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Cohort Default Rate

What is it?

The cohort default rate (CDR) is the percentage of a school's Stafford borrowers who enter repayment on Federal Family Education Loan Program (FFELP) or William D. Ford Federal Direct Loan Program (FDLP) loans during a federal fiscal year (October 1 through September 30) and default prior to the end of the following fiscal year.

By calculating CDRs, sanctioning schools with higher rates, and providing benefits to schools with lower rates, the U.S. Department of Education creates an incentive for schools to work with borrowers to reduce defaults. As a result, CDR monitoring helps to save taxpayer money.

How does it work?

The CDR is calculated by determining the number of students who default on a federal Stafford loan within a specified number of fiscal years after the start of repayment (each cohort tracks borrowers who enter repayment between October 1 and September 30). A federal loan goes into default after 270 days of nonpayment.

Because the CDR can significantly impact a school's eligibility for low CDR disbursement relief and the school's risk of high CDR funding penalties, it is vital that you take steps to address any potential errors.

What to look for—Before publishing the official CDR, the U.S. Department of Education sends each school the "draft" data used to calculate its CDR. The school should compare the draft data against the borrower and loan information in their own records to ensure it is accurate and current. Each school has their own policies and procedures set to review the accuracy of this draft data.

Common data discrepancies to keep an eye on include:
- Incorrect reporting of the date on which a borrower entered repayment
- Incorrect reporting of borrowers in default
- Incorrect reporting of borrowers who have multiple loans
- Borrowers incorrectly included or excluded
How to appeal—Schools have 45 days after receipt to review and respond to the "draft" CDR data through an incorrect data challenge or a participation rate index challenge. If a school does not challenge incorrect data based on the "draft" CDR, the school cannot submit an incorrect data challenge on the official CDR.

For more on challenges and appeals, read the U.S. Department of Education's Cohort Default Rate Guide.

Coming Soon: Important Changes to the CDR

The current or 2-year standard is the percentage of students who default before the end of the 1st fiscal year after the fiscal year in which the students entered repayment. The future or 3-year standard is the percentage of students who default before the end of the 2nd fiscal year after the fiscal year in which the students entered repayment. The U.S. Department of Education will publish two lists of CDRs for cohort fiscal years 2009, 2010, and 2011. The 2-year CDR for 2011 will be released in 2013, and the 3-year CDR for 2011 will be released in 2014. Therefore, 2014 is the 1st year in which there will be 3 years of the 3-year CDR (that is, 2009, 2010, and 2011).

Where can I obtain this resource?