Office of Debt Manageme

Fiscal Year 2012 Q3 Report
Table of Contents

I. Fiscal

A. Tax Receipts p. B. Monthly Receipt Levels p. C. O tl u

a

ys p. 

D. Treasury Net Nonmarketable Borrowing p. E. Cumulative Budget Deficits p. F. Deficit and Borrowing Estimates p. G. Budget Surplus/Deficit p. 

II. Financin

g

A. OMBs Projections of Borrowing from the Public p. B. Net Marketable Borrowing On “Auto Pilot” Versus Borrowing Forecasts p. C. Sources of Financing p. 

III. Portfolio Metrics

A. Weighted Average Maturity of Marketable Debt Outstanding with Projections p. B. Recent and Projected Portfolio Composition p. C. Recent and Projected Maturity Profile p. 

IV. Deman

d

A. Summary Statistics of Fiscal Year 2012 Q2 Auctions p. B. Bid-to-Cover Ratios p. C. Investor Class Auction Awards p. D Foreign Awards at Auction p 

. p. 

E. Primary Dealer Awards at Auction p. 
Section I:

Fiscal
Quarterly Tax Receipts

40%60%20%

Change

0%

Year over Year %

-20%-40%

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec10

Sept. 2002 yoy change data point excluded from corporate taxes due to 9-11 impacts on data

Corporate Taxes Non-Withheld Taxes (incl SECA) Withheld Taxes (incl FICA
Monthly Receipt Levels

(12-Month Moving Average)

100120

8060

$ bn

2040

0

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Individual Income Taxes include withheld and non-withheld. Social Insurance Taxes include FICA, SECA, RRTA, UTF Deposits, RUIA. Other includes excise taxes, estate and gift taxes, customs duties and miscellaneous receipts.

Corporation Income Taxes Individual Income Taxes Social Insurance Taxes 
Fiscal Year-to-Date Levels of Ten Largest Outlays

600700400500

bn

200300

$ 

0

100

HHS

SSA

Defense

Treasury

Agriculture

Labor

VA

Transportation

OPM

Education

Oct-Jun FY 2011 Oct-Jun FY 2012
Treasury Net Nonmarketable Borrowing

20 30 10 

(10)

0 

$ bn

(20)(30)

Q3-02

Q4-02

Q1-03

Q2-03

Q3-03

Q4-03

Q1-04

Q2-04

Q3-04

Q4-04

Q1-05

Q2-05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Fi l Q t Fiscal Quarter

Forei

gn Series State and Local Govt. Series (SLGS) Savin

gs Bonds
Cumulative Budget Deficits by Fiscal Year

1,2001,400

800

1,000

600

$ bn

200400

0

October

November

December

January

February

March

April

May

June

July

At

N

FY2010 FY2011 FY2012
In 

Primary 

FY 2012-2014 Deficits and Net Marketable Borrowing 

Dealers1 CBO2 

FY 2012 Deficit Estimate 1,166 1,171 FY 2013 Deficit Estimate 951 612 FY 2014 Deficit Estimate 805 385 FY 2012 Deficit Range 1,000-1,280FY 2013 Deficit Range 700-1,115FY 2014 Deficit Range 624 950 624-950FY 2012 Net Marketable Borrowing Estimate 1,170 FY 2013 Net Marketable Borrowing Estimate 984 FY 2014 Net Marketable Borrowing Estimate 857 FY 2012 Net Marketable Borrowing Range 1,080-1,260FY 2013 Net Marketable Borrowing Range 700-1,145FY 2014 Net Marketable Borrowing Range 650-1,200

Estimates as of: Jul-12 Mar-12 

1Based on primary dealer feedback on July 23, 2012. Deficit estimates are averages. 2CBO' b li ti t t l

CBO's baseline estimate; assumes current law.

3Table S-5 and S-14 of the "Fiscal Year 2013 Mid-Session Review Budget of the US Government"
Budget Surplus/Deficit

0 

500 

(500)

(1,500)(1,000)(2,000)(2,500) 

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Fiscal Year

Surplus/Deficit in $ bn-(L) Surplus/Deficit as a % of GDP-(R)

OMB’s Projection

Projections are from Table S-5 of the “Fiscal Year 2013 Mid-Session Review Budget of the US Government.” 
Section II:

Financin

g
OMB's Projections of Borrowing from the Public

1,126* 1,158

723

1,000 1,200 

803

736 749

696 657

684

699

723

600 800 

$ bn

200 400 

$

(200)

0 

2

3

4

5

6

7

8

9

0

1

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Fiscal Year

Primary Deficit InterestOther Data Labels: Annual Change in Debt Held by PuAnnual Change in Debt Held by Public as a Percent of GDP ‐ R

OMB’s projections of borrowing from the public projections are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Revthe US Government.” Data labels represent the change in debt held by the public in $ billions. Other represents borrowing from 

provide direct and guaranteed loans, in addition to TARP activity.*For Fiscal Year 2012, actuals up to 6/30/2012 and Treasury’s projections for Q4 as of 7/30/2012.Data labels represent the annual change in debt held by the public

Annual Change in Debt Held by Public as a Percent of GDP R
2 000 

Historical Net Marketable Borrowing and Projected Net 

Borrowing Assuming Future Issuance Remains Constant

1,500 2,000 g g1,000 

$ bn

0 

500 

(500)

2008

2009

2010

2011

2012*

2013

2014

2015

2016

2017

2018

2019

2020

783 1,786 1,482 1,104 1,048 906 744 627 669 474 564 487 311 

End of Fiscal Year

Bills 2/3/5 7/10/30 TIPS Historical Net Marketable

Borrowing/Projected Net Borrowing

(data labels at bottom)

OMB’s Proje

Borrowing fr

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. Assumes issuance siBills, Nominal Coupons and TIPS are unchanged from 6/30/2012 levels, along with SOMA reinvestment. The principal on the Twere accreted to each projection date based on market ZCIS levels. No attempt was made to match future financing needs. OMBof borrowing from the public projections are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the Government.” *For Fiscal Year 2012, actuals up to 6/30/2012 and Treasury’s projections for Q4 as of 7/30/2012.Data labels represent historical net marketable borrowing and projected net borrowing capacity. See table on the following page 
Historical Net Marketable Borrowing and Projected Net Borro

Assuming Future Issuance Remains Constant, $ Billion $ Billion

End of Fiscal 

Year Bills 2/3/5 7/10/30 TIPS

Historical Net Marketable 

Borrowing/Projected Net 

B i C iBorrowing Capacity 

2008 532 106 105 40 7832009 503 732 512 38 1,7862010 (204) 869 782 35 1,482

2011 (311) 576 751 88 1,104

2012* 72 148 737 91 1,048 

2013 (12) 90 720 108 906 

2014 0 (8) 669 83 744 

2015 0 ( ) 94 639 82 627 

2016 0 95 500 73 669 2017 0 87 318 69 474 2018 0 117 370 78 564 2019 0 131 282 75 487 2020 0 32 241 39 311 

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. Assumes issuance si

2020 0 32 241 39 311 2021 0 11 258 13 282 2022 0 (19) 192 (2) 172 

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. Assumes issuance siBills, Nominal Coupons and TIPS are unchanged from 6/30/2012 levels, along with SOMA reinvestment. The principal on the Twere accreted to each projection date based on market ZCIS levels. No attempt was made to match future financing needs. OMBof borrowing from the public projections are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the Government.” *For Fiscal Year 2012, actuals up to 6/30/2012 and Treasury’s projections for Q4 as of 7/30/2012.Data labels represent historical net marketable borrowing and projected net borrowing capacity.
Sources of Financing in Fiscal Year 2012 Q1

Net Funding Need (282)

Issuance Gross Maturing Net G

Net Bill Issuance 43 4 Week 487 474 13 

October-December 2011 October-December 2011 

Bill Issuance

Net Bill Issuance 43 4-Week 487 474 13 

Net Coupon Issuance 267 13-Week 377 367 10 

Subtotal: Net Marketable Borrowing 310 26-Week 351 337 14 

52-Week 75 69 6 

Plus: Beginning Cash Balance 58 CMBs 10 10 0 

Less: Ending Cash Balance Less: Ending Cash Balance 86 Bill Subtotal Bill Subtotal 1 300 , 1 257 , 43 1 

Subtotal: Funding Adding to Build Up of Cash (28)

Total: Net Funding 282

Issue Gross Maturing Net G

2-Year 73 90 (17) 

Coupon Issuance

October-December 2011 

ea 3 90 ( ) 

3-Year 100 58 41 5-Year 73 33 40 7-Year 60 0 60 

10-Year 69 0 69 30-Year 44 0 44 

5‐Year 5 Y TIPS 5-Year TIPS 12 0 12 10‐Year 10-Year TIPS 11 0 11 30‐Year 30-Year TIPS 7 0 7 

Coupon Subtotal 449 182 267 

Total 1,749 1,439 310 1

ota , 9 , 39 3 0 
Sources of Financing in Fiscal Year 2012 Q2

Net Funding Need (443)

Issuance Gross Maturing Net G

Net Bill Issuance 154 4 Week 523 498 25 1 

January-March 2012 January-March 2012 

Bill Issuance

Net Bill Issuance 154 4-Week 523 498 25 1

Net Coupon Issuance 247 13-Week 409 377 32 

Subtotal: Net Marketable Borrowing 401 26-Week 383 336 47 

52-Week 77 67 10 

Plus: Beginning Cash Balance 86 CMBs 40 0 40 

Less: Ending Cash Balance Less: Ending Cash Balance 44 Bill Subtotal Bill Subtotal 1,432 1,278 154 2

Subtotal: Funding from Draw Down of Cash 42

Total: Net Funding 443

Issue Gross Maturing Net G

2-Year 107 135 (28) 

Coupon Issuance

January-March 2012 

3-Year 104 101 4 5-Year 107 48 60 7-Year 89 0 89 

10-Year 72 25 47 30-Year 46 0 46 

5‐Year 5-Year TIPS 5-Year TIPS 0 0 0 10‐Year 10-Year TIPS 28 8 21 30‐Year 30-Year TIPS 9 0 9 

Coupon Subtotal 563 316 247 1

Total 1,995 1,594 401 3
Sources of Financing in Fiscal Year 2012 Q3

Net Funding Need 124

Issuance Gross Maturing Net G

Net Bill Issuance (78) 4 Week 451 486 (35) 1 

April-June 2012 April-June 2012 

Bill Issuance

Net Bill Issuance (78) 4-Week 451 486 (35) 1

Net Coupon Issuance 250 13-Week 392 409 (17) 

Subtotal: Net Marketable Borrowing 172 26-Week 359 351 8 

52-Week 102 96 6 

Plus: Beginning Cash Balance 44 CMBs 0 40 (40) 

Less: Ending Cash Balance Less: Ending Cash Balance 91 Bill Subtotal Bill Subtotal 1 304 , 1 382 , (78) 4 

Subtotal: Funding Adding to Build Up of Cash (48)

Total: Net Funding 124

Issue Gross Maturing Net G

2-Year 107 133 (27) 

Coupon Issuance

April-June 2012 

2 Year 107 133 (27) 3-Year 106 112 (6) 

5-Year 107 49 58 7-Year 88 0 88 

10-Year 73 0 73 30-Year 46 0 46 

5‐Year 5 Y TIPS 5-Year TIPS 16 19 (3) 10‐Year 10-Year TIPS 13 0 13 30‐Year 30-Year TIPS 7 0 7 

Coupon Subtotal 564 314 250 1

Total 1,868 1,696 172 5Total 1,868 1,696 172 5
Section III:

Portfolio Metrics
Weighted Average Maturity of Marketable Debt Outstandi

64.2 months 

707580

hs) on 6/30/2012

58.1 (Histfrom 

606570

e Maturity (Month

5055

Weighted Average

4045

0

2

4

6

8

0

2

4

6

8

0

2

4

6

8

0

2

4

6

W

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Calendar Year

Historical Adjust Nominal Coupons to Match Financin

g Needs Historical Avera

ge from 1

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury.
Recent and Future Portfolio Composition by Issuance 

T

ype, Percen

t

80%90%

100%

y

60%70%

rtfolio

30%40%50%

% of Por

10%20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

End of Fiscal Year

Bills 2/3/5 7/10/30 TIPS (principal accreted to projection date)

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury. See table on the following page for details.
Recent and Future Portfolio Composition by Issuance Type, P

End of Fiscal Year Bills 2-, 3-, 5-Year Nominal Coupons 7-, 10-, 30-Year Nominal Coupons Total Nominal Coupons TI

Nominal Coupons Nominal Coupons pr

2006 21.3% 40.5% 29.0% 69.5% 2007 21.6% 38.9% 29.2% 68.1% 2008 28.5% 34.5% 26.9% 61.4% 2009 28.5% 36.2% 27.4% 63.6% 

2010 21 1%. 40 1%. 31 8%. 71 9%. 2011 15.4% 41.4% 35.9% 77.3% 2012 14.5% 38.5% 39.5% 78.0% 2013 12.9% 37.0% 42.3% 79.3% 2014 12.1% 34.8% 45.1% 79.8% 2015 11 4%. 32 4%. 47 8%. 80 2%. 2016 10.8% 31.5% 49.1% 80.5% 2017 10.3% 30.9% 49.7% 80.6% 2018 9.8% 30.4% 50.4% 80.8% 2019 9.3% 30.6% 50.4% 81.0% 2020 8.9% 30.7% 50.7% 81.4% 2021 8.6% 30.6% 51.2% 81.8% 2022 8.2% 31.0% 51.3% 82.4% 

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury.
Recent and Future Maturity Profile, $ Billion

16,000 18,000 20,000 12,000 14,000 

n

6,000 8,000 

10,000 

$ b

2,000 4,000 

0 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

End of Fiscal Year

< 1yr [1, 2) [2, 3) [3, 5) [5, 7) [7, 10) >= 10yr

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury. See table on the following page for details.
Recent and Future Maturity Profile, $ Billion

End of Fiscal < 1yr [1 2) [2 3) [3 5) [5 7) [7 10) >= 10yr T

Year < 1yr [1, 2) [2, 3) [3, 5) [5, 7) [7, 10) >= 10yr T

2007 1,582 664 343 551 276 498 628 42008 2,151 710 280 657 317 514 690 52009 2,703 775 666 970 540 690 779 2010 2,563 1,143 872 1,309 917 880 953 2011 2 621 , 1 273 , 1 004 , 1 526 , 1 145 , 1 085 , 1 129 , 2012 2,884 1,388 1,125 1,837 1,235 1,168 1,325 12013 2,966 1,592 1,225 2,105 1,496 1,272 1,519 12014 3,129 1,624 1,489 2,299 1,485 1,264 1,745 12015 3,161 1,908 1,521 2,435 1,610 1,294 1,902 12016 3,343 1,979 1,712 2,558 1,649 1,311 2,093 12017 3,516 2,186 1,671 2,702 1,636 1,392 2,300 12018 3,765 2,158 1,757 2,814 1,718 1,449 2,466 12019 3,695 2,289 1,951 2,825 1,856 1,598 2,660 12020 3,823 2,472 1,947 2,976 1,863 1,597 2,955 12021 4,009 2,473 2,012 3,111 1,925 1,636 3,251 12022 4,010 2,593 2,218 3,239 2,064 1,569 3,536 1

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury.
Recent and Future Maturity Profile, Percent

80%90%

100%

60%70%30%40%50%

%

10%20%

0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

End of Fiscal Year

< 1yr [1, 2) [2, 3) [3, 5) [5, 7) [7, 10) >= 10yr

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury. See table on the following page for details.
Recent and Future Maturity Profile, Percent

End of Fiscal < 1yr [1 2) [2 3) [3 5) [5 7) [7 10) >= 10yr 

Year < 1yr [1, 2) [2, 3) [3, 5) [5, 7) [7, 10) >= 10yr 

2007 34.8% 14.6% 7.5% 12.1% 6.1% 11.0% 13.8% 52008 40.4% 13.3% 5.3% 12.3% 6.0% 9.7% 13.0% 52009 37.9% 10.9% 9.4% 13.6% 7.6% 9.7% 10.9% 52010 29.7% 13.2% 10.1% 15.2% 10.6% 10.2% 11.0% 52011 26 8%. 13 0%. 10 3%. 15 6%. 11 7%. 11 1%. 11 5%. 52012 26.3% 12.7% 10.3% 16.8% 11.3% 10.7% 12.1% 42013 24.4% 13.1% 10.1% 17.3% 12.3% 10.4% 12.5% 42014 24.0% 12.5% 11.4% 17.6% 11.4% 9.7% 13.4% 42015 22.9% 13.8% 11.0% 17.6% 11.6% 9.4% 13.8% 42016 22 8%. 13 5%. 11 7%. 17 5%. 11 3%. 8 9%. 14 3%. 42017 22.8% 14.2% 10.9% 17.5% 10.6% 9.0% 14.9% 42018 23.3% 13.4% 10.9% 17.5% 10.7% 9.0% 15.3% 42019 21.9% 13.6% 11.6% 16.7% 11.0% 9.5% 15.8% 42020 21.7% 14.0% 11.0% 16.9% 10.6% 9.1% 16.8% 42021 21.8% 13.4% 10.9% 16.9% 10.5% 8.9% 17.7% 42022 20.9% 13.5% 11.5% 16.8% 10.7% 8.2% 18.4% 4

Portfolio & SOMA holdings as of 6/30/2012 and estimated projections of the Maturity Extension Program. To match OMB’s pro

from the public for the next 10 years, nominal coupon securities (2-, 3-, 5-, 7-, 10-, and 30-year) were adjusted by the same percent

projections of borrowing from the public are from Table S-5 and S-14 of the “Fiscal Year 2013 Mid-Session Review Budget of the UGovernment.” The principal on the TIPS securities were accreted to each projection date based on market ZCIS levels. This scenrepresent any particular course of action that Treasury is expected to follow. Instead, it is intended to demonstrate the basic trajecmaturity absent changes to the mix of securities issued by Treasury.
Section IV:

Demand
Summary Statistics for Fiscal Year 2012 Q3 Auctions

S it ecur y St O t Bid t C C titi

% P i

N C titi SOM

Type Term

Stop

Out

Rate (%)

Bid‐to‐Cover

Ratio

Competitive

Awards ($ bn)

% Primary

Dealer % Direct % Indirect

Non‐Competitive

Awards ($ bn)

SOM

Ons 

Bill 4-Week 0.064 4.7 386.0 69.1% 10.1% 20.8% 3.3 6Bill 13-Week 0.086 4.6 378.0 68.5% 7.4% 24.1% 9.8 0Bill 26-Week 0.142 4.7 344.1 66.0% 7.1% 26.9% 8.1 0Bill 52-Week 0.190 4.5 101.1 69.8% 12.0% 18.2% 0.6 0

Coupon 2-Year 0.294 3.8 104.4 59.3

% 8.2

% 32.4

% 0.5 1

Coupon 3-Year 0.392 3.5 95.9 55.4% 10.4% 34.2% 0.1 1Coupon 5-Year 0.796 2.9 104.9 49.4% 8.9% 41.8% 0.1 1Coupon 7-Year 1.208 2.8 86.9 45.7% 13.3% 41.0% 0.0 1Coupon 10-Year 1.841 3.0 66.0 44.4% 15.9% 39.7% 0.0 6Coupon 30-Year 3.019 2.6 42.0 50.1% 17.5% 32.4% 0.0 4

TIPS 5-Year (1.080) 2.6 15.9 54.9% 9.1% 36.0% 0.1 0

TIPS 10-Year (0.391) 3.0 13.0 34.5% 14.8% 50.7% 0.0 0

TIPS 30-Year 0.520 2.6 7.0 37.6% 28.1% 34.3% 0.0 0

Total Bills 0.104 4.6 1,209.2 68.1% 8.5% 23.4% 21.7 6

Total Coupons 1.010 3.2 499.9 51.4% 11.4% 37.2% 0.8 2

Total TIPS (0 072) (0.072) 2 9. 20 0. 35 6%. 19 5%. 44 9%. 0 0. 0 

Stop Out Rate, Bid-to-Cover Ratio, % Primary Dealer, % Direct and % Indirect are weighted averages of Competitive Awards. 10-is approximated using prices at settlement and includes both Competitive and Non-Competitive Awards. For TIPS 10-Yr equival

auction BEI is used as the inflation assumption.
Bid-to-Cover Ratios for Treasury Bills

5.5

6

4

4.5

5

Ratio

3

3.5

4

Bid-to-Cover R

2

2.5

1.5

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09

Jun-10

4-Week (13-week moving average) 13-Week (13-week moving average)26-Week (13-week moving average) 52-Week (6-month moving average)
Bid-to-Cover Ratios for 2-, 3-, and 5-Year Nominal Securiti

(6-Month Movin

g Avera

ge)

3.63.8

g g

3.23.4

atio

2.8

3

Bid-to-Cover R

2.42.6

2

2.2

un-09

ep-09

ec-09

ar-10

un-10

ep-10

ec-10

ar-11

un-11

ep-11

ec-11

Ju

Se

De

Ma

Ju

Se

De

Ma

Ju

Se

De

2-Year 3-Year 5-Year
Bid-to-Cover Ratios for 7-, 10-, and 30-Year Nominal Securit

(6-Month Movin

g Avera

ge)

3.23.4

g g

3

atio

2.8

Bid-to-Cover R

2.42.62.2

un-09

ep-09

ec-09

ar-10

un-10

ep-10

ec-10

ar-11

un-11

ep-11

ec-11

Ju

Se

De

Ma

Ju

Se

De

Ma

Ju

Se

De

7-Year 10-Year 30-Year
Bid-to-Cover Ratios for TIPS

3

3.52.5

atio

2

Bid-to-Cover R

1.5

1

un-00 un-01 un-02 un-03 un-04 un-05 un-06 un-07 un-08 un-09 un-10 Ju

Ju

Ju

Ju

Ju

Ju

Ju

Ju

Ju

Ju

Ju

5-Year 10-Year (6-month moving average) 20-Year 30-Year
Investor Class Auction Awards: Bills

Fiscal Year 2012 Q3

Foreign & 

Other

3.3%

International 

9.5%

Investment

Funds

12.7%

Primary

l

Other Dealers 

& Brokers

8.3%

Dea ers

66.2%

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance.
Change in Demand Over the Last Year in Bills, Auctio

Awards b

y Investor Class

5%6%2

%

3%4%

4 Quarters

0%1%

%

nge from Previous

-3%-2%-1%

Chan

-4%

Primary

Dealers

her Dealers 

& Brokers

Investment

Funds

Foreign & 

ternational 

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance. These results may include seasonal effects.

Oth

&

F

Int

2012 Q3 less Previous 4 Quarters 2012 Q2 less Previous 4 Quarters
Investor Class Auction Awards: Investor Class Auctio

Other

1.6%

2-, 3-, and 5-Year Nominal Securities

Fiscal Year 2012 Q3

Other

0.6%

7-, 10-, and 30-Year Nom

Fiscal Year 201

Foreign & 

International 

17 4%

1.6%

Foreign & 

International 

17.0%

0.6%

17.4%

Primary

Dealers

54.5%

Investment

Funds

17.9% Investment

Funds

28.2%

Other Dealers 

& Brokers

8.6%

Other 

Dealers 

& Brokers

8.0%

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance.
Change in Demand Over the Last Year in 2-, 3-, 5-Year 

Nominal Securities, Auction Awards b

y Investor Clas

6%

, y

2%4%

4 Quarters

-2%

0%

nge from Previous

-4%

Cha

-6%

Primary

Dealers

ther Dealers 

& Brokers

Investment

Funds

Foreign & 

nternational 

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance. These results may include seasonal effects.

Ot

&

F

In

2012 Q3 less Previous 4 Quarters 2012 Q2 less Previous 4 Quarters
Change in Demand Over the Last Year in 7-, 10-, 30-Yea

Nominal Securities, Auction Awards b

y Investor Clas

6%

, y

2%4%

4 Quarters

-2%

0%

nge from Previous

-4%

Cha

-6%

Primary

Dealers

ther Dealers 

& Brokers

Investment

Funds

Foreign & 

nternational 

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance. These results may include seasonal effects.

Ot

&

F

In

2012 Q3 less Previous 4 Quarters 2012 Q2 less Previous 4 Quarters
Investor Class Auction Awards: TIPS

Fiscal Year 2012 Q3

Foreign & 

International 

Other

0.8%

9.4%

Primary

Dealers

44.0%

Investment

Funds

43.5%

Other Dealers 

& Brokers

2.3%

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance.
Change in Demand Over the Last Year in TIPS, Auctio

Awards b

y Investor Class

3%4%1%2%

4 Quarters

-1%

0%

nge from Previous

-3%

Cha -2%n

-4%

Primary

Dealers

ther Dealers 

& Brokers

Investment

Funds

Foreign & 

nternational 

Excludes SOMA add-ons. The “Other” category includes categories that are each less than 2%, which include Depository InstitutPension and Insurance. These results may include seasonal effects.

Ot

&

F

In

2012 Q3 less Previous 4 Quarters 2012 Q2 less Previous 4 Quarters
Total Foreign Awards of Treasuries at Auction, $ Billion

160180200120140

ard ($bn)

80

100

nthly Private Awa

4060

Mon

0

20

un-09

ep-09

ec-09

ar-10

un-10

ep-10

ec-10

ar-11

un-11

ep-11

ec-11

Ju

Se

De

Ma

Ju

Se

De

Ma

Ju

Se

De

Bills 2/3/5 7/10/30 TIPS

Foreign includes both private sector and official institutions.
Foreign Awards of Bills at Auction, Percent

%

25%15%20

nvestors

10%

arded to Foreign I

5%

% Aw

0%

09

09

09

10

10

10

10

11

11

11

11

Jun-0

Sep-0

Dec-0

Mar-1

Jun-1

Sep-1

Dec-1

Mar-1

Jun-1

Sep-1

Dec-1

Excludes SOMA add-ons. Foreign includes both private sector and official institutions.
Foreign Awards of Nominal Coupons at Auction, Percent

40%45%50%30%35%

n Investors

20%25%

warded to Foreign

10%

% A 15%w

0%5%

un-09

ep-09

ec-09

ar-10

un-10

ep-10

ec-10

ar-11

un-11

ep-11

ec-11

Ju

Se

De

Ma

Ju

Se

De

Ma

Ju

Se

De

2/3/5 7/10/30

Excludes SOMA add-ons. Foreign includes both private sector and official institutions.
Foreign Awards of TIPS at Auction, Percent

20%25%15%

n Investors

10%

warded to Foreig

5%

% A

0%

un-09

ep-09

ec-09

ar-10

un-10

ep-10

ec-10

ar-11

un-11

ep-11

ec-11

Ju

Se

De

Ma

Ju

Se

De

Ma

Ju

Se

De

5-Year 10-Year 20-Year 30-Year

Excludes SOMA add-ons. Foreign includes both private sector and official institutions.
Primary Dealer Awards at Auction, Percent

65%70%

d

55%60%

Amount Awarde

45%50%

Total Competitive

35%40%

% of T

30%

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

4

/ / 13

/26-Week (13-week movin

g g) avera

ge) 52-Week (6-month movin

g g) avera

ge)

2/3/5 (6-month moving average) 7/10/30 (6-month moving average)TIPS (6-month moving average)
Appendix
Issue Settle Date

Stop Out

Rate (%)

Bid‐to‐Cover

Ratio

Competitive

Awards ($ bn)

% Primary

Dealer % Direct % Indirect

Non‐Competitive

Awards ($ bn)

SOMA Add

Ons ($ bn)

4-Week 04/03/12 0.055 4.75 29.72 55.9% 7.7% 36.3% 0.28 5.94 4-Week 04/10/12 0.080 4.71 29.78 56.9% 12.2% 30.8% 0.22 3.78 4-Week 04/17/12 0.065 4.88 29.76 60.3% 13.9% 25.8% 0.25 6.29 

Bill Issues

4-Week 04/24/12 0.075 4.44 29.51 70.1% 10.6% 19.3% 0.23 2.42 4-Week 05/01/12 0.080 4.88 29.68 68.1% 11.7% 20.2% 0.27 5.94 4-Week 05/08/12 0.075 5.05 29.75 48.7% 14.5% 36.7% 0.20 3.78 4-Week 05/15/12 0.075 4.63 29.76 77.2% 7.8% 15.1% 0.24 6.29 4-Week 05/22/12 0.065 4.95 29.72 78.7% 8.0% 13.3% 0.23 2.42 4-Week 05/30/12 0.060 4.77 29.73 69.6% 8.7% 21.7% 0.27 5.94 4-Week 06/05/12 0.040 4.79 29.72 73.6% 9.8% 16.7% 0.28 3.78 4W k - ee 06/12/12 06/12/12 0 055 . 4 53 . 29 71 . 82 5%. 8 0%. 9 5%. 0 29 . 6 29 . 4-Week 06/19/12 0.050 4.54 29.74 78.7% 8.9% 12.4% 0.26 2.42 4-Week 06/26/12 0.060 4.43 29.44 78.1% 9.4% 12.6% 0.27 5.94 

13-Week 04/02/12 0.075 4.57 29.98 58.5% 7.5% 34.0% 0.76 0.00 13-Week 04/09/12 0.085 4.20 30.18 60.8% 8.3% 30.9% 0.67 0.00 13-Week 04/16/12 0.080 4.50 29.15 61.2% 9.8% 29.0% 0.75 0.00 13-Week 04/23/12 0.080 4.72 28.25 63.7% 7.4% 28.9% 0.80 0.00 

13-Week 13-Week 04/30/12 04/30/12 0 095 . 4 60 . 28 98 . 68 0%. 5 4%. 26 6%. 0 72 . 0 00 . 13-Week 05/07/12 0.090 4.56 28.94 74.1% 9.5% 16.4% 0.76 0.00 13-Week 05/14/12 0.095 4.66 28.94 73.3% 8.0% 18.6% 0.76 0.00 13-Week 05/21/12 0.085 4.61 29.19 77.8% 6.5% 15.7% 0.71 0.00 13-Week 05/29/12 0.085 4.52 28.61 69.5% 6.6% 23.9% 0.73 0.00 13-Week 06/04/12 0.075 4.53 28.97 70.6% 7.5% 22.0% 0.75 0.00 13-Week 06/11/12 0.085 4.79 29.21 70.6% 6.6% 22.8% 0.79 0.00 13-Week 06/18/12 0.095 4.43 29.09 72.7% 5.8% 21.4% 0.76 0.00 13-Week 06/25/12 0.095 4.50 28.50 70.4% 6.9% 22.7% 0.81 0.00 26-Week 04/02/12 0.140 4.58 28.16 50.0% 8.1% 41.9% 0.64 0.00 26-Week 04/09/12 0.150 4.37 27.83 50.6% 7.3% 42.1% 0.65 0.00 26-Week 04/16/12 0.135 4.44 26.66 70.3% 8.3% 21.4% 0.71 0.00 26-Week 04/23/12 0.130 4.48 26.44 66.3% 7.6% 26.1% 0.60 0.00 26-Week 04/30/12 0.145 4.75 27.04 70.6% 9.3% 20.1% 0.56 0.00 26-Week 05/07/12 0.145 4.63 26.83 71.2% 7.8% 21.0% 0.62 0.00 26-Week 05/14/12 0.145 5.17 25.96 68.5% 7.5% 23.9% 0.64 0.00 26-Week 05/21/12 0.140 4.97 26.00 73.5% 6.1% 20.4% 0.60 0.00 26-Week 05/29/12 0.140 4.58 25.43 69.2% 5.7% 25.0% 0.62 0.00 26-Week 06/04/12 0.130 4.73 25.92 75.7% 6.0% 18.4% 0.65 0.00 26-Week 06/11/12 0.140 5.18 26.07 60.3% 7.2% 32.5% 0.63 0.00 26-Week 06/18/12 0.150 4.50 26.28 69.2% 4.6% 26.2% 0.62 0.00 26-Week 06/25/12 0.150 4.75 25.50 64.9% 6.4% 28.6% 0.60 0.00 52-Week 04/03/12 0.185 4.31 25.76 71.6% 9.5% 18.9% 0.14 0.00 52-Week 05/01/12 0.185 4.56 25.89 70.6% 7.5% 21.9% 0.11 0.00 52-Week 05/30/12 0.185 5.07 24.67 63.5% 18.8% 17.7% 0.16 0.00 52-Week 06/26/12 0.205 4.15 24.76 73.4% 12.5% 14.2% 0.14 0.00 

Stop Out Rate, Bid-to-Cover Ratio, % Primary Dealer, % Direct and % Indirect are weighted averages of Competitive Awards. 10-is approximated using prices at settlement and includes both Competitive and Non-Competitive Awards. 
Issue Settle Date

Stop Out

Rate (%)

Bid‐to‐Cover

Ratio

Competitive

Awards ($ bn)

% Primary

Dealer % Direct % Indirect

Non‐Competitive

Awards ($ bn)

SOM

Ons 

Nominal Coupon Securities

Issue Settle Date Rate (%) Ratio Awards ($ bn) Dealer % Direct % Indirect Awards ($ bn) Ons 

2-Year 04/24/12 0.270 3.76 34.84 60.0% 7.8% 32.1% 0.16 02-Year 05/22/12 0.300 3.95 34.81 57.5% 9.0% 33.5% 0.19 02-Year 06/26/12 0.313 3.62 34.72 60.4% 7.9% 31.7% 0.18 03-Year 04/10/12 0.427 3.36 31.96 52.2% 7.8% 40.0% 0.04 53-Year 05/08/12 0.362 3.65 31.96 53.1% 11.2% 35.7% 0.04 23-Year 06/12/12 0.387 3.53 31.97 60.9% 12.0% 27.0% 0.03 25-Year 04/25/12 0.887 3.09 34.98 43.1% 9.4% 47.5% 0.02 05-Year 05/23/12 0.748 2.99 34.93 50.9% 6.5% 42.6% 0.05 05-Year 06/27/12 0.752 2.61 34.95 54.1% 10.7% 35.1% 0.03 07-Year 04/26/12 1.347 2.83 28.96 44.1% 17.6% 38.2% 0.01 07-Year 05/24/12 1.203 2.80 28.97 41.6% 15.7% 42.7% 0.01 07-Year 06/28/12 1.075 2.64 28.97 51.5% 6.5% 42.0% 0.01 0

10-Year 04/11/12 2.043 3.08 20.99 50.5% 11.0% 38.5% 0.01 310-Year 05/09/12 1.855 2.90 23.98 45.5% 15.8% 38.7% 0.02 110-Year 06/13/12 1.622 3.06 20.99 37.2% 20.8% 42.0% 0.01 1

30 Y- ear 04/12/12 04/12/12 3 230 . 2 76 . 12 99 . 55 9%. 13 4%. 30 7%. 0 01 . 2 30-Year 05/10/12 3.090 2.73 15.98 50.8% 15.4% 33.8% 0.02 130-Year 06/14/12 2.720 2.40 12.99 43.5% 24.0% 32.5% 0.01 0

TIPS

Issue Settle Date

Stop Out

Rate (%)

Bid‐to‐Cover

Ratio

Competitive

Awards ($ bn)

% Primary

Dealer % Direct % Indirect

Non‐Competitive

Awards ($ bn)

SOM

Ons 

5-Year 04/19/12 (1.080) 2.58 15.88 54.9% 9.1% 36.0% 0.12 0

10-Year 05/17/12 (0.391) 3.01 12.98 34.5% 14.8% 50.7% 0.02 0

Stop Out Rate, Bid-to-Cover Ratio, % Primary Dealer, % Direct and % Indirect are weighted averages of Competitive Awards. 10-is approximated using prices at settlement and includes both Competitive and Non-Competitive Awards. For TIPS 10-Yr equival

auction BEI is used as the inflation assumption.

30-Year 06/21/12 0.520 2.64 6.99 37.6% 28.1% 34.3% 0.01 0
U.S. Treasury Borrowing Advisory Committee Char

August 2012

TBAC Charge #2 Presentation to the U.S. Treasury: The Federal Reserve’s MaturiExtension Program (MEP) has a medium-term impact on Treasury term impact on Treasury s 'borrowing needs. 

borrowing needs. 

discuss how Treasury should address the financing shortfall created by MEP.
S t b 21 2011 F d it fi t M t it E t 

Sep

tem

ber 21, 2011: 

F

e

d announces its firs

t

M

a

turity 

E

x

ten

Program (MEP1)

“The Committee intends to 

p y urchase, b

y the end of June 2012, $400 billion of Treasur

y s

remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securremaining maturities of 3 years or less.”

September 21, 2011 

June 20, 2012: Fed announces an extension of its Maturit

y g( ) Extension Pro

gram 

(MEP2

)

“The Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (tFederal Reserve Bank of New York to continue through the end of the year its program to average maturity of the Federal Reserve’s holdings of Treasury securities...The continuatextension program will proceed at the current pace and result in the purchase, as well as redemption, of about $267 billion in Treasury securities by the end of 2012... Once the maturity extension program is completed, the Federal Reserve will hold alsecurities maturing through January 2016.”

3

June 20, 2012 New York Fed O
Fed MEP Sales Raise the Maturing Stock of Debt Held By Private 

the Absence of Fed Add-ons, Treasury Must Issue More Debt to thR i th S A t f C h

Maturity Distribution of MEP Sales, by Fiscal Year 

R

aise th

e Same Amount 

of Cas

h

(i.e. the Amount of Debt That Would Have Been Issued to the Fed via Ad

Total $667 billion

$228

$250

$25

$68

$161

$150 $141$200

$136

$32 $161

$25

$103

$98

$141

$100$150

$ Billions

$66

$136

$38 

$0

$50

4

FY2012 FY2013 FY2014 FY2015 

MEP1 MEP2
MEP1 Lowered Borrowing Capacity As Projected Borrowing Need

As a Result, Treasury Went From Being Overfunded To Facing FinSh tf ll

Pre-MEP and Post-MEP1 Borrowing Capacity 

vs. OMB Projected Borrowing Need

Shortfall

s

Overfunded (+) vs. Underfunde

Pre-MEP 

FY2012 $72 FY2013 $260 

FY2014 $345 

$1,200$1,400$1,600

FY2014 $345 FY2015 $103 FY2016 -$30 

$600$800

$1,000

• Prior to MEP, Treasury faced a modest o

and significant overfunding in FY 2013 awould likely have led to cutbacks in coup

• As a result of MEP1 and an upward revis

borrowing need (reflecting in part stimuluPresident’s American Jobs Act) debt ma

$0

$200$400

FY2012 FY2013 FY2014 FY2015 FY2016

Pre MEP Borrow ing Capacity

Pre-MEP borrowing capacity based on portfolio and SOMA holdings as of 9/30/2011. Issuance sizes 

for bills, nominal coupons, and TIPS are unchanged from 9/30/2011 levels. OMB’s projected borrowing from the public from Table S-12 of Mid-Session Review, September 1, 2011. Post-MEP1 

borrowing capacity based on portfolio and SOMA holdings as of 6/30/2011 Issuance sizes for bills

President s American Jobs Act), debt ma

significant financing shortfall in FY 2012 underfunding in FY 2013-2016.

Pre MEPBorrow ing CapacityPost MEP1 Borrow ing CapacityOMB Projected Borrow ing, Sep 2011OMB Projected Borrow ing, Feb 2012

5

borrowing capacity based on portfolio and SOMA holdings as of 6/30/2011. Issuance sizes for bills, 

nominal coupons, and TIPS are unchanged from 6/30/2011 levels. OMB’s figures for projected 

borrowing from the public from Table S-15 of February 13, 2012, “Fiscal Year 2012 Budget of the US Government”
Given a Projected Financing Shortfall in FY 2012, No Coupon Auct

W C t Thi Y T Cl th F di G T Were C

ut Thi

s Year. To Close th

e Funding Gap, T-bill I I 

bill Issuance Incr

Post-MEP1 & MEP2 Borrowing Capacity vs. Revised Borrowing Needs1, Assuming 

Fundin

g Ga

p Is Closed With Increased Bill Issuance2 g p

Bills 2/3/5 7/10/30 TIPs

Post MEP 

Borrowing 

Capacity3

OMB Projec

Borrowing N

FY 2012 171 147 738 89 1,145 1,147 

FY 2013 52 90 720 103 964 1,059 

FY 2014 0 -8 669 77 739 809 FY 2015 0 -94 639 76 621 752 

FY 2016 0 95 496 63 655 783 

FY 2013-20

1The American Jobs Act did not win Congressional approval. Thus, actual borrowing needs in FY 2012 proved lower than the $1.405 trillion projected by 

OMB’s projected borrowing need for FY 2012 is based on actual results from October 2011 thru June 2012, and Treasury’s July-September borrowing foFY 2013-FY2016, projected borrowing from the public is from Table S-15 of February 13, 2012, “Fiscal Year 2012 Budget of the US Government” 

2 On July 26, 2012, Treasury announced increases in the weekly 3-month and 6-month T-bill auction sizes. In this table, 4-week T-bill auction sizes are fo

September, while 3-month and 6-month T-bill auction sizes are projected to increase in early August to $34 billion and $30 billion, respectively, and then 

September 30 2012 Under this scenario net borrowing in the T September 30, 2012. Under this scenario, net borrowing in the

T-bill sector is increased sufficiently to close a projected FY 2 bill sector is increased sufficiently to close a projected FY 2012 financing gap of roughly 

012 financing gap of roughly 

OMB borrowing needs.3Borrowing capacity is calculated assuming the Fed sells all of its Treasury holdings maturing through January 31, 2016 and issuance sizes for nominal c

unchanged from 6/30/2012 levels. Bill issuance is increased as noted in FY 2012 to close the financing gap and then held steady at 9/30/2012 levels.

6
However, Treasury Still Faces Funding “Shortfalls” in FY 2013 Thr

 R lt f MEP1 d MEP2 H Sh ld Thi G b Add d

Projected Net Borrowing (Assuming Future Is

Constant) and Fundin

g Shortfall Post-MEP

a Result 

of MEP1 and MEP2. How Should Thi

s Gap b

e Addressed

Funding "Shortfall“

Post-MEP1 & MEP2 ) g

FY2013 $95FY2014 $70FY2015 $131FY2016 $128

$1,000$1,200

$400$600$800

-$200

$0

$200

FY2013 FY2014 FY2015 

Borrowing capacity is calculated assuming the Fed sells all of its Treasury holdings maturing thro

sizes for bills, nominal coupons, and TIPS are unchanged from 6/30/2012 levels. Funding shortfa

borrowing capacity and projected borrowing from the public. The projected borrowing for FY 2012 

O t b 2011 th J 2012 d T ’ J l S t b b i f t f A il 30 2

FY2013 FY2014 FY2015 

Bills 2/3/5 7/10/30 TIPS Fu

7

October 2011 thru June 2012, and Treasury’s July-September borrowing forecast as of April 30, 2

projected borrowing from the public is from Table S-15 of February 13, 2012, “Fiscal Year 2012 B
Treasury has a Number of Options for Increasing Issuance to Meet 

Needs in the Coming Four Years. Here are the Most Attractive and Di ti th t P i d i thi P t ti Disruptive th

at are Previewed i

n thi

s Presen

t

ation:

• A 5.5%, pro-rata increase in T-bill auction sizes in each of the next four fisca

to the nearest $1bln)

• A 6% pro-rata increase in coupon auction beginning FY 2013 (rounded to the • New issuance of a 2yr FRN at $10bn/month in FY 2013 and FY 2014, bump

$20bn/month in fiscal years 2015 and 2016

• New issuance of a 5yr FRN at $10bn/month over the next four fiscal years• N i f 10 FRN t $10b / th th t f fi l New issuance of a 10yr FRN at $10b

n

/month over the next four fiscal years

8
Each Funding Option will Alter the Path of the Weighted Average 

(WAM) f O t t di T d bt (WAM) 

of O

u

t

s

tanding Treasury d

ebt

7072

WAM - A pro-rata 5.5% increase in T-Bill issuance in each of the next four fiscal yearsWAM - A pro-rata 6% increase in Coupon issuance beginning FY 2013

6870 WAM - Launching $10bn of a new monthly 2yr FRN beginning FY 2013, upsizing to $20bn/month in FY 2015

WAM - Launching $10bn of a new monthly 5yr FRN beginning FY 2013WAM- Launching $10bn of a new monthly 10yr FRN beginning FY 2013

646662

Jan-12

May-12

Sep-12

Jan-13

May-13

Sep-13

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

9

J

M

S

J

M

S

J

M

S

J

M

S
Path of the Weighted Average Maturity (WAM) of Outstanding Tr

if 2 5 10 FRN I d if 2y, 5y, or 10

y FRN

s are Issue

d

7072

WAM - Launching $10bn of a new monthly 2yr FRN beginning FY 2013, upsizing to $20bn/month in FY 2015WAM - Launching $10bn of a new monthly 5yr FRN beginning FY 2013

68

WAM- Launching $10bn of a new monthly 10yr FRN beginning FY 2013

646662

Jan-12

May-12

Sep-12

Jan-13

May-13

Sep-13

Jan-14

May-14

Sep-14

Jan-15

May-15

Sep-15

10

J

M

S

J

M

S

J

M

S

J

M

S
S f F di S i d WAM i t Summary

of Funding Scenarios and WAM impac

t

WAM - A pro-rata 

5.5% increase in TWAM - A pro-rata 6% increase in 

WAM - Launching 

$10bn of a new 

monthly 2yr FRN 

WAM - Launching 

$10bn of a new 

Fiscal Year 5.5% increase in T bill issuance in each 

of the next four fiscal 

years

6% increase in 

Coupon issuance 

beginning

FY 2013

monthly 2yr FRN 

beginning FY 2013, 

upsizing to 

$20bn/month in FY 

2015

$10bn of a new 

monthly 5yr FRN 

beginning

FY 2013

Sep-12 64.5 64.5 64.5 64.5 

Sep-13 65.6 66.3 65.6 66.0 Sep-14 66.3 67.5 66.2 66.9 Sep-15 66.7 68.4 66.7 67.5 Sep-16 67.5 69.7 67.5 68.3 

11
Th P d The Pros and Cons A i t d ith E h Ch i T ’ I 

Associated with Each Change in Treasury’s Issu

A pro-rata 5.5% increase in T-bill issuance in each of the next four fiscal years• Currently, T-Bills represent 15.2% of marketable borrowing, well below the 23.1% 15-year average. There is room to add m• Advantageous funding cost in the cu Advantageous funding cost in the current steep yield curve environment steep yield curve environment.• Flexible vehicle for short term swings in funding needs, as evidenced by the way T-Bills filled a sudden funding gap in FY 2• Heightens Treasury’s rollover risk.• Increasing T-Bills would slow the rise in the average maturity of Treasury debt outstanding (WAM).• Bumping up T-Bills by 5.5% per fiscal year will lead to some large T-Bill auctions in the out-years, such as $50bn 4-week BA pro-rata 6% increase in Coupon issuance beginning FY 2013 rata 6% increase in Coupon issuance beginning FY 2013• Would reduce Treasury’s rollover risk and further extend the WAM in outstanding Treasury debt, but at a higher funding co• Relatively less flexible to the lumpiness of FY funding needs in the years ahead. Balance can be made up in T-Bills.• Long end coupon issuance could temper the impact of MEP1 and MEP2, countering the Fed’s efforts to remove the stock o

long end duration from the market. By the end of MEP2, the Fed would have removed roughly $750bn in 10yr duration equ

Increasing coupon auction sizes by 6% would add an additional ~$160bn in 10-year equivalent duration to coupon supply i

the Fed’s ongoing support, bigger auction sizes could eventually be problematic for the Treasury auction process.

Launching a new FRN program at $10bn/month

• FRN issuance should expand Treasury’s investor base, reducing the risk of “crowding out” other Treasury buyers.• Regulatory and accounting changes (Basel III, FASB,etc) create potentially significant demand for FRN’s from financial ins

increasing institutional and retail investor interest in FRN’s. Additionally, FRN’s would likely benefit from increasing demand 

inflationary expectations rise inflationary expectations rise.

• Attractive funding source for Treasury, depending on the slope of the curve and the reset frequency.• A 2yr final maturity FRN would slow the rise in outstanding Treasury WAM, a 10yr final would accelerate the rise in WAM a

the difference.

12
Treasury Borrowing y Advisory Committe

TBAC Charge #3 Presentation to the U.S. Treasury: US Government issuance of l h i i l l f ll i h di i i f h loans has grown in recent years, particularly following the discontinuation of the guar

student loan program in 2010. What approaches should Treasury consider to minimize optimize composition of the net new issuance that finances these assets going forward

July 31, 2012
Table of Contents

• Executive Summary• F d l St d t L P D i ti Federal Student Loan Program Description• Student Loan Financing Activity• Loan Performance• Budget Implications of Direct Federal Student Lendin• Hypothetical Cash Flow Modeling and Funding Profile

Hypothetical Cash Flow Modeling and Funding Profile

• Liability Management Considerations

2
Executive Summary

• The Student Aid and Fiscal Responsibility Act (SAFRA) of 2010 ceased 

of federal student loans by private lenders, and as of July 1, 2010, all fedloans are made directly by the Department of Education and funded by tTreasury Department. Newly originated federal student loans since July 

fixed rate loans. 

• While data sources are inconsistent, the volume of student loans has inc

substantially $ ,g 

 to at least $900 billion, making student loans the second lar

consumer debt, ahead of credit cards and auto loans, trailing only mortgfederal government owns or guarantees approximately 85% of student looutstanding.

• As a result of this shift, the liability management task of Treasury has a 

dimension, moving from a focus on financing the deficit, toward an increaoverall issuance supporting the funding needs of financial assets owned some purchased during the financial crisis but future growth primarily drsome purchased during the financial crisis, but future growth primarily dr

student lending.

• There are a number of different student loan programs with varied repay

avail bl t b d th h t i ti f h t id 

ilable to borrowers, and the characteristics of each creates a wide ar

scenarios to be considered in determining an optimal funding strategy.

3
Executive Summary (continued)

• An important consideration is that the credit quality of the loans is signific

enhanced by the fact that they cannot be charged off in bankruptcy in almand that the consequences of default include garnishment of wages, tax other benefits other benefits.

• Additionally, the issuance of student loans is likely to be pro-cyclical to e

issuance, meaning that Treasury funding needs will increase as the econbeca se of an increase in dela ed cash flo s from deferment forbearanbeca

use of an increase in delayed cash flo

w

s from deferment, forbearan

defaults and potentially higher college enrollment, just as falling tax recepotentially higher federal spending impacts funding needs from an expandeficit. Because of the credit terms of these loans, however, this may ac

att ti li bilit t ti t T ttractive li

ability mana

gement options to 

Treasur

y.

• While this presentation will attempt to identify important characteristics o

features of some of the more common loans offered directly by the federclearl

y a more exhaustive anal

ysis, includin

g the collection and availabili

data about the performance and borrower trends is needed to complete assessment of the funding strategy for these loan programs.

4
Federal Student Loan Program Description 
Federal Student Loan Program History

Federal Perkins Loan FFELP (Federal F

amil

y Direct Loan Pro

gra

(FDLP – William D Direct Loan Progra•Still active

( ede a a y

Education Loan Program)•Discontinued July 2010

Federal Perkins LoanProgram •Still active

Started in 1993 and 2010, FDLP providestudent loan funding

Started in 1965 and discontinued in July 2010. Provided loans through private 

Initiated under National Defense Education Act of 1958. Renamed in 1986 to Perkins Loan Program student loan funding

Department of Educloans based on fundTreasury.

lenders with ultimate guarantees provided by the 

School-based loan program U.S. government.for undergraduates and 

Perkins Loan Program.

Four Types of Direct Student Loans:1) Subsidized Stafford Loans: loans made to eligible u

ndergraduate stude

nts wh

o de

m

o

nstrate fin

a

n

cial ne

graduate students with exceptional financial need, where the school is the lender. u de g aduate stude ts o de o st ate a c a e

2) Unsubsidized Stafford Loans: loans made to eligib

undergraduate and graduate students, regardless of f3) Federal PLUS Loans: loans made to graduate or p

students and parents of dependent undergraduate stu

Source: U.S. Department of Education; Finaid.org

6

students and parents of dependent undergraduate stu

4) Federal Consolidation Loans: combines an individu

federal student loans into a single loan with a single lo
Type of Loan Loans made on or after Loans made on or after Loans mad

Federal Student Loan Program: Borrower Interes

Jul. 1, 1995 Oct. 1, 1998 Jul. 1, 200

Stafford and Unsubsidized Stafford

91-day Treasury bill rate +2.5%, during in-school, grace, or deferment periods, but Treasury bill 

91-day Treasury bill rate +1.7%, during in-school, grace, or deferment periods, but TreasuryFixed rate of 

reduced: 6.0%--2008-25.6%--2009-2

Stafford 4 5% 2010 2

+3.1% during repayment; capped at 8.25% 

bill +2.3% during repayment; not to exceed 8.25% 

4.5%--2010-2

3.4%--2012-26.8%--2012-2

PLUS

Was 52-week Treasury bill rate +3.1%, not to exceed 9%. As of July 91-day Treasury bill rate +3.1%, Fixed rate of 

PLUS increased to 

1, 2001 converted to 1-year constant maturity +3.1%, not to exceed 9% 

not to exceed 9% increased to 

FFEL PLUS 

FFEL Consolidation Loans2

Weighted average of the interest rates on the loans consolidated, rounded up to the nearest whole 

Weighted average of the interest rates on the loans consolidated, rounded up to the nearest oneeighth of one percent not to

Weighted aveon the loans 

p to the neares

percent eighth of one percent, not to exceed 8.25% 

percent, not t

Direct Consolidation Loans--Stafford and Unsubsidized Stafford 

91-day Treasury bill rate +2.5%, during in-school, grace, or deferment periods, but Treasury bill +3.1% during repayment; capped at 

91-day Treasury bill rate +2.3%, not to exceed 8.25% for applications received Oct. 1, 1998through Jan. 31, 1999; Weighted 

Weighted avg

g p y pp

8.25% 

g g

avg. basis, as above, thereafter 

Direct PLUS Consolidation 

Was 52-week Treasury bill rate +3.1%, not to exceed 9%. As of Jul. 1, 2001 converted to 1-year constant maturity +3.1%, not to exceed 9% 

Same as Direct Consolidation, above, for Stafford and Unsubsidized Stafford loans 

Same as Direfor Stafford aloans 

1) Applies to undergraduate and graduate students; Interest rates for loans first disbursed between Jul. 1, 2012 and Jun. 30, 2013; 2) The Emergency Stu

1997, which was included in the Department’s FY 1998 appropriations act, temporarily changed a number of laws affecting Consolidation Loans. Under th1998, the interest rate for FFEL Consolidation Loans made on or after Nov. 13, 1997, was calculated based on the Treasury bill calculation--91 Day T-bill + the interest rates on the loans consolidated. Student Aid and Fiscal Responsibility Act (SAFRA) of 2010—part of the Health Care and Education Reconcilieliminated new FFEL Loans as of Jul.1, 2010. Source: U.S. Department of Education Fiscal Year 2013 Budget; Studentaid.ed.gov

7
Repayment Plan Eligible Loans Monthly Payment and Time Frame

William D. Ford Direct Loan Program: Repayment 

Standard Repayment Plan

1. Direct subsidized and 

unsubsidized loans

2. All PLUS loans

-Payments are a fixed amount of at least $50 per m-Up to 10 years

Graduated 1. Direct subsidized and unsubsidized loans -Payments are lower at first and then increase, usu

Repayment Plan unsubsidized loans 2. All PLUS loans -Up to 10 years

Extended Repayment Plan

1. Direct subsidized and 

unsubsidized loans

2. All PLUS loans

-Payments may be fixed or graduated-12 to 25 years

Income-BasedRepayment Plan

1. Direct subsidized and 

unsubsidized loans

2. All PLUS loans made to 

students

-Maximum monthly payments are 10% of discretiondifference between student’s adjusted gross incompoverty guideline for student’s family size and state -If the student has not repaid his/her loan in full afte

(IBR) 3. Consolidation loans that do not 

include consolidated PLUS loans made to parents

equivalent of 20 years of qualifying monthly paymepassed, any outstanding balance on the loan may bamount forgiven as part of taxable income-Public service: Unpaid loan balance forgiven after 

IncomeContingent Repayment Plan

1. Direct subsidized and 

unsubsidized loans

2. Direct PLUS loans made to 

students

3 Di t lid ti l

-Payments are calculated each year and are based income*, family size, and the total amount of studenup to 25 years-*If student is married, student’s spouse's income is -If the student does not repay his/her loan after 25 y

Source: Studentaid.ed.gov

8

3. Direct consolidation loans py y 

the unpaid portion will be forgiven. The student matax on the amount that is forgiven 
Annual Limits Annual Limits

FFEL and Direct Loans: Student Loan Program 

Dependent Undergraduates Stafford 

(Subsidized)

Total (Subsidized &Unsubsidized Stafford) 

First-Year Student $3,500 $5,5001

Second-Year Student $4,500 $6,5001Third Year+ Student $5,500 $7,5001

Independent Undergraduates2,3 Stafford 

(Subsidized)

Total (Subsidized &Unsubsidized Stafford) 

First-Year Student $3,500 $9,5001Second-Year Student $4,500 $10,5001Third-Year+ Student $5,500 $12,5001Graduate Students3 $8,500 $20,500

Aggregate Limits Aggregate Limits

Dependent Undergraduates $23,000 $31,0001

Independent Undergraduates2,3 $23,000 $57,5001Graduate Students3 $65,500 $138,500

Note: As of July 1, 2010, all new loans are required to be disbursed through the Direct Loan program. 1) ECASLA of 2008 increased Unsubsidized Stafford amounts by $2,000 annually for loans first disbursed on or after July 1, 2008. Aggregate amounts for 

increased by $8,000 and for independent undergraduates by $11,500. Graduate student levels did not change. 2) And dependent undergraduates whose 

the PLUS program. 3) Students who qualify for only a portion of the maximum Stafford Loan limit may borrow up to the remaining loan amount under the U

program, with the total amount borrowed limited to cost of attendance minus other aid. For example, a dependent first-year student who qualifies for a $2,0for an additional $3,500 in Unsubsidized Stafford up to the total of $5,500. For students borrowing under both programs, the loan limits displayed above in Unsubsidized Stafford) column apply. 

F i d d t d d t t d t ( d d t d d t t d t h t t b d th PLUS ) d f d t 

Graduate Students $65,500 $138,500

For independent undergraduate students (or dependent undergraduate students whose parents cannot borrow under the PLUS program) and for graduate 

maximum a student can borrow during any academic year is: the combined Stafford and Unsubsidized Stafford loan limit shown under the column entitledStafford)." For example, a second-year independent student could borrow up to $4,500 under Stafford Loans and up to an additional $6,000 in Unsubsidiz$10,500. Under HERA, qualified graduate students are now eligible to borrow PLUS loans, where no limit applies other than cost of attendance. The aggre

students is determined by the Secretary of Education.Source: U.S. Department of Education; Studentaid.ed.gov

9
Federal Student Loan Status

• In school• Grace period (6 months after graduation)• Repayment (current)• Deferment• Forbearance• Delinquent• Default• Rehabilitated

– After the borrower has made 9 out of 10 consecutive, voluntary

reasonable and affordable monthly payments on a defaulted saccording to a loan rehabilitation agreement, the loan may be and the default removed from the borrower's credit history

10
Deferment and Forbearance Policy on Federal L

 Deferment is a postponement of payment on a loan, 

during which interest does not accrue if the loan is 

b idi d

 If a borrower does not qualify for d

may still be eligible for forbearance

Deferment Forbearance

su

b

sidize

d

 Borrowers can qualify for Deferment while:

 Enrolled at least half time in an eligible 

postsecondary school; or

 Forbearance allows the borrower t

temporarily stop making payments make smaller payments, or extend making payments

 Studying full time in a graduate fellowship 

program or approved disability rehabilitation program; or

 Qualifying active duty service in the U.S. Armed 

 Interest will continue to accrue on 

during the forbearance period

 The borrower can request forbeara

fi i l h d hi ill Forces or National Guard

 During a period of unemployment or economic 

hardship (maximum period of 3 years)

 Loans are automatically put into deferment once the

financial har

d

ship or illness

 In this case, forbearance is pro

discretion of the lender

 The lender is required to grant forb

Loans are automatically put into deferment once the

borrower enrolls in school at least half time

 If the borrower is in default, he/she is no longer 

eligible for deferment

borrower is performing teaching senational service program, part of a residency program, etc.

11

Source: U.S. Department of Education
Default Consequences

• Tax Refund Offsets: IRS can offset the borrower’s income tax refund un

loan is paid in full. A number of states also have laws that authorize state agencies to take state income tax refunds.

• Federal Benefits Offsets: Federal Benefits Offsets: The government can offset certain Social Sec

The government can offset certain Social Sec

some Railroad Retirement benefits to collect government student loans. other types of student loan collection, there is no time limit on Social Secuaccording to a 2005 Supreme Court Case.

• W G ih t Wage Garnishments: Th t l i h 

The government can also garnish wages as a way 

money owed on a defaulted student loan. The United States Department a Student Loan Guarantor can garnish 15% of disposable pay1 per pay pe

court order. 

• Effect on Credit History: Adversely affects credit for many years. If bor

loan will be listed as a current debt that is in default. The default will also historical section of borrower’s credit report, specifying the length of the d

• License Revocations: License Revocations: A number of states allow professional and vocatio

A number of states allow professional and vocatio

refuse to certify, certify with restrictions, suspend or revoke a member’s pvocational license and, in some cases, impose a fine, when a member deloans.

1) Disposable pay is the pay remaining after deduction of any amounts required by law to be withheld. The maximum for student loan and all other garnishincome. Wage garnishment amounts may be lower, as the borrower must be left with weekly earnings after garnishment that are at least 30 times the Fed

an hour since July 24, 2009).Source: National Consumer Law Center; Finaid.org

12
Terms for Forgiveness, Cancellation, and Disch

Direct Loans

Type of Forgiveness, Cancellation, or Discharge

Direct

Loans

FFEL

Loans

Perki

Loan

Total and Permanent Disability 

Discharge XX X

Death Discharge XX XDischarge in Bankruptcy1 XX X

C S losed 

School Discharge X X

False Certification of Student Eligibility or Unauthorized Payment Discharge

X X

Unpaid Refund Discharge X XTeacher Loan Forgiveness X XPublic Service Loan Forgiveness

X

1) Not an automatic process since you must prove to the bankruptcy court that repaying your student loan would cause undue hardship The court uses a 

Perkins Loan Cancellation and Discharge (includes Teacher Cancellation)

X

13

1) Not an automatic process since you must prove to the bankruptcy court that repaying your student loan would cause undue hardship. The court uses a determine hardship: 1) If you are forced to repay the loan, you would not be able to maintain a minimal standard of living, 2) There is evidence that this har

portion of the loan repayment period; 3) You made good-faith efforts to repay the loan before filing bankruptcy (usually this means you have been in repay

Your loan will not be discharged if you are unable to satisfy any one of the three requirements. If your loan is discharged, you will not have to repay any poactivity will stop. You also will regain eligibility for federal student aid if you had previously lost it.Source: Studentaid.ed.gov
Income Based Repayment Capped Monthly Pay

(U.S. $/month)

Total Graduating Debt: U.S.$ 100,000

Years in Repayment: 20-years

AnnualIncome 1 2 3 4

Family Size Annual

Income 1 2 

Family Size

Maximum Monthly Payments Under Old IBR Maximum Payments with New 

$15,000 $0 $0 $0 $0$20,000 $41 $0 $0 $0$25,000 $103 $29 $0 $0$30,000 $166 $91 $17 $0$35,000 $228 $154 $80 $5

$15,000 $0 $0 $0 $20,000 $27 $0 $0 $25,000 $69 $19 $0 $30,000 $110 $61 $11 $35,000 $152 $103 $53 

$40,000 $291 $216 $142 $68$45,000 $353 $279 $205 $130$50,000 $416 $341 $267 $193$55,000 $478 $404 $330 $255$60,000 $541 $466 $392 $318

$40,000 $194 $144 $95 $45,000 $235 $186 $136 $50,000 $277 $228 $178 $55,000 $319 $269 $220 $60,000 $360 $311 $261 

Source: Barclays Capital

14
Income Based Repayment and Public Service L

Forgiveness

Total Graduating Debt: $100,000 

Public Service includes emergency management, military service, law enforcement, public interest law services, early childhood educ

Initial Adjusted Gross Income: $60,000 Income Growth Rate: 4.00%Interest Rate: 3.40%Family Size: 1Percenta

g y e of Discretionar

y 10.0%

Income: 

IncomeBased 

Repayment

Fixed 

Monthly 

Repayment

Years in Repayment: 10-years 10-yearsFirst Monthly Payment: $360 $984 Total Amount Paid: $52,829 $118,102 T t l I t t P id T

otal Interest P

aid: $31 187 $31,187 $18 102 $18,102

Payments to Principal: $21,642 $100,000 Government PaymentsLoan Forgiveness: 100%

Source: IBR Calculator at Finaid.org

Forgiveness Year: 10-yearsBalance Write-off: $78,358 

15
Student Loan Financing Activity
Total Student Aid and Nonfederal Loans Used to 

Postsecondary Education Expenses (Current U.1990-91 to 2010-11

Academic Year

Federal Programs 1990-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-0

Grants

Pell Grants $4,935 $5,793 $6,176 $5,654 $5,519 $5,472 $5,780 $6,331 $7,233 $7,208 $7,956 $9,975 $11,642 $12,708 $13,150 $12,693 $12,8FSEOG $458 $520 $580 $583 $583 $583 $583 $583 $614 $619 $631 $691 $725 $760 $771 $779 $7

LEAP $59 $62 $71 $72 $72 $64 $32 $50 $25 $25 $40 $55 $66 $66 $66 $65 $Academic Competitiveness Grants - - - - - - - - - - - - - - - - $2SMART Grants - - - - - - - - - - - - - - - - $2Veterans $679 $876 $1,037 $1,192 $1,256 $1,303 $1,279 $1,347 $1,484 $1,491 $1,644 $1,883 $2,313 $2,657 $3,012 $3,176 $3,2Military $369 $394 $393 $405 $419 $447 $445 $462 $482 $525 $544 $646 $707 $904 $1,069 $1,075 $1,Other Grants $118 $160 $182 $192 $269 $262 $246 $267 $271 $297 $332 $348 $343 $376 $395 $426 $4Social Security - - - - - - - - - - - - - - - - Total Federal Grants $6,618 $7,804 $8,439 $8,099 $8,119 $8,130 $8,366 $9,040 $10,108 $10,165 $11,147 $13,598 $15,796 $17,470 $18,462 $18,214 $19,0

Loans

Perkins Loans $870 $868 $892 $919 $971 $1,029 $1,022 $1,062 $1,070 $1,101 $1,144 $1,239 $1,460 $1,639 $1,652 $1,594 $1,6

Income Contingent Loans $6 $5 $5 - - - - - - - - - - - - - Subsidized Stafford $8,758 $9,461 $9,576 $12,396 $13,630 $15,035 $15,984 $16,119 $16,309 $16,190 $16,383 $17,391 $19,530 $22,039 $23,826 $24,440 $25, (FDLP) - - - - ($1,022) ($4,595) ($5,361) ($5,569) ($5,549) ($5,367) ($5,097) ($5,124) ($5,485) ($5,673) ($5,694) ($5,471) ($5,1 (FFELP) ($8,758) ($9,461) ($9,576) ($12,396) ($12,608) ($10,441) ($10,623) ($10,550) ($10,760) ($10,823) ($11,286) ($12,267) ($14,045) ($16,366) ($18,132) ($18,968) ($19,8

Unsubsidized Stafford - - $275 $1,727 $6,229 $7,748 $9,137 $10,174 $10,900 $12,166 $13,108 $14,681 $16,996 $19,599 $21,845 $23,609 $24,3 (FDLP) - - - - ($440) ($2,208) ($2,885) ($3,301) ($3,415) ($3,691) ($3,701) ($3,937) ($4,308) ($4,435) ($4,564) ($4,644) ($4,4 (FFELP) - - ($275) ($1,727) ($5,790) ($5,540) ($6,251) ($6,873) ($7,485) ($8,475) ($9,406) ($10,744) ($12,688) ($15,164) ($17,281) ($18,965) ($19,8PLUS $824 $1,004 $1,102 $1,316 $1,585 $2,065 $2,362 $2,678 $2,957 $3,285 $3,691 $4,122 $4,864 $6,233 $7,363 $8,183 $10,2 (FDLP) - - - - ($154) ($663) ($791) ($904) ($1,041) ($1,123) ($1,182) ($1,265) ($1,526) ($1,812) ($2,000) ($2,121) ($2,2

( ) FFELP ($824) ($1,004) ($1,004) ($1,102) ($1,102) ($1,316) ($1,316) ($1,431) ($1,431) ($1,402) ($1,402) ($1,571) ($1,571) ($1,774) ($1,774) ($1,915) ($1,915) ($2,162) ($2,162) ($2,509) ($2,509) ($2,857) ($2,857) ($3,338) ($3,338) ($4,421) ($4,421) ($5,363) ($5,363) ($6,062) ($6,062) ($7,9

($7,9

SLS $1,493 $1,765 $2,072 $2,531 $524 - - - - - - - - - - -  (FDLP) --- - - - - - - - - - - - - -  (FFELP) ($1,493) ($1,765) ($2,072) ($2,531) ($524) - - - - - - -----

Other Loans $345 $367 $411 $456 $404 $325 $281 $217 $117 $113 $116 $118 $125 $125 $141 $157 $Total Federal Loans $12,295 $13,469 $14,333 $19,344 $23,344 $26,202 $28,786 $30,249 $31,353 $32,855 $34,442 $37,551 $42,976 $49,635 $54,826 $57,983 $61,3

Federal Work-Study $728 $760 $780 $771 $757 $764 $776 $906 $913 $917 $939 $1,032 $1,097 $1,107 $1,082 $1,050 $1,0Education Tax Benefits - - - - - - - $1,487 $3,552 $4,147 $4,211 $4,631 $5,259 $5,784 $6,130 $6,398 $6,5

Total Federal Aid $19,641 $22,033 $23,552 $28,215 $32,220 $35,096 $37,928 $41,682 $45,927 $48,085 $50,739 $56,813 $65,128 $73,996 $80,501 $83,645 $87,9State Grant Programs $1,860 $1,968 $2,125 $2,374 $2,773 $3,000 $3,163 $3,404 $3,669 $4,064 $4,766 $5,223 $5,792 $5,991 $6,614 $6,836 $7,5

I tit ti l G t Institutional Grants $6 130 , $7 090 , $7 930 , $8 850 , $9 670 , $10 440 $10,440 $11 450 $11,450 $12 580 $12,580 $13 870 $13,870 $15 310 $15,310 $16 240 $16,240 $16 940 $16,940 $17 660 $17,660 $19 810 $19,810 $21 650 $21,650 $23 840 $23,840 $26 2

$26,2

Private & Employer Grants $2,020 $2,420 $2,810 $2,820 $2,830 $2,840 $3,320 $3,890 $4,550 $5,330 $5,850 $6,410 $7,030 $7,700 $8,520 $9,430 $10,4

$29,651 $33,511 $36,418 $42,259 $47,493 $51,376 $55,861 $61,556 $68,016 $72,789 $77,596 $85,385 $95,610 $107,497 $117,285 $123,751 $132,2

Nonfederal Loans - - - - - $1,330 $1,860 $2,310 $2,900 $4,560 $5,090 $6,220 $8,260 $10,820 $14,510 $17,790 $21,

(State- and Institution-Sponsored) - - - - - ($220) ($290) ($350) ($400) ($1060) ($1090) ($1220) ($1260) ($1420) ($1510) ($1,790) ($2,1(Private Sector) - - - - - ($1,110) ($1,570) ($1,960) ($2,500) ($3,500) ($4,000) ($5,000) ($7,000) ($9,400) ($13,000) ($16,000) ($19,0

$29,651 $33,511 $36,418 $42,259 $47,493 $52,706 $57,721 $63,866 $70,916 $77,349 $82,686 $91,606 $103,870 $118,317 $131,795 $141,541 $153,3

Total Federal, State, Institutional, Private AidTotal Funds Used to Finance Postsecondary Expenses

Notes: Components may not sum to totals because of rounding. Federal loan dollars reflect disbursements beginning in 1995-96. Prior to 1995-96 the da

commitments. These amounts are approximately 11% higher than disbursements. The Ford Federal Direct Student Loan (FDSL) Program began in 1992-FFEL and FDSL volumes are reported separately. “Private and Employer Grants” are estimated based on NPSAS data and surveys conducted by the NatProviders Association. Data for these programs were not estimated prior to 1993-94, even though funds were available from these sources. Where precisthe division of aid between undergraduate and graduate students is based on the NPSAS.

Source: The College Board

17
Percentage Share of Federal and Nonfederal Stu

Loans (Constant 2010 U.S. $): 2001 to 2011

1

41 4 35 5 90.0%

100.0%

41.4 35.5 Su

70.0%80.0%

Su

Lo

UnLo

33.2 41.2 50.0%

60.0% Pa

Gr

9.3 20.0% 9.3

30.0%40.0%

PeFeNo

12.9

7.0

3.2

1.0

6.0

9.3

0.0%

10.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

No

18

1) Data for academic year ending in years shown aboveNonfederal loans include loans to students from states and from institutions, in addition to private loans by banks, credit unions, and Sallie Mae

Source: College Board

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total Student Aid and Nonfederal Loans Used to 

Postsecondary Education Expenses in Constant Dollars (in Millions) Dollars (in Millions), 1963

-64 to 2010

-11

180,000200,000 Federal Grants Federal Loans

Federal Work Study Education Tax BenefitsState grant Private & Employer Grants

140,000160,000

Private Non-federal State/Institutional Loan Private Sector Loan

100,000120,000

40,00060,00080,000

0

20,00040,000

4

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

6

7

8

9

0

1

2

3

4

5

63-64

70-71

71-72

72-73

73-74

74-75

75-76

76-77

77-78

78-79

79-80

80-81

81-82

82-83

83-84

84-85

85-86

86-87

87-88

88-89

89-90

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

0405

19

Source: College Board
U.S. Student Loans Outstanding and Cost of Tu

2003 to 2011 2003 to 2011

Student Loan Debt Outstanding 

Public College Tuition P i I d (C t

721

812

225250

Student Loan Debt Outstanding

(U.S. $ Bil., Right Side)

Public College UndergraduateTuition Price Index (Left Side)

Price Index (Current

U.S. $): 1995 = 100

482

548

639

721

175200

253

346

392

150175

100125

2003 2004 2005 2006 2007 2008 2009 2010 

20

Note: in-state tuition and required fees for public institutionsSource: FRBNY; U.S. Department of Education
Average U.S. Student Loan Balance and Numbe

Borrowers: Q1 2005 to Q1 2012

Q1 '12

24.3

40.0 

Mil. Number of Borrowers (Left Side) 

36.0 

Average Student Loan Balance (Right Side)

32.0 

Q1 '05

15.7

24.028.0

Q1 '05

23.3

20.0 

Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q1 '1

21

Includes all age groupsSource: FRBNY
Percentage of Undergraduate Students Receivin

Student Loans: 2001 to 2010

1

All Undergraduate Students

2

2010

51.1

50.052.054.0

50.052.054.0

%

%

42.044.046.048.0

42.044.046.048.0

Public and Private for-Profit Undergraduate Students

2001

40.1

38.040.0

38.040.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

36.038.040.0

75.080.085.0

Private for-Profit Instit. (Left Side)Public Instit. (Right Side)

% %

2010

2001

63.5

2001

30.7 30.0

32.034.0

60.065.070.0

2001 2006 2007 2008 2009 2010

2010Public: 38.6Private for-Profit: 81.3

22

1) Data for academic year ending in years shown above2) Full-time, first-time degree/certificate seeking undergraduate students enrolled in all private or public degree-granting institutions

Student loans include only those made directly to students and do not include Parent Loans for Undergraduate Students (PLUS) and other loans made dir

Source: U.S. Department of Education

2001 2006 2007 2008 2009 2010
Average Student Loan Balance by Age Group: Q

$20,835 $19,225

$23,183 

$28,906 

$27,103

23

Source: FRBNY
Total Student Loan Debt by Age Group (U.S. $ Bi

$106 Bil.

11.8%

$43 Bil.

4.8%

$292 Bil.

32.4%

$154 Bil.

17.0%

$307 Bil.

34.0%

24

Source: FRBNY
Loan Performance
U.S. Student Loans: Amount and Percentage of 

Balance Delinquent for 90 or More Days: Q1 2003 to Q1 2012

Q3 '10

9.2

9.5 

% Percentage of Balance 90+ Days Delinquent (Left Side) 

8.59.0

New Seriously Delinquent Loans (+90 Days, Right Side)

7.58.0

6.57.0

5.56.0

Q1 '03 Q1 '04 Q1 '05 Q1 '06 Q1 '07 Q1 '08 Q1 '09 Q1 '10 Q

26

Source: FRBNY

Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q
National Student Loan Cohort Default Rates for 

Student loans: 1987 to 2009

21.4 22.4

25.0 

%

17.6

17.2

17.8

20.0 

15.0

11.6

10.710.4

9.6 8 8 

10 015.0

8.8

6.9

5.6 5.9 5.4 5.2 4.5 5.1 4.6 5.2

5.0

10.0

0.0 

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 

27

Note: The cohort default rate is the percentage of borrowers who enter repayment in a fiscal year and default by the end of the next fiscal yearSource: J.P. Morgan; U.S. Department of Education
Budget Implications of Direct Federal Student Lendin
U.S. Total Debt Held by the Public

1 and Total Debt 

Public Net of Direct Loan Accounts: Fiscal Year 20

20 022.5 Federal Debt Held by the Public (Left Side)

Federal Debt Held b

y the Public Net of 

U.S. $ Tril.

15.017.520.0

y

Direct Loan Accounts (Left Side)Direct Loan Accounts (% of Federal Debt Held by the Public, Right Side)

Projected

2008

3 4

2010

7.4

10.012.5

15.0

3.4

5.07.5

0.02.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 

29

1) Includes checks outstanding, accrued interest payable on Treasury debt, uninvested deposit fund balances, allocations of special drawing rights, and otoffset, cash and monetary assets (other than the Treasury operating cash balance), other asset accounts, and profit on sale of gold

Source: OMB
CBO Baseline Projected Direct Student Loan 

Subsidy Rates (%): 2012 to 2022

3.2

5.

5.0

10.0

%

Unsubsidized Student

9 2 -8 9 -8 9 -8 9 -10.0

-5.0

0.0

Subsidized Stu

-10.0 -10.7

-5.1

-0.7

-10.0

-5.0

0.0

-29 6

-23.7

-18.3

-13.5

-10.9 -9.2 8.9 8.9 8.9

-30.0-25.0-20.0-15.0

-15.1

-20.0-15.0

2012 2013 2014 2015 2016 2017 20

-35.0 -33.8

29.6

-40.0-35.0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

%

Parent GradPlus Stud

-25 0 -24 8 -24 8 -24 8

-20.0-10.0

0.0

30 6

-

-30.0-20.0-10.0

0.0

-51.3 -49.8

-45.7

-39.7

-34.2

-29.3

-26.7 -25.0 24.8 24.8 24.8

60 0

-50.0-40.0-30.0

%

-59.8 -57.8

-52.0

-44.1

-37.0

-30.6

-70 0-60.0-50.0-40.0

%

30

CBO March 2012 baseline; by fiscal yearSource: CBO

-60.0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

% -70.0

2012 2013 2014 2015 2016 2017 2

%
Direct Loans Subsidy Rate (%): Original vs. Ree

Fiscal Year 1994 to 2011

10.012.5

% Original Subsidy Rate Subsidy Rate Reestimate

2 55.07.5

-2.5

0.0

2.5

10 0

-7.5-5.0

-15.0-12.5-10.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

31

1) Reestimates from Federal Credit Supplement – Budget of the U.S. Government Fiscal Year 2013Source: OMB

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Contribution to Change between Original and R

Direct Loans Subsidy Rate: Fiscal Year 1994 to 2

22.5

Technical Assumptions Interest Rates 

%

12.517.5

7.52.5

-7.5-2.5

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 

32

1) Reestimates from Federal Credit Supplement – Budget of the U.S. Government Fiscal Year 2013Source: OMB

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Hypothetical Cash Flow Modeling and Funding Profil
Note on Data Used in this Presentation

S f i f ti i thi t i l d Sources for information in this report inclu

d

e

• Federal Reserve• Department of Education• C Fi i l P t ti B Consumer Financial Protection 

Bureau

• Office of Management and Budget• Congressional Budget Office• C ll B d C

ollege 

Boar

d

• Private lenders

In some instances data is inconsistent or limited In some instances data is inconsistent or limited with regard to information ne

with regard to information ne

student loan performance and trends. It may be worthwhile to provide more complete historical data in a centralized 

34
Data Assumptions

• The loan is an unsubsidized Stafford loan• Borrower is in deferment while in school as a result of being enrolled 

time

• There is no grace period There is no grace period - the borrower starts repaying immediately a

the borrower starts repaying immediately a

• Interest rate: 6.8% • Repayment schedule assumes interest accrues for 4 years and level 

years

• Default base case assumption: 16.6% cumulative default rate (CDR); 

rate in year one with decay to achieve CDR in 10-years

• Default alternative assumption: 33.2% cumulative default rate (CDR); 

rat i ith d t hi CDR i te in year one with decay to achieve CDR in 10-years

• Recovery period: No payments for 5-years post-default and then full p

level fashion over 5-years (5Y5Y); No payments for 5-years post-defafull payment in level fashion in 10-years (5Y10Y)

• 1.66% weighted average funding cost: Calculated based on the weigh

yield of current Treasury zeros to match-fund the cash flow of a hypotunsubsidized Stafford loan carrying 6.8% interest, 10-years post-gradmaturity, maturity, 16.6% CDR, and a recovery assumption of no payments for % CDR, and a recovery assumption of no payments for default and then full payment in a level fashion in 5-years (5Y5Y)

35
Unsubsidized Stafford Loan: Hypothetical Cash 

Profile

• First-year borrower completes school in four years• Interest rate: 6.8%; term: 10-years post-graduation• Default base case assumption: 16.6% cumulative default rate (CDR); 8% default rate 

decay to achieve CDR in 10-years

• Recovery period: No payments for 5-years post-default and then full payment in 5-ye• Weighted average life (WAL) in years:

No default16

6% CDR with

5

Y

5Y recovery

9.50 

10 01

3,845 3,683 3,601 3,559 3,537 4,325 4,677 4,840 4,915 4,949 4000 6000 U.S. $ 

16.6

% CDR with

5

Y

5

Y recovery 10.01

33.2% CDR with 5Y5Y recovery 10.62

652 300 

2000

0

2000

-5,500

-6,500

-6000-4000-2000

36

,

-7,500 -7,500

-10000

-8000

2013 2015 2017 2019 2021 2023 2025 2027 
Cash Flow Variance in Different Default Scenario

• First-year borrower completes school in four years• Interest rate: 6.8%; term: 10-years post-graduation• Default base case assumption: 16.6% cumulative default rate (CDR); 8% default rate 

decay to achieve CDR in 10-years

• Default alternative assumption: 33.2% cumulative default rate (CDR); 8% default rate 

decay to achieve CDR in 10-years

• Recovery period: No payments for 5-years post-default and then full payment in 5-ye

1,292

1

10001500

No-Default less 16.6% CDR 33.2% CDR less 16.6% CDR

U.S. $ 

334

496

578 620 642

0

139

381

0

500

-146

-498

-661 -652

-30

-118

-272

-430

-579

715

-468

-152

-500

0

37

661

-736 -770 -715

-1000

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027
Cash Flow Variance in Different Default and Rec

Scenarios

• First-year borrower completes school in four years• Interest rate: 6.8%; term: 10-years post-graduation• Default base case assumption: 16.6% cumulative default rate (CDR); 8% default rate 

decay to achieve CDR in 10-years

• Default alternative assumption: 33.2% cumulative default rate (CDR); 8% default rate 

decay to achieve CDR in 10-year

• Recovery period: No payments for 5-years post-default and then full payment in 5-ye

payments for 5-years post-default and then full payment in 10-years (5Y10Y)

712

788823 800

1000

U.S. $ 

15002000

U.S. $ 

Extended Recovery vs Base Case(16.6% CDR with 5Y10Y vs 16.6% CDR with 5Y5Y)

Higher Default, Extended Recov(33.2% CDR with 5Y10Y vs 16.6% 

192

547

375

173

80

0

200400600 16.6% CDR 5Y10Y less 16.6% CDR 5Y5Y 

0

500

1000

33.2% 5Y10Y less 16.6% CDR 5Y5Y

-334

-484

-554

586

-600 -601-400-200 -118

-272

-430

-579

-1,049

-1,061-945

-80

-1000

-500

0

-586 -800

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

-1500

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

38
Hypothetical Modeled Funding Scenarios Relativ

(2012=100) in Different Loan Growth Scenarios

0

%

20%40%

-20%

0%

• Assumes program fully ramped and loan interest rates 300 bp above the funding co

-80%-60%-40%-20%

%

No growth -80%

-60%-40%

-120%-100%

80%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

-120%-100%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

6% 

-40%-20%

0%

20%

-100%

-50%

0%

-100%

-80%-60%

3% growth

-250%-200%-150%

10% grow

-120%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

-300%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

39
Liability Management Considerations
Potential Liability Management Options 

Description Pros ConsCash flow-matched funding with existing coupon maturities

Ease of implementation given no new forms of issuance

Dependency on assumcash flows, exposure to variability; debt costs mnecessary 

Extendibles Classic agency origination technique; 

partially automates origination and asset-liability matching

Higher cost given matu

Putables Reduce u

p g front ori

gination cost. Grants Could add to Treasur

y 

optionality to investor to put bonds backto issuer. Works when negative correlation between defaults (unemployment) and Treasury yields h ld

y 

requirements at an inothe correlation breaks dissues

h

old

s

Amortizing, Sinking Funds Spreads out liabilities stream; provides 

Treasury a chance to buyback bonds at a discount if rates rise; lower coupon 

Hard to evaluate optionrollover risk; less structinvestors

Passthroughs Familiar MBS structure appeals to some 

investors; automates duration and cash flow matching

Complexity and policy to some investors

Create a new se

gre

gated 

Additional flexibilit

y to more accuratel

y Inte

gration with rest of 

41

g g

funding program for student loans

y

y

use sophisticated liability management tools to fund highly-complex student loan program 

g

funding programs
U.S. Treasury Student Loan Primary Funding Me

Structure Coupon (%) Duration Conve10-yr bullet 1.54 9.24 7-yr bullet 1.04 6.73 10-yr bullet, Issuer option to extend to 20 yr in 10 yr, same coupon 2.45 11.41 10-

y , r bullet, Issuer o

p yy tion to extend to 20 

yr after 

yr 5, p same cou

pon 2.45 11.41 

7-yr bullet, Issuer option to extend to 14 yr in 7 yr, same coupon 2.05 9.01 7-yr bullet, Issuer option to extend to 14 yr after yr 4, same coupon 2.05 9.01 10-yr bullet, European put from Investor at 5 yr 0.55 5.01 10-yr bullet, American put from Investor at 5 yr 0.54 5.08 10-yr bullet, Bermudan put from Investor at 5 and 7 yrs yr bullet, Bermudan put from Investor at

5 and

7 yrs 0.55 5.06 

7-yr bullet, European put from Investor at 5 yrs 0.59 5.01 7-yr bullet, American put from Investor at 5 yrs 0.58 5.03 10-yr bullet, 10% annual sinking fund beginning in yr 5 1.36 7.90 10-yr bullet, 10% annual sinking fund (SF), with option to double to total of 20% in every yr (issuer's option every year) beginning in yr 5 1.50 N/A total of 20% in every yr (issuer s option, every year), beginning in yr

5

10-yr bullet, 10% annual SF, starting in yr 2 1.07 5.02 7-yr bullet, 10% annual SF, beginning in yr 2 0.83 4.74 7-yr bullet, 10% annual SF, with option to double (issuer's option, every year), beginning in yr 2 0.90 N/A 10-yr, noncall 5, American option to call at par thereafter 1.77 8.51 10-yr, noncall 5, American option to call at par plus initial coupon, descending to par on final 1.72 8.71 7-yr, noncall 3, American option to call at par thereafter 1.25 5.67 7 yr, noncall 3, American option to call at par plus initial coupon, d di t fi l 1.19 5.93 descending to par on final7-yr, noncall 5, American option to call at par thereafter 1.13 6.53 

Calculation Source: J.P. Morgan

42
Data and Analysis Considerations

For purposes of assessing loan cash flows, variability, and credit p

- Volume and growth rates by type of loan (unsubsidized, subsidize

consolidation)- Choice of repayment option- Percent in deferment and forbearance by type- Type of school (2yr, 4yr, public, private, for-profit, etc)- A d i j d l ti Aca

demic major an

d wage correlation

- For payment plans specific to public service

- percent that remain in payment plan- credit 

performance

- Rates and causes of forgiveness, cancellations, and discharges- Delinquency transition rates from 30 to 60, 60 to 90, etc - Rehabilitation rates and redefault rates-Co-signer credit information recovery signer credit information, recoveryPrepayments- Wage levels leading to prepay- Other loan options, rates- Sensitivity to interest rates

43
Data and Analysis Considerations (continued)

Collections and Recovery- Expense- Source of collection

Voluntar

y

Involuntary

wage garnishmenttax refunds (impact of tax rates)

other benefits other benefits

Loan volume drivers- College attendance rates

- Correlation to economic activity Correlation to economic activity- Correlation to relative wages, breakeven timelinesAnalysis• M d l l h fl h d li d f lt 

M

o

d

el volumes, cas

h flow c

hanges, 

d

elinquency, 

d

e

fault, prepaym

on variables above

• Default seasoning curve based on school, major, repayment optio• Funding analysis based on modeled outcomes, adjusted as varia

• Consider "FICO" score for schools and academic majors

44