Default Rate Statistics

Change in Definition of an Institution's "Default Rate"

The Higher Education Opportunity Act ("HEOA") of 2008 made a number of changes to federal student financial aid programs, including the timeframes for the calculation of Federal Stafford Loan Cohort Default Rates.

 

Under the new provisions, an institution's Cohort Default Rate (CDR) is calculated as the percentage of borrowers in the cohort who default before the end of the third fiscal year in which the borrowers entered repayment.  This represents a one year extension of the current default monitoring period. Institutions with unacceptable default rates will be subject to sanctions under the new three year monitoring period starting in 2014

Definition of Default for Student Eligibility and Cohort Default Rate Calculations

On February 4, 2011, the Department of Education forwarded to institutions preliminary calculations of their Cohort Default Rate using the new three year  timeframe  that will be used to calculate an institution's Cohort Default Rate.

As expected, the three-year rates are higher than the official two-year rates released in September 2010 that are currently being used by the Department.

The trial three-year CDR for FY2008 was 13.8 percent compared to a two-year rate of 6.7 percent. These rates are for informational purposes only. The Department will issue official three-year rates next year. In 2014, institutions that have three-year rates higher than 30 percent will face possible sanctions, including loss of eligibility to participate in Title IV programs. The trial rates are broken out by sector

TYPE OF INSTITUTION LESS THAN 2 YEARS 2-3 YEARS 4+ YEARS
Public --10.8% overall  14.7%  17.9%  7.9%
Private -- 7.6% overall  26.1%  16.7%  7.3%
Proprietary-- 25.0% overall  27.6%  27.9%  22.7%
Foreign - 4.7% overall      

 

 

 When looking at this chart:

  • The trial Fiscal Year 2005 three year rate is calculated as the percentage of the institution's borrowers who entered repayment between October 1,2004 and September 30, 2005  AND who subsequently defaulted on or before  September 30, 2007.
  • The trial Fiscal Year 2006 three year rate is calculated as the percentage of the institution's borrowers who entered repayment between October 1,2005 and September 30, 2006  AND who subsequently defaulted on or before  September 30, 2008.
  • The trial Fiscal Year 2007 three year rate is calculated as the percentage of the institution's borrowers who entered repayment between October 1, 2006 and September 30, 2007  AND who subsequently defaulted on or before  September 30, 2009

 

  • The  official 2008 Fiscal year default rate  is a snapshot in time, representing the cohort of borrowers whose first loan repayments came due between October 1, 2007 and September 30, 2008, and who defaulted before September 30, 2009.
    • During this time, almost 3.4 million borrowers entered repayment, and more than 238,000 defaulted on their loans. They attended 5,860 participating institutions. Borrowers who default after their first two years of repayment are not measured as defaulters in these statistics.
  • The  2009 Fiscal year default rate  is a snapshot in time, representing the cohort of borrowers whose first loan repayments came due between October 1, 2008 and September 30, 2009, and who defaulted before September 30, 2010.
    • During this time, almost 3.6 million borrowers entered repayment, and more than 320,000 defaulted on their loans. They attended 5,900 participating institutions. Borrowers who default after their first two years of repayment are not measured as defaulters in these statistics. Rates are based on the current formula (2 year rate)   -

Loyola University New Orleans

 

Fiscal Year Rate Type Numerator Denominator Rate
2009 Official 18 950 1.8%
2008 Official 31 923 3.3%
  3 Year Trial 46 * 922  4.9% 
2007 Official 32 968 3.3%
  3 Year Trial 49 967 5.1%
2006 Official 23 1421 1.6%
  3 Year Trial 37 1413 2.6%
2005 Official 8 1411 0.5%
  3 Year Trial 39 1409 2.7%

For additional information on how these rates are calculated, consult the Department of Education's Cohort Default Guide Quick Reference Guide

* The Department released revised 3 year trial rates for 2008 on April 21, 2011

Federal Student Aid Data Center

The Federal Student Aid Data Center is a centralized source for information relating to the federal financial assistance programs.  

Return to:

Media Coverage

Additional References

Updated September 13, 2011