March 2005

1
NSLDS WORKGROUP MEETING
Understanding the Cohort Default Rate
Calculation_____
Andrea Wise, NSLDS U.S. Department of
Education Brian Gray, NSLDS Pearson Government
Solutions
March 2005
2
NSLDS WORKGROUP MEETING
Why Calculate the Cohort Default Rate?

• Section 430 (e)
• Section 435 (m)

March 2005
3
NSLDS WORKGROUP MEETING
How often are the rates calculated?
- Draft Cohort Default Rate (CDR) Calculate
January Publish February - Official Cohort
Default Rate (CDR) Calculate August
Publish September
March 2005
4
NSLDS WORKGROUP MEETING
Fiscal Year 03 CDR Schedule

• Draft Rate Calculation (January 8, 2005)
• Draft Rate Release (February 14, 2005)
• Official Rate Calculation (July 30, 2005)
• Official Rate Release (September 12, 2005)

March 2005
5
NSLDS WORKGROUP MEETING
How are the rates distributed?

• Schools receive their rate packages via SAIG
• Notification Letter
• Loan Record Detail Report (LRDR) Guaranty
  Agencies receive their rates by mail and can
  request LRDR from NSLDS
• Lenders/GA receive their rates by mail and can
  request LRDR through the NSLDS website

March 2005
6
NSLDS WORKGROUP MEETING
Cohort Default Rate Formula
Fiscal Year 2003 Rate Borrowers who entered
repayment in FY03 and defaulted in FY03
04 divided by Borrowers who entered
repayment in FY03
March 2005
7
NSLDS WORKGROUP MEETING
What NSLDS fields affect the rate?

• Date Entered Repayment (DER)
• Loan Type
• Date Claim Paid
• Claim Reason Code
• Loan Status Codes
• Student Identifiers

March 2005
8
NSLDS WORKGROUP MEETING
Important DER facts

• Do not change DER after the loan enters repayment
  unless correcting data
• For loan paid in full prior to entering repayment
  set DER to effective date of paid in full status

March 2005
9
NSLDS WORKGROUP MEETING
CDR Calculation Logic

• Denominator
• On the date of the calculation, NSLDS extracts
  all loans with the date entered repayment in the
  given fiscal year
• Loan types extracted include
• SF FFEL Subsidized Stafford
• SU FFEL Unsubsidized Stafford
• SL FFEL Supplemental Loans for Students
• D1 Direct Subsidized Loans
• D2 Direct Unsubsidized Loans

March 2005
10
NSLDS WORKGROUP MEETING
CDR Calculation Logic

• Denominator
• Exclude loans in the following loan statuses
• AL Abandoned Loan
• CA Cancelled
• UA Temporarily Uninsured No default claim
  requested
• UB Temporarily Uninsured Default claim denied
• UC Permanently Uninsured/Unreinsured No
  Default claim requested
• UD Permanently Uninsured/Unreinsured Default
  Claim denied
• UI Unreinsured

March 2005
11
NSLDS WORKGROUP MEETING
CDR Calculation Logic

• Numerator
• Extract loans that default within the cohort
  period
• Exclude loans with CS (closed school) or FC
  (false certification) status

March 2005
12
NSLDS WORKGROUP MEETING
CDR Calculation Logic

• Consolidation Loans
• Extract from the denominator loans with a paid
  through consolidation status (PC,PN,DN), perform
  the following steps
• Retrieve the Consolidation loan associated with
  the underlying loan
• Consolidation loans receive a Usage Code N for
  Not Used

March 2005
13
NSLDS WORKGROUP MEETING
CDR Calculation Logic

• Consolidation Loans
• Case Consolidation Loan Defaults within the
  Cohort Period
• Question How is the borrower counted for
  schools, Lenders and GAs?

March 2005
14
CDR Calculation Logic

• Consolidation Loans and
• School Rates
• What schools are associated with the borrowers
  underlying loans
• The borrower is counted in the numerator and
  denominator of each school

15
CDR Calculation Logic

• Consolidation Loans and
• Lender Rates
• The borrower is counted in the numerator and
  denominator of
• The current lender on the consolidation loan
• The original lender of the underlying loan(s)

16
CDR Calculation Logic

• Consolidation Loans and
• GA Rates
• The borrower is counted in both the numerator
  and denominator of
• - The consolidation GA

17
CDR Calculation Logic

• Determining your rate
• Once the loans for the denominator and numerator
  are determined and stored, a usage code is
  assigned to each loan.
• Ensures that a borrower only gets counted once in
  an entitys rate.
• Provides entities with how each loan is counted
  in the rate.

18
LRDR File Layout

• The GA Loan Record Detail Report (LRDR) Record
  File Layout can be found at http//www.ifap.ed.gov
  /nsldsmaterials/attachments/GA200107attachment1.pd
  f
• Chapter 2.3 of the Cohort Default Rate Guide
  available at http//ifap.ed.gov/drmaterials/attach
  ments/FinalCDRGuide.pdf describes how to
  interpret the information contained in the LRDR
  file.

19
LRDR File Layout

• Default Rate Usage Code

20
GA Cohort Default Rate History RPT
21
(No Transcript)
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
(No Transcript)
26
Questions?
27
Thank you for joining us!

• Andrea Wise, NSLDS
• U.S. Department of Education
• Brian Gray, NSLDS