USA Funds® reports that it prevented $22.3 billion in defaults on nearly 1.2 million past-due federal student loan accounts during the fiscal year ending Sept. 30. USA Funds’ default prevention efforts succeeded in averting default on 93 percent of loan accounts on which payments were reported by the lender as being 60 days or more past due.
“These default prevention results saved U.S. taxpayers and student loan borrowers tens of billions of dollars,” said Gregory A. Ayers, USA Funds senior vice president, Government Services and Administration. “Taxpayers bear the lion’s share of the costs of student loan defaults, and borrowers incur additional interest expenses, late fees and collection costs, not to mention severe damage to their credit, when they default on federal student loans.”
USA Funds supports a team of nearly 200 full-time professionals who work with student loan borrowers who are behind in their payments. During the past year, this default prevention team made 194 million phone calls and sent 2.4 million pieces of correspondence and 1.9 million email messages to borrowers to counsel them about their options.
The options for borrowers include flexible repayment plans — including plans that limit 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.
To promote successful student loan repayment, USA Funds supports a wide range of additional services, including the following:
· Borrower contact and counseling. USA Funds Borrower Connect™ is a Web-based tool that helps colleges contact and counsel their student loan borrowers, and USA Funds Borrower Connect InTouchSM is a staffing solution for colleges that lack the resources to carry out borrower communications. A total of 123 colleges and universities, representing 400 individual campuses, use these services. During the past year, more than 650,000 student loan borrowers in repayment benefited from these services.
· Financial literacy and student success. USA Funds Life Skills® is a comprehensive online personal finance and student success curriculum for college students. During the 12 months ending Sept. 30, 2013, nearly 60,000 students at 200 colleges and universities benefited from USA Funds Life Skills courses. Of those students who took USA Funds Life Skills courses and responded to a follow-up survey, more than 95 percent reported making changes in their personal finance or academic success behaviors.
· Debt management consultation. USA Funds consultants helped 84 colleges and universities develop or implement default prevention and debt management plans.
· Publications and online resources. USA Funds distributed nearly 1.6 million copies of free publications to colleges and universities to advise student loan borrowers on the management and repayment of their education loans. USA Funds offers additional resources for student loan borrowers on its website — www.usafunds.org.
USA Funds also works with student loan borrowers who are in default on their loans to resolve the default and recover amounts owed U.S. taxpayers. During the past year, USA Funds recovered more than $1.5 billion on defaulted loan accounts, including $933 million through loan rehabilitation, which has the added benefit of clearing the student loan default from the borrower’s credit record.
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. USA Funds provides grants to support initiatives that improve student access to and success in higher education, and serves colleges and universities with financial literacy programs for college students, debt management and default prevention consultation and support, training for financial aid administrators, and student aid policy compliance assistance. For more information, visit www.usafunds.org.