Estimate Borrower Savings From Your Cohort-Default-Rate Improvement

Financial-aid professionals who have helped their institutions achieve a reduction in their 2005 cohort-default rates should advise important campus constituencies — including administration, governing boards, students and parents, and alumni — of their success. USA Funds^® can help financial-aid administrators make that message even more compelling, by providing an estimate of the dollars that the prevention of defaults has saved an institution’s alumni.

USA Funds Default-Prevention-Savings calculator estimates the dollar savings to an institution’s borrowers and to U.S. taxpayers that resulted from a reduced loan-default rate.

To estimate the savings, the online calculator requires the following information:

• The institution’s cohort-default rates for 2004 and 2005.
• The number of borrowers and dollars of loans that entered repayment during the 2005 cohort year. These figures are included in the loan-detail information delivered as part of the electronic Cohort Default Rate Notification package from the National Student Loan Data System.
• The total dollar amount of subsidized and unsubsidized Stafford loans that the institution awarded or expects to award this academic year.
• The number of students who borrowed, or are expected to borrow, Stafford loans to attend the institution this academic year.

An alternative for institutions that traditionally have maintained low default rates is to estimate borrower savings by comparing the institution’s 2005 cohort rate to the 2005 average rate for all institutions of the same type. USA Funds’ online calculator also can provide this estimate.

Campus administrators who would like to see further improvement in their institution’s student-loan default rates can review the array of debt-management services that USA Funds provides or contact the USA Funds debt-management consultant assigned to their region.