Inaccuracies in Cohort Default Rate. Kim Uphold, Reading Area Community College Will Lindsey, PHEAA

Transcription

1 Inaccuracies in Cohort Default Rate Kim Uphold, Reading Area Community College Will Lindsey, PHEAA Bedford Springs, October 12-14, 2015

2 Agenda What is it? How does it work? Understanding the CDR Cycle Sanctions Notification through ecdr Challenges, Appeals and Adjustments Taking Action Resources 2

3 What Is It? 30 or more borrowers For schools with 30 or more borrowers, the CDR is defined as the %age of a school s borrowers who enter repayment on certain Federal Family Education Loans (FFELs) and/or William D. Ford Federal Direct Loans (Direct Loans) during that fiscal year and default or meet the other specified condition) within the cohort default period. 29 or fewer borrowers For schools with 29 or fewer borrowers entering repayment during a fiscal year, the CDR is an average rate based on borrowers entering repayment over a three-year period. 3

4 How Does It Work? The CDR is calculated using The Non-Average Rate Formula by determining the number of students who default on a federal student loan within a specified number of fiscal years also known as the cohort period after the start of repayment. The Numerator is the number of borrowers in the denominator who defaulted or met other specified condition during the cohort default period 30 or more borrowers Example The Denominator is the number of borrowers who entered repayment in the cohort default fiscal period 4

5 How Does It Work? If 29 or fewer borrowers entered repayment in a given cohort fiscal year, The Average Rate Formula is used to calculate a CDR. The Numerator is the # of borrowers who entered repayment in the cohort fiscal year and the two preceding cohort fiscal years and who defaulted or met the other specified condition in the cohort default period for the cohort fiscal year in which they entered repayment 29 or fewer borrowers The Denominator is the # of borrowers who entered repayment in the cohort fiscal year and the two preceding cohort fiscal years Example 5

6 CDR Cycle The U.S. Department of Education calculates CDR twice each year. February Draft Rate Cycle August September Official Rate Cycle January Draft Rates released to schools only Official rates released to schools and the general public The Department sends draft and official CDRs to all schools that: Are eligible to participate in any of the Title IV programs Have had a borrower in repayment in the current or any of the past CDR periods The official CDRs are available to the public through a searchable database at: ed.gov/fsa/defaultmanagement/cdr.html 6

7 3-Year CDR Publications CDR calculations for fiscal years under the 3-year CDR methodology. Cohort Fiscal Year Borrower Entered Repayment 3-Year Cohort Default Period CDR Calculation Date /01/ /30/ /01/ /30/2013 Draft: February 2014 Official: September 2014* /01/ /30/ /01/ /30/2014 Draft: February 2015 Official: September /01/ /30/ /01/ /30/2015 Draft: February 2016 Official: September * 10/01/ /30/ /01/ /30/2016 Draft: February 2017 Official: September /01/ /30/ /01/ /30/2017 Draft: February 2018 Official: September /01/ /30/ /01/ /30/2018 Draft: February 2019 Official: September /01/ /30/ /01/ /30/2019 Draft: February 2020 Official: September

8 Sanctions for a High CDR Schools whose official cohort default rates are 30% or greater: First Year Establish a default prevention task force to identify the factors causing the CDR to exceed the threshold. The task force should establish measurable objectives and steps that will be taken to improve the CDR. The plan must be submitted to ED for review. Second Year Revise default prevention plan and submit to ED for review. ED may revise the plan and include specific actions the school must take to improve the CDR. Third Year School will lose Direct Loan and Pell eligibility for the fiscal year in which the school is notified of its sanction and for the following two fiscal years. 8

9 Sanctions for a High CDR Schools whose official cohort default rates are 40% or greater: 40% or Greater Will lose Direct Loan eligibility for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years 9

10 Benefits of a Low CDR 3 most recent three year CDRs are less than 15% may: Choose to deliver or disburse loans in a single installment as long as the student s loan period is not more than one semester, one trimester, one quarter, or, for non term-based schools or schools with non-standard terms, four months. Choose not to delay the delivery or disbursement of the first installment of loans for first-year, first-time undergraduate borrowers. Most recent three year CDR is less than 5% may: Choose to deliver or disburse loans in a single installment to a student studying abroad regardless of the length of the student s loan period. Choose not to delay the delivery or disbursement of the first installment of loan proceeds for first-year, first-time borrowers studying abroad. 10

11 How Are Schools Notified? All schools must enroll in ecdr to receive CDR notification packages. The CDR data is electronically sent to schools using the Student Aid Internet Gateway (SAIG) destination point designated by the school. CDR packages include: Cover letter Two Loan Record Detail Reports (LRDR) Reader-friendly Extract-type Beginning with the FY 2009 cohort all schools MUST use ecdr Appeals to prepare and submit challenges or adjustments. 11

12 Loan Record Detail Report (LRDR) The LRDR will be sent as part of both the draft and official CDR notification packages. This report lists specific information for each loan that was included in your school's CDR. The LRDR contains borrower information for Stafford loans that were used to calculate a school s draft or official CDR. Name Social Security Number Date borrower entered repayment Date of default (if applicable) Loan type * Borrowers with multiple loans will be counted only once 12

13 Loan Record Detail Report (LRDR) Import Tool Loan Record Detail Report (LRDR) Import Tool Designed to assist schools with reviewing and analyzing their LRDR extract files. Can be used to easily load data generated from the LRDR into an Excel spreadsheet. The file is converted into a spreadsheet with assigned column headings, creating a view of the data that is manageable and easy to review. Contact Information If you have questions about using the LRDR Import Tool or NSLDS, contact the NSLDS Customer Support Center at 800/ You can also contact Customer Support by at nslds@ed.gov. 13

14 Loan Record Detail Report (LRDR) Review Check for accuracy Correct borrowers in cohort Compare to school records Repayment date Default Status Cancellations/Refunds Possible Errors on the LRDR: Data element reported incorrectly Includes a borrower whose repayment date does not fall within the cohort fiscal year and the borrower should be removed from the cohort rate calculation Excludes a borrower who entered repayment within the cohort and the borrower should be added to the cohort rate calculation 14

15 LRDR Review LRDR screenshot 15 <#>

16 LRDR Review 16 <#>

17 LRDR Review 17

18 LRDR Review 18

19 Correcting Data Challenges, Adjustments &Appeals Challenges Can be filed by all schools during the draft cycle Incorrect Data Challenge (IDC) Participation Rate Index Challenge (PRI) Adjustments Can be filed by all schools during the official cycle Uncorrected Data Adjustment (UDA) New Data Adjustment (NDA) Appeals Can be filed by all schools during the official cycle Loan Servicing Appeal (LS) Erroneous Data Appeal (ER) Economically Disadvantaged Appeal (EDA) Participation Rate Index Appeal (PRI) Average Rates Appeal (AR) 30 or Fewer Borrowers Appeal 19

20 Challenges Challenges Definition Timeframe Required Documentation Incorrect Data Challenges (IDC) Used to correct errors on the draft CDR. This challenge is submitted by the school to guarantors and/or DL servicers via ecdr Appeals within 45 days of timeframe begin date. Relevant information for each borrower challenged Supporting documentation for each borrower challenged CEO Certification Letter Participant Rate Index Challenges (PRI) Available to schools anticipating sanction based on draft rates. This challenge is submitted to the Dept. of Education within 45 days of timeframe begin date. PRI Challenge Spreadsheet Letter If a school does not challenge a Draft CDR, then they may not submit an Uncorrected Data Adjustment (UDA). This is the only appeal or adjustment that is contingent upon submitting an IDC. 20

21 Adjustments Adjustment Definition Timeframe Required Documentation Uncorrected Data Adjustment (UDA) Available to schools who filed an Incorrect Data Challenge but the data was not corrected. Schools must submit its UDA to the Department within 30 calendar days of the timeframe begin date via ecdr Appeals system. Supporting documentation for each borrower challenged CEO Certification Letter New Data Adjustment (NDA) Allows schools to challenge the accuracy of new data included in the most recent official CDR. Schools must submit its NDA to the Data Manager via ecdr Appeals within 15 days of the timeframe begin date. Relevant information for each borrower challenged Supporting documentation for each borrower challenged CEO Certification Letter 21

22 Appeals Appeals Definition Timeframe Required Documentation Loan Servicing Appeal (LS) Alleges a school s official LRDR contains loans that have been improperly serviced for CDR purposes. The school must send a request for loan servicing records to the Data Manager and to the Department within 15 days of the timeframe begin date. The Data Manager notifies school and the Department within 20 days of receipt of request. A copy of the entire relevant LRDR for the official CDR being appealed Letter Erroneous Data Appeals (ER) An erroneous data appeal alleges that because of new data and/or disputed data included in the official cohort default rate calculation, a school s official cohort default rate is inaccurate. Schools must send the Erroneous Data Appeal allegations to Data Manager within 15 days of the timeframe begin date. Erroneous Data Appeal spreadsheet Relevant pages of the Loan Record Detail Report Supporting documentation for each borrower challenged Letter Written opinion from an independent auditor Economically Disadvantaged Appeals (EDA) An economically disadvantaged appeal alleges that a school should not be subject to loss of eligibility because it has a high number of low-income students. Requires an independent auditor opinion certifying school s low income rate and completion or placement rates meet regulatory requirements within 30 days of timeframe begin date. Spreadsheet of students that qualify Spreadsheet of students showing: - School s low-income rate and placement rate (non-degreegranting school); or - School s low-income rate and completion rate (degree-granting school)

23 Appeals continued Appeals Definition Timeframe Required Documentation Participation Rate Index Appeals (PRI) If a school can demonstrate that the number of students who obtain loans is very low in relation to the number of regular students at the school, the school will be able to avoid sanction. The school must send completed Participation Rate Index Appeals to the Department within 30 days of timeframe begin date. Participation Rate Index Appeal spreadsheet Letter Average Rates Appeals (AR) The Department will automatically determine if a school meets the criteria associated with an average rates appeal. This initial determination will take place prior to the release of the official cohort default rates. Schools must send completed Average Rates Appeals to the Department within 30 days of timeframe begin date. Supporting documentation Certification 30 or Fewer Borrowers Appeal If a combined total of thirty or fewer borrowers entered repayment in the three most recent cohort fiscal years used to calculate a school s cohort default rates, the school is not subject to sanction. Schools must send completed Thirty or Fewer Borrowers Appeal to the Department within 30 days of timeframe begin date. Supporting documentation Certification 23

24 Submitting a Challenge, Adjustment or Appeal Challenges, adjustments, and appeals are submitted either to the Data Manager at the agency holding the loan or to the Department. After locating the numerical code for the Data Manager on the LRDR (Field Q), you can find the name, address, and phone number on the list of Data Managers posted on the Default Management home page. The link to find this information is: Challenges, adjustments, and appeals submitted after the time deadline will be automatically rejected. Must use ecdr Appeals (ecdrappeals.ed.gov) to submit IDC, UDA, NDA, and most recently, LSAs (the use of ecdr Appeals is not mandatory for LS Appeals.) 24

25 Submitting a Challenge, Adjustment or Appeal Borrower incorrectly reported in default on a LRDR Claim Death, disability, bankruptcy, or other type of loan discharge before default occurred What does the school allege? That the loan was discharged before the borrower defaulted during the cohort default period Supporting documentation Documentation that the loan was discharged before the default Borrower incorrectly included on a LRDR because of multiple loans Claim What does the school allege? What is the school requesting? Supporting documentation Borrower has multiple loans that should be included in only one CDR calculation That the borrower was continuously enrolled at least half-time and did not use the entire grace period A change to the date entered repayment and that all loans be moved to the correct cohort fiscal year Documentation of the enrollment status history and the LRDR pages from the cohort fiscal year where the borrower is included and, if applicable, the cohort fiscal year where the borrower should be Included <#>

26 NSLDS Reports for Schools Report DRC016 Take Action before your draft or official rates are released! Description The 36 Month School Repayment Information Loan Record Detail (DRC016) report provides the current repayment status of certain borrowers in the FFEL and Direct Loan programs who attended a school during a specific period DER001 The Date Entered Repayment Report (DER001) is a list of student borrowers who are scheduled to go into repayment during a specified date range, with their loan histories SCHDF2 SCHPR2 The Borrower Default Summary Report (SCHDF2) provides a list of loans that currently have a defaulted loan status (DB, DL, DO, DT, DU, DW, DF, or DZ) and a loan status date that falls within the requested date range The School Portfolio Report (SCHPR2) provides school users with information about all Direct Loan and/or FFEL program loans for a specified school DELQ01 The Delinquent Borrower Report (DELQ01) provides school users a report of borrowers who have been reported as delinquent in making loan payments to one of the federal loan servicers 27

27 Frequently Asked Questions Q: Is there a place that I can check for updated information about changes to the CDRs? A: The Information for Financial Aid Professionals (IFAP) Web site provides up to date information on CDRs along with other Title IV federal student aid information. Schools should check this site regularly for updates regarding financial aid. The IFAP Web site can be found here. Q: How does a school download and review the ecdr notification package? A: Instructions for downloading and reviewing the ecdr notification package can be found at If you need additional help, you can contact the SAIG helpdesk at (800) Q. What is the ecdr Appeals system? A. ecdr Appeals is the vehicle for schools to electronically submit certain challenges, adjustments, and appeals of CDR data to the Department of Education and/or to the Data Managers. ecdr Appeals is a single web-based user interface for all users. This process applies to the Federal Family Education Loan and Direct Loan Programs only. 27

28 Frequently Asked Questions Q: May I request an extension on the challenge, adjustment, and/or appeal timeframe? A: No, timeframes are mandated by regulation; therefore no extensions are granted. However, as stated in Dear Colleague Letter dated March, 2003, if an school believes that a technical problem that was caused by the U.S. Department of Education (Department) resulted in the school not being able to access its electronic CDR information, it must notify us no later than five business days after the transmission date announced on IFAP Web site. By doing so and if we agree that the Department caused the problem, we will extend the challenge, appeal, and adjustment deadlines and timeframes to account for a re-transmission of the information after the technical problem is resolved. Q: Are there templates/spreadsheets for me to use in organizing my school s challenges/appeals? A: Yes, all the templates/spreadsheets you need to prepare challenges/appeals is on the Guide homepage at These forms should facilitate the process for you. 28

29 Frequently Asked Questions Q: Does a borrower default when they loan delinquency reaches 270 days or when it is at 360 days? A: For eligibility purposes, a borrower who is 270 or more days past due in repaying a Federal Family Education Loan (FFEL) Program loan or a William D. Ford Federal Direct Loan (Direct Loan) Program loan is considered to be in default. Such borrowers are not eligible to receive additional Title IV federal student aid unless the borrower has made satisfactory arrangements with the holder of the loan to repay the loans. For CDR calculations, Direct Loans and FFEL loans held by the Department of Education, the date of default is when the loan is 360 days past due. Please refer to the IFAP announcement for additional clarification. Q: How do borrowers who default and rehabilitate their loans affect our CDR calculation? A: If a borrower defaults on a loan, and is able to rehabilitate the loan before the cohort default period expires, then the borrower will not be counted in the numerator. In general, a borrower rehabilitates a defaulted federal student loan by making nine on-time payments within ten consecutive months under a signed rehabilitation agreement. 29

30 Frequently Asked Questions Q: If a student consolidates his loans during the grace period, and then defaults, is it counted in the institution s CDR? A: Borrowers who default on a federal Consolidation loan within the cohort default period will count in the numerator and denominator of the school's calculation if any of the underlying loans were FFELP or Direct Stafford loans that entered repayment during the cohort fiscal year. Borrowers who consolidate one or more defaulted loans counts in the cohort that relates to the date the underlying loans entered repayment and will appear in the numerator as a defaulted borrower. If a defaulted loan is included in a Consolidation loan, but the default did not occur during the relevant cohort default period, the borrower will not appear in the numerator. Q: What happens if a borrower paid the loan in full after during the cohort default period but without rehabilitating the loan? A: The borrower is included in the numerator because the loan was not successfully rehabilitated for CDR purposes within the cohort default period. Q: How does a student who has been granted a discharge due to total permanent disability effect the CDR? A:The borrower is included in the cohort fiscal year based on the date the loan was discharged. The date of discharge becomes the date entered repayment. The borrower is not included in the numerator because the borrower did not default 30

31 Common Acronyms & Abbreviations CFR Code of Federal Regulations ED the U.S. Department of Education EFC Expected Family Contribution FFEL a loan made under the Federal Family Education Loan Program FSA Federal Student Aid GPA Grade Point Average HEA Higher Education Act of 1965 LRDR Loan Record Detail Report N/A not applicable NSLDS National Student Loan Data System SAIG - Student Aid Internet Gateway SSN Social Security Number 31

32 Resources CDR Guide Default Management Homepage ecdr Appeals ecdrappeals.ed.gov IFAP Announcement Frequently Asked Questions on ed.gov Loan Record Detail Report (LRDR) Import Tool 32

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