Three-year CDR Agenda What is a CDR? Cohort timelines Prioritizing cohort borrowers Three-year CDR impact Tips and tools Reactive and proactive approaches 2 1
Cohort default rate (CDR) Gauge of success Measures number of borrower defaults Relative to borrowers in repayment During specific periods Tracked and calculated by ED* NSLDS (National Student Loan Data System) elrdr (electronic Loan Record Detail Report) *U.S. Department of Education 3 CDR calculation Numerator (borrowers in default) Denominator (borrowers in repayment) = 55 451 = 0.12195 = 12.1% 4 2
Denominator Borrowers in repayment Stafford loans Subsidized Unsubsidized Excluded loans PLUS Perkins Private Institutional 5 Numerator Defaulted borrowers Default = claim paid Defaults Included in denominator and numerator DF or DU on NSLDS and elrdr 6 3
NSLDS usage codes D Entered repayment Borrower belongs to the denominator B Borrower has defaulted loan(s), belongs to both the denominator and numerator E These loans are excluded from the CDR calculation (ED counts borrowers only, not number of loans per borrower) N Not counted for CDR calculation 7 Consolidation loans New loan (pay off underlying loans) Default may affect school CDR May affect underlying loans repayment date Underlying loans Paid in full by consolidation PN and PC on NSLDS and elrdr 8 4
Defaulted consolidation loan School A School B School C Two loans taken One loan taken One loan taken Borrower leaves school C and enters repayment on all five loans LDA = 5-24-2008 DER = 11-25-2008 CY 2009 Borrower consolidates all five loans on 2-15-2009 One consolidation loan Borrower defaults on consolidation loan on 5-15-2011 All five loans default All three schools three-year CDRs are impacted 9 CDR timeline Draft rates in February Incorrect data challenge (IDC) Official rates in September Appeals and adjustments Tools to monitor rates Delinquency reports Simulated cohort reports Tracking systems 10 5
Two-year cohort 2009 timeline Default Repayment ED draft rate ED official rate 10-1-2008 9-30-2009 9-30-2010 Feb. 2011 Sept. 2011 11 Two-year cohort 2010 timeline Default Repayment ED draft rate ED official rate 10-1-2009 9-30-2010 9-30-2011 Feb. 2012 Sept. 2012 12 6
Three-year cohort 2009 timeline* Default Repayment and monitoring those for potential defaults in this date range Three-year draft rate Three-year official rate 10-1-2008 9-30-2009 9-30-2010 9-30-2011 Feb. 2012 Sept. 2012 Borrowers entered repayment in this date range *First cohort year calculated with new three-year formula 13 Three-year cohort 2010 timeline Default Repayment and monitoring those for potential defaults in this date range Three-year draft rate Three-year official rate 10-1-2009 9-30-2010 9-30-2011 9-30-2012 Feb. 2013 Sept. 2013 Borrowers entered repayment in this date range 14 7
Quiz Borrower separates from school on 6-5-2009 Enters repayment on 12-6-2009 = DER DER = separation date plus six months and one day Defaults on 9-27-2012 Which cohort year is he/she in? CY 2010 Will the default impact the two-year or the three-year cohort? Three-year How is he/she counted? B 15 Quiz Borrower separates from school on 2-20-2009 Enters repayment on 8-21-2009 = DER DER = separation date plus six months and one day Defaults on 12-1-2011 Which cohort year is he/she in? CY 2009 Will the default impact the two-year or the three-year cohort? Three-year How is he/she counted? D 16 8
Claim paid date (FFEL) Day one Delinquency date 270 days Delinquent Default 361 days or more Claim paid date No payments made for 270 days Guarantor adjudicates claim within 90 days Loan servicer Guarantor Lender files claim with guarantor Cohort Default Rate Guide (for Schools), 2.1-10, 11 Integrated Common Manual, 11.4.B, 12.6.A, 12.2 17 Claim paid date (DL) Day one Delinquency date 271 days Claim filing Default Day 361 Claim paid date No payments made for 270 days DL process DL servicer DL servicer DL servicer changes loan status to default on NSLDS Student no longer eligible for FSA funds DL process, ED website 18 9
Identifying at-risk borrowers Delinquency dates CY 2009 On or before 10-5-2010 may affect CDR After 10-6-2010 unlikely to affect CDR 10-1-2008 9-30-2009 10-6-2010 9-30-2011 360 days Critical delinquencies Non-critical delinquencies 10-1-2008 10-5-2010 End of cohort year 1,095 days 19 Prioritizing cohort borrowers 20 10
Three-year CDR changes Timeline Three-year cycle School loss of eligibility CY 2009-2011 will also receive a two-year rate Current threshold is 25 percent New threshold is 30 percent Default prevention task force Disbursement benefit Current threshold is 10 percent New threshold is 15 percent (October 1, 2011) 21 Cohort Changes 22 11
Two- and three-year 2009 CDR Default Repayment and 55 of those default in this range and 30 more default in this date range 10-1-2008 9-30-2009 9-30-2010 Sept. 2011 If 451 borrowers enter repayment in this date range 55 (Numerator) 451 (Denominator) = 12.1% two-year CDR 85 (Numerator) 451 (Denominator) = 18.8% three-year CDR 23 Transition to three-year CDR 24 12
Quiz Borrower separates from school on 3-30-2009 Does not re-enroll in school What is the date entered repayment? 10-1-2009 Which cohort year is he/she in? CY 2010 25 Quiz Borrower separates from school on 5-21-2010 Re-enrolls on 7-1-2010 and withdraws a final time on 9-1-2010 What is the date entered repayment? 3-2-2011 Which cohort year is he/she in? CY 2011 26 13
Three-year cohort rate impact Extra year Increases your workload Increases your two-year CDR by 40-60 percent or more Loan rehabilitation 27 Tips and tools NSLDS reports Loan servicer reports Training opportunities Publications 28 14
Tips and tools (continued) 2009 CDR Proactive: Work the DER report from NSLDS on a monthly basis Reactive: Wait for draft CDR to do a data challenge 2010 CDR Proactive: Counsel borrowers, utilize loan rehabilitation Reactive: Wait for draft CDR to do a data challenge 29 Identify your needs Enhance borrower counseling Loan counseling Grace and early repayment Delinquency Post-default Loan rehabilitation 30 15
Reactive approach Request NSLDS reports Assist delinquent borrowers Challenge draft rate Opt out of participation in loan program 31 Proactive solutions Enhance loan counseling sessions Include financial literacy education, repayment plans and postponement options Enhance retention efforts Withdrawn borrowers more likely to default Grace period campaigns Reach them early and remind them often Analyze defaulters Look for trends to focus your efforts 32 16
Resources IFAP website www.ifap.ed.gov ED cohort default rate guide www.ifap.ed.gov/defaultmanagement/finalcdrg.html ECMC www.ecmc.org/topic/school_overview.html 33 Ruby Nieto Student Success Initiatives 916-526-8980 rnieto@ecmc.org 17