DATE: March 10, 2005
CONTACT: Gus Wales
PHONE: (225) 922-2029
FAX: (225) 922-0790
State's Student Loan Default Rate Projected To Drop
According to figures recently released by the U.S. Department of Education (ED), the draft cohort default rate on student loans guaranteed by Louisiana’s Office of Student Financial Assistance (LOSFA) has dropped from 6.77 percent in fiscal year (FY) 2002 to 5.25 percent in FY 2003, a decrease of 22.6 percent.
The cohort default rate is defined by federal regulations as the percentage of borrowers who enter repayment in a certain year and default before the end of the following year. The recently released draft data represents the cohort of borrowers who entered into repayment during the period from Oct. 1, 2002 through Sept. 30, 2003.
Robert Pollage, administrator of LOSFA’s Default Prevention Section, attributes the improved rate to several factors, including the coordinated effort of staff members from various branches of the agency: the Default Prevention Section, the Public Information and Communications Division (PIC) and the School and Lender Services (SLS) Section.
Pollage said the Default Prevention Section recently instituted an early awareness program wherein borrowers leaving school and entering the grace period are notified by mail about repayment, deferment and forbearance options. The grace period begins when the student graduates or leaves school and ends six months later.
In addition, Pollage said that students are better informed of their loan obligations as a result of the expanded outreach efforts conducted by PIC and SLS. These efforts have included the distribution of informational posters, magnets and wallet cards.
The official 2003 cohort default rate will not be released by the ED until September, 2005.
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