What’s the Big Deal with Draft CDR?


It will be a few weeks before we expect to see the Electronic Announcement regarding the FY2019 draft cohort default rate (CDR). The CDR includes students who borrowed Direct Loans at your institution and entered repayment between October 1, 2018, and September 30, 2019. In the calculation, these borrowers represent the denominator. Their repayment performance was monitored beginning October 1, 2018, through September 30, 2021. Borrowers in the denominator who also defaulted on or before September 30, 2021, are counted in the numerator in the calculation. Although given the payment pause, it would be unlikely to see any defaults after March 2020.

The draft period gives institutions the opportunity to review and identify incorrect loan data reported to NSLDS. Why does this matter? Read on…

Institutions with low default rates may be eligible for certain benefits. Schools with an official CDR of less than 15% during the three most recent reporting periods do not have to delay disbursement for first-time borrowers and may request a single disbursement for students enrolled less than a full academic year (i.e., one semester, one quarter, etc.). Schools where the most recent CDR is under 5% can issue loan proceeds in a single disbursement to students studying abroad regardless of loan period.

There are also ramifications for institutions with a high CDR. A school with a CDR over 30% in each of the three most recent years can lose eligibility to participate in both the Direct Loan and Pell Grant programs for as long as three fiscal years, while schools where the most recent CDR is over 40% face suspension of Direct Loan eligibility for the same amount of time.

Finally, it’s important to find and correct any information that may remove a borrower from default because they are likely suffering negative repercussions such as damaged credit or an inability to return to school. Likewise, it’s important to analyze the population included in your CDR because there may be students who should have entered repayment during the period (added to denominator) but have not defaulted (not included in the numerator). This could decrease the institutions default rate!

So, get ready to help your institution and your alumni by making time to participate in this important process. The eCDR package is typically delivered during the last week of February and the ‘Challenge Period’ begins during the first week in March. There’s only 45 days to file, so it’s a good idea to start right away. You can find additional information about calculating CDR, how to read the reports and more in the Cohort Default Rate Guide. Stay tuned for more on managing CDR in the Higher Education Assistance Group Blog!