2006 NCHELP DEBT MANAGEMENT CONFERENCE

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans A Look Back, A Look Ahead
Greg Jaeger Senior Vice President Wells Fargo
Education Financial Services Richard Tombaugh
President Education Finance Consulting Group Jon
Wollman Vice President Sallie Mae / HEMAR
Insurance
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans A Look Back, A Look Ahead
Greg Jaeger Senior Vice President Wells Fargo
Education Financial Services
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans

• Where we were
• Where we are
• Where were going

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans where are you?

• Contemplating the merits?
• Marketing the loans?
• Servicing the loans?
• Providing capital?
• Taking the risk?

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Norwest (now Wells Fargo) Began in 1987

• Current Products
• Graduate MedCAP, Law, MBA, etc.
• Undergraduate Collegiate, ConSern, etc.

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Where we are -

• Market is still very young and growing fast
• Expansion of products by existing companies
• Start ups are obtaining capital

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Items to consider

• Private student loans are a traditional consumer
  loan
• Superior knowledge of the product life cycle is
  essential
• The risk reward equation is complicated
• Adherence to compliance is critical

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans A Look Back, A Look Ahead
Richard Tombaugh President Education Finance
Consulting Group
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EFCG
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Borrowing GrowthFederal vs. Non-Federal Student
Loans (in Millions)Source College Boards
Trends in Student Aid, 2005
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Non Fed Loans 934 Fed Loans 141
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Borrowing Growth - Dollars
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Borrowing Growth - Percentage
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Lender ExpansionSource Voluntary
Reporting to the Greentree Gazette
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans in the Financial Aid Office

• Utilization and attitude varies by school
• High cost schools consider them necessary
• Moderate cost schools consider them important for
  certain types of students
• Low cost schools consider them extraneous for all
  but a few, and would prefer not to be bothered

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans in the Financial Aid Office

• Private loans are used for
• Supplementing Title IV Loans when maximums keep
  need from being met
• Replacing Parental Contribution when not
  available
• Covering expenses determined to be legitimate but
  not allowable in COA
• Avoiding the need for Professional Judgment while
  maintaining compliance with Title IV regs and
  institutional policy

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans in the Financial Aid Office

• Students are made aware of private loans by
• Allowing lender materials to be displayed in or
  near the Financial Aid Office
• Including basic information in institutional
  publications and websites
• Advising students who need additional help
• Responding to parental or student insistence that
  aid is not sufficient

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Private Loans A Look Back, A Look Ahead
Jon Wollman Vice President HEMAR
Insurance/SallieMae
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2006 NCHELP DEBT MANAGEMENT CONFERENCE
What Does A Private Loan Borrower Look Like?

• In the beginning
• -Graduate/professional student
• -High cost/private schools
• -Not Title IV eligible

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
What Does A Private Loan Borrower Look Like?

• Todays borrower
• -Undergraduate is fastest growing market
• -Popular at State schools and for-profit
  institutions
• -Majority also Title IV borrowers

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Effect of Private Borrowing on Debt Management

• Higher debt loads
• Better controls
• Family impact
• Potential for Title IV Loan delinquency

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Tools to Resolve Delinquency

• Payment Plans
• Extended Repayment Terms
• Forbearance
• Consolidation

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
Post Default Collections

• Long Term Solutions
• Partnerships
• Litigation

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2006 NCHELP DEBT MANAGEMENT CONFERENCE
THANK YOU!Please be sure to complete your
conference evaluation forms after the conference!
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