Benefits & Sanctions
School Information
Cohort Default Rates: Why Are They Important?
Cohort default rates (CDRs) may generate good (or bad) publicity, might facilitate (or hamper) recruitment efforts, and can impact the motivation and morale of financial aid departments. They also have serious, tangible impacts on how a school administers Title IV funds.
Benefits
Sanctions
- If CDR is 15% or lower for the most recent three (3) year period, schools may disburse loans in one installment and are not required to delay disbursement by 30 days to first-year undergraduates.
- If CDR is 5% or lower for the most recent year, schools may disburse loans in one installment and are not required to delay disbursement by 30 days to first-year undergraduates in study abroad programs.
- Sanctions and benefits are based on official CDRs. Schools may submit challenges, adjustments and/or appeals to both draft and official CDRs – all of which demand time and resources.
- If CDR is 30% or higher for most recent three (3) years, the school is ineligible to participate in Federal Loan and Pell Grant Programs for three (3) fiscal years.
- If CDR is 40% or higher in a single year, the school is ineligible to participate in Federal Loan Programs for three (3) fiscal years.
- After a single year of 30% or higher CDR, a school must create a default prevention task force and submit a written plan to the Department of Education.