Shelly Repp, President, NCHER Vince Sampson , President, EFC

1. Washington UpdateNCHER/EFC Student Loan Legal Meeting August 5, 2013 Shelly Repp, President, NCHERVince Sampson, President, EFC

2. Agenda • Fiscal Cliffs • HEA Reauthorization • Regulations • Tax Reform • CFPB Oversight • Dodd Frank Update • Pending Legislation

3. Fiscal Cliffs • FY 2014 Budget Resolution unlikely • Appropriations • House and Senate using different top lines • $967 billion vs. $1.058 trillion • Effects of sequester • Difference on defense/non-defense split • Senate Appropriations Committee has approved Labor-HHS-Education bill; House Committee has not • Continuing Resolution likely; issues will be funding levels and length

4. Fiscal Cliffs (cont.) • Debt Ceiling • Emergency measures likely to run out in October/November • Will there be • Grand Bargain • Short-term Bargain • Default

5. Higher Education Act Reauthorization • HEA expires at end of year – but HEA has automatic one-year extension • Last reauthorization in 2008 followed multiple extensions

6. Higher Education Act Reauthorization (cont) • House Education and the Workforce Committee has sought recommendations; Senate process has not started • Both committees likely to hold multiple hearings • Interest rates will be on the table (again) • Other issues/themes • One loan program/one grant program • Increased Pell funding/making it an entitlement • Funding tied to cost reduction/success • Eliminate loan subsidy • Automatic IBR • Loan limits • Simplify tax credit • Streamline FASFAA/apply through tax return • Better consumer information

7. Regulations • ED’s 2012 Negotiated Rulemaking • Final rule for PAYE, ICR and IBR and disability discharges published 11/1/12 • NPRM with bulk of negotiated rules published 7/29/13. • Changes include: • Deferment & forbearance provisions • Loan rehabilitation and AWG • FDLP and FFELP consistency • ED’s 2013 Negotiated Rulemaking • Revisiting gainful employment • CFPB has announced it will issue Fair Debt Collection Protection Act regulations near year end

8. Tax Reform • Signature issue for both tax committee chairman • Similar approaches to start discussions • Baucus: “clean slate” • Camp: “blank sheet of paper” • Key issue for NFP student loan issuers: tax treatment for municipal bonds • Current state of play: student loan bonds can range from taxable to fully tax exempt • Proposals under consideration: • Eliminate tax exempt bonds in favor of tax credit bonds • Impose a 28% cap on individual deductions

9. CFPB Oversight • Director Cordray now confirmed. What's the impact? • CFBP structure unlikely to change • Appropriations unlikely to change • Increase in enforcement and supervision • Oversight shifting to “big data” and agency management • Pinkski v. CFPB • CFBP acquisition and use of credit reports • Staff salaries and building renovations

10. Dodd Frank Update • Regulations still behind schedule • Risk retention • MMMF • Investment advisor • Volker Rule • Securities and Exchange Commission • Shifting focus to enforcement • Key offices, including Office of Municipal Securities remain unstaffed • Congressional efforts to unwind Fannie and Freddie • House – PATH Act; Senate – Corker (R-TN)/Warner (D-VA) proposal • Secondary market “utility” • PATH act seeks to block Dodd Frank mandates such as risk retention

11. Selected Pending Legislation • Private Education Loan bankruptcy bills • Fairness for Struggling Students Act of 2013 (S 114), Senator Durbin (D-IL) • Private Student Loan Bankruptcy Fairness Act of 2013 (HR 532), Rep. Cohen (D-TN) • Budget and Accounting Transparency Act of 2013 (HR 1872), Rep. Garrett (R-NJ) • Earning Contingent Education Loans Act of 2013 (HR 1716), Rep. Petri (R-WI) • Supporting Academic Freedom Through Regulatory Relief Act (HR 2637), Rep Foxx (R-NC) • Know Before You Owe Private Student Loan Act of 2013 (S 113), Sen. Durbin (D-IL) • Refinancing Education Funding to Invest (REFI) for the Future Act of 2013 (S 1266), Sen. Brown (D-OH) • FAIR Student Credit Act of 2013 (HR 2561), Rep. Peters (D-MI)