Measuring the Value of Default Prevention
Use USA Funds®' Default Prevention Savings Calculator to estimate the dollar savings to your institution’s borrowers and to U.S. taxpayers that resulted from your default prevention efforts. To use the calculator, you’ll need to supply the following information:
Your institution’s cohort-default rates for 2008 and 2009.
- The number of your institution’s borrowers and dollars of loans that entered repayment during the 2009 cohort year. These figures are included in the loan detail information delivered to your institution as part of the electronic Cohort Default Rate Notification (eCDR) package from the National Student Loan Data System (NSLDS).
- The total dollar amount of subsidized and unsubsidized Stafford loans that your institution awarded or expects to award this academic year.
- The number of students who borrowed, or you expect will borrow, Stafford loans to attend your institution this academic year.
The calculator will return the following information:
- Average loan balance and additional cost of default for your institution’s borrowers who entered repayment in the 2009 cohort, as well as your students who borrowed during the current academic year.
- Measures of your default prevention success, including the total number of borrowers prevented from defaulting, the total savings to these borrowers, and the savings to taxpayers for borrowers who entered repayment during the 2009 cohort year and for your current borrowers throughout the lives of their loans.
Please note that these values are estimates based on assumptions that, on average, a default adds one-third of the default amount to a borrower’s loan costs, and that an institution’s cumulative default rate — the percentage of borrowers who default during the lives of their loans — is 3.3 times the institution’s cohort-default rate. These figures approximate the averages for loans that USA Funds has guaranteed.
If your school consistently has maintained a low default rate, but did not record a significant reduction in your cohort rate between 2008 and 2009, you still may use the calculator to estimate your default prevention savings by comparing your institution’s default rate to average rates for peer institutions. Instead of supplying your institution’s cohort default rate for 2008, enter in the calculator the average cohort rate for your institution type using the table below.
2009 Cohort Default Rates by Institution Type
Instructions: Supply the cohort-default rate for your institution type in the calculator window in place of your institution’s 2008 cohort default rate.
| Institution Type |
2009 Cohort-Default Rates |
| Public, less than 2 years |
9.9% |
| Public, 2-3 years |
11.9% |
| Public, 4 years or more |
5.2% |
| Private, less than 2 years |
14.5% |
| Private, 2-3 years |
10.0% |
| Private, 4 years or more |
4.5% |
| Proprietary, less than 2 years |
13.7% |
| Proprietary, 2-3 years |
14.8% |
| Proprietary, 4 years |
15.4% |
| Foreign |
5.5% |
If your school did not show an improvement in its cohort-default rate between 2008 and 2009, we invite you to consider the comprehensive assistance that USA Funds offers postsecondary institutions to support strong default prevention programs.