1. Dino Tsibouris (614) 360-1160 dino@tsibouris.com Private Loan Opportunities for the Brave at Heart (How would one structure a new private education loan program?)

2. Legal Structure Unsecured consumer loan Favorable interest rates Not dischargeable in bankruptcy if funds used for qualified educational expenses

3. Legal Structure - Bankruptcy 11 USC 523(a)(8) – Education loans funded or guaranteed by private nonprofit organizations are nondischargeable unless the borrower requests an adversary proceeding and proves undue hardship – Loans to eligible students at Title IV schools

4. Legal Structure - Bankruptcy Qualified education loans – Any debt incurred by the taxpayer solely for the purpose of paying for qualified higher education expenses – Refers to IRC 221(d)(1) for definition – Expenses paid or incurred within a reasonable time before or after loan

5. Legal Structure - Bankruptcy Qualified higher education expenses – Cost of attendance (as defined in HEA Section 472) reduced by: Student aid Expenses paid by employer tuition assistance 529s, prepaid tuition plan payments Savings bonds

6. Legal Structure - Bankruptcy Summary – Its not enough to be a loan to a student – Confirm proper use of loan funds – Confirm qualification of expenses – Debtor may request discharge of ineligible portions of the balance

7. Legal Structure - Pricing Profitable interest rates can be attractive Permissible fees and charges can provide product flexibility Lenders corporate organizational structure is important Some companies have more pricing options – LLC vs. Credit Union vs. National Bank

8. The Market Affects the Product Credit standards are tightening Cosigners enhance creditworthiness and offer additional source of collection Keeper loans more common – make-and- hold Higher quality origination with an eye to potential future (delayed) sale

9. Service Providers Assist Market Entrants License to lend or rely on bank charter Service providers provide turnkey systems or augment what you have already Origination, authentication, servicing Third party collectors collect past due accounts

10. Service Providers System Requirements Consumer compliance High online system availability during busy season Prominent lender branding Segregated funding accounts Proper document/ESIGN process and recordkeeping

11. Service Providers Legal Issues Service levels, reporting Compliance with consumer laws Uptime Disclaimer of warranties Limitation of liability Audit, infosecurity

12. Questions & Answers Dino Tsibouris (614) 360-1160 dino@tsibouris.com