The Student Loan Corporation Announces First Quarter Earnings

Business Wire, April 17, 2003

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--April 17, 2003

The Student Loan Corporation (NYSE:STU) today reported net income of $61.5 million ($3.08 basic earnings per share) for the first quarter of 2003, an increase of $11.9 million (24%) compared to net income of $49.6 million ($2.48 basic earnings per share) for the same period of 2002.

The improvement is attributable to 17% portfolio growth, driven by record disbursement volume and increased floor income earned on both Consolidation and Stafford Loan assets.

During the twelve month period ending March 31, 2003, the Company's student loan assets grew by $3.1 billion (17%) to $21.8 billion. Combined Federal Family Education Loan Program (FFELP) Stafford and PLUS disbursements and new CitiAssist Loan commitments of $1,289 million were up $257 million (25%) for the first quarter of 2003 compared to the same period of 2002. These first quarter 2003 disbursements were composed of FFELP Stafford and PLUS disbursements of $913 million, up $145 million (19%). First quarter 2003 disbursements also include new CitiAssist Loan commitments of $376 million, up $112 million (43%) compared to the same period last year. Secondary market loan activities also added approximately $607 million of FFELP loans to the Company's student loan portfolio during the first quarter of 2003. Most of the secondary market volume is comprised of FFELP Consolidation Loans.

The net interest margin for the first quarter of 2003 was 2.30%, up 14 basis points from 2.16% for the same period of 2002. The improvement was driven by increased floor income resulting from the Company's ability to take advantage of favorable funding opportunities as market interest rates continued to decline. The Company expects the floor income benefit on Stafford Loans, which represent the majority of the Company's loan assets, to end in July when current borrower rates reset.

The Company's expense ratio (expenses as a percentage of average student loan assets) for the first quarter of 2003 was 0.50%, one basis point better than the first quarter 2002 ratio. Operating expenses of $26.3 million for the first quarter of 2003 were $2.6 million (11%) higher than those expenses for the same period of 2002. This increase reflects the incremental costs incurred to service the larger loan portfolio and ongoing investments in sales and technology.

The Company's return on equity for the quarter ended March 31, 2003 improved to 31.6%, up 1.5% compared to 30.1% for the same period of 2002.

The Company's Board of Directors declared a regular quarterly dividend on the Company's common stock of $0.77 per share. The dividend will be paid June 2, 2003 to shareholders of record on May 15, 2003.

The Student Loan Corporation is one of the nation's largest originators and holders of insured student loans. Citibank (New York State), a subsidiary of Citigroup Inc., remains 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 http://www.studentloan.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The Company's actual results may differ materially from those suggested by the forward-looking statements, which are typically identified by the words or phrases "believe", "expect", "anticipate", "intend", "estimate", "target", "may increase", "may fluctuate", "may result in", "are projected", "will", "should", "would", "could" and similar expressions. These forward-looking statements involve risks and uncertainties including, but not limited to, general economic conditions, including the performance of financial markets and interest rates; and the effects of future legislative and regulatory changes, including those affecting the interest rates borrowers pay on certain loans and the magnitude of certain loan subsidies, which will determine the floor income benefit to the Company on Stafford Loans.

                     THE STUDENT LOAN CORPORATION
                            BALANCE SHEETS
                        (Dollars in thousands)

                                 March 31,   December 31,  March 31,
                                   2003         2002         2002
                                (Unaudited)   (Audited)   (Unaudited)
                                ------------ ------------ ------------
ASSETS
   Student loans                $19,842,116  $19,173,992  $18,110,624
   Less: allowance
    for loan losses                  (5,734)      (5,484)      (3,884)
                                ------------ ------------ ------------
   Student loans, net            19,836,382   19,168,508   18,106,740
   Loans available for sale       1,945,230    1,361,874      538,646
   Cash                                 205          383          203
   Other assets                     490,834      474,839      510,449
                                ------------ ------------ ------------

   Total Assets                 $22,272,651  $21,005,604  $19,156,038
                                ============ ============ ============


LIABILITIES AND STOCKHOLDERS' EQUITY
   Short-term borrowings        $14,401,345  $15,789,900  $17,742,015
   Long-term notes                6,650,000    4,000,000      100,000
   Payable to principal
    stockholder                       5,748        6,247        7,305
   Deferred income taxes            117,628      105,897      103,395
   Other liabilities                278,981      338,524      515,264
                                ------------ ------------ ------------

      Total Liabilities          21,453,702   20,240,568   18,467,979
                                ------------ ------------ ------------

   Common stock, $.01 par value;
    authorized 50,000,000 shares;
    20,000,000 shares issued and
    outstanding                         200          200          200
   Additional paid-in capital       135,688      135,205      135,205
   Retained earnings                682,269      636,142      552,303
   Accumulated other changes in
    equity from nonowner sources        792       (6,511)         351
                                ------------ ------------ ------------

      Total Stockholders'
       Equity                       818,949      765,036      688,059
                                ------------ ------------ ------------

   Total Liabilities and
    Stockholders' Equity        $22,272,651  $21,005,604  $19,156,038
                                ============ ============ ============


AVERAGE STUDENT LOANS           $21,362,608  $19,481,147  $18,714,881
(year-to-date)                  ============ ============ ============



                     THE STUDENT LOAN CORPORATION
                         STATEMENTS OF INCOME
           (Dollars in thousands, except per share amounts)
                              (Unaudited)

                                                   Three months ended
                                                        March 31,
                                                   -------------------
                                                       2003      2002
                                                   --------- ---------
  REVENUE
    Interest income                                $218,160  $262,884
    Interest expense                                 97,027   163,276
                                                   --------- ---------
    Net interest income                             121,133    99,608
    Less: provision for loan losses                  (2,495)   (2,001)
                                                   --------- ---------
    Net interest income after
     provision for loan losses                      118,638    97,607
    Gain on student loan securitizations                  -     3,121
    Fee and other income                              5,204     5,968
                                                   --------- ---------
       Total revenue, net                           123,842   106,696
                                                   --------- ---------

  OPERATING EXPENSES
    Salaries and employee benefits                    6,915    $6,159
    Other expenses                                   19,384    17,545
                                                   --------- ---------
       Total operating expenses                      26,299   $23,704
                                                   --------- ---------
    Income before income taxes                       97,543   $82,992
    Income taxes                                     36,016    33,340
                                                   --------- ---------
  NET INCOME                                        $61,527   $49,652
                                                   ========= =========

  DIVIDENDS DECLARED                                $15,400   $14,000
                                                   ========= =========

  BASIC AND DILUTED EARNINGS PER COMMON SHARE         $3.08     $2.48
   (based on 20 million average shares             ========= =========
    outstanding)

  DIVIDENDS DECLARED PER COMMON SHARE                 $0.77     $0.70
                                                   ========= =========

  OPERATING RATIOS
    Net interest margin                                2.30%     2.16%
    Operating expense as a percentage of average
     student loans                                     0.50%     0.51%
    Return on Equity                                  31.61%    30.12%