TG's Student Loan Default Rate Continues to Decline

According to preliminary information issued by the U.S. Department of Education for fiscal year (FY) 1999, the draft student loan default rate for Texas Guaranteed (TG) is 7.03 percent. This rate is more than a two-percentage point reduction from FY 1998 when TG's default rate was 9.4 percent and more than a 23 percentage point reduction from 1990, when TG's default rate peaked at 30.8 percent.

This year's default rate figures represent over 99,100 student loan borrowers in repayment status, with less than 7,000 in default. This reduction in the default rate is important because it demonstrates that more borrowers are responsibly managing their student loans. TG has actively implemented multiple default prevention efforts to further reduce its borrower default rate.

"Our default prevention efforts are working, and borrowers are honoring their obligations to repay their student loans," said Milt Wright, TG President and CEO. "This benefits all of us. Each dollar repaid reinforces the integrity of the Federal Family Education Loan Program, reassuring future generations of continued access to their educational and career dreams."

As the guarantor to 82.7 percent of the student loan market in Texas, TG, along with its business partners, has successfully reduced its default rate through the implementation of several default prevention efforts, including:

• TG's Default Prevention Team, which provides solutions to assist borrowers in managing their student loan debts so that they can meet their financial obligations. The Team counsels borrowers in the use of deferments, forbearance, flexible repayment options, and loan consolidation. Many student loan borrowers who have had questions or concerns about paying back their loans have discussed their options with one of TG's Default Prevention Counselors.
• The Council for the Management of Educational Finance, a Texas-based consortium of financial aid professionals established in 1997, which has been working to develop and carry out innovative default aversion strategies and debt management tools. Sixteen seasoned professionals representing eight institutions of higher learning and eight lender/servicer organizations comprise the Council's membership, whose efforts are supported by TG.
• Achieving Systemic Default Aversion (ASDA), a program unveiled by TG in FY 1998 that provides a comprehensive plan designed to offer technical assistance and support services to Texas institutions of higher education. ASDA helps these institutions establish, strengthen, and implement default management plans.

"Through our efforts with programs such as our Default Prevention Team, the Council, and our ASDA program, we will continue our significant role in further reducing our default rate and that of schools who participate in the program," said Wright.

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