HOW AMERICA PAYS FOR COLLEGE

1. HOW AMERICA PAYS FOR COLLEGE The Private Credit Marketplace Today Presented by: Michael Arp VP, Sales November 2008

2. Financial Markets • Properly functioning credit markets: Vital to the financial health of American consumers, including those in pursuit of a higher education. • Current Climate: All financial service companies, student loan providers and colleges, are experiencing tighter credit markets as a result of the sub-prime mortgage crisis. • Ongoing turbulence makes for extraordinarily challenging times for student lenders and the entire higher education community.

3. Financial Markets • A total of 137 education lenders have exited or suspended their participation in all or part of the federally student loan program (According to FINAID.ORG). • Hundreds of higher education institutions that regularly rely on the availability of reasonably priced credit to finance their day-to-day operations have also been unable to access critical funds. • Not relative, however, to the strength or quality of the institution or company.

4. Credit Markets The Situation: Access to funds from which new private credit loans can be made is extremely limited for all financial services companies. Hundreds of higher education institutions that regularly rely on the availability of reasonably priced credit to finance their day-to-day operations have been unable to access critical short-term funds. The situation underscores how these difficulties are impacting institutions on multiple levels regardless of their financial soundness or quality. The Result: Fewer private loans are being offered, and where they are being offered, credit criteria has become more stringent

5. 20,000,000 Chase 18,000,000 Sallie Mae Bank of America 16,000,000 National City MyRichUncle GMAC 14,000,000 HSBC (Loan to Learn) RBS 12,000,000 Education Finance Partners Collegiate Funding Services 10,000,000 Discover GE 8,000,000 PNC Bank KeyBank 6,000,000 U.S. Bank Wells Fargo Goal Financial 4,000,000 College Loan Corporation Wachovia 2,000,000 Campus Door, Inc. 0 Apr-07 Apr-08 Oct-06 Oct-07 Jun-06 Jun-07 Jun-08 Aug-06 Aug-07 Dec-06 Dec-07 Feb-07 Feb-08 Private Education Loans – Direct MailJune 2006 – June 2008

6. Thinking ahead, what worries families when considering paying for college?

7. Liquidity Solution: Business As Usual • The liquidity solution provides unlimited funding for student lenders to make loans through 2010. • Guarantees that any student that needs a federal loan for college will get one. • Lenders should have until 2010 to decide if they will sell loans to the Department (Awaiting implementation details of the extension from the Department). • Thus far, only one lender has decided to sell only $61 million in loans to the Department.

8. Emergency Economic Stabilization Act of 2008 • Broad $700 Billion economic rescue plan aimed at alleviating the prolonged credit market deterioration and its impact on all American consumers. • Student loans, including private loans, could be part of the plan: • The definition of financial institutions as—outlined in the legislation— does not limit participation of student loan companies. • Legislation could potentially allow purchase of student loan assets, if Treasury determines it necessary to promote financial market stability.

9. Secretary of Treasury • “Families, too, feel the credit crunch as it becomes more difficult to get car loans or a student loan.“ • Treasury Secretary Henry Paulson

10. FAFSA Application • One-quarter (25%) college families don’t complete the FAFSA application • Not surprisingly, application rates decline with household income • One-in-four families with incomes between $35,000 and $100,000 donot fill out an application Completion of FAFSA by Annual Household Income % Applied

11. Alternatives to Alternative Loans • Scholarships and Grants • Tuition Payment Plans • Low-cost Federal Student Loans • Graduate PLUS Loans may be an effective substitute for some private loan programs

12. PANEL DISCUSSION