Nation's leading guarantor delivers comprehensive default-prevention solutions

USA Funds records another default-rate reduction

INDIANAPOLIS — USA Funds®, the nation's leading education-loan guarantor, has achieved another record-low student-loan default rate. The U.S. Department of Education reports that USA Funds’ default rate fell to 4.4 percent of the borrowers who entered repayment during fiscal 2002, down from a rate of 4.5 percent for the previous year.

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.

USA Funds has reduced its default rate by nearly 28 percent during the three most-recent cohort periods for which final rates are available.

"USA Funds' comprehensive array of default-prevention services, the hard work of our school- and lender-partners, and conscientious student- and parent-borrowers are responsible for this record-low default rate" said Carl C. Dalstrom, USA Funds president and CEO.

Among USA Funds' default-prevention services are the following:

  • Investment in default prevention — USA Funds invests in a team of 200 full-time professionals, backed by the latest technology and a sophisticated predictive model, to counsel borrowers who are experiencing payment problems about their options for avoiding default. This team annually resolves more than 1 million seriously past-due student-loan accounts, preventing nearly $10.9 billion in loan defaults.
  • USA Funds Life Skills® — This flexible program equips postsecondary institutions to educate their students about time- and money-management issues while they are on campus and following graduation. USA Funds Life Skills is being enhanced with information to meet the special needs of graduate and professional students and other adult learners.
  • Debt-management consultants — Experienced debt-management consultants review and assess campus debt-management activities and suggest improvements. These consultants also can help financial-aid administrators develop a default-management plan and identify other action items to strengthen campus default-prevention efforts.
  • Default Management System (DMS) — USA Funds provides free Default Management System software, which permits schools to easily tailor letter, phone or e-mail campaigns to their student-loan borrowers to ensure they stay on the path toward successful loan repayment.
  • Online best-practices manual — USA Funds offers a free online resource that offers financial-aid professionals ideas, tools and activities for enhancing their campus debt-management activities.
  • Online student-loan counseling — USA Funds supports the leading online entrance- and exit-counseling services, with special options for annual MPN counseling, graduate exit counseling and Perkins-loan counseling.
  • Web resources for borrowers with loan-payment problems — Borrowers whose payments are 60 days or more past due can access their account information online, learn about the options for resolving their payment problems and take action to avoid additional costs.
  • School reports — USA Funds offers financial-aid administrators reports that can help them track borrowers with payment problems to combat loan defaults.
  • Borrower Debt Management Information Service — Using this service, schools can arrange for correspondence to be sent to their borrowers to advise them of their repayment options.

"In keeping with our nonprofit mission, we continue to invest in products and services that help curb loan defaults," Dalstrom said.