Guarantor’s efforts save taxpayers, student-loan borrowers billions of dollars

USA Funds prevents $16.7 billion in loan defaults

USA Funds^®, the nation’s leading education-loan guarantor, reports that it prevented more than $16.7 billion in potential defaults on loans issued under the Federal Family Education Loan Program during the fiscal year ending Sept. 30, 2007.

USA Funds’ default-prevention success saved U.S. taxpayers nearly $16 billion in potential loan-default costs and averted an estimated $5.5 billion in additional loan costs to former students and their parents. Default typically increases a borrower’s loan-repayment costs by one-third of the outstanding balance at default, due to collection costs and additional interest.

“We consider default prevention to be USA Funds’ top priority,” said Carl C. Dalstrom, USA Funds president and CEO. “USA Funds invests tens of millions of dollars every year in services that promote successful student-loan repayment and assist borrowers who experience difficulty in making their loan payments.”

Among those services are the following items:

Default-Aversion Assistance. USA Funds joins lenders in default-prevention efforts when borrowers fall 60 days behind in their payments. USA Funds supports a team of more than 250 full-time professionals, backed by the latest information and telecommunications technology, who contact and counsel borrowers about the options for resolving their payment problems. Those options can include flexible repayment plans, loan consolidation and opportunities for borrowers to temporarily suspend or reduce their loan payments. These efforts successfully avert default in more than nine of every 10 cases.

Borrower Counseling. USA Funds Loan Counselor^SM is a suite of online counseling programs that colleges, universities and private career schools can customize to provide students with memorable guidance about managing their education debt before they take out loans and before they leave campus. USA Funds is enhancing its online counseling services with entrance- and exit-counseling programs for graduate and professional students.

Financial Literacy. USA Funds Life Skills^® is a comprehensive and flexible curriculum that equips postsecondary institutions to teach their students to manage their time and money while on campus and following graduation. USA Funds is developing online components of USA Funds Life Skills to expand the delivery of this financial-literacy program.

Borrower Contact. USA Funds Debt Manager^® is a Web-based tool that postsecondary institutions can use to easily contact their student-loan borrowers by mail, e-mail and phone, and to develop reports that help schools refine and target their default-prevention efforts.

Student Success. USA Funds Retention and Repayment Success^SM is a suite of services, currently being tested with select schools, that assist postsecondary institutions in improving student-retention and graduation rates, while preparing students to take control of their education debt.

Debt-Management Consultations. USA Funds supports a team of debt-management consultants who work with postsecondary institutions to enhance their debt-management and default-prevention efforts.

Borrower Support. USA Funds supports hundreds of telephone representatives, as well as informational publications and Web-based resources that assist student-loan borrowers throughout the loan process. USA Funds designed the Web site, Loan Payment Solutions, to help former students understand their options and take action to resolve student-loan-payment problems.

 “USA Funds continually enhances what is already the most-comprehensive array of debt-management and default-prevention services available in the student-loan program,” Dalstrom said.