© Davis & Harman LLP The Future: Innovative Ideas and Solutions Proposals from Policymakers College Saving and Financing Summit May 21, 2008 Jamey Delaplane (202)

© Davis & Harman LLP Democratic Perspective Skepticism About Industry/Financial Services Motives  Concern That Prior Policymaking Too Industry-Friendly Distributional Approach to Issues  How Do Proposals Affect Individuals in Different Income Groups? Skepticism Regarding Tax Incentives That Track Income Tax Rates  Interest in Alternative of Refundable Tax Credits Continuing Pressure to Find “Revenue-Raisers”

© Davis & Harman LLP 529 College Saving Plan Reforms Fostering Low- and Moderate-Income Participation  Extension of Saver’s Tax Credit to 529 Plans  Promotion of State Efforts to Reach This Population  Interest in Data Collection About Plan Participants Promoting Employer Involvement  Tax Incentives for Employer Contributions  Requirement for Employer Payroll Deduction Expansion of Permissible Expenses Promoting Plan Transparency and Comparability

© Davis & Harman LLP Financial Aid Expansion/Reform Context  Concern About Student and Family Debt Levels  Aid Application Process Itself as Deterrent to College  Skepticism Regarding Private Lenders Proposals  Index Pell Grant Amounts to College Inflation  Eliminate FAFSA and Base Eligibility on Tax Returns  Eliminate Subsidized Private Loan Programs  Student Borrower Bill of Rights

© Davis & Harman LLP Higher Education Tax Incentives Context  Confusion Re Array of Current Higher Ed Tax Incentives  Significant Number of Eligible Taxpayers Not Using Benefits  Concern Re Distributional Effects of Current Incentives Proposals  Expanded, Refundable Tax Credit for Higher Education  Deliver Tax Benefits at Time of Tuition Payment Goals Repercussions for Savings Strategies

© Davis & Harman LLP Worker Training/Learning Accounts Context  Response to Job Displacement Due to Trade/Economic Change  Financing Source for Job Retraining/Skill Development Proposals  McCain Flexible Training Account Proposal Financed by Unemployment Insurance Taxes  Congressional Lifelong Learning Accounts Proposals Financed by Employee and Employer Contributions Interaction with 529 Plans

© Davis & Harman LLP Retirement Savings Coverage Context  Frustration Regarding Lack of Plan/IRA Coverage  Size of Tax Expenditure on Retirement Savings Proposals  Payroll Deduction IRA Mandate  Mandated Contributions for Those Without Plans  Kids Accounts Repercussions  Rely on IRA Rules That Allow Penalty-Free Distributions for Higher Education Expenses