USA Funds Prevents $26.5 Billion in Student Loan Defaults

INDIANAPOLIS, Oct. 25, 2011 /PRNewswire/ — USA Funds® reports that it prevented
nearly $26.5 billion in defaults on nearly 1.6 million past-due federal student
loan accounts during the fiscal year ending Sept. 30. USA Funds’ default
prevention efforts were successful in averting default on more than 93 percent
of loan accounts on which payments were reported by the lender as being 60 days
or more past due.

USA Funds’ default prevention efforts saved U.S. taxpayers an estimated $25
billion and student loan borrowers a projected $8.8 billion in additional costs
associated with student loan default.

“These hard economic times are challenging many student loan borrowers to keep
up with their monthly payments,” said Carl C. Dalstrom, USA Funds president and
CEO. “Fortunately, federal student loans offer a variety of options to help
borrowers cope with payment problems. USA Funds invests significant resources in
contacting and counseling these borrowers about their options.”

These options include flexible repayment plans — including a plan that limits
monthly payments to a percentage of a borrower’s discretionary income — as well
as deferment and forbearance to allow borrowers to temporarily postpone or
reduce their monthly payments.

As part of its default prevention efforts, USA Funds supports a team of more
than 220 full-time professionals who work with student loan borrowers who are
behind in their payments. During the past year, this default prevention team
made nearly 88 million phone calls and sent 2.7 million pieces of correspondence
to borrowers.

Although the most recent national student loan default rate rose to 8.8 percent,
the comparable default rate on loans guaranteed by USA Funds fell to 6.9
percent.

To promote successful student loan repayment, USA Funds supports a wide range of
additional services, including USA Funds Life Skills®, a comprehensive online
personal finance curriculum for college students; debt management and default
prevention consultations for higher education institutions; and online and print
resources to assist student loan borrowers.

If, in spite of these intensive default prevention efforts, a borrower defaults,
USA Funds continues to work with the borrower to resolve the default and recover
amounts owed U.S. taxpayers. During fiscal 2011, USA Funds’ default recovery
efforts collected more than $1.3 billion. Nearly $652 million of these default
resolutions involved loan rehabilitation, which has the added benefit of
clearing the student loan default from the borrower’s credit record.

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. For more information about
USA Funds, visit www.usafunds.org.

SOURCE USA Funds