Nation's leading guarantor records loan-volume gain, fewer defaults, increased collections
USA Funds delivers record levels of education-loan service
INDIANAPOLIS — USA Funds®, the nation's leading education-loan guarantor, posted record levels of education-loan service to the nation's postsecondary-education institutions, students and parents during the fiscal year ending Sept. 30, 2004. USA Funds guaranteed more dollars of new education loans to students and parents, prevented more loan defaults and helped borrowers in default on their loans rehabilitate more loan dollars than ever before.
USA Funds guaranteed more than $9.9 billion in Federal Stafford loans to students and Federal PLUS loans to parents of undergraduate students, an increase of $320 million over its fiscal-2003 loan volume. In addition, USA Funds guaranteed nearly $6.6 billion in Federal Consolidation loans to help education-loan borrowers manage their loan payments.
USA Funds posted major gains in the battle against student-loan defaults. During the past fiscal year, USA Funds resolved more than 1 million past-due education-loan accounts, thereby averting nearly $12 billion in potential loan defaults. USA Funds achieved a cure rate of 93.62 percent of the past-due education-loan accounts on which education lenders requested USA Funds’ assistance. As a result, USA Funds' annual default rate declined to 1.13 percent from the 2003 rate of 1.37 percent. The annual default rate, also known as the trigger rate, compares the dollars of loan defaults against the dollars of USA Funds-guaranteed loans that are in repayment.
If, despite intensive default-prevention efforts, a borrower does default, USA Funds works with the borrower to resolve the default. As a result of its default-collection efforts, USA Funds recovered nearly $1.1 billion on behalf of federal taxpayers. USA Funds also increased by 43 percent the dollars of loan defaults resolved through loan rehabilitation. Rehabilitation is the best default resolution for most borrowers, because it removes the default from the borrower's credit record. During the past fiscal year, USA Funds recovered nearly $370 million through loan rehabilitation.
"These record-setting results demonstrate USA Funds' commitment to supporting financial access to higher education while protecting the federal fiscal interest in the student-loan program," said Carl C. Dalstrom, USA Funds president and CEO. "We could not have achieved these extraordinary results without the support of our school- and lender-customers and the assistance of the men and women who work on USA Funds' behalf."