Default Aversion Assistance
Schools, lenders/servicers and guarantors all have significant roles in preventing defaults. When a borrower becomes delinquent in the repayment of a student loan, the lender must submit a complete and accurate default aversion assistance request (DAAR) with the guarantor no earlier than the 60th day and no later than the 120th day of the borrower’s delinquency.
Default aversion assistance is collection assistance provided to a lender by a guarantor. It involves the initiation of at least three collection activities by the guarantor, including at least one letter to the borrower that is designed to encourage the borrower to begin or resume repayment.
Default aversion assistance in no way replaces the lender’s responsibilities to perform due diligence. If a lender fails to continue required due diligence while the guarantor is providing assistance, interest penalties or a loss of guarantee on the loan may result.
Lenders submit default aversion assistance requests either electronically via the Common Account Maintenance (CAM) process (preferred), or manually using a paper Default Aversion Assistance Request Form. If lenders submit more than 10 DAARs at a time, ISAC requires that they be submitted via CAM.
Whether the DAAR is submitted via CAM or via the paper form, the process allows lenders/servicers to request assistance from ISAC to supplement their efforts to resolve delinquencies and help bring accounts current. It is the goal of both the lender and ISAC to counsel borrowers regarding all of their repayment options, including deferment and forbearance.
The Notification of Student Borrower DAAR Status Report, which lists students who borrowed Federal Stafford loans while enrolled at that college and who now have active DAARs, is available to colleges allowing them to become involved in the default aversion process. The DAAR Status Report provides colleges with the information they need to work with lenders/servicers and ISAC to contact delinquent borrowers and encourage them to avoid default.