An analysis of the U.S. Department of Education's (ED) default reduction plan under the Stafford Student Loan Program (formerly called the Guaranteed Student Loan program) is presented that concentrates on the new regulations and their implications for schools, students, and program administrators. The default plan's success largely depends upon whether the ED aggressively enforces the new regulations, and the extent to which institutional actions are actually contributing to defaults. Following a background of the default initiative (the problem and the ED plan), the following are covered: the final regulations (provisions affecting schools with high default rates, consumer information, guaranty agency program reviews, borrower counseling requirements, lender notification to school on delinquency, school refund policies, information sharing, and annual information ED); the proposed regulations; administrative actions to reduce defaults; ED legislative proposals to reduce defaults (major default reduction provisions of legislation proposed as part of the fiscal year 1990 budget request, and legislation requested specifically as part of the default initiative); and analysis of the initiative (implications for schools, students, and program administrators). (SM)