1. Washington Update NCHELP/EFC Student Loan Legal Meeting August 6, 2012 Shelly Repp, NCHELP & Vince Sampson, EFC

2. Agenda  Fiscal Cliff  Appropriations  Department of Education Initiatives  Consumer Financial Protection Bureau Initiatives  Alternative loans  Key tax issues  Dodd Frank  Election

3. Fiscal Cliff – Expiring Provisions  Programs expiring on December 31, 2012  2001 and 2003 tax cuts  Temporary measures to “boost economy”  2% reduction in payroll tax  Extended unemployment insurance  Medicare “doc fix” (postponing provider cuts)

4. Fiscal Cliff - Sequestration  January 2, 2013 Sequester Triggers  Spending cuts  $948B over 9 years ($109.3B/year)  Split evenly between defense and non-defense  Sequestration Transparency Act  Administration required to provide plan for implementing sequestration within 30 days of enactment  Not yet signed by the President

5. FY 2013 Appropriations  Senate using $1.047 trillion ceiling set by Budget Control Act  House using $1.027 trillion ceiling in “Ryan budget”  None of the twelve appropriations bills has been enacted  Leader Reid and Speaker Boehner last week announced agreement on a 6-month continuing resolution that will avoid a potential government shutdown until well after the election.  Considered after August recess  Based on Budget Control Act ceiling

6. FY 2013 Labor-HHS-Education Appropriations  Senate Appropriations Committee approved bill  $68.5B for ED  Fully funds Pell Grant at increased maximum ($5,635)  Limits length of eligibility for Subsidized Stafford loans to 150% of published program length  Cuts guaranty agency retention on rehabilitation loans  Federal assistance funds cannot be used for recruiting or marketing  For Pell, cost of education for distance education students is limited to tuition, fees and books

7. FY 2013 Labor-HHS-Education Appropriations  House Appropriations Subcommittee approved bill  $67B (estimate) for ED  Fully funds Pell Grant at increased maximum ($5635)  No guaranty agency cut  No funds to be used for implementing gainful employment, state authorization or credit hour regulations

8. 3.4% Interest Rate  3.4% interest rate for Subsidized Stafford loans  Extended through June 30, 2013  CBO scored cost of lower rate at $6.0B  Cost “paid for” by:  Limiting length of eligibility for Subsidized Stafford loans to 150% of published program length  Increasing PBGC insurance premiums and allowing corporations to reduce their pension expenses, thus increasing taxes  Passed as part of Temporary Surface Transportation Extension Act

9. Department of Education Initiatives  Not-For-Profit Servicing  Policy prohibiting two entities that share common ownership, management or control from receiving more than on 100K allocation  Requirement to prepare, maintain and test a Continuation of Mission Critical Services Plan  Fully operational within 72 hours of disaster  VFA’s

10. Department of Education Initiatives  Special consolidation  Expired June 30, 2012  $14B in funded loans from 485K borrowers  Rulemaking  Status of program integrity rules  2012 neg reg  Changes to ICR (Pay-As-You-Earn)  IBR changes  Temporary permanent disability  Others  Reasonable and affordable standard for rehabilitation  Plan to convene neg reg to prevent fraud; focus on distance education use of prepaid and debit cards to disburse aid  Final “shopping sheet”

11. Consumer Financial Protection Bureau Initiatives  Shopping sheet  Supervision of larger participants for consumer financial services  Consumer complaints  Enforcement

12. Alternative Loans  Impacts of CFPB private loan report  Differentiation among loan products  Know Before You Owe bills introduced in House and Senate  Return of bankruptcy discharge?  Student debt a proxy for for-profit school issues

13. Key Tax Issues  AMT holiday  Bipartisan bill introduced, H.R. 6180, would permanently repeal AMT for PABs  Discussed as part of tax extenders package  150(d)  Bipartisan bill introduced, H.R. 6280, would access tax-exempt financing for alternative student loans

14. Dodd-Frank  House continues passing “refining” bills; No Senate appetite for change  Muni Market report released by SEC  15 recommendations but no repeal of Tower  Key rulemakings left undone; SEC removed target dates for key rule affecting student lenders, including:  Section 941: Adopt rules (jointly with others) regarding risk retention by securitizers of asset-backed securities, and implementing the exemption of qualified residential mortgages from this prohibition.”  Section 942: Adopt rules requiring each issuer of an ABS to disclose, for each tranche or class of security, information regarding the assets backing that security.”  Section 975: Adopt permanent rules for the registration of municipal advisors.”  Section 979: Establish and staff Office of Municipal Securities  Volker rule due soon; effect on liquidity remains to be seen

15. Elections  Presidential  Still close  Battleground states are key- Arizona, Colorado, Florida, Indiana, Iowa, Michigan, Missouri, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin  Huge money game  Romney/RNC June 2012 = $106 million; Obama reelect $35  Projection of $700 million total for TV ADS  Senate  10 toss-ups – HI, MO, MT, NM, ND, VA, WI, ME, MA, NV  Could be as important as Presidential because of agenda and committee control  Dodd-Frank reforms  Republican victories could portend budget scoring reform