Default Management

National American University Multi Campus Institution Multi Campus Institution Several states Several states Multiple Guarantee Agencies Multiple Guarantee Agencies Default rate in % Default rate in % Certain Guarantors set limits on amounts they would guarantee Certain Guarantors set limits on amounts they would guarantee Limited growth Limited growth Loss of Students Loss of Students Utilize one Guarantor for all regions of operation Utilize one Guarantor for all regions of operation

Default Management Plan National American University continues to be proactive in managing our Cohort Default Rate. Listed below are the processes the university follows in this respect. National American University continues to be proactive in managing our Cohort Default Rate. Listed below are the processes the university follows in this respect. Counsel students to borrow only what is needed to cover direct educational costs Counsel students to borrow only what is needed to cover direct educational costs Preformed entrance loan counseling with each loan borrowed, in the beginning stages of our plan. Now all first time borrowers do entrance counseling through Mapping-Your-Future. All continuing borrowers receive a loan information form with each subsequent loan, informing of total loan indebtedness and approximate payment. Preformed entrance loan counseling with each loan borrowed, in the beginning stages of our plan. Now all first time borrowers do entrance counseling through Mapping-Your-Future. All continuing borrowers receive a loan information form with each subsequent loan, informing of total loan indebtedness and approximate payment.

Quarterly went to classroom and gave presentations on budgeting for college loan debt and reiterated need to borrow responsibly Quarterly went to classroom and gave presentations on budgeting for college loan debt and reiterated need to borrow responsibly Group exit counseling sessions were done quarterly courtesy of our Guarantee agency Group exit counseling sessions were done quarterly courtesy of our Guarantee agency Notify student’s who have graduated or withdrawn when payments will begin and where to sent payments Notify student’s who have graduated or withdrawn when payments will begin and where to sent payments Quarterly send letter and NAU brochure. Quarterly send letter and NAU brochure. Friendly reminder Friendly reminder Provides toll-free phone number to NAU Provides toll-free phone number to NAU

Receive Lender Pre-Claims reports every 20 to 30 days. These are reviewed by the Loan Repayment Advisor Receive Lender Pre-Claims reports every 20 to 30 days. These are reviewed by the Loan Repayment Advisor Send letter to student’s 30 to 90 days delinquent. Send letter to student’s 30 to 90 days delinquent. Letter stresses consequences of default Letter stresses consequences of default Provide brochure explaining deferments, forbearance, payment options and loan consolidation Provide brochure explaining deferments, forbearance, payment options and loan consolidation Phone calls made to student’s who are delinquent Phone calls made to student’s who are delinquent Provide lender phone number and toll free number to contact NAU Provide lender phone number and toll free number to contact NAU

Phone calls Phone calls Contact student’s in the 230 day delinquent range. Contact student’s in the 230 day delinquent range. Friendly non threatening. Friendly non threatening. Determine why having difficulty making payments Determine why having difficulty making payments Reiterate options Reiterate options Deferments Deferments Forbearance Forbearance Consolidation Consolidation Change in payment plan Change in payment plan Provide Lender number Provide Lender number

Assistance to lenders requesting updated addresses and phone numbers Assistance to lenders requesting updated addresses and phone numbers Provide addresses Provide addresses Reference names and phone numbers Reference names and phone numbers Work phone numbers Work phone numbers Locating student’s prevents defaults Locating student’s prevents defaults

Results National American University’s default rate for the year 2004 is 6.5% National American University’s default rate for the year 2004 is 6.5% Default rate as fallen from a high of 21.4 in 1989 to 6.5 in 2004 Default rate as fallen from a high of 21.4 in 1989 to 6.5 in 2004 Research has shown the slight increase in 2004 default rate can be attributed to a larger on-line student body. Research has shown the slight increase in 2004 default rate can be attributed to a larger on-line student body.