COHORT DEFAULT RATES RELEASED

On September 24, 2018, the Official Cohort Default Rates were released for the 2015 Fiscal Year.

The national default rate has fallen since last year after it rose to more than 11.5%. Since 2013, the National Student Loan Cohort Default Rate has been trending down, despite a small uptick last year. The official 2015 rate is now 10.8%.

According to Federal Student Aid’s National Default Briefing, the highest Defaults are still coming from the proprietary school sector which has an average of 15.6% for the 2015 CDR. Public institutions fared much better at 10.3%, followed by private institutions with just 7.1% of students defaulting on their loans. There are some interesting outliers in this year’s CDR which signify borrowers are struggling in each sector.

Although the privates had the lowest overall default rate, borrowers from schools identified as 2-3 year schools, defaulted at a rate of 16.7%. At private colleges identified as less than 2 years, that rate jumps to 22%, beating the defaults in every other category. Even among public institutions, students who had attended institutions identified as 2-3 year schools the same 16.7% of borrowers defaulted on their loans. Out of the 6155 schools included in the national cohort default rate, nearly 27.5% of schools were identified as 2-3 year institutions and those institutions account for nearly 23% of all defaults.

Borrowers from institutions identified as 4-year institutions had the lowest rates of default in each sector.

The Fiscal Year 2015 Three-Year CDR is calculated by dividing the number of borrowers who entered repayment in 2015 by the number of borrowers who entered repayment in 2015 and defaulted in 2015, 2016 or 2017. A school with a high default rate will face sanctions and may lose its eligibility to participate in Federal Student Aid Programs or expand their scope of participation with ED. Schools with Three-year CDRs of 30% or greater for three consecutive years or with CDRs greater than 40% for one year are subject to federal sanctions.

Nearly sixty institutions with at least one year of cohort default rates over 30% will be required to submit a formal default management plan to ED. High cohort default rates are also a trigger for program reviews and can lead to heightened cash monitoring.

This year seven institutions will lose Title IV program eligibility because their 2015 Cohort Default Rate is over 40%. Five institutions will also lose eligibility to participate in the federal student aid programs due to having three years of official 3-year Cohort Default Rates that are 30% or greater.

The official Three-Year rates were sent to all schools via their Student Aid Internet Gateway (SAIG) mailbox. Federal Student Aid’s Operations Performance Management Services calculates the rates which measure the ratio of students who enter repayment during a cohort year and who later default on those loans. Since the data isn’t always right, schools can challenge and appeal their CDR calculation to have their rates adjusted. Schools may begin submitting challenges and appeals on Tuesday, October 2, 2018 through the eCDR appeals website.

FISCAL YEAR 2015 OFFICIAL COHORT DEFAULT RATES COMING SEPTEMBER

ED will release Fiscal Year (FY) 2015 Official Cohort Default Rates (CDR) to all eligible institutions in September. Schools will receive their CDR electronically via their SAIG mailbox, sometime on or after September 25. The Cohort Rates are an important metric used to determine school or program quality.

This year’s Cohort includes three years; FY 2015, 2014 and 2013.

Schools with low cohort default rates can receive their funds more timely than schools with rates above certain thresholds. Schools with a 3-year cohort default rate less than 15% enjoy the benefit of the ability to deliver disbursements to first-year, first-time undergraduate borrowers without delay. Schools with rates greater than 15% must delay the delivery of loans for 30 days.

Schools with 3-year CDRs of 30% or greater for three consecutive years, or with CDRs greater than 40% for just one year may face federal sanctions including loss of Direct Loan or Pell Grant Program eligibility. Institutions may challenge, appeal, or have their rate adjusted in certain circumstances.

Be on the lookout for more information such as an Electronic Announcement announcing the official release dates of the 2015 CDR package from FSA’s Operations Performance Division in the forthcoming days. In the meantime, check out the Default Management Web site which contains resources for Financial Aid Professionals, Data Managers and Students.

DRAFT COHORT DEFAULT RATE CHALLENGE APPEAL DEADLINE APRIL 19, 2018

In a message to the Financial Aid Community posted by Federal Student Aid yesterday, FSA reminded schools the Fiscal Year 2015 Draft Cohort Default Rate Challenge Appeal Deadline is April 19, 2018.

On February 26, 2018, the Department of Education (the Department) distributed the FY 2015 Draft Electronic Cohort Default Rate (eCDR) notification packages to all Title IV eligible schools.

As a reminder, the 45-day timeline for schools to challenge their FY 2015 Draft Cohort Default Rate (CDR) data began on March 6, 2018 and will end on April 19, 2018. During this period, schools have the option to submit an incorrect data challenge, an uncorrected data adjustment (UDA), a loan servicing appeal (LSA), or a new data adjustment (NDA).

If you have any questions or concerns regarding CDR challenges and procedures, please contact us at FSA.Schools.Default.Management@ed.gov or by phone at 202-377-4259.

 

Thank you for your continued cooperation.

FY 2015 3-YEAR DRAFT COHORT DEFAULT RATES RELEASED

On February 26, 2018, the Department of Education distributed the FY 2015 3-Year Draft Cohort Default Rate (CDR) notification packages to schools via their Student Aid Internet Gateway (SAIG) mailbox. The package includes a cover letter and Loan Record Detail Report (LRDR). It’s important for schools to review their draft data because there are sanctions for schools with high cohort default rates and benefits for schools with low ones and the draft cycle is one of the only opportunities to challenge certain data.

The Fiscal Year 2015 3-Year Draft CDR is calculated by dividing the number of borrowers who entered repayment in 2015 by the number of borrowers who entered repayment in 2015 and defaulted in 2015 2016 or 2017.

Although there are no sanctions or benefits associated with the draft rates themselves, the draft rates become official in September. During the draft cycle, schools have an opportunity to challenge incorrect data or challenge their (low) participation rate. The challenge and appeals cycle begins on March 6, 2018 and lasts for 45 days. More information about submitting an Incorrect Data Challenge or a Participation Rate Index Challenge can be found in the Cohort Default Rate Guide

PARTICIPATION RATE INDEX APPEAL FOR COHORT DEFAULT RATES

There’s good reason for schools to keep their default rates low. Schools with low default rates enjoy special benefits such as the ability to disburse loans without delaying the disbursement date for 30 days for first time borrowers and the ability to single loan disbursements for students in study abroad programs.

On the other hand, schools with Three-Year CDRs of 30% or greater for three consecutive years or with CDRs greater than 40% for one year may face federal sanctions.

Some schools have a small number of borrowers entering repayment which can really make their rates look awful. At other schools only a small portion of the student body takes out student loans. If only three students chose to borrow loans, and one defaults, a school’s default rate would be 33% and subject to sanctions.

Facing sanctions over your school’s High Cohort Default Rate but don’t have many borrowers in your cohort? Check out the Participation Index Rate Challenge to see if your school qualifies to have its rates adjusted!

If a school is facing sanctions, schools with a low loan “participation rate” may be able to appeal sanctions through the Participation Rate Index Appeal. To qualify a school can’t have more than 21% of students borrowing loans in a cohort.
To determine if your school might qualify check out the Templates and Spreadsheets section of FSA’s Default Management website and navigate to the Participation Rate Index Worksheet. This worksheet is intended to help schools understand whether their student loan volume is low enough to meet the criteria of a PRI Challenge or Appeal.

2014 COHORT DEFAULT RATES RELEASED

On September 25, 2017, the Official Cohort Default Rates were released for the 2014 Fiscal Year. For the first time in several years, the national default rate has risen to more than 11.5%. According to Federal Student Aid’s National Default Briefing the 2014 Cohort Default Rate is over 18% at Public Colleges with programs less than 4 years, followed by For-profits schools at 15.5%. Public and Private Nonprofit institutions still have the lowest Cohort Default Rates, roughly 7.5%.

The official Three-Year rates were sent to all schools via their Student Aid Internet Gateway (SAIG) mailbox. Federal Student Aid’s Operations Performance Management Services calculates the rates which measure the ratio of students who enter repayment during a cohort year and who later default on those loans. Since the data isn’t always right, schools have the ability to challenge and appeal their Cohort Default Rate calculation to have their rates adjusted.

The Fiscal Year 2014 Three-Year Cohort Default Rate is calculated by dividing the number of borrowers who entered repayment in 2014 by the number of borrowers who entered repayment in 2014 and defaulted in 2014, 2015 or 2016. A school with a high default rate will face sanctions and may lose its eligibility to participate in Federal Student Aid Programs or expand their scope of participation with ED.  Schools with Three-year CDRs of 30% or greater for three consecutive years or with CDRs greater than 40% for one year are subject to federal sanctions.

Nearly fifty institutions with at least one year of cohort default rates over 30% will be required to submit a formal default management plan to ED. High cohort default rates are also a trigger for program reviews and can lead to heightened cash monitoring.  According to the National Association of Financial Aid Administrators, “This year, ten institutions may lose Title IV eligibility for high default rates”.

Higher Ed Executives Cohort Default Rate
This year ten schools will lose access to Title IV Federal Student Aid Funding due to having high Cohort Default Rates of over 40 percent.

2014 OFFICIAL COLLEGE COHORT DEFAULT RATES COMING SEPTEMBER 25

Does your school have a Default Management Plan

For those involved with your school’s Default Management efforts, ED will release FY 2014 Official Cohort Default Rates (CDR) to all eligible institutions on September 25, 2017. All schools will receive their CDR electronically via their SAIG mailbox.

As I’ve mentioned in the past, schools with 3-year CDRs of 30% or greater for three consecutive years or with CDRs greater than 40% for one year may face federal sanctions. Institutions may challenge, appeal, or have their rate adjusted in certain circumstances. Be on the lookout for more information such as an Electronic Announcement announcing the official release dates of the 2014 CDR package from FSA’s Operations Performance Division in the forthcoming days. In the meantime, check out the Default Management Web site which contains resources for Financial Aid Professionals, Data Managers and Students here.

DRAFT FY 2014 3-YEAR COHORT DEFAULT RATES RELEASED

On February 27, 2017, the Department of Education distributed the FY 2014 3-Year Draft Cohort Default Rate (CDR) notification packages to schools via their Student Aid Internet Gateway (SAIG) mailbox. The package includes a cover letter and Loan Record Detail Report (LRDR). It’s important for schools to review their draft data because there are sanctions for schools with high cohort default rates and benefits for schools with low ones and the draft cycle is one of the only opportunities to challenge certain data.
The Fiscal Year 2014 3-Year Draft CDR is calculated by dividing the number of borrowers who entered repayment in 2014 by the number of borrowers who entered repayment in 2014 and defaulted in 2014, 2015 or 2016.

Although there are no sanctions or benefits associated with the draft rates themselves, the draft rates become official in September. During the draft cycle, schools have an opportunity to challenge incorrect data or challenge their (low) participation rate. Such challenges, if successful, will be reflected in the school’s official rate. The challenge and appeals cycle begins on March 7, 2017 and lasts for 45 days. More information about submitting an Incorrect Data Challenge or a Participation Rate Index Challenge can be found in the Cohort Default Rate Guide here: http://bit.ly/2lWBRLo

Benefits for schools with low cohort default rates

A school whose most recent official cohort default rate is less than 5.0 percent and is an eligible home institution that is originating loans to cover the cost of attendance in a study abroad program may disburse loan proceeds in a single installment to a student studying abroad regardless of the length of the student’s loan period, and may choose not to delay the disbursement of the first installment of loan proceeds for first year first-time borrowers studying abroad.

A school with a cohort default rate of less than 15.0 percent for each of the three most recent fiscal years for which data are available, including eligible home institutions and foreign institutions, may disburse, in a single installment, loans that are made for one semester, one trimester, one quarter, or a four-month period and may choose not to delay the first disbursement of a loan for 30 days for first time, first-year undergraduate borrowers.

Sanctions for schools with high cohort default rates

If a school‘s three most recent official cohort default rates are 30.0 percent or greater for the three year calculation it will lose Direct Loan and Pell Grant program eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.

If a school‘s current official cohort default rate is greater than 40.0 percent, for the three year CDR calculation, it will lose Direct Loan and Pell Grant program eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.

FY 2014 DRAFT COHORT DEFAULT RATES

In the coming weeks, the U.S. Department of Education is due to release draft Cohort Default Rates the Fiscal Year 2014 cohort of borrowers. At publishing time, Ed has not yet provided an exact release date for the Draft 2014-CDR. Schools have 45 days from receipt of the report to submit challenges and appeals. Although there are no sanctions associated with the draft rates, schools should review the data used to calculate the rate for accuracy, because this data forms the basis of a school’s official cohort default rate. A school that fails to challenge the accuracy of its draft cohort default rate data through an Incorrect Data Challenge may not contest the accuracy of the same cohort data when it receives its official cohort default rate when it comes out later this year in September.

What are the sanctions?

  • When a school’s three most recent official cohort default rates are 30.0 percent or greater for the three year calculation:
  • A school will lose Direct Loan and Federal Pell Grant Program eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.
  • When a schools current official cohort default rate is greater than 40.0 percent, for the three year CDR calculation:
  • A school will lose direct Loan Program eligibility fort the remainder of the fiscal ear in which the school is notified of its sanction and for the following two years.

New FSA Loan Servicing and Collection Information Page

In a recent announcement, Federal Student Aid unveiled the Loan Servicing and Collection Information Page. This page provides easy access to information about collection and servicing of Federally-owned student loans including Direct Loans, TEACH Grants converted to Direct Unsubsidized Loans, ED purchased FFEL Loans and Federal Perkins Loans assigned to the Department.

It’s a great resource for students and FA Officers alike. My favorite part is a toss up between the Borrower Resources section which links to all sorts of great info to help borrowers learn about repaying their federally-owned loans and the Forms section which gives you invaluable and often hard to locate Servicer addresses, forms and documents. Check it out. http://bit.ly/2cVpUCG