July 2008 Revisions to Cash Management Regulations

2. July 2008 Revisions to Cash Management Regulations • Changes to CFR 668.164 (c) (d) (g) (h) • Disbursing of Funds • Direct payments (c) • Prior year charges (d) • Late disbursements (g) • Returning funds (h)

3. 668.164(c)Direct PaymentsJuly 1, 2008 Final rule expanded regulations governing electronic disbursements of Title IV payment to include Opening a Bank Account for the student Stored Value Cards Similar instruction such as an ATM Schools can now establish a policy which requires a student to provide bank account information OR Set up a bank account into which the school can deposit credit balances 3

4. Institutional Responsibilities • Requesting bank account information = No Responsibility • Direct Action = Responsibilities • Opening an account for the student/ parent • “Setting Up” steps to follow • Assisting the student in opening an account

5. Initiating a Bank Account • The institution must: • (i) Obtain in writing affirmative consent from the student or parent to open that account • (ii) Before the account is opened, inform the student or parent of the terms and conditions associated with accepting and using the account • (iii) Not make any claims against the funds in the account without the written permission of the student or parent

6. Initiating a Bank Account (continued) • (iv) Ensure that the student or parent does not incur any cost • (v) Ensure that the student has convenient access • (vi) Wide Usage –not limited to particular vendors and no marketing • (vii) No credit card or credit instrument • Bank debit card or stored value must be FDIC insured

7. Prior-Year Charges (d) • Schools are permitted without authorization to use • Current year Title IV funds to satisfy prior year charges for tuition, fees and contracted room and board up to $200 • The student’s authorization is required to • Use Current year Title IV funds for any other prior year charges • New Rules • Increases the amount of minor prior year charges which can be paid using current year aid to a maximum of $200 AND • Removes the provision that allowed for more than $100 in prior year charges to be paid if payment of that amount did not prevent the student from paying current year charges

8. Late Disbursements (g) New regulations extend the deadline for schools to make a late disbursement • Extension from 120 days to 180 days • Late, Late disbursements • No longer an option

9. Returning Title IV Funds (h) • Unclaimed loan funds student and/or parent • Includes uncashed checks • Rejected EFT • New Regulations adds a time frame for returning funds to appropriate Title IV accounts • No additional attempts • must return within 45 days of the initial disbursement attempt • If additional attempts will be made, you have 240 days from the date check issued or EFT transaction was initiated

10. July 2008 Revisions to Cash Management Regulations • Changes to 34 CFR 668.165(a) – Notices & Authorizations • The Institutions must notify a student of • The amount of funds that they or their parent can expect to receive under each type of Title IV aid • How and when those funds will be disbursed • IF those funds include Direct or FFEL Program Funds, the notices must • indicate which funds are subsidized and which are unsubsidized • the student’s or parent’s right to cancel all or a portion of that loan or disbursement and • the process and deadline by which the borrower is required to cancel the disbursement.

11. 668.165(a) Notices and Authorizations • New regulations • Affirmative Confirmation • A process by which the school obtains confirmation from the student of the types and amounts of Title IV loans that the student wants for the award year • Pen and Paper • Electronic

12. Disbursement Notice With Affirmative Confirmation • If an institution uses affirmative confirmation • It has 30 days before and 30 days after crediting the students’ accounts to notify the student of the right to cancel all or a portion of the loans • Cancellation • Schools using the Affirmative Confirmation must cancel and return loan funds if the request is received on the latter of the first day of the payment period OR 14 days after the school sent the right-to cancel notice

13. Without Affirmative Confirmation • Passive Confirmation (assuming borrower’s acceptance of loan funds) • The school has 30 days before and only 7 days after the credit to student’s account to provide notification of Title IV funds • Cancellation • Schools using Passive Confirmation • The cancellation request must be received within 30 days of the date the school provided the notice

14. 668.166 Excess Cash • Simplified • Eliminating provision of 3% of institution’s total prior-year drawdown of Title IV funds. • Hold excess cash for a maximum of 7 days if amount does not exceed 1% of institutions prior year drawdown • ED updated Student Financial Aid Handbook • Volume 4, Chapter 2

15. Student Loan Summit Held Jackson, Mississippi May 22, 2008

16. Current Environment • Recent History • Impact • Why?---The Perfect Storm • Recent Legislation

17. Recent History • Exodus of Lenders from FFELP • Exodus of Lenders from Consolidation Market • Exodus of Lenders from Private Student Loan Market

18. Impact • Loss of Front-end Pricing Benefits • Reduced or elimination of Back-end Borrower Benefits • Reduced Service Levels • Limited availability to certain sectors and students • More restricted availability of Private Loans at higher prices

19. Why?---The Perfect Storm • College Cost Reduction and Access Act of 2007—Reduced Margins and Insurance • Sub Prime Credit Crisis spreads to Student Loans—No liquidity for new loans “Congress took away half the lender profits and the credit crisis took the other half.”

20. Recent Legislation • HR 5715 Ensuring Continued Access to Student Loans Act of 2008 – May 7 2008 • DOE able to act as secondary market for FFELP • Increased Unsubsidized Stafford Loan Limits for Undergraduates • PLUS Loan Modifications • Lender of Last Resort Provisions

22. Guarantors in Mississippi

23. All Sectors – FFEL Loans Originated Between 7/01/06 and 6/30/07 Current Guaranty Agencies Ranked by Dollars Disbursed

24. Lenders Respond To Survey Survey Results May 22, 2008

25. Public Two Year Mississippi Schools Original Lender (Mississippi Based) by Dollars Disbursed Between 7/1/06 and 6/30/07

26. Public Two Year Mississippi Schools Original Lender (National) by Dollars Disbursed Between 7/1/06 and 6/30/07

27. Front End Pricing by Lender’s • BancorpSouth – No front end or back end benefits due to the programs being eliminated by our secondary markets • Citibank – Origination fee is now paid by Stafford Loan borrowers. The Federal Default Fee (FDF) is now paid by the borrower unless the borrower uses a guarantor who pays the fee • Citizens Bank of Philadelphia – No longer offer zero (0) fee loans and no longer offer 2% interest rate reduction for auto debit • Education Services Foundation – No payment of upfront fees; no repayment benefits • First Tennessee Bank – All borrower benefits have been eliminated for 2008-2009

28. Front End Pricing (Cont.) • Hancock Bank – No longer offer zero (0) fee loans or the 2% interest rate reduction for auto debit • Regions Bank – Discontinuing subsidy of Stafford Loan origination fee for loans guaranteed after May 2, 2008 • Renasant Bank – No longer subsidize default and origination fees nor offer repayment benefits (interest rate reduction for ACH payments • SallieMae/Sallie Mae Education Trust – Benefits and repayment incentives and the terms of private loan programs vary by school, servicer, guarantor (if applicable) and other factors • Trustmark National Bank – No longer offer 2% rate reduction in repayment benefit on all loan products • Wells Fargo Bank – interest reduction rate of .050% at repayment; interest rate reduction during repayment (.025%) for automatic withdrawals from a checking or saving account; no longer paying FDF or origination fee for fedreral loans after July 1, 2008

29. Lender 2008 Survey ResultsChanges • As of this date what changes in terms of the types of schools, students and parents do you plan to serve in 2008-2009 • BancorpSouth – Will lend to borrowers attending an eligible MS school, and will lend to MS residents attending out of state eligible school • Chase – Will suspend lending at 2-year institutions in Mississippi • Citibank – Will suspend lending at 2-year institutions in Mississippi • Citizens Bank of Philadelphia - None • Education Services Foundation – None • First Tennessee Bank – None

30. Lender 2008 Survey ResultsChanges Terms/Types (Continued) • Hancock Bank - None • Regions Bank – None • Renasant Bank – borrowers must be attending an eligible MS school or a MS resident attending an eligible out of state school • SallieMae/Sallie Mae Education Trust – None • Trustmark National Bank – None • Wells Fargo Bank – No longer lending to public 2 year and 4 year institutions in Mississippi

31. Lender 2008 Survey ResultsOutlook • As of this date what is the outlook in terms of capacity or originate Federal Student Loans in 2008/09? • BancorpSouth – Will be originating loans for this loan period • Citibank – Continues to have the necessary funding available to originate student loans • Citizens Bank of Philadelphia – Continues to have funding available for student loan for FY 08/09 • Education Services Foundation – Does not currently anticipate a lack of funding for the AY 08/09 • First Tennessee Bank – Outlook is still good

32. Lender 2008 Survey ResultsOutlook (Continued) • Hancock Bank – Has available student loan funds for 08/09 • Regions Bank – Not changing it’s capacity to originate Federal Student Loans in 08/09 • Renasant Bank – If no further negative impact to the student loan industry, plans are to originate as in the past • SallieMae/Sallie Mae Education Trust – Has funds available for funding both student loans and general corporate purposes • Trustmark National Bank – Does not have a set capacity at this time and are still open for all originations at this point • Wells Fargo Bank – Has available student loan funds for 08/09

33. Lender 2008 Survey ResultsInternal Changes • What internal changes have been made by your organization in terms of marketing, personnel, customer service representation and other support resources in light of the current student lending environment? • BancorpSouth –Reduction in marketing as a result of the Sunshine Act, elimination of three (3) positions in other states as our policy changed on 1/08 only originate for MS schools and MS residents attending in or out of state institutions • Education Services Foundation – Decreased marketing and efforts and budget • Sallie Mae/Sallie Mae Education Trust – Currently making changes in response to the College Cost Reduction and Access Act of 2007

34. Lender 2008 Survey ResultsConsolidation Loans • Are you continuing to originate Federal Consolidation Loans? • No longer making Federal Consolidation Loans