Annual report highlights guarantor's support of access to education

USA Funds Posts Record Default-Prevention and Recovery Results

INDIANAPOLIS — Exceptional default-prevention and default-recovery results propelled USA Funds^® to record levels of service during fiscal 2001. In issuing its annual report, the nation's leading education-loan guarantor announced that it helped to avert $9.2 billion in potential loan defaults during the year by preventing default on more than 91 percent of the seriously past-due accounts on which lenders had requested its assistance.

"USA Funds invests significant resources to help borrowers avoid default on their education loans," said Carl C. Dalstrom, USA Funds president and CEO. "These efforts spare borrowers the severe financial consequences of loan default, preserve the favorable default records of postsecondary institutions and protect the federal fiscal interest."

In addition, USA Funds recovered a record $1.3 billion from borrowers who had previously defaulted on their loans. These recoveries represent an increase of nearly 19 percent over results for fiscal 2000. An average of 82.5 cents of every dollar that USA Funds collects goes to the federal government.

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, supported by USA Funds, assisted more than 400 postsecondary institutions nationwide by evaluating their debt-management efforts and suggesting possible enhancements. In addition, these debt-management consultants conducted 26 workshops 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, guided development of an online best-practices manual that offers proven strategies for successful student-loan default-prevention programs. The council also played a leading role in the development of Life Skills^SM, a new program that helps postsecondary institutions teach their students how to manage time and money wisely on campus and after graduation.

Additional highlights of the past year include the following items:

• USA Funds guaranteed more than $10 billion in Federal Stafford, PLUS and Consolidation loans. This volume represents an increase of more than $1 billion from the previous year in the financial-aid dollars supported by USA Funds' guarantee.

• USA Funds expanded its support for need-based student aid by tripling to $3 million funding for the USA Funds Access to Education Scholarships^™ for the 2002-2003 academic year. In addition, USA Funds provided a total of $300,000 in contributions to three national scholarship organizations to support their programs, and committed up to $1 million to the Families of Freedom Scholarship Fund^™ to assist dependents of those who were killed or permanently disabled by the Sept. 11, 2001, terrorist attacks.

• To help families plan for higher education, USA Funds partnered with Wiredscholar.comT to offer a comprehensive Web-based resource for authoritative college-admissions, financial-aid and education-loan information.

Looking to the future, USA Funds will continue to invest in strong default-prevention efforts, in the research and development of enhanced loan-delivery services, and in philanthropic programs that help American families take advantage of advanced learning and training.