Nation’s leading guarantor has cut its default rate by nearly 40 percent during past five years
USA Funds projects record-low default rate
INDIANAPOLIS — USA Funds®, the nation’s leading education-loan guarantor, projects another reduction in its record-low student-loan-default rate. According to draft cohort-default-rate figures released by the U.S. Department of Education, USA Funds' default rate will drop to 4.1 percent of the borrowers who entered repayment during fiscal 2003, a decline from the 4.4-percent rate that USA Funds recorded for the previous cohort of borrowers.
The draft default-rate report indicates that, compared with the previous two-year cohort period, 810 fewer borrowers who entered repayment on Federal Stafford loans guaranteed by USA Funds during fiscal 2003 had defaulted by the end of fiscal 2004.
During the past five years, USA Funds has cut its cohort-default rate by nearly 40 percent.
The Department of Education will release final 2003 cohort-default rates in September.
In response to the draft default-rate report, USA Funds President and CEO Carl Dalstrom said, “We are pleased to offer USA Funds' customers the most-comprehensive array of default-prevention services available in the Federal Family Education Loan Program to help student-loan borrowers avoid the significant penalties associated with default.”
Among USA Funds' default-prevention services are the following:
- USA Funds supports a team of 200 full-time professionals who counsel borrowers who are experiencing loan-payment problems. Last year, these default-prevention specialists averted nearly $12 billion in potential loan defaults.
- USA Funds offers a team of debt-management consultants who offer postsecondary institutions free assessments and recommendations for enhancing their default-prevention efforts. Last year, these consultants assisted 524 postsecondary institutions with debt-management initiatives.
- USA Funds' award-winning financial-literacy program for college students, USA Funds Life Skills®, is being enhanced with new components to address the needs of graduate and professional students and adult learners. The program already is being implemented at approximately 550 postsecondary institutions to educate students about time- and money-management practices and prepare students to repay the loans that financed their education.
- USA Funds provides software that permits colleges and universities to stay in contact with borrowers to ensure that they stay on track to successful loan repayment. This service is being enhanced with a Web-based tool.
- A special section of the USA Funds Web site, www.usafunds.org, is devoted to helping borrowers with loan-payment problems to assess the status of their accounts, understand their options and take action to quickly resolve their payment problems.
Achieving further reductions in these record-low default rates requires a significant investment of resources,” Dalstrom said. “The primary beneficiaries of that investment are borrowers and taxpayers, who are spared the additional costs of loan default.”