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:: Cohort Default Rates ::

Definition of a cohort default rate
Specific calendar dates for a cohort year
Benefits and sanctions
Challenging your cohort default rate
Our cohort rate analysis services
Resources


Definition of a Cohort Default Rate

For each federal fiscal year (FFY), the Department of Education (ED) calculates a cohort default rate (CDR) for each school, lender and guarantor based on the number of borrowers that went into repayment during that FFY. For cohort purposes, this group of borrowers is commonly referred to as the “repayment base” and the FFY is also known as a “cohort year”. ED publishes CDR draft rates in February and final rates in September.

The CDR is the ratio, or percentage, of the number of borrowers in that repayment base who defaulted over a specified number of years to the total number of borrowers that went into repayment.

The number of years that a borrower’s default could negatively impact the CDR has traditionally been a two-year period: the federal fiscal year the borrower entered repayment and the following year. Starting with the 2009 cohort year, ED has extended the length of time counting the number of borrower defaults from two years to three years. Consequently, cohort years 2009 through 2011 will receive both a two-year and three-year CDR. Cohort year 2012 will be the first to have a three-year CDR only.

Specific Calendar Dates for a Cohort Year

Please select the cohort year you wish to view as a specific example.

2011  |  2012  |  2013  |  2014



2011

Two-Year (Released in 2013)

Borrowers who entered repayment in FFY 2011 and defaulted
from 10/1/10 to 9/30/12 (FFY 2011 or 2012)


Borrowers who entered repayment from 10/1/10 to 9/30/11 (FFY 2011)

Three-Year (Released in 2014)

Borrowers who entered repayment in FFY 2011 and defaulted
from 10/1/10 to 9/30/13 (FFY 2011, 2012 or 2013)


Borrowers who entered repayment from 10/1/10 to 9/30/11 (FFY 2011)


The cohort period will only be three years for cohort years after 2011

2012

Three-Year (Released in 2015)

Borrowers who entered repayment in FFY 2012 and defaulted
from 10/1/11 to 9/30/14 (FFY 2012, 2013 or 2014)


Borrowers who entered repayment from 10/1/11 to 9/30/12 (FFY 2012)



2013

Three-Year (Released in 2016)

Borrowers who entered repayment in FFY 2013 and defaulted
from 10/1/12 to 9/30/15 (FFY 2013, 2014 or 2015)


Borrowers who entered repayment from 10/1/12 to 9/30/13 (FFY 2013)



2014

Three-Year (Released in 2017)

Borrowers who entered repayment in FFY 2014 and defaulted
from 10/1/13 to 9/30/16 (FFY 2014, 2015 or 2016)


Borrowers who entered repayment from 10/1/13 to 9/30/14 (FFY 2014)


Benefits and Sanctions

From Federal Student Aid

Low CDRs bestow certain benefits to schools while high default rates can adversely affect a school’s ability to participate in Title IV programs. With the release of the 2009 three-year CDR, schools may use either their two-year or three-year CDR to determine which benefits are applicable. Current sanction rules will continue to exist for the two-year rates. Beginning with the 2009 three-year rates, any school that's required to establish a default management plan must do so – other sanctions will not begin until after the 2011 three-year rate is released. Please note that once the official three-year rate for 2011 is published in September 2014, only three-year rates will be used for both benefits and sanctions.

Benefits for Schools with Low Cohort Default Rates (Cohort Default Rate Guide 2.4) PDF

Schools whose official cohort default rates were less than 15 percent (using either the two- or three-year rates) for each of the three most recent fiscal years for which data are available may:

Schools whose most recent official cohort default rate is less than 5 percent (using either the two- or three-year rates) and who are eligible home institution that is originating loans to cover the cost of attendance in a study abroad program may:

Sanctions for Schools with High Cohort Default Rates (Cohort Default Rate Guide 2.4) PDF

  1. Under the two-year CDR, schools whose three most recent official cohort default rates are 25 percent or greater:
    • Will lose Direct Loan and Pell eligibility for the fiscal year in which the school is notified of its sanction and the following two fiscal years.
  2. Under the three-year CDR, schools whose official cohort default rates are 30 percent or greater have special sanctions:
    • First Year: Establish a default prevention task force to identify the factors causing the CDR to exceed the threshold. The task force should establish measurable objectives and steps that will be taken to improve the CDR. The plan must be submitted to ED for review.
    • Second Year: Revise default prevention plan and submit to ED for review. ED may revise the plan and include specific actions the school must take to improve the CDR.
    • Third Year: School will lose Direct Loan and Pell eligibility for the fiscal year in which the school is notified of its sanction and for the following two fiscal years*.
  3. Schools whose current official cohort default rate is greater than 40 percent:
    • Will lose Direct Loan eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years
    • The two-year CDR will be used until September 2014 with the release of the 2011 three-year CDR.

Challenging Your Cohort Default Rate

By challenging the cohort default rate, a school is contesting the accuracy of the Stafford loan records in the NSLDS system as reported by ED and the guarantors. ED and the guarantors receive the information from both schools and lenders. A challenge occurs only on the draft cohort default rates which have been historically released in February of each year. If a school chooses not to challenge a borrower’s data and later finds that data to be incorrect, the school may not appeal the accuracy of the data when the official cohort default rate is released, historically, in September.

The cohort default rate is a formula where the total number of borrowers who entered repayment in a particular year and defaulted in a two- or three-year term is divided by the total number of borrowers entering repayment in that particular year. This formula produces a percentage, which schools hope will be under the current percentage that requires sanctions. To reduce this percentage, the school will either need to 1) reduce the number at the top of the equation or 2) increase the number at the bottom of the equation. All challenges to the draft cohort rates should focus on changing the rate in either of these two ways.

According to the Current Default Rate Guide (PDF), there are two challenges schools can use on the draft cohort default rates and eight adjustments/appeals schools can use on the final draft cohort rates. These are briefly described below:

Draft Cohort Default Rates (Released in February)

Final Cohort Default Rates (Released in September)

Our Cohort Rate Analysis Services

We provide a free cohort rate analysis to Oklahoma schools, which enables you to use the data supplied annually by the Department of Education to target specific borrower groups that may need extra attention from default management personnel. Learn more about this service.

Resources