Guarantee fee remains at 0.5 percent

USA Funds announces extension of reduced guarantee fee

INDIANAPOLIS — USA Funds^® has announced that it is postponing the scheduled Nov. 1, 2004, increase in its guarantee fee to 1 percent. USA Funds will continue to assess a guarantee fee of 0.5 percent on all Federal Stafford and Federal PLUS loans that it guarantees.

USA Funds will announce in January 2005 its guarantee-fee policy for the 2005-2006 education-lending season.

USA Funds recently submitted to the U.S. Department of Education a request for a voluntary flexible agreement (VFA), which would permit USA Funds to waive the guarantee fee, if necessary to level the competitive playing field in the Federal Family Education Loan Program (FFELP).

USA Funds is able to continue the reduced guarantee fee for the next several months, while continuing to comply with federal minimum reserve-ratio requirements, because of lower-than-expected loan-delinquency and default rates and higher-than-anticipated default collections.

"We are pleased that the extension of the 0.5-percent guarantee fee will produce savings for borrowers, who otherwise would have paid a 1-percent guarantee fee effective Nov. 1," said USA Funds President and CEO Carl C. Dalstrom.