1. 1 How companies are approaching consumer marketing of student loans and how Sallie Mae does it differently 2008 Southern Association of Student Financial Aid Administrators Conference Crystal City, Virginia Prepared by Sallie Mae Consumer Marketing Department

2. 2 Topics Cost of attendance overview What is direct to consumer marketing? Trends in direct-to-consumer student loan marketing Who is mailing what? What companies are selling mailing lists and how do they acquire them? Sallie Mae’s approach to direct-to-consumer marketing How to opt out of DTC marketing Appendix – Sallie Mae’s bedebtsavvy

3. 3 How much is the cost of attending college rising?

4. 4 2006 Cost of Attendance = $229 billion Parent/Student Contributions Down 15% Federal Student Loans Up 10% Private Education Loans Up 21% Other (Includes scholarships, grants, tax relief and other aid from states, colleges, employers and other sources) Up 6% Source: Based on estimates by Octameron Associates, “Don’t Miss Out”, 29th Edition; College Board, “Trends in Student Aid”; and Sallie Mae. Includes tuition, room, board, transportation and miscellaneous costs for two and four year college degree granting programs.

5. 5 Demand for Private Education Loans Private education loans help bridge the gap between funding available through government financial aid and the rapidly increasing cost of education Source: College Board Cost of college including tuition, fees, room and board, transportation and other expenses for degree granting institutions.

6. 6 2006 Cost of Attendance In 20 years, average tuition and fees have doubled for private institutions –More than doubled for public institutions 05/06 to 06/07 increase for private tuition, fees, room, board is almost 6% to $30,367 For public institutions, increase is just over 6% to $12,796

7. 7 Borrowing for College Today More than half of all college students borrow Total federal loan dollars AY 06/07 = $74B –139% increase in 10 years in number of loans –20+% increase in two years Total private loan dollars AY 06/07 = $23B –1200% increase in 10 years –64% increase in two years 74% of students use credit cards for school supplies 24% report using credit cards to pay some portion of tuition –OF NOTE: Section 529 college savings plan assets = $72 billion in just 10 years

8. 8 What is direct to consumer marketing? The promotion of services directly to consumers via broadcast and print media such as television, radio, magazines, mailings, phone calls, billboards, and the Internet.

9. 9 What trends are we seeing in the direct-to-consumer student loan marketplace?

10. 10 DTC trends 458 million pieces of direct mail offering student loans were sent last year (Source: Compremedia Dec 2005-Nov 2006) With the cost of attendance rising, more lenders are using direct mail to market student loans than ever before Consolidation Loans PLUS Loans Private Loans

11. 11 DTC Trends Private Loan messages are typically targeted to students, not parents More messages are from lenders; fewer messages are endorsed by or from schools Consolidation messages often have official/government look and feel Proliferation of print, television and radio advertising in national publications, airline magazines and networks More aggressive on-campus marketing campaigns

12. 12 Who is Mailing What?

13. 13 The number of student loan mailings has increased by 50% or more each year over the past 5 years. Source: Compremedia. Includes Federal & Private Student Loan and Consolidation offers

14. 14 Who is sending mailings? 4.0 Student Loans AAA Academic Financial Services Academic Lending Center Academic Loan Group, Inc. All Student Loan Corporation American Education Services American Student Assistance American Student Loan Consolidation Corp. American Student Loan Services AutoMoney, Inc. Bank of America Brazos Higher Education Service Corporation, Inc. Buffalo Metropolitan Federal Credit Union CFS Affinity Services CFS-SunTech Servicing, LLC Charter One Bank Chase Citibank Class Advantage, LLC. Class One Associates CLC/College Loan Corporation Clout College Loans College Funding Consultants CollegeInvest Collegiate Funding Services Commerce Bank Commercial Bank of Texas, N.A. Compass Bank Connecticut Student Loan Foundation Direct Loans Doral Bank EdFed EdFinancial Services EdFund Edloan Education Direct National Student Loans National Student Loans Direct Navy Federal Credit Union Nelnet NextStudent North Texas Higher Education Authority, Inc. NSL Direct PNC Bank Sallie Mae ScholarPoint Financial, Inc. Student Funding Services Student Lending Works Student Loan Consolidation Center Student Loan Xpress, Inc Student Trust Student Trust, Inc. SunTrust Bank TCF National Bank The Educated Borrower The First National Bank of Bryan The Student Loan Processors, Inc. TIAA-CREF Top Consolidator U.S. Bank UFS University Financial Services Vista Financial, Inc. Wachovia Wells Fargo Xanthus Higher Education Loan Program Education Finance Partners Education Loan Center Education Loan Funding Educational Direct Educational Loan Company Fast Payday Loans Federal Student Loan Consolidation Professionals Federal Student Loan Solutions First Convenience Bank First National Bank First Ohio Banc & Lending, Inc. GMAC Goal Financial Graduate Consolidation Services Graduate Loan Associates HSBC Huntington Bank IDAPP JPMorgan Chase & Co. K2 Financial KeyBank Higher Education Resource Loan To Learn M&I Bank M&T Bank Mohela MyRichUncle National City National Student Loan Center National Student Loan Center Finance Unit Source: Compremedia 2006

15. 15 The number of PLUS Loan mailings has more than doubled each year since 2004. Source: Compremedia

16. 16 Who is sending PLUS Loan Mailings? Academic Loan Group, Inc. All Student Loan Corporation American Student Loan Services Charter One Bank Citibank College Loan Corporation Collegiate Funding Services Commercial Bank of Texas, N.A. Connecticut Student Loan Foundation Education Loan Center Educational Loan Company GMAC Bank Goal Financial, LLC Higher Education Resource Organization JPMorgan Chase & Co. MyRichUncle National Student Loan Center Nelnet. NextStudent Sallie Mae Student Loan Xpress, Inc SunTrust Bank The First National Bank of Bryan Wachovia Education Finance Wells Fargo Bank Source: Compremedia 2006

17. 17 The number of Consolidation Loan mailings has increased nearly 30% per year in the past 3 years Source: Compremedia

18. 18 Nearly 40% of annual loan consolidation mailings hit student’s mailboxes in May and June Source: Compremedia millions of pieces mailed

19. 19 Who is sending Consolidation Loan Mailings? 4.0 Student Loans Academic Financial Services Academic Lending Center Academic Loan Group, Inc. All Student Loan All Student Loan Corporation American Education Services American Student Assistance American Student Loan Consolidation Corp. American Student Loan Services Bank of America Brazos Higher Education Service Corporation, Inc. CFS Affinity Services CFS-SunTech Servicing, LLC Citibank Class Advantage, LLC. Class One Associates CLC/College Loan Corporation Collegiate Funding Services EdFed EdFinancial Services Edloan Education Direct Graduate Loan Associates National Student Loans National Student Loans Direct Nelnet NextStudent North Texas Higher Education Authority, Inc. NSL Direct Sallie Mae ScholarPoint Financial, Inc. Student Funding Services Student Lending Works Student Loan Consolidation Center Student Loan Xpress, Inc Student Trust SunTrust Bank The Student Loan Processors, Inc. Top Consolidator UFS University Financial Services Vista Financial, Inc. Wachovia Bank Xanthus Higher Education Loan Program Education Finance Partners Education Loan Funding Educational Direct Federal Student Loan Consolidation Professionals Federal Student Loan Solutions First National Bank First Ohio Banc & Lending, Inc. Goal Financial Graduate Consolidation Services Higher Education Loan Providers Higher Education Resource Organization HSBC Bank USA JP Morgan Chase Bank K2 Financial KeyBank Loan To Learn Mohela National Student Loan Center National Student Loan Center Finance Unit Source: Compremedia 2006

20. 20 The growth in private loan mailings seems to have leveled off a bit in the past year Source: Comperemedia. 2007 data is YTD through October.

21. 21 Who is sending Private Loan Mailings? Top Mailers in 2007 Bank of America Charter One Bank Chase Discover Education Finance Partners GE General Motors Goal Financial KeyBank Loan to Learn MyRichUncle National City PNC Bank Sallie Mae U.S. Bank

22. 22 Sample Private Loan Mailing

23. 23 Sample PLUS Loan Mailing

24. 24 Sample Loan Consolidation Mailing

25. 25 What companies are selling mailing lists and how do they acquire them?

26. 26 Who sells lists? Industry lists & Compiled Lists: American Student List Student Marketing Group (SMG) FastWeb Kaplan Test Prep Princeton Review Alloy/360 Youth Credit Bureau Lists: Equifax Experian TransUnion

27. 27 How do companies acquire their mailings lists? Industry lists & Compiled Lists College-bound Students –Scholarship searches –College prep classes and inquiries –Surveys –Online websites In-college Students –Compiled University Directories –On-campus Surveys –Online websites General Compiled Lists –Product Warranty Cards –Public Information sources including: home ownership records, drivers licenses in some states, auto registrations, even college registrations through the freedom of information act.

28. 28 How do credit bureau lists work? Credit Bureau Lists Pre-screened Lists –All Federally regulated lending institutions are required to report their consumer lending relationships to at least one credit bureau. –The mailer submits a list request with specific credit criteria such as minimum FICO score, loan balance, deferred or not-deferred payment status, etc. that meet the requirements for the loan being offered. –Mailer must extend a firm offer of credit in their mailing Invitation to Apply Lists –Demographic data pulled from the credit files, and compiled lists held by the credit bureau. –The mailer submits specific demographic criteria (age, income, age) that they wish to target. –No individual credit information is provided to the mailer –Mailer is an invitation to apply Firm offers of credit must: –State the amount for which they are pre-qualified –Tell recipient how to opt-out of receiving future pre-screened offers via bureau

29. 29 Sallie Mae’s Direct to Consumer Marketing Approach

30. 30 Five Simple Consumer Marketing Best Practices from Sallie Mae Best practice #1: Sallie Mae's 1-2-3 approach to paying for college. SM 1.Free - Get the free money first 2.Federal - Apply for federal student loans 3.Private - Fill any gap with private loans

31. 31 Sallie Mae Consumer Marketing Best Practices… 2.Encourage students to apply for scholarships and grants first, then federal loans, then private funding. 3.Provide online tools including cost-of-attendance calculators and award letter analyzers to help families determine the cost of attendance at their chosen school and to estimate prospective repayment amounts. 4.Provide online services such as courtesy emails to remind in-school students of FAFSA deadlines, help them borrow responsibly and maintain good credit, and encourage them to graduate. 5.Prevent over-borrowing and provide educational materials and online tools and support on managing finances.

32. 32 What should schools expect from lenders? Require that the lenders you include on your lender lists… Prevent over borrowing by providing clear roadmaps to help consumers borrow wisely and to clearly understand and navigate their education financing options. Teach consumers how to establish and maintain good credit through smart decisions and responsible financial habits. Educate borrowers about their rights and how to opt-out. Encourage students to consult with their financial aid office at every step of the way.

33. 33 Cost of attendance calculator Cost of attendance available for all schools –COA information gathered from College Board or school profile –Used as guide for how much an applicant can borrow Over-borrowing review –Originations system now captures borrowers’ existing SM loans & loan requests adjusted accordingly –Call to borrower if multiple private loans for same academic period in process – borrower given choice Calculator tool –Helps estimate unmet financial need by calculating in-school expenses and any gaps in financing.

34. 34 Sallie Mae’s 1-2-3 Approach to Paying for College Guides students to get free money first and provide links; Positions federal student loans as the first loan alternative; Then use private loans to fill any gaps. We also provide helpful resources addressing myths about financial aid

35. 35 Graduate Student Loan Pages Advise Federal Options First Place Federal Loans first and advise them that these have more favorable terms, Provide a direct link to a PLUS MPN, Remind them of the federal loan option once again in the text of the private loans

36. 36 Private Loan offers remind students about federal loan options and reinforce the message of not exceeding the cost of attendance Maximum loan amount and loan availability varies by school. Tuition Answer Loan proceeds are solely to pay for a student’s qualified higher education expenses, as described in Section 221 (d)(2) of the Internal Revenue Code of 1986, 26 U.S.C. Section 221 (d)(2), at an eligible educational institution. The expenses considered “qualified higher education expenses” may vary from school to school and may affect a student’s ability to qualify for a school’s financial aid program. Students seeking federal financial assistance should seek that assistance first, and then use the Tuition Answer Loan, and any other private loan proceeds, for any remaining financial need gap and, if necessary, to finance their expected family contribution (EFC).

37. 37 Does Sallie Mae sell students other products besides student loans when they contact us? Customer research has shown that our borrowers trust Sallie Mae to refer them to other reputable companies who provide some specific services they need upon graduation. Our partnership process is highly selective and driven by requests and feedback form our borrowers. Customer communications are limited to borrowers in- repayment (NOT to in-school borrowers).

38. 38 bedebtsavvy Advice for Any Consumer Easy steps to: Opt out of unwanted solicitations Credit Bureau Opt-out Telemarketing – DNC Registry Guard against identity theft How to proceed if a victim Build and protect credit Understand lending terms Identify/avoid credit scams How can students stop receiving marketing communications?

39. 39 Does Sallie Mae offer financial counseling to students and parents? bedebtsavvy

40. 40 Goals Centralize and integrate Sallie Mae’s debt management materials to for the benefit of a wide variety of audiences. Provide a clear roadmap for consumers for borrowing wisely and navigating education financing options. Teach consumers how to establish and maintain good credit through responsible financial habits. bedebtsavvy Do lenders take responsibility for helping prevent students from over-extending themselves? Sallie Mae does.

41. 41 The right guidance for borrowers at the right time: 1.Before college (borrowing wisely) 2.In school (budgeting, learning about credit) 3.About to graduate (understanding repayment options) 4.Out of school (how to get and maintain good credit) What does bedebtsavvy deliver?

42. 42 Available freely at www.salliemae.com/bedebtsavvy

43. 43 Before You Borrow

44. 44 While in School

45. 45 Preparing to Graduate

46. 46 In Repayment