Session GA-06

1. Session GA-06 Operational Flows & Reporting for New Loan Programs Katrina Turner Pam Eliadis U.S. Department of Education

2. Agenda • Program Goals and Background • Operational Flows • Loan Participation Program • Loan Purchase Program • Lender of Last Resort • Compliance Audit • Operational Reporting • Resources • Questions

3. Program Goals and Background • Ensuring Continuing Access to Student Loans Act of 2008 (ECASLA) • Signed May 7, 2008 • Federal Register July 1, 2008 • Provided Secretary authority to purchase FFEL loans • Strengthened GA Lender of Last Resort Program

4. Program Goals and Background • ECASLA Objectives • Ensure that eligible students and parents receive federal student loans for the 2008-2009 academic year • Support the FFEL Program • Ensure no net cost to the federal government

5. Program Goals and Background • Loan Participation Purchase Program • ED to purchase “participation interests” in eligible loans • ED provides liquidity • Participation interest terminates 9/30/09 via • Redemption by Lender • Sold to ED

6. Program Goals and Background • Loan Purchase Commitment Program • ED to purchase eligible loans • Called “put” • Must be fully disbursed • 45-day advance notice

7. Program Goals and Background • Lender of Last Resort Program • Strengthen current LLR Program • Types: • Lender • GA • Funded by GA • Federal Advances

8. Operational Flows: Approval of Custodian • Officer’s Certificate • List of Key Personnel, Title, Years of Service and Credentials • Bank’s Most recent SAS70 • Copy of the SEC Regulation AB reports • Description of current trust activities • Copies of the Bank’s Errors and omissions policy and its fidelity bond • Description of Disaster Recovery

9. Operational Flows: Approval of Custodian • List of EIN and all affiliates names and CEO’s phone number • List of all existing LIDs • Most recent audited Financial Statement

10. Operational Flows: Loan Participation Purchase Program (LPPP) To participate, each Eligible Lender must have a Notice of Intent to Participate on file with the Department of Education (ED), Submit their Master Participation Agreement and Receive approval from ED 10

11. Operational Flows: Master Participation Agreement (LPPP) Notice of Intent to Participate Adoption Agreement (Exhibit A) Officer’s Certificate (Exhibit E) which includes the following: Incorporation and by-laws (Attachment I) Resolutions (Attachment II) Good Standing of the Sponsor (Attachment III) 11

12. Operational Flows: Master Participation Agreement (LPPP) • Opinion of Counsel to the Sponsor (Exhibit F • Initial Monthly Forecasting Report (Optional) • Date of Initial Funding Request and Amount

13. Operational Flows: Loan Purchase Commitment Program (LPCP) • To participate, each Eligible Lender must have a Notice of Intent to Participate on file with the Department of Education (ED), • Submit their Master Loan Sales Agreement and • Receive approval from ED

14. Operational Flows:Master Loan Sales Agreement (LPCP) • Notice of Intent to Participate • Adoption Agreement (Exhibit A) • Officer’s Certificate (Exhibit C) which includes the following: • Incorporation and by-laws (Attachment I) • Resolutions (Attachment II) • Good Standing of the Seller (Attachment III) • Opinion of Counsel to the Seller (Exhibit D)

15. Operational Flows: Intake and Approval Process of the Custodian and Agreements • Intake Process • Verification of submission of all required documents. • Request for additional documents (if applicable) • Issuance of Custodian LID

16. Operational Flows: Intake and Approval Process of the Custodian and Agreements • Email to Sponsor, Custodian and Seller of the Department’s approval of their agreement package. • Signed executed Adoption agreement is sent via FEDEX to Sponsor, Custodian and or Seller

17. Operational Flows: Operational Flows: Lender of Last Resort (LLR) for GA’s • To participate each GA must submit an LLR Agreement to ED Agency • GA may request an LLR LID

18. Compliance Audit: Lenders Participating in the Loan Participation Purchase Program • Authority: Section 8(a)(5) of the Master Participation Agreement (MPA) • Audit Type: Due Diligence Audit • Audit Guide: Agreed Upon Procedures Attestation Engagement Guide issued October 17, 2008 by ED OIG

19. Operational Reporting • Loan Participation Program • Weekly Loan Schedule • Month-End Loan Schedule • Pay.gov Remittance Activity • NSLDS Reporting

20. Operational Reporting • Loan Purchase Program • 45 Day Notice of Intent to Sell • Loan Transfer/Conversion File • Final Pre-Sale Report • Bill of Sale and Documentation • Lenders/Sponsors in Loan Participation • Directly from Lender • ED Servicer report to Guaranty Agencies • NSLDS Reporting

21. Resources www.federalstudentaid.ed.gov/ffelp • Webinars • Q&A’s • Electronic Announcements • Agreement Documents www.ed.gov/about/offices/list/oig/nonfed/sfa.html • OIG Audit Guide for Lenders Participating in LPPP

22. Questions??

23. Contact Information • We appreciate your feedback and comments. We can be reached at: • Phone:Pam 202-377-3554 • Katrina 202-377-3311 • Email: Pam.Eliadis@ed.gov • Katrina.Turner@ed.gov