Reviewing the Accuracy of Your Cohort Default Rate Reports
By Dave Bowman, Regional Marketing Director
Great LakesEducational Loan Services, Inc
Recently, the first draft three-year cohort default rates (CDRs) were sent to schools. The switch from a two-year rate to a three-year rate means that this calculation includes an additional year of defaulted loans. The draft calculation includes the percentage of borrowers who first entered repayment between October 1, 2008, and September 30, 2009, who subsequently defaulted on or before September 30, 2011. With the additional year included, almost every school is seeing a higher three-year CDR.
The draft three-year rates are for informational purposes only and are not challengeable. However, the Department of Education has provided them to give schools a preview of what to expect once the three-year rates become real. While not every school will need to challenge the information used to calculate their three-year rate once they are officially released, every school should want to ensure that its newly-released rate is accurate and become familiar with the challenge/appeal process before next year. Take time to make sure that correct information was used to calculate your school’s CDR, so that your official rate, when released, is as accurate as possible.
Know what the cohort default rate package contains.
The cohort default rate package comes to you in an electronic format and arrives via the Student Aid Internet Gateway, and is issued in early February of each year. You will find a cover letter and two types of Loan Record Detail Reports (LRDR), the extract-type and the reader-friendly version. The extract-type file is best used for loading CDR data into a database while the reader-friendly version is best used for schools that wish to simply view the information.
Know how to read the LRDR.
Many of the challenges that are submitted to the Department every year are unwarranted. Save your school time and effort by ensuring you are reading your school’s LRDR correctly.
The LRDRundefinedcreated for the Department by the National Student Loan Data System (NSLDS) using the information that schools, data managers, and various offices within the Department have submitted to the NSLDSundefinedlists specific information for each loan that was included in your school’s CDR.
In addition to demographic information about your school, you will be able to find information about the borrowers included in the CDR calculation, and the date the CDR was calculated.
Be aware of the codes used by the Department on this form, including:
•· Loan type codes
•· Enrollment status codes
•· Usage codes
•· Claim reason codes
•· Loan status codes
•· Academic level codes
•· Data manager codes
•· Guarantor/Servicer
More information about theses codes is available at http://ifap.ed.gov/DefaultManagement/guide/attachments/Ch2pnt3LRDRpt2.doc, page 2.3-7 and 8.
Know what actions to take.
Save a copy of all of your school’s LRDRs:
•· To use in the event of a challenge, adjustment, or appeal
•· To compare draft and official rates
•· To compare rates from one fiscal year to the next
Also, take the time to review the accuracy of the data used to calculate the draft CDR. Compare the information in the LRDR to your school records to ensure that the students on your system match those listed in the report.
Take action if you find an error.
If any of the information used in the draft rate is inaccurate, your school should file the appropriate challenge. Be aware that a school that fails to challenge the accuracy of its draft CDR may not contest the accuracy of the data in the official CDR. Incorrect data can be resolved by taking these steps:
•· Locate the Guarantor/Servicer number on the LRDR, and use it to obtain the name and address of the data manager who is responsible for the loan. You will need to have this information in order to submitting a challenge, adjustment, and/or appeal. Be aware that there could be a cost for review of your information by a servicer.
•· There are several categories of errors, and it is important to find the correct category for the error you have found. Note that incorrect data challenges apply to the draft rate, while adjustments and appeals apply to the official rate. More information on these categories can be found at http://ifap.ed.gov/DefaultManagement/CDRGuideMaster.html.
•· You must use the eCDR Appeals System to submit a draft rate challenge. The eCDR process includes registering for a user account, creating an organizational and individual profile, creating a new case, uploading the applicable LRDR extracts, adding detail, and submitting the case.
•· If additional documentation is requested, you will be contacted via email by the data manager or the Department of Education, depending on the type of challenge or appeal.
Analyze your default management plan
Always take the time to look at the borrowers from your school who have defaulted. What do borrowers who have defaulted have in common, and how do they compare to your broader student body? Think about what steps you could take to lower your default rate, so that your school can avoid sanctions and benefit from a lower CDR, and your former students can avoid the consequences of default while building a more solid financial future.
Dave Bowman is a Regional Marketing Director with Great Lakes, serving schools in TASFAA. You can reach Dave at (888) 685-1604, or by e-mail at DBowman@glhec.org. Additional information about Great Lakes can be found online at www.mygreatlakes.org
