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Default Prevention

What A School Should Know About Default Prevention

Default occurs when a student is 270 days delinquent on their Stafford Loan Payment. The consequences of default have a negative impact on a student’s present and future financial health.  For instance, the default will be reported to national credit bureaus which may impact his/her chances of obtaining credit, or financing an automobile or house.  It may also mean a person may have to pay higher interest rates, increased insurance premiums, and in some cases may impact an employer’s hiring decision. Fortunately, default can usually be avoided.

Nobody likes to see a student fail. When student borrowers become delinquent or default on the repayment of their loans, that’s exactly what happens. Many students simply don’t understand the long-term peril default places on their financial future.  Successful repayment is a key step for the student in establishing a healthy financial future.

Financial Aid Administrators (FAAs) are in an ideal position to help at-risk student borrowers understand the important benefits they’ll earn from debt repayment.  To support FAAs in this effort ISAC provides the twice-monthly Notification of Student Borrower DAAR Status Report for use in counseling delinquent borrowers about default prevention methods.  For your students, we also offer a wealth of loan repayment information in the After College area of our website. Refer to the Default Information Resources Information page on the Information for Financial Aid Professionals (IFAP) website for assistance with efforts to educate students about their loan repayment obligation, encourage successful repayment, and address delinquent repayment when it occurs. 

Cohort Default Rate (CDR)

The cohort default rate (CDR) is defined as the percentage of a college’s student borrowers entering repayment on federal student loans [Federal Family Education Loan Program (FFELP) or Federal Direct Loan Program] during a specific fiscal year who default on those loans within the cohort default period.

The U.S. Department of Education (ED) calculates a college’s CDR based on information from guaranty agencies and federal loan processors. ED sends draft default rates to participating colleges in February and the official default rates in September.  The draft and official rates are electronically sent (eCDR) to colleges via Student Aid Internet Gateway (SAIG) and posted on the NSLDS Professional Access website. 

Access the Cohort Default Rate page within this section to learn how the school's CDR is calculated, about enrollment in the eCDR process via SAIG, how to challenge or appeal a CDR  decision and link to guides published by the U.S. Department of Education.