On September 23, 2019, the Official Cohort Default Rates were released for the 2016 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 is trending down again. The official 2016 rate is now 10.1%, down 6.5% from the Official FY 2015 rate of 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 15.2% for the 2016 CDR. Public institutions fared much better at 9.6%, followed by private institutions with just 6.6% of students defaulting on their loans.
The Fiscal Year 2016 Three-Year CDR is calculated by dividing the number of borrowers who entered repayment in 2016 by the number of borrowers who entered repayment in 2016 and defaulted in 2016, 2017 or 2018. 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.
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 1, 2019 through the eCDR appeals website.