|UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|----------------------------------------------------------------------

|FORM 10-Q
|---------

X    Quarterly Report Pursuant to Section 13 or 15(d)
ofThe Securities Exchange Act of 1934

For the quarterly period ended March 31,
2004

or

    Transition Report Pursuant to Section 13 or 15(d)
ofThe Securities Exchange Act of 1934

For the transition period from    to

Commission File Number: 1-11616

THE STUDENT LOAN CORPORATION(Exact name of registrant as specified in its charter)

|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) 975-6237(Registrant's telephone
number, including area code)
|------------------------------------------------------------------

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes X       No

Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

Yes X       No

On May 5, 2004,
there were 20,000,000 shares of The Student Loan Corporation's Common Stock
outstanding.

Available on the World Wide Web at studentloan.com

Form 10-Q

|Part I                                                                                                                                                                | Financial Information | Page                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                     
|                                                                                                                                                                      | Item 1 -              | Financial Statements                                                                                                                                                                          
|                                                                                                                                                                     
|                                                                                                                                                                      |                       | Statement of Income (Unaudited) for the Three-Month Periods         Ended March 31, 2004 and 2003...............................................................................              
|                                                                                                                                                                     
|                                                                                                                                                                      |                       | Balance Sheet as of March 31, 2004 (Unaudited)         and December 31, 2003 (Audited)............................................................................                            
|                                                                                                                                                                     
|                                                                                                                                                                      |                       | Statement of Cash Flows (Unaudited) for the Three-Month Periods Ended         March 31, 2004 and 2003.........................................................................................
|                                                                                                                                                                     
|                                                                                                                                                                      |                       | Statement of Changes in Stockholders' Equity (Unaudited) for the         Three-Month Periods Ended March 31, 2004 and 2003..........................................                          
|                                                                                                                                                                     
|                                                                                                                                                                      |                       | Notes to Financial Statements (Unaudited).................................................................                                                                                    
|                                                                                                                                                                     
|                                                                                                                                                                      | Item 2 -              | Management's Discussion and Analysis of Financial Condition         and Results of Operations........................................................................................         
|                                                                                                                                                                     
|                                                                                                                                                                      | Item 3 -              | Quantitative and Qualitative Discussion About Market Risk...........................................                                                                                          
|                                                                                                                                                                     
|                                                                                                                                                                      | Item 4 -              | Controls and Procedures....................................................................................................                                                                   
|                                                                                                                                                                     
|Part II                                                                                                                                                               | Other Information     |                                                                                                                                                                                               
|                                                                                                                                                                     
|                                                                                                                                                                      | Item 6 -              | Exhibits and Reports on Form 8-K...................................................................................                                                                           
|                                                                                                                                                                     
|Signature............................................................................................................................................................ | 27                   
|                                                                                                                                                                     
|Exhibit Index......................................................................................................................................................   | 28                   
|                                                                                                                                                                     

2

|PART I. FINANCIAL INFORMATION
|-----------------------------
|                             
|Item 1. Financial Statements 

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

|                                                            | Three months ended March 31,
|----------------------------------------------------------- | ----------------------------
|                                                            | 2004                        
|
|Interest income                                             | $ 206,638                   
|Interest expense                                            | 75,586                      
|Net interest income                                         | 131,052                     
|Less: provision for loan losses                             | (2,235)                     
|Net interest income after provision for loan losses         | 128,817                     
|Fee and other income                                        | 14,046                      
|Total revenue, net                                          | 142,863                     
|                                                           
|
|Salaries and employee benefits                              | 7,510                       
|Other expenses                                              | 21,244                      
|Total operating expenses                                    | 28,754                      
|Income before income taxes                                  | 114,109                     
|Income taxes                                                | 41,249                      
|$  72,860                                                   | $  61,527                   
|                                                           
|$  18,000                                                   | $  15,400                   
|                                                           
|
|
|(based on 20 million average shares outstanding)            | $      3.64                 
|                                                           
|$      0.90                                                 | $      0.77                 
|                                                           
|
|Net interest margin                                         | 2.22%                       
|Operating expenses as a percentage of average student loans | 0.49%                       
|Return on Average Equity                                    | 30.53%                      
|                                                           

See accompanying notes to financial statements.

3

|THE STUDENT LOAN CORPORATION
|----------------------------
|BALANCE SHEET               
|(Dollars in thousands)      
|                            
|                            

|                                                                       | March 31,      | December 31,
|---------------------------------------------------------------------- | -------------- | ------------
|                                                                       | 2004           | 2003        
|                                                                       | (Unaudited)    | (Audited)   
|
|Student loans                                                          | $ 20,451,298   | $ 20,285,596
|Less: allowance for loan losses                                        | (5,145)        | (4,835)     
|Student loans, net                                                     | 20,446,153     | 20,280,761  
|Loans available for sale                                               | 3,359,584      | 2,939,756   
|Cash                                                                   | 571            | 476         
|Other assets                                                           | 497,536        | 482,913     
|                                                                      
|$ 24,303,844                                                           | $
  23,703,906
|                                                                      
|                                                                      
|
|Short-term borrowings                                                  | $ 13,448,800   | $ 9,973,100 
|Long-term borrowings                                                   | 9,450,000      | 12,350,000  
|Payable to principal stockholder                                       | 4,504          | 4,897       
|Deferred income taxes                                                  | 135,263        | 129,376     
|Other liabilities                                                      | 273,475        | 315,209     
|                                                                      
|Total
      Liabilities                                                | 23,312,042     | 22,772,582  
|                                                                      
|Common stock, $.01 par value;
      authorized 50,000,000             
|shares; 20,000,000
      shares issued and outstanding                 | 200            | 200         
|Additional paid-in capital                                             | 136,020        | 135,934     
|Retained earnings                                                      | 841,606        | 786,746     
|Accumulated other changes in equity
      from nonowner        sources | 13,976         | 8,444       
|                                                                      
|Total Stockholders'
      Equity                                       | 991,802        | 931,324     
|                                                                      
|$ 24,303,844                                                           | $ 23,703,906  
|                                                                      
|                                                                      
|$ 23,728,658                                                           | $ 22,274,671  
|(year-to-date)                                                        
|                                                                      

See accompanying notes to financial statements.

4

|THE STUDENT LOAN
  CORPORATION
|------------------------------
|STATEMENT OF CASH FLOWS       
|(Dollars in thousands)        
|(Unaudited)                   

|                                                              | Three months ended
|------------------------------------------------------------- | ------------------
|                                                              | March 31,         
|                                                              | 2004              
|Cash flows from operating activities:                        
|Net income                                                    | $     72,860      
|Adjustments to reconcile net income to                       
|net cash from operating
    activities:                      
|Depreciation and amortization                                 | 29,482            
|Provision for loan losses                                     | 2,235             
|Deferred tax provison                                         | 2,543             
|Gain on sale of loan assets                                   | (8,137)           
|Decrease/(increase) in accrued interest receivable            | 1,781             
|(Increase)/decrease in other assets                           | (2,093)           
|Decrease in other liabilities                                 | (41,368)          
|Net cash provided by operating activities                     | 57,303            
|                                                             
|Cash flows from investing activities:                        
|Disbursements of loans                                        | (1,074,083)       
|Loan portfolio purchases                                      | (713,796)         
|Loan purchases available for
    sale                         | (389,997)         
|Loan reductions                                               | 1,089,554         
|Net increase in loan origination and purchase costs           | (50,968)          
|Proceeds from sale of loan assets                             | 532,184           
|Capital expenditures on equipment
      and computer software | (7,802)           
|Net cash used in investing activities                         | (614,908)         
|                                                             
|Cash flows from financing activities:                        
|Net increase/(decrease) in borrowings
      with original    
|maturities of one
      year or less                          | 3,375,700         
|Proceeds from long-term
    borrowings                        | -                 
|Repayments of long-term borrowings                            | (2,800,000)       
|Dividends paid to stockholders                                | (18,000)          
|Net cash provided by financing activities                     | 557,700           
|                                                             
|Net increase/(decrease) in cash                               | 95                
|Cash - beginning of period                                    | 476               
|                                                             
|Cash - end of period                                          | $        
571     
|                                                             
|Supplemental disclosure of cash flow
      information:      
|Cash paid for:                                               
|Interest                                                      | $  128,267        
|Income taxes
      paid                                       | $    29,198       

See accompanying notes to financial statements.

5

|THE STUDENT LOAN
  CORPORATION                  
|------------------------------------------------
|STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY    
|(Dollars in thousands, except per share amounts)
|(Unaudited)                                     
|                                                
|                                                
|                                                

|                                                                       | Three months ended
|---------------------------------------------------------------------- | ------------------
|                                                                       | March 31,         
|                                                                       | 2004              
|COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL                           
|Balance, beginning of period                                           | $ 136,134         
|Other                                                                  | 86                
|Balance, end of period                                                 | $ 136,220         
|                                                                      
|RETAINED EARNINGS                                                     
|Balance, beginning of period                                           | $ 786,746         
|Net income                                                             | 72,860            
|Common dividends declared, $0.90
      per common share in 2004;       |                   
|$0.77 per common share in 2003                                         | (18,000)          
|Balance, end of period                                                 | $ 841,606         
|                                                                      
|ACCUMULATED OTHER CHANGES IN EQUITY FROM NONOWNER
      SOURCES       
|Balance, beginning of period                                           | $     8,444       
|Net change in cash flow hedges,
      net of taxes of $276 in 2004 and |                   
|$2,336 in 2003                                                         | 396               
|Net change in unrealized gains on investment securities,               |                   
|net of taxes of $3,067 in 2004 and $2,675 in 2003                      | 5,136             
|Balance, end of period                                                 | $   13,976        
|                                                                      
|TOTAL STOCKHOLDERS' EQUITY                                             | $ 991,802         
|                                                                      
|SUMMARY OF CHANGES IN EQUITY FROM NONOWNER SOURCES                    
|Net income                                                             | $   72,860        
|Changes in equity from nonowner sources, net of taxes                  | 5,532             
|Total changes in equity from nonowner sources                          | $   78,392        

See accompanying notes to financial
statements.

6

THE STUDENT LOAN CORPORATIONNotes to Financial Statements
(Unaudited)March 31, 2004

1.       Significant
Accounting Policies

Interim
Financial Information

| | The
financial information of The Student Loan Corporation (the Company) as of March
31, 2004 and for the three-month periods ended March 31, 2004 and 2003 is
unaudited and includes all adjustments (consisting of normal recurring accruals)
which, in the opinion of management, are necessary to state fairly the
Companys financial position and results of operations in conformity with
accounting principles generally accepted in the United States of America. The
results for the three-month period ended March 31, 2004 may not be indicative of
the results for the full year ended December 31, 2004.The accompanying
financial statements should be read in conjunction with the financial statements
and related notes included in the Companys 2003 Annual Report and Form
10-K.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Certain
amounts in the prior years financial statements have been reclassified to
conform with the current years presentation. Such reclassifications had no
effect on the results of operations as previously reported.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Use of Estimates

| | The
preparation of the financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the balance sheet date and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenue Recognition

| | Revenues,
which include net interest, fees, and gains on loans securitized, if any, are
recognized as they are earned. Interest income may include special allowance
payments and other interest subsidies made by the federal government as
prescribed under the Federal Higher Education Act of 1965, as amended (the Act).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Most Federal Family Education Loan (FFEL) Program premiums and discounts on loan portfolio purchases and loan
origination and lender fees paid on disbursements are deferred and amortized to
interest income on a level yield basis over the expected weighted average life
of the student loans in those portfolios on a pool basis. Most deferred fees for
CitiAssist Loans are amortized over contractual life on a loan level basis. The
expected weighted average life of FFEL Program loans is determined by analyzing
market and borrower interest rates, customer prepayments and guarantor payments
received through the claims process. Expected life, which is initially
determined and may be subsequently revised, may be different from one portfolio
to another based upon loan type, year of origination or purchase or other
factors. Therefore, different lives are used for different portfolio types based
upon these underlying loan characteristics and historical performance. The
expected weighted average lives of these loans are reviewed periodically and
compared to actual loan run off. If the actual loan run off is different from
the anticipated prepayments reflected in the amortization tables, the Company
makes a current period adjustment to interest income to arrive at the investment
balance that would have been remaining had the new effective yield been applied
since loan inception and the amortization rates for future periods are
appropriately adjusted.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

Loans

| | Loans
primarily consist of student loans originated under the FFEL Program authorized by the U.S. Department of Education (the
Department) under the Act, and are insured by guaranty agencies (guarantors).  The Company's FFEL Program loan portfolio
is composed of subsidized Federal Stafford, unsubsidized Federal Stafford, Federal Parent Loans to Undergraduate Students (PLUS)
and Federal Consolidation Loans. The Company also has an inventory of student loans available for sale, consisting of both Federal Consolidation Loans acquired through third party marketing relationships and loans consolidated internally.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Student loan interest, inclusive of special allowance payments, if any, is
recognized as it is earned. Federally mandated loan origination or lender fees
paid on disbursements, as well as other loan origination costs and premiums and
discounts on loan portfolio purchases, are deferred and amortized to interest
income on a level yield basis over the expected weighted average lives of the
student loans in those portfolios. The determination of the expected weighted
average life is based upon a consideration of a variety of factors, including
customer prepayments and guarantor payments received through the claims process.
See Revenue Recognition.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company also has a portfolio of alternative loans, primarily CitiAssist Loans.
Generally, such loans are insured against loss by private insurers or are
covered under risk-sharing agreements with creditworthy universities.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Allowance for Loan Losses

| | Allowance
for loan losses provides a reserve for estimated losses on: (1) the externally
serviced portions of the FFEL Program loan portfolio under the risk-sharing
provisions of the Act, which generally provide for lender risk-sharing of 2% of
the principal and accrued interest on default claims paid and (2) the CitiAssist
Loan portfolio, after taking into consideration the risk-sharing provisions of
the credit risk insurance obtained from third parties, if any, and/or other
risk-sharing agreements with third parties. Amounts of estimated potential
future losses are expensed currently and actual losses are charged off against
the reserve as they occur.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2003, the Company was designated as an Exceptional Performer by the Department
in recognition of its exceptional level of performance in servicing FFEL Program
loans. As a result of this designation, the Company receives 100% reimbursement
on all eligible FFEL Program default claims submitted for reimbursement after
December 31, 2003, and the Company is not subject to the 2% risk-sharing loss
for eligible claims submitted after that date. Only FFEL Program loans that are
serviced by the Company are subject to this designation.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
allowance is established based on estimates of probable losses inherent in the
externally serviced FFEL Program and CitiAssist Loan portfolios and is
determined through various statistical analyses. These include migration
analyses, in which historical delinquency and credit loss experience is applied
to the current aging of the portfolio, together with analyses that reflect
current trends and conditions. The estimated losses (net of any third party risk-sharing) are subject to
inclusion in the allowance for loan losses when the student loans reach 30 days of delinquency. Actual losses, including those that arise from claims with
guarantors and private insurers, are charged against the allowance as they
occur.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Student Loan
Securitizations

| | The
Company accounts for its securitization transactions in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 140,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement of FASB Statement No. 125".
Under the Companys program to securitize student loans, the loans are
removed from the financial statements of the Company and ultimately sold to
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

| | an
independent trust. In turn, the trust sells securities, backed by the student
loan assets, to outside investors. Since  the securitizations meet the SFAS No.
140 criteria for sale recognition, and the trust qualifies as a qualifying special purpose entity, gains or losses on the sale of the student loans are
recorded at the time of securitization and
  the financial statements of the trust
are not consolidated with those of the Company. Gains or losses are reflective of the difference between the carrying value of the assets sold to the trust and
the fair value of the assets received, which are composed of cash proceeds and the interests retained in the loans securitized.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
retained interests from securitizations are accounted for as investments in
available-for-sale securities and are included in other assets. The retained
interests are carried at their estimated fair value at the balance sheet date.
Changes in fair value are recorded net of applicable income taxes in accumulated
other changes in equity from nonowner sources. Interest earned on the retained
interest is recorded on the effective yield basis. Changes in expected future
cash flows are reflected in the yield on a prospective basis. The retained
interest is regularly reviewed for impairment and other-than-temporary impairment, if any, is
recognized as a charge to earnings when identified. The initial value of the
retained interest is determined by allocating the carrying value of the loans
securitized between assets sold and the interest retained based on their
relative fair values at the securitization date. Initial and subsequent
measurements of the fair value of the retained interest are performed using a
discounted cash flow model.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Loans
Available for Sale

| | Loans
available for sale are primarily those loans originated or purchased by the
Company for future securitization and are recorded at the lower of cost or
market value.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Hedging Transactions

| | The
Company manages its exposure to market interest rates by entering into interest
rate swap agreements on portions of its portfolio. The Company accounts for its
interest rate swap agreements in accordance with the provisions of SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as
amended, which requires that all derivatives be recorded at fair value on the
balance sheet. Fair value is determined by discounting the cash flows using
market interest rates through the contractual maturity dates. These derivatives,
which have been designated and are effective as cash flow hedges, are recorded
as either other assets or other liabilities, depending on whether the fair value
of the derivative is a net gain or a net loss. The hedge relationship is
formally documented at inception detailing the risk management objective, the
risk being hedged and how effectiveness is assessed. To the extent these
derivatives are not effective, changes in their fair values representing the
ineffectiveness are included in other revenue as incurred. To the extent the
derivatives are effective and exactly match the variability of the cash flow
being hedged, changes in their fair values are not reflected in current
earnings, but are recorded net of taxes in the accumulated other changes in
equity from nonowner sources component of stockholders equity. These
changes in fair value will be included in earnings of future periods when
earnings are also affected by the variability of the hedged cash flows. Accrued
interest receivable or payable related to the interest rate swap agreements is
recorded in interest expense.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.       Accounting Changes

| | Effective January 1, 2004, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities (revised December 2003)
(FIN 46-R), which includes substantial changes from the original FIN 46. Included in these changes,
the calculation of expected losses and expected residual returns has been altered to reduce the impact of decision
maker and guarantee fees in the calculation of expected residual returns and expected losses.  In addition,
the definition of a variable interest has been changed in
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

| | the revised guidance. FIN 46 and FIN 46-R change the method of
determining whether certain entities, including securitization entities, should be included in consolidated financial statements.
An entity is subject to FIN 46 and is called a VIE if it has: (1)
equity that is insufficient to permit the entity to finance its activities
without additional subordinated financial support from other parties, or (2)
equity investors that cannot make significant decisions about the entitys
operations, or that do not absorb the expected losses or receive the expected
returns of the entity. A VIE is consolidated by its primary beneficiary, which
is the party involved with the VIE that absorbs a majority of the expected
losses, receives a majority of the expected residual returns, or both. Certain
entities, including transferors to qualifying special-purpose entities (QSPEs) meeting the reporting requirements of SFAS No. 140, are specifically exempted
from the scope of FIN 46. Since the Companys securitizations use trust
arrangements that meet the QSPE conditions of SFAS No. 140, its QSPEs
financial statements are not consolidated with the financial statements of the
Company. The Company has no other structures that qualify as VIEs. The  provisions of FIN 46 applied immediately to variable
interest entities (VIEs) created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after
that date. In October 2003, the FASB announced that the effective date of FIN 46 was deferred from July 1, 2003 to periods ending after December 31, 2003
for VIEs created prior to February 1, 2003. The Company elected to adopt the provisions of FIN 46 in the third quarter of 2003. The impact of the adoptions of FIN 46 and FIN 46-R
were not material to the Companys financial condition or
results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3.       Related Party
Transactions

| | Citibank,
N.A. (CBNA), an indirect wholly owned subsidiary of Citigroup Inc., owns 80% of
the outstanding common stock of the Company. A number of significant
transactions are carried out between the Company and Citigroup and its
affiliates.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys loan portfolio primarily consists of student loans originated
under the FFEL Program through a trust agreement with CBNA. The majority of the
Companys loan originations and servicing is performed through the
provisions of intercompany agreements with affiliates of Citigroup. Expenses
related to these agreements were $7.3 million and $7.9 million for the
three-month periods ended March 31, 2004 and 2003, respectively. In addition,
the Company recorded loan origination and servicing revenue of $3.4 million and
$2.8 million for the first three months of 2004 and 2003, respectively, for work
performed by the Company on CitiAssist Loans held by the Companys majority
shareholder prior to purchase by the Company.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company had outstanding short- and long-term unsecured borrowings with CBNA,
pursuant to the terms of an Omnibus Credit Agreement, of $13.4 billion and $9.5
billion, respectively, at March 31, 2004 and $10.0 billion and $12.3 billion,
respectively, at December 31, 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
March 31, 2004 and 2003, the total outstanding borrowings had contracted
weighted average interest rates of 1.3% and 1.8%, respectively, based on LIBOR
at the time the borrowings were established or rates reset. For the three-month
periods ended March 31, 2004 and 2003, the Company incurred $75.1 million and
$93.4 million, respectively, in interest expense payable to the Companys
majority shareholder related to these borrowings.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has a number of interest rate swap agreements outstanding with a
subsidiary of Citigroup. At March 31, 2004, the agreements had notional amounts
totaling $1.6 billion and remaining contractual terms of between three and nine
months. For the three-month periods ended March 31, 2004 and 2003, the Company
realized $0.5 million and $3.6 million, respectively, in interest expense
related to these swap agreements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, Citigroup and its subsidiaries engage in other transactions and
servicing activities with the Company, including cash management, data
processing, income tax payments, loan servicing, employee benefits, payroll
administration and facilities management. Also, certain of the Companys
employees perform services on behalf of
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

| | other Citigroup entities, which are
unrelated to the business of education financing, and for which the Company receives compensation. Management believes that the terms under which these
transactions and services are
 provided are, in the aggregate, no less favorable to the Company than those that could be obtained from third parties.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4.       Interest Rate
Swap Agreements

| | The
Companys overall risk management strategy includes utilizing interest rate
swap agreements to manage its exposure to interest rate variability between the
rates paid on its borrowings (based on LIBOR) and received on its
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | loan assets
(based either on the 91-day Treasury Bill rate or the 90-day Commercial Paper
rate). In order to reduce this basis risk, the Company has entered into interest
rate swap agreements on portions of its portfolio. Management expects the
Companys hedge program to be effective in offsetting changes in cash flows
for the risk being hedged and is in compliance with the hedge accounting
requirements of SFAS No. 133, as amended.
At
March 31, 2004, the Company had a number of interest rate swap agreements
outstanding with CBNA to receive payments based on LIBOR and make payments based
on the 91-day Treasury Bill rate. These agreements, which have been designated
and are effective as cash flow hedges, had notional amounts totaling $1.6
billion and $3.0 billion at March 31, 2004 and December 31, 2003, respectively. At March 31,
2004, the contractual terms remaining on these agreements were for periods of
between three and nine months. Swap agreements with notional amounts totaling
$1.4 billion matured in January 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the swaps at March 31, 2004 and December 31, 2003 were liabilities
of $0.9 million and $1.6 million, respectively, and are reflected in other
liabilities on the balance sheet with corresponding amounts, net of taxes of
$0.3 million and $0.6 million, respectively, reflected in the accumulated other
changes in equity from nonowner sources component of stockholders equity.
Substantially all of this March 31, 2004 balance in accumulated other changes in
equity from nonowner sources is expected to be reclassified into earnings within
the next twelve months. No amounts have been excluded from the assessment of
effectiveness and no hedge ineffectiveness has been recognized in earnings
pursuant to these swap agreements. Net amounts reclassified from accumulated
other changes in equity from nonowner sources are reported in interest expense.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accumulated
other changes in equity from nonowner sources from cash flow hedges, net of
taxes, are summarized as follows for the three-month periods ended March 31,
2004 and 2003:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(Dollars in thousands)                                                                          | 2004        | 2003      
|----------------------------------------------------------------------------------------------- | ----------- | ----------
|                                                                                                |             |           
|Balance at beginning of year                                                                    | $     (959) | $  (7,010)
|Net unrealized gain from cash flow hedges (net of taxes of $84 for 2004 and      $809 for 2003) | 121         | 1,119     
|Net amounts reclassified to earnings (net of taxes of $192 for 2004 and      $1,527 for 2003)   | 275         | 2,114     
|                                                                                                |             |           
|Ending balance                                                                                  | $    (563)  | $ (3,777) 
|                                                                                                |             |           

5.      Commitments and
Contingencies

| | In
the ordinary course of business, the Company is involved in various litigation
proceedings incidental to and typical of the business in which it is engaged. In
the opinion of the Companys management, the ultimate resolution of these
proceedings would not be likely to have a material adverse effect on the results
of the Companys operations, financial condition or liquidity.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

6.      Student Loan
Securitization

| | In
2002, the Company commenced a program to securitize certain portfolios of FFEL
Program student loan assets.
 The Company accounts for its securitization
transactions in accordance with the provisions of SFAS No. 140. Under the
Companys program to securitize student loans, the loans are removed from
the financial statements of the Company and ultimately sold to an independent
trust. In turn, the trust, sells debt securities, backed by the student loan
assets, to outside investors. During 2003 and the first quarter of 2004, the
Company did not enter into any new securitizations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
March 31, 2004 and December 31, 2003, approximately $406.1 million and $414.5
million, respectively, of student loan assets were held by the trust. At March
31, 2004 and December 31, 2003, the Company had retained interests in the assets
securitized of approximately $40.7 million and $28.7 million, respectively,
recorded at fair value. The Company accounts for the retained interests as
investments in available-for-sale securities and records them in other assets in
the financial statements. At March 31, 2004, the Company had an unrealized
holding gain on its retained interests of $14.5 million, which is net of taxes
of $9.3 million, recorded in accumulated other changes in equity from nonowner
sources. Of this unrealized gain, $5.1 million, net of taxes, was recorded in
the first quarter of 2004. The $12.0 million growth in fair value of the
retained interest from December 31, 2003 to March 31, 2004 was attributable to
a change in assumptions used in determining the estimated cash flows.
Interest income of $3.9 million and $0.1 million was accreted on the retained
interest in the first three months of 2004 and 2003, respectively.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | After
securitization, the Company continues to provide servicing for the loans sold to
the trust. As a result, the Company earns administrative and servicing fees on
the securitized portfolio. For the quarters ended March 31, 2004 and 2003, the
Company received cash flows of $0.1 million and $0.2 million, respectively, for
loan servicing and administrative fees as the master servicer. Failure to
service the loans in accordance with contractual obligations could lead to a
termination of the servicing rights and the loss of future servicing revenue. As
a result, the Company considers both the securitized and unsecuritized student
loans to be part of the business it manages.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | There
were no receivables due from the trust or payables due to the trust at March 31,
2004. At March 31, 2003, there were receivables of $0.02 million due from the
trust and no amounts were due to the trust. During the quarter ended March 31,
2004, the trust paid $1.1 million in note interest to third party investors.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
required by SFAS No. 140, the effect of two negative changes in each of the key
assumptions used to determine the fair value of the retained interests are
disclosed. The negative effect of the change in each assumption must be
calculated independently, holding all other assumptions constant. Because the
key assumptions may not be independent, the net effect of simultaneous adverse
changes in the key assumptions may be different from the sum of the individual
effects shown below.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
key assumptions used to value the retained interests were as follows:

|                                                     | March 31, 2004 | December 31, 2003
|---------------------------------------------------- | -------------- | -----------------
|                                                     |                |                  
|Discount rate                                        | 10.0%          | 7.0%             
|Constant prepayment rate                             | 4.0%           | 3.0%             
|Anticipated net credit losses                        | 0.10%          | 0.24%            
|Basis spread between LIBOR and Commercial Paper rate | 0.10%          | 0.18%            
|                                                     |                |                  

12

| | The change in the discount rate assumption was due to the increased variability of cash flows. Changes to prepayment rate, net credit losses and basis spread assumptions were made in
consideration of actual results.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
sensitivities of the fair value of the retained interests to adverse changes in
the key assumptions were as follows:
| | ------------------------------------------------------------------------------------------------------------------------

|(Dollars in thousands)               | March 31, 2004            | December 31, 2003        
|------------------------------------ | ------------------------- | -------------------------
|                                     |                           |                          
|Carrying value of retained interests | $                40,733   | $                28,672  
|                                     |                           |                          
|Discount rate                        | 10.0%                     | 7.0%                     
|+10%                                 | $                (910.8)  | $                (818.7) 
|+20%                                 | $             (1,806.1)   | $             (1,589.6)  
|                                    
|Constant prepayment rate             | 4.0%                      | 3.0%                     
|+10%                                 | $                (243.5)  | $                (209.6) 
|+20%                                 | $                (485.3)  | $                (409.1) 
|                                    
|Anticipated net credit losses        | 0.10%                     | 0.24%                    
|+10%                                 | $                  (84.5) | $                  (42.8)
|+20%                                 | $                (169.5)  | $                  (85.8)
|                                    
|Basis spread                         | 0.10%                     | 0.18%                    
|-10%                                 | $                (130.4)  | $                (600.1) 
|-20%                                 | $                (261.2)  | $             (1,200.3)  
|                                     |                           |                          

| | These
estimates and assumptions are subject to change and, therefore, the fair values
of the retained interests as presented in the financial statements are subject
to possible impairment and may not be fully recoverable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.      Fee and Other Income

| | In the first quarter of 2004, a gain of $8.1 million was recorded in fee and other income as a result of the sale of $532
 million of student loans to a third party.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.      Future
Application of Accounting Standards

| | On
December 12, 2003, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position No. 03-3, Accounting for Certain
Loans or Debt Securities Acquired in a Transfer (SOP 03-3). SOP 03-3 is
effective for loans acquired in fiscal years beginning after December 15, 2004.
SOP 03-3 requires loans to be recorded at fair value and prohibits carrying over
valuation allowances in the initial accounting for all loans acquired in a
transfer that have evidence of deterioration in credit quality since
origination, when it is probable that the investor will be unable to collect all
contractual cash flows. Loans carried at fair value, mortgage loans held for sale, loans originated by the entity, loans that are retained interest and loans
to borrowers in good standing under revolving credit agreements are excluded
from the scope of SOP 03-3.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SOP 03-3 limits the yield that may be accreted to
the excess of the undiscounted expected cash flows over the investors
initial investment in the loan. The excess of the contractual cash flows over
expected cash flows may not be recognized as an adjustment of yield. Subsequent increases in cash flows expected to be collected are
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

| | recognized prospectively through an adjustment of the loan's yield over its remaining life. Decreases in expected cash flows are recognized as impairment.
 Adoption of SOP 03-3 is not expected to have a material impact on the Companys financial
condition or results of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

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

Critical
Accounting Policies

| | There
were no material changes to the Companys critical accounting policies
during the first quarter of 2004. The Company considers its accounting policies
on revenue recognition, allowance for loan losses, student loan securitizations,
and hedging transactions to be its critical accounting policies. For a
description of these and other significant accounting policies, see Notes 1, 4 and 6 to
the financial statements or see the Companys 2003 Annual Report and Form
10-K.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accounting Changes

| | Effective January 1, 2004, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 46, "Consolidation of
         Variable Interest Entities (revised December 2003) (FIN 46-R), which includes substantial changes from the original FIN
         46.  Included in these changes, the calculation of expected losses and expected residual returns has been altered to reduce
         the impact of decision maker and guarantor fees in the calculation of expected residual returns and expected losses.  In
         addition, the definition of a variable interest has been changed in the revised guidance.   FIN 46 and FIN 46-R change the
         method of determining whether certain entities, including securitization entities, should be included in  consolidated
         financial statements.    An entity is subject to FIN 46 and is called a VIE if it has:  (1) equity that is insufficient to
         permit the entity to finance its activities without additional subordinated financial support from other parties, or (2)
         equity investors that cannot make significant decisions about the entity's operations, or that do not absorb the expected
         losses or receive the expected returns of the entity.  A VIE is consolidated by its primary beneficiary, which is the party
         involved with the VIE that absorbs a majority of the expected losses, receives a majority of the expected residual returns,
         or both.  Certain entities, including transferors to qualifying special-purpose entities (QSPEs) meeting the reporting
         requirements of SFAS No. 140, are specifically exempted from the scope of FIN 46.  Since the Company's securitizations use
         trust arrangements that meet the QSPE conditions of SFAS No. 140, its QSPE's financial statements are not consolidated with
         the financial statements of the Company.  The Company has no other structures that qualify as VIEs. The provisions of FIN 46
         applied immediately to variable interest entities (VIEs) created after January 31, 2003, and to VIEs in which an  enterprise
         obtains an interest after that date.  In October 2003, the FASB announced that the effective date of FIN 46 was deferred
         from July 1, 2003 to periods ending after December 31, 2003 for VIEs created prior to February 1, 2003.  The Company elected
         to adopt the provisions of FIN 46 in the third quarter of 2003.  The impact of the adoptions of FIN 46 and FIN 46-R were not
         material to the Company's financial condition or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management Summary

| | The earnings of the Company are primarily dependent on the size of its net interest income, which is the difference between
         the interest received on its loan assets (based on either the 91-day Treasury Bill rate or the 90-day Commercial Paper rate)
         and the interest paid on its borrowings (based on LIBOR).  Net interest income may be impacted by the current interest rate
         environment and, especially, by uneven interest rate shifts between the 91-day Treasury Bill rate and LIBOR.  The Company
         manages these risks by entering into interest rate swap agreements on portions of its portfolio and regularly monitoring and
         acting upon fluctuations in the interest rate curves. In declining short-term rate environments, net interest income may
         also be significantly impacted by floor income, which is generated when the Company's cost of funds declines while borrower
         and government subsidized interest rates remain fixed at the annual reset rate, yielding net interest income in excess of
         the minimum expected spread.  Also, although the rate at which borrowers pay interest on Federal Consolidation Loans is
         generally fixed and is not subject to the annual reset provisions, a decline in the Company's cost of funds during the term
         of such loans
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

| | could contribute significantly to floor income.  Floor income will decline in periods of increasing interest
         rates.  A gradual increase in interest rates is expected over the next several years.  Management expects that this interest
         rate increase will result in reduced floor income in 2004 and future years. See the definition of floor income in Special
         Allowance and Floor Income on page 21.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In recent years, the growth in net interest income has been primarily attributable to increases in floor income.  Floor income will decline
in periods of higher interest rates and is affected by the overall level of interest rates between reset dates.  The Company
has entered into loan commitments at implied current forward rates that lock in floor income for a periods of up to
one year.  Growth in net interest income may also be attributable to portfolio growth.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In addition to floor income and portfolio growth, the Company's earnings can also be impacted by the number and size of
         securitizations, loan servicing costs, and the results of the Company's hedging activities. Other factors that may impact
         earnings are applicable laws and regulations, prepayment rates on student loans including those resulting from student loan
         consolidations, financing options available to students and their parents and competitors' initiatives.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Certain of the above statements are forward-looking statements within the meaning of the Private Securities Litigation
         Reform Act.  See Forward-Looking Statements on page 22.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial Condition

| | Citibank,
N.A. (CBNA), an indirect wholly owned subsidiary of Citigroup, Inc. (Citigroup),
owns 80% of the outstanding common stock of the Company.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | At
March 31, 2004, the Companys student loan assets were composed of a $20.4
billion portfolio of loans held and a $3.4 billion inventory of loans available
for sale. The combined $23.8 billion of loan assets, composed primarily of loans
originated under the Federal Family Education Loan (FFEL) Program, increased by
$0.6 billion (3%) from $23.2 billion at December 31, 2003. This growth was
attributable to FFEL Program loan disbursements totaling $1,074 million and loan
purchases of $1,104 million in the first three months of 2004, partially offset
by $1,090 million in loan reductions (attributable primarily to borrower
principal payments, loan consolidations and claims paid by guarantors), loan
portfolio sales of $532 million, and other adjustments of $30 million. During
the first quarter of 2003, the Company had FFEL Program loan disbursements of
$913 million, loan purchases of $1,364 million, loan reductions of $1,058
million and other adjustments of $32 million.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Loan Activity

| | The
Companys loan disbursements and loan commitments to finance education for
the first three months of 2004 and 2003 are presented below:
| | -------------------------------------------------------------------------------------------------------------------------------------------

|(Dollars in millions) | 2004 | 2003 | Difference | %
Change
|--------------------- | ---- | ---- | ---------- | --------
|                      |      |      |            |         

|FFEL Program Stafford and PLUS Loan     disbursements | $1,074 | $     913 | $  161 | 18%
|----------------------------------------------------- | ------ | --------- | ------ | ---
|CitiAssist Loans under commitments to     purchase    | 465*   | 377*      | 88     | 23%
|                                                      |        |           |        |    
|Total loan disbursements and commitments              | $1,539 | $1,290    | $  249 | 19%
|                                                      |        |           |        |    

16

*
These disbursements are originated and disbursed by CBNA and are committed by the Company for future             purchase.

| | The
$161 million increase in loan disbursements for the first quarter of 2004,
compared to the same period last year, is primarily attributable to ongoing
sales and electronic commerce initiatives.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
order to comply with certain regulatory requirements, CitiAssist Loans are
originated by CBNA through an intercompany agreement. Following full
disbursement, the Company purchases all qualified CitiAssist Loans at
CBNAs carrying value at the time of purchase, plus contractual fees.
CitiAssist Loans are originated through an alternative loan program and do not
carry federal government guarantees. As of March 31, 2004, there were CitiAssist Loans of
$610 million to be purchased from CBNA, that had been disbursed by CBNA in the first quarter of 2004
and prior periods.  These loans are not included in the Companys March 31, 2004 loan
portfolio.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys secondary market and other loan procurement activities for the
first three months of 2004 and 2003 are presented in the table below:
| | --------------------------------------------------------------------------------------------------------------------------------------------------

|(Dollars in millions) | 2004 | 2003 | Difference | %
Change
|--------------------- | ---- | ---- | ---------- | --------
|                      |      |      |            |         

|FFEL Program Consolidation Loan volume | $   648 | $1,026 | $ (378) | (37)%
|-------------------------------------- | ------- | ------ | ------- | -----
|CitiAssist Loan purchases              | 369     | 306    | 63      | 21%  
|Other loan purchases                   | 87      | 32     | 55      | 172% 
|                                       |         |        |         |      
|Total loan purchases                   | $1,104  | $1,364 | $ (260) | (19)%
|                                       |         |        |         |      

| | From
time to time, the Company makes student loan purchases. For the first three
months of 2004, the Companys loan purchases decreased by $260 million
compared to the same period last year. The decrease in loan purchases is
primarily attributable to a decrease in Consolidation Loan volume.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Federal Consolidation Loans were purchased primarily for the Companys
available for sale inventory, which was established to create a portfolio of
loans available for future securitization. The size of the available for sale
portfolio is dependent upon the needs of the securitization program. The
Companys participation in securitization and secondary market loan
activities is dependent upon market conditions. Of the Consolidation Loan volume
presented in the table above, $294 million and $328 million for the first
quarters of 2004 and 2003, respectively, were consolidations of federally
guaranteed student loans already held in the Companys loan portfolios. For
the first three months of 2004, the Companys student loan purchases
included $714 million purchased for its portfolio and $390 million purchased for
its resale inventory. During the quarter ended March 31, 2003, the Company
purchased $810 million of student loans for its portfolio and $554 million for
its resale inventory.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securitization Activity

| | In
2002, the Company commenced a program to securitize certain portfolios of FFEL
Program student loan assets. The Company accounts for its securitization
transactions in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, a replacement
of FASB Statement No. 125". Under the Companys program to securitize
student loans, the loans are sold, through a wholly owned special purpose
subsidiary, to an independent trust that was established for that purpose. The
trust, in turn, sells debt securities, backed by the student loan assets, to
outside investors. During 2003 and the first quarter of 2004, the Company did
not enter into any new securitizations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

| | At
March 31, 2004 and December 31, 2003, approximately $406.1 million and $414.5
million, respectively, of student loan assets were held by the trust. At March
31, 2004 and December 31, 2003, the Company had retained interests in the assets
securitized of approximately $40.7 million and $28.7 million, respectively,
recorded at fair value. The $12.0 million increase in fair value of the retained interest from
December 31, 2003 to March 31, 2004 was attributable to a change in assumptions used in determining
the estimated cash flows. The Company accounts for the retained interests as
investments in available-for-sale securities and records
them in other assets in the financial statements. At March 31, 2004, the Company had an unrealized
holding gain on its retained interests of $14.5 million, which is net of taxes
of $9.3 million, recorded in accumulated other changes in equity from nonowner
sources. Of this unrealized gain, $5.1 million, net of taxes, was recorded in
the first quarter of 2004, reflecting an increase in expected future cash flows.
Interest income of $3.9 million and $0.1 million was accreted on the retained interest in the first three months of
2004 and 2003, respectively. The increase in interest income accreted for the first quarter
of 2004 was primarily attributable to the change in assumptions used in determining the estimated cash flows, mentioned above.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company has retained the servicing relationship on the transferred portfolios
and receives servicing and administrative fees from the trust. Failure to
service the loans in accordance with contractual obligations could lead to a
termination of the servicing rights and the loss of future servicing revenue. The Company received cash flows of $0.1 million and $0.2 million from the trust
during the first three months of 2004 and 2003, respectively, for loan servicing
and administrative fees as the master servicer. See Note 6 to the financial
statements for further information on the Companys securitizations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Rate Swap Agreements

| | To
better match the interest rate characteristics of its borrowings with its loan
assets, the Company, from time to time, enters into interest rate swap
agreements on portions of its portfolio. The swap agreements are intended to
reduce the basis risk caused by differences between the Companys borrowing
rates (based on LIBOR) and the student loan lending rates (based either on the
91-day Treasury Bill rate or the 90-day Commercial Paper rate). The
Companys hedges are in compliance with the hedge accounting provisions of
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, and management expects the Companys hedge
program to be effective in offsetting changes in cash flows for the risk being
hedged.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
March 31, 2004, the Company had a number of interest rate swap agreements
outstanding with CBNA to receive payments based on LIBOR and make payments based
on the 91-day Treasury Bill rate. These agreements, which have been designated
and are effective as cash flow hedges, have notional amounts totaling $1.6
billion and $3.0 billion at March 31, 2004 and December 31, 2003, respectively.
Swap agreements with notional amounts of $1.4 billion matured in January 2004.
At March 31, 2004, the contractual terms remaining on these agreements were for
periods of between three and nine months.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the swaps at March 31, 2004 and December 31, 2003 were liabilities
of $0.9 million and $1.6 million, respectively, and are reflected in other
liabilities on the balance sheet with corresponding amounts, net of taxes of
$0.3 million and $0.6 million, respectively, reflected in the accumulated other
changes in equity from nonowner sources component of stockholders equity.
Substantially all of this balance in accumulated other changes in equity from
nonowner sources is expected to be reclassified into earnings within the next
twelve months. No amounts have been excluded from the assessment of
effectiveness and no hedge ineffectiveness has been recognized in earnings
pursuant to these swap agreements. For additional information on the
Companys interest rate swap agreements, see Note 4 to the financial
statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

Taxes

| | Pursuant
to federal tax regulations, the Company has elected to be included in the
consolidated federal income tax return of Citigroup, and is also included in
certain combined or unitary state/local income or franchise tax returns of
Citicorp/Citigroup or its subsidiaries. In the first three months of 2004, the
Company paid income taxes, net of refunds, of $29 million, primarily pursuant to
a tax-sharing agreement with its majority shareholder, compared to
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | $61 million
paid in the same period last year. The decrease in taxes paid is primarily
attributable to the timing of the majority owners requests for tax
payments and is not reflective of any significant changes in the tax provision.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Borrowings

| | The
Companys short- and long-term debt was procured primarily through the
Omnibus Credit Agreement with its majority shareholder, which provides for a
maximum aggregate credit limit of $25 billion. Total short- and long-term
borrowings of $22.9 billion at March 31, 2004 increased $576 million compared to
year-end 2003. New short-term borrowings of $3.4 billion included $2.8 billion
of debt that matured and was replaced with new borrowings in the first quarter
of 2004 as well as $0.6 billion of additional borrowings used to fund
new loan originations and purchases. Also impacting the debt structure was a
$2.9 million reclassification of maturing long-term borrowings to short-term
borrowings.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
March 31, 2004 and 2003, the total outstanding borrowings had weighted average
interest rates of 1.3% and 1.8%, respectively, based on LIBOR at the time the
borrowings were established or rates reset. For the three-month periods ended
March 31, 2004 and 2003, the Company incurred $75.1 million and $93.4 million,
respectively, in interest expense payable to its majority shareholder related to
these borrowings. The $18.3 million decrease in interest expense was primarily
attributable to the decline in interest rates. During the first three months of
2004, the Company made $128.3 million in interest payments, compared to $133.1
million for the same period in 2003. The difference in interest payments between
the two periods resulted primarily from differences in the contractual interest
due dates and the lower interest rates on the Companys borrowings.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends

| | The
Company paid a quarterly dividend of $0.90 per common share on March 1, 2004. On
April 15, 2004, the Board of Directors declared a regular quarterly dividend on
the Companys common stock of $0.90 per share to be paid June 1, 2004 to
stockholders of record on May 14, 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of Operations

Quarter Ended March 31, 2004

| | Net
income was $72.9 million ($3.64 basic and diluted earnings per share) for the
first quarter of 2004. This was an increase of $11.3 million (18%) compared to
earnings for the same period last year. The improvement is primarily
attributable to portfolio growth of 9% over the previous twelve months and
increased floor income earned on both Consolidation and Stafford Loan assets.
First quarter 2004 net income also benefited from an $8.1 million pretax
gain, booked in fee and other income, that resulted from the sale of $532
million of student loans. The gain was partially offset by a $6.5 million pretax
deferred fee amortization charge that resulted from changes in prospective
prepayment speeds related to student loan consolidations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Changes
in prospective prepayment speeds occur when actual loan run off occurs at rates
that are different from the anticipated prepayments reflected in the
amortization tables. When this occurs, the Company makes a current
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

| | period
adjustment to interest income in order to arrive at the investment balance that
would have been remaining had the new effective yield been applied since loan
inception and the amortization rates for future periods are appropriately
adjusted.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue
of $142.9 million for the first quarter of 2004 was $19.4 million (16%) higher
than revenue for the same period of 2003. The net interest margin for the first
quarter of 2004 was 2.22%, down 8 basis points from 2.30%
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | for the same period of
2003. However, net interest income grew by $9.9 million. The increase in net
interest income was primarily attributable to portfolio growth and increased floor income resulting
from the Companys ability to take advantage of favorable funding
opportunities, as well as $3.9 million of interest income accreted on the
Companys retained interest investments, partially offset by the $6.5
million pretax deferred fee amortization charge described above.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Total
operating expenses for the first quarter of 2004 were $28.8 million, an increase
of $2.8 million (11%) from the same period last year, reflecting both the
incremental costs incurred to originate, service and administer the larger loan
portfolio and ongoing infrastructure investments. For the first quarter of 2004,
the Companys expense ratio, operating expenses as a percentage of average
student loan assets, was 0.49%, consistent with the first quarter 2003 ratio.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | An
allowance for loan losses provides a reserve for probable estimated losses on:
(1) the externally serviced portions of the FFEL Program loan portfolio under
the risk-sharing provisions of the Act, which generally provide for lender
risk-sharing of 2% of the principal and accrued interest on default claims paid
and (2) the CitiAssist Loan portfolio, after taking into consideration the
risk-sharing provisions of the credit risk insurance obtained from third
parties, if any, and/or other risk-sharing agreements with third parties.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2003, the Company was designated as an Exceptional Performer by the Department
in recognition of its exceptional level of performance in servicing FFEL Program
loans. As a result of the designation, the Company receives 100% reimbursement
on all eligible FFEL Program default claims submitted for reimbursement after
December 31, 2003, and the Company is not subject to the 2% risk-sharing loss
for eligible claims submitted after that date. Only FFEL Program loans that are
serviced by the Company are subject to this designation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Most
of the Companys CitiAssist Loan portfolio is insured by Guaranty National
Insurance Company (GNIC) and Globe Indemnity Company (GIC), subsidiaries of
Royal & SunAlliance Insurance Group PLC (RSA). These loans are generally
subject to risk-sharing losses of 5% of the claimed amount. Effective April 1,
2003, the Company began to insure substantially all new CitiAssist Loan
originations and purchases through a subsidiary of American International Group
(AIG), diversifying private insurer risk. Under the new insurers program,
defaults on new loan originations are generally subject to risk-sharing losses
of 10% - 20%. However, since the increase in risk-sharing expense is generally
expected to be offset by a decrease in insurance premiums, the Company does not
expect a material change in overall costs related to the CitiAssist Loan
program. The allowance also provides a reserve for certain CitiAssist Loans that
are not insured against loss.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys provision for loan losses for the first quarter of 2004 was $2.2
million, $0.6 million less than the provision for the same period of 2003. This
decrease was primarily attributable to the estimates of risk-sharing benefits
expected as a result of being designated an Exceptional Performer by the
Department of Education.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys return on average equity was 30.5% for the first quarter of 2004,
down 1.1% compared to 31.6% for the same period of 2003. The decrease was
attributable to changes in shareholders' equity.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys effective tax rate was approximately 36.1% for the first quarter
of 2004, compared to 36.9% for the same period of the prior year. The decrease
in the effective tax rate was primarily attributable to a change in
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

| | certain
state tax estimates and its impact on the Companys existing deferred tax
assets and liabilities.
| | ---------------------------------------------------------------------------------------------------------

Special Allowance and Floor Income

| | Most
FFEL Program Stafford and Parent Loans to Undergraduate Students (PLUS) Loans
originated prior to July 24, 1992 have fixed interest rates. Those originated
subsequent to July 23, 1992 generally have variable
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | interest rates. The Company
also has a portfolio of FFEL Program Consolidation Loans, which have fixed
borrower interest rates. Most FFEL Program loans also qualify for the federal
governments special allowance payment (SAP). Whenever the stated interest
rates on these FFEL Program loans provide less than prescribed rates of return,
as defined by the Act, the federal government makes a SAP, which increases the
lenders loan yield by markups ranging between 1.74 and 3.50 percentage
points per annum, over a base rate tied to either the 91-day Treasury Bill
auction yield or the 90-day Commercial Paper rate, depending on the loans
origination date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
periods of declining interest rates, the stated borrower rates, which are
generally subject to various annual reset provisions, become, in effect,
interest rate floors until the next reset date. For purposes of evaluating
financial results and the Companys results, management determines floor
income to be the amount of additional interest income generated when net
interest margin exceeds the minimum expected spreads and is generally earned in
declining short-term interest rate environments when the Companys cost of
funds declines while borrower and government subsidized interest rates remain
fixed. Floor income, as determined by the Company, is a financial measure that
is not defined by generally accepted accounting principles in the United States
of America. Depending on the manner in which the Companys assets are
funded, the Company may earn net interest margin spreads, which include floor
income, on portions of its portfolio until the next annual interest rate reset
date. Also, although the rate at which borrowers pay interest on FFEL Program
Consolidation Loans is generally fixed and is not subject to the annual reset
provisions, a decline in the Companys cost of funds during the term of
such loans could contribute significantly to floor income.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company earned $37.0 million of floor income in the first quarter of 2004,
compared to $33.6 million in the same period in 2003, when short-term interest
rates were higher. The increase in floor income is primarily attributable to the
Companys ability to take advantage of favorable funding opportunities.
Floor income will decline in periods of increasing interest rates and is generally
affected by the overall interest rate environment prevailing between the reset
dates. The Company has entered into loan commitments at implied current forward
interest rates that lock in floor income for periods of up to one year. Should
short-term interest rates increase above the March 31, 2004 level, the floor
income benefit could decline materially.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Off-Balance Sheet Transactions

| | In
2002, the Company entered into off-balance sheet transactions in which certain
FFEL Program portfolios of student loan assets were securitized. Securitization is a process in which loans are removed from the financial
statements of the Company and ultimately sold to an independent trust that was established for that purpose. The Company
uses the cash proceeds from securitizations to retire debt, fund new loan
originations, purchase loans or for other business purposes.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Investors
have recourse to the assets in the trust, but not to the Company, and benefit
from other credit enhancements, such as a cash collateral account and other
specified enhancements. The documents establishing the trust generally require
the Company to maintain an ownership interest in the trust. In the event that
net cash flows derived from the securitized student loan assets are insufficient
to meet the payments of interest to trust investors and make other fee and
transaction payments of the trust, the Companys retained interest is
reduced or forfeited. The Companys loss is limited to its retained
interest in the securitized assets.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

| | After
securitization, the Company continues to provide servicing for the loans sold to
the trust. As a result, the
| | ------------------------------------------------------------------------------------------------------------------

| | Company earns administrative and servicing fees on
the securitized portfolio. For additional information on the Companys
student loan securitization activities, see Note 6 to the financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During 2003 and the first quarter of 2004, the Company did not enter into any new securitizations.
| | --------------------------------------------------------------------------------------------------

Regulatory Impacts

| | Over the past decade, amendments to the Act that governs the FFEL Program have
reduced the interest spread earned on the FFEL Program guaranteed student loan
portfolio as new loans with lower yields are added to the portfolio and older,
more profitable loans are repaid. Despite reductions in funding costs and their
expected effects on net income, pressure on margins is expected to continue as
more loans are originated with lower lender yields. Amendments to the Act also
introduced a competitor program, the Federal Direct Student Loan Program (Direct
Lending), in which private lenders, such as the Company, do not participate.
Direct Lending accounts for approximately 30%, on a national basis, of all
student loans originated under federally sponsored programs. In addition,
reauthorization of the Act, which will occur in either 2004 or 2005, depending
on Congressional action, as well as other amendments to the Act could ultimately
result in further reductions in FFEL Program loan subsidies and lender net
interest margins, and could influence customer prepayments. Any such amendments,
in part or in combination, could adversely affect the Companys business
and prospects.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company continues to search for ways to take advantage of greater economies of
scale. It is pursuing both new and existing marketing programs, including
electronic commerce, and continues to expand its guarantor relationships and
pursue alternative loan products, such as CitiAssist, that are not dependent on
federal funding and program authorization.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Forward-Looking Statements

| | Certain
statements contained in this report that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. The Companys actual results may differ materially
from those suggested by the forward-looking statements, which are typically
identified by the words or phrases believe, expect,
anticipate, intend, estimate, may
increase, may result in, and similar expressions or future or
conditional verbs such as will, should,
would and could. These forward-looking statements
involve risks and uncertainties including, but not limited to, the following:
the effects of legislative changes, particularly those affecting the demand for
and interest rates on student loans, loan origination costs, and the
availability and amount of certain loan subsidies; the availability of
alternative financing options to students and their parents, including
competitive products offered by other lenders; the effects of changes in
accounting standards; actual credit losses, loan collection strategies and their
impact on delinquency rates, and the adequacy of loan loss reserves; the effect
of fluctuations in interest rates, particularly as they affect the
Companys funding costs, the rates at which interest accrues on its loan
portfolio, the demand for student loans, and floor income; changes in prepayment
rates on student loans and in the quality of those loans that move into
repayment status; the Companys ability to continue to service its loan
portfolio in accordance with its contractual obligations; the actual cost of
employee stock option awards and the effects of changes made to various
stock-based compensation programs; the success of the Companys hedging
policies; the Companys ability to acquire or originate loans in the
amounts anticipated and with interest rates that generate sufficient yields and
margins; the Companys ability to continue to develop its electronic
commerce initiatives; the performance of the Companys loan portfolio
insurers and risk-sharers; whether risk-sharing expenses for defaults are offset
by lower insurance premiums; the adequacy of funds allocated for future capital
expenditures; the Companys ability to utilize alternative sources of
funding, including its ability to continue to securitize loan portfolios; the
resolution of legal proceedings; as well as
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

| | general economic conditions, including the performance of financial markets and the implementation of
regulatory changes.
| | -------------------------------------------------------------------------------------------------------------------------

23

Item 3.
Quantitative and Qualitative Discussion About Market Risk

| | The
Companys primary market risk exposure results from fluctuations in the
spreads between the Companys borrowing and lending rates, which may be
impacted by shifts in market interest rates. Market risk is measured using
various tools, including Earnings-at-Risk. The Earnings-at-Risk calculation
seeks to determine the effect that shifts in interest rates are expected to have
on net interest margin in future periods. The Company prepares Earnings-at-Risk
calculations to measure the discounted pre-tax earnings impact over a preset
time span of a specific parallel upward and downward shift in the interest rate yield
curve. The Earnings-at-Risk calculation, a static and passive measurement that
excludes managements responses to prospective changes in market interest
rates, reflects the repricing gaps in the position as well as option positions,
both explicit and embedded, in the loan portfolio. Earnings-at-Risk is
calculated by multiplying the gap between interest sensitive items, including
assets, liabilities and derivative instruments, by 35 and 100 basis point
changes in the yield curve. A 35 basis point change in the yield curve
represents approximately a two standard deviation change. The one hundred basis
point information is provided for comparative purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Earnings-at-Risk calculation measures the Companys position at one point
in time. As indicated in the table below, as of March 31, 2004, a 35 basis point
increase in the interest yield curve would have a potential negative impact on
the Companys pretax earnings of approximately $9.6 million for the next
twelve months and approximately $74.5 million thereafter. A 35 basis point
decrease in the interest yield curve as of March 31, 2004 would have a potential
positive impact on the Companys pretax earnings of approximately $14.3
million for the next twelve months and approximately $74.5 million thereafter.
The increase in the March 31, 2004 Earnings-at-Risk, compared to that at March
31, 2003, was due to changes in the interest rate environment and its impact on
floor income.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Earnings-at-Risk (on pre-tax
    earnings)
|------------------------------------------
|                                          
|                                          
|                                          
|(Dollars in millions)                     
|                                          
|Thirty five basis point increase          
|Thirty five basis point decrease          
|One hundred basis point increase          
|One hundred basis point decrease          
|                                          

| | In
addition, the Company has significantly greater exposure to uneven shifts in
interest rate curves (i.e., the Treasury Bill to LIBOR rate spreads). The
Company, through its Asset/Liability Management Committee, actively manages
these risks by setting Earnings-at-Risk limits and takes actions in response to
interest rate movements against the existing structure.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

Item 4.
Controls and Procedures

(a) Disclosure Controls and Procedures

| | The
Companys management, with the participation of the Companys Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Companys disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the Exchange Act)) as of the end of the period covered by this
report. Based on such evaluation, the Companys Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of such period, the
Companys disclosure controls and procedures are effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b) Internal Control Over Financial Reporting

| | There
have not been any changes in the Companys internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

PART II. OTHER
INFORMATION

Item 6.    
Exhibits and Reports on Form 8-K

a)        See Exhibit Index.

b)       Reports on Form 8-K

| | On
January 21, 2004, the Company filed a Current Report on Form 8-K, dated January
21, 2004,                       reporting under Items 7 and 12 thereof its results of operations for
the quarter and year ended                       December 31, 2003 and filing therewith a copy of the
related press release. On April 6, 2004, the                       Company filed a Current Report on
Form 8-K, dated April 1, 2004, reporting under Item 5 thereof                       the appointment of
Daniel P. McHugh as Chief Financial Officer of The Student Loan Corporation                       and
filing therewith a copy of the related press release. Also, on April 15, 2004,
the Company filed a                       Current Report on Form 8-K, dated April 15, 2004, reporting
under Items 7 and 12 thereof its results                       of operations for the quarter ended
March 31, 2004 and filing therewith a copy of the related press                       release.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

SIGNATURE

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

Date: May 7, 2004

The
Student Loan Corporation

By/s/ Daniel P. McHugh  
       Daniel P. McHugh        

                                         Principal
Financial and
Accounting
Officer

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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 June 30, 1993 (File No. 1-11616).                                                                                    
|              
|10.1           |  | Trust Agreement, dated as of December 21, 1992, between the Company and CNYS, incorporated by reference to Exhibit
10.2 to the Companys 1992 Annual Report on Form 10-K (File No. 1-11616).                                                                                  
|              
|10.2.1         |  | Non-Competition Agreement, dated as of December 22, 1992, among the Company, CNYS and Citicorp, incorporated by reference to Exhibit
10.4 to the Companys 1992 Annual Report on Form 10-K (File No. 1-11616).                                                                
|              
|10.2.2         |  | Amendment No. 1, dated as of June 22, 2000, to Non-Competition Agreement among the Company, CNYS and Citigroup
Inc., incorporated by reference to Exhibit 10.2.2 to the Company's 2001 Annual Report on Form 10-K (File No. 1-11616).                                         
|              
|10.2.3         |  | Amendment No. 2, dated as of June 22, 2001, to Non-Competition Agreement among the Company, CNYS and Citigroup
Inc., incorporated by reference to Exhibit 10.2.3 to the Company's 2001 Annual Report on Form 10-K (File No. 1-11616).                                         
|              
|10.3           |  | Tax Agreement, dated as of December 22, 1992, between the Company and CNYS, incorporated by reference to Exhibit 10.5
to the Companys 1992 Annual Report on Form 10-K (File No. 1-11616).                                                                                    
|              
|10.4           |  | Omnibus Credit Agreement, dated November 30, 2000, between the Company and CNYS, incorporated by reference to Exhibit
10.10 to the Companys 2000 Annual Report on Form 10-K (File No. 1-11616).                                                                              
|              
|10.4.1         |  | Amendment No. 1, dated as of October 15, 2002, to Omnibus Credit Agreement between the Company and CNYS, incorporated by reference to Exhibit 10.4.1 to the Company's 2002 Annual Report on Form 10-K (File No. 1-11616).                                                     
|              
|10.4.2         |  | Amendment No. 2, dated as of March 5, 2004, to Omnibus Credit Agreement between the Company and CBNA (as successor to CNYS), incorporated by reference to Exhibit 10.4.2 to the Company's 2003 Annual Report on Form 10-K (File No. 1-11616).                                 
|              
|10.5           |  | Facilities Occupancy, Management and Support Service Agreement, dated as of January 1, 1998, by and between the
Company, CNYS and Citicorp North America, Inc., incorporated by reference to Exhibit 10.5 to the Company's 2001 Annual Report on Form 10-K (File No. 1-11616).
|              
|10.6     *     |  | Retention Agreement for Sue F. Roberts, dated April 28, 2003.                                                                                                                                                                                                                 
|              
|31.1     *     |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                       
|              
|31.2     *     |  | Certification of Principal Financial and Accounting 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.                                                                                                

---

*Filed herewith



28