anatomy of a cohort default rate. a·nat·o·my ə ˈ nat ə mē/ noun noun: anatomy; noun: anat....
TRANSCRIPT
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Anatomy of a Cohort Default Rate
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a·nat·o·myəˈnatəmē/nounnoun: anatomy; noun: anat.The branch of science concerned with the bodily structure of humans, animals, and other living organisms, especially as revealed by dissection and the separation of parts. The bodily structure of an organism.
A study of the structure or internal workings of something.
Plural noun: anatomiesSynonyms: bodily structure, makeup, composition, constitution, form, structure
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co·hort de·fault ratekōˌhôrt/dēfôlt/rāt/ noun
The percentage of a school's borrowers who enter repayment on certain loans during a federal fiscal year (October 1 to September 30) and default prior to the end of the next two fiscal years
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Objectives
1│Discuss the timing of loan default
2│Share how the Department calculates CDRs
3│Walk through special circumstances and how they impact CDRs
4│Discuss how and when CDRs are sent to schools
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Objectives
5│Discuss how to correct data
6│Review CDR rewards and penalties
7│Share resources
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Timing of Loan Default
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When Does a Borrower Default?
Repayment Begins
Technical Default
Direct Loan
Transferred to DMCS
FFEL Loan Claim Paid
270 Days.
Default
.
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When Does a Borrower Default?
Technical Default• 270 days of delinquency• DF reported as the loan status code• Ineligible for Title IV aid• Servicer continues due diligence • Payment, deferment, or forbearance
can bring loan current
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When Does a Borrower Default?
Actual Default• 360 days of delinquency – Direct
Loans• Claim paid by guarantor – FFELP
Loans• Default status reported to the credit
reporting agencies• Collection costs can be assessed
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Which Loans are Included in the Cohort Default
Rate?
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FFEL subsidized and unsubsidized loans
Federal Direct subsidized and unsubsidized loans
Which Loans are Included in the Cohort Default Rate?
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How Does the Department Calculate CDRs?
Number of borrowers in
the denominator
who defaulted during the
cohort period
Number of borrowers who
entered repayment in
the cohort default rate fiscal period
Cohort Default Rate
Numerator
Denominator
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Which Loans are in the Denominator?
• The official repayment date is the first day following the end of the 6-month grace period
Last Date of
Attendance (LDA) = 5/15/14
Grace Period = 6
Months
Repayment Date =
11/16/2014
Macie graduated on 5/15/14
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Which Loans are in the Numerator?
• Borrowers must be included in the denominator in order to be included in the numerator
• For CDR purposes, a loan is considered in default– After 360 days of delinquency for Direct
loans–When the guarantor has paid a default
claim to the lender for FFEL loans
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Calculating the CDR
3 Default in 2011
4 Default in 2012
2 Default in 2013 12.5%
Cohort Default
Rate72 borrowers who entered
repayment in 2011
9
72
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Timeframes for CDRs
Cohort Fiscal Year
Year Published Borrowers in the Numerator
Borrowers in the Denominator
2011 2014Borrowers who defaulted 10/1/2010 to 9/30/2013
Borrowers who entered repayment 10/1/2010 to 9/30/2011
2012 2015Borrowers who defaulted 10/1/2011 to 9/30/2014
Borrowers who entered repayment 10/1/2011 to 9/30/2012
2013 2016Borrowers who defaulted 10/1/2012 to 9/30/2015
Borrowers who entered repayment10/1/2012 to 9/30/2013
2014 2017Borrowers who defaulted 10/1/2013 to 9/30/2016
Borrowers who entered repayment 10/1/2013 to 9/30/2014
2015 2018Borrowers who defaulted 10/1/2014 to 9/30/2017
Borrowers who entered repayment 10/1/2015 to 9/30/2015
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Cohort Default Rate Cycle
• The Department sends draft and official cohort default rates to all schools that– Are eligible to participate in any of the Title
IV programs – Have had a borrower in repayment in the
current or any of the past cohort default rate periods
February August
Draft default rates released to schools only
Official rates released to schools and the general public
September JanuaryDraft Rate Cycle Official Rate Cycle
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Special Circumstances and How They Impact
CDRs
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Consolidation
• Borrower consolidates their federal loans– They are included in the cohort fiscal
year when they entered repayment on the underlying loans
– Even though the borrower has regained Title IV eligibility, they are still in default for the purpose of calculating the CDR
– Borrower will only count in the CDRonce, even if they default on theconsolidation loan
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Should Mickey be Included in FY12 CDR?
• Mickey withdrew from school on 6/1/2011• He defaulted on his loans on 5/27/2013• He then consolidated three loans on
12/4/2013 in order to regain Title IV eligibility
Last Date of
Attendance
6/1/2011
Date Entered
Repayment
12/2/2011
Default Date
5/27/2013
Consolidation Date
12/4/2013
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Yes
Yes
Should Mickey be Included in FY12 CDR?
• The date underlying loans entered repayment is the date used in the cohort default rate calculation
Mickey defaulted 5/27/2013 FY2012 (10/1/2011 – 9/30/2014)
Date Mickey entered repayment 12/2/2011 FY2012 (10/1/2011 – 9/30/2012)
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Deferment and Forbearance
• Borrower enters repayment and later receives a forbearance on the loan – Deferments and forbearance do not
alter the date the borrower enters repayment
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Should Myles be Included in FY12 CDR?
• Myles withdrew from school 11/4/2011• His loans are placed in forbearance on
10/15/2012• He defaulted on 2/19/2014
Last Date of
Attendance
Forbearance
10/15/2012
Default Date
11/4/2011 2/19/2014
Date Entered
Repayment
5/3/2012
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Should Myles be Included in FY12 CDR?
• The borrower is included in the cohort fiscal year when they entered repayment
• They are also included if they default during the same cohort period
Yes
YesMyles entered repayment on 5/3/2012FY2012 (10/1/2011 – 9/30/2012)
Myles defaulted 2/19/2014FY2012 (10/1/2011 – 9/30/2014)
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Transfer Schools
• A borrower takes out loans from one school, withdraws and enrolls at another school before the end of the grace period– The borrower is included in the cohort
fiscal year when they actually enter repayment
– If the date they enter repayment is delayed by enrolling in school, then their inclusionin the default rate calculation is alsodelayed
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Transfer Schools
• A borrower takes out loans from one school, withdraws and enrolls at another school after the grace period expires– The borrower is included in the cohort
fiscal year when then they enter repayment for each school where they received loans
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Multiple Loans
• A borrower received more than one loan with repayment dates that fall into different cohort fiscal years– The borrower will be included in two
different cohort default rate calculationsfor the same school
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Paid in Full
• Borrower pays loan in full before they were scheduled to go into repayment– The borrower is included in the cohort
fiscal year that they paid the loan in full– The paid-in-full date becomes the new
repayment date
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Paid in Full
• Borrower pays loan in full after defaulting – The borrower is included in the cohort
year when they entered repayment and defaulted
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Discharged Loans
• A borrower defaults on their loan and the loan subsequently is discharged due to death, bankruptcy, or disability– The borrower is included in the cohort
fiscal year of the year the borrower entered repayment and defaulted
BankruptcyDeath Disability
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Discharged Loans
• The borrower’s loan was discharged due to school closure, false certification or identity theft– The borrower’s is not included because
school closure, false certification, identity thefts are not included in cohort default rate calculations
False CertificationSchool Closure
Identity Theft
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Rehabilitation
• A borrower defaults on their loans and later fulfills the rehabilitation agreement –Must make at least 9 full payments
over a 10-month period – Payments must be made
within 20 days of thedue date
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Rehabilitation
• If the borrower rehabilitates the loan before the end of the cohort default period, the borrower is not included in the numerator because the borrower is no longer considered to be in default Numerator
Denominator
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Should Marla be Included in FY12 CDR?
• Marla entered repayment on 11/14/2011
• Marla defaults on 12/4/2012• She begins loan rehabilitation on
3/29/2013 and completes it on 12/29/2013 Date
Entered Repayme
nt
Rehab Begins
3/29/2013
Rehab Complete
d
11/14/2011 12/29/2013
Default Date
12/4/2012
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Should Marla be Included in FY12 CDR?
• The borrower is included in the cohort fiscal year when they entered repayment
• They are also included if they default during the same cohort period but removed if they rehab before the same cohort ends
Marla entered repayment on 11/4/2011FY2012 (10/1/2011 – 9/30/2012)
Marla defaulted 12/4/2012FY2012 (10/1/2011 – 9/30/2014) Yes
Yes
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How and When CDRs areSent to Schools?
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How Are Schools Notified?
• CDR notification packages – Sent electronically to all eligible
domestic and foreign schools (eCDR)• Using Student Aid Internet Gateway (SAIG)• Allowed five business days to report
problems• Timelines for submitting challenges,
adjustments and appeals begin six days following announced transmission date, as posted on IFAP (ifap.ed.gov)– IFAP notification establishes the “Timeframe Begin
Date”
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What Is Included in the eCDR?
• CDR package includes– Cover letter– Loan Record Detail
Reports (LRDR)• Reader-friendly• Extract-type
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Loan Record Detail Report (LRDR)
• Contains borrower information for Stafford (DL and FFELP) loans that were used to calculate a school’s draft or official cohort default rate– Includes borrower’s• Name, social security number• Date borrower entered repayment• Date of default (if applicable)• Loan type
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Correcting Data – Challenges, Adjustments,
and Appeals
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Review the Loan Record Detail Report
• Check for accuracy• Compare to school records– Repayment Date– Default Status– Cancellations/Refunds
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Possible Errors on the LRDR
• LRDR incorrectly: – Reports a data element and the data
element should be changed– Includes a borrower whose repayment
date does not fall within the cohort fiscal year and the borrower should be removed from
the cohort rate calculation– Excludes a borrower who entered
repayment within the cohort and the borrower should be added to the cohort rate calculation
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Collecting the Data
• Determine data that needs to be captured– Last date of attendance (LDA)– Less than half-time date (LTH)– Withdrawal date (WD)– Date entered repayment (DER)– Claim paid date/default date (CPD/DD)
• Use a spreadsheet or database to collect this data– Implement this process early
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Challenging the Draft CDR
• Used to correct errors on the draft CDR
• Submitted by school to federal servicers and/or guarantors (FFEL) via eCDR Appeals within 45 days of timeframe begin date
Incorrect Data Challenge (IDC)
34 CFR 668.185(b)34 CFR 668.204(b)
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Challenging the Draft CDR
• Possible incorrect data– Borrower did not enter repayment
during cohort year– Borrower did not default during
cohort period– Other borrowers entered repayment
during cohort period
Incorrect Data Challenge (IDC)
34 CFR 668.185(b)34 CFR 668.204(b)
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Challenging the Draft CDR
• Schools that fail to challenge the accuracy of draft cohort default rate data through an incorrect data challenge may not contest the accuracy of the data used in the official rate
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Other Challenges, Adjustments, and Appeals
Participation Rate Index Challenge
Uncorrected Data Adjustment
Erroneous Data Appeal
New Data Adjustment
Loan Servicing Appeal
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Other Challenges, Adjustments, and Appeals
Economically Disadvantaged Appeal
Participation Rate Index Appeal
Average Rate Appeal
Thirty or Fewer Borrowers Appeal
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Rewards and Penalties
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CDR Rewards
• Schools with a cohort default rate of less than 15% for each of the three most recent fiscal years – May disburse, in a single installment,
loans that are made for one semester, one trimester, one quarter, or a four-month period
–May choose not to delay the first disbursement of a loan for 30 days for first-time, first-year undergraduate borrowers
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CDR Penalties
– Default prevention plan and task force– Submit plan to FSA for review
– Review/revise default prevention plan– Submit revised plan to FSA– FSA may require additional steps to promote
student loan repayment
First consecutive year at 30% or more
Second consecutive year at 30% or more
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– Loss of Title IV eligibility
– Loss of Direct Loan program eligibility for the remainder of the fiscal year
Third consecutive year at 30% or more
One year at 40% or more
CDR Penalties
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Conclusion and Resources
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Control Your Default Rate…Don’t Let it Control You
• Implement effective and proactive default prevention strategies
• Work with borrowers to facilitate successful repayment
• Review the LRDR and submit timelyappeals, if necessary
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Resources
• Great Lakes’ Default Management Tools and Resources
• Cohort Default Rate Guide– http://
ifap.ed.gov/DefaultManagement/CDRGuideMaster.html
• eCDR Appeals System– ecdrappeals.ed.gov
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Helpful Resources
• 6 Steps to Choosing a Default Prevention Partner – http://nseds.com/resources/
• CDR Snapshot: track & evaluate your CDR throughout the cohort period– https://cdrsnapshot.nseds.com/
NorthStar Ready-To-Use Resources
Free resources for the good of all
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