Nation's leading guarantor has cut its default rate by nearly half during past five years
USA Funds projects another default-rate reduction
INDIANAPOLIS — USA Funds®, the nation's leading education-loan guarantor, expects to record another reduction in its student-loan default rate. Draft cohort default-rate figures released by the U.S. Department of Education project that USA Funds' default rate will drop to 4.4 percent of the borrowers who entered repayment during fiscal 2002, a decline from the 4.5-percent rate that USA Funds recorded for the 2001 cohort of borrowers.
The draft default-rate report indicates that, compared with the previous two-year cohort period, nearly 1,000 fewer borrowers who entered repayment on Federal Stafford loans guaranteed by USA Funds during fiscal 2002 had defaulted by the end of fiscal 2003.
During the past five years, USA Funds has cut its cohort default rate by nearly 50 percent.
The Department of Education will release final 2002 cohort default rates in September.
"Because loan defaults inflict severe penalties on borrowers, USA Funds offers the most-comprehensive array of default-prevention services available in the Federal Family Education Loan Program," said Carl C. Dalstrom, USA Funds president and CEO.
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 $10.9 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.
- USA Funds' financial-literacy program for college students, USA Funds Life Skills®, helps approximately 500 postsecondary institutions educate their 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.
- Special features on the USA Funds Web site enable borrowers with loan-payment problems to assess the status of their accounts, understand their options and take action to quickly resolve their payment problems.
During 2004, USA Funds is adding the following enhancements to its default-prevention services:
- USA Funds will offer new USA Funds Life Skills materials designed to address the unique needs of graduate and professional students and adult learners.
- USA Funds is building a Web-based version of the borrower-contact software that permits schools to conduct letter, e-mail and telephone campaigns to their borrowers.
- USA Funds is supplying experienced financial-aid professionals to help select schools conduct exit counseling on their campuses.
"We continue to invest in products and services that make a real difference in curbing loan defaults," Dalstrom said.