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FAME Regulatory Bulletin

What a Draft!… the DRAFT Cohort Default Rates, that is.

“Draft” is an interesting word with many different meanings.  A “draft” is a process used in sports in the United States of America to select players for various teams within a league.  A person can also be “drafted” into politics based upon a large base of public support, as was the case for both major political parties’ candidates in the 1952 presidential election, resulting in the election of President Dwight D. Eisenhower[1].  And, in days gone by, young men were worried about the “draft” resulting in their potential involuntary selection for military service.  But, more generally, we think of a “draft” as being the initial effort at, or version of, a project, report, or writing.

With the U.S. Department of Education’s (ED) calculation of cohort default rates, it is no different.  There is an initial “draft” of the rates calculated before the final, official release of rates for the year.  ED has now released the FY 2015 Draft Cohort Default Rate (CDR) notification packages.  As a result, it is time to begin the review of your “draft” options.  Yes, it is time to start analyzing the details of your new draft CDRs.

FY 2015 3-Year CDRs are in Draft Mode

ED announced the release of the new FY 2015 3-year draft CDR in an Electronic Announcement on February 26, 2018[2].  Since the implementation of the 3-year CDR in FY 2011, the 3-year CDR is the only rate calculated.  (This is in contrast to the brief period when there were both 2-year and 3-year CDRs calculated.)  This 3-year calculation is in accordance with the provisions of the Higher Education Opportunity Act (HEOA) of 2008.

Close scrutiny of the underlying data in this most recent draft 3-year CDR—the FY 2015 edition—is vital.  The accuracy of data in this draft rate is important to your institution’s continued participation in the Title IV Federal Student Aid programs.  Thus, it is necessary to examine all of the data provided (and that on record at your institution) in making your determination of the accuracy of your calculated rate in this current draft of your CDR.

The FY2015 CDR is calculated as the percentage of borrowers in the FY 2015 cohort who default before the end of the second fiscal year following the fiscal year in which the borrowers entered repayment.  For example, an institution’s FY 2015 3-year CDR will be calculated as the percentage of borrowers who were included in the 2015 cohort (i.e., began repayment in FY 2015) but then defaulted on or before September 30, 2017.  (See the chart below for an illustration of this.)  This is the same manner in which future years’ CDRs will also be calculated.  As a reminder, the federal fiscal year that is used in the CDR calculations runs from October 1 of one year to September 30 of the following year, e.g., FY 2015 began October 1, 2014 and ended on September 30, 2015.


Value of the Draft 3-Year CDR Calculation

As most institutions are aware, the CDR is an item that requires careful attention on an ongoing basis.  The provision of this draft CDR allows institutions the opportunity to review the data ED currently has recorded for the institution.  If there are perceived errors in the data, now is the time to address them while the CDR is still in “draft” form since when the final official CDRs are released in September of this year, it will be too late to affect any desired changes.

Ensuring that the draft CDR data is accurate is critical to the best possible outcome for your official CDR in September.  This is because if an institution has a 3-year CDR of 30% or more when the official CDR is published, the institution may have to establish a Default Prevention Task Force and implement a default prevention plan.  If the institution has its three most recent years’ CDRs in which their 3-year CDR has been 30% or more, then the institution is subject to potential loss of eligibility to participate in Title IV for the remainder of the fiscal year in which the institution is notified of its sanction and for the following two fiscal years.[3]  This impact can also be the result if the institution has a FY 2015 3-year CDR of 40% or more for the one year’s calculation.  Therefore, reviewing the draft CDR is very important to ensure there are no errors in the data.

Inspecting the Draft CDR Data

Institutions that have signed up for the Electronic Cohort Default Rate (eCDR) notification process were notified of the draft CDR via the Student Aid Internet Gateway (SAIG).  If your institution has not signed up for the eCDR notification process, you will need to download the CDRs and the Loan Record Detail Report (LRDR) that accompanies the rates by accessing the National Student Loan Data System (NSLDS) Professional Access Web site.

The timeframe for beginning the appeal of an institution’s draft CDR began on Tuesday, March 6, 2018.  Institutions have 45 days from the announced appeal begin date in which to ensure they have reviewed their data and submitted any challenge or appeal to the data utilized in the calculation of their draft FY 2015 CDR.  An institution may question the accuracy of the data utilized in the draft CDR by reviewing the LRDR.  Once an institution determines that it believes there is incorrect data in the LRDR it may submit an Incorrect Data Challenge (IDC).  The IDC must be submitted via the eCDR Appeals application on the eCDR Appeals Web site.  If an institution’s official is not registered to use this site, one may do so at the eCDR Appeals Web site.  Institutions may also appeal their Participation Rate Index (PRI).  The PRI is a ratio of borrowers to the total number of regular students during an acceptable 12-month period.  Institutions that wish to challenge the PRI must continue to do so by means of submitting hard copy documentation.  For more information on these challenge opportunities and the specific details of what is necessary, the institution should refer to the instructions provided in the Cohort Default Rate Guide at

This annual draft CDR review is important to every institution.  And, proper use of your analytical skills in the review can assist in determining whether default management has become the draft pick of choice at your institution—one which results in the desired final rate.  That desired final version is the announcement from ED that your institution has a favorable official CDR when released this fall.


This article is presented for informational and educational purposes only and should not be considered to be giving legal advice.


[1]United States presidential election of 1952;” Encyclopedia Britannica online.  Accessed March 6, 2018.

[2] U.S. Department of Education’s Electronic Announcement, February 26, 2018.

[3] U.S. Department of Education’s Cohort Default Rate Guide, Chapter 2.4, page 2.4-4.


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