New-loan volume grows by 24 percent during fiscal 2007
USA Funds supports $25.8 billion in loans for higher education
INDIANAPOLIS — USA Funds®, the nation’s leading education-loan guarantor, reports that it guaranteed nearly $25.8 billion in loans under the Federal Family Education Loan Program to help students and parents pay higher-education expenses during the fiscal year ending Sept. 30, 2007.
The volume of new Federal Stafford and PLUS loans that USA Funds guaranteed grew by nearly 24 percent to $15.6 billion during the past fiscal year. Stafford-loan volume increased by nearly 25 percent to $13.1 billion, and the volume of PLUS loans issued to graduate and professional students more than doubled to $664 million.
The volume of Federal Consolidation loans guaranteed by USA Funds declined 31 percent to $10.2 billion. The decline follows several consecutive years of exceptional increases in Federal Consolidation-loan volume due to borrowers’ locking in lower fixed rates on consolidation loans to avoid increases in variable rates on Stafford loans.
“These increases in loan volume are evidence of the quality of service that USA Funds delivers to postsecondary and financial institutions, students and parents,” said Denise B. Feser, USA Funds senior vice president, customer relations. “We are intent on continuing to deliver the finest services available in the FFELP, despite the recent severe budget cuts enacted by the U.S. Congress.”
The FFELP is the largest federal student-aid program and was projected to deliver more than $79 billion in funding for college during the past fiscal year. A public-private partnership, FFELP loans are funded by private lenders, which are insured against default by guarantors, such as USA Funds. Guarantors are, in turn, partially reinsured by the U.S. Department of Education.
The FFELP offers three loan types. Stafford loans and PLUS loans offer borrowers below-market interest rates and flexible repayment terms. Stafford loans are available to undergraduate and graduate students who are enrolled at least half time. PLUS loans are offered to parents of dependent undergraduate students and, since July 2006, to graduate and professional students enrolled at least half time. Federal Consolidation loans permit student- and parent-borrowers to bundle multiple federal education loans into a single loan, and in many cases to obtain more-affordable monthly loan payments through a longer repayment period.
Student-loan guarantors, like USA Funds, deliver critical services to the federal student-loan program. These services include promoting successful loan repayment and the prevention of loan defaults, recovering on behalf of U.S. taxpayers amounts owed by borrowers in default on their loans, streamlining the loan-delivery process to benefit campus administrators and borrowers, ensuring borrower eligibility and the accuracy of new-loan requests, assisting program participants with their inquiries, and helping program participants comply with the rules that govern federal student loans.