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Managing Your School's Cohort Default Rate

Managing Your School's Cohort Default Rate. Overview. Understanding Cohort Default Rate Brainstorming Getting Started Creating a Plan Measuring Success. Understanding CDR. Measures number of borrower defaults relative to borrowers in repayment during specific periods

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Managing Your School's Cohort Default Rate

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  1. Managing Your School's Cohort Default Rate

  2. Overview • Understanding Cohort Default Rate • Brainstorming • Getting Started • Creating a Plan • Measuring Success

  3. Understanding CDR • Measures number of borrower defaults relative to borrowers in repayment during specific periods • Tracked and calculated by the Department of Education using the National Student Loan Data System (NSLDS) and the Loan Record Detail Report (LRDR) % Numerator (Borrowers in default) Cohort Default Rate = Denominator (Borrowers in repayment)

  4. Understanding 3-Year CDR *First application of sanctions for 3-Year Cohort Default Rates.

  5. Impact – Consequences* • Most recent 3-year CDR above 30% - Create a default prevention taskforce and plan. • Two of three most recent 3-year CDRs 30% - Obtain provisional certification. If consecutive years, revise default prevention plan. • Three consecutive 3-year rates above 30%– Lose Pell Grant and Direct Loan eligibility. • Most recent 3-year CDR above 40% - Lose Direct Loan eligibility only. * Consequences of high 3-year CDRs will take effect beginning in September 2014, based on 3-year official CDRs for FY 2009 – FY 2011. Until then, consequences are based on 2-year official CDRs.

  6. Impact - Benefits • Three most recent CDRs are below 15% - Exemption from the 30-day delayed disbursement rule for first-year, first-time Stafford loan borrowers and from the multiple disbursement rule for Stafford and PLUS loan borrowers (for a loan period no longer than one standard term or four months.) • Most recent CDR is less than 5% - Exemption from both rules for borrowers using the loan to cover a study-abroad cost of attendance.

  7. Brainstorming You have been asked to create a simple, effective default prevention plan for your school, Sample State College. You should know: • Your approximate enrollment is 15,000 students, 45% of which receive federal aid. • Your student body is made up of commuters, non-commuters and online students. • Over the past four years, your CDR has increased steadily by 2% and your estimated 3-year rate is 18%. • Your plan should contain strategies for students who are: • In School • In Grace/Repayment • Delinquent

  8. How Do I Get Started? • Set a target default rate for your institution. • Identify the maximum number of defaults to meet your target. • Project your rates throughout the year by monitoring current defaulted borrowers and borrowers over 300 days delinquent. • Review prior defaulters at your school to identify common characteristics. • Withdrawn students • Transfer students • Participants in particular programs of study • SAP students • Students who borrowed above the cost of attendance

  9. Developing Messages In School Their total loan debt and available resources Repayment Their servicer contact information and payment options Delinquent The consequences of default and their resources What should your students know?

  10. Creating a Plan • In-school • Meet with “high-risk” students, based on your research • Encourage small, manageable payments while in school • Grace • Email students • Calls to “high-risk” students • Repayment • Letters/emails to early stage delinquent students • Calls to late stage delinquent students • Calls to students ending a deferment/forbearance

  11. In School - Campus Involvement • Your administration and faculty could be impacted by your school’s high CDR. Make them part of the solution! • Consider including: • Admissions • Resident Life • Commuter Services • Greek Life • Academic Clubs • Career Counseling • Faculty

  12. Creating a Plan • In-school • Meet with “high-risk” students, based on your research • Encourage small, manageable payments while in school • Grace • Email students • Calls to “high-risk” students • Repayment • Letters/emails to early stage delinquent students • Calls to late stage delinquent students • Calls to students ending a deferment/forbearance

  13. Entering Grace - Before You Go

  14. Creating a Plan • In-school • Meet with “high-risk” students, based on your research • Encourage small, manageable payments while in school • Grace • Email students • Calls to “high-risk” students • Repayment • Letters/emails to early stage delinquent students • Calls to late stage delinquent students • Calls to students ending a deferment/forbearance

  15. Delinquent - NSLDS Resources

  16. Measure Success • Categorize your efforts, track your success, and make adjustments.

  17. Questions? Comments?

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