Annual report highlights guarantor's support of access to education
USA Funds Posts Record Default-Aversion and Recovery Results
INDIANAPOLIS—Exceptional default-prevention and default-recovery results propelled USA Funds® to record levels of service during 2000. In issuing its annual report, the nation's largest education-loan guarantor announced that it helped to avert $8.8 billion in potential loan defaults during the year by restoring to repayment more than 90 percent of seriously past-due accounts.
"We invest significant resources to spare student- and parent-borrowers the severe consequences of default," said Carl C. Dalstrom, USA Funds president and CEO. "Our default-prevention success also preserves the favorable default records of postsecondary institutions and protects the federal fiscal interest."
In addition, USA Funds recovered a record $1.1 billion from borrowers who had previously defaulted on their loans. These recoveries represent a 54-percent increase over fiscal 1999. USA Funds remitted to the federal government an average of 81.5 cents of every dollar collected.
During the past year, USA Funds extended its default-prevention efforts to assist its partners in the student-loan program. A seven-member team of debt-management consultants, funded by USA Funds, assisted more than 250 postsecondary institutions nationwide by evaluating their debt-management efforts and suggesting possible enhancements. In addition, the debt-management consultants developed workshops that they are presenting at sites across the nation to help financial-aid professionals combat loan defaults.
USA Funds' Default-Prevention Council, which includes campus representatives and default-prevention experts, is working with four schools to develop a predictive model that will enable financial-aid administrators to identify students who are at risk for loan default and provide them with additional assistance. The council also is guiding development of a life-skills course to teach college students to budget for their expenses while on campus and following graduation.
Additional highlights of the past year include the following items:
- USA Funds guaranteed more than $9 billion in Federal Stafford, PLUS and Consolidation loans. This volume represents a 14-percent increase from the previous year in the financial-aid dollars supported by USA Funds' guarantee.
- In conjunction with the July 31, 2000, acquisition of USA Group's guarantor-servicing, loan-servicing and secondary-market operations, USA Funds returned to its roots as an independent nonprofit guarantor, with separate governance, management and staff. Through an innovative, performance-based service contract, USA Funds continues to benefit from the support of the premier guarantor-servicing organization in the country.
- The past year marked USA Funds' 40th year of service to higher education. Since it was established in 1960, USA Funds has guaranteed $58 billion in education loans to help millions of Americans pursue higher education.
Looking to the future, USA Funds has made an unprecedented commitment to invest more than $25 million annually in research and development of new and enhanced financial-aid services.
"This commitment ensures that USA Funds remains on the cutting edge of education-loan services and helps us continue to keep the promise our founders made to open college doors to every deserving student, regardless of their financial means," Dalstrom said.