Tag: cohort default rates and how the rates are calculated

Colleges with high default rates may lose their eligibility to participate in federal student aid programs.

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Americans collectively owe $1.6trillion in student loan debt. By comparison, we owe $8.2 trillion in mortgage debt and $659 billion in credit card debt.

There are 45 million borrowers who collectively owe nearly $1.6 trillion in student loan debt in the U.S. Student loan debt is now the second highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans. The average student loan debt for members of the Class of 2018 is $29,200, a 2% increase from the prior year, according to the Institute for College Access and Success.

The U.S. Department of Education releases official cohort default rates

Colleges with high default rates may lose their eligibility to participate in federal student aid programs.

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Final regulations on improving free inquiry, transparency, and accountability at colleges and universities, outlined in a previous issue, were published in the Federal Register, effective November 23, 2020.

Official Cohort Default Rates for Schools

A cohort default rate is the percentage of a school’s borrowers who enter repayment on certain Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans during a particular federal fiscal year (FY), October 1 to September 30, and default or meet other specified conditions prior to the end of the second following fiscal year. Please refer to the Cohort Default Rate Guide for a more in-depth description of cohort default rates and how the rates are calculated.

The U.S. Department of Education releases official cohort default rates once per year. The FY 2017 official cohort default rates were delivered to both domestic and foreign schools on September 28, 2020, electronically via the eCDR process. All schools must enroll in eCDR to receive cohort default rate notification. Schools may check their eCDR enrollment online or by calling CPS/SAIG Technical Support at 800-330-5947.

The FY 2017 national cohort default rate is 9.7 percent. The Department released a summary of the FY 2017 official cohort default rates by institution type.

Schools may also obtain an electronic loan record detail report via the National Student Loan Data System (NSLDS) Professional Access website. A loan record detail report contains the data used to calculate a school’s FY 2017 official cohort default rate. Assistance in accessing the NSLDS site or with downloading an electronic loan record detail report is available through NSLDS Customer Service at 1-800-999-8219.

For schools interested in taking actions to manage defaults, and for schools required to submit a default prevention plan based on at least one year of a cohort default rate equal to or greater than 30 percent, please refer to the federal regulations at 34 CFR 668.217 and Appendix A within that section.

Important Note: Some schools have a small number of borrowers entering repayment. At other schools only a small portion of the student body takes out student loans. In such cases, the cohort default rate should be interpreted with caution as these rates may not be reflective of the entire school population.

https://www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html

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