By delivering high-quality services and promoting accountability in the federal education-loan program, the nation's education-loan guarantors help pave the way for Americans to pursue higher education. As nonprofit organizations or agencies of state government, guarantors link students, parents, postsecondary institutions and education lenders to help families prepare and pay for higher education.

Innovative loan-delivery services
Guarantors pioneered the first electronic and online loan-delivery systems, which today allow education-loan program participants to rapidly and securely exchange the information necessary to deliver tens of billions of loan dollars to campuses each year. As a result, students and parents can conveniently apply online for their education loans. Loan dollars are disbursed to campuses through Electronic Funds Transfer, arriving on schedule to pay student expenses. In a pinch, the process of reviewing a loan application and approving the disbursement can be completed in minutes.

Simplifying a complex process
Guarantors work to simplify the heavily regulated federal student-loan program for schools, lenders, students and parents. Guarantors have successfully advocated loan-program innovations, such as electronic signatures and the Master Promissory Note, which reduce paperwork for all loan-program participants. Guarantors have worked cooperatively with other loan-program participants to develop common forms and applications, a common set of education-loan policies, and a common network for sharing vital loan data. All of these efforts make life easier for campus financial-aid staff and for education lenders.

Successful default prevention
Guarantors have played a key role in dramatically reducing the national student-loan cohort-default rate. The national default rate has fallen to 4.6 percent, down from 22.4 percent recorded in 1990. During the same period in which this default-rate reduction was accomplished, the dollar volume of new loans more than doubled. According to a survey by the National Council of Higher Education Loan Programs (NCHELP), these default-prevention efforts averted $33 billion in potential loan defaults during fiscal 2004. Some guarantors, including USA Funds^®, are reaching out to assist schools through debt-management consultation and workshops, and by providing students with materials, such as USA Funds' innovative financial-literacy program, USA Funds Life Skills^®, to help educate students about prudent borrowing and repayment. Should a borrower default, the guarantor works to recover the debt and reimburse the federal government.

Ensuring that loan-program participants know the rules
Guarantors host free training sessions for campus financial-aid staff and education lenders to update them on changes in loan-program regulations, policies and processes. Guarantors check the eligibility of borrowers to make sure funds go to those qualified to participate in the student-loan program. In addition, guarantors conduct regular reviews or audits of schools and lenders to protect the integrity of the loan program. Guarantors also work to resolve borrower disputes or servicing issues. In fact, some guarantors employ designated ombudsmen to research and mediate borrower complaints.

Beyond education loans
In addition to their pivotal role in the student-loan program, many guarantors provide additional services in support of higher-education access. Some guarantors administer scholarship programs, funded either through state appropriations or private resources. Guarantors support early-awareness programs that help economically disadvantaged families realize that a college education is attainable. Guarantors host financial-aid nights, counseling sessions, special outreach programs to underserved populations, as well as Web sites that feature college-going information.

Through their multi-faceted programs, guarantors help Americans prepare for a brighter future.