Permissible Activities in the FFELP

1. Permissible Activities in the FFELP Will Shaffner Director Business Development The Higher Education Loan Authority for the State of Missouri (MOHELA) MASFAP Conference November 2007 Fall 2007 MASFAP Conference Life begins at 40 !

2. FFELP Participants • Congress • Department of Education • Guarantors • Schools • Lenders • Servicers • Secondary Markets • Students Fall 2007 MASFAP Conference Life begins at 40 !

3. FFELP Oversight • Congress Establishes Law • Department of Education Issues Guidance • Regulations (Interpretation of Law) • Dear Colleague Letters • Guarantors Fall 2007 MASFAP Conference Life begins at 40 !

4. Legislative Process • Reauthorization of the Higher Education Amendment (REA HEA) • Act of Congress • House & Senate Bills • Conference • Signed into Law • Other Forms of Legislation • Budget Reconciliation Fall 2007 MASFAP Conference Life begins at 40 !

5. Regulatory Process • Department of Education Guidance • Negotiated Regulation (Neg Reg) • Notice of Proposed Rule Making (NPRM) • Dear Colleague Letter • Occurs as Needed Fall 2007 MASFAP Conference Life begins at 40 !

6. Legislative Process • Budget Reconciliation • Financial in Nature (PayGo) • Act of Congress • First in 2006 • Again in Oct 2007 Fall 2007 MASFAP Conference Life begins at 40 !

7. Where Are We NowCurrent Situation • Budget Reconciliation • College Cost Reduction Access Act (CCRAA) of 2007 • Majority is financially driven • Affects guarantors, lenders, loan holders & secondary markets • Indirectly impacts schools & borrowers Fall 2007 MASFAP Conference Life begins at 40 !

8. Where Are We NowCurrent Situation • Current Laws/Regulatory Items • CCRAA • SLATE Act (New York) • Department of Education Guidance Fall 2007 MASFAP Conference Life begins at 40 !

9. Where Are We NowCurrent Situation • Codes of Conduct • Inconsistently Created • Preemption Fall 2007 MASFAP Conference Life begins at 40 !

10. Review of Current Legislation and Guidance • CCRAA • Largely financial affecting guarantors, lenders and student loan holders • Changes here could impact benefits and services Fall 2007 MASFAP Conference Life begins at 40 !

11. Review of Current Legislation and Guidance • Student Lending Accountability, Transparency and Enforcement Act (SLATE) Act • For New York Colleges & Universities • Organizations doing business in New York • Shaping the national direction • Institutions with multiple campuses could be affected • Department of Education • Final Regulations 11/1/07 • Codes of Conduct & other agreements • May be legally binding Fall 2007 MASFAP Conference Life begins at 40 !

12. Student Lending Accountability, Transparency and Enforcement Act (SLATE) • No gifts can be given by a lender to a school that are not more than nominal value for consideration or advantage in relation to the lenders education loan activities • EEs/FAOs of Colleges & Universities are forbidden from accepting or receiving gifts from lenders Fall 2007 MASFAP Conference Life begins at 40 !

13. Student Lending Accountability, Transparency and Enforcement Act (SLATE) • EEs/FAOs of Colleges & Universities are prohibited from accepting remuneration for serving as member of advisory boards or receiving reimbursement of expenses for doing so • PLL – If a school has a Preferred Lender List, then any lender on the list must: • Provide assurances to those who take out loans that the advertised benefits upon repayment will continue to inure to the benefit of the borrower regardless of whether the loans are sold • Must disclose of the lender has an agreement to sell loans with another lender Fall 2007 MASFAP Conference Life begins at 40 !

14. Department of Education Final Regulations 11/1/07 • Permissible activities include: • Largely affect lenders • Indirectly impacting schools & borrowers • Assistance to a school that is comparable to the kind of assistance provided to FDSLP by te Secretary • Support of & participation in a school’s or guaranty Agency’s Out reach activities, excluding initial or exit counseling • If printed material is provided by lender, must be documented Fall 2007 MASFAP Conference Life begins at 40 !

15. Department of Education Final Regulations 11/1/07 • Meals, refreshments & receptions reasonable in costs & timed in conjunction with training, meeting or conference events, if open to all attendees • Toll-free telephone numbers for use by schools or others to obtain information about FFELP & free data transmission service for use by schools to electronically submit loan data Fall 2007 MASFAP Conference Life begins at 40 !

16. Department of Education Final Regulations 11/1/07 • Reduced Origination Fee • Reduced Interest Rate • Purchase a loan made by another lender at a premium • Other benefits to a borrower under a repayment incentive program that requires, at a minimum, one or more scheduled payments to receive or retain the benefit Fall 2007 MASFAP Conference Life begins at 40 !

17. Department of Education Final Regulations 11/1/07 • Items of nominal value to schools, school-affiliated organizations & borrowers that are offered as a form of generalized marketing or advertising or to create good will • Can provide staffing services to a school under an emergency basis, such as a state or federally declared natural disaster and other localized disaster and emergencies identified by the Secretary Fall 2007 MASFAP Conference Life begins at 40 !

18. Department of Education Final Regulations 11/1/07 • Other services as identified and approved by the Secretary through public announcement, such as a notice in the Federal Register Fall 2007 MASFAP Conference Life begins at 40 !

19. Department of Education Final Regulations 11/1/07 • Preferred Lender Lists (PLL) • Can’t be used to deny or otherwise prevent borrower’s choice of lender • If using a PLL, a school must have at least three un-affiliated lenders • A lender on the school’s PLL must, if offering borrower benefits, the lender must provide the benefit to all borrowers at that school Fall 2007 MASFAP Conference Life begins at 40 !

20. Department of Education Final Regulations 11/1/07 • Preferred Lender Lists (PLL) • School must disclose to prospective borrowers (if using a PLL) • Method and criteria used to select any lender that is recommended or suggested • Provide comparative information about interest rates & other benefits being offered • Include a prominent statement, in any information related to its list of lenders, advising that they are not required to use one of the school’s recommended or suggested lenders Fall 2007 MASFAP Conference Life begins at 40 !

21. Codes of Conduct and Other Agreements • Inconsistently Created • State-by-State • Not all states have issued them • Impacts institutions with multiple campuses • Impacts organizations doing business in multiple states • May or may not be enforceable • Preemption • “…any State law that conflicts with or “stands as an obstacle to the accomplishment and execution of the full purposes and objectives” of a Federal law is preempted…” Fall 2007 MASFAP Conference Life begins at 40 !

22. Review of Pending Legislation and Guidance • REA HEA • Extended a record 8th time • Not counting the automatic 1 year extension • HR 3746 • S 1642 Fall 2007 MASFAP Conference Life begins at 40 !

23. Review of Pending Legislation and Guidance • H.R. 3746 • Student Loan Auction • PLUS Loan Interest Rates • Guarantor Inducement Provisions • Lender Inducement Provisions • Code of Conduct & PLL • Disclosure Provisions • Sharing of Student Loan Information Fall 2007 MASFAP Conference Life begins at 40 !

24. Review of Pending Legislation and Guidance • H.R. 3746 • New Borrower Definition • Loan Forgiveness • Three-times Rule • Aggregate Consolidation Loan Limits • VFAs • Financial Literacy • Program Assistance for Borrowers • Credit Bureau Reporting Fall 2007 MASFAP Conference Life begins at 40 !

25. Review of Pending Legislation and Guidance • H.R. 3746 • Disability Determination • FDLP Income-Contingent Repayment • School Exit Counseling Requirements • Financial Aid Fraud and Abuse Report Fall 2007 MASFAP Conference Life begins at 40 !

26. Review of Pending Legislation and Guidance • S. 1642 • Using NSLDS for Deferments • Disclosure requirements for unsub Stafford loans • Disclosure requirements on loan sales to borrowers • Amend Prohibited Inducements • Lender Disclosure requirements on capitalization impact Fall 2007 MASFAP Conference Life begins at 40 !

27. Review of Pending Legislation and Guidance • S. 1642 • Create financial literacy programs applicable to guaranty agencies • Require guarantors & lenders to work with all national consumer reporting agencies • Require lenders to provide borrowers with certain information on their loan benefits • Sunset SAL on June 30, 2012 • Expand discharge eligibility Fall 2007 MASFAP Conference Life begins at 40 !

28. Review of Pending Legislation and Guidance • S. 1642 • Require a guarantor to report a “rehabbed” loan the new status to any consumer reporting agency, removing the default from the borrower’s credit history • Contains other “sunshine” requirements Fall 2007 MASFAP Conference Life begins at 40 !

29. Other Pending Legislation Related to FFELP & Financial Aid • Sunshine Act • Reporting Requirements • Lenders are required to make annual certifications w/Secretary that all PLL relationships are in compliance • Lenders on PLL are required to provide annual reports to schools and Secretary using the model approved for federal and private loans for the prior Academic Year Fall 2007 MASFAP Conference Life begins at 40 !

30. Other Pending Legislation Related to FFELP & Financial Aid • Sunshine Act • Gift Ban • Staffing Assistance Ban • Opportunity Pool Ban • Participation on Advisory Councils • Private Loans (Truth in Lending Act) • Disclosure Requirements • Specific Items • To Schools • To Borrowers Fall 2007 MASFAP Conference Life begins at 40 !

31. Permissible Activities • Thank you for your time • Additional Resources Include • www.NCHELP.org Fall 2007 MASFAP Conference Life begins at 40 !