STAMFORD, Conn.--(BUSINESS WIRE)--The Student Loan Corporation (NYSE:STU) today reported net income of $183 million, or $9.13 per share, for the year ended December 31, 2007, a decrease of $104 million (36%) compared to net income of $287 million, or $14.34 per share, reported for 2006. This decrease was primarily due to a $3.9 billion reduction in loan sales and securitizations during 2007 as the Company decided to postpone securitization volume due to prevailing market conditions. This reduction in volume resulted in a $65 million after-tax decrease in associated gains. Also affecting income for the year was a $12 million after-tax impact related to the enactment of the College Cost Reduction and Access Act (the Act).

“We are pleased with our results in light of the difficult market conditions. We have consistently grown our managed assets and believe we have the balance sheet strength to continue this growth and to gain market share in the current market environment,” said CEO Mike Reardon.

For the quarter ended December 31, 2007, net income was $43 million, or $2.16 per share, a decrease of $18 million (29%) compared to net income of $61 million, or $3.05 per share, for the fourth quarter of 2006. The fourth quarter results included a $12 million after-tax decrease in loan sales and securitization gains due to prevailing market conditions as well as a $10 million after-tax increase in the provision for loan losses primarily due to continued seasoning of the CitiAssist portfolio.

During the twelve-month period ended December 31, 2007, the Company’s managed student loan portfolio grew by $2.8 billion (8%) to $36.5 billion reflecting the Company’s continued strong origination performance. The managed portfolio includes $22.0 billion of Company owned loan assets and $14.5 billion of loans serviced on behalf of securitization trusts or other lenders. Originations for the year included retail FFELP Stafford and PLUS originations of $4.6 billion, a 22% increase from 2006. The Company also made new CitiAssist Loan commitments of $1.8 billion, down 1% compared to last year, due largely to the shift in volume to the Graduate PLUS loan product which was introduced last year. Loan consolidation and other secondary market activities contributed approximately $2.4 billion of loans to the Company’s student loan portfolio during 2007. For the fourth quarter, FFELP originations of $851 million increased 24% over the fourth quarter of 2006, and overall retail originations were $1.1 billion which represents a 10% increase over the fourth quarter of 2006.

Net interest income of $389 million for 2007 was $23 million (6%) lower than 2006. This decrease was primarily driven by lower average loan balances, offset by an increase in net interest margin. The 2007 net interest margin was 1.66%, an increase of five basis points from 2006. The increase in interest margin was primarily driven by higher overall rates earned on the Company’s assets. Net interest income of $92 million for the fourth quarter of 2007 was $1 million (1%) higher than 2006. The fourth quarter net interest margin was 1.54%, an increase of four basis points from the fourth quarter of 2006. This increase in interest margin was primarily driven by decreases in funding costs.

The Company’s 2007 other income of $148 million was $97 million (39%) lower than the prior year. For the fourth quarter of 2007, other income was $49 million, a decrease of $8 million (14%) from the fourth quarter of 2006. These decreases were primarily attributable to the Company’s decision to postpone securitization volume in light of market conditions.

The Company’s operating expense ratio (total operating expenses as a percentage of average managed student loans) for the year 2007 was 0.51%, unchanged from the prior year, and 0.50% for the fourth quarter, two basis points lower than the fourth quarter of 2006. Total operating expenses for 2007 were $180 million, $14 million (8%) higher than 2006, and $46 million for the fourth quarter of 2007, $2 million (4%) higher than the fourth quarter of 2006. Operating expenses increased as a result of the incremental costs associated with servicing and administering the larger managed loan portfolio.

The Company’s 2007 year-end allowance for loan losses was $42 million compared to $14 million at year-end 2006. This increase was primarily driven by the Act’s elimination of the Exceptional Performer program as well as continued seasoning of the CitiAssist portfolio.

The Company’s 2007 return on average equity decreased to 11.5% from 19.8% in 2006, due primarily to lower earnings. The 2007 fourth quarter return on average equity was 10.6%, compared to 15.8% for the fourth quarter of 2006.

On January 14, 2008, the Company’s Board of Directors declared a regular quarterly dividend on the Company’s common stock of $1.43 per share. The dividend will be paid March 3, 2008 to shareholders of record on February 15, 2008.

The Student Loan Corporation is one of the nation’s leading originators and holders of FFELP program and private education loans. Citibank, N.A., a subsidiary of Citigroup Inc., is the largest shareholder in the Company with an 80% interest.

For information or inquiries regarding student loan accounts, please call 1-800-967-2400. Hearing impaired customers with Telecommunication Devices for the Deaf (TDD) may call 1-800-846-1298. Information is also available on the Company’s Web site at studentloan.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this document are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in the Company’s filings with the Securities and Exchange Commission.

THE STUDENT LOAN CORPORATION

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