Federal loan program participants working hard to help students avoid default
September 14, 2005
Contacts: Stephanie Babyak or Jane Glickman|
U.S. Secretary of Education Margaret Spellings announced today a new low student loan default rate of 4.5 percent, and she credited schools, loan industry partners and the Education Department's Federal Student Aid office for their concerted efforts to help students repay their loans on time.
"There's a coordinated campaign among all partners in the federal loan programs to focus attention on student loan repayment -- and it's working," said U.S. Education Secretary Spellings. "Financial awareness outreach to students and families, and targeted intervention when needed have paid off, resulting in significant savings to taxpayers."
The Department released the FY 2003 national student loan default rate, the latest year for which data are available, along with rates for individual schools, types of postsecondary institutions, states and other sectors of the federal loan industry. The national rate fell from 5.2 percent for FY 2002.
The Department's enhanced management and oversight of the federal loan programs is one reason the Federal Student Aid (FSA) office was taken off the Government Accountability Office's high-risk list in January 2005. FSA improved default prevention efforts in a number of ways, including:
Educating future student consumers as early as middle and high school about the cost of paying for college, the financial obligations that may be necessary to attend postsecondary education and the options to pay for that education;
Educating borrowers about repayment options that meet their financial needs, including loan consolidation opportunities;
Working with lenders and guaranty agencies to identify high-risk borrowers and target efforts to help them avoid default; and
Sharing the latest information on borrower activity with schools.
Borrowers needing assistance on repaying their student loans should contact the holders of the loans to learn about repayment options. For help locating their loan holders, borrowers may access www.nslds.ed.gov or may contact the Department's Federal Student Information Center at 1-800-4FED-AID (1-800-433-3243).
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NOTE TO EDITORS: The FY 2003 default rates released today represent the most current data available and include data on borrowers who attended some 5,837 schools that participate in the Federal Family Education Loan and William D. Ford Federal Direct Loan programs. The FY 2003 default rate is the percentage of borrowers who began repaying their loans between Oct. 1, 2002, and Sept. 30, 2003, and who defaulted before Sept. 30, 2004.
Individual school default rates are posted on the department's website at http://www.ifap.ed.gov/DefaultManagement/DefaultManagement.html (click on Press Release hyperlink).
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