Boston—American Student Assistance^®, the student loan guarantor with proven results in education debt management, has achieved a cohort default rate of just 1.4 percent, the lowest among all national guarantors. The continued achievement is further proof that ASA’s “Wellness” model, which focuses on delinquency prevention, is a win-win for education loan borrowers and taxpayers alike.

“ASA’s positive impact on student loan repayment in recent years proves that the guarantor can play a crucial role in the success of the federal student loan program,” said Shelley Saunders, ASA vice president of strategic services. “Today our nation uses debt to provide access to higher education, which creates an obligation not only on the borrower’s part, but also on society to help the borrower manage that debt over the life of the loan. Debt management and default prevention is something that should be measured and for which guarantors, as neutral third parties, should be made accountable. The role and financing of the guarantor should be refocused away from the origination process to early awareness and information, debt management and default prevention, and loan rehabilitation for all borrowers. Guarantor fees and incentives should be based on the relative success of the borrowers in their portfolio.”

While the national CDR rose from 4.6 to 5.2 percent year-over-year, ASA’s rate declined from 1.5 percent. ASA’s 2006 CDR is more than 70 percent lower than the national rate and 40 percent lower than the next best national guarantor.

The annual cohort default rate, along with the annual default “trigger” rate that tracks the total amount of defaulted loans in a guarantor’s portfolio, are key indicators of a guarantor’s ability to keep its loan portfolio in good standing. FFELP guarantor cohort default rates are based on the cohort default statistics released each year by the U.S. Department of Education. The term cohort default rate is the percentage of those borrowers who enter repayment on certain FFELP loans during a particular fiscal year and default within the same fiscal year or within the next fiscal year. The fiscal year 2006 default rate is the percentage of borrowers who began repaying their loans between October 1, 2005 and September 30, 2006, and who defaulted before September 30, 2007.

About American Student Assistance

American Student Assistance is a private, federally funded, nonprofit organization that helps students and parents manage higher education debt. Its unique Wellness programs give student loan borrowers the support they need to avoid default. Incorporated in 1956, ASA was the nation’s first private student loan guarantee agency and a model for the federal student loan program. As an administrator of the Federal Family Education Loan Program, ASA delivers quality default prevention, guarantee, origination and fund delivery services to students, parents, schools and lenders nationwide. ASA guarantees more than $2 billion in student loans annually and currently manages a student loan portfolio worth more than $45 billion. Based in Boston, American Student Assistance employs more than 700 associates nationwide and has been recognized by the Boston Business Journal and the Boston Globe as one of the region’s best places to work. Visit www.amsa.com or call 617.728.4631 for more information.