Borrowers already saved more than $186 million through fee waiver

USA Funds Extends Zero Guarantee Fee for Federal Education Loans

INDIANAPOLIS — USA Funds^® announces the extension of a practice that has saved student- and parent-loan borrowers more than $186 million over the last three years. The nation's leading student-loan guarantor will continue to waive the 1-percent guarantee fee to parents and students borrowing under the Federal Family Education Loan Program (FFELP).

"We are pleased that our strong default-aversion efforts have kept our student-loan default rates at a low level that allows us to offer these savings to college students and their parents," said Carl C. Dalstrom, USA Funds president and CEO.

During the next year, the zero guarantee fee is projected to save USA Funds' borrowers nearly $74 million.

The zero guarantee fee applies to all Federal Stafford and Federal PLUS loans guaranteed by USA Funds on or after May 1, 1999, for students, or for parents of undergraduates, attending any academic institution that participates in the FFELP.

Federal law allows guarantors to collect up to 1 percent as an insurance premium from each education loan that they guarantee. Guarantee fees are used to pay lenders in case of loan defaults and to support the guarantor's default-prevention efforts.

Because USA Funds will not deduct a guarantee fee from a borrower's loan amount, parent- and student-loan borrowers will have more money to pay education expenses.

"As a means to make college more affordable for students and their parents, extending the zero guarantee fee is one way that USA Funds is working to enhance access to education," Dalstrom said. "We look forward to offering this benefit to borrowers as long as favorable conditions exist and it is financially feasible to do so."