Avoiding Default Rate Appeals Errors

To expedite and ensure the accuracy of your cohort default rate appeal, USA Funds® recommends that you review the following list of six common errors to avoid:

  1. Student leaves one school and enrolls at another school before the grace period expires from the original school. If a student's grace period has not expired, loans will not enter repayment until the student withdraws, drops to less than half-time attendance, or graduates from the subsequent school. Borrowers in this situation are not included in the cohort default rate calculations until one of their loans enters repayment. To determine if students have enrolled in another institution, schools should review National Student Loan Data System information for all schools for students. Providing information that a student left school in a different fiscal year is not, by itself, sufficient for challenging the data. You must be able to show that students did not attend another institution after withdrawal. If filing a cohort data challenge, include a screen print from NSLDS showing enrollment detail "For All Schools" for each student included in the challenge. Schools that file enrollment status updates through the National Student Clearinghouse should include screen prints from the Clearinghouse so that guarantors can verify when status updates were reported.
  2. Untimely or inaccurate updates. Lenders often will use the anticipated graduation date (shown on the loan certification by the school) as the last date of attendance if the school never has reported that the student has withdrawn or dropped to less than half-time attendance. In a cohort data challenge, schools must be able to show that student status changes were reported in a timely and accurate manner. The fact that a student withdrew or dropped to less than half-time attendance is one element of the challenge, but you must be able to verify that the information was reported to the lender or the guarantor in a timely manner. For additional information refer to Chapter 3.1 (page 3.1-7) of the U.S. Department of Education's Cohort Default Rate Guide.
  3. Student attends a school for a term, drops out for a term (or longer), and then later re-enrolls. When schools receive the Loan Record Detail Report, they may see the name of a student who currently is enrolled and decide that the data must be in error. If the student did not attend the school for a period of at least six months, some of the student's loans may have entered repayment before the student re-enrolled. Prior to filing a data challenge, look carefully at the loans listed in the LRDR to be certain that the information listed for the specific loans actually is the information that needs to be corrected. In the data challenge, if you provide information that may be pertinent to other loans but has no bearing on the loan listed on the LRDR, your challenge for that loan will be denied.
  4. Correct cohort year for the date entered repayment versus the last date of attendance. The "date entered repayment" is six months plus one day after the last day of attendance (or the last date of half-time attendance). For example, if the student's LDA was March 30, 2009, or March 31, 2009, the DER would be Oct. 1, 2009 (2010 cohort year). If the student's LDA was March 30, 2010, or March 31, 2010, the DER would be Oct. 1, 2010 (2011 cohort year).
  5. Inclusion of Stafford loans that have been canceled, PLUS or consolidation loans. Schools sometimes mistakenly try to include Stafford loans that have been canceled by the student before the loan enters repayment. Stafford loans that are canceled before they enter repayment status are not included in the cohort default rate calculation. Likewise, PLUS loans never are included in the cohort default rate. Consolidation loans, however, may appear in the cohort default rate calculation when the underlying Stafford loans of the consolidation loan entered repayment during the cohort default period. If the consolidation loan defaults in the same cohort period in which the underlying Stafford loans entered repayment, then the borrower will count as a default in the calculation. For a detailed explanation of which loans are included in the cohort default rate, refer to Cohort Default Rate Guide Chapter 2.1 (pages 2.1-7 through 2.1-12).
  6. Failure to include supporting documentation. Challenges and appeals must include documentary evidence that the school deems appropriate in support of its challenge or appeal. For additional information refer to Chapter 3.1 (pages 3.1-7 and 3.1-8) of the Cohort Default Rate Guide.

If you have questions about cohort default rate appeals or other issues related to Title IV aid, contact USA Funds Ask PolicySM.