CRI- Common Review Initiative

1. CRI-Common Review Initiative Improving Accountability in the FFEL Program Through Cooperation November 17, 2003 Mike Hawkes Educational Credit Management Corporation

2. DISCLAIMER: This presentation was prepared in October, 2003. CRI is an evolving concept; accordingly, information contained in this presentation may not be 100% accurate by the time this session is presented at the Fall Training Conference.

3. CRI Concept • Guarantors would combine resources to conduct a single review of large lenders and servicers. • Each CRI review would go toward meeting the requirements of 682.410(c)(1) for all CRI participating guarantors

4. CRI Progress • CRI – great progress in less than one year • Concept to Guarantor CEO caucus in November 2002 • Steering Committee formed – December 2002 • Conference call in February 2003 • Face-to-face meeting in March 2003 • Workgroups have been meeting ever since

5. Current CRI Status • August 27, 2003 • Final CRI proposal to ED • Proposal went to ED with endorsements from: • All 36 guaranty agencies • Student Loan Servicing Alliance (SLSA) • Consumers Bankers Association (CBA) • Education Finance Council (EFC) • National Council of Higher education Loan Programs (NCHELP)

6. Current CRI Status • September 23, 2003 • Met in DC with Financial Partners • September 30, 2003 • Suggested deadline for determining CRI participation by signing agreement • To date, 28 of 36 guarantors have signed CRI agreement

7. Current CRI Status • October 29, 2003 • First CRI conference call since agreements signed • November 16, 2003 • CRI review team member training • December 10, 2003 • First meeting of CRI Oversight and Administration Council • 2004-2005 biennium • Begin conducting CRI reviews

8. Current CRI Status • On-going CRI projects • Completion of CRI review procedures and review guide • Completion of CRI administrative policies and procedures manual • Lender selection and review scheduling for 2004-2005 reviews

9. CRI Focus • Initial focus – reduce redundancy in lender reviews by guarantors • Current focus – improving review quality with added benefit of reducing redundancy

10. CRI – Improving Reviews • Current file review process inherently limited • Not inclusive of all attributes • Sample sizes limited • CRI review protocol avoids these limitations • Use of attribute testing • Statistically valid sampling to provide a 95% confidence level • Adoption of “best practices”

11. CRI – Improving Reviews • ED Lender Review Guide is base document for CRI review protocol • CRI review teams would test additional attributes not contained in Guide • CRI reviews would not test LaRS • Proposal calls for ED to test this • CRI reviews would track findings back to LaRS where adjustments are necessary

12. CRI Review Selection • CRI reviews would be conducted at lenders/servicers required to be reviewed by at least four guarantors • Servicer reviews would apply to all lenders contracting with that servicer

13. CRI reviews would tentatively be conducted at the following lenders: Citibank (currently reviewed by 12 GAs) Educaid/Wachovia (14) Wells Fargo (14) CRI Reviews - Lenders

14. CRI reviews would tentatively be conducted at the following servicers: ACS (currently reviewed by 10 GAs) AES (6) Edamerica (7) KHESLC (7) MOHELA (4) CRI Reviews - Servicers

15. CRI reviews would tentatively be conducted at the following servicers: Nelnet (currently reviewed by 24 GAs) Sallie Mae (24) SSSC (5) Suntech (9) CRI Reviews - Servicers

16. CRI Benefits • Current focus – improving review quality with added benefit of reducing redundancy • Demonstrably better reviews through attribute testing, statistically valid sampling and “best practices” • By conducting 12 CRI reviews, 111 other reviews would be eliminated • Significant cost savings for guarantors and trading partners

17. CRI – Current Participants • The following guarantors have signed CRI Participation Agreements: • American Education Services • American Student Assistance • Colorado Student Loan Program • Connecticut Student Loan Foundation • Education Assistance Corporation • Educational Credit Management Corporation • Florida Department of Education

18. CRI – Current Participants • Other agencies participating are: • Great Lakes Higher Education Corporation • Illinois Student Assistance Commission • Iowa College Student Aid Commission • Kentucky Higher Education Assistance Authority • Louisiana Office of Student Financial Assistance • Michigan Higher Education Assistance Authority • Missouri Student Assistance Resource Services • Montana Guaranteed Student Loan Program

19. CRI – Current Participants • Other agencies participating are: • National Student Loan Program • New Mexico Student Loan Guarantee Corporation • New Jersey Higher Education Student Assistance Authority • Northwest Education Loan Association • Oklahoma Guaranteed Student Loan Program • Oregon Student Assistance Commission • Student Loan Guarantee Foundation of Arkansas

20. CRI – Current Participants • Other agencies participating are: • Student Loans of North Dakota • Tennessee Student Assistance Commission • Texas Guaranteed Student Loan Corporation • USA Funds • Utah Higher Education Assistance Authority • Vermont Student Assistance Corporation

21. CRI – The Future • Bring additional guarantors into the CRI process • Additional training for CRI review team members • Work with ED to demonstrate effectiveness of CRI reviews • Hopefully obtain permanent ED approval of CRI

22. Questions? Common Review Initiative