The Michigan Guaranty Agency (MGA), the federally designated guarantor for student loans in the State of Michigan, has recorded another significant reduction in its student loan default rate. Final default rate figures, released by the U.S. Department of Education, show MGA's rate dropped 35 percent during Fiscal Year 2003, to 5.1 percent. MGA credits the drop to an aggressive default prevention program. "Default prevention helps stretch and save taxpayer dollars," said Deputy State Treasurer Cynthia Faulhaber, who oversees the Student Financial Services Bureau. "Those dollars can then be used to help even more young people in Michigan live their dream of attending college."
MGA attributes success in reducing its loan default rate to a focus on why some borrowers default on student loans as well as an aggressive plan to contact high-risk borrowers. "By reaching out to young people before they default, we have made significant progress in educating student borrowers on the importance of repaying their loans," Faulhaber said. "This has also helped borrowers who might otherwise have faced a negative credit report for having defaulted on their student loan."
Since 1965, MGA has helped students and their families finance a postsecondary education through more than $9.6 billion in low-cost, guaranteed student loans. MGA services also include training and technical support to schools and lenders, borrower information programs, and customer assistance throughout repayment. For more on this and other financial aid programs, visit michigan.gov/mistudentaid.
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