1. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. Vice President, Government Affairs and Services FROM WASHINGTON TO YOUR CAMPUS Scott Buchanan

2. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 The Great Obsession

3. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 What secretly worried each campaign? Obama Campaign ► Early voting was not showing D strength and merely canibalistic ► Horse race and someone else has momentum ► Firewall has leaks in unexpected places ► Weaker GOTV ► Economy, Libya, Economy, Plausible alternative, and Economy Romney Campaign ► Electoral map required diverse dominoes to fall ► Public polling had bent but not broken ► Last minute D base afterburner ► Smaller ground game ► Bain, Bankruptcy, Big Bird, Binders, and Bayonets

4. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2004

5. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2006

6. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2008

7. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2010

8. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2008

9. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2010

10. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 The Electoral Math McCain

11. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 The Electoral Math

12. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2012 Electoral Map

13. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 2012 Senate Results

14. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 Democrat Strength Intensification

15. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 Republican Strength Intensification

16. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 16 ► Every poll can be wrong, but they can't all be wrong ► Obama is first President to lose ground while getting a second term ► GOP appears to have a minority and women problem that time won't help ► America is more divided than ever ► Faithful kept the faith, but the independents swung right ► But is this all just about candidate? Election Observations

17. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 Power Divide on Capitol Hill

18. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 Status Quo

19. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 2 America’s Investment in Higher Education is Sizable and Growing Sources: College Board, 2011 Trends in Student Aid, McKinsey & Company +236%

20. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 4 How America Pays for College in 2012 Source: Sallie Mae How America Pays for College, 2012

21. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 6 Pell Grants Maximum over the Years

22. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 7 Pell Appropriations over the Years

23. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 4 Pell Shortfall

24. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 4 Student Loan Growth Source: Department of Education Annual Performance and Accountability Reports, FY 2006 to FY 2011, Notes to the Principal Financial Statements, Credit Programs note; Federally- owned FFELP is calculated based on receivables in purchase program and participated loans sold to the Department; private education loan volume from Consumer Finance Protection Agency, “Private Student Loans,” July 2012

25. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 5 (in millions) FY 13 Net Disbursements Lifetime Default Rate Expected Defaults over Life of Loans Stafford Sub 31,84224% 7,760 Stafford Unsub 65,18917% 10,841 PLUS 21,86910% 2,119 Total 118,900 20,720 Administration Expects to Originate $119 Billion New Loans in 2013 Forecasts that $21 Billion Will Default Source: Budget of the U.S. Government, Fiscal 2013; Federal Credit Supplement, and Appendix

26. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 12 Half a decade of persistently high unemployment

27. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 4 Employment Rates

28. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 6 VALUE OF COLLEGE AS INVESTMENT Willing to Stretch Financially Rather Borrow Than Not Go An Investment in The Future Degree More Important Now Strongly AgreeAgree *Not asked in 2008 or 2009 Source: Sallie Mae How America Pays for College, 2012 HOW AMERICA PAYS FOR COLLEGE: 2012 KEY FINDINGS

29. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 8 Budget Challenges Expiring Tax Cuts/Medicare Payments Forecast: $10.6 Trillion in additional deficits from 2012 to 2021

30. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 9 Where Do We Save?

31. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 10 Will Cuts Come From Entitlements?

32. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 13 Major Political Issues ► Jobs and the economy –College costs and student loans –Unemployment ► Debt and the deficit –Investment in higher education –Sequestration –Fiscal cliff

33. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 16 ► Interest Rates – Arbitrary and budget driven ► Universal Subsidies – Shift from front-end to back-end ► Need-based Subsidies – Shift from dominant to marginal ► Core Value – Shift from tool of choice for few to central resource of the many Federal Loan Trends and Dynamics

34. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 17 ► Relative Value – Shift from purchasing tool to cost cushion ► True Cost – Explosive growth and usage ► Target population – Shift from small population of select high need traditional students to mix including large population of middle need non-traditional students ► Power of the Brand eclipses all other approaches and programs Pell Grant Trends and Dynamics

35. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 18 ► Aid shift from need-based to middle-income drive ► Aid programs built for the moment ► Declining state investment being absorbed by federal taxpayers and middle-income families ► Expanded government relationships ► Retail shopping model will shift to brokered transactions ► “The medicine is strong so let’s give it to the next patient” General Trends in Congressional Intent

36. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 19 ► Election has crippled Congress ► Clock is ticking ► Past legislative gimmicks have come home to roost and more challenges will come ► Impossible to be able to spend enough ► Economy, greet your graduates ► Lack of standard market forces means resistance to correction Legislative and Public Policy Realities

37. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 16 ► Obama's 2nd term ► Sharply divided electorate ► The Congressional Wall ► The Inevitable ► Market Forces Did the Election Matter?

38. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 26 Deficit will limit new education investments Pell shortfall will dominate Defaults will be an increasing area of great concern Key Realities

39. Confidential and proprietary information © 2012 Sallie Mae, Inc. All rights reserved. 16 ► Interest Rates - What is the best solution? ► Pell Grants - Should we get more and how to better utilize? ► Education tax incentives - Should they stay, go, or change? ► Default Rates - Prevention before, during, or after college? And using what tools? ► The Economy - Are families starting to make different choices? Topics for Panel Discussion