copyright 2010 national student loan program getting ready for a three year cohort default rate...

Copyright 2010 National Student Loan Program

Getting Ready for a Three Year Cohort Default Rate

Getting Ready for a Three Year Cohort Default Rate

MASFAA Conference

June 17, 2010


Three-year cohort Three-year cohort


Cohort Default RateCohort Default Rate


Reauthorization – HEOA 2008Reauthorization – HEOA 2008

• Authorized the standard from a two year measurement to a three year measurement

• Thresholds changed

• Default Prevention requirements


When is the new rate official?When is the new rate official?

• FY09 rate which is published September 30, 2012


What is a cohort?What is a cohort?

• Group of borrowers who entered repayment in a Fiscal Year*

• Tracking borrowers entering repayment in that Fiscal Year to determine if they defaulted in that Fiscal Year or subsequent two Fiscal Years

* Federal Fiscal Year: Oct. 1 – Sept. 30


What is a cohort?

A group, similar set of characteristics

Included loans:Stafford (sub & unsub)

What is a cohort?

A group, similar set of characteristics

Included loans:Stafford (sub & unsub)


The equation The equation


Three-year cohort equationThree-year cohort equation

# borrowers entering repay in cohort FY and defaulted in the cohort FY or the subsequent two FYs *_________________________________________________ # borrowers entered repay in the cohort FY*** Oct. 1, 2008 – Sept. 30, 2011

** Oct. 1, 2008 – Sept. 30, 2009


FY 2009 Cohort Default Year - 3 year period

D N

Year MonthFiscal Year 2009

Repay Performance over 3 year period

2 May0 June0 July8 August

SeptemberOctober C TNovember O RDecember H A

2 January O C0 February R K0 March T9 April R

May E EJune N PJuly T AAugust R YSeptember Y MOctober ENovember NDecember T

2 January 0 February P1 March E0 April R

May FJune OJuly RAugust MSeptember AOctober NNovember CDecember E

2 January0 February S1 March T1 April A

May TJune UJuly SAugustSeptemberOctoberNovemberDecember


Multiple CDR Years in motionMultiple CDR Years in motion


What’s in the numerator?What’s in the numerator?

• All cohort loans with a default date in the three-year cohort period – counted by borrower at your school– default for FFELP is determined by default

claim payment date


Default timelineDefault timeline

• 60 days to establish the first payment

• 270 delinquency days

• 90 days for the lender to file a default claim

• 60+ days thereafter for the guarantor to review and pay the default claim


What’s in the denominator?What’s in the denominator?

• All loans entering repay in cohort year– counted by borrower– can include borrowers with loans deferred,

forborne, rehabbed, death, disability and bankruptcy

Enter Repayment

Oct. 1, 2008

Sept. 30, 2009

Mar. 2008

Leave School

Feb. 2009


Individual Borrower in FY 09 Cohort Group

Federal Fiscal Year FY 2009 FY 2010 FY 2011

YEAR 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1

MONTH MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

DAYS 30 60 90 120 150 1 30 60 90 120 150 180 210 240 270 300 330 360 390 420 450 480 510 540 570 600 630 690 720 750 780 810 840 870 900 930 960 990 1020 1050 1080

School

Cohort Determine Cohort Group

Repay CDR Year 1 Year 2 Year 3

Borrower

Grace

Repay

Delinquent

Default

Lender

Repay

Delinquency Request

Default Claim

Guarantor pays claim

Guarantor

Repay

Delinquency Request

Default Claim received

Claim Paid to lender

Attempt Rehab

Collections


The clock is ticking – now!The clock is ticking – now!

• FY2009 is the first three-year cohort rate

numerator = 2009 + 2010+2011

denominator = 2009

default rate announced in 2012

• Calculated by ED based on NSLDS data


Cohort Transition 2yr to 3yrCohort Transition 2yr to 3yr


FY11 CDR Thresholds ChangeFY11 CDR Thresholds Change


FY09 CDR ThresholdsFY09 CDR Thresholds

• Increased from 10 percent to 15 percent – disbursement and study abroad exceptions

• Increased from 25 percent to 30 percent– program eligibility


Cohort calculation datesCohort calculation dates

• Draft – typically first week of January and released mid-February– 45 days to appeal w/ guarantor for incorrect data

• Official – typically last week of July and released mid-September– 30 days to appeal w/ ED for uncorrected data

adjustment (appealed after draft but did not get fixed in NSLDS)

– 15 days to appeal w/ guarantor for new data adjustment (appeared one way in draft but is different in final)


What next?What next?• Expect

your three-year cohort rate to be higher


What next?What next?• Be proactive:

– ensure accurate NSLDS data– review your cohort data for accuracy– utilize services :

• financial literacy • Default Aversion Assistance• Cohort Reports


Questions?Questions?


Let’s look atCARS on the web!

Let’s look atCARS on the web!


Accessing CARS Accessing CARS

• Available to registered users at www.nslp.org

• User account and password obtain through NSLP Regional Director

• Once account established the view School section under nslp.org

• Select Loan Management - CARS

http://www.nslp.org/


What is a cohort?What is a cohort?

• Group of


Contact informationContact information

National Student Loan Program1300 O St.Lincoln, NE 68508 www.nslp.org

Paul MittelhammerVP- Business Development East [email protected]

copyright 2010 national student loan program getting ready for a three year cohort default rate...

Documents

equation slide

yr slide

default claim slide

motion slide

cohort year

cohort loans

cohort fy

nslds data slide