Smart Option Student Loan - VolCorp · Federal Loans Federal loans-some available regardless of...

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

SALLIE MAE® PARTNER CHANNEL

Smart Option Student Loan®

October 27, 2010

Jim JohnsonVice PresidentSilver Sword Capital Partners

Sandy SwoffordSenior Vice President of Marketingand Business DevelopmentVolCorp



AGENDA

► The Education Lending Opportunity

► Identifying Sales Opportunities

► Smart Option Student Loan Features & Benefits

► Families and Cosigners

► The Loan Process

► Reporting

► Sales Tools Review

► Q&A

22 NOT FOR BORROWER OR STUDENT DISTRIBUTION.


THE EDUCATION LENDING OPPORTUNITY

► In 2010, there will be nearly 16 million undergraduate students

► More than $11 billion in private student loans are likely to be required

After the excitement of college acceptance, many students —and their families — face the challenge of how to pay for school, but they have limited knowledge of their financing options.

The education lending selling season is very brief, running from April — when many college acceptance letters go out —

through August when the first tuition bills are due. MINI-PEAK

Through a partnership with Sallie Mae, you can now offer customers guidance on their education financing

options and a private student loan solution — the Smart Option Student Loan® —

that can help our customers bridge the college funding gap.



THE EDUCATION LENDING OPPORTUNITY CONT.

This partnership enables partners to:

► Ensure continued availability of a private lending option for families in VolCorp’s footprint

► Tap a fair share of the $11 billion in private student loans estimated for 2010

► Retain and grow your current customer relationships by offering

this solution with student checking, debit cards, online banking,

etc.

► Acquire new customers likely to grow into long-term relationships

60% of students are likely to stay with their bank after

graduation (Celent 2007)

The millennial/student market has the potential to provide

VolCorp with an enhanced market opportunity



IDENTIFYING SALES OPPORTUNITIES

Questions you may here from your customers:

―May I use a home equity line to fund my child’s college education?

―Is it a good idea to liquidate a CD to pay for tuition?‖

―I have a child heading to college, can I open a student checking account and link it to my account for money-transfers?‖

―Do you offer parent or student loans to cover the cost of college?‖



OUR PAYING FOR COLLEGE PHILOSOPHY

Step 1. Use Free MoneyFill out the Free Application for Federal Student Aid (FAFSA) to access need-based grants, then research and apply for scholarships. Consider supplementing grants and scholarships with current

income and savings.

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Step 2. Explore Federal LoansFederal loans-some available regardless of need-offer students and parents low, fixed interest rates and flexible payment options. You may be able to borrow up to your school’s full cost of attendance with federal loans.

Step 3. Fill Any Gaps with Private Student LoansOne of the most popular private student loans is the Sallie Mae Smart Option Student Loan. See how you can save hundreds-even thousands-in repayment.



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THE SMART OPTION STUDENT LOAN

Why it’s so smart; it can help students:

• Features pricing that rewards good credit

• Offers possibility of a lower interest rate when students apply with a creditworthy cosigner

• Offers a 0.25 percentage point interest rate reduction when students enroll to make monthly recurring payments by automatic debit

• Can avoid interest capitalization for borrowers who elect to make monthly interest payments while in school

Save money over the life of the loan

• Shorter repayment term due to making payments while in school

• No repayment penalty

• Offers enrollment in Sallie Mae’s Upromise to help students pay down eligible loans more quickly

Achieve freedom from loan debt faster

• Helps students develop good repayment habits and establish a credit rating in their own name

• Helps borrowers track their repayment progress — at home or at school — through 24x7 online account management

Establish responsible payment behavior

NOT FOR BORROWER OR STUDENT DISTRIBUTION.


KEY FEATURES

► Students can borrow up to the full cost of their education, less other aid received. The minimum loan amount is $1000.

► Covers educational expenses including books, fees and other school certified expenses.

► A school-certified loan

► Offers pricing that rewards creditworthy borrowers.

► Applying with a creditworthy cosigner may help the student qualify and/or receive a lower interest rate - borrowers may apply for a cosigner release after successful completion of their education.

► A 0.25 percentage point interest rate reduction is available for automatic debit

► A 2 percent credit into a Upromise® account for making each Smart Option Student Loan payment on-time while in-school and during the separation period.

► Interest paid on qualified student loans may be tax deductable.

► Easy online application with fast credit decision and electronic signature ("eSign") available.



ELIGIBILITY REQUIREMENTS

► U.S. citizens enrolled at an eligible school in the U.S. or study abroad program, or who are studying at a medical school outside the U.S.

► International students are eligible with a creditworthy cosigner (who must be a U.S. citizen or permanent resident) and appropriate U.S. Citizenship and Immigration Service documentation.

► Schools are required to have a satisfactory academic progress (SAP) policy in place to maintain Title IV eligibility. Satisfactory academic progress is also required for the Smart Option Student Loan according to the eligible school’s standards.

► Students must meet current credit and other eligibility criteria.



SMART OPTION STUDENT LOAN

Market-Leading Interest Rates for Degree-Granting Institutions

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Interest Rate for Fixed Repayment Option

Interest Rate for Interest Repayment Option

OriginationFee

With a Creditworthy

Cosigner

1-Month LIBOR + 3.500% to

1-Month LIBOR + 10.375%


1-Month LIBOR + 9.375%0%

Without a Creditworthy

Cosigner




1-Month LIBOR + 9.875%0%

Pricing is subject to change.

NOT FOR BORROWER OR STUDENT DISTRIBUTION.10


CAREER TRAINING SMART OPTION STUDENT LOANSM

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Borrowers and/or cosigners who meet our highest underwriting standards will pay a 0% origination fee.Pricing is subject to change.

Interest Rate for Fixed Repayment Option

Interest Rate for Interest Repayment Option

Origination Fee

With a Creditworthy

Cosigner




1-Month LIBOR + 10.75%0% - 5%

Without a Creditworthy

Cosigner




1-Month LIBOR + 11.75%0% - 5%

Interest Rates for Non-Degree-Granting Institutions



EVEN A SMALL PAYMENT CAN MAKE A DIFFERENCE

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Fixed $25/Month Repayment Option

► Ideal for students who want to make low monthlypayments and those who understand the benefits of making continued in-school payments

► An affordable repayment option that allows students to budget their expenses each month and still save over 20% compared to a 15-year traditional payment-deferred private student loan¶

*Based on a $10,000 loan. See appendix for savings example assumptions.



WANT TO HELP FAMILIES SAVE EVEN MORE?

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Full Monthly Interest Repayment Option

► Through a shorter repayment term and by making full interest payments while in school, students can avoid capitalized interest over the life of theloan and save over 30% compared to a traditional private student loan*

► Students can pay off their loan much sooner after graduation—on average eight years earlier

*Based on a $10,000 loan. See appendix for savings example assumptions.



THE SMART OPTION STUDENT LOAN:

SAVES SUBSTANTIAL MONEY

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Savings with full interest payments3

Savings with $25 fixed monthly

payment2

2,3 - Based on a $10,000 loan. See appendix for savings example assumptions.

Pay off your loan 5 years earlier

Pay off your loan 8 years earlier



FAMILIES AND COSIGNERS

► Cosigners can:

Increase the chance of approval

Increase the chance of a lower interest rate on the loan

► Sallie Mae will also correspond regularly with cosigners throughout the loan process

15 NOT FOR BORROWER OR STUDENT DISTRIBUTION.15


FAMILIES AND COSIGNERS

► Enhanced Application Process

Single application session

Compliant with Higher Education Opportunity Act (HEOA) regulations

Cosigner initiated application (coming soon)



FAMILIES AND CUSTOMER SERVICE

► Consistency, Accountability and Dedication

► Focus on families

Customer service surveys

Daily scorecard on customer service statistics

Loan Optimization Group



FAMILIES AND CUSTOMER SERVICE

► Valuable messages are frequently sent to customers and cosigners:

Application approval

Welcome emails

30-days after disbursement

Satisfaction survey



SALLIE MAE OPENNET® APPLICATION FLOW

School Selection

Determine EligibilityLender’s Privacy PolicyLoan Application & Solicitation Disclosure

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1 Tell us About YourselfElectronic Disclosure Consent

Enter Credit Information

Review Credit Results

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3

4

5


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Enter Additional Borrower Information

Review Loan Documents

Approval Disclosure

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Self-Certification

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6

7

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eSignature

Print Documents – Personal Records

Final Instructions

School Certifies Final DisclosureSent to

Borrower

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The applicant has a 3 business day right to cancel provision. Sallie Mae

will provide an additional three business days for mailing.

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SCHOOL CERTIFIES PRIVATE LOAN APPLICATIONS



WEEKLY REFERRAL STATUS REPORT

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Partner Referral Smart Option Data CompiledCurrent WeekYear To Date



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Co-branded information tiles for your web pages

MARKETING SUPPORT

Create customized emails to customers

Educational collateral and advertising


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The information contained in this presentation is not

comprehensive, is subject to change, and therefore

should serve only as general, background

information for further investigation and study

related to the subject matter and the specific

factual circumstances being considered or

evaluated. Nothing in this presentation constitutes

or is designed to constitute legal advice.


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APPENDIX - PAYMENT ASSUMPTIONS

► 1 No origination fees apply to borrowers attending degree-granting institutions only. Borrowers should visit their financial aid office for more information.

► 2 $25/month fixed payment repayment option is available for new loan applications initiated on or after June 28, 2010, and is subject to change. The savings example uses approximated numbers, is for informational purposes only and is an example of loan terms available through the Smart Option Student Loan. Savings is based on the following assumptions: A Smart Option Student Loan made to a freshman borrower at a degree-granting institution of $10,000 with two disbursements and a 10.05% APR [Interest rate of LIBOR + 10.375% (LIBOR of 0. 375% as of 6/25/2010) and no origination fee or disbursement fee]. APR may increase after consummation. Repayment consists of 51 fixed $25/month payments (in-school period of 45 months plus separation period of 6 months), followed by 119 principal and interest payments of $179.79 per month and one payment of $115.65. Compare against a traditional 15 year private student loan for $10,000 where payments are deferred during school and grace periods, an estimated APR of 9.97% and repayment consisting of 179 principal and interest payments of $162.11 per month and one payment of $41.83 (following a 45-month in-school period and 6-month grace period, after which accrued interest is capitalized).

► 3 The savings example uses approximated numbers, is for informational purposes only and is an example of loan terms available through the Smart Option Student Loan. Savings is based on the following assumptions: A Smart Option Student Loan made to a freshman borrower at a degree-granting institution of $10,000 with two disbursements and a 9.72% APR [Interest rate set at LIBOR + 9.375% (LIBOR of 0.375% as of 6/25/2010) and no origination fee or disbursement fee]. APR may increase after consummation. Repayment consists of 51 interest payments ranging from $40.63 to $81.25 per month (in-school period of 45 months plus separation period of 6 months), followed by 83 principal and interest payments of $165.80 per month and one payment of $134.84. Compare against a traditional 15 year private student loan for $10,000 where payments are deferred during school and grace periods, an estimated APR of 9.11% and repayment consisting of 179 principal and interest payments of $148.81 per month and one payment of $57.43 (following a 45-month in-school period and 6-month grace period, after which accrued interest is capitalized).


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