For most people, February means appearances by groundhogs and cupids; however, when you are responsible for your institution’s CDR it means it’s time to review new draft data. If you haven’t already, you will shortly receive the draft CDR data for the Federal Fiscal Year (FY) 2022 Cohort. This is the data that will be used to calculate your institution’s official CDR in the fall, so you better make sure it is correct!
The most basic definition of CDR is the percentage of a particular group of borrowers (the cohort) that default on their Stafford loans during a particular period (the monitoring period). The FY 2022 Cohort includes borrowers that entered repayment between 10/1/2021 and 9/30/2022. The monitoring period for this cohort is 10/1/2021 through 9/30/2024 or three years. The percentage is calculated as follows:
FY 2022 Cohort Members Defaulting During Monitoring Period ÷
Total Number of FY2022 Cohort Members
In February, Federal Student Aid (FSA) will send an extract with detailed draft data to your SAIG mailbox. Once this report is available, you will also be able to download it in .csv format from the reports section of NSLDS. The report will contain identifying information about the borrowers, like name and Social Security number and information about the loans on record with NSLDS including the type, the grade level and loan period for which each was borrowed, repayment start dates, and repayment status. Conducting a detailed review during the draft period (about 45 days from the date the data is made available) will enable you to identify and correct errors that may be negatively impacting your institution’s CDR.
Why does it matter? Institutions with a very low CDR get to avoid some of the more onerous disbursement requirements like having to delay disbursements for first-time borrowers or originate multiple disbursements for study abroad students. Institutions with a very high CDR get sanctioned, which may be as severe as not being able to participate in the program any longer. If your draft CDR puts you on the cusp at either end, it will be beneficial to put in the effort to make sure your draft data is accurate. Of course, it will also be beneficial to your former students who have been improperly placed in default status.
There are two things you absolutely need to be able to complete this process — a list of students who separated or fell below half-time status during the timeframe that would cause them to enter repayment during the cohort year (10/1/2021 – 9/30/2022) and access to FSA’s eCDR Appeals application. Contrary to its name, this application is used to dispute (or challenge, to use the correct lingo) data used to calculate the draft CDR and later to dispute uncorrected or new incorrect data when the official information is distributed. If you are new to this game, we encourage you to visit the eCDR Appeals page as soon as possible to learn how to gain access, review the user guides, and view the helpful video demonstrations provided.
So, let’s get back to reviewing the data. There will be some errors that are plain as day, like incorrect separation dates. But there are also some murky situations where whether the data is correct ‘depends,’ so let’s talk about some of those.
The defaulted loan was paid in full.
Whether the default should ‘count’ depends on when the loan was paid in full. Generally, if the borrower defaulted during the monitoring period and then paid in full to resolve the default, the data is correct, and default is counted.
The defaulted loan was discharged.
Again, it depends on the timing. If the borrower defaulted prior to becoming eligible for discharge, no correction is warranted.
The borrower did default but then rehabilitated the defaulted loan(s).
As you know, the rehabilitation process gives borrowers back all the benefits and rights they initially enjoyed before defaulting…as if the default never happened. That holds true for the CDR calculation as well. The caveat is that the borrower must complete rehabilitation and return to good standing before the end of the monitoring period.
The borrower has multiple loan holders and defaulted on loans held by one or some but not all of them.
While this is an incredibly confusing situation for borrowers, they are still responsible for keeping loans in good standing with all holders. These borrowers are counted in the number defaulting during the monitoring period.
You can read about more of these exceptional situations in the Cohort Default Rate Guide, Chapter 3.1.
If this sounds like a lot of work, it is! So, keep your eyes peeled for our blog about managing your CDR and related student data all year so February can go back to being about groundhogs and sweethearts.
In the meantime, contact the Higher Education Assistance Group at info@heag.us if we can be of assistance. Our team of regulatory experts can train your staff or provide an extra set of hands…whatever you need to get over the finish line.