AGENDA ITEM 3.

EXECUTIVE DIRECTOR’S REPORT

3 Item 3. 9/24/10

ILLINOIS STUDENT ASSISTANCE COMMISSION

EXECUTIVE DIRECTOR’S REPORT

MARKETING AND COMMUNICATIONS

College !® 529 Prepaid Tuition Program Summary

Since the last Commission meeting in June the Marketing and Communications Division has undergone a change in leadership. The division has also initiated a review of prior strategy and past marketing and communications programs for efficacy and to glean insights for future efforts.

Specifically, the recently retained marketing agency is preparing recommendations in conjunction with qualitative research with students, parents and grandparents. The research will validate relevance of messaging and help identify at what specific points in the sales cycle these groups are most likely to consider and purchase a prepaid tuition contract. This information will be incorporated into media strategy and form the basis for a new “micro” marketing approach and a general shift from retail communications to targeted engagement and dialogue with potential clients.

Sales for College Illinois! 529 Prepaid Tuition Program contracts remain problematic and will likely not reach the target of 5,500 contacts for the program year. To remedy during the new contract year we are accelerating third-party sales agency and affinity group marketing effort.

Radio and print advertising has been curtailed until after November 2 when both will resume coinciding with the strong College Illinois! 529 Prepaid Tuition Program contract sales pattern seen last November and December. Future advertising will be dependent on articulation and alignment around the new brand and marketing strategy.

College Illinois! 529 Prepaid Tuition Program Sales

Sales of our prepaid tuition product continue to drift downward with 572 contracts sold since the last commission meeting, representing approximately $25 million in revenue. July and August saw the lowest level of sales since the monthly pricing program went into effect. Due to the changes in the program effective November 2009, we do not have adequate historical sales information to determine if this represents seasonality or not. Regardless, it is unlikely sales will reach the targeted level of 5,500 contracts. Efforts are being made to review the structure of the sales organization with consideration given to adding a business development function to accelerate efforts with third-party sales agents.

3-1

Marketing Communications

The social media strategy is under review. Currently Twitter and Facebook are utilized as another form of paid media. This approach may help explain the overall poor performance (open rates) for our emails and the minimal number of “followers” we’ve earned on social media sites. Going forward the strategy will be to engage potential clients and other stakeholders in relevant dialogues and exchanges, adding value to the interaction.

eMessaging activities included 8 emails sent to over 124,000 addresses on file – both contract and non-contract holders. Open rates ranged from 12 – 18% on par or slightly below industry norms. Monitoring the opts-out will be useful evaluating relevance to recipients.

More than 40,000 CollegeZone e-messages we sent resulting in over 113,000 website visits. College Illinois! 529 Prepaid Tuition Program sent approximately 41,000 e-message contributing to 26,000 web visits.

There were 68 Twitter posts promoting College Illinois! 529 Prepaid Tuition Program events, pricing adjustments, photos and news. An additional 27 posts were made leading up to and promoting the ISAC presence at the Illinois State Fair.

Two major print initiatives were executed during the period. The first was a presence in a Chicago Sun-Times insert targeting MBA and graduate school students. This vehicle was selected as the audience over-indexed on being married and having young children in the household – two factors believed to be important. Circulation was approximately 653,000, almost exclusively in Cook and the collar counties. The second print activity reached approximately 800,000 statewide messaging “College Savings” month.

Radio stations in Chicago, Peoria and the Western Suburbs promoted College Illinois with online and on-air baseball ticket give-away promotions. Working with the IS department, an infrastructure was built to support these and future radio and online promotions.

Paid radio advertising reached statewide on the following outlets.

Chicagoland 93WXRT-FM Chicago Public Radio WBEZ-FM 98.7 WFMT-FM

Statewide Networks Illinois Radio Network (50 outlets throughout Illinois other than Chicago) Metro Networks (Chicago and St. Louis)

NPR Stations WILL , Urbana, IL WCBU Public Radio for Central Illinois, Peoria, IL WGLT Illinois State University, Normal, IL WNIJ Dekalb, IL WSIU Southern Illinois University Carbondale, IL WUIS University of Illinois at Springfield WIU Western Illinois University Macomb, IL

3-2

Communications/Media Affairs

The division issued 18 press releases and made 145 media contacts (2.3 per business day) in June, July and August, resulting in 223 tracked media placements (3.5 placements per day). Additionally, the team secured and staffed 20 events to support the College Illinois! 529 Prepaid Tuition Program, ISAC and the Corps.

June press coverage concentrated on MAP suspension updates as well as College Illinois! 529 Prepaid Tuition Program (graduation and Father’s Day messaging). Seven press releases were issued, including a statement regarding the passing of Senator Robert C. Byrd. Tracked media placements numbered 82 for the month. College Illinois! 529 Prepaid Tuition Program also put together five (5) events, including two library presentations and three public appearances.

July messaging focused on scholarship and grant programs in addition to MAP updates and College Illinois! 529 Prepaid Tuition Program providing independence from tuition inflation as well as a purposeful parents month message. There were 86 tracked media placements during the holiday- shortened month. College Illinois! 529 Prepaid Tuition Program appeared at six (6) events involving its baseball partners, the Peoria Chiefs and Kane County Cougars, and a concourse table at Wrigley Field for the “Road to Wrigley” game, attended by nearly 20,000 people.

August communications focused on providing MAP updates, back-to-school messaging, ISACorps and the Illinois State Fair in addition to addressing ShoreBank media inquiries. Although eight press releases/advisories were sent out, trackable media coverage included just 55 stories. The agency participated in nine events during the month as College Illinois! 529 Prepaid Tuition Program hosted two concourse table opportunities each for the Peoria Chiefs and Kane County Cougars in addition to doing two presentations. There was a similar presence at a Schaumburg Flyers game. The agency was had a display in the Governor’s tent at both the Illinois State Fair and DuQuoin State fair. The executive director and corps members participated in the Bud Billiken Parade fair.

PROGRAM SERVICES AND OPERATIONS

John R. Justice Student Loan Repayment Program

The Governor's Office designated ISAC as the state's administrator of a new federal student loan repayment program entitled the John R. Justice (JRJ) Program. ISAC staff have worked throughout the summer to launch the program that is designed for attorneys working criminal cases as prosecutors and public defenders. Illinois is following a model that centralizes the administration of the program thereby allowing a consistent and standard approach statewide. With this model, applicants apply directly to the Commission and applicants who will receive funding are decided by ISAC based on the programmatic criteria set forth by the U.S. Department of Justice and developed by an Advisory Committee.

The allocation for federal fiscal year 2010 is $365,309. It is anticipated that the demand for the program will exceed this funding level, therefore a formula has been designed to distribute awards to applicants with the least ability to repay their student loans within each of the five appellate districts statewide. There is an additional statewide category for prosecutors. Although the law permits an annual maximum award of $10,000, it was agreed by the Advisory Committee that the maximum annual award amount for federal FY2010 in Illinois is $4,000.

3-3

The application that individuals are using to apply to ISAC for benefits was made available on August 4, 2010 and 163 applications have been received through September 7th. The first round of awarding is scheduled to occur after September 30th. Information about the program is readily available at ISAC's Web site, collegezone.com. Outreach efforts to prosecutors and public defenders are being spearheaded by Advisory Committee members and are ongoing throughout the state.

Proposed Rules Amendments for Robert C. Byrd Honors Scholarship Program and Illinois Prepaid Tuition Program

Amendments to the Robert C. Byrd Honors Scholarship Program are being proposed at this time in order for changes to be in effect prior to the selection of the 2011-12 Byrd Honors scholars. The three main changes being proposed are as follows:

• The component of the formula regarding class size and rank is being modified to achieve more equity when selecting scholars within each geographic district. • In another effort to achieve equity, if not already selected as a scholar, a student who ranks first in his/her class and has a perfect GPA and standardized test score will be given first priority for a scholarship through the at-large category. • The geographic districts used to determine the number of scholarships awarded within each district across the state are being updated with more current population data.

The Illinois Prepaid Tuition Program (College Illinois! 529 Prepaid Tuition Program) is being amended to address the expanded definition of eligible institution as authorized in Public Act 96-1282. Prior to the change, a school within Illinois must have been eligible to participate in the Monetary Award Program (MAP) in order to qualify for use of College Illinois! 529 Prepaid Tuition Program benefits, and no proprietary school based outside of Illinois could ever qualify. The definition of “eligible institution” was modified such that it now matches the definition of an “institution of higher learning” found in the Higher Education Student Assistance Act, allowing the Commission to judge out-of-state and for-profit schools to ensure that they qualify as long as they meet standards—such as accreditation and maintenance of degree-granting programs—that are substantially equivalent to those for an eligible institution located in Illinois.

Initial publication of the proposed amendments triggered a 45-day public comment period which will end in November 2010. At its next meeting, revised proposed rules, as modified in response to public comment if necessary, will be presented to the Commission for action.

MONETARY AWARD PROGRAM (MAP)

FY2011 MAP application volume is still much higher than last year, but the increase has decreased steadily since peaking in early March. At that time, 25 percent more students had completed applications and 36 percent more were eligible for MAP. At the end of August, announced application volume was about 9 percent higher than last year and eligible application volume was 15 percent higher. Since the record-early suspense date of April 19 nearly 104,000 eligible applicants have had their awards suspended. Sixty-seven percent of the suspended applicants are non-traditional independent students and more than 70 percent chose a community college as their first-choice school.

3-4

GOVERNMENT RELATIONS

We received good news from the federal government this month. The U.S. Department of Education approved ISAC’s application for the Payments to Loan Servicers for Job Retention program. The Department has found IDAPP eligible to receive up to $757,379 for funding staff training and job retention activities. These funds are being made available as part of the Health Care and Education Reform Act (HCERA), the law that ended new originations through the Federal Family Education Loan Program.

At the state level, the funding news since our last meeting has been less positive. The Emergency Budget Act (Public Act 96-958) granted the Governor extraordinary authority to manage the state budget, including temporary power to impose reserves—that is, to hold back some dollars that had been appropriated by the General Assembly. To that end, the Governor's Office of Management and Budget (GOMB) is directing ISAC to meet a $9 million reserve from our program allocations for FY2011, with no reduction made to the Monetary Award Program.

In accordance with the Commission’s June direction to staff "to make any needed adjustments...to optimize the appropriation," and following the principles that were used to allocate the $425 million lump sum that ISAC was initially appropriated, three programs were identified for cuts.

In an effort to minimize the financial impact to students and make the reductions uncomplicated to explain and implement, funding allocation changes are being implemented for the Illinois Veteran Grant (IVG), the Illinois National Guard (ING) Grant, and the Minority Teachers of Illinois (MTI) Scholarship programs as follows:

IVG - Funding for institutional reimbursement is eliminated, although payment claims must still be submitted to properly assess eligibility units for veterans. ING - Grants for fall term will be reimbursed at 100%, with spring term claims prorated at an amount determined after fall term payments are processed. MTI – Sufficient funds were allocated to make awards to renewing applicants and a limited number of new applicants.

A chart detailing the allocation approved in June and the FY 11 allocation after applying the mandated reserves follows.

3-5

FY2011 ISAC GENERAL FUNDS RECOMMENDATION

(Dollars in thousands)

FY11-After Grant or Loan Repayment Recommended Applying Program Enacted FY10 FY11 Reserves

Monetary Award Program (MAP)# 398,521.10 403,896.10 403,896.10

Silas Purnell Illinois Incentive for Access (IIA) Program* 4,800.00 - -

Illinois Veteran Grant (IVG) Program 5,750.00 6,000.00 -

Illinois National Guard (ING) Grant Program** 4,400.00 4,400.00 2,400.00

College Savings Bond Bonus Incentive Grants (BIG) 325 325 325

Dependents Grant Program*** 875 950 950

Student to Student Grant Program 950 950 950

Veterans' Home Nurse Loan Repayment Program 50 50 50

Minority Teachers of Illinois (MTI) Scholarship Program 2,500.00 2,500.00 1,500.00

Illinois Future Teacher Corps/Golden Apple Scholars 2,000.00 2,000.00 2,000.00

Illinois Scholars (Pass-Through Funding) 3,160.00 3,160.00 3,160.00

Nurse Educator Loan Repayment Program 300 300 300

Nurse Educator Scholarship Program**** 900 - -

Teacher Loan Repayment Program 500 500 500

Total Grants and Loan Repayment Programs 425,031.10 425,031.10 416,031.10

# Increased with funds from IIA, Nurse Educator Scholarship * 27% of eligible students received half an award in FY 2010 ** fall claims to be paid at 100% *** increase to cover growth in tuition and fees **** program ends in FY2010

3-6

In other legislative news, several bills affecting higher education, which were summarized in prior Executive Director’s reports, have become law:

HB 859 P.A. 96-956 FY2011 budget SB 1215 P.A. 96-957 Technical corrections to FY2011 budget SB 3660 P.A. 96-958 Emergency Budget Act SB 377 P.A. 96-1435 Tax amnesty period (October through November 2010) HB 6206 P.A. 96-1282 College Illinois! school eligibility determination SB 3222 P.A. 96-1293 Public universities’ Truth-in-Tuition guarantee extension SB 3630 P.A. 96-1415 MIA/POW grant eligibility expansion (IDVA-administered) HB 6092 P.A. 96-1249 Private graduate and professional schools to join P-20 data system SB 3699 P.A. 96-1299 Grants for associate’s recipients who transfer to pursue a bachelor’s SB 1698 P.A. 96-880 Task Force for Higher Education Private Student Loans SJR 88 Adopted Higher Education Finance Study Commission HR 918 Adopted Blue Ribbon Committee on Higher Education Mandates HR 920 Adopted IBHE study of two-year budgeting cycles for postsecondary institutions HR 955 Adopted IBHE to prepare to implement a rural campus designation program SB 365 Vetoed General Assembly scholarship reforms

Finally, since the last Commission meeting, State Representative Bob Pritchard filed House Resolution 1372. The resolution directs the Illinois State Board of Investment to examine the asset allocation of College Illinois! 529 Prepaid Tuition Program investments to determine the overall level of risk associated with the program's investment mix, and it directs the Auditor General to conduct an audit of College Illinois! 529 Prepaid Tuition Program operations to examine the program’s administrative costs and determine “the efficacy of program administration.” The resolution could be considered during the General Assembly’s Veto Session, which begins November 16th.

3-7

ILLINOIS STUDENT ASSISTANCE COMMISSION FISCAL YEAR 2010 APPROPRIATION SUMMARY REPORT (July 1, 2009 - July 31, 2010) FY2010 Year-to-date Number of Percentage Appropriation Expended Recipients Expended STATE GENERAL FUNDS SCHOLARSHIPS AND GRANTS Monetary Award Program $388,094,729 $387,934,978 141,356 100.0% Illinois Incentive for Access Grants 4,800,000 $4,765,000 18,866 99.3% Teacher Loan Forgiveness Program 500,000 $494,702 116 98.9% Minority Teacher Scholarships 2,165,000 $2,158,821 467 99.7% Illinois Future Teachers Corps Scholarships 1,935,082 $1,932,582 269 99.9% Student to Student Grants 950,000 $948,280 N/A 99.8% Dependents Grants 710,191 $710,191 86 100.0% National Guard Grants 4,741,716 $4,729,651 1,929 99.7% Illinois Veteran Grants 16,850,000 $16,812,105 11,455 99.8% Nurse Educator Scholarships 574,654 $532,069 38 92.6% Nurse Educator Loan Repayment Program 300,000 $300,000 63 100.0% Veterans' Home Nurse Loan Repayment Program 43,288 $20,141 8 46.5% Bonus Incentive Grants 206,440 $206,440 262 100.0% Illinois Scholars Program 3,160,000 $3,160,000 N/A 100.0% TOTAL $425,031,100 $424,704,960 174,915 99.9%

SPECIAL REVENUE FUNDS STUDENT LOAN OPERATING FUND Administration Expense (see detail on next page) 59,477,500 31,630,402 N/A 53.2% Federal Loan System Development & Maintenance 3,500,000 18,000 N/A 0.5% Default Fees 10,000,000 872,138 N/A 8.7% TOTAL $72,977,500 $32,520,540 0 44.6% FEDERAL STUDENT LOAN FUND Loan Guarantee Program 290,000,000 236,082,475 N/A 81.4%

TOTAL $290,000,000 $236,082,475 N/A 81.4% SCHOLARSHIPS AND GRANTS Federal College Access Challenge Grant Program 5,000,000 2,122,530 N/A 42.5% Federal LEAP/SLEAP - Monetary Award Program 4,000,000 3,862,620 N/A 96.6% Transfer to ED -Paul Douglas Funds Collected 400,000 0 N/A 0.0% Federal Robert C. Byrd Fellowships 3,000,000 1,955,876 1,316 65.2% TOTAL $12,400,000 $7,941,026 $1,316 64.0% OTHER ISAC Accounts Receivables 300,000 192 N/A 0.1% Higher Education License Plate Program 70,000 68,425 N/A 97.8% Optometric Education Scholarship Program 50,000 50,000 10 100.0% IVG- National Guard Grant Fund 20,000 0 0 0.0% Illinois Future Teachers Corps Scholarship Fund 60,000 0 0 0.0% Contracts and Grants Fund 2,500,000 191,506 N/A 7.7% TOTAL, SPECIAL REVENUE FUNDS $378,377,500 $276,854,164 10 73.2% GRAND TOTAL $803,408,600 $701,559,123 176,241 87.3% 3-8

ILLINOIS STUDENT ASSISTANCE COMMISSION

FISCAL YEAR 2010 APPROPRIATION REPORT

ADMINISTRATION

(July 1, 2009 - July 31, 2010)

STUDENT LOAN OPERATING FUND FY2010 Year-to-date % Line Item Appropriation Expended Expended

Personal Services $17,208,900 $13,353,951 77.6%

Retirement 4,883,400 3,792,853 77.7%

Social Security 1,316,600 967,874 73.5%

Group Insurance 4,867,400 3,439,436 70.7%

Contractual Services 12,630,700 7,600,885 60.2%

Contractual - Collection Agency Fees 15,000,000 1,709,090 11.4%

Travel 311,000 64,735 20.8%

Commodities 282,200 119,412 42.3%

Printing 501,000 92,264 18.4%

Equipment 540,000 47,638 8.8%

Telecommunications 1,897,900 409,682 21.6%

Operation of Auto Equipment 38,400 32,582 84.8%

TOTAL $59,477,500 $31,630,402 53.2%

3-9

ILLINOIS STUDENT ASSISTANCE COMMISSION COLLEGE ILLINOIS! 529 PREPAID TUITION PROGRAM - TOTAL PROGRAM PERFORMANCE July 2010 - FY 2011 APPROXIMATE INVESTMENT RETURN, 07/31/2010 Fiscal Year- Since Inception Asset One Ending Market Value Total Funding Level to-Date Inception3,4 Date4 Allocation Month Total Program $1,024,394,561 $821,024,609 3.3% 2.9% 7/6/1999 100.0% 3.6% 1 Policy Benchmark 3.4% 2.8% 3.4% 2 Actuarial Assumption 0.7% 8.1% 0.7% Domestic Equity 262,761,058 283,314,442 7.1% 0.0% 7/6/1999 25.6% 7.1% RhumbLine Advisors 156708760 178314442.4 0.072 0.141 40018 0.153 0.072 WILSHIRE 5000 0 14.9% 7.0% SSgA S&P 500 Index Fund 106,052,299 105,000,000 7.0% -0.3% 7/6/1999 10.3% 7.0% S&P 500 Index 7.0% -0.2% 7.0% International Equity 100,329,747 108,890,168 8.2% 8.2% 10/1/2002 9.8% 8.2% LSV Asset Management International 52,689,115 70,064,167 7.0% 2.4% 11/4/2005 5.1% 7.0% MSCI EAFE (Gross Div) 9.5% 1.4% 9.5% State Street MSCI EAFE Index Fund 47,640,632 38,826,001 9.5% 15.1% 12/17/2008 4.6% 9.5% MSCI EAFE (Gross Div) 9.5% 15.9% 9.5% Domestic Fixed Income $276,696,789 $218,723,373 1.3% 6.5% 7/6/1999 27.0% 1.3% C.S. Mckee Investment Managers 68,845,128 51,858,015 0.7% 8.9% 7/27/2007 6.7% 0.7% Pugh Capital Management 40,770,056 33,590,505 1.7% 10.0% 7/25/2007 4.0% 1.7% BARCAP Aggregate Index 1.1% 7.6% 1.1% Piedmont Investment Advisors 32,203,642 28,268,636 1.7% 8.2% 8/2/2007 3.1% 1.7% BARCAP Aggregate Index 1.1% 7.4% 1.1% Galliard Capital Management 64,372,643 52,988,536 1.2% 6.9% 11/1/2006 6.3% 1.2% Income Research & Management 62,587,920 48,354,622 2.0% 7.4% 11/1/2006 6.1% 2.0% BARCAP Intermediate Gov't/Credit 1.1% 6.4% 1.1% 10 TIPS 7,917,400 3,663,060 -1.4% 3.0% 7/29/2008 0.8% -1.4% BARCAP TIPS 0.1% 4.4% 0.1% Real Estate 137,528,219 114,477,743 3.0% 21.3% 8/14/2009 13.3% 3.0% SCM Short Term 35,025,541 29,962,549 1.5% 17.1% 8/19/2009 3.4% 1.5% SCM Stable Value 59,003,823 49,115,194 2.7% 20.4% 8/14/2009 5.8% 2.7% BARCAP CORPORATE REIT BOND 2.2% 17.8% 2.2% BARCAP CONVERTIBLE REIT BOND 2.8% 19.8% 2.8% WELLS FARGO HYBRID & PREFERRED REIT 3.9% 31.1% 3.9% 9 SCM PREFERRED GROWTH 43,498,855 35,400,000 4.7% 23.4% 12/1/2009 4.1% 4.7% BARCAP CORPORATE REIT BOND 2.2% 10.1% 2.2% BARCAP CONVERTIBLE REIT BOND 2.8% 10.7% 2.8% WELLS FARGO HYBRID & PREFERRED REIT 3.9% 21.5% 3.9% Infrastructure 9,526,919 7,764,087 - 22.4% 12/23/2009 0.9% - Alinda Capital II7 9,526,919 7,764,087 0.0% 22.4% 12/23/2009 0.9% 0.0% LIBOR+4% 0.4% 2.8% 0.4% Hedge Fund 142,425,563 145,000,000 - -1.8% 2/1/2010 13.9% - Balestra Spectrum7 56,426,625 55,000,000 0.0% 2.6% 2/1/2010 5.5% 0.0% HFR MACRO 0.3% 1.2% 0.3% 7 NB Diversified Arbitrage 25,338,722 25,000,000 0.0% 1.4% 2/1/2010 2.5% 0.0% HFR RELATIVE VALUE 1.5% 3.7% 1.5% 7 Pinnacle Natural Resources 50,770,630 55,000,000 0.0% -7.7% 2/1/2010 5.0% 0.0% HFR MULTI-STRATEGY FOF 0.7% -0.1% 0.7% 7 Reynoso Asset Management 9,889,586 10,000,000 0.0% -1.1% 2/27/2010 1.0% 0.0% S&P 500 Index 7.0% 1.4% 7.0% Private Equity 68,394,179 69,170,393 0.0% -38.1% 9/30/2008 6.8% 0.0% 7 DDJ Distressed Fund 49,897,808 50,000,000 0.0% -0.2% 6/1/2010 4.9% 0.0% RUSSELL 3000+5% 7.3% 1.6% 7.3% 6 J.P. Morgan AIRRO Fund 10,397,726 12,029,853 0.0% 0.0% 4/16/2010 1.0% 0.0% RUSSELL 3000+5% 7.3% -6.0% 7.3% 7 Morgan Stanley Secondary Fund 4,044,903 3,689,260 0.0% 12.4% 4/29/2010 0.4% 0.0% RUSSELL 3000+5% 7.3% -6.0% 7.3% 8 Portfolio Advisors Secondary Fund 4,053,742 3,451,280 0.0% 31.7% 12/23/2009 0.4% 0.0% RUSSELL 3000+5% 7.3% 6.7% 7.3% Interest and Dividends Account 18,697,161 18,684,402 - 0.1% 9/17/2008 1.8% 0.0% T-Bills 0.0% 0.3% 0.0% 5 Cash Account $4,543,733 0.0% 3.3% 0.8% 0.0% T-Bills 0.2% 2.9% 0.0%

Securities Lending Income $56,326 Securities Lending Collateral Loss $3,429,214 Continue to next page for explanations. 3-10

NOTE: Returns are preliminary and subject to revision pending the September 30, 2010 quarterly report. The total funding level includes initial dollars funded and any monthly contributions as well as withdrawals.

1 The Policy Benchmark is 25% Wilshire 5000, 8% MSCI EAFE, 15% BarCap Aggregate, 12% BarCap Int. Govt./Credit, 5% BarCap TIPS, 15% HFR FOF, 7% Russell 3000 + 5%, 1% LIBOR + 4%, 10% NCREIF ODCE, and 2% T-Bills.

Prior to May 31, 2010, the Policy Benchmark was 25% Wilshire 5000, 8% MSCI EAFE, 15% BarCap Aggregate, 15% BarCap Int. Govt./Credit, 5% BarCap TIPS, 15% HFR FOF, 1% Russell 3000 + 5%, 1% LIBOR + 4%, 10% NCREIF ODCE, and 5% T- Bills.

Prior to January 31, 2010, the Policy Benchmark was 30% Wilshire 5000, 8% MSCI EAFE, 25% BarCap Aggregate, 15% BarCap Int. Govt./Credit, 5% BarCap TIPS, 2% Russell 3000 + 5%, 10% NCREIF ODCE, and 5% T-Bills.

Prior to August 31, 2009, the Policy Benchmark was 30% Wilshire 5000, 8% MSCI EAFE, 25% BarCap Aggregate, 15% BarCap Int. Govt./Credit, 5% BarCap TIPS, 2% Russell 3000 + 5%, and 15% T-Bills.

Prior to July 31, 2009, the Policy Benchmark was 35% Wilshire 5000, 8% MSCI EAFE, 25% BarCap Aggregate, 15% BarCap Int. Govt./Credit, 5% BarCap TIPS, 2% Russell 3000 + 5%, and 10% T-Bills.

Prior to May 31, 2009, the Policy Benchmark was 35% Wilshire 5000, 8% MSCI EAFE, 25% BarCap Aggregate, 20% BarCap Int. Govt./Credit, 5% BarCap TIPS, 2% Russell 3000 + 5%, and 5% T-Bills.

Prior to March 31, 2009, the Policy Benchmark was 20% S&P 500, 10% Russell 1000 Value, 10% Russell 1000 Growth, 5% Russell 2000, 5% Russell 2000 Value, 10% MSCI EAFE, 18% BarCap Aggregate, 16% BarCap Int. Govt./Credit, 5% BarCap TIPS, and 1% T-Bills.

Prior to December 31, 2008, the Policy Benchmark was 40% S&P 500, 10% Russell 2000, 5% Russell 2000 Value, 10% MSCI EAFE, 18% BarCap Aggregate, 16% BarCap Int. Govt./Credit, and 1% T-Bills.

Prior to December 31, 2007, the Policy Benchmark was 45% S&P 500, 10% Russell 2000, 5% Russell 2000 Value, 5% MSCI EAFE, 18% Lehman Aggregate, 16% Lehman Int. Govt./Credit, and 1% T-Bills.

Prior to December 31, 2005, the Policy Benchmark was 45%,S&P 500, 10% Russell 2000, 5% Russell 2000 Value, 5% MSCI EAFE, 18% Lehman Aggregate, 15% Lehman Int. Govt./Credit, and 2% T-Bills.

Prior to March 31, 2004, the Policy Benchmark was 45% S&P 500, 10% Russell 2000, 5% MSCI EAFE, 25% Lehman Aggregate, 13% Lehman Int. Govt./Credit, and 2% T-Bills.

Prior to September 30, 2002, the Policy Benchmark was 50% S&P 500, 10% Russell 2000, 38% Lehman Aggregate and 2% T- Bills.

Prior to September 30, 2001, the Policy Benchmark was 50% S&P 500, 47% LB Aggregate, 3% T-Bills.

2 Actuarial assumption is 9.25%. Prior to July 2009, the actuarial assumption was 8.5%.

Prior to July 2008, the actuarial assumption was 8.0%.

Prior to July 2006, the actuarial assumption was 7.75%.

Prior to July 2002, the actuarial assumption was 8.0%.

3 Annualized if over one year.

4 All returns are as of the beginning of the first full month of performance.

5 Market value includes cash balance in the US Bank securities lending account, Security Capital Preferred Growth account, and Alinda II account as well as the balances in the transition accounts.

6 Market value is capital called and applied towards investments.

7 Market value is as of 6/30/2010 and has been adjusted to reflect subsequent cash flows.

8 Market value is preliminary as of 3/31/2010 and has been adjusted to reflect subsequent cash flows.

9 Market value is a preliminary estimate as of 7/31/2010.

10 TIPS account contains only money market funds as of July 31, 2010.

3-11

ILLINOIS STUDENT ASSISTANCE COMMISSION COLLEGE ILLINOIS! SOURCES AND USES REPORT July 2010 - FY 2011 BEGINNING MARKET VALUE TOTAL FUNDS BALANCE, 07/01/10 Cash at Custodians $14,808,663 ISAC-Securities Lending Income $56,326 Securities Lending Collateral Loss $3,429,214 SSgA S&P 500 Index Fund 99,111,953 LSV Asset Management - International 49,142,754 SSgA MSCI EAFE 43,519,146 SCM Stable Value Account 56,930,345 Income Research & Management 60,759,252 LSV Asset Management 5,652 SCM Term Income Account 34,191,161 Galliard Capital 63,160,984 Security Capital Preferred Growth LLC 41,512,615 Pugh Capital Management 39,819,711 C.S. McKee Investment Manager 67,912,508 Piedmont Advisors 31,477,767 Alinda Infrastructure Fund II 9,588,313 ISAC-TIPS 7,975,279 RhumbLine Advisors Large Cap Growth 146,160,127 Interest & Dividends 3,697,161 Portfolio Advisors Secondary Fund L.P. 4,053,742 JPM AIRRO 10,397,726 Balestra Capital Spectrum 55,574,578 Neuberger Berman 25,300,480 Pinnacle Natural Resource 52,886,849 Reynoso Asset Management 10,000,000 Morgan Stanley 3,600,000 DDJ Distressed 50,000,000

TOTAL BEGINNING BALANCE $985,072,308 SOURCES OF FUNDS Contributions received $6,391,341 Application and other fees 97,469 Interest from Treasury and Banks 1,662 Unrealized Gain on Investments 33,655,971 Change in Market Value Dividends and Interes 931,213 TOTAL SOURCES $41,077,656 USES OF FUNDS Administrative Expenses $637,113 Refunds to Purchasers 377,571 Tuition Payments 332,965 Investment Expense 407,754 TOTAL USES $1,755,402 3-12

ENDING MARKET VALUE TOTAL FUNDS BALANCE, 07/31/10

Cash at Custodians $4,543,733 Securities Lending Income 56,326 Securities Lending Collateral Loss 3,429,214 SSgA S&P 500 Index Fund 106,052,299 LSV Asset Management - International 52,689,115 SSgA MSCI EAFE 47,640,632 LSV Asset Management 5,652 ISAC-TIPS 7,917,400 Income Research & Management 62,587,920 Galliard Capital 64,372,643 C.S. Mckee Investment Managers 68,845,128 Pugh Capital Management 40,770,056 Piedmont Investment Advisors 32,203,642 RhumbLine Advisors Large Cap Growth 156,708,760 Interest and Dividends Account 18,697,161 Security Capital (Stable Value Acct) 59,003,823 Security Capital (Term Income Acct) 35,025,541 Balestra Capital-Spectrum 56,426,625 Neuberger Berman 25,338,722 Pinnacle Natural Resources 50,770,630 Security Capital Preferred Growth Fund LLC 43,498,855 Alinda Infrastructure II Fund L.P. 9,526,919 Portfolio Advisors Secondary Fund L.P. 4,053,742 JPM AIRRO 10,397,726 Morgan Stanley Secondary Fund 4,044,903 REYNOSO Asset Management 9,889,586 DDJ Distressed Fund 49,897,808 TOTAL ENDING BALANCE 1,024,394,561 $1,024,394,561

NUMBER AND DOLLAR VALUE OF PLANS, 07/31/2010 Number of Plans: Plans Paid in Full 47,706 Active Plans 11,801 Cancelled Plans 9,024 Suspended Plans 4

Total Number of Plans 68,535

Purchased Value of all Plans $1,571,849,069

Active Plan : Plan which has been approved and contract payments are being made. Cancelled Plan : Plan that has been terminated either at the request of the purchaser or involuntarily due to delinquency, fraud, etc. Suspended Plan : Plan with an incomplete application or other outstanding omissions; a plan with this status is inactive. 3-13

ILLINOIS STUDENT ASSISTANCE COMMISSION ILLINOIS DESIGNATED ACCOUNT PURCHASE PROGRAM July 31, 2010 CURRENT MONTH PREV. MONTH FY TO DATE CUMULATIVE Disbursements: Student Loan Originations & Purchases Average Borrower Indebtedness $12,160 $14,025 $12,160 $6,114 Number of Borrowers 181 $146 181 1,527,192 Total Originations & Purchases $2,200,894 $2,053,112 $2,200,894 9,336,960,780 Operating Expenses $1,578,943 $2,484,155 $1,578,943 545,979,028

Collections: Principal - Student $9,211,685 $8,857,387 $9,211,685 $4,664,546,274 Interest - Student $2,180,952 $2,119,443 $2,180,952 $794,015,848 Principal - Guarantor $2,487,761 $2,681,222 $2,487,761 $986,827,938 Interest - Guarantor $78,667 $67,870 $78,667 $62,431,493 Federal Interest Benefits $552,192 $552,192 $552,192 $301,131,294 Special Allowance (Excess Interest) ($1,491,434) ($1,491,434) ($1,491,434) $219,416,223

Summary: Total Principal $11,699,446 $11,538,609 $11,699,446 $5,651,374,212 Total Interest $2,811,810 $2,739,504 $2,811,810 $1,157,578,635 Total Special Allowance ($1,491,434) ($1,491,434) ($1,491,434) $219,416,223

TOTAL COLLECTIONS $13,019,822 $12,786,679 $13,019,822 $7,028,369,070

3-14

SUMMARY OF IDAPP INVESTMENTS

AS OF JULY 31, 2010 Summary Yi e l d Par Value Market Value % YTM Current Federal Prime Cash Obligation #851 4,743,564.26 4,743,564.26 1.72 0.189 0.260 Federal Prime Cash Obligation #851 13,712,343.37 13,712,343.37 4.97 0.187 0.260 Wells Fargo Advantage Treasury -Rehab 6,574,696.40 6,574,696.40 2.39 0.031 0.069 Wells Fargo Advantage Treasury -CU 8,279,821.55 8,279,821.55 3.00 0.031 0.069 CITIBANK NA FDIC TLGP 7,069,790.00 7,149,100.00 2.56 0.850 0.850 CITIGROUP FUNDING INC FDIC TLGP 12,521,720.00 12,825,395.00 4.54 0.783 0.783 GMAC LLC FDIC TLGP 3,503,925.00 3,612,175.00 1.27 0.830 0.830 GOLDMAN SACHS GROUP INC FDIC TL 2,993,430.00 3,035,580.00 1.09 0.380 0.380 GENL ELEC CAP CORP FDIC TLGP 5,551,945.00 5,667,365.00 2.01 0.830 0.830 FEDERAL FARM CREDIT BANK 59,867,140.00 60,435,455.00 21.72 0.768 0.768 FHLMC 43,799,030.00 44,017,247.00 15.89 0.775 0.775 FEDERAL HOME LOAN BANKS 45,224,697.84 45,574,377.25 16.41 0.741 0.741 UNITED STATES TREASURY (<10 yrs) 9,528,794.54 10,239,164.22 3.46 0.635 0.635 UNITED STATES TREASURY (>10 yrs) 3,510,531.71 3,749,903.62 1.27 1.630 1.630 FEDERAL FARM CREDIT BANK 999,700.00 1,003,000.00 0.36 0.760 0.760 FHLMC 2,999,300.00 3,003,540.00 1.09 0.490 0.490 GMAC LLC FDIC TLGP 1,017,740.00 1,032,050.00 0.37 0.840 0.840 UNITED STATES TREASURY (<10 yrs) 503,734.38 507,812.50 0.18 0.500 0.500 FHLMC / FHLB 13,486,050.00 13,541,688.90 4.89 0.653 0.653 FEDERAL FARM CREDIT BANK 11,997,900.00 12,024,280.00 4.35 0.735 0.735 UNITED STATES TREASURY 11,578,339.87 11,679,687.50 4.20 0.500 0.500 Columbia Treasury Res-Advisor D Class Shares 5,782,893.75 5,782,893.75 2.10 0.018 0.010 MM Obligation Gov't Obl (boa) 415,448.66 415,448.66 0.15 0.058 0.065

275,662,536.33 278,606,588.98 100 275,662,536.33 - Due > one year Due < one year & < ten years Due > ten years

Federal Prime Cash Obligation #851 4,743,564.26 Federal Prime Cash Obligation #851 13,712,343.37 Wells Fargo Advantage Treasury -Rehab 6,574,696.40 Wells Fargo Advantage Treasury -CU 8,279,821.55 CITIBANK NA FDIC TLGP 7,069,790.00 CITIGROUP FUNDING INC FDIC TLGP 12,521,720.00 GMAC LLC FDIC TLGP 3,503,925.00 GOLDMAN SACHS GROUP INC FDIC TLGP 2,993,430.00 GENL ELEC CAP CORP FDIC TLGP 5,551,945.00 FEDERAL FARM CREDIT BANK 59,867,140.00 FHLMC 43,799,030.00 FEDERAL HOME LOAN BANKS 45,224,697.84 UNITED STATES TREASURY (<10 yrs) 9,528,794.54 UNITED STATES TREASURY (>10 yrs) 3,510,531.71 FEDERAL FARM CREDIT BANK 999,700.00 FHLMC 2,999,300.00 GMAC LLC FDIC TLGP 1,017,740.00 UNITED STATES TREASURY (<10 yrs) 503,734.38 FHLMC / FHLB 13,486,050.00 FEDERAL FARM CREDIT BANK 11,997,900.00 UNITED STATES TREASURY 11,578,339.87 Columbia Treasury Res-Advisor D Class Shares 5,782,893.75 MM Obligation Gov't Obl (boa) 415,448.66

$ 39,508,768 $ 232,643,237 $ 3,510,532 $ 275,662,536 3-15