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Issue 8

Proposed Regulatory Language

Team II – School-based Loan Issues

Origin: HEOA section 436

Issue: Cohort Default Rate Calculation, 

Institutional Eligibility, and 

Default Prevention Plans

Statutory cites: Sections 435(a) and (m) of the HEA

Regulatory cites: §§668.183, 668.187, 668.189, and 

668.195

DCL GEN-08-12 cite: Page 131

Status: Unresolved

Regulatory language:

34 CFR §668.16(m) Standards of administrative capability.

(m)(1) Has a cohort default rate--

(i) Calculated under subpart M of this part, t That is 

less than 25 percent for each of the three most recent 

fiscal years during which rates have been issued, to the 

extent those rates for those years are calculated under 34 

CFR Part 668, Ssubpart M of this part; for which the 

Secretary has determined the institution's rate; and

(ii) That is less than 30 percent for at least two of 

the three most recent fiscal years for which the Secretary 

has during which the Secretary has issued rates for the 
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institution determined the institution’s rate under 34 CFR 

Part 668 S subpart N of this subpart; and

(iii) As defined in 34 CFR 674.5, on loans made under 

the Federal Perkins Loan Program to students for attendance 

at that institution that does not exceed 15 percent.;

(2)(i) However, if the Secretary determines that an 

institution's administrative capability is impaired solely 

because the institution fails to comply with paragraph 

(m)(1) of this section and none of the institution's three 

most recent cohort default rates subject the institution to 

sanctions under Subpart M or N of this Part, the 

institution is not subject to a loss of eligibility under 

§§668.187(a) or 668.206(a), the Secretary allows the 

institution to continue to participate in the Title IV, HEA 

programs. In such a case, the Secretary but may 

provisionally certify the institution in accordance with 

§668.13(c) unless the institution has two successive rates 

calculated under Subpart N that equal or exceed 30 percent 

and the institution either has taken a successful 

economically disadvantaged appeal under 34 CFR 668.213, or 

has timely submitted such an appeal and that appeal is 

pending except as provided in paragraphs (m)(2)(ii) and 

(m)(2)(iii) of this section.

(ii) An institution that fails to meet the standard 

of administrative capability in paragraph (m)(1)(ii) based 

on two cohort default rates that are greater than or equal 

to 30 percent but less than 40 percent is not placed on 

provisional certification under paragraph (m)(2)(i) of this 

section--
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(A) If it has timely filed a request for adjustment or 

appeal under §§668.209, 668.210, or 668.212 with respect to 

the second such rate, and the request for adjustment or 

appeal is either pending or succeeds in reducing the rate 

below 30 percent; or 

(B) If it has timely filed an appeal under §§668.213 

or 668.214 after receiving the second such rate, and the 

appeal is either pending or successful.

(iii) The institution may appeal the loss of full 

participation in a Title IV, HEA program under paragraph 

(m)(2)(i1) of this section by submitting an erroneous data 

appeal in writing to the Secretary in accordance with and 

on the grounds specified in §§668.192 or 668.211, as

applicable subpart M of this part;;

Subpart M--Two Year Cohort Default Rates

Source: 65 FR 65638, Nov. 1, 2000, unless otherwise 

noted.

§668.181 Purpose of this subpart.

(a) General. Your cohort default rate is a measure 

we use to determine your eligibility to participate in 

various Title IV, HEA programs. We may also use it for 

determining your eligibility for exemptions, such as those 

for certain disbursement requirements under the FFEL and 

Direct Loan Programs. This subpart applies solely to 

cohorts, as defined in §§668.182(a) and 668.183(b), for 

fiscal years through 2011. For those these cohorts, this 

subpart describes how cohort default rates are calculated, 

some of the consequences of cohort default rates, and how 

you may request changes to your cohort default rates or 

appeal their consequences. Under this subpart, you submit 
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a ―challenge‖ after you receive your draft cohort default 

rate, and you request an ―adjustment‖ or ―appeal‖ after 

your official cohort default rate is published. 

(b) Cohort Default Rates. Notwithstanding anything 

to the contrary in this subpart, we will issue annually two 

sets of draft and official cohort default rates for fiscal 

years 2009, 2010, and 2011. For each of these years, yYou 

will receive one set of draft and official cohort default 

rates under this sSubpart and another set of draft and 

official cohort default rates under sSubpart N of this 

part. 

. . . .

§668.185 Draft cohort default rates and your ability to 

challenge before official cohort default rates are issued.

(a) General. (1) We notify you of your draft cohort 

default rate before your official cohort default rate is 

calculated. Our notice includes the loan record detail 

report for the draft cohort default rate.

(2) Regardless of the number of borrowers included in 

your cohort, your draft cohort default rate is always 

calculated using data for that fiscal year alone, using the 

method described in §668.183(d)(1).

(3) Your draft cohort default rate and the loan 

record detail report are not considered public information 

and may not be otherwise voluntarily released to the public

by a data manager., except that we will publish life of 

cohort default rates, including rates for the second and 

third fiscal year after students enter repayment.

* * * *
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§668.186 Notice of your official cohort default rate.

(a) We electronically notify you of your cohort 

default rate after we calculate it, by sending you an eCDR 

notification package to the destination point you 

designate. After we send our notice to you, we publish a 

list of cohort default rates calculated under this subpart 

for all institutions. 

If your cohort default rate is 10 percent or more, we 

include a copy of the loan record detail report with the 

notice.

(b) If your school has you have one or more borrowers 

entering repayment or is are subject to sanctions, or if 

the Department believes your school you will have an 

official cohort default rate calculated as an average rate, 

you will receive a loan record detail report as part of 

your eCDR notification package with your electronic notice. 

(c) If your cohort default rate is less than 10 percent—

(1) You may request a copy of any loan record detail 

report that lists loans included in your cohort default 

rate calculation; and

(2) If you are requesting an adjustment or appealing 

under this subpart, your request for a copy of the loan 

record detail report or reports must be sent to us within 

15 days after you receive the notice of your cohort default 

rate.

(c) You have five business days, from the 

transmission date for eCDR notification packages as posted 

on the Department's Wweb site, to report any problem with 
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receipt of the electronic transmission of your eCDR 

notification package.

(d) Except as provided in paragraph (e) of this 

section, timelines Timelines for submitting challenges, 

adjustments, and appeals begin on the sixth business day 

following the announced transmission date for eCDR 

notification packages that is posted on the Department’s 

Web site.

(e) If you timely report a problem with the receipt 

of the electronic transmission of your eCDR notification 

package under paragraph (c) of this section and the

Department agrees that the Department caused the problem 

with the transmission, the Department will extend the 

challenge, appeal and adjustment deadlines and timeframes 

to account for a retransmission of the your eCDR 

notification package information after the technical 

problem is resolved.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

. . . .

§668.187 Consequences of cohort default rates on your 

ability to participate in Title IV, HEA programs.

(a) End of participation. (1) Except as provided 

in paragraph (ef) of this section, you lose your 

eligibility to participate in the FFEL and Direct Loan 

programs 30 days after you receive our notice that your 

most recent cohort default rate is greater than 40 percent.
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(2) Except as provided in paragraphs (ed) and (fe) of 

this section, you lose your eligibility to participate in 

the FFEL, Direct Loan, and Federal Pell Grant programs 30 

days after you receive our notice that your three most 

recent cohort default rates are each 25 percent or greater.

(b) Length of period of ineligibility. Your loss of 

eligibility under this section continues--

(1) For the remainder of the fiscal year in which we 

notify you that you are subject to a loss of eligibility; 

and

(2) For the next 2 fiscal years.

(c) Using a cohort default rate more than once. The 

use of a cohort default rate as a basis for a loss of 

eligibility under this section does not preclude its use as 

a basis for--

(1) Any concurrent or subsequent loss of eligibility 

under this section; or

(2) Any other action by us.

(d) Special institutions. If you are a special 

institution that satisfies the requirements for continued 

eligibility under § 668.198, you are not subject to any 

loss of eligibility under this section or to provisional 

certification under § 668.16(m).

(de) Continuing participation in Pell. If you are 

subject to a loss of eligibility under paragraph (a)(2) of 

this section, based on three cohort default rates of 25 

percent or greater, you may continue to participate in the 

Federal Pell Grant Program if we determine that you--
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(1) Were ineligible to participate in the FFEL and 

Direct Loan programs before October 7, 1998, and your 

eligibility was not reinstated;

(2) Requested in writing, before October 7, 1998, to 

withdraw your participation in the FFEL and Direct Loan 

programs, and you were not later reinstated; or

(3) Have not certified an FFELP loan or originated a 

Direct Loan Program loan on or after July 7, 1998.

(ef) Requests for adjustments and appeals. (1) A loss 

of eligibility under this section does not take effect 

while your request for adjustment or appeal, as listed in 

§668.189(a), is pending, provided your request for 

adjustment or appeal is complete, timely, accurate, and in 

the required format.

(2) Eligibility continued under paragraph (fg)(1) of 

this section ends if we determine that none of the requests 

for adjustments and appeals you have submitted qualify you 

for continued eligibility under §668.189. Loss of 

eligibility takes effect on the date that you receive 

notice of our determination on your last pending request 

for adjustment or appeal.

(3) You do not lose eligibility under this section if 

we determine that your request for adjustment or appeal 

meets all requirements of this subpart and qualifies you 

for continued eligibility under §668.189.

(4) To avoid liabilities you might otherwise incur 

under paragraph (fg) of this section, you may choose to 

suspend your participation in the FFEL and Direct Loan 

programs during the adjustment or appeal process.
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(fg) Liabilities during the adjustment or appeal 

process. If you continued to participate in the FFEL or 

Direct Loan Program under paragraph (ed)(1) of this 

section, and we determine that none of your requests for 

adjustments or appeals qualify you for continued 

eligibility--

(1) For any FFEL or Direct Loan Program loan that you 

certified and delivered or originated and disbursed more 

than 30 days after you received the notice of your cohort 

default rate, we estimate the amount of interest, special 

allowance, reinsurance, and any related or similar payments 

we make or are obligated to make on those loans;

(2) We exclude from this estimate any amount 

attributable to funds that you delivered or disbursed more 

than 45 days after you submitted your completed appeal to 

us;

(3) We notify you of the estimated amount; and

(4) Within 45 days after you receive our notice of 

the estimated amount, you must pay us that amount, unless--

(i) You file an appeal under the procedures 

established in subpart H of this part (for the purposes of 

subpart H of this part, our notice of the estimate is 

considered to be a final program review determination); or

(ii) We permit a longer repayment period.

(gh) Regaining eligibility. If you lose your 

eligibility to participate in a program under this section, 

you may not participate in that program until--

(1) The period described in paragraph (b) of this 

section has ended;
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(2) You pay any amount owed to us under this section 

or are meeting that obligation under an agreement 

acceptable to us;

(3) You submit a new application for participation in 

the program;

(4) We determine that you meet all of the 

participation requirements in effect at the time of your 

application; and

(5) You and we enter into a new program participation 

agreement.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

. . . .

§668.188 Preventing evasion of the consequences of cohort 

default rates.

(a) General. Unless you are a special institution 

complying with § 668.198, yYou are subject to a loss of 

eligibility that has already been imposed against another 

institution as a result of cohort default rates if--

. . . .

§668.190 Uncorrected data adjustments.

(a) Eligibility. You may request an uncorrected data 

adjustment for your most recent cohort of borrowers, used 

to calculate your most recent official cohort default rate, 

if in response to your challenge under §668.185(b), a data 

manager agreed correctly to change the data, but the 
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changes are not reflected in your official cohort default 

rate.

(b) Deadlines for requesting an uncorrected data 

adjustment. (1) If the loan record detail report was not 

included with your official cohort default rate notice, you 

must request it within 15 days after you receive the notice 

of your official cohort default rate.

(2) You must send us a request for an uncorrected data 

adjustment, including all supporting documentation, within 

30 days after you receive your loan record detail report 

from us.

(c) Determination. We recalculate your cohort 

default rate, based on the corrected data, and 

electronically correct the rate that is publicly released,

if we determine that--

(1) In response to your challenge under §668.185(b), 

a data manager agreed to change the data;

(2) The changes described in paragraph (c)(1) of this 

section are not reflected in your official cohort default 

rate; and

(3) We agree that the data are incorrect.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.191 New data adjustments.

(a) Eligibility. You may request a new data 

adjustment for your most recent cohort of borrowers, used 

to calculate your most recent official cohort default rate, 

if--
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(1) A comparison of the loan record detail reports 

that we provide to you for the draft and official cohort 

default rates shows that the data have been newly included, 

excluded, or otherwise changed; and

(2) You identify errors in the data described in 

paragraph (a)(1) of this section that are confirmed by the 

data manager.

(b) Deadlines for requesting a new data adjustment. 

.(1) If the loan record detail report was not included with 

your official cohort default rate notice, you must request 

it within 15 days after you receive the notice of your 

official cohort default rate.

(2)(1) You must send to the relevant data manager, or 

data managers, and us a request for a new data adjustment, 

including all supporting documentation, within 15 days 

after you receive your loan record detail report from us.

(3)(2) Within 20 days after receiving your request 

for a new data adjustment, the data manager must send you 

and us a response that--

(i) Addresses each of your allegations of error; and

(ii) Includes the documentation used to support the 

data manager's position.

(4)(3) Within 15 days after receiving a guaranty 

agency's notice that we hold an FFELP loan about which you 

are inquiring, you must send us your request for a new data 

adjustment for that loan. We respond to your request as 

set forth under paragraph (b)(23) of this section.

(5)(4) Within 15 days after receiving incomplete or 

illegible records or data from a data manager, you must 
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send a request for replacement records or clarification of 

data to the data manager and us.

(6)(5) Within 20 days after receiving your request 

for replacement records or clarification of data, the data 

manager must--

(i) Replace the missing or illegible records;

(ii) Provide clarifying information; or

(iii) Notify you and us that no clarifying 

information or additional or improved records are 

available.

(7)(6) You must send us your completed request for a 

new data adjustment, including all supporting 

documentation--

(i) Within 30 days after you receive the final data 

manager's response to your request or requests; or

(ii) If you are also filing an erroneous data appeal 

or a loan servicing appeal, by the latest of the filing 

dates required in paragraph (b)(67)(i) of this section or 

in §668.192(b)(6)(i) or §668.193(c)(10)(i).

(c) Determination. If we determine that incorrect 

data were used to calculate your cohort default rate, we 

recalculate your cohort default rate based on the correct 

data and make electronically corrections to the ratedata

that is publicly released.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.192. Erroneous data appeals.
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. . . .

(c) Determination. If we determine that incorrect 

data were used to calculate your cohort default rate, we 

recalculate your cohort default rate based on the correct 

data and electronically correct the rate that is publicly 

released. 

. . . .

Delete § 668.198

. . . .

Delete Part 668, Subpart M, Appendix A; Re-letter Appendix 

B as Appendix A 

Subpart N--Cohort Default Rates

§668.200 Purpose of this subpart.

(a) General. Your cohort default rate is a measure 

we use to determine your eligibility to participate in 

various Title IV, HEA programs. We may also use it for 

determining your eligibility for exemptions, such as those 

for certain disbursement requirements under the FFEL and 

Direct Loan Programs. This subpart applies solely to 

cohorts, as defined in §§668.201(a) and 668.202(b), for 

fiscal years 2009 and later. For these those cohorts,

tThis subpart describes how cohort default rates are 

calculated, some of the consequences of cohort default 

rates, and how you may request changes to your cohort 

default rates or appeal their consequences. Under this 

subpart, you submit a ―challenge‖ after you receive your 

draft cohort default rate, and you request an ―adjustment‖ 

or ―appeal‖ after your official cohort default rate is 

published.
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(b) Cohort Default Rates. Notwithstanding anything 

to the contrary in this subpart, we will issue annually two 

sets of draft and official cohort default rates for fiscal 

years 2009, 2010, and 2011. For each of these years, yYou 

will receive one set of draft and official cohort default 

rates under this sSubpart and another set of draft and 

official cohort default rates under sSubpart M of this 

part. 

 Except as provided in §668.200, the provisions in 

this subpart are effective for cohorts, as defined in 

§§668.182(a) and 668.183(b), for fiscal year 2009 and 

subsequent fiscal years.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.201182 Definitions of terms used in this subpart.

We use the following definitions in this subpart:

(a) Cohort. Your cohort is a group of borrowers used 

to determine your cohort default rate. The method for 

identifying the borrowers in a cohort is provided in 

§668.183202(b).

(b) Data manager. (1) For FFELP loans held by a 

guaranty agency or lender, the guaranty agency is the data 

manager.

(2) For FFELP loans that we hold, we are the data 

manager.

(3) For Direct Loan Program loans, the Direct Loan 

Servicer, as defined in 34 CFR 685.102, is the data 

manager.
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(c) Days. In this subpart, ―days‖ means calendar 

days.

(d) Default. A borrower is considered to be in 

default for cohort default rate purposes under the rules in 

§668.202183(c).

(e) Draft cohort default rate. Your draft cohort 

default rate is a rate we issue, for your review, before we 

issue your official cohort default rate. A draft cohort 

default rate is used only for the purposes described in 

§668.204185.

(f) Entering repayment. (1) Except as provided in 

paragraphs (f)(2) and (f)(3) of this section, loans are 

considered to enter repayment on the dates described in 34 

CFR 682.200 (under the definition of ―repayment period‖) 

and in 34 CFR 685.207.

(2) A Federal SLS loan is considered to enter 

repayment--

(i) At the same time the borrower's Federal Stafford 

loan enters repayment, if the borrower received the Federal 

SLS loan and the Federal Stafford loan during the same 

period of continuous enrollment; or

(ii) In all other cases, on the day after the student 

ceases to be enrolled at an institution on at least a halftime basis in an educational program leading to a degree, 

certificate, or other recognized educational credential.

(3) For the purposes of this subpart, a loan is 

considered to enter repayment on the date that a borrower 

repays it in full, if the loan is paid in full before the 

loan enters repayment under paragraphs (f)(1) or (f)(2) of 

this section.
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(g) Fiscal year. A fiscal year begins on October 1 

and ends on the following September 30. A fiscal year is 

identified by the calendar year in which it ends.

(h) Loan record detail report. The loan record 

detail report is a report that we produce. It contains the 

data used to calculate your draft or official cohort 

default rate.

(i) Official cohort default rate. Your official 

cohort default rate is the cohort default rate that we 

publish for you under §668.205186. Cohort default rates 

calculated under this subpart are not related in any way to 

cohort default rates that are calculated for the Federal 

Perkins Loan Program.

(j) We. We are the Department, the Secretary, or the 

Secretary's designee.

(k) You. You are an institution.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.202183 Calculating and applying cohort default rates.

(a) General. This section describes the four steps 

that we follow to calculate and apply your cohort default 

rate for a fiscal year:

(1) First, under paragraph (b) of this section, we 

identify the borrowers in your cohort for the fiscal year. 

If the total number of borrowers in that cohort is fewer 

than 30, we also identify the borrowers in your cohorts for 

the 2 most recent prior fiscal years.
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(2) Second, under paragraph (c) of this section, we 

identify the borrowers in the cohort (or cohorts) who are 

considered to be in default by the end of the second fiscal 

year following the fiscal year those borrowers entered 

repayment. If more than one cohort will be used to 

calculate your cohort default rate, we identify defaulted 

borrowers separately for each cohort.

(3) Third, under paragraph (d) of this section, we 

calculate your cohort default rate.

(4) Fourth, we apply your cohort default rate to all 

of your locations--

(i) As you exist on the date you receive the notice 

of your official cohort default rate; and

(ii) From the date on which you receive the notice of 

your official cohort default rate until you receive our 

notice that the cohort default rate no longer applies.

(b) Identify the borrowers in a cohort. (1) Except 

as provided in paragraph (b)(3) of this section, your 

cohort for a fiscal year consists of all of your current 

and former students who, during that fiscal year, entered 

repayment on any Federal Stafford loan, Federal SLS loan, 

Direct Subsidized loan, or Direct Unsubsidized loan that 

they received to attend your institution, or on the portion 

of a loan made under the Federal Consolidation Loan Program 

or the Federal Direct Consolidation Loan Program (as 

defined in 34 CFR 685.102) that is used to repay those 

loans.

(2) A borrower may be included in more than one of 

your cohorts and may be included in the cohorts of more 

than one institution in the same fiscal year.
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(3) A TEACH Grant that has been converted to a 

Federal Direct Unsubsidized Loan is not considered for the 

purpose of calculating and applying cohort default rates.

(c) Identify the borrowers in a cohort who are in 

default. (1) (1) Except as provided in paragraph (c)(2) of 

this section, a borrower in a cohort for a fiscal year is 

considered to be in default if, before the end of the 

following second fiscal year following the fiscal year the 

borrower entered repayment--,

(i) tThe borrower defaults on any FFELP loan that was 

used to include the borrower in the cohort or on any 

Federal Consolidation Loan Program loan that repaid a loan 

that was used to include the borrower in the cohort 

(however, a borrower is not considered to be in default 

unless a claim for insurance has been paid on the loan by a 

guaranty agency or by us);

(ii) Before the end of the following fiscal year,

tThe borrower fails to make an installment payment, when 

due, on any Direct Loan Program loan that was used to 

include the borrower in the cohort or on any Federal Direct 

Consolidation Loan Program loan that repaid a loan that was 

used to include the borrower in the cohort, and the 

borrower's failure persists for 360 days (or for 270 days, 

if the borrower's first day of delinquency was before 

October 7, 1998); or

(iii) Before the end of the following fiscal year,

yYou or your owner, agent, contractor, employee, or any 

other affiliated entity or individual make a payment to 

prevent a borrower's default on a loan that is used to 

include the borrower in that cohort.
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(2) A borrower is not considered to be in default 

based on a loan that is, before the end of the second 

fiscal year immediately following the fiscal year in which 

it entered repayment--

(i) Rehabilitated under 34 CFR 682.405 or 34 CFR 

685.211(e); or

(ii) Repurchased by a lender because the claim for 

insurance was submitted or paid in error.

(d) Calculate the cohort default rate. Except as 

provided in §668.203184, if there are--

(1)(i) Thirty or more borrowers in your cohort for a 

fiscal year, your cohort default rate is the percentage 

that is derived calculated by-- dividing—

(ii) Dividing Tthe number of borrowers in the cohort 

who are in default, as determined under paragraph (c) of 

this section; by (ii)T the number of borrowers in the 

cohort, as determined under paragraph (b) of this section.

(2)(i) Fewer than 30 borrowers in your cohort for a 

fiscal year, your cohort default rate is the percentage 

that is calculated derived by dividing—

(ii) Dividing Tthe total number of borrowers in that 

cohort and in the two most recent prior cohorts who are in 

default, as determined for each cohort under paragraph (c) 

of this section; by (ii) T the total number of borrowers in 

that cohort and the two most recent prior cohorts, as 

determined for each cohort under paragraph (b) of this 

section.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 
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(Authority: 20 U.S.C. 1070g, 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 67 FR 67075, Nov. 

1, 2002; 73 FR 35494, June 23, 2008]

§668.203184 Determining cohort default rates for 

institutions that have undergone a change in status.

(a) General. (1) If you undergo a change in status 

identified in this section, your cohort default rate is 

determined under this section.

(2) In determining cohort default rates under this 

section, the date of a merger, acquisition, or other change 

in status is the date the change occurs.

(3) A change in status may affect your eligibility to 

participate in Title IV, HEA programs under §668.206187 or 

§668.188207.

(4) If another institution's cohort default rate is 

applicable to you under this section, you may challenge, 

request an adjustment, or submit an appeal for the cohort 

default rate under the same requirements that would be 

applicable to the other institution under §§668.204185 and 

668.189208.

(b) Acquisition or merger of institutions. If your 

institution acquires, or was created by the merger of, one 

or more institutions that participated independently in the 

Title IV, HEA programs immediately before the acquisition 

or merger--

(1) For the cohort default rates published before the 

date of the acquisition or merger, your cohort default 

rates are the same as those of your predecessor that had 

the highest total number of borrowers entering repayment in 
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the two most recent cohorts used to calculate those cohort 

default rates; and

(2) Beginning with the first cohort default rate 

published after the date of the acquisition or merger, your 

cohort default rates are determined by including the 

applicable borrowers from each institution involved in the 

acquisition or merger in the calculation under §668.202183.

(c) Acquisition of branches or locations. If you 

acquire a branch or a location from another institution 

participating in the Title IV, HEA programs--

(1) The cohort default rates published for you before 

the date of the change apply to you and to the newly 

acquired branch or location;

(2) Beginning with the first cohort default rate 

published after the date of the change, your cohort default 

rates for the next 3 fiscal years are determined by 

including the applicable borrowers from your institution 

and the other institution (including all of its locations) 

in the calculation under §668.202183;

(3) After the period described in paragraph (c)(2) of 

this section, your cohort default rates do not include 

borrowers from the other institution in the calculation 

under §668.202183; and

(4) At all times, the cohort default rate for the 

institution from which you acquired the branch or location 

is not affected by this change in status.

(d) Branches or locations becoming institutions. If 

you are a branch or location of an institution that is 

participating in the Title IV, HEA programs, and you become 
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a separate, new institution for the purposes of 

participating in those programs--

(1) The cohort default rates published before the 

date of the change for your former parent institution are 

also applicable to you;

(2) Beginning with the first cohort default rate 

published after the date of the change, your cohort default 

rates for the next 3 fiscal years are determined by 

including the applicable borrowers from your institution 

and your former parent institution (including all of its 

locations) in the calculation under §668.202183; and

(3) After the period described in paragraph (d)(2) of 

this section, your cohort default rates do not include 

borrowers from your former parent institution in the 

calculation under §668.183202.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.204185 Draft cohort default rates and your ability to 

challenge before official cohort default rates are issued.

(a) General. (1) We notify you of your draft cohort 

default rate before your official cohort default rate is 

calculated. Our notice includes the loan record detail 

report for the draft cohort default rate.

(2) Regardless of the number of borrowers included in 

your cohort, your draft cohort default rate is always 

calculated using data for that fiscal year alone, using the 

method described in §668.202183(d)(1).
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(3) Your draft cohort default rate and the loan 

record detail report are not considered public information 

and may not be otherwise voluntarily released to the public

by a data manager, except that we will publish life of 

cohort default rates, including rates for the second and 

third fiscal year after students enter repayment.

(4) Any challenge you submit under this section and 

any response provided by a data manager must be in a format 

acceptable to us. This acceptable format is described in 

the ―Cohort Default Rate Guide‖ that we provide to you. If 

your challenge does not comply with the requirements in the 

―Cohort Default Rate Guide,‖ we may deny your challenge.

(b) Incorrect data challenges. (1) You may 

challenge the accuracy of the data included on the loan 

record detail report by sending a challenge to the relevant 

data manager, or data managers, within 45 days after you 

receive the data. Your challenge must include--

(i) A description of the information in the loan 

record detail report that you believe is incorrect; and

(ii) Documentation that supports your contention that 

the data are incorrect.

(2) Within 30 days after receiving your challenge, 

the data manager must send you and us a response that--

(i) Addresses each of your allegations of error; and

(ii) Includes the documentation that supports the 

data manager's position.

(3) If your data manager concludes that draft data in 

the loan record detail report are incorrect, and we agree, 
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we use the corrected data to calculate your cohort default 

rate.

(4) If you fail to challenge the accuracy of data 

under this section, you cannot contest the accuracy of 

those data in an uncorrected data adjustment, under 

§668.209190, or in an erroneous data appeal, under 

§668.192211.

(c) Participation rate index challenges. (1)(i) You 

may challenge an anticipated loss of eligibility under 

§668.206187(a)(1), based on one cohort default rate over 40 

percent, if your participation rate index for that cohort's 

fiscal year is equal to or less than 0.06015.

(ii) You may challenge an anticipated loss of 

eligibility under §668.206187(a)(2), based on three cohort 

default rates of 2530 percent or greater, if your 

participation rate index is equal to or less than 0.0375

0.0625 for any of those three cohorts' fiscal years.

(iii) You may challenge a potential placement on 

provisional certification under 34 CFR §668.16(m)(2)(i), 

based on two cohort default rates that fail to satisfy the 

standard of administrative capability in 34 CFR

§668.16(m)(1)(ii), if your participation rate index is 

equal to or less than 0.0625 for either of the two cohorts' 

fiscal years.

(2) For a participation rate index challenge, your 

participation rate index is calculated as described in 

§668.214195(b), except that--

(i) The draft cohort default rate is considered to be 

your most recent cohort default rate; and
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(ii) If the cohort used to calculate your draft 

cohort default rate included fewer than 30 borrowers, you 

may calculate your participation rate index for that fiscal 

year using either your most recent draft cohort default 

rate or the average rate that would be calculated for that 

fiscal year, using the method described in 

§668.202183(d)(2).

(3) You must send your participation rate index 

challenge, including all supporting documentation, to us 

within 45 days after you receive your draft cohort default 

rate.

(4) We notify you of our determination on your 

participation rate index challenge before your official 

cohort default rate is published.

(5) If we determine that you qualify for continued 

eligibility or full certification based on your 

participation rate index challenge, you will not lose 

eligibility under §668.206187 or be placed on provisional 

certification under 34 CFR§668.16(m)(2)(i) when your next 

official cohort default rate is published. A successful 

challenge that is based on your draft cohort default rate 

does not excuse you from any other loss of eligibility or 

placement on provisional certification. However, if your 

successful challenge of a loss of eligibility under 

paragraph (c)(1)(ii) or (c)(1)(iii) of this section is 

based on a prior, official cohort default rate, and not on 

your draft cohort default rate, we also excuse you from any 

subsequent loss of eligibility, under §668.206187(a)(2), or 

placement on provisional certification, under 
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§668.16(m)(2)(i), that would be based on that official 

cohort default rate.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.205186 Notice of your official cohort default rate.

(a) We electronically notify you of your cohort 

default rate after we calculate it, by sending you an eCDR 

notification package to the destination point you 

designate. After we send our notice to you, we publish a 

list of cohort default rates for all institutions.

(b) If your cohort default rate is 10 percent or 

more, we include a copy of the loan record detail report 

with the notice. If your school had one or more borrowers 

entering repayment in the fiscal year for which the rate is 

calculated, or are is subject to sanctions, or if the 

Department believes your school will have an official 

cohort default rate calculated as an average rate, you will 

receive a loan record detail report as part of your eCDR 

notification package with your electronic notice.

(c) If your cohort default rate is less than 10 

percent—

(1) You may request a copy of any loan record detail 

report that lists loans included in your cohort default 

rate calculation; and

(2) If you are requesting an adjustment or appealing 

under this subpart, your request for a copy of the loan 

record detail report or reports must be sent to us within 

15 days after you receive the notice of your cohort default 
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rate. You have five business days, from the transmission 

date for eCDR notification packages as posted on the 

Department's Wweb site, to report any problem with receipt 

of the electronic transmission of your eCDR notification

package.

(d) Except as provided in paragraph (e) of this 

section, timelines Timelines for submitting challenges, 

adjustments, and appeals begin on the sixth business day 

following the announced transmission date for eCDR 

notification packages that is posted on the Department’s 

Web site.

(e) If you timely report a problem with the receipt 

of the electronic transmission of your eCDR notification 

package under paragraph (c) of this section and the 

Department agrees that the Department caused the problem 

with the transmission, the Department will extend the 

challenge, appeal and adjustment deadlines and timeframes 

to account for a retransmission of your eCDR notification 

package the information after the technical problem is 

resolved.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.206187 Consequences of cohort default rates on your 

ability to participate in Title IV, HEA programs.

(a) End of participation. (1) Except as provided in 

paragraph (fe) of this section, you lose your eligibility 

to participate in the FFEL and Direct Loan programs 30 days 

after you receive our notice that your most recent cohort 

default rate is greater than 40 percent.
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(2) Except as provided in paragraphs (de) and (ef) of 

this section, you lose your eligibility to participate in 

the FFEL, Direct Loan, and Federal Pell Grant programs 30 

days after you receive our notice that your three most 

recent cohort default rates are each 25 30 percent or 

greater.

(b) Length of period of ineligibility. Your loss of 

eligibility under this section continues--

(1) For the remainder of the fiscal year in which we 

notify you that you are subject to a loss of eligibility; 

and

(2) For the next 2 fiscal years.

(c) Using a cohort default rate more than once. The 

use of a cohort default rate as a basis for a loss of 

eligibility under this section does not preclude its use as 

a basis for--

(1) Any concurrent or subsequent loss of eligibility 

under this section; or

(2) Any other action by us.

(d) Special institutions. If you are a special 

institution that satisfies the requirements for continued 

eligibility under §668.198, you are not subject to any loss 

of eligibility under this section or to provisional 

certification under §668.16(m).

(ed) Continuing participation in Pell. If you are 

subject to a loss of eligibility under paragraph (a)(2) of 

this section, based on three cohort default rates of 30 25

percent or greater, you may continue to participate in the 

Federal Pell Grant Program if we determine that you--
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(1) Were ineligible to participate in the FFEL and 

Direct Loan programs before October 7, 1998, and your 

eligibility was not reinstated;

(2) Requested in writing, before October 7, 1998, to 

withdraw your participation in the FFEL and Direct Loan 

programs, and you were not later reinstated; or

(3) Have not certified an FFELP loan or originated a 

Direct Loan Program loan on or after July 7, 1998.

(fe) Requests for adjustments and appeals. (1) A 

loss of eligibility under this section does not take effect 

while your request for adjustment or appeal, as listed in 

§668.208189(a), is pending, provided your request for 

adjustment or appeal is complete, timely, accurate, and in 

the required format.

(2) Eligibility continued under paragraph (ef)(1) of 

this section ends if we determine that none of the requests 

for adjustments and appeals you have submitted qualify you 

for continued eligibility under §668.189208. Loss of 

eligibility takes effect on the date that you receive 

notice of our determination on your last pending request 

for adjustment or appeal.

(3) You do not lose eligibility under this section if 

we determine that your request for adjustment or appeal 

meets all requirements of this subpart and qualifies you 

for continued eligibility under §668.189208.

(4) To avoid liabilities you might otherwise incur

under paragraph (gf) of this section, you may choose to 

suspend your participation in the FFEL and Direct Loan 

programs during the adjustment or appeal process.
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(gf) Liabilities during the adjustment or appeal 

process. If you continued to participate in the FFEL or 

Direct Loan Program under paragraph (fe)(1) of this 

section, and we determine that none of your requests for 

adjustments or appeals qualify you for continued 

eligibility--

(1) For any FFEL or Direct Loan Program loan that you 

certified and delivered or originated and disbursed more 

than 30 days after you received the notice of your cohort 

default rate, we estimate the amount of interest, special 

allowance, reinsurance, and any related or similar payments 

we make or are obligated to make on those loans;

(2) We exclude from this estimate any amount 

attributable to funds that you delivered or disbursed more 

than 45 days after you submitted your completed appeal to 

us;

(3) We notify you of the estimated amount; and

(4) Within 45 days after you receive our notice of 

the estimated amount, you must pay us that amount, unless—

(i) You file an appeal under the procedures 

established in subpart H of this part (for the purposes of 

subpart H of this part, our notice of the estimate is 

considered to be a final program review determination); or

(ii) We permit a longer repayment period.

(gh) Regaining eligibility. If you lose your 

eligibility to participate in a program under this section, 

you may not participate in that program until--

(1) The period described in paragraph (b) of this 

section has ended;
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(2) You pay any amount owed to us under this section 

or are meeting that obligation under an agreement 

acceptable to us;

(3) You submit a new application for participation in 

the program;

(4) We determine that you meet all of the 

participation requirements in effect at the time of your 

application; and

(5) You and we enter into a new program participation 

agreement.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§ 668.207188 Preventing evasion of the consequences of 

cohort default rates.

(a) General. Unless you are a special institution 

complying with §668.198, yYou are subject to a loss of 

eligibility that has already been imposed against another 

institution as a result of cohort default rates if--

(1) You and the ineligible institution are both 

parties to a transaction that results in a change of 

ownership, a change in control, a merger, a consolidation, 

an acquisition, a change of name, a change of address, any 

change that results in a location becoming a freestanding 

institution, a purchase or sale, a transfer of assets, an 

assignment, a change of identification number, a contract 

for services, an addition or closure of one or more 

locations or branches or educational programs, or any other 
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change in whole or in part in institutional structure or 

identity;

(2) Following the change described in paragraph 

(a)(1) of this section, you offer an educational program at 

substantially the same address at which the ineligible 

institution had offered an educational program before the 

change; and

(3) There is a commonality of ownership or management 

between you and the ineligible institution, as the 

ineligible institution existed before the change.

(b) Commonality of ownership or management. For the 

purposes of this section, a commonality of ownership or 

management exists if, at each institution, the same person 

(as defined in 34 CFR 600.31) or members of that person's 

family, directly or indirectly--

(1) Holds or held a managerial role; or

(2) Has or had the ability to affect substantially 

the institution's actions, within the meaning of 34 CFR 

600.21.

(c) Teach-outs. Notwithstanding paragraph (b)(1) of 

this section, a commonality of management does not exist if 

you are conducting a teach-out under a teach-out agreement 

as defined in 34 CFR 602.3 and administered in accordance 

with 34 CFR 602.24(c), and--

(1)(i) Within 60 days after the change described in 

this section, you send us the names of the managers for 

each facility undergoing the teach-out as it existed before 

the change and for each facility as it exists after you 

believe that the commonality of management has ended; and
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(ii) We determine that the commonality of management, 

as described in paragraph (b)(1) of this section, has 

ended; or

(2)(i) Within 30 days after you receive our notice 

that we have denied your submission under paragraph 

(c)(1)(i) of this section, you make the management changes 

we request and send us a list of the names of the managers 

for each facility undergoing the teach-out as it exists 

after you make those changes; and

(ii) We determine that the commonality of management, 

as described in paragraph (b)(1) of this section, has 

ended.

(d) Initial determination. We encourage you to 

contact us before undergoing a change described in this 

section. If you write to us, providing the information we 

request, we will provide a written initial determination of 

the anticipated change's effect on your eligibility.

(e) Notice of accountability. (1) We notify you in 

writing if, in response to your notice or application filed 

under 34 CFR 600.20 or 600.21, we determine that you are 

subject to a loss of eligibility, under paragraph (a) of 

this section, that has been imposed against another 

institution.

(2) Our notice also advises you of the scope and 

duration of your loss of eligibility. The loss of 

eligibility applies to all of your locations from the date 

you receive our notice until the expiration of the period 

of ineligibility applicable to the other institution.

(3) If you are subject to a loss of eligibility under 

this section that has already been imposed against another 
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institution, you may only request an adjustment or submit 

an appeal for the loss of eligibility under the same 

requirements that would be applicable to the other 

institution under §668.189208.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.208189 General requirements for adjusting official 

cohort default rates and for appealing their consequences.

(a) Remaining eligible. You do not lose eligibility 

under §668.206187 if--

(1) We recalculate your cohort default rate, and it 

is below the percentage threshold for the loss of 

eligibility as the result of--

(i) An uncorrected data adjustment submitted under 

this section and §668.209190;

(ii) A new data adjustment submitted under this 

section and §668.210191;

(iii) An erroneous data appeal submitted under this 

section and §668.192211; or

(iv) A loan servicing appeal submitted under this 

section and §668.212193; or

(2) You meet the requirements for--

(i) An economically disadvantaged appeal submitted 

under this section and §668.213194;

(ii) A participation rate index appeal submitted 

under this section and §668.195214;
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(iii) An average rates appeal submitted under this 

section and §668.196215; or

(iv) A thirty-or-fewer borrowers appeal submitted 

under this section and §668.216197.

(b) Limitations on your ability to dispute your 

cohort default rate. (1) You may not dispute the 

calculation of a cohort default rate except as described in 

this subpart or in 34 CFR §668.16(m)(2).

(2) You may not request an adjustment or appeal a 

cohort default rate, under §§668.209190, 668.191210, 

668.192211, or 668.212193, more than once.

(3) You may not request an adjustment or appeal a 

cohort default rate, under §§668.209190, 668.210191, 

668.192211, or 668.193212, if you previously lost your 

eligibility to participate in a Title IV, HEA program, 

under §668.206187, or were placed on provisional 

certification under 34 CFR §668.16(m)(2)(i), based entirely 

or partially on that cohort default rate.

(c) Content and format of requests for adjustments 

and appeals. We may deny your request for adjustment or 

appeal if it does not meet the following requirements:

(1) All appeals, notices, requests, independent 

auditor's opinions, management's written assertions, and 

other correspondence that you are required to send under

this subpart must be complete, timely, accurate, and in a 

format acceptable to us. This acceptable format is 

described in the ―Cohort Default Rate Guide‖ that we 

provide to you.

(2) Your completed request for adjustment or appeal 

must include--
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(i) All of the information necessary to substantiate 

your request for adjustment or appeal; and

(ii) A certification by your chief executive officer, 

under penalty of perjury, that all the information you 

provide is true and correct.

(d) Our copies of your correspondence. Whenever you 

are required by this subpart to correspond with a party 

other than us, you must send us a copy of your 

correspondence within the same time deadlines. However, 

you are not required to send us copies of documents that 

you received from us originally.

(e) Requirements for data managers' responses. (1) 

Except as otherwise provided in this subpart, if this 

subpart requires a data manager to correspond with any 

party other than us, the data manager must send us a copy 

of the correspondence within the same time deadlines.

(2) If a data manager sends us correspondence under 

this subpart that is not in a format acceptable to us, we 

may require the data manager to revise that 

correspondence's format, and we may prescribe a format for 

that data manager's subsequent correspondence with us.

(f) Our decision on your request for adjustment or 

appeal. (1) We determine whether your request for an 

adjustment or appeal is in compliance with this subpart.

(2) In making our decision for an adjustment, under 

§§668.209190 or 668.191210, or an appeal, under 

§§668.211192 or 668.212193—

(i) We presume that the information provided to you 

by a data manager is correct unless you provide substantial 

evidence that shows the information is not correct; and
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(ii) If we determine that a data manager did not 

provide the necessary clarifying information or legible 

records in meeting the requirements of this subpart, we 

presume that the evidence that you provide to us is correct 

unless it is contradicted or otherwise proven to be 

incorrect by information we maintain.

(3) Our decision is based on the materials you submit 

under this subpart. We do not provide an oral hearing.

(4) We notify you of our decision--

(i) If you request an adjustment or appeal because 

you are subject to a loss of eligibility under §668.206187

or potential placement on provisional certification under 

§668.16(m)(2)(i) or bring file an economically 

disadvantaged appeal under §668.213(a)(2), within 45 days 

after we receive your completed request for an adjustment 

or appeal; or

(ii) In all other cases, except for appeals submitted 

under §668.211192(a) to related to avoid following 

placement on provisional certification, before we notify 

you of your next official cohort default rate.

(5) You may not seek judicial review of our 

determination of a cohort default rate until we issue our 

decision on all pending requests for adjustments or appeals 

for that cohort default rate.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.209190 Uncorrected data adjustments.
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(a) Eligibility. You may request an uncorrected data 

adjustment for your most recent cohort of borrowers, used 

to calculate your most recent official cohort default rate, 

if in response to your challenge under §668.185204(b), a 

data manager agreed correctly to change the data, but the 

changes are not reflected in your official cohort default 

rate.

(b) Deadlines for requesting an uncorrected data 

adjustment. (1) If the loan record detail report was not 

included with your official cohort default rate notice, you 

must request it within 15 days after you receive the notice 

of your official cohort default rate.

(2) You must send us a request for an uncorrected

data adjustment, including all supporting documentation, 

within 30 days after you receive your loan record detail 

report from us.

(c) Determination. We recalculate your cohort 

default rate, based on the corrected data, and 

electronically correct the rate that is publicly released,

if we determine that--

(1) In response to your challenge under 

§668.204185(b), a data manager agreed to change the data;

(2) The changes described in paragraph (c)(1) of this 

section are not reflected in your official cohort default 

rate; and

(3) We agree that the data are incorrect.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)
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§668.210191 New data adjustments.

(a) Eligibility. You may request a new data 

adjustment for your most recent cohort of borrowers, used 

to calculate your most recent official cohort default rate, 

if--

(1) A comparison of the loan record detail reports 

that we provide to you for the draft and official cohort 

default rates shows that the data have been newly included, 

excluded, or otherwise changed; and

(2) You identify errors in the data described in 

paragraph (a)(1) of this section that are confirmed by the 

data manager.

(b) Deadlines for requesting a new data adjustment.

(1) If the loan record detail report was not included with 

your official cohort default rate notice, you must request 

it within 15 days after you receive the notice of your 

official cohort default rate.

(2) (1) You must send to the relevant data manager, 

or data managers, and us a request for a new data 

adjustment, including all supporting documentation, within 

15 days after you receive your loan record detail report 

from us.

(3) (2) Within 20 days after receiving your request 

for a new data adjustment, the data manager must send you 

and us a response that--

(i) Addresses each of your allegations of error; and

(ii) Includes the documentation used to support the 

data manager's position.
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(4)(3) Within 15 days after receiving a guaranty 

agency's notice that we hold an FFELP loan about which you 

are inquiring, you must send us your request for a new data 

adjustment for that loan. We respond to your request as 

set forth under paragraph (b)(23) of this section.

(5) (4) Within 15 days after receiving incomplete or 

illegible records or data from a data manager, you must 

send a request for replacement records or clarification of 

data to the data manager and us.

(6)(5) Within 20 days after receiving your request 

for replacement records or clarification of data, the data 

manager must--

(i) Replace the missing or illegible records;

(ii) Provide clarifying information; or

(iii) Notify you and us that no clarifying 

information or additional or improved records are 

available.

(7)(6) You must send us your completed request for a 

new data adjustment, including all supporting 

documentation--

(i) Within 30 days after you receive the final data 

manager's response to your request or requests; or

(ii) If you are also filing an erroneous data appeal 

or a loan servicing appeal, by the latest of the filing 

dates required in paragraph (b)(6)(i) of this section or in 

§668.211192(b)(6)(i) or §668.212193(c)(10)(i).

(c) Determination. If we determine that incorrect 

data were used to calculate your cohort default rate, we 

recalculate your cohort default rate based on the correct 
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data, and electronically correct the rate that is publicly 

released.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.21192 Erroneous data appeals.

(a) Eligibility. Except as provided in 

§668.189208(b), you may appeal the calculation of a cohort 

default rate upon which a loss of eligibility, under 

§668.206187, or provisional certification, under 

§668.16(m), is based if--

(1) You dispute the accuracy of data that you 

previously challenged on the basis of incorrect data, under 

§668.204185(b); or

(2) A comparison of the loan record detail reports 

that we provide to you for the draft and official cohort 

default rates shows that the data have been newly included, 

excluded, or otherwise changed, and you dispute the 

accuracy of that data.

(b) Deadlines for submitting an appeal. (1) You 

must send a request for verification of data errors to the 

relevant data manager, or data managers, and to us within 

15 days after you receive the notice of your loss of 

eligibility or provisional certification. Your request must 

include a description of the information in the cohort 

default rate data that you believe is incorrect and all 

supporting documentation that demonstrates the error.
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(2) Within 20 days after receiving your request for 

verification of data errors, the data manager must send you 

and us a response that--

(i) Addresses each of your allegations of error; and

(ii) Includes the documentation used to support the 

data manager's position.

(3) Within 15 days after receiving a guaranty 

agency's notice that we hold an FFELP loan about which you 

are inquiring, you must send us your request for 

verification of that loan's data errors. Your request must 

include a description of the information in the cohort 

default rate data that you believe is incorrect and all 

supporting documentation that demonstrates the error. We 

respond to your request as set forth under paragraph (b)(2) 

of this section.

(4) Within 15 days after receiving incomplete or 

illegible records or data, you must send a request for 

replacement records or clarification of data to the data 

manager and us.

(5) Within 20 days after receiving your request for 

replacement records or clarification of data, the data 

manager must--

(i) Replace the missing or illegible records;

(ii) Provide clarifying information; or

(iii) Notify you and us that no clarifying 

information or additional or improved records are 

available.

(6) You must send your completed appeal to us, 

including all supporting documentation--
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(i) Within 30 days after you receive the final data 

manager's response to your request; or

(ii) If you are also requesting a new data adjustment 

or filing a loan servicing appeal, by the latest of the 

filing dates required in paragraph (b)(6)(i) of this 

section or in §668.210191(b)(6)(i) or 

§668.193212(c)(10)(i).

(c) Determination. If we determine that incorrect 

data were used to calculate your cohort default rate, we 

recalculate your cohort default rate based on the correct 

data and electronically correct the rate make electronic 

corrections to that data that is publicly released.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.212193 Loan servicing appeals.

(a) Eligibility. Except as provided in 

§668.208189(b), you may appeal, on the basis of improper 

loan servicing or collection, the calculation of--

(1) Your most recent cohort default rate; or

(2) Any cohort default rate upon which a loss of 

eligibility under §668.206187 is based.

(b) Improper loan servicing. For the purposes of 

this section, a default is considered to have been due to 

improper loan servicing or collection only if the borrower 

did not make a payment on the loan and you prove that the 

FFEL Program lender or the Direct Loan Servicer, as defined 

in 34 CFR 685.102, failed to perform one or more of the 

following activities, if that activity applies to the loan:
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(1) Send at least one letter (other than the final 

demand letter) urging the borrower to make payments on the 

loan.;

(2) Attempt at least one phone call to the borrower.;

(3) Send a final demand letter to the borrower.;

(4) For a Direct Loan Program loan only, document 

that skip tracing was performed if the Direct Loan Servicer 

determined that it did not have the borrower's current 

address.; and

(5) For an FFELP loan only--

(i) Submit a request for preclaims or default 

aversion assistance to the guaranty agency; and

(ii) Submit a certification or other documentation 

that skip tracing was performed to the guaranty agency.

(c) Deadlines for submitting an appeal. (1) If the 

loan record detail report was not included with your 

official cohort default rate notice, you must request it 

within 15 days after you receive the notice of your 

official cohort default rate.

(2) You must send a request for loan servicing 

records to the relevant data manager, or data managers, and 

to us within 15 days after you receive your loan record 

detail report from us. If the data manager is a guaranty 

agency, your request must include a copy of the loan record 

detail report.

(3) Within 20 days after receiving your request for 

loan servicing records, the data manager must--

(i) Send you and us a list of the borrowers in your 

representative sample, as described in paragraph (d) of 
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this section (the list must be in social security number 

order, and it must include the number of defaulted loans 

included in the cohort for each listed borrower);

(ii) Send you and us a description of how your 

representative sample was chosen; and

(iii) Either send you copies of the loan servicing 

records for the borrowers in your representative sample and 

send us a copy of its cover letter indicating that the 

records were sent, or send you and us a notice of the 

amount of its fee for providing copies of the loan 

servicing records.

(4) The data manager may charge you a reasonable fee 

for providing copies of loan servicing records, but it may 

not charge more than $10 per borrower file. If a data 

manager charges a fee, it is not required to send the 

documents to you until it receives your payment of the fee.

(5) If the data manager charges a fee for providing 

copies of loan servicing records, you must send payment in 

full to the data manager within 15 days after you receive 

the notice of the fee.

(6) If the data manager charges a fee for providing 

copies of loan servicing records, and--

(i) You pay the fee in full and on time, the data 

manager must send you, within 20 days after it receives 

your payment, a copy of all loan servicing records for each 

loan in your representative sample (the copies are provided 

to you in hard copy format unless the data manager and you 

agree that another format may be used), and it must send us 

a copy of its cover letter indicating that the records were 

sent; or
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(ii) You do not pay the fee in full and on time, the 

data manager must notify you and us of your failure to pay 

the fee and that you have waived your right to challenge 

the calculation of your cohort default rate based on the 

data manager's records. We accept that determination unless 

you prove that it is incorrect.

(7) Within 15 days after receiving a guaranty 

agency's notice that we hold an FFELP loan about which you 

are inquiring, you must send us your request for the loan 

servicing records for that loan. We respond to your request 

under paragraph (c)(3) of this section.

(8) Within 15 days after receiving incomplete or 

illegible records, you must send a request for replacement 

records to the data manager and us.

(9) Within 20 days after receiving your request for 

replacement records, the data manager must either--

(i) Replace the missing or illegible records; or

(ii) Notify you and us that no additional or improved 

copies are available.

(10) You must send your appeal to us, including all 

supporting documentation—

(i) Within 30 days after you receive the final data 

manager's response to your request for loan servicing 

records; or

(ii) If you are also requesting a new data adjustment 

or filing an erroneous data appeal, by the latest of the 

filing dates required in paragraph (c)(10)(i) of this 

section or in §668.210191(b)(6)(i) or §668.192211(b)(6)(i).
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(d) Representative sample of records. (1) To select 

a representative sample of records, the data manager first 

identifies all of the borrowers for whom it is responsible 

and who had loans that were considered to be in default in 

the calculation of the cohort default rate you are 

appealing.

(2) From the group of borrowers identified under 

paragraph (d)(1) of this section, the data manager 

identifies a sample that is large enough to derive an 

estimate, acceptable at a 95 percent confidence level with 

a plus or minus 5 percent confidence interval, for use in 

determining the number of borrowers who should be excluded 

from the calculation of the cohort default rate due to 

improper loan servicing or collection.

(e) Loan servicing records. Loan servicing records 

are the collection and payment history records--

(1) Provided to the guaranty agency by the lender and 

used by the guaranty agency in determining whether to pay a 

claim on a defaulted loan; or

(2) Maintained by our Direct Loan Servicer that are 

used in determining your cohort default rate.

(f) Determination. (1) We determine the number of 

loans, included in your representative sample of loan 

servicing records, that defaulted due to improper loan 

servicing or collection, as described in paragraph (b) of 

this section.

(2) Based on our determination, we use a 

statistically valid methodology to exclude the 

corresponding percentage of borrowers from both the 

numerator and denominator of the calculation of your cohort 
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default rate, and electronically correct the rate that is 

publicly released.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 67 FR 67075, Nov. 

1, 2002]

§668.213194 Economically disadvantaged appeals.

(a) Eligibility General. As provided in this section

described in this section, you may appeal--

(1) aA notice of a loss of eligibility under 

§668.206187; or

(2) Aa notice of a second successive official cohort 

default rate calculated under this subpart that is equal to 

or greater than 30 percent but less than or equal to 40 

percent, potentially subjecting you to provisional 

certification under 34 CFR §668.16(m)(2)(i).

(b) Eligibility. You may appeal under this section

if an independent auditor's opinion certifies that your low

income rate is two-thirds or more and--

(1) You offer an associate, baccalaureate, graduate, 

or professional degree, and your completion rate is 70 

percent or more; or

(2) You do not offer an associate, baccalaureate, 

graduate, or professional degree, and your placement rate 

is 44 percent or more.
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(bc) Low income rate. (1) Your low income rate is 

the percentage of your students, as described in paragraph 

(bc)(2) of this section, who--

(i) For an award year that overlaps the 12-month 

period selected under paragraph (cb)(2) of this section, 

have an expected family contribution, as defined in 34 CFR 

690.2, that is equal to or less than the largest expected 

family contribution that would allow a student to receive 

one-half of the maximum Federal Pell Grant award, 

regardless of the student's enrollment status or cost of 

attendance; or

(ii) For a calendar year that overlaps the 12-month 

period selected under paragraph (cb)(2) of this section, 

have an adjusted gross income that, when added to the 

adjusted gross income of the student's parents (if the 

student is a dependent student) or spouse (if the student 

is a married independent student), is less than the amount 

listed in the Department of Health and Human Services 

poverty guidelines for the size of the student's family 

unit.

(2) The students who are used to determine your low 

income rate include only students who were enrolled on at 

least a half-time basis in an eligible program at your 

institution during any part of a 12-month period that ended 

during the 6 months immediately preceding the cohort's 

fiscal year.

(cd) Completion rate. (1) Your completion rate is 

the percentage of your students, as described in paragraph 

(cd)(2) of this section, who--
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(i) Completed the educational programs in which they 

were enrolled;

(ii) Transferred from your institution to a higher 

level educational program;

(iii) Remained enrolled and are making satisfactory 

progress toward completion of their educational programs at 

the end of the same 12-month period used to calculate the 

low income rate; or

(iv) Entered active duty in the Armed Forces of the 

United States within 1 year after their last date of 

attendance at your institution.

(2) The students who are used to determine your 

completion rate include only regular students who were--

(i) Initially enrolled on a full-time basis in an 

eligible program; and

(ii) Originally scheduled to complete their programs 

during the same 12-month period used to calculate the low 

income rate.

(de) Placement rate. (1) Except as provided in 

paragraph (de)(2) of this section, your placement rate is 

the percentage of your students, as described in paragraphs 

(de)(3) and (de)(4) of this section, who--

(i) Are employed, in an occupation for which you 

provided training, on the date following 1 year after their 

last date of attendance at your institution;

(ii) Were employed for at least 13 weeks, in an 

occupation for which you provided training, between the 

date they enrolled at your institution and the first date 
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that is more than a year after their last date of 

attendance at your institution; or

(iii) Entered active duty in the Armed Forces of the 

United States within 1 year after their last date of 

attendance at your institution.

(2) For the purposes of this section, a former 

student is not considered to have been employed based on 

any employment by your institution.

(3) The students who are used to determine your 

placement rate include only former students who—

(i) Were initially enrolled in an eligible program on 

at least a half-time basis;

(ii) Were originally scheduled, at the time of 

enrollment, to complete their educational programs during 

the same 12-month period used to calculate the low income 

rate; and

(iii) Remained in the program beyond the point at 

which a student would have received a 100 percent tuition 

refund from you.

(4) A student is not included in the calculation of 

your placement rate if that student, on the date that is 1 

year after the student's originally scheduled completion 

date, remains enrolled in the same program and is making 

satisfactory progress.

(ef) Scheduled to complete. In calculating a 

completion or placement rate under this section, the date 

on which a student is originally scheduled to complete a 

program is based on--
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(1) For a student who is initially enrolled fulltime, the amount of time specified in your enrollment 

contract, catalog, or other materials for completion of the 

program by a full-time student; or

(2) For a student who is initially enrolled less than 

full-time, the amount of time that it would take the 

student to complete the program if the student remained at 

that level of enrollment throughout the program.

(fg) Deadline for submitting an appeal. (1) Within 

30 days after you receive the notice of your loss of 

eligibility, you must send us your management's written 

assertion, as described in the Cohort Default Rate Guide.

(2) Within 60 days after you receive the notice of 

your loss of eligibility, you must send us the independent 

auditor's opinion described in paragraph (hg) of this 

section.

(gh) Independent auditor's opinion. (1) The 

independent auditor's opinion must state whether your 

management's written assertion, as you provided it to the 

auditor and to us, meets the requirements for an 

economically disadvantaged appeal and is fairly stated in 

all material respects.

(2) The engagement that forms the basis of the 

independent auditor's opinion must be an examination-level 

compliance attestation engagement performed in accordance 

with--

(i) The American Institute of Certified Public 

Accountant's (AICPA) Statement on Standards for Attestation 

Engagements, Compliance Attestation (AICPA, Professional 

Standards, vol. 1, AT sec. 500), as amended (these 
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standards may be obtained by calling the AICPA's order 

department, at 1–888–777–7077); and

(ii) Government Auditing Standards issued by the 

Comptroller General of the United States.

(hi) Determination. You do not lose eligibility 

under §668.206187, and we do not provisionally certify you 

under 34 CFR §668.16(m)(2)(i), if--

(1) Your independent auditor's opinion agrees that 

you meet the requirements for an economically disadvantaged 

appeal; and

(2) We determine that the independent auditor's 

opinion and your management's written assertion--

(i) Meet the requirements for an economically 

disadvantaged appeal; and

(ii) Are not contradicted or otherwise proven to be 

incorrect by information we maintain, to an extent that 

would render the independent auditor's opinion 

unacceptable.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§ 668.214195 Participation rate index appeals.

(a) Eligibility. (1) You may appeal a notice of a 

loss of eligibility under §668.206187(a)(1), based on one 

cohort default rate over 40 percent, if your participation 

rate index for that cohort's fiscal year is equal to or 

less than 0.06015.
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(2) You may appeal a notice of a loss of eligibility 

under §668.206187(a)(2), based on three cohort default 

rates of 25 30 percent or greater, if your participation 

rate index is equal to or less than 0.0375 0.0625 for any 

of those three cohorts' fiscal years.

(3) You may appeal potential placement on provisional 

certification under 34 CFR §668.16(m)(2)(i) based on two 

cohort default rates that fail to satisfy the standard of 

administrative capability in 34 CFR §668.16(m)(1)(ii) if

your participation rate index is equal to or less than 

0.0625 for either of the two cohorts' fiscal years.

(b) Calculating your participation rate index. (1) 

Except as provided in paragraph (b)(2) of this section, 

your participation rate index for a fiscal year is 

determined by multiplying your cohort default rate for that 

fiscal year by the percentage that is derived by dividing--

(i) The number of students who received an FFELP or a 

Direct Loan Program loan to attend your institution during 

a period of enrollment, as defined in 34 CFR 682.200 or 

685.102, that overlaps any part of a 12-month period that 

ended during the 6 months immediately preceding the 

cohort's fiscal year, by

(ii) The number of regular students who were enrolled 

at your institution on at least a half-time basis during 

any part of the same 12-month period.

(2) If your cohort default rate for a fiscal year is 

calculated as an average rate under §668.183202(d)(2), you 

may calculate your participation rate index for that fiscal 

year using either that average rate or the cohort default 
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rate that would be calculated for the fiscal year alone 

using the method described in §668.202183(d)(1).

(c) Deadline for submitting an appeal. You must send 

us your appeal under this section, including all supporting 

documentation, within 30 days after you receive--

(i) the nNotice of your loss of eligibility; or

(ii) Nnotice of a second cohort default rate that 

exceeds 30 percent but is less than 40 percent and that, in 

combination with an earlier rate, potentially subjects you 

to provisional certification under 34 CFR 668.16(m)(2)(i)..

(d) Determination. (1) You do not lose eligibility 

under §668.187206 , and we do not place you on provisional 

certification, if we determine that you meet the 

requirements for a participation rate index appeal.

(2) If we determine that your participation rate 

index for a fiscal year is equal to or less than 0.0375

0.06015 or 0.0625, under paragraph (d)(1) of this section, 

we also excuse you from any subsequent loss of eligibility 

under §668.206187(a)(2) or placement on provisional 

certification under 34 CFR 668.16(m)(2)(i) that would be 

based on the official cohort default rate for that fiscal 

year.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.215196 Average rates appeals.

(a) Eligibility. (1) You may appeal a notice of a 

loss of eligibility under §668.187206(a)(1), based on one 

cohort default rate over 40 percent, if that cohort default 
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rate is calculated as an average rate under 

§668.202183(d)(2).

(2) You may appeal a notice of a loss of eligibility 

under §668.206187(a)(2), based on three cohort default 

rates of 25 30 percent or greater, if at least two of those 

cohort default rates--

(i) Are calculated as average rates under 

§668.202183(d)(2); and

(ii) Would be less than 25 30 percent if calculated 

for the fiscal year alone using the method described in 

§668.202183(d)(1).

(b) Deadline for submitting an appeal. (1) Before 

notifying you of your official cohort default rate, we make 

an initial determination about whether you qualify for an 

average rates appeal. If we determine that you qualify, we 

notify you of that determination at the same time that we 

notify you of your official cohort default rate.

(2) If you disagree with our initial determination, 

you must send us your average rates appeal, including all 

supporting documentation, within 30 days after you receive 

the notice of your loss of eligibility.

(c) Determination. You do not lose eligibility under 

§668.187206 if we determine that you meet the requirements 

for an average rates appeal.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§668.216197 Thirty-or-fewer borrowers appeals.
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(a) Eligibility. You may appeal a notice of a loss 

of eligibility under §668.206187 if 30 or fewer borrowers, 

in total, are included in the 3 most recent cohorts of 

borrowers used to calculate your cohort default rates.

(b) Deadline for submitting an appeal. (1) Before 

notifying you of your official cohort default rate, we make 

an initial determination about whether you qualify for a 

thirty-or-fewer borrowers appeal. If we determine that you 

qualify, we notify you of that determination at the same 

time that we notify you of your official cohort default 

rate.

(2) If you disagree with our initial determination, 

you must send us your thirty-or-fewer borrowers appeal, 

including all supporting documentation, within 30 days 

after you receive the notice of your loss of eligibility.

(c) Determination. You do not lose eligibility under 

§668.206187 if we determine that you meet the requirements 

for a thirty-or-fewer borrowers appeal.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

§ 668.198 Relief from the consequences of cohort default 

rates for special institutions.

(a) Eligibility. You are only eligible for relief from the 

consequences of cohort default rates under this section if 

you are a—

(1) Historically black college or university as defined in 

section 322(2) of the HEA;
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(2) Tribally controlled community college as defined in 

section 2(a)(4) of the Tribally Controlled Community 

College Assistance Act of 1978; or

(3) Navajo community college under the Navajo Community 

College Act.

(b) Applicability of requirements. We may determine that 

the loss of eligibility provisions in §668.187 and the 

prohibition against full certification in §668.16(m) do not 

apply to you for each 1-year period beginning on July 1 of 

1999 through 2003, if you meet the requirements in 

paragraph (a) of this section and you send us—

(1) By July 1 of the first 1-year period that begins after 

you receive our notice of a loss of eligibility under 

§668.187—

(i) A default management plan; and

(ii) A certification that you have engaged an independent 

third party, as described in this section; and

(2) By July 1 of each subsequent 1-year period—

(i) Evidence that you have implemented your default 

management plan during the preceding 1-year period;

(ii) Evidence that you have made substantial improvement in 

the preceding 1-year period in your cohort default rate; 

and

(iii) A certification that you continue to engage an 

independent third party, as described in this section.

(c) Default management plan. (1) Your default management 

plan must provide reasonable assurance that you will, no 

later than July 1, 2004, have a cohort default rate that is 
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less than 25 percent. Measures that you must take to 

provide this assurance include but are not limited to—

(i) Establishing a default management team by engaging your 

chief executive officer and relevant senior executive 

officials and enlisting the support of representatives from 

offices other than the financial aid office;

(ii) Identifying and allocating the personnel, 

administrative, and financial resources appropriate to 

implement the default management plan;

(iii) Defining the roles and responsibilities of the 

independent third party;

(iv) Defining evaluation methods and establishing a data 

collection system for measuring and verifying relevant 

default management statistics, including a statistical 

analysis of the borrowers who default on their loans;

(v) Establishing annual targets for reductions in your 

cohort default rate; and

(vi) Establishing a process to ensure the accuracy of your 

cohort default rate.

(2) We will determine whether your default management plan 

is acceptable, after considering your history, resources, 

dollars in default, and targets for default reduction in 

making this determination.

(3) If we determine that your proposed default management 

plan is unacceptable, you must consult with us to develop a 

revised plan and submit the revised plan to us within 30 

days after you receive our notice that your proposed plan 

is unacceptable.
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(4) If we determine, based on the evidence you submit under 

paragraph (b)(2) of this section, that your default 

management plan is no longer acceptable, you must develop a 

revised plan in consultation with us and submit the revised 

plan to us within 60 days after you receive our notice that 

your plan is no longer acceptable.

(5) A sample default management plan is provided in 

appendix B to this subpart. The sample is included to 

illustrate components of an acceptable default management 

plan. Since institutions' family income profiles, student 

borrowing patterns, histories, resources, dollars in 

default, and targets for default reduction are different, 

you must consider your own, individual circumstances in 

developing and submitting your plan.

(d) Independent third party. (1) An independent third party 

may be any individual or entity that—

(i) Provides technical assistance in developing and 

implementing your default management plan; and

(ii) Is not substantially controlled by a person who also 

exercises substantial control over your institution.

(2) An independent third party need not be paid by you for

its services.

(3) The services of a lender, guaranty agency, or secondary 

market as an independent third party under this section are 

not considered to be inducements under 34 CFR 682.200 or 

682.401(e).

(e) Substantial improvement. (1) For the purposes of this 

section, your substantial improvement is determined based 

on—
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(i) A reduction in your most recent draft or official 

cohort default rate;

(ii) An increase in the percentage of delinquent borrowers 

who avoid default by using deferments, forbearances, and 

job placement assistance;

(iii) An increase in the academic persistence of student 

borrowers;

(iv) An increase in the percentage of students pursuing 

graduate or professional study;

(v) An increase in the percentage of borrowers for whom a 

current address is known;

(vi) An increase in the percentage of delinquent borrowers 

that you contacted;

(vii) The implementation of alternative financial aid award 

policies and development of financial resources that reduce 

the need for student borrowing; or (viii) An increase in 

the percentage of accurate and timely enrollment status 

changes that you submitted to the National Student Loan 

Data System (NSLDS) on the Student Status Confirmation 

Report (SSCR).

(2) When making a determination of your substantial 

improvement, we consider your performance in light of—

(i) Your history, resources, dollars in default, and 

targets for default reduction;

(ii) Your level of effort in meeting the terms of your 

approved default management plan during the previous 1-year 

period; and

(iii) Any other mitigating circumstance at your institution 

during the 1-year period.
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(f) Determination. (1) If we determine that you are in 

compliance with this section, the provisions of §§668.187 

and 668.16(m) do not apply to you for that 1-year period, 

beginning on July 1 of 1999 through 2003.

(2) If we determine that you are not in compliance with 

this section, you are subject to the provisions of 

§§668.187 and 668.16(m). You lose your eligibility to 

participate in the FFEL, Direct Loan, and Federal Pell 

Grant programs on the date you receive our notice of the 

determination.

(Approved by the Office of Management and Budget under 

control number 1845–0022) 

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 69 FR 12276, Mar. 

16, 2004]

§668.218 217 Default prevention plans.

(a) First year. (1) If your cohort default rate is 

equal to or greater than 30 percent you must establish a 

default prevention task force that prepares a plan to--

(i1) Identify the factors causing your cohort default 

rate to exceed the threshold;

(ii2) Establish measurable objectives and the steps 

you will take to improve your cohort default rate; 

(iii3) Specify the actions you will take to improve 

student loan repayment, including counseling students on 

repayment options; and

(iv4) Submit your default prevention plan to us. 
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(2) We will review your default prevention plan and 

offer technical assistance intended to improve student loan 

repayment.

(b) Second year. (1) If your cohort default rate is 

equal to or greater than 30 percent for two consecutive 

fiscal years, you must revise your default prevention plan 

and submit it to us for review. 

(2) We may require you to revise your default 

prevention plan or specify actions you need to take to 

improve student loan repayment.

Appendix A to Subpart M of Part 668—Summaries of 

Eligibility and Submission Requirements for Challenges, 

Adjustments, and Appeals

I. Summary of Submission Eligibility

Some types of appeals may be submitted only if you are 

subject to a loss of eligibility under §668.187 or to 

provisional certification under §668.16(m). These types of 

appeals are identified in the following table. Submission 

deadlines are described in the paragraphs and sections that 

are cited in the table. For example, although you may 

submit an uncorrected data adjustment, new data adjustment, 

or loan servicing appeal if you are subject to provisional 

certification, the deadlines for those submissions are 

based on the date you receive your cohort default rate, not 

the date you receive the notice of your provisional 

certification.
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II. Summary of Submission Deadlines

1. General. The deadlines you must meet when submitting a 

challenge, a request for adjustment, or an appeal are 

summarized in the following table. The full, official 

requirements for these deadlines are in §668.189 and in the 

sections and paragraphs cited in the table.

2. Timeframes. The timeframes provided in the table (―30 

Days‖, ―15 Days‖, etc.) identify the number of calendar 

days within which that action must be performed. Timeframes 
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begin on the date that the previous action (connected to 

that timeframe with an arrowed line) is completed:

(i) For your first action (and for both actions, during an 

economically disadvantaged appeal), the timeframe begins on 

the date that you receive your draft cohort default rate, 

official cohort default rate, notice of loss of 

eligibility, or notice of provisional certification.

(ii) For all other actions, the timeframe begins on the 

date you receive the response to your pending request. If 

you are waiting for responses from more than one data 

manager, the timeframe begins on the date that you receive 

the final response from the last data manager.

3. Dotted borders. Some actions identified in the table are 

required only in certain circumstances. For example, if we 

don't send you a loan record detail report, because your 

cohort default rate is less than 10 percent, you must 

request one before you can request an adjustment or appeal. 

Timeframes for actions that aren't always required are 

identified in the table by dotted borders:

(i) If you are required to perform that action, the 

timeframes begin on the same dates that they would if the 

timeframe borders were not dotted.

(ii) If you are not required to perform that action, the 

timeframe for your next required action is determined as if 

the timeframes with the dotted borders were not there. The 

timeframe for your next required action begins on the date 

that the last required action was completed.
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Appendix AB to Subpart NM of Part 668—Sample Default 

Management Prevention Plan for Special Institutions to Use 

When Complying With §668.198

This appendix is provided as a sample plan for those 

institutions developing a default management prevention

plan in accordance with §668.198199(a)(1). It describes 

some measures you may find helpful in reducing the number 

of students that default on federally funded loans. These 

are not the only measures you could implement when 
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developing a default management prevention plan. In 

developing a default management plan, you must consider 

your history, resources, dollars in default, and targets 

for default reduction to determine which activities will 

result in the most benefit to your students and to you.

I. Core Default Reduction Strategies (From §668.198(c)(1))

1. Establish a your default management prevention

team by engaging your chief executive officer and relevant 

senior executive officials and enlisting the support of 

representatives from offices other than the financial aid 

office. Consider including individuals and organizations

independent of your institution that have experience in 

preventing title IV loan defaults.

2. Consider your history, resources, dollar in 

default, and targets for default reduction to determine 

which activities will result in the most benefit to you and 

your students.

3. Define evaluation methods and establish a data

collection system for measuring and verifying relevant 

default prevention statistics, including a statistical 

analysis of the borrowers who default on their loans.

2(4). Identify and allocate the personnel, 

administrative, and financial resources appropriate to 

implement the default management prevention plan.

3. Define the roles and responsibilities of the independent 

third party.

4. Define evaluation methods and establish a data 

collection system for measuring and verifying relevant 

default management statistics, including a statistical 

analysis of the borrowers who default on their loans.
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5. Establish annual targets for reductions in your 

rate.

6. Establish a process to ensure the accuracy of your 

rate.

II. Additional Default Reduction Strategies

1. Enhance the borrower's understanding of his or her 

loan repayment responsibilities through counseling and debt 

management activities.

2. Enhance the enrollment retention and academic 

persistence of borrowers through counseling and academic 

assistance.

3. Maintain contact with the borrower after he or she 

leaves your institution by using activities such as skip 

tracing to locate the borrower.

4. Track the borrower's delinquency status by 

obtaining reports from data managers and FFEL Program 

lenders.

5. Enhance student loan repayments through counseling 

the borrower on loan repayment options and facilitating 

contact between the borrower and the data manager or FFEL 

Program lender.

6. Assist a borrower who is experiencing difficulty 

in finding employment through career counseling, job 

placement assistance, and facilitating unemployment 

deferments.

7. Identify and implement alternative financial aid 

award policies and develop alternative financial resources 

that will reduce the need for student borrowing in the 

first 2 years of academic study.
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8. Familiarize the parent, or other adult relative or 

guardian, with the student's debt profile, repayment 

obligations, and loan status by increasing, whenever 

possible, the communication and contact with the parent or 

adult relative or guardian.

III. Defining the Roles and Responsibilities of Independent 

Third Party

1. Specifically define the role of the independent third 

party.

2. Specify the scope of work to be performed by the 

independent third party.

3. Tie the receipt of payments, if required, to the 

performance of specific tasks.

4. Assure that all the required work is satisfactorily 

completed.

IIIV. Statistics for Measuring Progress

1. The number of students enrolled at your 

institution during each fiscal year.

2. The average amount borrowed by a student each 

fiscal year.

3. The number of borrowers scheduled to enter 

repayment each fiscal year.

4. The number of enrolled borrowers who received 

default prevention counseling services each fiscal year.

5. The average number of contacts that you or your 

agent had with a borrower who was in deferment or 

forbearance or in repayment status during each fiscal year.
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6. The number of borrowers at least 60 days 

delinquent each fiscal year.

7. The number of borrowers who defaulted in each 

fiscal year.

8. The type, frequency, and results of activities 

performed in accordance with the default management

prevention plan.