Investor Group Offers to Terminate Merger Agreement

J.C. Flowers & Co., on behalf of itself and its partners Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM) released a letter sent today to Vice Chancellor Leo E. Strine, Jr. of the Delaware Chancery Court offering to terminate the Merger Agreement with SLM Corporation (NYSE: SLM), commonly known as Sallie Mae. The Investor Group also filed its Answer and Counterclaims in Sallie Mae's lawsuit, which explain why Sallie Mae has suffered a "Material Adverse Effect" as defined by the Merger Agreement.

The Investor Group's letter to Vice Chancellor Strine was sent in response to a letter that Sallie Mae sent to the court on Friday, October 12, 2007, asking the court to schedule an expedited trial. Sallie Mae sent its letter to the court the day after Sallie Mae's Chairman Al Lord told the company's shareholders that an expedited trial was unnecessary because the company was "not in any kind of difficulty." In today's letter, the Investor Group offered to terminate the Merger Agreement in response to Sallie Mae's assertion on Friday that the Merger Agreement is impeding Sallie Mae's ability to run its business. The letter explains that by entering into an agreement to terminate the Merger Agreement, Sallie Mae would be free from the restrictions that it is complaining about.

The Investor Group also filed its Answer and Counterclaims with the Delaware Chancery Court. In its filing, the Investor Group asks the Court to declare that it is not obligated to proceed to closing under the Merger Agreement because, among other reasons:

--  In the Merger Agreement, Sallie Mae agreed that the full impact of any
    legislative changes relating to the student lending industry that are "in
    the aggregate more adverse" to the company than the Bush Budget Proposal
    counts in determining whether there has been a Material Adverse Effect.

--  Since Sallie Mae is the largest education finance company and
    approximately 84% of Sallie Mae's loan portfolio consists of federally
    subsidized loans, Sallie Mae is the single largest beneficiary of federal
    subsidies and suffers the largest economic impact as a result of the recent
    enactment of the College Cost Reduction Act.

--  According to the Congressional Budget Office, the College Cost
    Reduction Act will cut subsidies to the student loan industry by $22.32
    billion on a present value basis over the next five years.  The cuts
    imposed by the College Cost Reduction Act are much more severe than the
    $15.5 billion of cuts proposed in the Bush Budget Proposal.  Sallie Mae, in
    its complaint, admitted that the new legislation is more adverse to the
    company than the Bush Proposal.

--  Under the terms of the Merger Agreement, if something in the aggregate
    more adverse than the Bush Budget proposal is signed into law, then the
    entirety of the impact of that new law must be included in evaluating
    whether there has been a Material Adverse Effect.

--  According to the Investor Group's projections, the College Cost
    Reduction Act will cut Sallie Mae's core net income by approximately $316
    million, or 15.2%, in 2009, rising to a reduction of approximately $595
    million, or 23.5%, in 2012 as compared to what it would have been if no
    legislation had been enacted.

--  The net result of the College Cost Reduction Act is that Sallie Mae
    will suffer a 'material' reduction in future income that is considerably
    more severe than if the Bush Budget Proposal were enacted.

--  Sallie Mae also agreed in the Merger Agreement that changes in credit
    markets that disproportionately impact the company relative to similarly
    sized financial services companies like banks would count in determining
    whether there has been a Material Adverse Effect.  Sallie Mae has been
    disproportionately affected by the recent credit market collapse because,
    unlike banks that can accept deposits, Sallie Mae is acutely dependent on
    the wholesale credit markets to finance its operations.

--  The new legislation and the changes in conditions in the credit
    markets that disproportionately affect Sallie Mae each independently give
    rise to a Material Adverse Effect under the Material Adverse Effect
    definition in the Merger Agreement.

Below is today's letter to Vice Chancellor Leo E. Strine, Jr., and attached is the Investor Group's Answer and Counterclaims filed today in the Delaware Chancery Court.

Media Contact:  Stephanie Cutter
                202-528-0143 or  Stephanie@CutterMediaGroup.Com 


                   Young Conaway Stargatt & Taylor, LLP

October 15, 2007

The Honorable Leo E. Strine, Jr.
The Court of Chancery of the State of Delaware
500 N. King Street
Wilmington, Delaware  19801

                    Re:    SLM Corp. v. J.C. Flowers II, L.P.,
                           et al., C.A. No. 3279-VCS

Dear Vice Chancellor Strine:

We are counsel to J.C. Flowers II L.P., Bank of America, N.A., JPMorgan Chase Bank, N.A, Mustang Holding Company Inc. and Mustang Merger Sub, Inc. (collectively, the "Buying Group"), defendants in the above-captioned action which, in essence, alleges that the Buying Group breached its obligation to acquire plaintiff SLM Corporation ("Sallie Mae" or the "Company") for $60 per share in cash. The Buying Group today filed its Answer and Counterclaims, which explain why Sallie Mae has suffered a "Material Adverse Effect" within the meaning of the term as it is specifically defined in the Merger Agreement. As a result of this, among other things, if the conditions to closing were to be measured today, the Buying Group would not be obligated to consummate the merger. The Buying Group has not repudiated the Merger Agreement and continues to abide by its terms. A copy of the Answer and Counterclaims is enclosed for the Court's convenience.