USA Funds Helping to Take Aim at Student-Loan Defaults in New York

USA Funds^® is partnering with colleges and universities in New York to work to reduce student-loan defaults in the state. 

The effort is part of a nationwide initiative the U.S. Department of Education is pursuing in several states to reduce the nation’s cohort-default rate. In 2004, the latest year for which figures are available, the national cohort-default rate was 5.1 percent, up slightly from 4.5 percent in 2003.

The cohort-default rate measures the percentage of students who entered repayment on their education loans during a given federal fiscal year and defaulted on their loans prior to the end of the following fiscal year.

According to the Department of Education, 10 states — including New York — accounted for nearly half the student-loan accounts and dollars that went into default.

In the last year, the Department’s Default Prevention and Management Division has begun working with schools in those 10 states to encourage each institution to increase student-retention and program-completion efforts and default-prevention activity. As part of this process, in August the Department initiated an effort to form a statewide advisory committee in New York.

Eileen Muhlig, a USA Funds debt-management consultant, is a member of the committee. Other members include representatives from State University of New York, City University of New York, the Association of Proprietary Colleges, and the Commission on Independent Colleges and Universities.

“USA Funds is a leader in student-loan-default prevention, offering many innovative products and services that customers can use to assist students with repayment of their loans,” Muhlig says. “We support many programs that help underserved students access higher education and provide schools and students with tools, such as USA Funds Life Skills^®, that promote student success. We are eager to add our experience to this very important effort.”

The advisory committee has had one teleconference and plans another in the next couple of weeks. Group members plan to meet Nov. 7 with school representatives at the NYSFAAA conference in Lake Placid, N.Y. One session will include representatives from private and four-year public schools, and the other will include two-year schools and career schools. The group is seeking advice from school participants about the following:

• How to begin a discussion of the relationship between student success and student-loan default.
• How to create effective default-prevention strategies that capitalize on this relationship between student success and loan default.
• Organizations and entities that should be included in the discussion.
• How to coordinate and organize the effort.