understanding the cohort default rate cycle - … · •understand cohort default rate (cdr) cycle...

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Decoding CDR Reports and

Correcting Data

Why Review Your CDR Data

– High CDR could result in

• Adverse publicity

• Loss of Title IV eligibility

• Loss of access to private loan funds

• Extra work

Administrative capability


– Correct data

– Accurate data

– Timely data


Better-quality decision-making


– When borrowers default

• Pay more in interest and collections fees

• Government can seize wages, tax refunds, Social

Security, and disability benefits


Better service to students

Better-quality decision-making

Objectives

• Understand Cohort Default

Rate (CDR) cycle

• Decode Loan Record Detail Report

• Learn how to collect, compare, and

correct data

• Know common appeal errors to avoid

Understanding the Cohort

Default Rate Cycle

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What Is a Cohort Default Rate?

The Numerator is the

number of Stafford loan

borrowers from the

denominator who default

within a cohort period

The Denominator is the

number of Stafford loan

borrowers who enter

repayment within a

cohort period

= Did not default

in 2011-2013

= Defaulted

in 2011

= Defaulted

in 2012

= Defaulted

in 2013

All borrowers entered

repayment in 2011

What Is a Cohort Default Period?

Borrowers who entered

repayment between

10/01/2010 and

9/30/2011


repayment between

10/01/2010 and

9/30/2011


repayment between

10/01/2010 and 9/30/2011

and who defaulted between

10/01/2010 and 9/30/2012

2-year CDR Example FY2011


repayment between

10/01/2010 and 9/30/2011

and who defaulted between

10/01/2010 and 9/30/2013

3-year CDR Example FY2011

What Is a Cohort Default Rate

Cycle?

• Department sends draft and official cohort

default rates to schools

– Eligible to participate in any of the Title IV programs

– 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 January

Draft Rate Cycle Official Rate Cycle

Source: CDR Quick Reference Guide

What Is a Cohort Default Rate

Cycle?

• Official cohort default rates are available at:

– ed.gov/FSA/defaultmanagement/cdr.html

Source: CDR Quick Reference Guide

February August

Draft default rates released

to schools only

Official rates released to

schools and the general public

September January

Draft Rate Cycle Official Rate Cycle

No Sanctions or Benefits

Associated with Draft CDR

• Keep in mind

– Schools that fail to challenge accuracy of

draft rate data through incorrect data

challenge can’t contest accuracy of official

rate data

Fiscal

Year

(FY)

Denominator

# in

Repayment

Numerator

# in Default

Draft CDR

Publication

Date

Official CDR

Publication

Date

Rate Used for

Sanctions

2010 10/01/09 – 09/30/10 3-yr: 10/01/09 – 09/30/12 3-yr: Feb 2013 3-yr: Sept 2013 N/A

2011 10/01/10 – 09/30/112-yr: 10/01/10 – 09/30/12

3-yr: 10/01/10 – 09/30/13

2-yr: Feb 2013

3-yr: Feb 2014

2-yr: Sept 2013

3-yr: Sept 2014

2-yr rate (25%)

3-yr rate (30%)

2012 10/01/11 – 09/30/12 3-yr: 10/01/11 – 09/30/14 3-yr: Feb 2015 3-yr: Sept 2015 3-yr rate (30%)

Publication of CDRs

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How Are Schools Notified?

• CDR notification packages

– Sent electronically to all domestic schools

(eCDR)

• Student Aid Internet Gateway (SAIG)

• 5 business days to report problems

• Challenges, adjustments, and appeals begin 6th

day following announced transmission date

– Posted on IFAP (ifap.ed.gov)

What is Included in the eCDR?

• CDR package includes

– Cover letter

– Two Loan Record Detail Reports (LRDR)• Reader-friendly

• Extract-type

• CDR package includes

– SHDRLROP

– SHCDRROP

– SHCDREOP

– Cover letter

– Loan Record Detail

Reports (LRDR)• Reader-friendly

• Extract-type

Decoding the Loan Record

Detail Report

Loan Record Detail Report (LRDR)

• Contains borrower information for Stafford

loans used to calculate draft or official

cohort default rate

– Includes borrower’s

• Name, Social Security number

• Date borrower entered repayment

• Date of default (if applicable)

• Loan type

– Borrowers with multiple loans counted only

once

Review LRDR

• Check for accuracy

• Compare to school records

– Repayment Date

– Default Status

– Cancellations/Refunds

What is Included in the eCDR?

• Beginning with the

FY 2009 cohort

– MUST use eCDR

appeals to prepare

and submit

challenges or

adjustments

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Reader-Friendly LRDR Loan Record Detail Report –

Data Manager

• Three-digit code used to identify entity

reporting the information

Guaranty Agency Department of Education

Loan Record Detail Report –

Repayment Date

• Indicates when borrower began repayment

• Determines if loan is included in denominator


Default Date

• Indicates the date– Direct Loan considered in default based on past due status

OR

– Guarantee agency paid default claim to lender for FFELP Loan

5


CDR Usage

• Indicates how loan is included in calculation

– “D” Denominator only

– “B” Both Numerator and Denominator

– “N” Not Used

– “E” Eligible, but not counted

Important Codes to Know

Source: CDR Guide, page 2.3-7

Important Codes to Know

Source: CDR Guide, page 2.3-8

Collecting and Comparing

Data

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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)

• Spreadsheet or database to collect data

– Implement this process early

Collecting the Data

– Internal resources

available on-campus

– External resources

• NSLDS

• Servicer reports

• Guaranty agencies

Determine where

to find data

Possible Errors on LRDR

• LRDR incorrectly:

– Reports data element and data element

should be changed

– Includes borrower whose repayment date

does not fall within cohort fiscal year;

borrower removed from calculation

– Excludes borrower who entered repayment

within cohort; borrower added to calculation

Should the Loan be Included in

FY09 3-year CDR?

Darin

• Graduated from school 11/4/2008

• NSLDS reveals transferred to another school 2/4/2009

LDA

11/4/2008

Add 6 months,

1 day

5/5/2009

Date entered repayment

Actual DER

5/13/2010

Default date

5/8/2011


FY09 3-year CDR? No

YDefaulted between 10/1/2008 – 9/31/2011• Defaulted 5/8/2011

NFY2009 (10/1/2008 – 09/31/2009)

• Date Darin entered repayment 5/13/2010

If date of repayment is delayed by re-enrolling in school prior to the end of grace, inclusion in a CDR calculation is also delayed

Darin


FY09 3-year CDR?

• Left school 11/4/2008

• Transferred to another school 1/12/2010

• Loans deferred 1/12/2010

LDA

11/4/2008

Add 6 months,

1 day

5/5/2009


05/05/2009

(Loan deferred 1/12/2010)

Default date

NA

Kara

7


FY09 3-year CDR? Yes

Deferments or forbearances do not alter the date the borrower entered repayment

N Defaulted between 10/1/2008 - 9/31/2011• No default

YFY2009 (10/1/2008 – 09/31/2009)

• Date Kara entered repayment 05/05/2009

Kara


FY09 3-year CDR?

• Withdrew from school 6/1/2008

• Defaulted on loans 5/27/2010

• Consolidated three loans 12/4/2010 in order to regain Title IV eligibility

LDA

6/1/2008

Add 6 months,

1 day

12/2/2008


12/2/2008

Default date

5/27/2010

Kyle

Consoldate

12/4/2010


FY09 3-year CDR? Yes

YDefaulted between 10/1/2008 – 9/31/2011

• Kyle defaulted 5/27/2010

YFY2009 (10/1/2008 – 09/31/2009)

• Date Kyle entered repayment 12/02/2008

The date underlying loans entered repayment is the date used in the cohort default rate calculation

Kyle


FY09 3-year CDR?

• Graduated from school 6/1/2008

• Paid loan in full on 7/1/2008

LDA

6/1/2008

Add 6 months,

1 day

12/2/2008


Loan paid in full 7/1/2008

Default date

NA

Bethany


FY09 3-year CDR? No

The paid-in-full date becomes the new repayment date.

Same is true for loans discharged due to death, bankruptcy, disability

Defaulted between 10/1/2008 – 9/31/2011

• No default

FY2009 (10/1/2008 – 09/31/2009)

• Date Bethany paid in full 07/01/2008

N

N

Bethany

Correcting Data

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Challenges of Draft CDR

– Used to correct errors on draft CDR

– Submitted to guarantors (FFEL) and/or DL

servicers via eCDR appeals within 45 days of

timeframe begin date

• Relevant information for each borrower challenged

• Supporting documentation for each borrower

challenged

• CEO Certification Letter

Incorrect Data Challenge (IDC)

Challenges of Draft CDR

– Only available if school potentially subject to loss of eligibility (or provisional certification) based on draft rates

– Must send completed PRI Challenge to U.S. Department of Education within 45 days of timeframe begin date

• PRI Challenge Spreadsheet (CDR Guide page 4.2 – 8)

• Letter

Participation Rate Index Challenge (PRI)

Adjustments of Official CDR

– Ensures school’s official cohort default rate

calculation reflects changes correctly agreed

to as result of incorrect data challenge

– Must submit UDA to Department within 30

calendar days of timeframe begin date via

eCDR appeals

Uncorrected Data Adjustment (UDA)

Adjustments of Official CDR

– Allows school to challenge accuracy of “new data”

included in most recent official CDR

• Compare LRDR of draft CDR to LRDR of official CDR to

determine if new data reported correctly

– Must submit NDA to Data Manager via eCDR appeals

within 15 days of timeframe begin date

• Relevant information for each borrower challenged

• Supporting documentation for each borrower challenged

• CEO Certification Letter

New Data Adjustment (NDA)

Appeals of Official CDR

– Alleges school’s official cohort default

rate includes defaulted loans considered

improperly serviced for cohort default rate

purposes

– Example

• Borrower never made loan payment and school

can document that lender/servicer failed to

complete due diligence

Loan Servicing Appeal (LS)


– Must send request for loan servicing records

to Data Manager and Department within 15

days of timeframe begin date


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– Data Manager notifies school and Department

within 20 days of receipt

• Fees for providing records

• List of representative sample

• Description of how sample was chosen

– School must pay fee, if charged, within 15

days of data manager notification



– Available if school is subject to loss of

eligibility (or provisional certification) based on

official rates

– School previously challenged accuracy of

data as part of Incorrect Data Challenge

– Review of loan record detail reports for draft

and official rates show new data

Erroneous Data Appeal (ER)


– School must send Erroneous Data Appeal

allegations to Data Manager within 15 days of

timeframe begin date

• Erroneous Data Appeal spreadsheet

• Relevant pages of Loan Record Detail Report

• Supporting documentation

• Letter

Erroneous Data Appeal (ER)


– Available based on loss of eligibility or notice of second successive official rate potentially subjecting school to provisional certification

– School must submit independent auditor’s written opinion to Department within 30 days of timeframe begin date

• Spreadsheet of students that qualify to be included

– School’s low-income rate and placement rate (non-degree-granting school)

– School’s low-income rate and completion rate (degree-granting school)

Economically Disadvantaged Appeal (EDA)


– Only available if school is subject to loss of eligibility or provisional certification based on official rates

– Must send completed Participation Rate Index Appeal to Department within 30 days of timeframe begin date

• Participation Rate Index Appeal spreadsheet

• Letter

Participation Rate Index Appeal (PRI)


– Subject to sanctions based on three consecutive

CDRs that meet or exceed relevant threshold if

• At least two official cohort default rates are average rates

• CDRs would have been less than relevant threshold if calculated as

non-average rates

– School must send completed Average Rates Appeal

to Department within 30 days of timeframe begin date

• Supporting documentation

• Certification

Average Rates Appeal

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– Department automatically determines if school

meets criteria for thirty or fewer borrowers appeal

– School disagrees with Department’s

determination• Must send completed Thirty or Fewer Borrowers Appeal to

Department within 30 days of timeframe begin date

– Supporting documentation

– Certification

Thirty or Fewer Borrowers Appeal

Common Appeal Errors to

Avoid

Avoid Two Common Errors

1) Check NSLDS for student's

enrollment status

– Students who have withdrawn or dropped to

less than half-time status may be taking

classes that maintain their eligibility elsewhere

Two Common Errors

2) If two entities are listed for loan, make

sure to send challenges to correct entity

– Indicated with usage code of “B” rather than

“E”

– Sending challenge to wrong servicer or

guarantor can result in missed deadline

Conclusion and Resources

Take Action

• Review LRDR

• Compare defaulted borrowers to your

own system to ensure borrowers are

listed correctly

• Submit timely appeals

• Analyze defaulted borrowers to see

if changes are needed in default

management plan

11

Resources

– ifap.ed.gov/DefaultManagement/Default

Management.html

– ecdrappeals.ed.gov

Default Prevention and Management

eCDR Appeals System

Thank You!

understanding the cohort default rate cycle - … · •understand cohort default rate (cdr) cycle...

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