No, it goes away. It also stops splitting among the group.
This is how I understood the change. Basically, when it goes into effect, your received exp gets multiplied by your penalty and balances out to what a 1x exp table person would receive. Group exp gets split on basis of level, not total exp. And Racial penalties will always be yours to cherish, but not shared with group. You won't see your exp bar compensated or anything, but leveling will go more quickly.
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