Guarantor supports $16.7 billion in education loans, averts $10.9 billion in defaults
USA Funds posts record loan volume, default-prevention results
INDIANAPOLIS — USA Funds®, the nation's leading education-loan guarantor, reports that it guaranteed a record volume of education loans and achieved a record level of default-prevention success during the fiscal year ending Sept. 30, 2003.
USA Funds' guarantee supported more than $16.7 billion in education loans to students and parents of undergraduates. This volume represents a nearly 21-percent increase over the previous year's volume.
USA Funds guaranteed nearly $9.6 billion in Federal Stafford and PLUS loans, a 17-percent increase over fiscal 2002 volume. In addition, the guarantor reported that its Federal Consolidation-loan volume increased by nearly 26 percent to more than $7.1 billion.
USA Funds' default-aversion activities resolved more than 1 million seriously past-due student-loan accounts, thereby preventing nearly $10.9 billion in loan defaults. The default-prevention professionals who counsel USA Funds borrowers whose accounts are 60 days or more in arrears successfully prevented default on more than 93 percent of those accounts.
As a result, USA Funds reduced its annual default rate to 1.37 percent from the previous year's rate of 1.97 percent. Also known as the "trigger" default rate, this figure compares a guarantor's dollars in default to the dollars of loans in repayment.
In addition, USA Funds recovered on behalf of taxpayers nearly $938 million from borrowers who had previously defaulted on their federal education loans. Notably, USA Funds recovered nearly $258 million through the rehabilitation of defaulted loans. This figure is more than four times the previous year's loan-rehabilitation volume.
Loan rehabilitation is the most-satisfactory default resolution for borrowers, because it removes the default from the borrower's credit record and establishes a history of on-time payments. Successful loan rehabilitation requires a borrower in default to make 12 consecutive voluntary monthly payments.
"By all key measures, 2003 was a tremendously successful year for USA Funds," said Carl C. Dalstrom, USA Funds president and CEO. "We thank our customers and colleagues in the financial-aid and education-lending communities for their continued support. This support makes possible service of this magnitude to ensure financial access to higher education, promote successful loan repayment and protect the federal fiscal interest in the student-loan program."