1. Washington Update September 25, 2015 Shelly Repp, Senior Advisor and General Counsel Tim Fitzgibbon, Senior Vice President 1

2. Government Funding FY 15 Omnibus funding measure expires September 30, 2015. Neither House nor Senate has passed any appropriations bills, though the appropriations committees in each chamber have passed all 12 appropriation bills. There will be a government shutdown unless Congress passes a continuing resolution by September 30. 2

3. Govt. Funding Continued Issues include duration (mid-December?), whether it will be clean (current roadblock is funding for Planned Parenthood), and whether to break sequestration caps. Budget Control Act of 2011, as amended, sets limit of discretionary budget authority at $1.016 trillion for FY 2016 ($523 billion for defense and $493 billion for non-defense), only $3 billion more than this year. 3

4. Govt. Funding Continued Of Special Interest: – House report language expresses concern over the drop in the number of ED’s private collection agencies – ED is directed to submit report on how it will ensure “proper oversight and management” of the defaulted student loan portfolio. – Senate bill would require higher allocation of new student loan accounts to the NFP Servicers. – Senate report language directs ED to allow consolidation loan borrowers to be able to select among all servicers. 4

5. Debt Limit Public Law 113-83 enacted in February 2014 suspended the debt ceiling through March 15, 2015. Debt limit was reset at amount outstanding on March 15, which was $18.113 trillion. While maturing debt can be rolled over, no new debt can be issued. Monies to pay for government operations and debt service have to come from revenues or from “extraordinary measures.” 5

6. Debt Limit - Continued Ability to tap extraordinary measures will be exhausted sometime in November or early December. Congressional action is needed. 6

7. Expired Tax Provisions 52 tax expenditures expired at the end of 2014, including the above-the-line deduction for tuition expenses. These provisions do not need to be extended until the start of the 2015 tax season. Generally, the Congress extends these provisions. The question is whether the extensions will be paid for. 7

8. Expired Tax Provisions - Continued There will be a push to make some of the provisions permanent. – On September 17, the House Ways and Means Committee approved bills to make 5 tax provisions permanent, including the above-the-line deduction for classroom expenditures by school teachers. 8

9. Federal Highway Program Funding Authorization for Federal Highway Programs expires October 29, 2015. Of note, the Senate approved a six-year extension on July 30, 2015, by a 65-34 vote. The bill (the DRIVE Act) provides that: – Treasury shall enter into one or more qualified collection contracts for the collection of all outstanding inactive tax receivables; and – Treasury shall utilize Private Collection Agencies on the schedule required under Section 3711 (g) of title 31 to the extent such entities are appropriate for this purpose. 9

10. HEA Reauthorization The Higher Education Act (HEA) expires September 30, 2015 – It will be extended as needed until a new bill passes, which in the past has taken five years or more. – The Perkins Loan Program expires next week with the HEA, but it’s chances of being extended are slim at best. Both House and Senate have held hearings regarding HEA, with the Senate considering a full overhaul and the House looking at a series of smaller bills. 10

11. HEA Reauthorization - Continued Senate Activity: – Full 800 page rewrite under former HELP Chairman Tom Harkin (D-IA) released last year but never passed committee. Will serve as a marker for Senate Democrats when negotiating a new bill with Senate Republicans. – Chairman Lamar Alexander (R-TN) favors “starting from scratch.” – Repay Act of 2015: Bipartisan attempt to revise and simplify the repayment plans available to Direct Loan borrowers. – Student Protection and Success Act: Bipartisan bill to hold schools accountable for the repayment rates of former student loan borrowers. 11

12. HEA Reauthorization - Continued House Activity – The following four bipartisan bills are expected to advance. The introduction of these bills could signal that a consensus has developed for the House to move a series of bills in a piecemeal approach to reauthorization, with the Committee developing a comprehensive package later this year or next. – The Simplifying the Application for Student Aid Act – The Strengthening Transparency in Higher Education Act – The Empowering Students Through Enhanced Financial Counseling Act – The Flexible Pell Grant for 21 st Century Students Act 12

13. HEA Reauthorization - Continued Obama Administration Initiatives – College Scorecard: provides students and families access to national data on college costs, graduation rates, and debt and post-graduate earnings; – FAFSA Simplification: Beginning in 2016, students and their families will be able to fill out the FAFSA in October, at the same time that they’re beginning to apply to colleges, rather than in January. – Free Community College: Few details yet – the Federal government would pay the majority of costs but likely to require state investment as well to cover free tuition for “K-14” instead of “K-12”. 13

14. President Election Update What life is like in Iowa during a Presidential Caucus Season (aka “Can I Live In Your State for the Next Five Months?”) CBS/YouGov Iowa Poll Released September 10, 2015 – Donald Trump:29% – Ben Carson:25% – Ted Cruz:10% – Marco Rubio: 6% – Scott Walker: 5% 14

15. President Election Update What life is like in Iowa during a Presidential Caucus Season (aka “Can I Live In Your State for the Next Five Months?”) CNN National Poll Released September 20, 2015 – Donald Trump:24% – Carly Fiorina:15% – Ben Carson:14% – Marco Rubio11% – Jeb Bush 9% 15

16. President Election Update What life is like in Iowa during a Presidential Caucus Season (aka “Can I Live In Your State for the Next Five Months?”) CBS/YouGov Iowa Poll Released September 10, 2015 – Bernie Sanders:43% – Hillary Clinton:33% – Joe Biden:10% 16

17. President Election Update What life is like in Iowa during a Presidential Caucus Season (aka “Can I Live In Your State for the Next Five Months?”) – Democratic candidates following the lead of Sen. Elizabeth Warren (D- MA) in making college costs and student debt keys provisions in political campaigns. – GOP mostly silent, although Marco Rubio has discussed student aid reform and income-based repayment for all. 17