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.