Slide 1© Student Lending Analytics, LLC Student Lending Analytics Flash Survey: Private Loan Availability June 11, 2009

Slide 2© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Background Situation: The private student loan market continues to be strained by a lack of capacity. SLA estimates that the market has shrunk by 30% due to lenders dropping out of the market as well as cutbacks in originations by other lenders. Survey Goals –Determine the level of concern in the financial aid community about private student loans –Ascertain the methods that schools are using to select their private lenders and characteristics of their lender list –Assess reasons that schools choose not to provide students with a lender list –Enumerate the strategies that schools are employing to meet this challenge

Slide 3© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Methodology ed flash survey on June 3, 2009 with due date of June 4, 2009 In addition to demographic questions, the survey asked respondents the following questions: –Is your institution planning to provide students with a lender list for private loans for the school year? –Please describe your institution's process for developing a lender list for private student loans. –How many lenders does your institution plan to have on your lender list for private loans for the academic year? –Please describe the importance of these factors in determining why your institution will not be providing students with a lender list for private student loans for the school year. –How concerned are you about the availability of PRIVATE loans for your students for the academic year? –What are your current strategies to help students find private, nonfederal loans for the school year?

Slide 4© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Methodology (Cont.) Responses were normalized for following reasons: – 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 187 survey responses analyzed

Slide 5© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Summary Overall, 56% of survey respondents indicated that they would provide their students with a lender list for private loans for the school year –As expected, respondents at four year private institutions had the highest rate, with 69% indicating that they would be providing such a list –48% of respondents with lists indicated that they listed 4-5 lenders –While 35% of schools indicated that they would be completing a formal RFI process to select their lenders, 32% indicated that they would be keeping their list –In terms of information provided on these lender lists, links to the lender sites (83%), loan costs (69%) and interest rate ranges (65%) were most frequently cited. Only 23% provide specific interest rates on their lender lists. The top four reasons given by schools NOT putting together a lender list for private loans were: –Do not want to encourage usage of private loans –Too much time required to complete RFI process –Too much time required to maintain lender list –Concern over regulations

Slide 6© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Summary (Cont.) The top three third-party sites provided by schools offering links to private loan information are Finaid.org (64%), Student Lending Analytics (38%) and Simple Tuition (31%) 53% of respondents believe that lenders’ approval rates on private loans are either much lower (7%) or lower (46%) than last year –A large percentage, 21%, indicated that they were not sure about approval rates for their students Overall, 58% of financial aid administrators are either Very Concerned (14%) or Somewhat Concerned (44%) about the availability of private student loans for the academic year –4-year private institutions demonstrated the highest level of concern with 69% either Very Concerned (17%) or Concerned (52%)

Slide 7© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Summary (Cont.) Top three strategies cited by financial aid administrators to address private loan availability issues were: – Encourage usage of Parent Plus loans before applying for private loan –Highlight the importance of using a cosigner to improve interest rate on the loan –Make students/families aware of tuition repayment options Check out SLA’s new Private Student Loan Ratings service –Independent, objective source of information about leading private loans –Featured in NY Times as “a service to improve transparency” –Provides comprehensive details on loans gleaned from promissory notes –Updated immediately to reflect lender changes –In addition to not being affiliated with any lenders, SLA: Does not receive any referral fees from lenders Does receive accept compensation for advertising any lender products

Slide 8© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Profile of Survey Participants

Slide 9© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Prevalence of Lender Lists for Private Loans Survey question: Is your institution planning to provide students with a lender list for private loans for the school year? Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 10© Student Lending Analytics, LLC What Schools and Families Want Lenders On Private Loan Lists Survey question: How many lenders does your institution plan to have on your lender list for private loans for the academic year? Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 11© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Lender Selection Process for Survey question: Please describe your institution's process for developing a lender list for private student loans. Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 12© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Information Provided on Lender List Survey question: Describe the types of information that you will be providing about the lenders appearing on your institution's lender list for private loans. Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 13© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Other Information Provided About Lenders Servicing/servicer details pertaining to each lender Lender’s inclusion on listing of FFELP lenders Lender's relevant history in the student loan "industry“ Lender's source(s) of private loan capital/funding Factors to consider in selecting a lender Importance of keeping private loan indebtedness levels to a minimum Enrollment requirements Whether loan requires repaying interest while in school Borrower benefits Cosigner release option Minimum/maximum loan levels Cosigner requirement Satisfactory academic progress requirement

Slide 14© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Reasons Given For Not Providing Lender List Survey question: Please describe the importance of these factors in determining why your institution will not be providing students with a lender list for private student loans for the school year. Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 15© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Other Reasons Given For Not Providing Lender List “Lenders have too many hidden costs and are constantly changing the terms of the loans. This makes it impossible for even professionals to explain all of the variations.” “The fear of our students being able to receive so many loans and when they go into repayment I'm afraid they will pay private loans first and let there federal stafford loans fall behind causing defaults to go up. This will effect the schools cohort default rates to rise when our school rate is very low.” “Concerned about high levels of indebtedness while attaining only a two year degree.” “Graduate students are eligible for the Grad Plus loan so we are encouraging students to “Borrow Federal First.” “This is partially captured with "time required to maintain list" but things seem to be changing so rapidly that we're afraid as soon as we publish something it will be out of date.” “Over-regulation makes the process daunting.”

Slide 16© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Third-Party Websites Survey question: Which third-party sites, if any, will you be directing students to, if they are interested in applying for a private student loan?. Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents) Note: 34% of schools responding to the survey include a link to a third-party website on their financial aid site.

Slide 17© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Private Loan Approval Rates: Impressions From the Field Survey question: Please describe your impressions regarding private loan approval rates for your students today, as compared to a year ago. Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 18© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Degree of Concern Regarding Private Student Loans Survey question: How concerned are you about the availability of PRIVATE loans for your students for the academic year? Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 19© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Strategies For Challenging Times Survey question: What are your current strategies to help students find private, nonfederal loans for the school year? Source: SLA Flash Survey: Private Student Loans, June 2009 (187 respondents)

Slide 20© Student Lending Analytics, LLC SLA Flash Survey: Availability of Private Student Loans Other Comments From Financial Aid Administrators Two comments about specific lenders and approval or interest rates –“Citibank has a high approval rate for our students.” –“Our students think Discover has pretty good rates.” See SLA Blog post for details about Discover’s recent interest rate increase, effective June 1, 2009 Concern among community college administrators: –“No one wants to lend to community college students. Even our nursing, radiological, surgical techs, and sonography students can not get private loans.” –“Very few lenders will work with 2 year schools.” Several comments about the new Sallie Mae product –“Eager to see if Sallie Mae's change to in-school interest payments will be accepted.” –“Too early in the academic year to determine this, but the new Sallie Mae loan will not be popular with our students and I am sure they will look else where. If a student falls behind on their interest payments than there will be no second disbursement and it is unclear (per our rep) if Sallie Mae will even be notifying the schools!” See SLA Blog post for additional details “Parents are declining the PLUS loan in favor of the private loan in the student's name with the intention of paying the loan back themselves.” “Bank of America opted not to respond to RFI.” –See SLA Blog post for additional details

Slide 21© Student Lending Analytics, LLC Thank You Thank you again for your participation! Please contact Tim Ranzetta if you have any additional comments or questions regarding this survey –Send to –Phone: Look for more upcoming SLA Flash Surveys in the future For more information on Student Lending Analytics, proceed to the final three slides

Slide 22© Student Lending Analytics, LLC Student Lending Analytics Background 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 –Private Loan Options and the SLA’s 2009 Alternative Loan Guide provides students and financial aid offices with an objective and focused list of private lenders –SLA Student Satisfaction Surveys measures student satisfaction with lenders

Slide 23© Student Lending Analytics, LLC 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

Slide 24© Student Lending Analytics, LLC Unlocking the Mysteries of Private Student Loans Private Student Loan Ratings Available at Featured on front page of New York Times BusinessNew 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

Slide 25© Student Lending Analytics, LLC Unlocking the Mysteries of Private Student Loans 2009 SLA Private Loan Series Most popular post: Shopping for Private Student Loans Makes a Difference!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 UnionsWhat 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

Slide 26© Student Lending Analytics, LLC The Student Lending Analytics Process RFI Management

Slide 27© Student Lending Analytics, LLC Student Lending Analytics Research Services Inform financial aid offices on industry developments (implications for their lender lists and relationships) –Student Lending Analytics BlogStudent 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)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