1. IFC Investing in Student Lending
November2009

2. Agenda Overview of IFC’s Health & Education Department
Student Lending Programs
DUOC and IFC Student Loan Program
Other Examples of IFC Student Loan Facilities

3. IFC Health and Education Department
Health and Education Department (CHE) was established in FY02
Health and Education Sectors are Pillars of IFC’s Strategy
Approximately 60% annual commitment growth since FY03
CHE has 2 health and 1 education specialists
Health Sector:
78 private health projects in 18 countries
US$ 3,013 mln of total project value
US$ 901 mln of CHE total investments
Education Sector:
52 private education projects in 18 countries
US$ 1,013 mln of total project value
US$ 281 mln of CHE total investments
CHE Portfolio by Product*
CHE Portfolio by Country*
* Data as of March 2009 3

4. Areas of Private Education Investment
Primary/Secondary
Technical & Vocational
Tertiary/Post-Secondary
Sub Saharan Africa
Latin America
Europe & Central Asia
Middle East
Middle East
East Asia & Pacific
South Asia
IDA Countries
Direct investments
Schools Facilities
Student Loans

5. Types of Education Investment
Student Loan facilities are the fastest growing type of commitment in the education portfolio, representing 8/16 of new investments since FY07 as well as 7/13 of those made at the tertiary level
Declining direct investments also have been offset by the emergence of school facilities, which represent 3/5 primary and secondary level investments originated since FY05
Type of Education Investments (Active Projects Only)
As of June 30, 2009

6. Student Loans in Emerging Markets
There is strong market demand but few successful experiences
Most programs are run by governments and have issues
Highly dependent on government subsidies
Inefficient collecting system
Not all players are accountable
Student loans have a negative reputation
Collection difficulties
Lack of credit reporting
Adequate funding is generally not available and financial structures are inefficient

7. IFC Student Loan Facilities
CHE has committed $89 million in loan guarantees to leverage a maximum portfolio of $286 million in student loans across 8 countries
An anticipated +175,000 loans, averaging +US$2,200 will support tertiary and post-secondary students
Countries include: Indonesia, Mexico, Chile, Brazil, Kenya, West Bank/Gaza, Jordan and Egypt
Foundation & institutional partners assume first loss risk. IFC’s senior risk position has never been exercised
As of July 31, 2009

8. Structure of an Unfunded Student Loan Program
Role of IFC:
Risk taker (senior losses)
Engages banks and universities
Arranger. Uses prior experience to assist in:
developing loan criteria
designing loan features
creating portfolio scenarios
structuring risk sharing arrangements
providing tested legal documentation
Role of First Loss Provider:
Contributes capital to cover the first loss and possible interest subsidy
100%
Fin’l Partner
Senior Tranche
IFC x%
University
1st loss provider
First loss 0%

9. DUOC Loan Program with IFC
Risk-sharing facility between IFC, local commercial bank (BCI), and DUOC
DUOC: acts as provider of first loss
IFC: participates as senior risk guarantor
BCI: acts as senior risk guarantor and servicer
Potential portfolio of US$50 million
Product features:
Target Interest Rate: below 10%
Tenor: Study + up to 7 years
First-loss: university will fund a reserve account
Co-signer required (typically parent)
Bank and Institute share in screening and monitoring

10. Structure of Unfunded Student Loan Facility
IFC
DUOC (1st Loss)
First Loss
Reserve
Risk
Protection
Student A
Disbursement Made to University
Repayment by Families / Students
BCI (bank)
Student B
Student C

11. Benefits of a Student Loan Program
Students: Improves access and affordability of higher education
Universities:
Enables enrollment of all academically qualified students
Increases enrollments
Improves financial position of Universities and shifts financial managemnt to Banks
Banks: Increases banks’ access to new customers
First Loss Provider: enables education spending to be leveraged seven to ten times

12. Other IFC Student Lending Programs

13. Funded Student Loan Programs: IFC’s Experience
Project
Key Features
FINEM (Mexico)
Specialized non-banking institution focusing on education financing
IFC participating with US$15 mm debt financing
In-depth analysis on student’s study-area and related employment/salary probabilities, family size and income, etc.
Product features:
Product Interest Rate: 9.75%
Tenor: up to 10 years
Grace on principal during studies
First-loss: University takes 100% of the loss by repurchasing all loans past 90 days due
Co-signer required (parent)
Finances up to 80% of tuition costs
Eduloan
(South Africa)
Institution financing student tuition since 1996 – IFC debt-financed since 2001
Targets low-wage government employees (automatic deduction from payroll)
Short-term maturity: months
Receives substantial discounts (~15%) from universities to supplement the return (student still repays the full face-value of tuition)

14. Unfunded Student Loan Programs: IFC’s Experience
Project
Key Features
Real Student Fin
(Brazil)
Risk-sharing facility involving IFC, ABN AMRO’s subsidiary in Brazil, Banco Real, and multiple universities
IFC participating as senior risk guarantor and will share second loss 50/50 with Banco Real
Potential portfolio of US$50 mm
Product features
Interest Rate: 20%
Tenor: up to 5 years, immediate amortization
Only final three years of tuition are financed (high drop-out rates in first year)
Co-signer required (parent)
First-loss: Universities (10%)
Universities help in marketing/screening/collection
Palestine Education Fund (West Bank & Gaza)
Risk-sharing facility involving IFC, Palestine Education Fund (“PEF”) and the Bank of
Palestine
IFC participating as senior risk guarantor and will share second loss with Bank of Palestine
Potential portfolio of US$40 mm
Product features:
Tenor: three years after one year grace period
PEF will contribute funds to cover the interest
expense during studies
Co-signer required (parent)
First-loss: PEF (20%)
Universities help in
marketing/screening/collection

15. Unfunded Student Loan Programs: IFC’s Experience
Project
Key Features
Student Loans
(Kenya)
Risk-sharing facility involving IFC, Commercial Bank of Africa (local commercial bank) and Strathmore University, a private university specializing in commerce and information technology
Similar facilities are expected between IFC, Commercial Bank of Africa and other tertiary educational institutions, who will provide a first loss
IFC participating as a senior risk guarantor
Potential portfolio of US$4.5 mm
Product features:
Interest Rate: 12% (vs. rates in excess of 25% on credit cards)
Tenor: 1 year
First-loss: Strathmore (5%)
Parent is the primary borrower
Finances up to 100% of tuition
Strathmore helps in marketing/collection
(Jordan)
Risk-sharing facility between IFC, Cairo Amman Bank (local commercial bank) and Omnix International, a provider of software, networking and security solutions in the Middle East
IFC participating as senior risk guarantor
Potential portfolio of US$25mm
Variable Interest Rate: ~11%
Tenor: 8 years
Only interest payments during study
First-loss: Omnix International will fund a reserve account (20%)
Co-signer required (typically parent)

16. Unfunded Student Loan Programs: IFC’s Experience
Project
Key Features
Sampoerna (Indonesia)
Risk-sharing facility involving IFC, Bank International Indonesia (local commercial bank), and an Indonesian charitable foundation (Sampoerna) focusing on student scholarships
IFC participating as a senior risk guarantor and structuring agent
Potential portfolio of US$20 mm
Product features:
Product Interest Rate: 19% (vs. ~ 40% rates on credit cards)
Tenor: 1-3 years, repayment before graduation
First-loss: Sampoerna Foundation (12%)
Co-signer required (parent)
Finances up to 100% of tuition
Universities help in marketing/screening/collection