Education touts loan default tool

The Education Department reported Sept. 19 that the default rate on college student loans has dropped to its lowest point ever — 5.6 percent in fiscal 1999 — and that a new matching process with a Department of Health and Human Services database could help reduce that rate further.

Already in fiscal 2001, Education has collected $130 million by matching its data with HHS' National Directory of New Hires, which contains every U.S. worker's name, address, Social Security number and quarterly wage report and has helped track down parents who owe child support. HHS first began using the system in 1998.

"It's just as good at finding student loan defaulters, especially those who are able but unwilling to pay," said Greg Woods, chief operating officer for the department's Office of Student Financial Assistance Programs, during congressional testimony in May. Congress authorized Education to use the directory beginning this year to compel those who are able to pay back their student loans to do so.

Education's deputy secretary, William Hansen, said Sept. 19 that the directory holds a great deal of promise for loan recovery. "It's been a real boon," he said. "We think that number [of collected dollars] will just continue to grow."

Education officials started a pilot program using the National Directory of New Hires in January, when a comparison of more than 2 million of its records resulted in the discovery of 1 million student loan defaulters. The department continues to obtain good matches on data files it runs through the directory, Hansen said, and the program will continue to be expanded.

"This will be one of the legs under our collection program," he said.