The Future of Private Loans Migration from prime to LIBOR In-school interest payments Tight credit markets/TALF Increased collection efforts Increased credit regulation

Migration from Prime to LIBOR Matching loan pricing with funding costs Minimum and maximum rates on variable loans increasing Only three major lenders using prime rate as their index Other indices may develop

In-School Interest Payments Costs increasing – index and margin Provides in-school revenue stream for investors Trains the borrower to repay a portion of the loan when in school Deterrent effect on future borrowing?

Credit Market Challenges Securitizations may require more collateral and income streams TALF offers a 3 year term but most private loans have a 12 year maturity Pricing and allocation of risk important What if the law changes after the securitization takes place?

Increased Collection Efforts Proving Undue Hardship in a Ch. 13 Challenges based on holder status Challenging electronic signature based on failed or inadequate security process New Reg. Z violation claims

Increased Credit Regulation Implementation of Reg. Z State regulation of lending process and new consumer disclosures (e.g., Iowa)

Questions & Answers