Nation’s leading guarantor offers comprehensive default-prevention services

USA Funds reports decline in loan-default rate

INDIANAPOLIS — USA Funds^®, the nation’s leading education-loan guarantor, reports a decline in its most-recent student-loan default rate. According to draft cohort-default-rate figures released by the U.S. Department of Education, USA Funds’ default rate fell to 4.22 percent of the borrowers who entered repayment during fiscal 2005, a decline from the 4.89-percent rate that USA Funds recorded for the previous cohort of borrowers.

The Department of Education will release final 2005 cohort-default rates in September.

Cohort-default rates measure the percentage of all Stafford-loan borrowers entering repayment in a given federal fiscal year who default on their loans by the end of the following fiscal year.

“By helping to lower loan-default rates, USA Funds is saving individual student-loan borrowers thousands of dollars and saving federal taxpayers billions of dollars,” said Carl C. Dalstrom, USA Funds president and CEO. “We are pleased to offer USA Funds’ customers the most-comprehensive array of default-prevention services available in the Federal Family Education Loan Program.”

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

• USA Funds supports a team of more than 240 full-time professionals who counsel borrowers who are experiencing loan-payment problems. Last year, these default-prevention specialists averted nearly $15.8 billion in potential loan defaults.
• USA Funds’ team of debt-management consultants offers postsecondary institutions free assessments and recommendations for enhancing their default-prevention efforts. 
• Last year USA Funds introduced a new online Stafford-loan entrance-counseling tool that provides students with memorable guidance about their rights and responsibilities as student-loan borrowers. As part of a comprehensive suite of loan-counseling services, USA Funds will introduce a new online exit-counseling program this spring.
• USA Funds’ financial-literacy program for college students, USA Funds Life Skills^®, helps postsecondary institutions educate students about time- and money-management practices and prepares students to repay the loans that financed their education.
• USA Funds Debt Manager^® permits colleges and universities to stay in contact with borrowers to ensure that they stay on track to successful loan repayment. 
• A special section of the USA Funds Web site, http://www.loanpaymentsolutions.org/, is devoted to helping borrowers with loan-payment problems to assess the status of their accounts, understand their options and take action to quickly resolve their payment problems.
• Currently being tested, USA Funds Retention and Repayment Success^SM is a suite of USA Funds’ student-success services that combines new and existing programs to enhance student-retention and graduation rates and curb student-loan delinquencies and default.

“As part of our nonprofit mission to enhance postsecondary-education preparedness, access and success, USA Funds will continue to invest heavily in services that spare borrowers and taxpayers the additional costs of loan default,” Dalstrom said.