Lender Disclosure Statement for NELA
Information Regarding Northwest Education Loan Association (NELA)

NELA® was organized as a private, nonprofit corporation in November 1978 under the General Corporation Law of the State of Washington. In accordance with its Articles of Incorporation, NELA (i) maintains facilities for the provision of guarantee services with respect to approved education loans made to or for the benefit of eligible students attending approved educational institutions, (ii) guaranteed education loans made pursuant to the Higher Education Act loan programs and (iii) serves pursuant to designation as the guaranty agency for the Federal Family Education Loan Programs in Washington and Idaho. Effective December 13, 2004, United Student Aid Funds, Inc. (“USA Funds”) became the sole member of NELA.

NELA contracts with Navient Solutions, Inc. and Student Assistance Corporation. Student Assistance Corporation is a wholly owned subsidiary of Navient Solutions, Inc. Navient Solutions, Inc. and its subsidiaries are not sponsored by nor are they agencies of the United States of America.

For the purpose of providing loan guarantees under the Higher Education Act, NELA has entered into various agreements with the U.S. Secretary of Education (collectively, the “Federal Reinsurance Agreements”). Pursuant to the Federal Reinsurance Agreements, NELA serves as a “Guaranty Agency” as defined in Section 435(j) of the Higher Education Act. Under the terms of the Federal Reinsurance Agreements, reinsurance is paid to NELA by the Secretary of Education in accordance with a formula based on the annual default rate of loans guaranteed by NELA under the Higher Education Act. Under the Higher Education Act, certain reserve funds of a guarantee agency are considered the property of the United States, and recalls of reserves may occur.

On March, 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), which ended the origination and guarantee of new loans under the Federal Family Education Loan Program, effective for loans whose first disbursement was after June 30, 2010. As a result of the new statute, NELA will continue to administer a portfolio of outstanding FFELP loans, but no longer may guarantee new federal student loans.

As of September 30, 2014, NELA administered total assets of $10.3 million in the Federal Reserve fund.

NELA’s “reserve ratio” complies with the U.S. Department of Education definition, which is determined by dividing the fund balance reserves in a guarantor’s federal reserve fund, by the total amount of loans outstanding. Following this formula, the reserve ratio for the federal reserve fund administered by NELA for the last five fiscal years was as follows: 2014 – 0.34 percent; 2013 – 0.36 percent; 2012 – 0.40 percent; 2011 – 0.42 percent; 2010 – 0.45 percent.

NELA’s “claims rate” represents the percentage of default claims (based on dollar value) submitted as reinsurance claims to the Department of Education, less amounts remitted to the Secretary of Education for defaulted loans that are rehabilitated relative to its existing portfolio of loans in repayment at the start of the federal fiscal year. Past “claims rates” were as follows: 2014 – 1.37%; 2013 – 1.52%; 2012 – 1.53%; 2011 – 1.54 percent; 2010 – 1.82 percent.