Dangers of a High CDR The Cohort Default Rate is a mandate of the federal Higher Education Act stating if a higher education institution has too many former students defaulting on their federal loans, it can no longer be eligible to receive taxpayer-funded student grants and loans. The longer the rate remains high, the less federal support they will be able to offer their students. School Requirements A school with a single-year CDR of 30% or greater is required to establish a default prevention task force. The task force must develop a default prevention plan that includes measurable objectives designed to lower the school’s CDR. The plan must be submitted to the U.S. Department of Education. Schools with CDRs of 30% or greater for two consecutive years must revise their plans to implement additional measures and could also be subject to provisional certification. Sanctions A school with three consecutive official CDRs of 30% or over (without a successful appeal) will lose eligibility to participate in the Federal Direct Loan program and the Federal Pell Grant program. If the official three-year CDR or any succeeding year’s rate exceeds 40%, without a successful appeal, the school will lose eligibility to participate in the Direct Loan program. The school will, however, retain eligibility to participate within the Federal Pell Grant program. Reminder: If a borrower defaults on their Federal Stafford loans and later consolidates the defaulted loans, the borrower is still included in the cohort fiscal years when the borrower entered repayment on the underlying loans. The borrower is still considered to be in default for the purpose of calculating the school’s cohort default rate. Students No Longer Hid from Debt Blue Ridge Community College needed to lower its higher student loan default rate but its limited staff size prevented them from doing so. The financial aid team knew an outsourced solution would help students pay back debt and relieve their workload. Read more.
Try the Cohort Year Impact Tool This tool displays the amount of time that has expired versus the amount of time still remaining within each cohort year. It’s important to understand the ability to impact your school’s cohort default rate and that it is directly related to the amount of time remaining within each cohort year to work the delinquent accounts.
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