USA Funds Helps Schools Avoid Errors in Default-Rate Approvals

To expedite and ensure the accuracy of your cohort-default-rate-data appeal, USA Funds^® recommends that you review the following list of five common errors:

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 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. Schools must be able to show that students did not attend another institution after withdrawal. Schools that file a cohort-data challenge should 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loan certification by the school) as the last date of attendance if the school never has reported that the student has withdrawn or dropped to less-than-half-time attendance.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 schools must be able to verify that the information was reported to the lender or the guarantor in a timely manner. For additional information and documentation to be included with a cohort-data challenge, refer to Chapter 4.11 (pages 4.11-2 through 4.11-8) 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 reenrolls. 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 reenrolled. Prior to filing a data challenge, schools should 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 last date of half-time attendance). For example, if the student's LDA was March 30, 2003, or March 31, 2003, the DER would be Oct. 1, 2003 (FY 2004 cohort year). If the student's LDA was March 30, 2004, or March 31, 2004, the DER would be Oct. 1, 2004 (FY 2005 cohort year).
5. Inclusion of Stafford loans that have been cancelled, PLUS or Consolidation loans. Schools mistakenly try to include Stafford loans that have been cancelled by the student before the loan enters repayment. Stafford loans that are cancelled before they enter repayment status are not included in the cohort-default-rate calculation. Likewise, PLUS loans are never 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 the Cohort Default Rate Guide, Chapter 2.1 (pages 2.1-9 through 2.1-11).

If you have questions about cohort-default-rate appeals, please send an e-mail to USA Funds' policy staff.