Cohort Default Rates CDRs Used for Sanctions

Transcription

1 Coht Default Rates CDRs Used f Sanctions Fiscal year Denominat (browers who entered repayment) Numerat (browers who defaulted) Draft CDR publication date (challenges) Official CDR publication date (appeals) CDR used f official sanctions /01/10 09/30/11 10/01/10 09/30/13 February 2014 September 2014 FY (30%) FY 2011 only (40%) /01/11 09/30/12 10/01/11 09/30/14 February 2015 September 2015 FY (30%) FY 2012 only (40%) /01/12 09/30/13 10/01/12 09/30/15 February 2016 September 2016 FY (30%) FY 2013 only (40%) /01/13 09/30/14 10/01/13 09/30/16 February 2017 September 2017 FY (30%) FY 2014 only (40%) /01/14 09/30/15 10/01/14 09/30/17 February 2018 September 2018 FY (30%) FY 2015 only (40%)

2 Coht Default Rates Consequences of High CDRs Consequences of high official CDRs Default prevention task fce and plan required? Provisional certification of Title IV eligibility? Loss of Title IV program eligibility?* Most recent rate is 30% higher No No, if most recent rate is not above 40% 2 of 3 most recent rates are 30% higher, and if those rates are f 2 consecutive years, school must revise default management plan No, if most recent rate is not above 40% 3 consecutive rates are 30% higher No, but vital if school hopes to regain Federal Pell Grant and Direct Loan Program eligibility in future Federal Pell Grant and Direct Loan Program eligibility Most recent rate is above 40% (as of September 2014) No, but vital if school hopes to regain Federal Direct Loan Program eligibility in future Not based on that rate alone (depends on pri 2 rates) Federal Direct Loan Program eligibility * A loss of Title IV program eligibility may be avoided if a school successfully appeals obtains an adjustment of its official CDR.

3 Coht Default Rates Benefits of Low CDRs Benefits of low official CDRs Exempt from 30-day delayed disbursement rule f first-year, first-time subsidized and unsubsidized Direct loan browers? Exempt from multiple disbursement rule f Direct and Direct PLUS loan browers? 3 most recent rates are less than 15%, a school may choose to make a single disbursement f a loan period no longer than 1 standard term 4 months Most recent rate is less than 5%, f a school iginating a Direct loan to cover a study-abroad student s cost of attendance, f a school iginating a Direct Direct PLUS loan to cover a study-abroad student s cost of attendance

4 Coht Default Rates Regular (Non-Average) and Average Rate CDR Fmulas If 30 me browers entered repayment in a given coht fiscal year, the non-average rate fmula is used to calculate a CDR: CDR calculation Browers who entered repayment in the coht fiscal year and defaulted by the end of the second subsequent fiscal year Browers who entered repayment in the coht fiscal year If 29 fewer browers entered repayment in a given coht fiscal year, the average rate fmula is used to calculate a CDR CDR calculation Browers who entered repayment in the coht fiscal year and the two preceding coht fiscal years, and defaulted by the end of the second fiscal year following the year repayment began Browers who entered repayment in the coht fiscal year and the two preceding coht fiscal years Example f FY 2012 CDR published in September 2015: Browers who entered repayment 10/01/11 09/30/12 and defaulted by 09/30/14 Browers who entered repayment 10/01/11 09/30/12 Example f FY 2012 CDR published in September 2015: Browers who entered repayment 10/01/09 09/30/10 and defaulted by 09/30/12 + browers who entered repayment 10/01/10 09/30/11 and defaulted by 09/30/13 + browers who entered repayment 10/01/11 09/30/12 and defaulted by 09/30/14 Browers who entered repayment 10/01/09 09/30/12

5 Coht Default Rates Default Management Opptunities to Improve CDRs Fiscal year Repayment period (Denominat) Default period (Numerat) CDR release date Current opptunities f schools /01/11 09/30/12 10/01/11 09/30/ /01/12 09/30/13 10/01/12 09/30/ /01/13 09/30/14 10/01/13 09/30/ Draft: Feb 2015 Official: Sept 2015 Draft: Feb 2016 Official: Sept 2016 Draft: Feb 2017 Official: Sept Closely review the CDR data and criteria f submitting challenges, appeals, requests f adjustment of rates. 1 Identify any possible options f recalculation of rate(s) exemption from sanctions. 2 - Evaluate the risk of adverse consequences, fming contingency plans f student aid packaging and pending federal aid disbursements, if needed. 3 Implement stronger internal third-party default prevention services, as appropriate. - Analyze the data to determine where defaults were most prevalent. Do risk indicats such as GPA, enrollment status histy, total educational debt, program of study, grade level, etc. reveal trends among defaulted browers? These insights will be critical in developing effective default management strategies. - If the rate is 30% higher f the first time, a default prevention task fce must be established to develop a datadriven default management plan to submit to ED. If the rate is 30% higher f a second consecutive year, the default management task fce must strengthen and resubmit the default management plan to ED f approval. - In addition to the above considerations, investigate tools offered by ED, loan servicers and holders, guaranty agencies, and other third parties to facilitate identification of delinquency and default management opptunities. - Plan ahead f the release of upcoming draft and official CDRs, developing internal estimates of expected rates and gauging appropriate steps to take befe and after the rates are released. Some types of challenges and appeals, if needed, can be prepared in advance of the release of rates, providing me time to determine if exemptions apply. - Review loan counseling, academic advising, registration, career services, and other suppt processes involving direct contact with students to evaluate if appropriate guidance and resources are available at those critical touch points. - Look f opptunities to improve communication and collabation among campus administrats, faculty, and suppt services staff to recognize when students may be experiencing academic personal challenges that could derail successful program completion. Consider interventions that may help students in such circumstances to overcome impediments to success, taking care not to violate student privacy rules. - Continue to build on the above effts, and proactively tackle new challenges that may hinder student completion and repayment success. If CDR data has not been analyzed by program of study, it is imptant to begin doing so. - Some defaults to be included in upcoming CDRs have already occurred, but others may be preventable. Focus effts on delinquent browers to help them avoid default, if possible. Some may not understand all available repayment options, such as income-based repayment, that could make a critical difference in meeting repayment obligations during challenging circumstances. - There are other good opptunities to positively impact the success of browers who have recently entered repayment will soon do so. Consider what steps can be taken now to facilitate successful transitions. - Review institutional policies and procedures, perhaps using focus groups on campus, to seek feedback on whether current processes are functioning effectively to suppt student success. Keep in mind that federal rules generally do not permit school default management effts to impede limit student access to Title IV funds.

6 Coht Default Rates Challenges, Adjustments, and Appeals School may submit if subject to... Draft CDRs (February) No sanction? Loss of eligibility provisional certification? Increct Data Challenge No sanctions based on draft rates Participation Rate Index Challenge No sanctions based on draft rates Official CDRs (September) No sanction? Loss of eligibility provisional certification? Uncrected Data Adjustment New Data Adjustment Erroneous Data Appeal No Loan Servicing Appeal Economically Disadvantaged Appeal No Participation Rate Index Appeal No Average Rates Appeal No Thirty--Fewer Browers Appeal No Source: U.S. Department of Education