COHORT DEFAULT RATE – PARTICIPATION RATE INDEX APPEAL

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 make 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. 

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. 

COHORT DEFAULT RATES RELEASED

On September 28, 2020, the Official Cohort Default Rates were released for the 2017 Fiscal Year. 

Since 2013, the National Student Loan Cohort Default Rate has been trending down, despite a small uptick last year. The official 2017 rate is now 9.7%, down 4% from the Official FY 2016 rate of 10.1%

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 14.7% for the 2017 CDR. Public institutions fared much better at 9.3%, followed by private institutions with just 6.7% of students defaulting on their loans. 

The Fiscal Year 2017 Three-Year CDR is calculated by dividing the number of borrowers who entered repayment in 2017 by the number of borrowers who entered repayment in 2017 and defaulted in 2017, 2018 or 2019. 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 6, 2020 through the eCDR appeals website. 

FISCAL YEAR 2017 OFFICIAL COHORT DEFAULT RATES COMING LATE-SEPTEMBER

ED will release FY 2017 Official Cohort Default Rates (CDR) to all eligible institutions in mid-September. Schools will receive their CDR electronically via their SAIG mailbox.

The Cohort Rates are an important metric used to determine school or program quality. 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 2017 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.

FY 2016 OFFICIAL COHORT DEFAULT RATES RELEASED

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.