1. S. 1932: Changes to the Student Loan Programs School and Student Perspectives

2. Loan Limits First year students: $ 3,500 Second year students:$ 4,500 Third and Fourth year:$ 5,500 no change Students in prep coursework:$ 7,000 Teacher certification pgms:$ 7,000 Undergrad aggregate limits:$23,000 no change Grad Unsub:$12,000 Effective:7/1/07

3. PLUS Eligibility New PLUS eligibility for graduate and professional students Same eligibility criteria as parent PLUS including credit checks and no in-school status Eligible for in-school deferment Effective:7/1/06

4. Teacher Loan Forgiveness Extends Teacher Loan Forgiveness from Teacher- Taxpayer Act $17,500 for highly qualified math, science and special ed teachers at qualified low-income schools Effective: date of enactment, retroactive to Oct. 1, 2005

5. Teacher Loan Forgiveness for Private School Teachers Under “certain conditions,” private school teachers who are exempt from State certification requirements may still be eligible for loan forgiveness. Effective: date of enactment, retroactive to Oct. 1, 2005

6. Disbursement Rule Changes Reinstatement of low-default disbursement rule waivers (cohort default rate less than 10% for 3 most recent fiscal years exempt from 2 separate disbursements for 1 term loans and from the 30- day delay requirement for first time students.) Effective: Date of Enactment

7. Repayment Plans Standard, graduated, and extended repayment plans in DL are now identical to the same plans in FFELP. Maintains differences between FFEL’s Income Sensitive and DL’s Income Contingent repayment plans Effective: 7/1/06

8. Interest Rates Stafford Loan Interest Rates: Maintains scheduled fixed interest rate for Stafford Loans at 6.8% fixed for new loans made on or after 7/1/06 Consolidation Loan Interest Rates: Maintains current fixed interest rates (calculated using the weighted average of the loans being consolidated, rounded to the next 1/8 percent) on both FFEL and DL PLUS for FFEL fixed at 8.5% PLUS for DL fixed at 7.9% Effective: 7/1/06

9. Borrower Fees - FFELP Phase out of current 3% FFELP Stafford origination fee by 7/1/10 7/1/062% 7/1/071.5% 7/1/081.0% 7/1/09.5% 7/1/100.0% Guaranty Fee mandatory at 1% Effective: 7/1/06

10. Borrower Fees – Direct Loans Phase down of current statutory 4% DL Stafford origination fee by 7/1/10 7/1/063% 7/1/072.5% 7/1/082.0% 7/1/091.5% 7/1/101.0% Equal to FFELP GA fee in 7/1/10 Secretary retains ability to use her discretion to reduce DL fees to remain competitive with FFELP as long as its cost-neutral and in best interest of federal government Effective: 7/1/06

11. Consolidation Loans No re-consolidation allowed (Prevents the two-step!) Unless FFEL consolidator is in default and wants DL ICR FFEL borrowers can’t consolidate into DL unless lender refuses a FFEL consolidation loan, even if student wants ICR repayment plan Eliminates ability of borrower to request early repayment status or forego grace in order to consolidate Eliminates DL in-school consolidation Eliminates joint consolidation loans Effective: 7/1/06

12. School as Lender Moratorium and Restrictions No loans to undergraduate students No PLUS to graduate students Award contracts on competitive basis only Must offer loans with lower origination fees or interest rates than Title IV Cohort default rate 10% or lower Annual full compliance reports to Secretary Income from sale of loans, SAP, and interest must be used for new need-based grants School must make loans by 4/1/06 and be an eligible lender by date of enactment Effective: 7/1/06

13. Lender and Guarantor Provisions Betsy Mayotte Director of Regulatory Compliance and Privacy American Student Assistance

14. Topics Rehabilitation Subsidies and Special Allowance Escrow Claims College Access Initiative Miscellaneous *Note that all mentioned trigger events are speculative

15. Rehabilitation Reduces required payments from 12 to 9 consecutive Must be made within 20 rather than 15 days from due date Note that current language still requires payments within 15 days for regaining Title IV eligibility

16. Special Allowance Removes limitations on special allowance payments for PLUS loans disbursed between 10/1/1998 and 7/1/2003 and Consolidation loans disbursed between 10/1/1998 and 7/1/2003 Instead Lender must credit excess interest earned back to ED annually Quarters where applicable interest rate exceeds SAP SAP payments made on or after 4/1/2006 for loans disbursed on or after 4/1/2006

17. Escrow Lenders may not begin to bill for interest subsidy prior to 3 days before the 1 st disbursement date Regardless of if the funds are sent through an escrow agent Funds may not stay in escrow longer than 10 days (reduced from 21)

18. Claims Ineligible borrower claims Disbursed on or after July 1, 2006 will receive 100% rather than 98% reinsurance Exceptional performers Default claims submitted on or after July 1 st, 2006 will receive 99% rather than 100% reinsurance Non-exceptional performers Default claims paid by the guarantor on or after July 1 st, 2006 will receive 97% rather than 100% reinsurance

19. College Access Initiative Guarantors must provide information on postsecondary education opportunities, programs, web sites, publications and other services within their designated states Must be provided to ED and the public Effective 270 days from date of enactment

20. Foreign Schools No longer exempt from Multiple disbursement rule Delayed disbursement rule The borrower may no longer request direct disbursement School may Note that foreign schools are eligible for the low cohort provisions.

21. Miscellaneous Military deferments Loans disbursed on or after July 1, 2001 Applications received on or after July 1, 2006 Foreign schools No longer exempt from multiple disbursement or delayed delivery rules Borrower can no longer request direct disbursement But school can Study abroad does not apply

22. Miscellaneous Forbearance Mandatory forbearances may be verbal Includes: Excessive debt National service Medical internship Lender must send terms in writing

23. Miscellaneous False Certification Loans may be discharged if was falsely approved as a result of identity theft Fraud PLUS borrowers (including graduates) convicted or pleading no contest must pay back all monies prior to future Title IV eligibility

24. Miscellaneous Wage Garnishments Guarantors may garnish up to 15% of a defaulted borrower’s disposable pay Per pay period Up from 10%