**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**__________________**

**FORM      10-Q**

**__________________**

| **x**      | **QUARTERLY                REPORT PURUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934**   |   |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|
|       |                                                                                                                                      |   |
|       | **For                the quarterly period ended September 30, 2006**                                                                      |   |
|       |                                                                                                                                      |   |
|       | **or**                                                                                                                                    |   |
|       |                                                                                                                                      |   |
| ** ̈** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |   |
|       |                                                                                                                                      |   |
|       | **For                the transition period from ___ to ___**                                                                              |   |

**THE      STUDENT LOAN CORPORATION**

| **Delaware**                                            |   | **16-1427135**                                      |
|---------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of          |   | (I.R.S.                Employer Identification No.) |
| incorporation                or organization)           |   |                                                |
|                                                    |   |                                                |
| **750                Washington Blvd.**                 |   | **06901**                                           |
| **Stamford,                Connecticut**                |   | (Zip                Code)                           |
| (Address                of principal executive offices) |   |                                                |

**(203)      975-6320**

**__________________**

|   | Yes | **x**  | No | **o** |   |
|--------|-----|-------------|----|-------|--------|

| Large                accelerated filer **x** | Accelerated                filer **o** | Non-accelerated                filer **o** |
|----------------------------------------------|----------------------------------------|--------------------------------------------|

|   | Yes | **o** | No | **x** |   |
|--------|-----|-------|----|-------|--------|

| Part                I        | Consolidated                Financial Information |                                                                                                                                                                   |
|------------------------------|---------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |                                              |                                                                                                                                                                   | Page |
|                         | Item                1 -                           | Consolidated                Financial Statements                                                                                                                       |   |
|                         |                                              |                                                                                                                                                                   |   |
|                         |                                              | Consolidated                Statement of Income (Unaudited) for the Three- and Nine-Month Periods                Ended September 30, 2006 and 2005                     | 3 |
|                         |                                              |                                                                                                                                                                   |   |
|                         |                                              | Consolidated                Balance Sheet as of September 30, 2006 (Unaudited) and December 31,                2005                                                    | 4 |
|                         |                                              |                                                                                                                                                                   |   |
|                         |                                              | Consolidated                Statement of Cash Flows (Unaudited) for the Nine-Month Periods Ended                September 30, 2006 and 2005                            | 5 |
|                         |                                              |                                                                                                                                                                   |   |
|                         |                                              | Consolidated                Statement of Changes in Stockholders’ Equity (Unaudited) for the                Nine-Month Periods Ended September 30, 2006 and 2005 | 6 |
|                         |                                              |                                                                                                                                                                   |   |
|                         |                                              | Notes                to Consolidated Financial Statements (Unaudited)                                                                                                  | 7                -                18 |
|                         |                                              |                                                                                                                                                                   |   |
|                         | Item                2 -                           | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                                              | 19                - 30 |
|                         |                                              |                                                                                                                                                                   |   |
|                         | Item                3 -                           | Quantitative                and Qualitative Disclosures About Market Risk                                                                                              | 31 |
|                         |                                              |                                                                                                                                                                   |   |
|                         | Item                4 -                           | Controls                and Procedures                                                                                                                                 | 32 |
|                         |                                              |                                                                                                                                                                   |   |
| Part                II       | Other                Information                  |                                                                                                                                                                   |
|                         |                                              |                                                                                                                                                                   |   |
|                         | Item                1A-                           | Risk                Factors                                                                                                                                            | 33 |
|                         |                                              |                                                                                                                                                                   |   |
|                         | Item                6 -                           | Exhibits                                                                                                                                                               | 33 |
|                         |                                              |                                                                                                                                                                   |   |
| Signature                    | 34                                                |
|                         |                                              |                                                                                                                                                                   |   |
| Exhibit                Index | 35                                                |

**PART      I CONSOLIDATED FINANCIAL INFORMATION**

| **Item                1.** | **Consolidated                Financial Statements** |
|----------------------------|------------------------------------------------------|

**THE      STUDENT LOAN CORPORATION**

|                                                                                           | Three                months ended             |   | Nine                months ended              |
|------------------------------------------------------------------------------------------------|-----------------------------------------------|--------|-----------------------------------------------|
|                                                                                           | September                30,                  |   | September                30,                  |
|                                                                                           | 2006                                          |   | 2005                                          |   | 2006 |   | 2005 |
| **NET                INTEREST INCOME**                                                         |                                          |   |                                          |   |   |   |   |
| Interest                income                                                                 | $420,366                                      |   | $340,890                                      |   | $1,227,924 |   | $946,232 |
| Interest                expense to principal stockholder                                       | 321,962                                       |   | 217,656                                       |   | 907,234 |   | 565,053 |
| **Net                interest income**                                                         | 98,404                                        |   | 123,234                                       |   | 320,690 |   | 381,179 |
| Less:                provision for loan losses                                                 | (7,065)                                       |   | (2,427)                                       |   | (18,506) |   | (7,828) |
| **Net                interest income after provision for loan losses**                         | 91,339                                        |   | 120,807                                       |   | 302,184 |   | 373,351 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **OTHER                INCOME**                                                                |                                          |   |                                          |   |   |   |   |
| Gains                on loans securitized                                                      | 75,163                                        |   | 37,817                                        |   | 144,236 |   | 85,604 |
| Gains                on loans sold                                                             | 5,904                                         |   | 11,902                                        |   | 26,103 |   | 12,151 |
| Fee                and other (loss)/income                                                     | (2,433)                                       |   | 4,631                                         |   | 16,963 |   | (5,106) |
| **Total                other income**                                                          | 78,634                                        |   | 54,350                                        |   | 187,302 |   | 92,649 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **OPERATING                EXPENSES**                                                          |                                          |   |                                          |   |   |   |   |
| Salaries                and employee benefits                                                  | 14,969                                        |   | 12,158                                        |   | 41,128 |   | 35,399 |
| Other                expenses                                                                  | 29,023                                        |   | 27,688                                        |   | 80,811 |   | 72,654 |
| **Total                operating expenses**                                                    | 43,992                                        |   | 39,846                                        |   | 121,939 |   | 108,053 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **Income                before income taxes and extraordinary item**                           | 125,981                                       |   | 135,311                                       |   | 367,547 |   | 357,947 |
| Income                taxes                                                                    | 48,170                                        |   | 52,353                                        |   | 141,771 |   | 133,412 |
| **Income                before extraordinary item**                                            | 77,811                                        |   | 82,958                                        |   | 225,776 |   | 224,535 |
| Gain                on extinguishment of trust, net** **of                taxes of $3,448 | -                                             |   | -                                             |   | - |   | 5,465 |
| **NET                INCOME**                                                                  | $                77,811                       |   | $                82,958                       |   | $                 225,776 |   | $230,000 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **DIVIDENDS                DECLARED**                                                          | $                26,000                       |   | $                21,600                       |   | $                   73,600 |   | $                 64,800 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **BASIC                AND DILUTED EARNINGS**                                                  |                                          |   |                                          |   |   |   |   |
| **PER                COMMON SHARE**                                                            |                                          |   |                                          |   |   |   |   |
| (based                on 20 million average shares outstanding)                                |                                          |   |                                          |   |   |   |   |
| Income                before extraordinary item                                                | $                    3.89 |   | $                    4.15 |   | $                     11.29 |   | $                   11.23 |
| Extraordinary                item                                                              | -                                             |   | -                                             |   | - |   | .27 |
| **NET                INCOME**                                                                  | $                    3.89 |   | $                    4.15 |   | $                     11.29 |   | $                   11.50 |
|                                                                                           |                                          |   |                                          |   |   |   |   |
| **DIVIDENDS                DECLARED PER COMMON SHARE**                                         | $                    1.30 |   | $                    1.08 |   | $                       3.68 |   | $                     3.24 |

**THE      STUDENT LOAN CORPORATION**

|                                                    | September                30,                                                                                                                       |                        | December                31, |
|---------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|-----------------------------|
|                                                    |                                                                                                                                               | 2006(Unaudited)             |                        | 2005 |
| **ASSETS**                                              |                                                                                                                                               |                        |                        |
|                                                    | Federally                insured student loans                                                                                                     | $                16,675,850 |                        | $                17,508,605 |
|                                                    | Private                education loans                                                                                                             | 3,647,499                   |                        | 4,812,443 |
|                                                    | Deferred                origination and premium costs                                                                                              | 662,049                     |                        | 706,736 |
|                                                    | Less:                allowance for loan losses                                                                                                     | (11,377)                    |                        | (4,990) |
|                                                    | Student                loans, net                                                                                                                  | 20,974,021                  |                        | 23,022,794 |
|                                                    | Other                loans and lines of credit                                                                                                     | 104,816                     |                        | 50,085 |
|                                                    | Loans                held for sale                                                                                                                 | 2,614,727                   |                        | 2,067,937 |
|                                                    | Cash                                                                                                                                               | 27                          |                        | 1,152 |
|                                                    | Residual                interests in securitized loans                                                                                             | 382,963                     |                        | 188,454 |
|                                                    | Other                assets                                                                                                                        | 895,761                     |                        | 657,275 |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    | **Total                Assets**                                                                                                                    | $                24,972,315 |                        | $                25,987,697 |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    |                                                                                                                                               |                        |                        |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY** |                                                                                                                                               |                        |                        |
|                                                    | Short-term                borrowings, payable to principal stockholder                                                                             | $                11,384,800 |                        | $                10,781,100 |
|                                                    | Long-term                borrowings, payable to principal stockholder                                                                              | 11,200,000                  |                        | 13,200,000 |
|                                                    | Deferred                income taxes                                                                                                               | 290,289                     |                        | 289,843 |
|                                                    | Other                liabilities                                                                                                                   | 578,431                     |                        | 354,909 |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    | Total                Liabilities                                                                                                                   | 23,453,520                  |                        | 24,625,852 |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    | Common                stock, $0.01 par value; authorized 50,000,000 shares; 20,000,000                shares                issued and outstanding | 200                         |                        | 200 |
|                                                    | Additional                paid-in capital                                                                                                          | 141,312                     |                        | 139,383 |
|                                                    | Retained                earnings                                                                                                                   | 1,375,932                   |                        | 1,222,262 |
|                                                    | Accumulated                other changes in equity from nonowner sources                                                                           | 1,351                       |                        | - |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    | Total                Stockholders' Equity                                                                                                          | 1,518,795                   |                        | 1,361,845 |
|                                                    |                                                                                                                                               |                        |                        |   |
|                                                    | **Total                Liabilities and Stockholders' Equity**                                                                                      | $                24,972,315 |                        | $                25,987,697 |

**THE      STUDENT LOAN CORPORATION**

|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   | Nine                months ended |
|----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|----------------------------------------------------------------------------------------------|--------------------------------------------------------|----------------------------------|
|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   | September                30,     |
|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   | **2006**                         |   | **2005** |
| Cash                flows from operating activities:                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   |
| Net                income                                                                                | $                 225,776                                                                                                  |                                                              | $                  230,000                                                         |
| Adjustments                to reconcile net income to net cash from operating                activities: |                                                                                                                            |                                                              |                                                                                         |
|                                                                                                     | Depreciation                and amortization of equipment and computer software                                                 | 9,962                                                             |                                                                                         | 10,364                                                 |
|                                                                                                     | Amortization                of servicing asset                                                                                  | -                                                                 |                                                                                         | 4,241                                                  |
|                                                                                                     | Amortization                of deferred loan origination and purchase costs                                                     | 110,431                                                           |                                                                                         | 88,363                                                 |
|                                                                                                     | Accreted                interest on residual interests                                                                          | (15,306)                                                          |                                                                                         | (4,808)                                                |
|                                                                                                     | Provision                for loan losses                                                                                        | 18,506                                                            |                                                                                         | 7,828                                                  |
|                                                                                                     | Deferred                tax provision                                                                                           | (1,346)                                                           |                                                                                         |                    100,040              |
|                                                                                                     | Gains                on loans sold                                                                                              | (26,103)                                                          |                                                                                         | (12,151)                                               |
|                                                                                                     | Gains                on loans securitized                                                                                       |  (144,236)                                                   |                                                                                         | (85,604)                                               |
|                                                                                                     | Loss/(gain)                on valuation of residual interests designated as trading                                             | 5,937                                                             |                                                                                         | (3,988)                                                |
|                                                                                                     | Gain                on extinguishment of the 2002 Trust                                                                         | -                                                                 |                                                                                         | (8,913)                                                |
|                                                                                                     | Loss                on valuation of servicing assets                                                                            | 12,917                                                            |                                                                                         | -                                                      |
|                                                                                                     | Disbursements                and procurements of loans for resale                                                               | (901,235)                                                         |                                                                                         | (63,909)                                               |
|                                                                                                     | Proceeds                from loans securitized                                                                                  | 841,292                                                           |                                                                                         | -                                                      |
|                                                                                                     | Cash                received on residual interests in trading securitized                assets                                 | 2,754                                                             |                                                                                         | -                                                      |
|                                                                                                     | Impairment                loss on retained interests in securitized assets                                                      | 2,934                                                             |                                                                                         | 24,759                                                 |
|                                                                                                     | Increase                in accrued interest receivable                                                                          |                  (168,245)                                   |                                                                                         |                  (133,703)                        |
|                                                                                                     | Increase                in other assets                                                                                         | (13,685)                                                          |                                                                                         | (29,518)                                               |
|                                                                                                     | Increase                in other liabilities                                                                                    | 225,451                                                           |                                                                                         | 36,879                                                 |
| **Net                cash provided by operating activities**                                             | 185,804                                                                                                                         |                                                              | 159,880                                                                                      |
|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   |                             |   |   |
| Cash                flows from investing activities:                                                     |                                                                                                                            |                                                              |                                                                                         |
|                                                                                                     | Disbursements                of loans                                                                                           |                                                              |                                                                                         | (3,019,309)                                            |                             | (2,654,220) |
|                                                                                                     | Secondary                market and other loan procurement activity for portfolio                                               | (5,061,996)                                                       |                                                                                         | (5,399,232)                                            |
|                                                                                                     | Redemption                of 2002 Trust beneficial interests, net of expenses                                                   | -                                                                 |                                                                                         | (373,352)                                              |
|                                                                                                     | Loan                reductions                                                                                                  | 4,907,810                                                         |                                                                                         | 4,152,403                                              |
|                                                                                                     | Increase                in loan origination costs and purchase premiums                                                         | (225,738)                                                         |                                                                                         | (292,548)                                              |
|                                                                                                     | Proceeds                from loans sold                                                                                         | 874,806                                                           |                                                                                         | 375,757                                                |
|                                                                                                     | Proceeds                from loans securitized                                                                                  | 3,809,324                                                         |                                                                                         | 3,045,978                                              |
|                                                                                                     | Cash                received on residual interests in available-for-sale securitized                assets                      | 5,818                                                             |                                                                                         | 6,050                                                  |
|                                                                                                     | Capital                expenditures on equipment and computer software                                                          | (7,744)                                                           |                                                                                         | (8,802)                                                |
| **Net                cash provided by/(used in) investing activities**                                   | 1,282,971                                                                                                                       |                                                              | (1,147,966)                                                                                  |
|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   |                             |   |   |
| Cash                flows from financing activities:                                                     |                                                                                                                            |                                                              |                                                                                         |
|                                                                                                     | Net                increase/(decrease) in borrowings with original maturities of one                year or                less | 1,603,700                                                         |                                                                                         | (1,297,000)                                            |
|                                                                                                     | Repayments                of borrowings with original terms of one year or more                                                 | (3,000,000)                                                       |                                                                                         | (3,650,000)                                            |
|                                                                                                     | Proceeds                from borrowings with original terms of one year or more                                                 | -                                                                 |                                                                                         | 6,000,000                                              |
|                                                                                                     | Dividends                paid to stockholders                                                                                   | (73,600)                                                          |                                                                                         | (64,800)                                               |
| **Net                cash (used in)/provided by financing activities**                                   | (1,469,900)                                                                                                                     |                                                              | 988,200                                                                                      |
|                                                                                                     |                                                                                                                            |                                                              |                                                                                         |                                                   |                             |   |   |
| **Net                (decrease)/increase in cash**                                                       | (1,125)                                                                                                                         |                                                              | 114                                                                                          |
| **Cash                - beginning of period**                                                            | 1,152                                                                                                                           |                                                              | 628                                                                                          |
| **Cash                - end of period**                                                                  | $                              27                         |                                                              | $                            742 |
| **Supplemental                disclosure:**                                                              |                                                                                                                            |                                                              |                                                                                         |
|                                                                                                     | Cash                paid for:                                                                                                   |                                                              |                                                                                         |                                                   |
|                                                                                                     | Interest                                                                                                                        | $                     905,888            |                                                                                         | $                     530,688 |
|                                                                                                     | Income                taxes, net                                                                                                | $                       74,078 |                                                                                         | $                     122,343 |

**THE      STUDENT LOAN CORPORATION**

|                                                                         |                                                                                                                                                                      | Nine                months ended September 30,                                                         |
|------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|                                                                         |                                                                                                                                                                      | 2006                                                                                                   |   | 2005 |
| **COMMON                STOCK AND ADDITIONAL PAID-IN CAPITAL**               |                                                                                                                                                                      |                                                                                                   |   |
|                                                                         | Balance,                beginning of period                                                                                                                               | $                 139,583                                                                         |   | $                  139,376 |
|                                                                         | Capital                contributions and other changes                                                                                                                    | 1,929                                                                                                  |   | 179 |
|                                                                         | Balance,                end of period                                                                                                                                     | $                 141,512                                                                         |   | $                  139,555 |
|                                                                         |                                                                                                                                                                      |                                                                                                   |   |   |
| **RETAINED                EARNINGS**                                         |                                                                                                                                                                      |                                                                                                   |   |
|                                                                         | Balance,                beginning of period                                                                                                                               | $1,222,262                                                                                             |   | $                  999,702 |
|                                                                         | Cumulative                effect of adoption of accounting standard, net of taxes of $941                                                                                 | 1,494                                                                                                  |   | - |
|                                                                         | Net                income                                                                                                                                                 | 225,776                                                                                                |   | 230,000 |
|                                                                         | Common                dividends declared, $3.68 per common share in 2006 and $3.24 per                common                share in 2005                                 | (73,600)                                                                                               |   | (64,800) |
|                                                                         | Balance,                end of period                                                                                                                                     | $1,375,932                                                                                             |   | $1,164,902 |
|                                                                         |                                                                                                                                                                      |                                                                                                   |   |   |
| **ACCUMULATED                OTHER CHANGES IN EQUITY FROM NONOWNER SOURCES** |                                                                                                                                                                      |                                                                                                   |   |
|                                                                         | Balance,                beginning of period                                                                                                                               | $                              - |   | $       7,829 |
|                                                                         | Net                change in unrealized gains/(losses) on investment securities, net                of                taxes/benefits of $850 in 2006 and $(5,017) in 2005 | 1,351                                                                                                  |   | (7,829) |
|                                                                         | Balance,                end of period                                                                                                                                     | $                      1,351                                             |   | $               - |
|                                                                         |                                                                                                                                                                      |                                                                                                   |   |   |
| **TOTAL                STOCKHOLDERS' EQUITY**                                | $1,518,795                                                                                                                                                                |                                                                                                   | $1,304,457 |
|                                                                         |                                                                                                                                                                      |                                                                                                   |   |   |
| **SUMMARY                OF CHANGES IN EQUITY FROM NONOWNER SOURCES**        |                                                                                                                                                                      |                                                                                                   |   |
|                                                                         | Net                income                                                                                                                                                 | $                  225,776                                                                   |   | $                  230,000 |
|                                                                         | Changes                in equity from nonowner sources, net of taxes                                                                                                      | 1,351                                                                                                  |   | (7,829) |
|                                                                         | Total                changes in equity from nonowner sources                                                                                                              | $                  227,127                                                                   |   | $                  222,171 |

**THE      STUDENT LOAN CORPORATION**

**Notes      to Consolidated Financial Statements (Unaudited)**

**September      30, 2006**

| **1.** | **Basis                of Presentation and Significant Accounting                Policies** |
|--------|---------------------------------------------------------------------------------------------|

**Interim      Financial Information**

** **
** **

**Use      of Estimates**

**Principles      of Consolidation**

**Revenue      Recognition**

*Accounting      for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans      and Initial Direct Costs of Leases*

**Loans**

**Allowance      for Loan Losses**

**Transfer      of Student Loans through Sale or Securitization**

***Whole      Loan Sales***

*Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities, a replacement of FASB Statement No. 125 *

***Loans      Securitized***

**Loans      Held for Sale**

**Internally      Developed Software**

*      Accounting for the Costs of Computer Software Developed or Obtained for Internal      Use.*

| 2.  | **New              Accounting Standards**  |
|----------|-------------------------------------------------|

***Accounting      for Certain Hybrid Financial Instruments***

*Accounting      for Certain Hybrid Financial Instruments*
*.*

***Accounting      for Servicing of Financial Assets***

*Accounting      for Servicing of Financial Assets, an Amendment to SFAS No. 140*

| **3.** | **Student****Loans** |
|--------|----------------------|

|                                                         | **September                30,**                                   | **December                31,**                          |
|--------------------------------------------------------------|--------------------------------------------------------------------|----------------------------------------------------------|
| (*Dollars                in thousands)*                      | **2006                       ** | **2005        ** |
| Federal                Stafford Loans                        | $7,707,851                                                         | $8,374,721                                               |
| Federal                Consolidation Loans                   | 8,105,486                                                          | 8,177,635                                                |
| Federal                SLS/PLUS/HEAL Loans                   | 862,513                                                            | 956,249                                                  |
| CitiAssist                Loans                              | 3,647,424                                                          | 4,812,361                                                |
| Other                alternative loans                       | 75                                                                 | 82                                                       |
| Total                student loans, excluding deferred costs | 20,323,349                                                         | 22,321,048                                               |
| Deferred                origination and premium costs        | 662,049                                                            | 706,736                                                  |
| Student                loans                                 | 20,985,398                                                         | 23,027,784                                               |
| Less:                allowance for loan losses               | (11,377)                                                           | (4,990)                                                  |
| **Student                loans, net**                        | 20,974,021                                                         | 23,022,794                                               |
| Loans                held for sale, excluding deferred costs | 2,511,126                                                          | 2,039,728                                                |
| Deferred                origination and premium costs        | 103,601                                                            | 28,209                                                   |
| **Loans                held for sale**                       | 2,614,727                                                          | 2,067,937                                                |
| **Other                loans and lines of credit**           | 104,816                                                            | 50,085                                                   |
| **Total                loan assets**                         | $23,693,564                                                        | $25,140,816                                              |

|                                                                                                                                      | **September                30,**                               | **December                31,**                                |
|-------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|----------------------------------------------------------------|
| *(Dollars                in thousands)*                                                                                                   | **2006         ** | **2005         ** |
| Total                CitiAssist Loans(1)                                                                                                  | $5,906,424                                                     | $4,812,361                                                     |
| CitiAssist                Loans in repayment                                                                                              | $2,510,906                                                     | $2,541,869                                                     |
| CitiAssist                Loans in forbearance                                                                                            | $                  196,788                           | $                  191,410                           |
| CitiAssist                Loans delinquent 30 - 89 days as a % of total CitiAssist Loans in                repayment                      | 2.8%                                                           | 1.8%                                                           |
| CitiAssist                Loans delinquent 90 days or greater as a % of total CitiAssist Loans                in                repayment | 1.1%                                                           | 0.7%                                                           |
| Allowance                for loan losses for CitiAssist Loans                                                                             | $                      5,003     | $                      2,997     |
| Total                CitiAssist Loans insured by third party insurers(2)                                                                  | $5,113,871                                                     | $4,149,354                                                     |
| Total                uninsured CitiAssist Loans(3)                                                                                        | $                  792,553                           | $                  663,007                           |

|   | (1) | Of                the CitiAssist Loans, $2,259.0 million are included in “Loans held for                sale” at September 30, 2006. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | See                Allowance for Loan Losses in Note 1 regarding the Company’s insured                loans. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (3) | Of                the uninsured CitiAssist Loans, $518.8 million and $446.4 million                at                September 30, 2006 and December 31, 2005, respectively, are covered                under                risk-sharing arrangements with certain schools and universities.                See                Allowance for Loan Losses in Note 1 regarding risk-sharing agreements                with                certain schools and universities. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.**  | **Other              Assets**  |
|--------------|-------------------------------------|

|                                                                  | **September                30,**                               | **December                31,**                          |
|-----------------------------------------------------------------------|----------------------------------------------------------------|----------------------------------------------------------|
| (*Dollars                in thousands*)                               | **2006         ** | **2005        ** |
| Accrued                interest receivable                            |                                                           |                                                     |
| from                student loan borrowers/others                     | $                545,984                                       | $382,181                                                 |
| from                federal government                                | 138,174                                                        | 133,732                                                  |
| Servicing                assets from securitization activity (Note 9) | 135,558                                                        | 76,784                                                   |
| Equipment                and computer software(1)                     | 45,389                                                         | 47,231                                                   |
| Other                                                                 | 30,656                                                         | 17,347                                                   |
| Total                other assets                                     | $895,761                                                       | $657,275                                                 |

|   | (1) | This                amount primarily includes capitalized internal use software at September                30, 2006 and December 31, 2005. These amounts are reflected net of                accumulated depreciation and amortization, as appropriate, of $42.7                million and $32.8 million at September 30, 2006 and December 31,                2005,                respectively. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.**  | Fee              and Other (Loss)/Income |
|--------------|------------------------------------------|

|                                                                                                                                                       | **Three                months ended         ****September                30,                             ** | **Nine                months ended         ****September                30,             ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (*Dollars                in thousands*)                                                                                                                    | **2006  **                                                                                                                                                                                            | **2005  **                                                                                                                                                                      | **2006  ** | **2005  ** |
| Mark-to-market                (losses)/gains on residual interests                                                                                         | $(3,500)                                                                                                                                                                                                        | $                2,399                                                                                                                                                                    | $                (5,937) | $                  3,988 |
| Mark-to-market                losses on servicing assets                                                                                                   | (4,419)                                                                                                                                                                                                         | -                                                                                                                                                                                         | (12,917) | - |
| Mark-to-market                (losses)/gains on derivatives                                                                                                | (8,434)                                                                                                                                                                                                         | -                                                                                                                                                                                         | 2,867 | - |
| Servicing                fees on securitized assets (for the periods ended September 30, 2005,                fees                are net of amortization) |  8,997                                                                                                                                                                                                     |  2,209                                                                                                                                                                               |  22,298 |  4,086 |
| Other                origination and servicing fees, primarily from CBNA                                                                                   | 2,656                                                                                                                                                                                                           | 2,375                                                                                                                                                                                     | 5,456 | 5,000 |
| Servicing                asset impairments                                                                                                                 | -                                                                                                                                                                                                               | (99)                                                                                                                                                                                      | - | (8,462) |
| Residual                interest impairments                                                                                                               | -                                                                                                                                                                                                               | (4,480)                                                                                                                                                                                   | (2,934) | (16,297) |
| Late                fees                                                                                                                                   | 2,039                                                                                                                                                                                                           | 2,127                                                                                                                                                                                     | 5,293 | 6,277 |
| Other                                                                                                                                                      | 228                                                                                                                                                                                                             | 100                                                                                                                                                                                       | 2,837 | 302 |
| Total                fee and other (loss)/income                                                                                                           | $(2,433)                                                                                                                                                                                                        | $                4,631                                                                                                                                                                    | $                 16,963 | $                (5,106) |

| **6.** | **Related                Party Transactions** |
|--------|-----------------------------------------------|

|                                                                                                                                                  | **Three                months ended**                                     | **Nine                months ended**                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
|                                                                                                                                                  | **September                30,   **                   | **September                30,  **                                    |
| *(Dollars                in thousands)*                                                                                                               | **2006**                                                                  | **2005**                                                                             | **2006** | **2005** |
| **Revenues**Interest                income** **                                                                                                  |  $                        88 |  $                          2 | $                      304 | $                        11 |
| Interest                expense                                                                                                                       | 321,962                                                                   | 217,656                                                                              | 907,234 | 565,053 |
| Fee                and other income                                                                                                                   | 2,656                                                                     | 2,375                                                                                | 5,456 | 5,000 |
| **Operating                Expenses**** *****Salaries                and employee benefits***Employee                benefits and administration |   $                   2,703                      |   $                   2,329                                 | $                   7,832 | $                   6,842 |
| Stock-based                compensation                                                                                                               | 397                                                                       | 139                                                                                  | 1,481 | 630 |
|  ***Other                expenses***                                                                                                             |                                                                      |                                                                                 |   |   |
| Servicing,                professional and other fees paid                                                                                            | $                 12,483                                             | $                 11,264                                                        | $                 33,671 | $                 29,677 |
| Data                processing and communications                                                                                                     | 1,678                                                                     | 1,618                                                                                | 4,698 | 5,163 |
| Premises,                primarily rent                                                                                                               | 734                                                                       | 623                                                                                  | 2,202 | 1,861 |
| Other                                                                                                                                                 | 1,429                                                                     | 254                                                                                  | 2,184 | 1,088 |

*CBNA      Omnibus Credit Agreement*

*Interest      Rate Derivative Agreements*

*Student      Loan Origination Agreement*

*Servicing      Expenses*

*CBNA      Tax-sharing Agreement*

*Other      Intercompany Arrangements*

| **7.** | **Interest                Rate Derivative                Agreements** |
|--------|-----------------------------------------------------------------------|

*Accounting      for Derivative Instruments and Hedging Activities*

| **8.** | **Commitments                and Contingencies** |
|--------|--------------------------------------------------|

**Forward-Looking      Statements**

| **9.** | **Student                Loan Securitizations** |
|--------|-------------------------------------------------|

|                                                                             | **Three                months ended****September                30,**                  | **Nine                months ended****September                30,**             |
|----------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|
| *(Dollars                in millions)*                                           | **2006**                                                                               | **2005**                                                                         | **2006** | **2005** |
| Student                loans securitized during the period                       | $2,498.4              | $1,006.6             | $4,698.6             | $3,032.5             |
| Realized                gains on loans securitized                               | 75.2                  | 37.8                 | 144.2             | 85.6             |
| Mark-to-market                gains on residual interests at securitization date | 3.6                   | 1.5                  | 6.3             | 3.1             |

|  *(Dollars                in thousands)*              | **September                30,**** 2006                       ** | **December                31,**** 2005                      ** |
|------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|
| Total                student loan assets in trusts         | $9,608,669                                                                                               | $5,427,693                                                                                        |
| Residual                interests                          | 382,963                                                                                                  | 188,454                                                                                           |
| Servicing                assets                            | 135,558                                                                                                  | 76,784                                                                                            |
| Receivable                from trusts for servicing        | 2,993                                                                                                    | 1,776                                                                                             |
| Payable                to trusts for student loan payments | 8,581                                                                                                    | 3,130                                                                                             |

| *(Dollars                in thousands)*                | **2006** | **2005** |
|--------------------------------------------------------|----------|----------|
| Cash                received from trusts for servicing | $21,080  | $7,611   |
| Cash                received from trusts on residual   | 8,572    | 6,050    |

|                                                                           | **Three                months ended                             ****September                30,                                  ** | **Nine                months ended                              ****September                30,                                  ** |
|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *(Dollars                in thousands)*                                        | **2006  **                                                                                                                                                                                                                                                                            | **2005  **                                                                                                                                                                                                                                                                                 | **2006  ** | **2005  ** |
| Balance                at beginning of period                                  | $273,137                                                                                                                                                                                                                                                                                        | $                95,337                                                                                                                                                                                                                                                                              | $188,454 | $                72,733 |
| Accreted                interest                                               | 6,425                                                                                                                                                                                                                                                                                           | 2,188                                                                                                                                                                                                                                                                                                | 15,306 | 4,808 |
| Cash                flows from trusts                                          | (4,818)                                                                                                                                                                                                                                                                                         | -                                                                                                                                                                                                                                                                                                    | (8,572) | (6,050) |
| Temporary                change in fair value of available-for-sale securities | 2,201                                                                                                                                                                                                                                                                                           | -                                                                                                                                                                                                                                                                                                    | 2,201 | (2,983) |
| Mark-to-market                gains/(losses) on residual interests             | (3,500)                                                                                                                                                                                                                                                                                         | 2,399                                                                                                                                                                                                                                                                                                | (5,937) | 3,988 |
| Residual                interest impairments                                   | -                                                                                                                                                                                                                                                                                               | (4,480)                                                                                                                                                                                                                                                                                              | (2,934) | (16,297) |
| Student                loan securitizations                                    | 109,518                                                                                                                                                                                                                                                                                         | 38,382                                                                                                                                                                                                                                                                                               | 194,445 | 95,715 |
| Extinguishment                of the 2002 Trust                                | -                                                                                                                                                                                                                                                                                               | -                                                                                                                                                                                                                                                                                                    | - | (18,088) |
| Balance                at end of period                                        | $382,963                                                                                                                                                                                                                                                                                        | $133,826                                                                                                                                                                                                                                                                                             | $382,963 | $133,826 |

|                                                     | **Three                months ended                            **** September                30,                                  ** | **Nine                months                ended                  ****September                30,                      ** |
|----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *(Dollars                in thousands)*                  | **2006    **                                                                                                                                                                                                                                                           | **2005    **                                                                                                                                                                                                                                                                                                    | **2006    ** | **2005     ** |
| Balance                at beginning of period            | $                100,689                                                                                                                                                                                                                                                         | $                47,112                                                                                                                                                                                                                                                                                                   | $                76,784    | $                28,177    |
| Cumulative                effect adjustment              | -                                                                                                                                                                                                                                                                                | -                                                                                                                                                                                                                                                                                                                         | 2,435    | -    |
| Other-than-temporary                impairment           | -                                                                                                                                                                                                                                                                                | (99)                                                                                                                                                                                                                                                                                                                      | -    | (8,462)   |
| Mark-to-market                losses on servicing assets | (4,419)                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                         | (12,917)   | -    |
| Trust                securitizations                     | 39,288                                                                                                                                                                                                                                                                           | 16,516                                                                                                                                                                                                                                                                                                                    | 69,256    | 45,630    |
| Amortization                                             | -                                                                                                                                                                                                                                                                                | (2,425)                                                                                                                                                                                                                                                                                                                   | -    | (4,241)   |
| Balance                at end of period                  | $                135,558                                                                                                                                                                                                                                                         | $                61,104                                                                                                                                                                                                                                                                                                   | $135,558                   | $                61,104    |

|                                                                | **                               2006-1** | **                               2006-2** |
|---------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
| Discount                rate                                        | 10.0%                                                                                                                | 10.0%                                                                                                                |
| Consolidation                prepayment rates                       | Up                to 11.6% in 5 to 10 years                                                                          | Up                to 10.3% in 5 to 10 years                                                                          |
| Anticipated                net credit losses                        | 0.10%                                                                                                                | 0.10%                                                                                                                |
| Basis                spread between LIBOR and Commercial Paper rate | 0.10%                                                                                                                | 0.11%                                                                                                                |
| Utilization                rate of borrower benefits:               |                                                                                                                 |                                                                                                                 |
| Automated                clearing house (ACH)                       | 19.0%                                                                                                                | 20.5%                                                                                                                |
| On                time payments                                     | 17.2%                                                                                                                | 17.6%                                                                                                                |

|                                                                | **                            September 30,**** 2006        ** | **                              December 31,**** 2005        ** |
|---------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Discount                rate                                        | 10.0%                                                                                                                                                                   | 10.0%                                                                                                                                                                              |
| Consolidation                prepayment rates                       | Up                to 10.3% in 5 to 10 years                                                                                                                             | Up                to 10.0% in 6 to 10 years                                                                                                                                        |
| Anticipated                net credit losses                        | 0.09%                to 0.12%                                                                                                                                           | 0.00%                                                                                                                                                                              |
| Basis                spread between LIBOR and Commercial Paper rate | 0.11%                                                                                                                                                                   | 0.10%                                                                                                                                                                              |
| Utilization                rate of borrower benefits:               |                                                                                                                                                                    |                                                                                                                                                                               |
| Automated                clearing house                             | 17.5%                to 39.8%                                                                                                                                           | 18.0%                to 39.7%                                                                                                                                                      |
| On                time payments                                     | 14.9%                to 37.6%                                                                                                                                           | 14.5%                to 33.0%                                                                                                                                                      |

|                                          | **                             September 30,**** 2006        ** | **                             December 31,**** 2005        ** |
|-----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Average                discount rate          | 6.3%                                                                                                                                                                          | 6.0%                                                                                                                                                                         |
| Consolidation                prepayment rates | Up                to 10.3% in 5 to 10 years                                                                                                                                   | Up                to 10.0% in 6 to 10 years                                                                                                                                  |
| Average                servicing margin       | 26                basis points                                                                                                                                                | 26                basis points                                                                                                                                               |

| *(Dollars                in thousands)*             | **Residual                Interests** | **Servicing                Assets**       |
|-----------------------------------------------------|---------------------------------------|-------------------------------------------|
| Fair                value at September 30, 2006     | $382,963                              | $                135,558                  |
| Discount                rate                        | 10.0%                                 | 6.4%                                      |
| 10%                adverse change                   | $(14,590)                             | $                 (3,228)            |
| 20%                adverse change                   | $(28,100)                             | $                 (6,318)            |
| Consolidation                prepayment rate        | Up                to 10.3% in 5 to    | Up                to 10.3% in 5 to        |
|                                                | 10                years               | 10                years                   |
| 10%                adverse change                   | $                 (7,534)        | $                 (3,136)            |
| 20%                adverse change                   | $(13,886)                             | $                 (5,901)            |
| Anticipated                net credit losses        | 0.09%                to 0.12%         | 0.09%                to 0.12%             |
| 10%                adverse change                   | $                 (2,473)        | $                    (739) |
| 20%                adverse change                   | $                 (5,119)        | $                 (1,509)            |
| Servicing                margin                     | -                                     | 26                basis points            |
| 10%                adverse change                   | -                                     | $(11,608)                                 |
| 20%                adverse change                   | -                                     | $(22,663)                                 |
| Basis                spread                         | 0.11%                                 | -                                         |
| 10%                adverse change                   | $                 (4,396)        | -                                         |
| 20%                adverse change                   | $                 (8,838)        | -                                         |
| Borrower                benefits - ACH              | 17.5%                to 39.8%         | -                                         |
| 10%                adverse change                   | $                 (2,486)        | -                                         |
| 20%                adverse change                   | $                 (4,984)        | -                                         |
| Borrower                benefits - on time payments | 14.9%                to 37.6%         | -                                         |
| 10%                adverse change                   | $                 (6,517)        | -                                         |
| 20%                adverse change                   | $(13,081)                             | -                                         |

| **10.                       ** | **Short-                and Long-Term                Borrowings** |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------|

| **11.** | **Future                Application of Accounting                Standards** |
|---------|------------------------------------------------------------------------------|

***Accounting      for Uncertainty in Income Taxes***

*Accounting      for Uncertainty in Income Taxes, an interpretation of FASB Statement No.      109*

***Fair      Value Measurements***

*Fair      Value Measurements*

***Potential      Amendments to Various Current Accounting Standards***

**Item      2.**
**Management's      Discussion and Analysis of Financial Condition and Results of      Operations**

**Forward-Looking      Statements**

**Business      Overview**

***Reconciliation      of Floor Income to Net Interest Income***
** **

**Critical      Accounting Policies**

**Accounting      Changes and Future Application of Accounting Standards**

***Accounting      for Certain Hybrid Financial Instruments***

*Accounting      for Certain Hybrid Financial Instruments*
*.*

***Accounting      for Servicing of Financial Assets***

*Accounting      for Servicing of Financial Assets, an Amendment to SFAS No. 140*

***Accounting      for Uncertainty in Income Taxes***

*Accounting      for Uncertainty in Income Taxes, an interpretation of FASB Statement No.      109*

***Fair      Value Measurements***

*Fair      Value Measurements*

***Potential      Amendments to Various Current Accounting Standards***

**Financial      Condition**

***Loans***

| *(Dollars                in millions)*              | **September                30,****2006** | **December                31,****2005** |
|-----------------------------------------------------|------------------------------------------|-----------------------------------------|
| Average                owned loans (year to date)   | $25,962                                  | $26,305                                 |
| Average                managed loans (year to date) |                  32,020             |                  29,179            |
| Managed                loans at end of period       |  33,314                             |  30,573                            |

| *(Dollars                in millions)*                                | **September                30,****2006**                                      | **September                30,****2005**            |
|-----------------------------------------------------------------------|-------------------------------------------------------------------------------|-----------------------------------------------------|
| Balance                at beginning of period                         | $25,141                                                                       | $24,889                                             |
| FFEL                Program Stafford and PLUS Loan disbursements      |                    3,062                                       |                   2,654                   |
| Secondary                market and other loan procurement activities |                    5,920                                       |                   5,463                   |
| Redemption                of the 2002 Trust                           |                           - |                      370   |
| Loan                reductions(1)                                     |                    (4,908)                                     |                   (4,152)                 |
| Loan                securitizations                                   |                    (4,770)                                     |                   (3,084)                 |
| Loan                sales, gross                                      |                       (848)                     |                      (364) |
| Deferred                costs and other adjustments                   |                          97      |        217       |
| Balance                at end of period                               | $23,694                                                                       | $25,993                                             |

| (1)   | Loan                reductions are attributable primarily to borrower principal payments,                loan                consolidations, claims paid by guarantors and certain changes in                loan loss                reserves. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Loan      Disbursement and Procurement Activity***

|                                                                         | **Three                months ended****September                30,** | **Nine                months ended****September                30,** |
|------------------------------------------------------------------------------|-----------------------------------------------------------------------|----------------------------------------------------------------------|
| *(Dollars                in millions)*                                       | **2006**                                                              | **2005**                                                             | **2006** | **2005** |
| FFEL                Program Stafford and PLUS Loan disbursements             | $1,296(1)                                                             | $                1,079(1)                                            | $3,062(1)  | $2,654(1) |
| CitiAssist                Loans disbursed under commitments to purchase, net |                     682(2)                        |                      622(2)                 | 1,463(2) |                  1,310(2) |
| Total                loan disbursements and commitments                      | $1,978                                                 |  $                1,701                          | $4,525                     | $3,964     |

|                                                                            | **Three                months ended September 30,**            | **Nine                months ended September 30,**                        |
|---------------------------------------------------------------------------------|----------------------------------------------------------------|---------------------------------------------------------------------------|
| *(Dollars                in millions)*                                          | **2006**                                                       | **2005**                                                                  | **2006** | **2005** |
| FFEL                Program Consolidation Loans volume                          | $1,499                                          | $                2,040                                | $3,073                    | $3,567     |
| Purchases                of private education loans, primarily CitiAssist Loans |                    150(1)                       |                      131(1)                      |                  1,517(1) |                  1,348(1) |
| Other                FFEL Program loan purchases                                |                     691     |                      145     |                  1,330     |                     548     |
| Total                secondary market and other loan procurement activities     | $2,340(2)                                                      | $                2,316(3)                                                 | $5,920(2) | $5,463(3) |

|   | (1) | The                Company purchases CitiAssist Loans from CBNA shortly after final                disbursement. These loans have also been fully included in the loan                disbursements and commitments table above in CitiAssist Loans disbursed                under commitments to purchase, in this quarter or in prior quarters                depending on when the loan was disbursed by                CBNA. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Of                these procurements, $1,492 million of loans were procured for portfolio                and $848 million were procured for resale during the three months                ended                September 30, 2006 and $5,062 million were procured for portfolio                and $858                million were procured for resale for the nine months ended September                30,                2006. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Amount                includes $2,298 million procured for portfolio and $18 million procured                for resale for the three months ended September 30, 2005 and $5,399                million procured for portfolio and $64 million procured for resale                for the                nine months ended September 30,                2005. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Allowance      for loan losses***

**Regulatory      Impacts**

| *(Dollars                in thousands)*                                          | **Third  **** Quarter**** 2006  ** | **Second **** Quarter**** 2006                  ** | **First   ****Quarter****2006                  ** | **Fourth ****Quarter****2005  ** | **Third  ****Quarter****2005  ** |
|----------------------------------------------------------------------------------|------------------------------------------------------------------|-----------------------------------------------------------------------------|----------------------------------------------------------------------------|-------------------------------------------------|------------------------------------------------------|
|                                                                             |                                                             |                                                                        |                                                                       |                                            |                                                 |
| **Balance                at beginning of period**                                |                                                             |                                                                        |                                                                       |                                            |                                                 |
| FFEL                Program                                                      | $                5,519                                           | $4,245                                                                      | $1,993                                                                     | $2,003                                          | $1,338                                               |
| CitiAssist                                                                       | 4,417                                                            | 5,142                                                                       | 2,997                                                                      | 2,662                                           | 3,327                                                |
|                                                                             | 9,936                                                            | 9,387                                                                       | 4,990                                                                      | 4,665                                           | 4,665                                                |
| **Provision                for loan losses**                                     |                                                             |                                                                        |                                                                       |                                            |                                                 |
| FFEL                Program                                                      | 3,170                                                            | 1,149                                                                       | 2,401                                                                      | 1,335                                           | 1,354                                                |
| CitiAssist                                                                       | 3,895                                                            | 4,152                                                                       | 3,739                                                                      | 3,994                                           | 1,073                                                |
|                                                                             | 7,065                                                            | 5,301                                                                       | 6,140                                                                      | 5,329                                           | 2,427                                                |
| **Charge                offs**                                                   |                                                             |                                                                        |                                                                       |                                            |                                                 |
| FFEL                Program                                                      | (2,316)                                                          | 124                                                                         | (154)                                                                      | (1,348)                                         | (691)                                                |
| CitiAssist                                                                       | (3,776)                                                          | (5,293)                                                                     | (2,006)                                                                    | (3,818)                                         | (2,001)                                              |
|                                                                             | (6,092)                                                          | (5,169)                                                                     | (2,160)                                                                    | (5,166)                                         | (2,692)                                              |
| **Recoveries**                                                                   |                                                             |                                                                        |                                                                       |                                            |                                                 |
| FFEL                Program                                                      | 1                                                                | 1                                                                           | 5                                                                          | 3                                               | 2                                                    |
| CitiAssist                                                                       | 467                                                              | 416                                                                         | 412                                                                        | 159                                             | 263                                                  |
|                                                                             | 468                                                              | 417                                                                         | 417                                                                        | 162                                             | 265                                                  |
| **Balance                at end of period**FFEL                ProgramCitiAssist |  6,3745,003                                                 |  5,5194,417                                                            |  4,2455,142                                                           |  1,9932,997                                | 2,0032,662                                           |
|                                                                             | $11,377                                                          | $9,936                                                                      | $9,387                                                                     | $4,990                                          | $4,665                                               |

***Private      Education Loans in Repayment***

|                                               | **September                30, 2006  **   | **December                31, 2005  ** |
|----------------------------------------------------|------------------------------------------------|---------------------------------------------|
| *(Dollars                in millions)*             | **Amount      ** | **%   **                     | **Amount    ** | **%   ** |
| Insured                CitiAssist Loans            | $2,098                                         | 84%                                         | $2,081 | 82% |
| Uninsured                CitiAssist Loans          | 413                                            | 16%                                         | 461 | 18% |
| Total                CitiAssist Loans in repayment | $2,511                                         | 100%                                        | $2,542 | 100% |

*** ***

***Other      Assets***

***Other      Liabilities***

***Sources      and Uses of Cash***

**Results      of Operations**

***Factors      Affecting Net Interest Income***

*Net      Interest Margin Analysis*

|                                                                        | **Three                months ended  **** September                30,      ** | **Nine                months ended  **** September                30,      ** |
|-----------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                                                                        | **2006 **                                                                                                              | **2005                 **                                                                                             | **2006 ** | **2005 ** |
| Student                loan yield, before floor income                      | 7.48%                                                                                                                       | 5.82%                                                                                                                      | 7.16% | 5.36                % |
| Floor                income                                                 | 0.01%                                                                                                                       | 0.19%                                                                                                                      | 0.03% | 0.27                % |
| Consolidation                loan rebate fees                               | (0.42)%                                                                                                                     | (0.43)%                                                                                                                    | (0.43)% | (0.44)% |
| Accreted                interest on residual interests                      | 0.10%                                                                                                                       | 0.03                %                                                                                                      | 0.08% | 0.03                % |
| Amortization                of deferred loan origination and purchase costs | (0.60)%                                                                                                                     | (0.52)%                                                                                                                    | (0.57)% | (0.44)% |
| Net                yield                                                    | 6.57%                                                                                                                       | 5.09%                                                                                                                      | 6.27% | 4.78                % |
| Cost                of funds                                                | (5.03)%                                                                                                                     | (3.25)%                                                                                                                    | (4.63)% | (2.85)% |
| Net                interest margin                                          | 1.54%                                                                                                                       | 1.84                %                                                                                                      | 1.64% | 1.93                % |

*Rate/Volume      Analysis*

|                                        | **For                the three months ended September 30, 2006 vs. the three months ended                September 30, 2005** | **For                the nine months ended September 30, 2006 vs. the nine months ended                September 30, 2005** |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
|                                        | **Increase                (decrease) due to change in:**                                                                      | **Increase                (decrease) due to change in:**                                                                    |
| *(Dollars                in millions)*      | **Volume**                                                                                                                    | **Rate**                                                                                                                    | **Net** | **Volume** | **Rate** | **Net** |
| Interest                earning assets      | $(15.4)                                                                                                                       | $                94.9                                                                                                  |  $                 79.5   | $(10.3) | $292.0 | $                281.7 |
| Interest                bearing liabilities |                  (11.7)                                                                                                  | 116.0                                                                                                                       |  104.3 |                  (10.6) |                  352.8 |                   342.2 |
| Net                interest income          | $                 (3.7)                                                                                                  | $(21.1)                                                                                                                     | $(24.8) | $                  0.3  |  $(60.8) |                  $ (60.5)  |

*Reconciliation      of Floor Income to Net Interest Income*

***Net      Interest Margin***
** **
***Analysis***

|                                      | **For                the three months**** ended                September 30,** | **For                the nine months**** ended                September 30,** |
|-------------------------------------------|-------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
| *(Dollars                in millions)*    | **2006**                                                                            | **2005**                                                                           | **2006** | **2005** |
| Floor                income               | $   0.9                                                              | $                 12.4                                                        | $                   6.8 | $                 52.7 |
| Other                interest income, net |                    97.5                                         |                  110.8                                                        |                  313.9 |                  328.5 |
| Net                interest income        | $                98.4                                                               | $123.2                                                                             | $320.7 | $381.2 |

**Quarter      Ended September 30, 2006 **

***Net      income***

***Net      interest income***

***Factors      Affecting Net Interest Income***

***Gains      on loans securitized***

***Gains      on loans sold***

***Fee      and other (loss)/income***

***Operating      expenses***

***Loan      losses***

***Income      taxes***

**Nine      Months Ended September 30, 2006 **

***Net      income***

***Net      interest income***

***Factors      Affecting Net Interest Income***

***Gains      on loans securitized***

***Gains      on loans sold***

***Fee      and other (loss)/income***

***Operating      expenses***

***Loan      losses***

***Income      Taxes***

**Regulatory      Impacts**

| ·   | Stafford                Loans with a first disbursement made on or after July 1, 2006 have                a fixed                interest rate of 6.80%, in contrast to loans disbursed prior to July                1,                2006 which have a variable rate. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Stafford                Loan limits, which previously were $2,625 for freshman and $3,500                for                sophomores, will increase to $3,500 for freshmen and $4,500 for                sophomores, effective July 1, 2007, with aggregate Stafford Loan                limits                remaining unchanged. Stafford Loan limits for third- and fourth-year                undergraduate students remain at $5,500. Effective July 1, 2007,                unsubsidized Stafford Loan limits which previously were $10,000 for                graduate and professional students increased to $12,000 per year,                with                aggregate limits remaining unchanged. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PLUS                Loans with a first disbursement date on or after July 1, 2006 have                a fixed                interest rate of 8.50%, while loans disbursed prior to July 1, 2006                had an                annual variable rate. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On                July 1, 2006, the PLUS Loan program was opened to qualified graduate                and                professional students. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                3% borrower origination fee required to be paid on Stafford Loans                was                phased out over a five-year period starting July 1, 2006, but a 1%                mandatory federal default fee, which replaced the 1% guarantee fee,                was                imposed on Stafford and PLUS Loans guaranteed on or after that date. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Rebate                to the Department of almost all floor income by FFEL Program lenders                is                required, effective April 1, 2006, for loans for which the first                disbursement of principal is made on or after April 1, 2006. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | FFEL                Program lender insurance was reduced from 98% to 97% for default                claims on                loans that do not fall into the Exceptional Performer category and                for                which the first disbursement of principal was made on or after July                1,                2006.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exceptional                Performer designation rules are retained, with a 1% reduction in                amounts                reimbursed on Exceptional Performer default claims submitted on or                after                July 1, 2006, resulting in reimbursement of 99% of the claimed                amount. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                new moratorium has been created for the school-as-lender program                as of                April 1, 2006, with the addition of new requirements for schools                participating in the school-as-lender program prior to April 1, 2006. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In-school                loan consolidation and spousal loan consolidation were repealed for                those                loan applications submitted on or after July 1, 2006.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance      Sheet Arrangements**

| *(Dollars                in millions)*                             | **September                30, 2006** |   | **September                30, 2005** |
|--------------------------------------------------------------------|---------------------------------------|--------|---------------------------------------|
| Number                of securitization transactions               | 2                                     |   | 2                                     |
| Student                loans securitized                           | $4,698.6                              |   | $3,032.5                              |
| Gains                on student loans securitized                  | 144.2                                 |   | 85.6                                  |
| Total                student loan assets in trusts                 | 9,608.7                               |   | 5,427.7                               |
| Residual                interests                                  | 383.0                                 |   | 188.5                                 |
| Servicing                assets                                    | 135.6                                 |   | 76.8                                  |
| Amounts                receivable from trusts for servicing        | 3.0                                   |   | 1.8                                   |
| Amounts                payable to trusts for student loan payments | 8.6                                   |   | 1.0                                   |

***Sources      and Uses of Cash***

**Forward-Looking      Statements**

**Item      3.**
**Quantitative      and Qualitative Disclosures About Market Risk**

|                                            | **September                30, 2006**                          | **September                30, 2005**                           |
|-------------------------------------------------|----------------------------------------------------------------|-----------------------------------------------------------------|
| *(Dollars                in millions)*          | **Next****12                Mos.**                             | **Thereafter**                                                  | **Total** | **Next****12                Mos.** | **Thereafter** | **Total** |
| Thirty-five                basis point increase | $                 6.7       | $(17.7)                                | $(11.0)      | $(20.0)      | $                 (85.1)      | $(105.1)      |
| Thirty-five                basis point decrease | $                 2.2            | $                 33.3       | $  35.5       | $17.6        | $                85.7       | $                103.3       |
| One                hundred basis point increase | $19.2                            | $(49.8)                                | $(30.6)                     | $(11.7)                     | $(140.1)      | $(151.8)      |
| One                hundred basis point decrease | $29.3                            | $                 96.4            | $125.7       | $              47.7       | $                242.3       | $                290.0       |

| **Item                4.** | **Controls                and Procedures** |
|----------------------------|--------------------------------------------|

|   | **(a)** | **Disclosure                Controls and Procedures** |
|--------|---------|-------------------------------------------------------|

|   | **(b)** | **Internal                Control Over Financial                Reporting** |
|--------|---------|-----------------------------------------------------------------------------|

**PART      II. OTHER INFORMATION**

**Item      1A. Risk Factors**

| **Item                6.** | **Exhibits** |
|----------------------------|--------------|

|   | The                Student Loan Corporation |                                                                                              |
|--------|---------------------------------------------|---------------------------------------------------------------------------------------------------|
|   |                                        |                                                                                              |   |
|   |                                        |                                                                                              |   |
|   |                                        |                                                                                              |   |
|   |                                        |                                                                                              |   |
|   |                                        |                                                                                              |   |
|   | By                                          | /s/                Daniel P. McHugh                                                               |   |
|   |                                        | Daniel                P. McHughChief                Financial Officer and Duly Authorized Officer |
|   |                                        | (Principal                Financial Officer)                                                      |

**EXHIBIT      INDEX**

**Exhibit      **

| **Number** | **Description                of Exhibit** |
|------------|-------------------------------------------|

| 3.1 | Restated                Certificate of Incorporation of the Company, incorporated by reference                to                Exhibit 3.1 to the                Company’s 1992 Annual Report on Form 10-K (File No.                1-11616). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | By-Laws                of the Company, as amended, incorporated by reference to Exhibit                3.2 to                the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended                September 30, 1993 (File No.                1-11616). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1                * | Certification                of Principal Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| 31.2                * | Certification                of Principal Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002. |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| 32.1                * | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002. |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|