Default Rate Decline Carries Bittersweet Message

 WASHINGTON, D.C., September 11, 2007—Kevin Bruns, executive director of America’s Student Loan Providers, today released the following statement in response to the U.S. Department of Education’s release of the cohort default rate for federal student loans:
  
  “Today’s announcement of another decline in the cohort default rate to one of its lowest levels ever could hardly be more bittersweet. 
  
  “The decline in the cohort default rate represents significant savings for taxpayers.  It also means that more borrowers are able to avoid the life-changing, negative consequences of default.
  
  “The declining default rate is a testament to the joint efforts of schools, lenders and guarantors to prevent defaults.  Federal support for the Federal Family Education Loan Program (FFELP) has made it possible for loan providers to spend millions of dollars on counseling students on how to manage loan repayment and avoid default.  For taxpayers, schools and individual borrowers, these initiatives have paid off significantly. 
  
  “This near-term success in preventing defaults further highlights FFELP’s success in reducing the lifetime default rates, a more reliable indicator of program performance.  In fact, FFELP’s lifetime default rates for Stafford (unsubsidized and subsidized) and PLUS loans are markedly lower than the Federal Direct Loan Program’s (Pres. Bush’s FY 2008 Budget).  
  
  “It is exactly these kinds of investments, however, that the $21 billion budget cut puts at risk.  As far as default avoidance efforts are concerned, history will likely show the budget reconciliation bill to be penny wise and pound foolish.”  
  
                                                              ###

America’s Student Loan Providers represents 87 of the nation’s leading private, nonprofit and state-based education and financial organizations that provide guaranteed student loans through the Federal Family Education Loan (FFEL) Program. By leveraging private financial markets and competing for the right to lend to students, ASLP members offer low-cost loans to millions of students and superior levels of service to most of the approximately 5,000 postsecondary institutions that participate in the FFEL program. More information is available at www.aslp.us or call 202.721.1190.