Policy Frequently Asked Question: Consolidation Loan Defaults and Cohort Default Rate

How does a defaulted consolidation loan affect the cohort default rate? Is the default reflected in the CDR at each school the student attended?

Underlying Stafford loans in a consolidation loan are included in the cohort default rate calculation for each school that certified the loans. Considering that a borrower may have consolidated several Stafford loans obtained to attend several different postsecondary institutions, a default on a consolidation loan could affect the cohort default rates of several schools.

Section 16.2 of the Common Manual provides additional information about cohort default rates in relation to consolidation loans.