National Student Loan Cohort Default Rate Falls
WASHINGTON, DC – The U.S. Department of Education (Department) has announced that the Fiscal Year (FY) 2015 national federal student loan cohort default rate (also referred to as the CDR) decreased by 6.1 percent compared to the FY 2014 national rate, from 11.5 percent to 10.8 percent. The FY 2015 CDR represents the lowest national cohort default rate since the three-year rate was first released in 2012.
The FY 2015 national cohort default rate is the percentage of a school's borrowers who entered repayment on Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans between Oct. 1, 2014 and Sept. 30, 2015, and subsequently defaulted prior to Sept. 30, 2017.
During the tracking period for the FY 2015 borrower cohort—from Oct. 1, 2014 to Sept. 30, 2017—more than 4.9 million borrowers entered repayment, and 531,653 of them, or 10.8 percent, defaulted on their loans. Those borrowers attended 6,155 postsecondary institutions across the nation.
Rate Trends
From FY 2014 to FY 2015, cohort default rates fell for public and private institutions, while rising slightly among borrowers who attended proprietary schools.
For public institutions, the FY 2015 rate, 10.3 percent, fell from 11.3 percent in FY 2014. Public institutions make up approximately 27 percent—or 1,660—of the total number of schools and represent approximately 53 percent of borrowers who entered repayment that year. The rate dropped among private schools from 7.4 percent in FY 2014 to 7.1 percent in FY 2015. Private schools comprise approximately 28 percent—or 1,726—of the total number of schools.
Among the 2,364 proprietary institutions in the borrower cohort, the default rate went from 15.5 percent for FY 2014 to 15.6 percent for FY 2015. Proprietary schools accounted for approximately 38 percent of the total number of schools. Additionally, 405 foreign schools saw their rate remain at 3.5 percent for FY 2014 and FY 2015. Foreign institutions make up nearly 7 percent of all postsecondary schools.
The Department's default management website provides information about the national student loan default rate, as well as rates by individual schools, states, types of postsecondary institutions, and other details.
Sanctions
Schools with high default rates may lose their eligibility to participate in federal student aid programs. This year, 12 schools are subject to sanctions, including one public, two private, and nine proprietary institutions.
Those schools include:
- CA—Corona—Advance Beauty Techs Academy
- FL—Oakland Park—Florida Academy of Health and Beauty
- IL—Chicago—Larry's Barber College
- KY—Cumberland—Southeast Kentucky Community and Technical College
- MA—Worcester—Rob Roy Academy
- NY—Niagara Falls—Cheryl Fell's School of Business
- NY—Rochester—Sharp Edge Barber Institute
- ND—Bismarck—United Tribes Technical College
- PA—Lancaster—Champ's Barber School
- PR—Saint Just—Theological University of the Caribbean
- TN—Madison—Nashville Barber and Style Academy
- WI—Beloit—First Class Cosmetology School
Five schools are subject to a loss of eligibility based on a cohort default rate of 40 percent or more for one year, while five schools are subject to a loss of eligibility based on a cohort default rate of 30 percent or greater for three years. Two schools are subject to a loss of eligibility based on a cohort default rate of 40 percent or more for one year and a rate of 30 percent or greater for three years. In certain circumstances, schools may avoid sanctions by submitting a successful adjustment, appeal, or data challenge.
All institutions with a default rate that is equal to or greater than 30 percent must establish a default prevention task force that prepares a plan to identify the factors causing the school's cohort default rate to exceed 30 percent and submit the plan to the Department.
Two schools subject to sanctions for high FY 2014 and FY 2015 cohort default rates—Southeast Kentucky Community and Technical College and United Tribes Technical College—will not lose eligibility to participate in the federal student aid programs, if certain conditions are met, due to a provision written into the Consolidated Appropriations Act of 2018. The provision, which will last until the end of FY 2019, permits the secretary to exempt schools located in high poverty areas with high default rates.
The Department's office of Federal Student Aid provides extensive assistance to higher education institutions, including webinars and online training; state, regional, and national association training forums; and face-to-face training events.
Resources to Help Borrowers Manage Student Loan Debt
The Department offers a wealth of information and resources to assist borrowers with successfully managing their federal student loan debt. In addition to helping borrowers find an affordable repayment plan at StudentAid.gov/repay, the Department contacts borrowers through email outreach campaigns, offers loan counseling that allows borrowers the ability to select their repayment plan based on their individual circumstances during exit counseling, and answers questions in real-time via social media.
Borrowers will receive even more support in managing their student loan debt once the Next Generation (Next Gen) Financial Services Environment is implemented. In part, Next Gen will allow Federal Student Aid to further enhance its outreach to borrowers—through a mobile-first, mobile-complete, mobile-continuous platform—designed to help borrowers make informed decisions about their entire educational experience, including successful loan repayment.