education
Loan Program ("FFELP"). Among these proposals for student loan programs are:
- Reinstatement of a lower rate for new Federal Direct Consolidation
Loans. This variable rate (the 91-day Treasury bill rate plus 2.3%
during repayment and 1.7% during in-school and grace periods) would
apply for borrowers whose applications are received before September
30, 2000. The budget proposals would also lower the annual fee paid
bylenders on FFELP consolidation loans made during the same period
from 1.05% to .62% of the principal plus accrued unpaid interest;
- Creation of a 90-day period during which interest on a highly
delinquent FFELP loan does not accrue. The Higher Education
Amendments of 1998 (the "Reauthorization Legislation") extended the
period before lenders can submit default claims from 180 days to
270 days; the budget proposes to eliminate interest accrual during
this extended period;
- Reduction by 30 basis points of special allowance payments on FFELP
loans funded with tax exempt securities; and
- Implementation of additional Guarantor reforms, including the
acceleration of recall of Guarantor reserves mandated by the
Reauthorization Legislation, recall of an additional $1.5 billion in
reserves, the reduction of the Guarantor retention rate on payments on
defaulted loans to 18.5%, the reduction in the share of the remaining
amount that Guarantors may retain, and an expansion of the use of
voluntary flexible agreements authorized by the Reauthorization
Legislation.
All these proposals may be considered by Congress as it deliberates on the
Fiscal Year 2000 budget.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Nothing to report.
PART III.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
At December 31, 1998, the Certificates held by the Registrant were registered
in the name of CEDE and Co., as nominee of DTC. The books of DTC indicate
that thirty-six (36) participant institutions are record owners of more than
5% of the Certificates.
3
SALLIE MAE STUDENT LOAN TRUST 1995-1
CUSIP 795452AC5 $35,000,000
Name and Amount and
Address of Nature of Percent of
Title of Class Beneficial Beneficial Class
Owner Ownership
- ------------------------------ ------------------------------- ------------------------ ----------------------------
Floating Rate Student Chase Manhattan Bank
Loan-Backed Certificates 4 New York Plaza
13th Floor $ 14,650,000.00 41.86%
New York, NY 10004
SSB-Custodian
Global Corp. Action
Dept JAB5W
P. O. Box 1631 $ $18,500,000.00 52.86%
Boston, MA 02105-1631
SALLIE MAE STUDENT LOAN TRUST 1996-1
CUSIP 795452AF8 $52,500,000
Name and Amount and
Address of Nature of Percent of
Title of Class Beneficial Beneficial Class
Owner Ownership
- ------------------------------ ------------------------------- ------------------------ ----------------------------
Floating Rate Student Chase Manhattan Bank
Loan-Backed Certificates 4 New York Plaza
13th Floor $ 50,000,000.00 95.24%
New York, NY 10004
SLM STUDENT LOAN TRUST 1996-2
CUSIP 78442GAC0 $53,030,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ ------------------------------- ------------------------ ----------------------------
Floating Rate Student Boston Safe Deposit & Trust
Loan-Backed Certificates Co.
c/o Mellon Bank N.A.
Three Mellon Bank Center
Rm 153-3015 $ 22,800,000.00 42.99%
Pittsburgh, PA 15259
Chase Manhattan Bank
4 New York Plaza
13th Floor $ 25,499,000.00 48.08%
New York, NY 10004
4
SSB-Custodian
Global Corp. Action
Dept JAB5W
P. O. Box 1631 $ 3,200,000.00 6.03%
Boston, MA 02105-1631
SLM STUDENT LOAN TRUST 1996-3
CUSIP 78442GAF3 $52,750,000
Name and Amount and
Address of Nature of Percent of
Title of Class Beneficial Beneficial Class
Owner Ownership
- ------------------------------ ------------------------------- ------------------------ ----------------------------
Floating Rate Student Boston Safe Deposit & Trust
Loan-Backed Certificates Co.
c/o Mellon Bank N.A.
Three Mellon Bank Center
Rm 153-3015 $ 13,500,000.00 25.59%
Pittsburgh, PA 15259
Bankers Trust Company
c/o BT Services
Tennessee Inc. $ 3,000,000.00 5.69%
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank
4 New York Plaza
13th Floor $ 19,000,000.00 36.02%
New York, NY 10004
Huntington National Bank
Proxy Department
41 South High Street $ 5,500,000.00 10.43%
Columbus, OH 43287
Credit Suisse First Boston
Corporation
c/o ADP Proxy Services $ 5,000,000.00 9.48%
51 Mercedes Way
Edgewood, NY 11717
SSB-Custodian
Global Corp. Action
Dept JAB5W $ 3,222,500.00 6.11%
P. O. Box 1631
Boston, MA 02105-1631
5
SLM STUDENT LOAN TRUST 1996-4
CUSIP 78442GAJ5 $52,700,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ ------------------------------- ------------------------ ----------------------------
Floating Rate Student Boston Safe Deposit & Trust
Loan-Backed Certificates Co.
c/o Mellon Bank N.A.
Three Mellon Bank Center
Rm 153-3015 $ 13,700,000.00 26.00%
Pittsburgh, PA 15259
The Bank of New York
925 Patterson Plank Rd. $ 14,300,000.00 27.13%
Secaucus, NJ 07094
Bankers Trust Company
c/o BT Services
Tennessee Inc. $ 3,000,000.00 5.69%
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank
4 New York Plaza
13th Floor $ 10,000,000.00 18.98%
New York, NY 10004
The Northern Trust Company
801 S. Canal C-In
Chicago, IL 60607 $ 5,573,000.00 10.57%
J. P. Morgan Securities, Inc. -
Asset Backed
500 Stanton Christina Road $ 4,000,000.00 7.59%
Newark, DE 19173
6
SLM STUDENT LOAN TRUST 1997-1
CUSIP 78442GAM8 $71,800,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 13,000,000.00 18.11%
Secaucus, NJ 07094
Boston Safe Deposit & Trust
Co.
c/o Mellon Bank N.A.
Three Mellon Bank Center $ 34,800,000.00 48.47%
Rm 153-3015
Pittsburgh, PA 15259
Chase Manhattan Bank
4 New York Plaza $ 12,000,000.00 16.71%
13th Floor
New York, NY 10004
Huntington National Bank
Proxy Department $ 12,000,000.00 16.71%
41 South High Street
Columbus, OH 43287
SLM STUDENT LOAN TRUST 1997-2
CUSIP 78442GAQ9 $87,450,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 30,000,000.00 34.31%
Secaucus, NJ 07094
Bankers Trust Company
c/o BT Services
Tennessee Inc. $ 30,000,000.00 34.31%
648 Grassmere Park Drive
Nashville, TN 37211
7
Boston Safe Deposit & Trust
Co.
c/o Mellon Bank N.A.
Three Mellon Bank Center
Rm 153-3015 $ 9,450,000.00 10.81%
Pittsburgh, PA 15259
Chase Manhattan Bank
4 New York Plaza $ 13,000,000.00 14.87%
13th Floor
New York, NY 10004
SSB-Custodian
Global Corp. Action
Dept JAB5W $ 5,000,000.00 5.72%
P. O. Box 1631
Boston, MA 02105-1631
SLM STUDENT LOAN TRUST 1997-3
CUSIP 78442GAT3 $90,150,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 60,800,000.00 67.44%
Secaucus, NJ 07094
Bankers Trust Company
c/o BT Services $ 12,200,000.00 13.53%
Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Boston Safe Deposit & Trust Co.
c/o Mellon Bank N.A. $ 12,150,000.00 13.48%
Three Mellon Bank Center
Rm 153-3015
Pittsburgh, PA 15259
SSB-Custodian
Global Corp. Action $ 5,000,000.00 5.55%
Dept JAB5W
P. O. Box 1631
Boston, MA 02105-1631
8
SLM STUDENT LOAN TRUST 1997-4
CUSIP 78442GAW6 $89,900,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 89,900,000.00 100.00%
Secaucus, NJ 07094
SLM STUDENT LOAN TRUST 1998-1
CUSIP 78442GAZ9 $ 106,550,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 81,550,000.00 76.54%
Secaucus, NJ 07094
The Northern Trust Company
801 S. Canal C-In $ 8,600,000.00 8.07%
Chicago, IL 60607
SSB-Custodian
Global Corp. Action $ 13,000,000.00 12.20%
Dept JAB5W
P. O. Box 1631
Boston, MA 02105-1631
SLM STUDENT LOAN TRUST 1998-2
CUSIP 78442GBC9 $ 105,750,000
Title of Class Name and Amount and Percent of
Address of Nature of Class
Beneficial Beneficial
Owner Ownership
- ------------------------------ -------------------------------- ----------------------- ----------------------------
Floating Rate Student The Bank of New York
Loan-Backed Certificates 925 Patterson Plank Rd. $ 100,750,000.00 95.27%
Secaucus, NJ 07094
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Nothing to Report.
9
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The following documents are filed as part of this Annual Report on
Form 10-K:
Designation Description
----------- -----------
Exhibit 19.1 Annual Statements of Compliance
Exhibit 19.2 Annual Independent Certified Public
Accountant's Report
(b) REPORTS ON FORM 8-K. Current Reports on Form 8-K were filed during the last
quarter of the period covered by this report with the Commission on or about
January 25, 1999 in connection with a quarterly Distribution Date.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 25, 1999
SLM FUNDING CORPORATION
By: /s/ Mark G. Overend
----------------------------
Name: Mark G. Overend
Title: President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Mark G. Overend
- ------------------------ President and Director March 25, 1999
Mark G. Overend (Principal Executive
Officer)
/s/ J. Lance Franke
- ------------------------ Chief Financial March 18, 1999
J. Lance Franke Officer and Director
(Principal Financial
Officer)
/s/ William M.E. Rachal
- ------------------------ Treasurer and Controller March 18, 1999
William M.E. Rachal (Principal Accounting
Officer)
/s/ Elizabeth S. Eldrige
- ------------------------ Director March 18, 1999
Elizabeth S. Eldridge
/s/ Douglas Johnson
- ------------------------ Director March 18, 1999
Douglas Johnson
11
INDEX TO EXHIBITS
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Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ------------
19.1 Annual Statements of Compliance 13
19.2 Annual Independent Certified Public 35
Accountant's Report
12