FAME's Draft Cohort Default Rate Below National Average
Monday, April 11, 2011
Despite continued economic challenges and high unemployment rates, the Finance Authority of Maine (FAME) continues to maintain a cohort default rate that is below the national average of 7.0% According to data recently released by the U.S. Department of Education, FAME’s federal Fiscal Year 2009 draft cohort default rate held steady at 6.1% of borrowers who entered repayment during federal Fiscal Year 2009, which is the same rate posted by the agency in the prior year.
Cohort default rates measure the percentage of all federal Stafford Loan borrowers entering repayment in a given federal fiscal year who default on their loans before the end of the following fiscal year. Official cohort default rates won’t be released by the U.S. Department of Education until September 2011. Draft rates are released in mid-February each year and typically serve as good indicators of the subsequent official numbers.
FAME’s lower than average default rate is the result of expanded college access, financial education and debt management services that support financial aid offices and educate borrowers. FAME’s ability to maintain a low claims rate saves Maine taxpayers millions of dollars each year by reducing claim payments from the U.S. Department of Education; it also directly benefits borrowers, schools and lenders.
“We continue to be proud of our low default rate, especially in these challenging economic times. But we are working hard to reduce student default rates further. FAME’s emphasis on default prevention rather than on post-default collection is the right one for guarantors, schools, lenders and taxpayers,” stated FAME CEO Beth Bordowitz.
FAME believes strongly that financial education is the cornerstone of debt management and default prevention. Consequently, the agency will once again recognize April as Financial Literacy Month by offering a variety of financial education and financial-aid related workshops to students across the state.
FAME also is a major sponsor and contributor to the second annual financial literacy summit for Maine teachers, administrators, counselors and others. The summit, entitled “Fostering Financial Literacy in Maine Schools,” will be held at the Augusta Civic Center on Thursday, May 12, 2011 from 8:00 a.m. to 3:45 p.m. For more information on the financial literacy summit, please visit: