USA Funds Prevents $20 Billion in Loan Defaults

USA Funds(R), the nation’s leading education loan guarantor, reports that it helped prevent more than $20 billion in defaults on more than 1 million federal student loans during the 12-month period through July 2008.

USA Funds supports a team of more than 250 full-time professionals who contact and counsel federal student loan borrowers who have fallen 60 days or more behind in their student loan payments. Using tools — such as flexible repayment options, deferment and forbearance — these default prevention specialists succeed in averting default on 92 percent of these seriously past-due student loan accounts.

As a result of these efforts, U.S. taxpayers saved a projected $19 billion in potential loan default costs, and former students and their parents avoided an estimated $6.7 billion in additional interest and collection costs on their loans.

"The growth of education-related debt and the current economic downturn make repaying student loans more challenging for many former students," said Carl C. Dalstrom, USA Funds president and CEO. "The support of student loan guarantors, like USA Funds, is making a real difference in helping former students successfully meet their loan repayment obligations."

USA Funds also supports a comprehensive array of tools to help students and parents successfully repay their federal student loans. These tools include the following items:

Financial Literacy. USA Funds Life Skills(R) 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.

Borrower Contact. USA Funds Debt Manager(R) 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.

Borrower Counseling. USA Funds Loan Counselor(R) is a suite of interactive, online counseling programs that colleges, universities and private career schools can customize to provide students with guidance about managing their education debt before they take out loans and before they leave campus.

Debt Management Consultations. USA Funds’ team of debt management consultants works 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. The USA Funds Web site www.loanpaymentsolutions.org helps former students understand their options and take action to resolve student loan payment problems.

"In the coming months, we will introduce a new online exit counseling component for graduate and professional students, as well as a Web-based version of USA Funds Life Skills to further enhance the debt management and default prevention services we offer to the student loan program," Dalstrom said.

Headquartered in Indianapolis, USA Funds is a nonprofit corporation that works to enhance postsecondary education preparedness, access and success by providing and supporting financial and other valued services. During the year ending Sept. 30, 2007, USA Funds guaranteed education loans totaling $25.8 billion for students and parents throughout the nation. USA Funds serves as the designated guarantor of federal education loans in eight states: Arizona, Hawaii and the Pacific Islands, Indiana, Kansas, Maryland, Mississippi, Nevada and Wyoming. USA Funds also invests $16.3 million annually in scholarships and outreach programs that advance its mission of support to higher education. For more information about USA Funds, visit www.usafunds.org .