1. Presenter: Mary Lyn Hammer Proprietary A PLAN of ACTION Cohort Default Rates & Gainful Employment

2. Proprietary RISK

3. Borrowers Who Historically Became Delinquent Borrowers Who Historically Paid BUT Are Currently Becoming Delinquent Borrowers Who Historically Are Never Delinquent ADVERSE conditions are IMPACTING YOUR student loans Proprietary RISK Challenges

4. Proprietary RISK Challenges FY 2008 Trial 3-year Cohort Default Rates Private 2-year CDR UP 79.3% Proprietary 4-year+ CDR UP 81.1% Public Less Than 2-year CDR UP 94.0% Proprietary Less Than 2-year CDR UP 95.2% Proprietary 2-3 Year CDR UP 96.8% National Average CDR UP 83.6%

5. Proprietary RISK Challenges FY 2009 2-year Cohort Default Rates Private Schools CDR UP 15.0% Public Schools CDR UP 20.0% National Average CDR UP 25.7% Proprietary Schools CDR UP 29.3% There is HOPE! You can turn your rates around with the right intensity and processes.

6. Proprietary RISK Challenges CDR DefinitionLoss of Eligibility Disbursement Benefits 2-Year CDR 3 Consecutive Years Over 25% 1 Year Over 40% 3 Consecutive Years Under 10% 3-Year CDR 3 Consecutive Years Over 30% 1 Year Over 40% 3 Consecutive Years Under 15% The thresholds for eligibility and participation changes are not consistent with real increases. Accrediting agencies have been asked by the U.S. Department of Education to place additional restrictions and oversight on those institutions they identify for at-risk of high CDR’s. Institutional Eligibility

7. Proprietary Complexities PREPARE

8. Proprietary Complexities PREPARE Eligibility for Title IV funding, including federal loan and grant programs, is dependent upon the institution’s cohort default rate (CDR). Based on the HEOA (Higher Education Opportunity Act) passed on August 14, 2008, the current 2-year definition will be used until there are 3 consecutive CDR rates under the new 3-year definition. FY 2009 CDR through 9/30/2011 will be the first cohort default rate period measured under the new 3-year definition. TRANSITION of Cohort Default Rate Definitions

9. Proprietary RISK Challenges Programmatic Eligibility All Proprietary Institution Programs except those with a Baccalaureate Degree in Liberal Arts that have been regionally accredited since October 1, 2007; or preparatory courses of study that provide course work necessary for enrollment in an eligible program. Non-Profit, Public, and Private Institution Programs except programs that lead to a degree; Programs that are at least 2 years in length and fully- transferable to a bachelor’s degree program; or preparatory courses of study that provide course work necessary for enrollment in an eligible program. Teacher Certification Program Exclusion applies if the program does not lead to a certificate awarded by the institution. Eligible Program for Gainful Employment 34 C.F.R. 668.7(a)(3)(i) A program refers to any educational program offered by the institution under 668.8(c)(3) or (d).

10. Proprietary RISK Challenges A program must pass at least one of the three metrics to remain eligible for federal student aid funding. Programmatic Eligibility Gainful Employment Metrics: Repayment Rate: At least 35% of the former students are repaying their loan, as demonstrated by a balance that declines over the course of the year (prorated if multiple programs or institutions are included in the consolidation calculation.) Debt-to-Discretionary Income Ratio: The annual loan payment does not exceed 30% of the typical graduates’ discretionary income. Debt-to-Total Earnings Ratio: The annual loan payment does not exceed 12% of the typical graduates’ total earnings.

11. Proprietary RISK Challenges If a program fails all three of the metrics Programmatic Eligibility After 1 failure: The institution must disclose the amount by which the program missed minimal acceptable performance, the program’s plans for improvement, and establish a 3-day waiting period before students can enroll. After 2 failures within 3 years: The institution must tell students in the failing program that their debts may be unaffordable, the program may lose eligibility, and what transfer options exist. After 3 failures within 4 years: The program loses eligibility for federal student aid. Institutions cannot reestablish the program’s eligibility for at least 3 years; however, they can continue to operate without federal student aid.

12. Proprietary Complexities PREPARE Eligibility MEASUREMENT of Gainful Employment Programs By the 6-digit OPE ID Code (School level, not campus level) By the CIP Code established by the National Center for Education (NCES) and assigned to the program and approved by the Secretary of Education Credential Level (i.e. undergraduate certificate, associate’s degree, bachelor’s degree, post-baccalaureate certificate, master’s degree, doctoral degree, and first-professional degree)

13. Proprietary Complexities PREPARE EXCLUSIONS for All Gainful Employment Measures PLUS Loans made to parent borrowers TEACH Grant-related Unsubsidized Loans Loans included in an In-school Deferment at any time during the most recent FY Loans included in an Military-related Deferment at any time during the most recent FY Loans discharged due to the death of the borrower. Loans assigned or transferred to the Secretary for discharge as a result of a total and permanent disability of the borrower.

14. Proprietary Complexities PREPARE EXCEPTIONS for Programs with Small Numbers 2-year Measures are used if there are 30 or more students in the program at the relevant credential level after exclusions 4-year Measures are used if there are fewer than 30 students in the program at the relevant credential level after exclusions Programs are exempt if there are fewer than 30 borrowers in the 4-year measures for the program at the relevant credential level after exclusions

15. Proprietary Complexities PREPARE INCLUSIONS for Repayment Rates FFEL Loans Direct Loans Consolidation Loans that refinanced eligible FFEL or Direct Loans Loans Paid-in-Full by the Borrower (LPF) if: They have never been in default In the case of a Consolidation Loan when it or any underlying FFEL or Direct Loan have never been in default Loans with Payments Made (PML) if: They have never been in default In the case of a Consolidation Loan when it or any underlying FFEL or Direct Loan have never been in default Payments made by the borrower during the most recent FY reduce the outstanding balance of a loan plus any accrued and unpaid interest to an amount that is less than the outstanding balance of the loan at the beginning of the year. A borrower is in the process of qualifying for Public Service Loan Forgiveness and submits an employment certification to the Secretary that demonstrates the borrower is engaged in qualifying employment and the borrower made qualifying payments on the loan during the most recently completed FY A borrower is making scheduled payments under income-based (IBR) or income- contingent (ICR) or any other repayment plan with a maximum limit of 3% of the total dollar amount for interest-only or negative amortization loans.

16. Repayment Rate Calculations OOPB of LPF plus OOPB of PML OOPB Proprietary Determination for inclusion or exclusion is made on a borrower-by-borrower basis for all federal loan borrowers. Calculation of the REPAYMENT RATE is based on the dollar amounts associated with each borrower within CIP code at the highest relevant credential level. REPAYMENT RATE = PREPARE Complexities The OOPB is the Outstanding Original Principal Balance including outstanding interest on the date the borrower entered repayment. The determination of principal reduction is based on the outstanding balance at the beginning and end of the fiscal year of the calculation; however those dollar amounts are not used in the calculation.

17. Repayment Rate Calculations PREPARE Complexities Calculation Options for CIP's with MORE THAN 30 BORROWERS (Cumulative after exclusions) Sanction Year Principal Reduction YearCalculation Option Repayment Years Date Entered Repayment Dates Last Date of Attendance Standard CDR Servicing 2013 FY 2012 OOPB on 10/1/2011 OOPB on 9/30/2012 2YP-A (2012, 2013, 2014) FY 2010-201110/1/2009-9/30/20113/30/2009-3/29/2011 FY 2010 servicing ends 9/30/2012 Servicing is simultaneous 2YPFY 2008-200910/1/2007-9/30/20093/30/2007-3/29/2009 FY 2008 servicing ended 9/30/2009 FY 2009 servicing ends 9/30/2011 2YP-R *FY 2005-200610/1/2004-9/30/20063/30/2004-3/29/2006FY 2005 servicing ended 9/30/2006 2014 FY 2013 OOPB on 10/1/2012 OOPB on 9/30/2013 2YP-A (2012, 2013, 2014) FY 2011-201210/1/2010-9/30/20123/30/2010-3/29/2012 FY 2011 servicing ends 9/30/2013 Servicing is simultaneous 2YPFY 2009-201010-1-2008-9/30/20103/30/2008-3/29/2010FY 2009 servicing ends 9/30/2011 2YP-R *FY 2006-200710/1/2005-9/30/20073/30/2005-3/29/2007FY 2006 servicing ended 9/30/2007 2015 FY 2014 OOPB on 10/1/2013 OOPB on 9/30/2014 2YP-A (2012, 2013, 2014) FY 2012-201310/1/2011-9/30/20133/30/2011-3/29/2013 FY 2012 servicing ends 9/30/2014 Servicing is simultaneous 2YPFY 2010-201110-1-2009-9/30/20113/30/2009-3/29/2011FY 2010 servicing ends 9/30/2012 2YP-R *FY 2007-200810/1/2006-9/30/20083/30/2006-3/29/2008FY 2007 servicing ended 9/30/2008 2016 FY 2015 OOPB on 10/1/2014 OOPB on 9/30/2015 2YPFY 2011-201210-1-2010-9/30/20123/30/2010-3/29/2012FY 2011 servicing ends 9/30/2013 2YP-R *FY 2008-200910/1/2007-9/30/20093/30/2007-3/29/2009FY 2008 servicing ended 9/30/2009 2017 FY 2016 OOPB on 10/1/2015 OOPB on 9/30/2016 2YPFY 2012-201310-1-2011-9/30/20133/30/2011-3/29/2013FY 2012 servicing ends 9/30/2014 2YP-R *FY 2009-201010/1/2008-9/30/20103/30/2008-3/29/2010FY 2009 servicing ends 9/30/2010

18. Repayment Rate Calculations PREPARE Complexities Calculation Options for CIP's with LESS THAN 30 BORROWERS (Cumulative after exclusions) Sanction Year Principal Reduction Year Calculation Option Repayment Years Date Entered Repayment Dates Last Date of Attendance Standard CDR Servicing 2013 FY 2012 OOPB on 10/1/2011 OOPB on 9/30/2012 4YPFY 2006-200910/1/2005-9/30/20093/30/2005-3/29/2009FY 2006 servicing ended 9/30/2007 4YP-R **FY 2003-200610/1/2002-9/30/20063/30/2002-3/29/2006FY 2003 servicing ended 9/30/2004 2014 FY 2013 OOPB on 10/1/2012 OOPB on 9/30/2013 4YPFY 2007-201010/1/2006-9/30/20103/30/2006-3/29/2010FY 2007 servicing ended 9/30/2008 4YP-R **FY 2004-200710/1/2003-9/30/20073/30/2003-3/29/2007FY 2004 servicing ended 9/30/2005 2015 FY 2014 OOPB on 10/1/2013 OOPB on 9/30/2014 4YPFY 2008-201110/1/2007-9/30/20113/30/2007-3/29/2011FY 2008 servicing ended 9/30/2009 4YP-R **FY 2005-200810/1/2004-9/30/20083/30/2004-3/29/2008FY 2005 servicing ended 9/30/2006 2016 FY 2015 OOPB on 10/1/2014 OOPB on 9/30/2015 4YPFY 2009-201210/1/2008-9/30/20123/30/2008-3/29/2012FY 2009 servicing ended 9/30/2010 4YP-R **FY 2006-200910/1/2005-9/30/20093/30/2005-3/29/2009FY 2006 servicing ended 9/30/2007 2017 FY 2016 OOPB on 10/1/2015 OOPB on 9/30/2016 4YPFY 2010-201310/1/2009-9/30/20133/30/2009-3/29/2013FY 2010 servicing ended 9/30/2011 4YP-R **FY 2007-201010/1/2006-9/30/20103/30/2006-3/29/2010FY 2007 servicing ended 9/30/2009

19. Repayment Rate Calculations Proprietary Required Medical or Dental Internship or Residency PREPARE Complexities The *2YP-R and *4YP-R calculations are used when a medical or dental internship or residency as identified by the institution is required. For this purpose, a required medical or dental internship or residency is a supervise training program that: (1) Requires that student to hold a degree as a doctor of medicine or osteopathy, or a doctor of dental science; (2) Leads to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers post-graduate training; and (3) Must be completed before the borrower may be licensed by the State and board certified for professional practice or service.

20. Calculated for ALL education debts for federal and non-federal loans, including FFEL, Direct, Consolidation, Private, and Institutional Loans. Proprietary EARNINGS RATE = DISCRETIONARY INCOME RATE = Annual Loan Payment Mean or Median Annual Earnings – (150% *Poverty Guideline) Annual Loan Payment Mean or Median Annual Earnings Threshold of 12% PREPARE Complexities Debt-to-Earnings Ratios Threshold of 30%

21. Calculated for ALL education debts for federal and non-federal loans, including FFEL, Direct, Consolidation, Private, and Institutional Loans. Proprietary Mean or Median Debt PREPARE Complexities Debt-to-Earnings Ratios Annual Earnings As a cohort, the HIGHER of… The Mean or Median Annual Earnings Obtained from the Social Security Administration (SSA) By Student, the LESSER of… The Total Amount of Debt the Student Incurred OR The Total Amount of Tuition and Fees The mean and median debt payment calculations are based on the current student loan interest rate and the credential level of the program: 10 year standard repayment calculation for undergraduate, post-baccalaureate certificate or associate’s degree programs 15 year standard repayment calculation for bachelor’s and master’s degree programs 20 year standard repayment calculation for doctoral or first-professional degree programs

22. Proprietary PREPARE Complexities Debt-to-Earnings Ratios Calculated for ALL education debts for federal and non-federal loans, including FFEL, Direct, Consolidation, Private, and Institutional Loans. Calculation Options for CIP's with MORE THAN 30 BORROWERS (Cumulative after exclusions) Sanction YearReporting Year + Assumed Earnings Year Calculation Option Program Completion Years Program Completion Date (Last Date of Attendance) 2013FY 20122011 2YPFY 2008-200910/1/2007-9/30/2009 2YP-R *FY 2005-200610/1/2004-9/30/2006 2014FY 20132012 2YPFY 2009-201010-1-2008-9/30/2010 2YP-R *FY 2006-200710/1/2005-9/30/2007 2015FY 20142013 2YPFY 2010-201110-1-2009-9/30/2011 2YP-R *FY 2007-200810/1/2006-9/30/2008 2016FY20152014 2YPFY 2011-201210-1-2010-9/30/2012 2YP-R *FY 2008-200910/1/2007-9/30/2009 2017FY20162015 2YPFY 2012-201310-1-2011-9/30/2013 2YP-R *FY 2009-201010/1/2008-9/30/2010 + Outstanding Question: Is the earnings based on information from the prior year or the current year (reporting year)?

23. Proprietary PREPARE Complexities Debt-to-Earnings Ratios Calculated for ALL education debts for federal and non-federal loans, including FFEL, Direct, Consolidation, Private, and Institutional Loans. + Outstanding Question: Is the earnings based on information from the prior year or the current year (reporting year)? Calculation Options for CIP's with LESS THAN 30 BORROWERS (Cumulative after exclusions) Sanction YearReporting Year Assumed Earnings YearCalculation Option Program Completion Years Program Completion Date (Last Date of Attendance) 2013FY 20122011 4YPFY 2006-200910/1/2005-9/30/2009 4YP-R **FY 2003-200610/1/2002-9/30/2006 2014FY 20132012 4YPFY 2007-201010/1/2006-9/30/2010 4YP-R **FY 2004-200710/1/2003-9/30/2007 2015FY 20142013 4YPFY 2008-201110/1/2007-9/30/2011 4YP-R **FY 2005-200810/1/2004-9/30/2008 2016FY20152014 4YPFY 2009-201210/1/2008-9/30/2012 4YP-R **FY 2006-200910/1/2005-9/30/2009 2017FY20162015 4YPFY 2010-201310/1/2009-9/30/2013 4YP-R **FY 2007-201010/1/2006-9/30/2010

24. Repayment Rate Calculations Proprietary PREPARE Complexities Draft Debt Measures and Data Corrections: Pre-draft Corrections within 30 days: Accuracy of the data used in the list of students at least 30 days prior to the release of the draft calculations Post-draft Corrections within 45 days: Accuracy of data used in the list of students Accuracy of the loan data used to calculate the mean or median debt Additional Information: Institutions may not challenge the accuracy of the income data provided by the SSA If the SSA cannot provide income data for any students, the highest income data used for the equivalent number of students will be removed from the calculation Alternate income data may be used including: State data Survey data supported by an attestation audit BLS data

25. Proprietary RISK Challenges FY 2009 2-year Cohort Default Rates Private Schools CDR UP 15.0% Public Schools CDR UP 20.0% National Average CDR UP 25.7% Proprietary Schools CDR UP 29.3% Champion CDR’s DOWN 7.1% You can turn your rates around with the right intensity and processes. Champion Tenured Clients Repayment Rate Average is 45% Results from ED released August 2010

26. ReputationEnrollments Employer Confidence Student Satisfaction Loss of Eligibility School Value 30-50% Variation EVERYTHING What do you have to GAIN or LOSE? Challenges RISK

27. Dropped Students Graduated Students Employers Reason for Dropping Potential for Re-enrollment Potential Problems within the School Can Be Identified & Corrected Reason for Dropping Potential for Re-enrollment Potential Problems within the School Can Be Identified & Corrected Student Satisfaction Evaluated Appropriate Job Placement Services Improves Placement Rates Verified Employment Information for Annual Reporting of Placement Rates and Debt-to-income Ratios Student Satisfaction Evaluated Appropriate Job Placement Services Improves Placement Rates Verified Employment Information for Annual Reporting of Placement Rates and Debt-to-income Ratios Employer Satisfaction Evaluated Potential Issues with Training Can Be Identified & Adjusted to Fit Employer’s Needs Potential for Future Employment Opportunities Improves Placement Rates Employer Satisfaction Evaluated Potential Issues with Training Can Be Identified & Adjusted to Fit Employer’s Needs Potential for Future Employment Opportunities Improves Placement Rates Institutional Effectiveness Improved Satisfaction Positive Relationships Who Why What What Your School Can Do

28. PROACTIVE debt management is an INVESTMENT REACTIVE debt management is a CONSEQUENCE There is no one MIRACLE for SUCCESSFUL debt MANAGEMENT What Your School Can Do

29. Make Students RESPONSIBLE For Their Own REALITIES What Your School Can Do

30.  Master promissory notes and electronic processes have had unintended consequences by taking the responsibilities out of the borrowers’ hands.  Get the students involved in the responsibilities: Individual Entrance Interviews Check Disbursement Acknowledgements Individual Exit Interviews Address and enrollment updates  Use every opportunity you can during and after enrollment to encourage interest payments during deferments and forbearances.  Encourage payments first. If the borrower can’t make full payments, encourage them to pay the accruing interest at a minimum. You can not require them to do so, but you can encourage the payments.  Repeat the basics MANY times.  Put complicated details in writing. Make Students Responsible for Their Own Realities

31. What Your School Can Do Make Students Responsible for Their Own Realities  Have every borrower with prior loans bring the loans current before starting school.  If the borrower is in default, have them fully rehabilitate the loan before starting school. 9 on-time payments within10 months Paid-in-Full Rehabilitated through Consolidation Getting a new loan after 6 on-time payments does not rehabilitate the loans for the student or for the school!  Have every borrower sign an In-school Deferment when starting school and when there is a change in their anticipated graduation date.  Have students sign Change of Address Forms for the lenders, servicers, and guarantors.

32. What Your School Can Do Make Students Responsible for Their Own Realities Skip tracing has become a manual process.  Collect at least 6 different references  Verify the references before disbursing funds  Mail grades and other pertinent information  Send out graduation announcements to “references” collected before graduation  Collect the graduation announcement information through your teachers or student services, not through financial aid You Can’t Help Borrowers Who You Can’t Find

33. What Your School Can Do Make Students Responsible for Their Own Realities Borrower Education and Accountability Improving Borrower Responsibility

34. BaCfreedom.com B e A C hampion… Choose Financial FREEDOM Champion STUDENTS enjoy the benefits of having their own website to develop life skills and financial literacy that will enhance their abilities to succeed in attaining their financial freedom and in becoming a CHAMPION for LIFE!

35. Powered by BaCfreedom.com ADVERSE conditions Are IMPACTING your student loans MULTIPLE loan programs servicers loan payments delinquent loans forms to cure loans If any ONE thing goes WRONG… Everyone LOSES… Students Schools Taxpayers

36. Teaching ACCOUNTABILITY Borrower Education PPT in a colorful 14-slide presentation that motivates students to make good decisions for their financial freedom by focusing on making interest payments, choosing a repayment schedule that drives long- term success, and advising them of their rights and responsibilities. Both poverty and RICHES begin with a THOUGHT You have a CHOICE to DETERMINE your DESTINY EDUCATION is a means for making DREAMS come TRUE PAYING student loans is a MEANS for making FINANCIAL FREEDOM come TRUE Be EXTRAVAGANT with your DETERMINATION Be CONSERVATIVE with your FINANCES CREDIT is an ILLUSION of having MONEY that you DON’T really have

37. Teaching ACCOUNTABILITY Borrower Education Sheets that include pertinent information from the Borrower Education PowerPoint in a colorful and comprehensive 2-sided sheet to give to borrowers during Entrance and exit Counseling or any other relevant borrower education sessions.

38. Teaching ACCOUNTABILITY Business Cards in a colorful format for students to carry with them so they can quickly and easily contact Champion College Services if they need any type of assistance. Space is provided so they can fill in servicer information or school information.

39. Teaching ACCOUNTABILITY Set of 3 Awareness Posters are colorful in their 16 x 20 size and help students consider the impact that paying their student loans has on their lives.

40. Thank You! PROACTIVE debt management is an INVESTMENT REACTIVE debt management is a CONSEQUENCE There is no one MIRACLE for SUCCESSFUL debt MANAGEMENT 800.761.7376 ChampionCollegeServices.com

41. Ms. Mary Lyn Hammer’s belief that education is the vehicle for making dreams come true has led her in a passionate fight, that began in 1987, rectifying problems in the higher education industry to insure future participation for all students. Her innovative “Hands On” Default Management Program is recognized by the Department of Education for its remarkable results. Ms. Hammer is the Owner, Founder, President and CEO of Champion College Services, an international company offering default prevention for Federal and private student loans, job placement verification, skip tracing, consulting services, and custom surveys for students, alumni, and employers. She specializes in staff training, program development, and default prevention operations. She has participated in training sessions and workshops for numerous state, provincial, regional, national, and private associations in both the U.S. and Canada in a continued effort to share experiences and knowledge. Ms. Hammer was active in aiding the Department of Education in drafting language for default management that was in effect from 1989 until 1996 (now known as “Subpart M”); she has served three times on negotiated rulemaking committees and was instrumental in working with the Department on regulatory language for cohort default rate appeals, school-based loan issues, and the Cohort Default Rate Guide; and she has worked closely with Congressional Representatives and key staff at the U.S. Department of Education on many issues over her 20 year career in the higher education industry to insure program integrity and access to low income students. Her accomplishments include the 1989 nomination for the Member of the Year for the National Association of Trade and Technical Schools, the 1998 Outstanding Associate Member for the Arizona Private School Association, the 2000 Best Associate Member Participation for the Arizona Private School Association, the Millennium (2000) and 2006 editions of Who’s Who in Executives and Professionals for both the U.S. and Canada, the 2000 Wall Street Journal’s Businessman of the Year Award for Arizona, the 2005 CCA National Achievement Award for the Allied Member of the Year, and the 2007-2008 Best Associate Member Participation for the Arizona Private School Association. She has been elected four times to the Board of Directors for the Career College Association (CCA). Additionally, she serves on the Board of Directors for the Northwest Career College Federation (NWCCF) and is the Charter Member and former Chairwoman for the Higher Education Allied Health Leaders (HEAL) Coalition. (800) 761-7376 4600 S. Mill Avenue, Suite 180, Tempe, Arizona 85282 ML@ChampionCollegeServices.com Biography of President and CEO