PHEAA's effective delinquency and default prevention programs and industry-leading customer service have helped keep default numbers consistently lower than the national average
Harrisburg, PA (Vocus) September 19, 2009
The Pennsylvania Higher Education Assistance Agency (PHEAA) today announced that its 2007 fiscal year cohort default rate of 5.5 percent continues to be below the 2007 national average of 6.7 percent, as announced by the U.S. Department of Education.
The 2007 cohort default rates represent the percentage of borrowers who began repaying their loans between October1, 2006 and September 30, 2007, and who defaulted before September 30, 2008. Default rates increased nationally for all types of schools, public, private, and proprietary, as well as 4-year and 2-year schools due to the faltering economy and weak employment outlook.
"PHEAA's effective delinquency and default prevention programs and industry-leading customer service have helped keep default numbers consistently lower than the national average," said Representative William Adolph, PHEAA Board Chairman. "Keeping students out of default and on firm financial footing saves taxpayers millions of dollars each year."
PHEAA's highly trained loan counselors work with troubled borrowers to help them find affordable options for repaying their delinquent student loans, including the new Income-Based Repayment Plan which became available in July 2009. Default prevention staff educates student loan borrowers on the benefits of maintaining good credit and the hidden dangers of default and carrying a bad credit rating.
"It is important for borrowers who may find themselves having difficulty making their monthly student loan payments to contact PHEAA for guidance on how to best manage their debt," added Senator Sean Logan, PHEAA Board Vice Chairman. "Repayment options are available that can make their monthly payments more manageable."
When borrowers enter into default, federal tax dollars are spent to cover the cost since the loan is federally guaranteed. In fiscal year 1990, nearly one in four borrowers nationally defaulted on their federal student loans when default rates set an all-time high of 22.4 percent. The national rate dropped to a record low of 4.5 percent in fiscal year 2003.
PHEAA's financial literacy site, YouCanDealWithIt.com, helps to contribute to its lower cohort default rate by providing students and graduates with practical advice and information regarding financial situations that they can expect to encounter in the "real world," including budgeting and debt management.
Created in 1963 by the Pennsylvania General Assembly, the Pennsylvania Higher Education Assistance Agency (PHEAA) has evolved into one of the nation's leading nonprofit student aid organizations. Today, PHEAA is a national provider of student financial aid services, serving millions of students and thousands of schools through its loan guaranty, loan servicing, financial aid processing systems and outreach programs. As a nonprofit organization belonging to the Commonwealth of Pennsylvania, PHEAA devotes its energy, resources and imagination to developing innovative ways to ease the financial burden of higher education for Pennsylvania's students, families, schools and taxpayers.