I've had several ponds built over the past 15 months and have experienced the same erosion problems that you describe. I used a combination
of unhulled bermuda and fescue on the upper slopes of the dam, inside and out. The seed has
germinated and spread fairly well on mostly
hard clay sufaces. Bermuda seed is expensive,
but can be purchased in 50lb quantites at
chemical supply houses for about $100. The fescue is considerably cheaper. Rye might be a good start during the colder months. Commericial carpet starter grass is great for the state highway department, but it is prohibitively
expensive and was not a consideration.