N.C. Lender and Guaranty Agency Cohort Default Rates Much Lower Than National Average

RALEIGH, N.C., Sept. 27 /PRNewswire-USNewswire/ --  According to the report recently released by the U.S. Department of Education for federal fiscal year (FY) 2008, the cohort default rate for College Foundation, Inc. (CFI) related to borrowers with loans guaranteed by the North Carolina State Education Assistance Authority (SEAA) is 2.8%, one of the lowest default rates in the nation.  

The FY 2008 2.8% CFI borrower cohort default rate is slightly lower than the 2.9% reported for CFI borrowers in FY 2007, despite the difficult economy.  Over the same period that the CFI borrower cohort default rate decreased, the Department of Education reported a rise in the national default rate, from 6.7% in FY 2007 to 7% in FY 2008.    

According to Shirley A. Ort, Associate Provost and Director of Scholarships and Student Aid at the University of North Carolina at Chapel Hill, "I'm not surprised to hear that CFI has again achieved such a low cohort default rate for borrowers with loans guaranteed by the SEAA.  Nonprofit CFI has always worked very closely with the SEAA to provide personal attention and financial education to borrowers."  

Ort continued, "Another benefit this group of students gained from borrowing  with CFI was that CFI both loaned them money and then collected from them when they went into repayment.  During this period in the loan industry, many other lenders separated these functions – which made it much more difficult for students to figure out where to send their payments.  The close connection between CFI and its borrowers is an obvious reason their borrowers repay their loans at such a high rate."

Sharon Roberts, assistant vice president of borrower services at CFI, agrees that the low default rate is "because we have always focused our efforts on helping borrowers even before their loans are made and up through the time they are repaid."  Roberts continued, "We start educating people early about the many ways to pay for college.  Then, if they decide they need an education loan, we try to make sure they understand their payment responsibilities.  Once they are in repayment, we also work closely with them to find options should they encounter any financial difficulty."

Wayne Johnson, the director of guaranty agency and repayment services at SEAA, observed, "The low default rate on loans made and guaranteed by CFI and SEAA is likely also affected by the tendency many of our borrowers had to borrow less than the national average for their education.  Not only have these borrowers been given the message to borrow responsibly, many are North Carolinians who are fortunate to have so many reasonably priced in-state educational institutions as their college choices."  

More information about planning, applying or paying for college can be found at CFNC.org or by calling 866-866-CFNC.

About CFNC

College Foundation of North Carolina (CFNC) is a free service of the State of North Carolina that helps students plan, apply, and pay for college. CFNC is a partnership of Pathways, the N.C. State Education Assistance Authority, and College Foundation, Inc.  

• Pathways, created by the N.C. General Assembly in 1999, is a state-wide initiative to increase the college-going rate of North Carolinians by providing: comprehensive college and career planning resources; electronic applications and transcripts accepted by all 110 North Carolina colleges and universities; and, information on student financial aid and college affordability. Pathways is administered by The University of North Carolina General Administration in collaboration with the N.C. Department of Public Instruction, the N.C. Community College System, and the N.C. Independent Colleges and Universities.

• The North Carolina State Education Assistance Authority (NCSEAA), established in 1965, is the State agency that promotes access to higher education by administering financial aid and savings programs, informing students and families about paying for college, teaching educators about financial aid administration, and advocating for resources to support students.

• College Foundation, Inc. (CFI), a nonprofit corporation serving North Carolina students and families since 1955, administers a portfolio of more than $3.6 billion, including low-interest federal education loans, the State's college grant programs, and the tax-free "529" college savings program on behalf of the N.C. State Education Assistance Authority. CFI also delivers information to North Carolina students and families about paying for college and provides technology services for CFNC.org.

CFNC offers resources toll-free at 1-866-866-CFNC and at CFNC.org.

SOURCE College Foundation, Inc.