Student Lending Analytics Flash Survey: Perkins Loan Program July 13, 2009

1. Student Lending AnalyticsFlash Survey: Perkins Loan ProgramJuly 13, 2009

2. Flash Survey: Perkins Loan Program Background • Situation: The Obama Administration is proposing a significant increase in Perkins Loan funding from $1 billion today to $6 billion in 2010-11. The new Perkins loan program would also see the making, servicing and collecting of student loans be shifted onto the Department of Education’s Common Origination and Disbursement (COD) system. • Survey Goals • Determine how schools are currently processing Perkins Loans • Identify market share for Perkins Loan vendors who would be impacted by shift to COD system • Determine willingness of schools to contribute funding to Perkins Loan program

3. Flash Survey: Perkins Loan Program Methodology • Emailed flash survey on July 8, 2009 with due date of July 9, 2009 • In addition to demographic questions, the survey asked respondents the following questions: • What percentage of federal student aid was represented by Perkins Loans for the last academic year at your institution? • What was the annual change in loan volume for your Perkins Loan program over the past academic year? • Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process? • If so, what functions did you outsource? • Identify the name of the vendor(s) utilized to manage your Perkins Loan program. • Indicate how your Perkins Loan borrowers sign their promissory notes currently? • One of the Administration's proposals regarding the Perkins Loan program is to eliminate the in-school interest subsidy. Would your institution consider providing funding to reduce the costs of Perkins loans to students?

4. Flash Survey: Perkins Loan Program Methodology (Cont.) • Responses were normalized for following reasons: • Email addresses that did not correspond with an educational institution were excluded • Several schools provided multiple responses; only one response was analyzed • Responses that included demographic data but incomplete answers to main survey questions were excluded • Overall, there were 317 survey responses analyzed

5. Flash Survey: Perkins Loan Program Summary • For most schools, Perkins Loans are small part of the overall financial aid package, with 72% of respondents indicating that it made up less than 4% of overall federal student aid • 54% of respondents indicated that their volume of Perkins loans declined in 2008-09; 27% experienced more than a 20% decline • 83% of respondents indicated that they outsource some or all of their Perkins Loan activities • Collections (83%) and loan servicing (79%) were the most frequently cited activities outsourced • The four Perkins Loan servicers that appeared most frequently in the survey were ECSI with a 31% share and University Accounting Services (UAS), Campus Partners and Affiliated Computer Services (ACS) each having a 23% share. • In terms of promissory notes, 52% of respondents indicated they continue to have borrowers sign a paper copy, with 35% having an electronic process in place • 76% of respondents indicated that they would have difficulty providing institutional funds to reduce the cost of the Perkins Loan for their borrowers

6. Flash Survey: Perkins Loan Program Profile of Survey Participants

7. SLA Flash Survey: Perkins Loan Program Importance of Perkins Loans To Overall Aid Survey question: What percentage of federal student aid was represented by Perkins Loans for the last academic year at your institution? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

8. SLA Flash Survey: Perkins Loan Program Annual Change in Perkins Loans Survey question: What was the annual change in loan volume for your Perkins Loan program over the past academic year? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

9. SLA Flash Survey: Perkins Loan Program Perkins Loan Outsourcing Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

10. SLA Flash Survey: Perkins Loan Program Outsourced Activities Survey question: Does your institution outsource (use an external vendor) for any aspect of your Perkins Loan process? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

11. SLA Flash Survey: Perkins Loan Program Market Share For Perkins Loan Providers Survey question: Identify the name of the vendor(s) utilized to manage your Perkins Loan program. Source: SLA Flash Survey: Perkins Loan Program, July 2009 (205 respondents named at least one provider)

12. SLA Flash Survey: Perkins Loan Program Signature Method for Promissory Note Survey question: Indicate how your Perkins Loan borrowers sign their promissory notes currently. Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

13. SLA Flash Survey: Perkins Loan Program Willingness Of Institution To Reduce Cost of Perkins Loans Survey question: Would your institution consider providing funding to reduce the costs of Perkins loans to students? Source: SLA Flash Survey: Perkins Loan Program, July 2009 (317 respondents)

14. SLA Flash Survey: Perkins Loan Program Truth-in-Lending Compliance and References Question: If your students electronically sign their Perkins Loan promissory notes, how does your institution handle the Truth-in-Lending disclosure requirements and references? • “An information sheet is given to each student each year with the requirements even though it has become an electronic process.” • “Included with the promissory note electronically” • “When students do not view the Truth-in-lending disclosure or do not complete the reference it shows as an incomplete process. The truth-in-lending disclosure is also mailed to the student.” • “They go through all of this prior to reading and "signing" the prom note. We also utilize our servicer to provide an e-disclosure upon every loan disbursement.” • “References are supplied in an entrance interview done online before the student signs their electronic note. Annual disclosure notice is sent by the campus in paper and email form.” • Students are required to provide an active confirmation that they read and understood the terms and conditions before signing the promissory note. They supply references on line and are asked to update them each time they agree to a new disbursement. They receive disclosure documents after each disbursement. • “Paper mailing from the college” • “IPromise holds all the disclosures until exit time. Then we order packets for all exiting students which includes the disclosures, reference material, and copy of the MPN.”

15. Thank You • Thank you again for your participation! • Please contact Tim Ranzetta if you have any additional comments or questions regarding this survey • Send email to tranzetta@studentlendinganalytics.com • Phone: 650-218-8408 • Look for more upcoming SLA Flash Surveys in the future • Please provide us with topics that matter to you! • For more information on Student Lending Analytics, proceed to the final six slides

16. Student Lending AnalyticsBackground • Founded in 2007 • Independent Research and Advisory Service with NO lender affiliations • Mission: Find best lenders for students through an analytically rigorous, unbiased and comprehensive process • Services • RFI Management of FFEL and Private Loans • Research • Successes to Date • Managed RFI process at institutions with over one billion dollars in loan volume • Inside Student Lending, our monthly newsletter, reaches over 5,000 financial aid administrators • Student Lending Analytics Blog has become the go-to source for breaking developments and analysis on the student lending industry • SLA Flash Surveys have included the insights from over 1,500 financial aid professionals on a variety of timely topics • Dozens of Schools Linking To Private Loan Options and SLA’s 2009 Private Loan Guide which provides students and financial aid offices with an objective and focused list of lenders • SLA Student Satisfaction Surveys measures student satisfaction with lenders

17. Unlocking the Mysteries of Private Student Loans Student Lending Analytics: Resources Available • SLA Private Student Loan Ratings • 2009 SLA Private Loan Series • 2009 SLA Private Loan Guide • Paying For College Blog • Student Satisfaction Surveys • Coming Soon: Private Loan Quiz

18. Unlocking the Mysteries of Private Student LoansPrivate Student Loan Ratings • Available at http://www.studentlendinganalytics.com/ratings.html • Featured on front page of New York Times Business • Focused on evaluating eight lenders that appeared most frequently on over 700 school lender lists that SLA researched • Includes the following factors in ratings: • Expected loan cost • Borrower benefit savings • Fee structure • Flexibility of repayment options • Customer service • Financial stability • SLA receives no compensation from any lenders on this list • New Service: Student Loan Forum to capture real-time information about interest rates and approvals

19. Unlocking the Mysteries of Private Student Loans 2009 SLA Private Loan Series • Most popular post:  Shopping for Private Student Loans Makes a Difference! • Results from 6 student loan applications yields interest rates between 7% - 12% • Before You Apply for a Private Student Loan • Provides checklist of items to complete prior to considering a private student loan • What About Credit Unions? • Explores the increasing role that credit unions are providing in the private student loan market • "Miss A Payment On Your Private Student Loan, You Could See Your Interest Rate Rise" • Highlights two lenders that have clauses in promissory notes which could result in 2% increases in interest rates triggered by one late payment • Borrower Benefits on Private Student Loans • Provides examples of savings opportunities available to private loan borrowers • What Ingredients Go Into the "Secret Sauce"? • Insights into the factors that lenders consider in making their credit decisions • Does It Make Sense To Shop Around For Private Student Loans? • Provides details on new Fair-Isaac policy about the impact of applying for multiple student loans on your credit score (hint:  it helps student borrowers) • The Promissory Note • Highlights the key terms to be aware of when evaluating lender promissory notes • What is the Meaning of "Instant Credit Response"? • Reviews the on-line application process and analyzes the speed of lender credit reviews • Private Loan Fee Structure • Benchmarks most common fees assessed by private lenders for both origination and servicing of loans

20. The Student Lending Analytics ProcessRFI Management

21. Student Lending AnalyticsResearch Services • Inform financial aid offices on industry developments (implications for their lender lists and relationships) • Student Lending Analytics Blog • Key resource for thousands of professionals in the student lending industry • Timely insights to developments in student lending industry • Alerts • Legislation, lender exits, earnings calls, industry insight • Monthly newsletters • Webinars • December 2008 – A Conversation about FFELP and Direct Lending • May 2009 – Unlocking the Mysteries of Private Student Loans • Surveys (summaries available on our website) • FFEL vs. Direct Lending • RFI Practices • Implementing Increased Federal Stafford loan limits • Availability of Alternative Loans • Legislative and regulatory updates • White papers • Help Line to answer questions/resolve issues throughout the year