**Cohort Default Rate**

**Guide for**

**Guaranty Agencies & Lenders**

![](media/image1.png)

**Fiscal Year 2001**

**U.S. Department of Education**

**Financial Partners**

**TABLE OF CONTENTS**

Introduction\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....1

Background\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....1

Formula for Calculating 2001 Cohort Default
Rate\...\...\...\...\...\...\...\...\...\...\...\...\...\...2

Department of Education Contact
List\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....4

Correcting Cohort Default
Rates\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....5

Information About Back-Up Data
Printouts\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....7

Guaranty Agency
List\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....8

Commonly Asked
Questions\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....19

**INTRODUCTION**

This guide contains information about the publication of the Fiscal Year
(FY) 2001 cohort default rates for originating lenders, current holders,
and guaranty agencies participating in the Federal Family Education Loan
(FFEL) Program, as mandated by the Higher Education Act of 1965, as
amended.

**BACKGROUND**

Under Section 430(e) of the Higher Education Act of 1965, as amended
(HEA), the Department of Education (Department) is required to publish a
list of the cohort default rates of lenders, subsequent holders, and
guaranty agencies participating in the FFEL Program. The purpose of this
guide is to provide the student loan industry with information on the
calculation of the cohort default rates.

The term **cohort default rate**[^1]**,** for any fiscal year where 30
or more student borrowers enter repayment, is the percentage of those
borrowers who enter repayment on certain FFEL Program loans during a
particular fiscal year and default within the same fiscal year or within
the next fiscal year.

Cohort default rates are calculated for originating lenders, subsequent
holders, and guaranty agencies on the basis of their respective Lender
Identification Numbers (LID) or Guaranty Agency Identification Numbers.
Each assigned number identifies a separate lender or guaranty agency on
record at the Department of Education. The LID provides the guaranty
agencies with a means of reporting loan activity.

The FY 2001 cohort default rates will be calculated based on data
electronically reported to the National Student Loan Data System (NSLDS)
by the guaranty agencies. Subsidized Federal Stafford, Unsubsidized
Federal Stafford, Federal Supplemental Loan for Students[^2] (Federal
SLS), and Federal Consolidation Loans that repaid Federal Stafford or
Federal SLS loans will be included in the calculation of cohort default
rates. The NSLDS data submitted by the guaranty agencies were prepared
according to procedures developed by the Department and reflect activity
on the loans through September 30, 2002. Since the FY 2001 cohort
default rates were calculated based on data supplied to the Department
by the guaranty agencies, a lender or holder should address any initial
questions on data to these agencies.

Loans made under a Lender-of-Last-Resort program, Federal PLUS loans,
and Federally Insured Student loans are not used in the calculation.
Loans that were transferred from one guaranty agency to another prior to
submission of the NSLDS data to the Department are included in the NSLDS
data submitted by the receiving agency, but are not included in the
NSLDS data submitted by the transferring agency. For example, if a loan
was originally guaranteed by the Higher Education Assistance Foundation
(HEAF) and was transferred to the Great Lakes Higher Education
Corporation (Great Lakes), that loan was reported by Great Lakes.

**The formula for calculating the FY 2001 cohort default rate is:**

*\# of students who entered repayment on their loans in FY 2001*

*and defaulted in FY 2001 or FY 2002*

*(Numerator)*

*100 X
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

*\# of students who entered repayment on their loans in FY 2001*

*(Denominator)*

Example:

A lender has made loans to 100 students entering repayment in FY 2001
(October 1, 2000 through September 30, 2001). Of those 100 students, 25
defaulted on their student loans prior to October 1, 2002 and had a
default claim paid by the guaranty agency. This lender's FY 2001 cohort
default rate is calculated by dividing 25 by 100 and multiplying the
result by 100 to produce a cohort default rate of 25.0 percent.

**Denominator:** The number of students who entered repayment is
determined by counting the number of **different social security
numbers** in that category. If a student had more than one loan included
in the data (for example, two Federal Stafford loans or one Federal
Stafford and one Federal SLS loan), the student will be counted only
once. However, if a student borrowed from more than one lender, he or
she is counted in the calculation for each lender.

**Numerator:** If a student has a loan that entered repayment in FY 2001
and a default claim was paid by the guaranty agency during that fiscal
year or the subsequent fiscal year ending 9/30/2002, the student is
counted in the numerator, even if the student later enters into a
repayment arrangement with the guaranty agency, or the student
subsequently repaid his or her loan in full to the guaranty agency.

Loans that are discharged due to death, total and permanent disability,
or bankruptcy are not counted in the numerator when calculating the FY
2001 cohort default rate **if** the guaranty agency was officially
notified of the death, disability, or bankruptcy **before** a default
claim was paid.

2

Once data for a specific fiscal year is electronically submitted to
NSLDS by a guaranty agency and is accepted for calculation purposes, the
Department continues to update data on a monthly basis during the period
in which the rates calculated for that year are in effect. Technical
data

processing questions relating to the calculation of default rates, which
cannot be answered by the guaranty agency, should be directed to the
Department\'s NSLDS Customer Service Hotline at (800) 999-8219. Their
web address is: http://www.nsldsfap.ed.gov.

Section 430(e) of the HEA also mandates that originating lenders,
holders, and guaranty agencies have the opportunity to correct cohort
default rate information. If a lender or holder believes that the data
are incorrect and should be changed, it should promptly refer to the
NSLDS web site at http://www.nsldsfap.ed.gov to request back-up data
(loan record detail report). For instructions on how to correct cohort
default rate information go to page 5. For information about back-up
data printouts go to page 7.

Lenders (or holders) that have questions about the data should contact
the guaranty agency. For a list of guarantors and their telephone
numbers and addresses go to page 8.

Other questions on lender, holder, or guaranty agency default rates may
be referred to the Default Coordination Team, Financial Partners, the
address is listed on page 4.

3

**Department of Education Contact List**

**For technical data processing questions regarding the calculation of
the default rates, contact:**

U.S. Department of Education

NSLDS Customer Service Center

\(800\) 999-8219

http://www.nsldsfap.ed.gov

**For copies of regulations, Dear Colleague Letters, and other student
aid publications, contact:**

U.S. Department of Education

Student Aid Information Center

P.O. Box 84

Washington, D.C. 20044-0084

\(800\) 433-3243

http://www.ifap.ed.gov or

www.fp.ed.gov

**For other questions on lender, holder, or guaranty agency default
rates, contact:**

U.S. Department of Education

Default Coordination Team

Financial Partners, Partner Services

Union Center Plaza, 11^th^ Floor

400 Maryland Avenue, S.W.

Washington, D.C. 20202-5138

\(202\) 377-3053

http://www.fp.ed.gov

**To resolve errors in your lender (or holder) back-up data (loan record
detail report), contact the guaranty agency that reported the data to
the Department. A list of the guaranty agencies and their addresses is
included on Page 8, \"Guaranty Agency List\".**

**For information on school cohort default rates, contact:**

U.S. Department of Education

Default Management Division

Union Center Plaza 084F

400 Maryland Avenue, S.W.

Washington, D.C. 20202-5353

\(202\) 377-4258

http://www.ifap.ed.gov/csb_html/newdefault.htm

4

**Correcting Cohort Default Rates**

Under Section 430(e) of the HEA, lenders, holders, and guaranty agencies
are allowed the opportunity to correct cohort default rate information.
The Department calculates cohort default rates based on data
electronically submitted to NSLDS by guaranty agencies. The NSLDS data
reflects loan activity as of September 30 of each year. The Department
selects certain relevant fields from NSLDS, compiles the data by
borrower identification (the student\'s social security number) and
lender code, and then performs the calculations necessary to determine
the cohort default rate.

Although a student\'s loan records may be included in both the Federal
Stafford and Federal SLS data because he or she had both Federal
Stafford and Federal SLS loans from the same lender or holder entering
repayment in the same fiscal year, the student is only counted once in
the cohort default rate calculation. Likewise, if there are multiple
loan records for the student for one of the loan programs, the student
is still counted only once. If a student borrowed from more than one
lender, he or she is counted in the calculation for each lender. You
should note that the data reflects the status of loans through September
30 of the year following the cohort year. Thus, data for the FY 2001
cohort year reflects the status of loans only through September 30,
2002. Changes after that date, including a student\'s present loan
status, have no bearing on the cohort default rate calculation.

If you are an originating lender or holder and believe that the cohort
default rate was calculated based on erroneous data, contact the
guaranty agency. If you discover discrepancies between the information
in your records and the data provided to the Department by the guaranty
agencies, you should try to resolve the problem with the guaranty agency
that submitted the data to the Department. You should submit to the
guaranty agency all the relevant documentation supporting your
contention that the data relating to a particular loan are incorrect and
should be changed. The guaranty agency will review the documentation you
submit and determine whether it agrees that the data are incorrect. The
guaranty agency will notify you and the Department, in writing, of its
conclusions. The Department will make the final decision as to whether
the data should be corrected based on its review of the information
provided by you and the guaranty agency. If the correction is approved
by the Department, the guaranty agency will be notified and will make
the appropriate changes in the default rate information provided to
NSLDS.

*The process for data correction is as follows:*

1.  Lenders or holders are urged to promptly request back-up data (loan
    record detail report) from the NSLDS web site at
    [http://www.nsldsfap.ed.gov](http://www.nsldsfap.ed.gov/) if they
    believe their cohort default rates were calculated on the basis of
    incorrect data. (Back-up data is an extract of the loan records that
    formed the basis for calculating your lender or holder cohort
    default rate.)

5

2\. After reviewing the back-up data, the lender or holder should submit
the appropriate documentation to the guaranty agency in support of its
contention that the data are incorrect. Such documentation should
include the borrower\'s name, social security number, and the nature of
the error in each case. Supporting documentation could include copies of
the guarantor\'s notice of a change on the Student Status Confirmation
Report, canceled checks, or copies of other pertinent information. To
ensure timely processing of the request, borrowers should be listed in
social security number order. A lender or holder should identify the
cohort year to which the corrections apply. All requests to the guaranty
agency for a correction should be signed by an official of the lender or
holder who is authorized to act on its behalf in this regard.

3\. The guaranty agency should analyze a lender\'s or holder\'s request
for data correction and determine whether it will agree with or deny the
request for a correction.

4\. When the guaranty agency has completed its analysis of the request
for data correction, the lender or holder must be notified of the
agency\'s conclusions. A copy of the letter from the guaranty agency
agreeing with or denying the data correction must be sent to the Default
Coordination Team at the address listed below. After receiving the
agency\'s response, the lender should inform the Department, in writing,
whether it agrees with the agency or believes that the agency is wrong.
Based on these submissions, the Department will make the final decision
on the requested data correction and will notify the appropriate lender
or holder and guaranty agency of its determination.

U.S. Department of Education

Financial Partners, Partner Services

Union Center Plaza, 11^th^ Floor

400 Maryland Avenue, S.W.

Washington, D.C. 20202-5138

ATTN: Default Coordination Team

6

**Information About Back-Up Data Printouts**

**How to Read Back-Up Data Printout**

A back-up data printout, called a \"Loan Record Detail Report,\" is an
extract of the loan records that forms the basis for calculating your
lender or guaranty agency cohort default rate.

In your loan record detail report you will find general information,
including the name of the lender or guaranty agency, the corresponding
ID code, the cohort year covered, and the rate calculation date.

Information on how to find the NSLDS web site, loan record detail report
and downloading instructions can be found at the following web sites:
[http://sfa4schools.sfa.ed.gov](http://sfa4schools.sfa.ed.gov/) or
[http://www.ifap.ed.gov](http://www.ifap.ed.gov/). NOTE: Information on
how to retrieve the loan record detail report, including screen shots,
is provided in the updated section of the School Cohort Default Rate
Guide in Chapter 2.6 " General Information Tools" which is available
only via download from the web site.

The back-up data is sorted by borrower social security number. The data
field descriptions for the back-up data can be found on the first two
lines at the top of each page of back-up data\--one right below the
other. To locate specific loan information for a particular borrower,
make sure you read the line of the loan record that corresponds with the
data field description line.

**Privacy Act Notice**

Back-up data contains the social security numbers and names of students.
It contains material of private nature. The use of this material is
covered by the U.S. Privacy Act and may also be governed by State and
local laws and regulations, as well as by your own policies. You should
take appropriate steps to safeguard this material and ensure that it is
used and disposed of appropriately.

7

**Guaranty Agency List**

This section lists the names, addresses, and other identifying
information of the guaranty agencies. The address may be used to contact
guaranty agencies to resolve discrepancies in backup data. However, do
not use this address if a guaranty agency has provided you with a
different address or addressee.

Each agency is listed in alphabetical order by the name of the state in
which it is the primary guarantor. The three-digit guaranty agency code
listed in parentheses for each agency is the coding system used by the
Department to identify each guaranty agency.

The Higher Education Assistance Foundation (HEAF) ceased operations on
December 31, 1993. In preparation for the closing, HEAF transferred its
remaining guarantees on loans not in default to other guaranty agencies.
Affected lenders were notified of the guaranty agency now holding their
student loan guarantees which were originally issued by HEAF. The new
guaranty agency will be reported on the back-up data. The Department
possesses the records on defaulted loans on which HEAF paid default
claims to lenders. The Educational Credit Management Corporation (ECMC),
(formally the Transitional Guaranty Agency (TGA)), processes records
relating to a small number of loans guaranteed by HEAF that were not
transferred to other agencies and for loans guaranteed by HEAF that were
paid as or subsequently became Chapter 13 bankruptcy claims. ECMC also
holds and services Chapter 13 default bankruptcies for numerous guaranty
agencies that, on a voluntary basis, transfer these portfolios to ECMC.

The Puerto Rico Higher Education Assistance Corporation (PRHEAC) ceased
operations on April 15, 1994 and all guarantees were transferred to the
Great Lakes Higher Education Corporation (GLHEC). GLHEC will hold all
defaulted loans and related records previously held by PRHEAC. **NOTE:
If your organization is correcting its default rates based on erroneous
data, the possible errors must be identified to Great Lakes.**

The Mississippi Guaranty Student Loan Agency (MGSLA) ceased operations
on September 30, 1994 and all guarantees were transferred to the United
Student Aid Funds, Inc. (USAF). USAF will hold all defaulted loans and
related records previously held by MGSLA. **NOTE: If your organization
is correcting its default rates based on erroneous data, the possible
errors must be identified to USAF.**

The Student Loan Fund of Idaho, Inc. (SLFI) has been replaced (July 1,
1994) by the Northwest Education Loan Association (NELA) as the
designated guarantor. However, SLFI has not yet transferred defaulted
loans and related records to NELA.

**NOTE: If your organization is correcting its default rates based on
erroneous data, the possible errors must be identified to SLFI.**

8

The State Student Assistance Commission of Indiana (SSAC) ceased
guarantor operations on July 31, 1995 and all guarantees were
transferred to United Student Aid Funds (USAF). USAF holds all defaulted
loans and related records previously owned by SSAC. **NOTE: If your
organization is challenging its default rate based on erroneous data,
you must notify USAF of the possible errors.**

The Maryland Higher Education Loan Corporation (MHELC) ceased guarantor
operations on June 30,1995 and all guarantees were transferred to United
Student Aid Funds (USAF). USAF holds all defaulted loans and related
records previously owned by MHELC. **NOTE: If your organization is
challenging its default rate based on erroneous data, you must notify
USAF of the possible errors.**

The Delaware Higher Education Loan Program (DHELP) ceased guarantor
operations on April 24, 1996 and all guarantees were transferred to
Pennsylvania Higher Education Assistance Agency (PHEAA). PHEAA will hold
all defaulted loans and related records previously held by DHELP.
**NOTE: If your organization is challenging its default rate based on
erroneous data, you must notify PHEAA of the possible errors.**

The State Education Assistance Authority (SEAA) in Virginia has been
replaced (July 1, 1996) by the Educational Credit Management Corporation
(ECMC) as the designated guarantor. **NOTE: If your organization is
challenging its default rate based on erroneous date, you must notify
ECMC of the possible errors.**

The Ohio Student Aid Commission (OSAC) ceased guarantor operations
effective August 1, 1996 and all guarantees were transferred to Great
Lakes Higher Education Corporation (GLHEC). GLHEC will hold all
defaulted loans and related records previously held by OSAC. **NOTE: If
your organization is challenging its default rate based on erroneous
data, you must notify GLHEC of the possible errors.**

The Alabama Commission of Higher Education (ACHE) ceased operations in
December, 1996 and all guarantees have been transferred to Kentucky
Higher Education Assistance Authority (KHEAA) as of June, 1996. KHEAA
will hold all defaulted loans and related records previously held by
ACHE. **NOTE: If your organization is challenging its default rate based
on erroneous data, you must notify KHEAA of the possible errors.**

NORTHSTAR Guarantee Incorporated ceased operations in December, 1997 and
all guarantees were transferred to Great Lakes Higher Education
Corporation (GLHEC). GLHEC holds all defaulted loans and related records
previously held by Northstar. **NOTE: If your organization is
challenging its default rate based on erroneous data, you must notify
GLHEC of the possible errors.**

9

**Alabama, AL (701)**

SEE Kentucky

**Alaska, AK (702)**

SEE United Student Aid Funds, Inc.

**Arizona, AZ (804)**

SEE United Student Aid Funds, Inc.

**Arkansas, AR (705)**

Student Loan Guarantee Foundation of Arkansas

219 South Victory

Little Rock, AR 72201-1884

\(501\) 372-1491

**California, CA (706)**

California Student Aid Commission/Edfund

10834 International Drive

Rancho Cordova, CA 95670

\(916\) 526-7900

**Colorado, CO (708)**

Colorado Student Loan Program

One Denver Place

999 18th Street, Suite 425

Denver, CO 80202-2471

\(303\) 305-3000

**Connecticut, CT (709)**

Connecticut Student Loan Foundation

525 Brook Street

Rocky Hill, CT 06067

\(860\) 257-4001

10

**Delaware, DE (710)**

SEE Pennsylvania

**District of Columbia, DC (611)**

See Massachusetts

**Educational Credit Management Corporation (ECMC) (927)**

(Formerly the Transitional Guaranty Agency (TGA))

American National Bank Building

101 East 5th Street, Suite 2400

St. Paul, MN 55101

\(651\) 221-0566

**Florida, FL (712)**

State of Florida, Department of Education

Office of Student Financial Assistance

Turlington Building

1940 North Monroe Street

Suite 70

Tallahassee, FL 32399-0400

\(850\) 410-5200

**Georgia, GA (713)**

Georgia Higher Education Assistance Corporation

2082 East Exchange Place, Suite 200

Tucker, GA 30084

\(770\) 724-9132

**Hawaii, HI (815)**

SEE United Student Aid Funds, Inc.

**Idaho, ID (716)**

Student Loan Fund of Idaho, Inc.

190 Queen Anne Avenue North

Suite 300

Seattle, WA 98109

\(206\) 461-5300

11

**Illinois, IL (717)**

Illinois Student Assistance Commission

1755 Lake Cook Road

Deerfield, IL 60015

\(847\) 948-8500

**Indiana, IN (718)**

SEE United Student Aid Funds, Inc.

**Iowa, IA (719)**

Iowa College Student Aid Commission

200 10th Street

Fourth Floor

Des Moines, IA 50309-3609

\(515\) 242-3344

**Kansas, KS (620)**

SEE United Student Aid Funds, Inc.

**Kentucky, KY (721)**

Kentucky Higher Education Assistance Authority

1050 U.S. 127 South

Suite 102

Frankfort, KY 40601-4323

\(502\) 696-7200

**Louisiana, LA (722)**

Louisiana Office of Student Financial Assistance

1885 Wooddale Blvd., Suite 324

Baton Rouge, LA 70821-9202

\(225\) 922-1012, 1 800-259-0790

12

**Maine, ME (723)**

Maine Education Assistance Division

Finance Authority of Maine

5 Community Drive

Augusta, ME 04332-0949

\(207\) 623-3263

**Maryland, MD (724)**

SEE United Student Aid Funds, Inc.

**Massachusetts, MA (725)**

American Student Assistance

330 Stuart Street, Berkeley Place

Boston, MA 02116-5292

\(800\) 999-9080

**Michigan, MI (726)**

Michigan Higher Education Assistance Authority

Hannah Building

1^st^ Floor

Lansing, MI 48933

\(800\) 642-5626

**Minnesota, MN (727)**

SEE Wisconsin

**Mississippi, MS (728)**

SEE United Student Aid Funds, Inc.

**Missouri, MO (729)**

Coordinating Board for Higher Education

3515 Amazonas Drive

Jefferson City, MO 65109-5717

\(573\) 751-2361

13

**Montana, MT (730)**

Montana Guaranteed Student Loan Program

2500 Broadway

Helena, MT 59601-4989

\(406\) 444-6594

**Nebraska, NE (731)**

Nebraska Student Loan Program

1300 O Street

Lincoln, NE 68508-1511

\(402\) 475-8686

**Nevada, NV (732)**

SEE United Student Aid Funds, Inc.

**New Hampshire, NH (733)**

New Hampshire Higher Education Assistance Foundation

4 Barrell Court

Concord, NH 03301

\(603\) 225-6612

**New Jersey, NJ (734)**

New Jersey Higher Education Assistance Authority

Guaranteed Student Loan Program

4 Quakerbridge Plaza

P.O. Box 540

Trenton, NJ 08625-0540

\(800\) 792-8670

14

**New Mexico, NM (735)**

New Mexico Student Loan Guarantee Corporation

3900 Osuna, N.E.

Albuquerque, NM 87109-2230

\(505\) 345-3371

**New York, NY (736)**

New York State Higher Education Services Corporation

99 Washington Avenue, Twin Towers

Albany, NY 12255

\(518\) 473-7087

**North Carolina, NC (737)**

North Carolina State Education Assistance Authority

10 Alexander Drive

Research Triangle Park, NC 27709

\(919\) 549-8614

**North Dakota, ND (738)**

Student Loans of North Dakota

North Dakota Guaranteed Student Loan Program

715 East Broadway

Bismarck, ND 58501-5524

\(701\) 328-5754

**Ohio, OH (739)**

SEE Wisconsin

**Oklahoma, OK (740)**

Oklahoma State Regents for Higher Education

Guaranteed Student Loan Program

421 North West 13^th^ Street

Oklahoma City, OK 73103-3000

\(405\) 234-4300

15

**Oregon, OR (741)**

Oregon State Scholarship Commission

1500 Valley River Drive

Suite 100

Eugene, OR 97401

\(541\) 687-7400

**Pennsylvania, PA (742)**

Pennsylvania Higher Education Assistance Agency

1200 N. 7th Street

Towne House

Harrisburg, PA 17102-1444

\(717\) 720-2860

**Puerto Rico, PR (772)**

SEE Wisconsin

**Rhode Island, RI (744)**

Rhode Island Higher Education Assistance Authority

560 Jefferson Boulevard

Warwick, RI 02886-1320

\(401\) 736-1100

**South Carolina, SC (745)**

South Carolina State Education Assistance Authority

Interstate Center

15 Berry Hill Road

Suite 210

Columbia, SC 29210

\(803\) 798-0916

**South Dakota, SD (746)**

Education Assistance Corporation

115 First Avenue, S.W.

Aberdeen, SD 57401

\(605\) 622-6423

16

**Tennessee, TN (747)**

Tennessee Student Assistance Corporation

Parkway Towers, Suite 1950

404 James Robertson Parkway

Nashville, TN 37243-0820

\(615\) 741-1346

**Texas, TX (748)**

Texas Guaranteed Student Loan Corporation

Tower of the Hill

13809 N. Highway 183

Suite 100

Austin, TX 78750-1250

\(512\) 219-5700

**Transitional Guaranty Agency (927)**

SEE Educational Credit Management Corporation

**United Student Aid Funds, Inc. (USAF) (800)**

United Student Aid Funds, Inc.

10475 Crosspoint Boulevard

Suite 230

Indianapolis, IN 46256-3323

\(317\) 806-1210

**Utah, UT (749)**

Utah Higher Education Assistance Authority

60 South 400 West

5^th^ Floor

Salt Lake City, UT 84101-1284

\(801\) 321-7200

**Vermont, VT (750)**

Vermont Student Assistance Corporation

One Main Street

Winooski, VT 05404-2601

\(802\) 655-9602

17

**Virgin Islands, VI (778)**

SEE Wisconsin

**Virginia, VA (751)**

SEE Educational Credit Management Corporation

**Washington, WA (753)**

Northwest Education Loan Association

190 Queen Anne Avenue, North

Suite 300

Seattle, WA 98109

\(206\) 461-5300

**West Virginia, WV (654)**

SEE Pennsylvania

**Wisconsin, WI (755)**

Great Lakes Higher Education Corporation

2401 International Lane

Madison, WI 53704

\(608\) 246-1800

**Wyoming, WY (656)**

SEE United Student Aid Funds, Inc.

18

**[Commonly Asked Questions]{.underline}**

**Where can I get a copy of the Cohort Default Rate Guide for Guaranty
Agencies and Lenders?**

1)  website address http://www.ifap.ed.gov/csb_html/newdefault.htm

2)  contact Financial Partners, Default Coordination Team at (202)
    377-3053.

**What is a cohort default rate?**

The term **cohort default rate** is defined in Section 435(m) of the
HEA. The formula for calculating the cohort default rate is described
below.

\# of students who entered repayment in FY 2001 and

defaulted on or before the end of FY 2002

(Numerator)

100
X\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\# of students who entered repayment in FY 2001

(Denominator)

Example:

A lender has made 100 loans to students entering repayment in FY 2001
(October 1, 2000 through September 30, 2001). Of those 100 students, 25
defaulted on their student loans prior to October 1, 2002 and had a
default claim paid by the guaranty agency. This lender\'s FY 2001 cohort
default rate is calculated by dividing 25 by 100 and multiplying the
result by 100 to produce a cohort default rate of 25.0 percent.

**When is a loan considered to be in default?**

A loan is considered in default for cohort default rate purposes if a
default claim with a claim reason of default on the loan was paid by the
guarantor during the cohort period. (Prior to February 2002, claim
reasons of closed schools and false certification were included in this
definition)

**Where does the Department obtain the data for calculating these
lender, holder and guaranty agency cohort default rates?**

The FY 2001 cohort default rates were calculated based on data
electronically reported to the National Student Loan Data System (NSLDS)
by the guaranty agencies. The NSLDS data submitted by the guaranty
agencies was prepared according to procedures developed by the
Department and reflect activity through September 30, 2001.

19

**What loans are included in a cohort default rate calculation?**

Subsidized Federal Stafford, Unsubsidized Federal Stafford, Federal SLS,
and Federal Consolidation Loans that repaid Federal Stafford or Federal
SLS loans will be included in the calculation of cohort default rates.
Loans made under a Lender-of-Last-Resort program are not used in the
calculation. Loans that are transferred from one guaranty agency to
another prior to submission of the NSLDS data to the Department are
included in the NSLDS data submitted by the receiving agency, but are
not included in the NSLDS data submitted by the transferring agency.

**How is the numerator calculated?**

If a student entered repayment in FY 2001, defaulted on his or her loan,
and a default claim was paid by September 30, 2002, the loan continues
to be counted as in default in the FY 2001 cohort default rate
calculation, even if the student later enters into a repayment
arrangement with the guaranty agency or repays his or her loan in full
to the guaranty agency. The Date Entered Repayment is reported by
Guaranty Agencies to NSLDS on its normal submittal file.

**How is the denominator calculated?**

The number of students that entered repayment is determined by counting
the number of **different social security numbers** in that category. If
a student had more than one loan included in the NSLDS (for example, two
Federal Stafford Loans or one Federal Stafford and one Federal SLS
loan), the student will be counted only once. However, if a student
borrowed from more than one lender, he or she is counted in the
calculation for [each]{.underline} lender.

**How are discharged loans counted, e.g., death, disability, or
bankruptcy?**

Loans that are discharged due to death, total and permanent disability,
or bankruptcy are counted in calculating the FY 2001 cohort default rate
as a part of the denominator. Loans that are discharged due to death,
disability, or bankruptcy are not counted in calculating the FY 2001
cohort default rate as a part of the numerator **if** the guaranty
agency was officially notified of the death, disability, or bankruptcy
**before** a default claim was paid.

**What opportunity will guaranty agencies, lenders, and holders have to
correct the data?**

Any originating lender, holder, or guaranty agency will have the
opportunity to challenge its cohort default rate if it believes that the
data used to calculate the rate are incorrect. To challenge the cohort
default rate, the lender or holder must first request the back-up data
from the NSLDS web site at [http://www.nsldsfap.ed.gov]{.underline}. The
back-up data is the data that was electronically reported to NSLDS by
the guaranty agencies.

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After requesting and reviewing the data, a lender or holder may contest
its default rate by providing the guaranty agenc(ies) with any relevant
documentation to support its contention that the data are incorrect and
should be changed. The guaranty agency must review the documentation and
determine whether it agrees that the data are incorrect. The agency must
notify the lender or holder and the Department, in writing, of its
conclusion. The Department will make the final decision on the
correction(s).

**What is the process for data corrections for lenders and holders?**

1\. Lenders or holders are urged to promptly request back-up data from
the NSLDS web site at http://www.nsldsfap.ed.gov if they believe their
cohort default rates were calculated on the basis of incorrect data. A
delay in requesting the back-up data may delay the agency\'s response.

2\. After reviewing the back-up data, the lender or holder should submit
the appropriate documentation to the guaranty agenc(ies) in support of
its contention that the data are incorrect. Such documentation should
include the borrower\'s name, social security number, and the nature of
the error in each case. Supporting documentation could include copies of
the guarantor\'s notice of a change on the Student Status Confirmation
Report, canceled checks, or copies of other pertinent information. To
ensure timely processing of the request, borrowers should be listed in
social security number order. A lender or holder should identify the
cohort year to which the corrections apply. All requests to the guaranty
agency for a correction should be signed by an official of the lender or
holder who is authorized to act on its behalf in this regard.

3\. Each guaranty agency should analyze the lender\'s or holder\'s
request for data correction and determine whether it will agree with or
deny the request for a correction.

4\. [When the guaranty agenc(ies) has completed its analysis of the
request for data correction, the lender or holder must be notified of
the agency\'s conclusions.]{.underline} A copy of the letter from the
guaranty agency agreeing with or denying the data correction must be
sent to the Department of Education, Financial Partners, Partner
Service, Default Coordination Team at the address listed below. After
receiving the agency\'s response, the lender should inform the
Department, in writing, whether it agrees with the agency or believes
that the agency is wrong. Based on these submissions, the Department
will make the final decision on data correction and will notify the
appropriate lender or holder and guaranty agency of its determination.

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What is the difference between an originating lender/holder and the
current lender/holder?

The Originator lender represents the entity that provided and originated
the loan to the borrower.

The Current lender represents the last entity to hold the loan at the
time the cohort default rate was calculated.

Which loan type codes are included in the calculation of Cohort Default
Rates?

Subsidized Federal Stafford (SF), Unsubsidized Federal Stafford (SU),
Federal Supplemental Loan for Students (SL), and Federal Consolidated
Loans (CL) with specific rules. All other FFELP loan types are excluded.

Federal Consolidated Loans (CL) are linked back to the underlying loans
paid by consolidation. If the underlying loan entered repayment and is
included in the denominator and the Consolidation Loan defaults in the
cohort period, the underlying loans will be counted in the numerator for
cohort default rate purposes.

**Which loan status codes are included and excluded from the CDR
calculation?**

All Loan Status Codes are included in the Cohort Default Rate
Calculation except Abandoned Loans (AL), all uninsured status
(UA,UB,UC,UD,and UI, and Cancelled (CA).

**How can I get a copy of my loan record detail report?**

# 

# Log onto the NSLDS Web site at [http://www.nsldsfap.ed.gov](http://www.nsldsfap.ed.gov/) or contact Financial Partners, Partner Services at (202) 377-3053. To retrieve this information from the NSLDS website, log on with your NSLDS user id, go to the report tab, and select Report DRC040 [GA Cohort Default Rate History Report. The report is available in report format or extract format, the file layout for an extract can be found at:]{.underline} <http://ifap.ed.gov/nsldsmaterials/attachments/GA200107attachment1.pdf>

# 

If you have questions on getting an NSLDS user id or need information on
requesting this report, please call the NSLDS Customer Service Center at
1-800-999-8219.

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**How are the underlying loans in Consolidations counted in Guaranty
Agency Cohort Default Rates?**

> The Cohort Default Rate Program looks at the date entered repayment of
> the underlying loans (loans that NSLDS has linked to a consolidation
> loan) to determine which cohort fiscal year the loan is counted.
>
> For underlying loans with a status of 'PC', 'PN', or 'DN', the program
> looks to see if the guaranty date of the consolidation loan was on or
> before the end of the Cohort Period (2 year window beginning with
> Cohort Fiscal Year begin date).
>
> If the consolidation loan was made prior to the end of the cohort
> period, then the underlying loan is counted in the consolidating
> agencies cohort rate.
>
> Likewise, if the consolidation loan defaults it would also be counted
> in the consolidating agencies cohort rate.
>
> If the consolidation loan was made after the end of the cohort period,
> the underlying loan is processed as if no consolidation loan had
> occurred.
>
> Loans with the lender_of_last_resort flag set to 'Y' in NSLDS are NOT
> counted in the cohort default rate.

How important is the Date Entered Repayment as reported to NSLDS in the
Cohort Default Rate Calculation

The date entered repayment is integral to the cohort default rate
calculation. As a result, it is important that you ensure that this date
is reported accurately to NSLDS.

1.  For loans closed as a result of consolidation that have not entered
    repayment, set the date equal to the effective date of the loan
    status of 'PC', 'PN', or 'DN'.

2.  The cohort default rate calculation uses the date entered repayment
    to determine which loans to count in the denominator. Continually
    moving the date entered repayment can cause a loan to be counted
    potentially in multiple cohort fiscal year calculations or if the
    date is incorrect, a loan could be counted in the wrong cohort
    fiscal year.

3.  Many guarantor systems set the date entered repayment based on the
    anticipated completion date. It is important to update the date
    entered repayment to be equal to the borrower's separation date
    (withdrew, graduated, or less than half-time) plus grace plus a day.
    Furthermore, NSLDS does not use the anticipated completion date in
    its cohort default rate calculation.

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4.  In cases when the borrowers pay the loan in full while in school or
    grace, and prior to the end of the loan period, it is important that
    the date entered repayment be modified to the effective date of the
    loan being paid in full. A future date entered repayment remaining
    on a loan can cause the borrower to be counted in the wrong cohort
    unless it is a cancellation.

Note: If the loan is paid in full within 120 days of disbursement, then
the loan is cancelled. Cancelled loans do not get counted in the cohort
default rate calculation.

**Reporting Ineligible Borrower Claims Defaults**

A loan for which the borrower is ineligible due to the borrower's or
student's error is treated as a default if the borrower fails to repay
the full amount due within 30 days after the final demand letter is
mailed. For these loans to be appropriately reported to NSLDS and to be
counted in the calculation for cohort default rates, it is important
that the reason code for these claims be reported as 'DF'.

NSLDS Edit Changes

The following changes have recently been made in how NSLDS edits
guarantor submittals.

1.  The edits on Amount of Guaranty were changed to use net loan amount
    (i.e., Amount of Guaranty less Amount of Cancellation). Errors would
    be generated only if the net loan amount exceeded the amount
    specified in each edit. The edits would not apply to loans if the
    Date of Loan Guaranty were before October 1, 1994.

> The edits would be revised *(change is in italics)* as follows:

-   650: For SF loans with Academic Level 1-5 *guaranteed on or after
    October 1, 1994* and not transferred, the Amount of Guaranty *less
    the Amount of Cancellation* must not exceed \$5,500.

-   651: For SU loans with Academic Level 1-5 *guaranteed on or after
    October 1, 1994* and not transferred, the Amount of Guaranty *less
    the Amount of Cancellation* must not exceed \$27,167.

-   669: For SF loans with Academic Level A-N *guaranteed on or after
    October 1, 1994* and not transferred, the Amount of Guaranty *less
    the Amount of Cancellation* must not exceed \$8,500.

-   670: For SU loans with Academic Level A-G *guaranteed on or after
    October 1, 1994* and not transferred, the Amount of Guaranty *less
    the Amount of Cancellation* must not exceed \$45,167.

-   703: For SF and SU loans transferred or *guaranteed before October
    1, 1994*, the Amount of Guaranty must not exceed \$45,167 regardless
    of Academic Level.

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2.  The file tolerance edits on collections were changed to 30%
    (previously 50%) and TOP Offsets to 10% (previously 20%).

3.  The edit for loan status IA was changed to allow a later date than
    the guaranty date if IM is the previous loan status. Note: The
    current list of valid loan status codes distributed in GA Technical
    Update 2001-08 already reflects this exception.

**What is the process for data corrections for guaranty agencies?**

The FY 2001 cohort default rates will be calculated based on data
electronically reported to NSLDS by the guaranty agencies. The data
submitted by the guaranty agencies were prepared according to procedures
developed by the Department and reflect activity through September 30,
2002.

If a guaranty agency believes that its cohort default rate is incorrect,
it must notify the Department at the address listed below. The guaranty
agency will receive instructions on the documentation required by the
Department to support its contention that the data are incorrect and
should be changed.

U.S. Department of Education

Financial Partners, Partner Services

Union Center Plaza, 11^th^ Floor

400 Maryland Avenue, SW

Washington, D.C. 20202-5138

ATTN: Default Coordination Team

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[^1]: The cohort default rate is defined in Section 435(m) of the HEA.

[^2]: Federal SLS loans have not been issued since July 1, 1994.
    However, it is possible for a Federal SLS loan to be included in a
    recent cohort default rate calculation if the borrower has recently
    entered into repayment on the Federal SLS loan.

    1