COHORT 

DEFAULT 

RATE 

GUIDE
COHORT 

DEFAULT 

RATE 

GUIDE

Published 

August 2001

U.S.Department 

of Education

Student Financial

Assistance

Default

Management

Washington, DC 

20202-5353
Introduction

Introduction

Contents at a Glance

General Information

Calculating Cohort Default Rates

Cohort Default Rate Effects

Loan Record Detail Report

Change in Status and Evasion 

Department Offices and Addresses 

General Information Tools

Chapter

1.1

Chapter

2.1

Chapter

2.2

Chapter

2.6

Chapter

2.5

Chapter

2.4

Chapter

2.3

Part

I

Part

II

Detailed Table of Contents

 Table of Figures


Challenges, Adjustments,

and Appeals

Incorrect Data 

Challenge

Participation Rate

Index Challenge

Uncorrected Data

Adjustment

New Data

Adjustment

Erroneous Data

Appeal

Loan Servicing

Appeal 

Economically

Disadvantaged Appeal

Participation Rate

Index Appeal

Average Rates

Appeal

Thirty-or-Fewer

Borrowers Appeal

Challenge, Adjustment,

and Appeal Tools

Strategy

School Strategies

Data Manager Strategies

Strategy Tools

Part

IV

Part

III

Chapter

3.1

Chapter

3.2

Chapter

4.10

Chapter

4.9

Chapter

4.8

Chapter

4.7

Chapter

4.6

Chapter

4.5

Chapter

4.4

Chapter

4.3

Chapter

4.2

Chapter

4.1

Chapter

4.11

Chapter

3.3

Glossary

Index of Key Terms



 Appendix A


Detailed Table of Contents

Introduction

Introduction

What is the “Cohort Default Rate Guide?”. . . . . . . . . . . . . . 1.1-1

What kind of cohort default rates 

are not covered in this Guide?. . . . . . . . . . . . . . 1.1-1

How is this Guide organized?. . . . . . . . . . . . . . 1.1-2

How does this version of the Guide differ 

from previous versions of the Guide?. . . . . . . . . . . . . . 1.1-3

How does a school or data manager use this Guide?. . . . . . . . . . . . . . 1.1-4

How can a school or data manager 

provide feedback on this Guide?. . . . . . . . . . . . . . 1.1-6

General Information

Calculating Cohort Default Rates

What is a cohort default rate?. . . . . . . . . . . . . . 2.1-1

Which types of loans are included

in the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-2

When are cohort default rates sent to schools?. . . . . . . . . . . . . . 2.1-3

Who receives cohort default rates?. . . . . . . . . . . . . . 2.1-3

Detailed Table of Contents

Contents - i

Part

I

Chapter

1.1

Part

II

Chapter

2.1
What are the consequences of cohort default rates?. . . . . . . . . . . . . . 2.1-5

What are the time frames for cohort default rates?. . . . . . . . . . . . . . 2.1-6

How does the Department calculate 

a school’s cohort default rate?. . . . . . . . . . . . . . 2.1-7

Which formula does the Department use

to calculate a school’s draft cohort default rate?. . . . . . . . . . . . . . 2.1-9

Which formula does the Department use 

to calculate a school’s official cohort default rate?. . . . . . . . . . . . . . 2.1-9

What is an unofficial cohort default rate?. . . . . . . . . . . . . . 2.1-9

How does the Department determine 

which loans are placed in the denominator

of the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-9

How does the Department determine 

which loans are placed in the numerator 

of the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-10

How do consolidation loans affect the numerator

of the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-11

How does loan rehabilitation affect the numerator

of the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-11

Are there any special circumstances that 

affect how a borrower will be included

in the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-12

What effects do Department actions have

on the cohort default rate calculation?. . . . . . . . . . . . . . 2.1-16

Cohort Default Rate Effects

Why are cohort default rates important?. . . . . . . . . . . . . . 2.2-1

Are there any sanctions or benefits

associated with draft cohort default rates?. . . . . . . . . . . . . . 2.2-1

Will a school’s draft cohort default rate and

official cohort default rate be the same?. . . . . . . . . . . . . . 2.2-1

Are there any benefits for schools with

low official cohort default rates?. . . . . . . . . . . . . . 2.2-2

Detailed Table of Contents

Contents - ii

Chapter

2.2
Are there any sanctions associated with

high official cohort default rates?. . . . . . . . . . . . . . 2.2-3

Can a school avoid the sanctions associated 

with high official cohort default rates?. . . . . . . . . . . . . . 2.2-4

Do cohort default rate sanctions apply to 

Historically Black Colleges or Universities,

Tribally Controlled Community Colleges,

and Navajo Community Colleges?. . . . . . . . . . . . . . 2.2-5

Are there any consequences if a school

submits adjustments and/or appeals 

but fails to avoid sanctions?. . . . . . . . . . . . . . 2.2-5

If a school is subject to sanction,

when does the sanction take effect?. . . . . . . . . . . . . . 2.2-6

How does a school withdraw from or reapply

for participation in the Title IV loan programs?. . . . . . . . . . . . . . 2.2-7

Loan Record Detail Report

What is a loan record detail report?. . . . . . . . . . . . . . 2.3-1

Why should a school review its 

loan record detail report?. . . . . . . . . . . . . . 2.3-1

Which schools receive hardcopy

loan record detail reports?. . . . . . . . . . . . . . 2.3-2

What is an electronic loan record detail report?. . . . . . . . . . . . . . 2.3-3

Can a school request a hardcopy or electronic

loan record detail report from the Department?. . . . . . . . . . . . . . 2.3-4

Are the loan record detail reports 

subject to the Privacy Act?. . . . . . . . . . . . . . 2.3-4

How does a school read a

loan record detail report?. . . . . . . . . . . . . . 2.3-5

How does a school identify 

the data manager of a loan?. . . . . . . . . . . . . . 2.3-16

Detailed Table of Contents

Contents - iii

Chapter

2.3
Change in Status and Evasion

What is a change in status?. . . . . . . . . . . . . . 2.4-1

How does a school’s change in status affect 

the school’s cohort default rate?. . . . . . . . . . . . . . 2.4-2

What types of actions are considered attempts 

to evade cohort default rate consequences?. . . . . . . . . . . . . . 2.4-4

Department Offices and Addresses

Introduction. . . . . . . . . . . . . . 2.5-1

Default Management. . . . . . . . . . . . . . 2.5-2

Case Management. . . . . . . . . . . . . . 2.5-3

Direct Loan Schools Relations. . . . . . . . . . . . . . 2.5-4

Other Department Offices. . . . . . . . . . . . . . 2.5-6

General Information Tools

Instructions for Requesting Cohort Default Rates 

from the National Student Loan Data System (NSLDS). . . . . . . . . . . . . . 2.6-1

General Information About the 

Electronic Loan Record Detail Report. . . . . . . . . . . . . . 2.6-1

Instructions for Requesting an

Electronic Loan Record Detail Report. . . . . . . . . . . . . . 2.6-2

Electronic Loan Record Detail Extract File Layout and

Detailed Repayment Information Extract File Layout. . . . . . . . . . . . . . 2.6-4

Alphabetical Data Manager Contacts. . . . . . . . . . . . . . 2.6-10

Numerical Data Manager Contacts. . . . . . . . . . . . . . 2.6-11

Detailed Table of Contents

Contents - iv

Chapter

2.6

Chapter

2.5

Chapter

2.4
Strategy

School Strategies

Why should a school review this chapter?. . . . . . . . . . . . . . 3.1-1

What strategies can a school employ in relation to the 

release of the draft and official cohort default rates?. . . . . . . . . . . . . . 3.1-2

What is repayment information?. . . . . . . . . . . . . . 3.1-4

What are the benefits of reviewing 

repayment information?. . . . . . . . . . . . . . 3.1-4

What types of repayment information are available?. . . . . . . . . . . . . . 3.1-5

What actions can a school take to help process

the draft and official cohort default rates?. . . . . . . . . . . . . . 3.1-6

How does a school prepare for the release

of the cohort default rates?. . . . . . . . . . . . . . 3.1-6

When are cohort default rates sent to schools?. . . . . . . . . . . . . . 3.1-7

How does a school review its cohort default rate data?. . . . . . . . . . . . . . 3.1-8

How does a school determine if it should 

submit a challenge, adjustment, or appeal?. . . . . . . . . . . . . . 3.1-9

Why should a school that is not subject to sanction 

contest inaccurate data on the loan record detail report?. . . . . . . . . . . . . . 3.1-12

How does a school determine if there is

inaccurate data on the loan record detail report?. . . . . . . . . . . . . . 3.1-13

How does a school contest inaccurate

data on the loan record detail report?. . . . . . . . . . . . . . 3.1-14

How does a school contend that it has 

exceptional mitigating circumstances that 

should prevent the school from being subject

to sanction due to its cohort default rate?. . . . . . . . . . . . . . 3.1-15

What are the time frames for submitting

a challenge, adjustment, or appeal?. . . . . . . . . . . . . . 3.1-17

How does a school or data manager 

use the time frames chart?. . . . . . . . . . . . . . 3.1-17

Detailed Table of Contents

Contents - v

Part

III

Chapter

3.1
Data Manager Strategies

Why should a data manager review this chapter?. . . . . . . . . . . . . . 3.2-1

What strategies can a data manager employ before the

release of the draft and official cohort default rates?. . . . . . . . . . . . . . 3.2-1

What strategies can a data manager employ to help

process challenges, adjustments, and appeals?. . . . . . . . . . . . . . 3.2-2

What should a data manager do if it receives

an incorrect submission from a school?. . . . . . . . . . . . . . 3.2-4

What should a data manager do if the school’s

challenge, adjustment, or appeal is successful?. . . . . . . . . . . . . . 3.2-5

How does a data manager keep the Department

informed about its cohort default rate actions?. . . . . . . . . . . . . . 3.2-5

Strategy Tools

Repayment Information Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-1

What types of repayment information are available?. . . . . . . . . . . . . . 3.3-1 

How does a school obtain summary 

repayment information?. . . . . . . . . . . . . . 3.3-2

How does a school obtain detailed 

repayment information?. . . . . . . . . . . . . . 3.3-3

How does a school read a detailed 

repayment information extract file?. . . . . . . . . . . . . . 3.3-7

Is repayment information subject to the Privacy Act?. . . . . . . . . . . . . . 3.3-7

School Tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-8

Data Manager Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-10

Data Manager Monthly Status Report Instructions. . . . . . . . . . . . . . 3.3-10

Which Department address does a data manager

use for submitting a monthly status report?. . . . . . . . . . . . . . 3.3-12

Full-Sized Blank Spreadsheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-12

Detailed Table of Contents

Contents - vi

Chapter

3.3

Chapter

3.2
Challenges, Adjustments, and Appeals

Incorrect Data Challenge

What is an incorrect data challenge?. . . . . . . . . . . . . . 4.1-1

Which schools are eligible to submit 

an incorrect data challenge?. . . . . . . . . . . . . . 4.1-1

What benefit will a school gain from 

submitting an incorrect data challenge?. . . . . . . . . . . . . . 4.1-2

What roles do the Department and data managers

have in a school’s incorrect data challenge?. . . . . . . . . . . . . . 4.1-3

How does a school submit 

an incorrect data challenge?. . . . . . . . . . . . . . 4.1-4

How does a school identify 

the data manager of a loan?. . . . . . . . . . . . . . 4.1-6

How does a data manager respond to

a school’s incorrect data challenge?. . . . . . . . . . . . . . 4.1-6

Which Department address does a 

data manager use for submitting a copy 

of its incorrect data challenge response?. . . . . . . . . . . . . . 4.1-12

What does Default Management do with a

data manager’s incorrect data challenge response?. . . . . . . . . . . . . . 4.1-13

What does a school do with a data manager’s 

incorrect data challenge response?. . . . . . . . . . . . . . 4.1-13

Participation Rate Index Challenge

What is a participation rate index challenge?. . . . . . . . . . . . . . 4.2-1

Which cohort default rate can be used 

to determine a participation rate index challenge?. . . . . . . . . . . . . . 4.2-1

Detailed Table of Contents

Contents - vii

Part

IV

Chapter

4.1

Chapter

4.2
Which schools are eligible to submit 

a participation rate index challenge?. . . . . . . . . . . . . . 4.2-2

What benefit will a school gain from submitting

a participation rate index challenge?. . . . . . . . . . . . . . 4.2-2

Are participation rate index challenges 

based on a specific period of time?. . . . . . . . . . . . . . 4.2-2

How does a school calculate 

its participation rate index?. . . . . . . . . . . . . . 4.2-4

Does a school need to wait until the draft 

cohort default rate is released to prepare

its participation rate index challenge?. . . . . . . . . . . . . . 4.2-6

What roles do the Department and data managers have 

in a school’s participation rate index challenge?. . . . . . . . . . . . . . 4.2-6

How does a school submit a

participation rate index challenge?. . . . . . . . . . . . . . 4.2-7

Which Department address does a school use for

submitting a participation rate index challenge?. . . . . . . . . . . . . . 4.2-8

What happens after the school submits

the participation rate index challenge?. . . . . . . . . . . . . . 4.2-10

What happens to a school’s participation

rate index challenge after the release 

of the official cohort default rates?. . . . . . . . . . . . . . 4.2-10

Uncorrected Data Adjustment

What is an uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-1

Which schools are eligible to submit

an uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-2

What benefit will a school gain from submitting 

an uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-2

What roles do data managers have in a 

school’s uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-2

How does a school submit 

an uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-3

Detailed Table of Contents

Contents - viii

Chapter

4.3
Which Department address does a school use for

submitting an uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-6

What happens after the school submits 

the uncorrected data adjustment?. . . . . . . . . . . . . . 4.3-6

New Data Adjustment

What is a new data adjustment?. . . . . . . . . . . . . . 4.4-1

What is new data?. . . . . . . . . . . . . . 4.4-1

What if the new data is correct?. . . . . . . . . . . . . . 4.4-1

Which schools are eligible to submit 

a new data adjustment?. . . . . . . . . . . . . . 4.4-2

What benefit will a school gain from

submitting a new data adjustment?. . . . . . . . . . . . . . 4.4-3

What roles do the Department and data managers 

have in a school’s new data adjustment?. . . . . . . . . . . . . . 4.4-3

How does a school submit new data 

adjustment allegations to a data manager?. . . . . . . . . . . . . . 4.4-4

How does a school identify 

the data manager of a loan?. . . . . . . . . . . . . . 4.4-8

How does a data manager respond to a 

school’s new data adjustment allegations?. . . . . . . . . . . . . . 4.4-8

Which Department address does a 

data manager use for submitting a copy of

its new data adjustment allegations response?. . . . . . . . . . . . . . 4.4-12

What does a school do with the data manager’s 

new data adjustment allegations response?. . . . . . . . . . . . . . 4.4-14

Which Department address does a school use

for submitting a new data adjustment?. . . . . . . . . . . . . . 4.4-16

What happens after the school 

submits the new data adjustment?. . . . . . . . . . . . . . 4.4-16

20

Detailed Table of Contents

Contents - ix

Chapter

4.4
Erroneous Data Appeal

What is an erroneous data appeal?. . . . . . . . . . . . . . 4.5-1

What is new data?. . . . . . . . . . . . . . 4.5-1

What if the new data is correct?. . . . . . . . . . . . . . 4.5-1

What is disputed data?. . . . . . . . . . . . . . 4.5-2

Which schools are eligible to submit 

an erroneous data appeal?. . . . . . . . . . . . . . 4.5-2

What benefit will a school gain from 

submitting an erroneous data appeal?. . . . . . . . . . . . . . 4.5-3

What roles do the Department and data managers 

have in a school’s erroneous data appeal?. . . . . . . . . . . . . . 4.5-3

How does a school submit erroneous data 

appeal allegations to a data manager?. . . . . . . . . . . . . . 4.5-4

How does a school identify 

the data manager of a loan?. . . . . . . . . . . . . . 4.5-8

How does a data manager respond to a 

school’s erroneous data appeal allegations?. . . . . . . . . . . . . . 4.5-8

Which Department address does a

data manager use for submitting a copy of its 

erroneous data appeal allegations response?. . . . . . . . . . . . . . 4.5-12

What does a school do with the data manager’s 

erroneous data appeal allegations response?. . . . . . . . . . . . . . 4.5-14

Which Department address does a school use 

for submitting an erroneous data appeal?. . . . . . . . . . . . . . 4.5-18

What happens after the school 

submits the erroneous data appeal?. . . . . . . . . . . . . . 4.5-18

How does provisional certification affect a 

school’s ability to submit an erroneous data appeal?. . . . . . . . . . . . . . 4.5-19

Detailed Table of Contents

Contents - x

Chapter

4.5
Loan Servicing Appeal

What is a loan servicing appeal?. . . . . . . . . . . . . . 4.6-1

When is a defaulted FFEL considered improperly

serviced for cohort default rate purposes?. . . . . . . . . . . . . . 4.6-1

When is a defaulted Direct Loan considered improperly

serviced for cohort default rate purposes?. . . . . . . . . . . . . . 4.6-2

Which schools are eligible to submit 

a loan servicing appeal?. . . . . . . . . . . . . . 4.6-3

What benefit will a school gain from 

submitting a loan servicing appeal?. . . . . . . . . . . . . . 4.6-3

What roles do the Department and data managers 

have in a school’s loan servicing appeal?. . . . . . . . . . . . . . 4.6-4

How does a school submit a request 

for loan servicing records?. . . . . . . . . . . . . . 4.6-5

How does a school identify 

the data manager of a loan?. . . . . . . . . . . . . . 4.6-6

What does a data manager do when it receives 

a school’s request for loan servicing records?. . . . . . . . . . . . . . 4.6-8

What if the data manager requires that a fee 

be paid to obtain loan servicing records?. . . . . . . . . . . . . . 4.6-10

How does a data manager respond after determining

that it is appropriate to send the loan servicing records?. . . . . . . . . . . . . . 4.6-12

Which Department address does a data manager 

use for submitting a copy of the response 

to a request for loan servicing records?. . . . . . . . . . . . . . 4.6-16

What does the school do with the 

data manager’s response to the school’s 

request for loan servicing records?. . . . . . . . . . . . . . 4.6-16

Which Department address does a school use 

for submitting a loan servicing appeal?. . . . . . . . . . . . . . 4.6-20

What happens after the school submits 

the loan servicing appeal?. . . . . . . . . . . . . . 4.6-20

Detailed Table of Contents

Contents - xi

Chapter

4.6
Economically Disadvantaged Appeal

What is an economically disadvantaged appeal?. . . . . . . . . . . . . . 4.7-1

What benefit will a school gain from submitting

an economically disadvantaged appeal?. . . . . . . . . . . . . . 4.7-1

Are economically disadvantaged appeals 

based on a specific period of time?. . . . . . . . . . . . . . 4.7-2

How does a school calculate its low income rate?. . . . . . . . . . . . . . 4.7-3

How does a non-degree-granting school 

calculate its placement rate?. . . . . . . . . . . . . . 4.7-4

How does a degree-granting school 

calculate its completion rate?. . . . . . . . . . . . . . 4.7-6

Does a school need to wait until it receives 

a notice of loss of eligibility to calculate

its low income rate and placement rate

or low income rate and completion rate?. . . . . . . . . . . . . . 4.7-8

How does a school submit an 

economically disadvantaged appeal?. . . . . . . . . . . . . . 4.7-8

Which Department address does a school use for 

submitting an economically disadvantaged appeal?. . . . . . . . . . . . . . 4.7-12

How does an independent auditor review 

the management’s written assertion?. . . . . . . . . . . . . . 4.7-12

What happens after the school submits 

the independent auditor’s written opinion?. . . . . . . . . . . . . . 4.7-16

What roles do data managers have in a

school’s economically disadvantaged appeal?. . . . . . . . . . . . . . 4.7-18

Participation Rate Index Appeal

What is a participation rate index appeal?. . . . . . . . . . . . . . 4.8-1

Which cohort default rate can be used to determine 

a participation rate index appeal?. . . . . . . . . . . . . . 4.8-1

Which schools are eligible to submit 

a participation rate index appeal?. . . . . . . . . . . . . . 4.8-2

What benefit will a school gain from submitting

a participation rate index appeal?. . . . . . . . . . . . . . 4.8-2

Are participation rate index appeals 

based on a specific period of time?. . . . . . . . . . . . . . 4.8-2

Detailed Table of Contents

Contents - xii

Chapter

4.8

Chapter

4.7
How does a school calculate 

its participation rate index?. . . . . . . . . . . . . . 4.8-4

Does a school need to wait until the official

cohort default rate is released to prepare

its participation rate index appeal?. . . . . . . . . . . . . . 4.8-6

What roles do the Department and data managers have

in a school’s participation rate index appeal?. . . . . . . . . . . . . . 4.8-6

How does a school submit a 

participation rate index appeal?. . . . . . . . . . . . . . 4.8-7

Which Department address does a school use

for submitting a participation rate index appeal?. . . . . . . . . . . . . . 4.8-8

What happens after the school submits the 

participation rate index appeal?. . . . . . . . . . . . . . 4.8-10

Average Rates Appeal

What is an average rates appeal?. . . . . . . . . . . . . . 4.9-1

How does a school qualify for a successful average rates

appeal if the school is subject to sanction because

of three consecutive cohort default rates

that are 25.0 percent or greater?. . . . . . . . . . . . . . 4.9-1

How does a school qualify for a successful average rates

appeal if the school is subject to sanction because of a

cohort default rate that is greater than 40.0 percent?. . . . . . . . . . . . . . 4.9-2

How does the average rates appeal process begin?. . . . . . . . . . . . . . 4.9-2

What if a school disagrees with the initial 

determination by Default Management?. . . . . . . . . . . . . . 4.9-3

Which Department address does a school use 

for submitting an average rates appeal?. . . . . . . . . . . . . . 4.9-3

Thirty-or-Fewer Borrowers Appeal

What is a thirty-or-fewer borrowers appeal?. . . . . . . . . . . . . . 4.10-1

How does a school qualify for a successful 

thirty-or-fewer borrowers appeal?. . . . . . . . . . . . . . 4.10-1

How does the thirty-or-fewer borrowers appeal process begin?. . . . . . . . . . . . . . 4.10-1

What if a school disagrees with the initial 

determination by Default Management?. . . . . . . . . . . . . . 4.10-2

Which Department address does a school use for 

submitting a thirty-or-fewer borrowers appeal?. . . . . . . . . . . . . . 4.10-2

Detailed Table of Contents

Contents - xiii

Chapter

4.9

Chapter

4.10
Challenge, Adjustment, and Appeal Tools

Which address does a school or data manager 

use for submitting challenge, adjustment, or

appeal materials to Default Management?. . . . . . . . . . . . . . 4.11-1

Incorrect Data Challenge, New Data Adjustment,

and Erroneous Data Appeal Tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11-2

What types of loan record detail report allegations may a

school submit as a part of an incorrect data challenge,

new data adjustment, or erroneous data appeal?. . . . . . . . . . . . . . 4.11-2

What supporting documentation does a

school need to submit with its allegations?. . . . . . . . . . . . . . 4.11-2

Does a school need to submit loan record

detail report pages with its allegations?. . . . . . . . . . . . . . 4.11-3

What specific allegations and supporting

documentation can a school submit?. . . . . . . . . . . . . . 4.11-4

Spreadsheet Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11-9

General Spreadsheet Information. . . . . . . . . . . . . . 4.11-9 

Incorrect Data Challenge / New Data Adjustment /

Erroneous Data Appeal Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-12

Participation Rate Index Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-14

Uncorrected Data Adjustment / New Data Adjustment 

Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-16

Loan Servicing Appeal Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-18

Low Income Rate Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-20

Placement Rate Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-22

Completion Rate Spreadsheet Instructions. . . . . . . . . . . . . . 4.11-24

Full-Sized Blank Spreadsheets. . . . . . . . . . . . . . 4.11-26

Glossary

Index of Key Terms

Appendix A

Detailed Table of Contents

Contents - xiv

Chapter

4.11
Table of Figures

Figure 1.1.1 How to Use this Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 - 4

User Comments on the Cohort Default Rate Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 - 7

Figure 2.1.1 Time Frames for Cohort Default Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 - 6

Figure 2.1.2 Special Circumstances Involving Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 - 12

Figure 2.1.3 Special Circumstances Involving Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 - 13

Figure 2.1.4 Special Circumstances Involving Loans That Were 

Discharged, Canceled, or Refunded. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 - 14

Figure 2.1.5 Special Circumstances Involving Loans That Were Repurchased . . . . . . . . . . . . . . . . . 2.1 - 15

Figure 2.1.6 Effects of Department Actions on Cohort Default Rate Calculation . . . . . . . . . . . . . . . . 2.1 - 16

Figure 2.2.1 Benefits for Schools with Low Official Cohort Default Rates . . . . . . . . . . . . . . . . . . . . . 2.2 - 2

Figure 2.2.2 Sanctions for Schools with High Official Cohort Default Rates . . . . . . . . . . . . . . . . . . . 2.2 - 3

Figure 2.2.3 Challenges, Adjustments, and Appeals Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 - 4

Figure 2.2.4 Effective Date of Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 - 6

Figure 2.3.1 Loan Record Detail Reports at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 3

Figure 2.3.2 Sample Loan Record Detail Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 5

Figure 2.3.3 Sample Loan Record Detail Report with Identifiers A-H . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 6

Figure 2.3.4 Academic Level Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 7

Figure 2.3.5 Sample Loan Record Detail Report with Identifiers I-L . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 8

Figure 2.3.6 Loan Type Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 8

Figure 2.3.7 Loan Status Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 9

Figure 2.3.8 Sample Loan Record Detail Report with Identifiers M-R . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 10

Figure 2.3.9 Claim Reason Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 10

Figure 2.3.10 Sample Loan Record Detail Report with Identifiers S-V . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 12

Figure 2.3.11 Enrollment Status Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 12

Figure 2.3.12 Usage 1 Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 13

Figure 2.3.13 Usage 2 Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 13

Figure 2.3.14 Sample Loan Record Detail Report - Summary Section in Tan . . . . . . . . . . . . . . . . . . . 2.3 - 14

Figure 2.3.15 Appealed Rate Flag Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 - 15

Figure 2.4.1 Effect on Cohort Default Rates for Various Types of Changes in Status . . . . . . . . . . . . 2.4 - 2

Figure 2.5.1 Case Management Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 - 4

Figure 2.5.2 Direct Loan Schools Relations Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 - 5

Figure 2.6.1 Header Record Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 - 5 

Figure 2.6.2 Detail Record Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 - 6-7

Figure 2.6.3 Trailer Record Layout. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 - 8-9

Figure 2.6.4 Alphabetical Data Manager Codes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 - 10-11

Figure 2.6.5 Numerical Data Manager Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 - 12-19

Table of Figures

Figures - i
Figure 3.1.1 Schools Eligible to Submit a Challenge, Adjustment, or Appeal . . . . . . . . . . . . . . . . . . 3.1 - 10-11

Figure 3.1.2 Sample School Records Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 - 13

Figure 3.1.3 Challenges, Adjustments, and Appeals that Can Affect a School’s 

Cohort Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 - 14

Figure 3.1.4 Challenges and Appeals that Show a School Has 

Exceptional Mitigating Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 - 15

Figure 3.1.5 Challenges, Adjustments, and Appeals Time Frames . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 - 16

Figure 3.1.6 Excerpt from Time Frame for Submitting a Loan Servicing Appeal . . . . . . . . . . . . . . . . 3.1 - 18

Figure 3.2.1 Sample Data Manager Monthly Status Report to Default Management. . . . . . . . . . . . . 3.2 - 6

Figure 3.3.1 24-Month Periods Available to School in February 2004 . . . . . . . . . . . . . . . . . . . . . . . . 3.3 - 1

Figure 3.3.2 Blank School Records Spreadsheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 - 8

Figure 3.3.3 Blank Data Manager Monthly Status Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 - 10

Full-Sized Blank Spreadsheets at end of Chapter 3.3

School Records Spreadsheet

Monthly Status Report

Figure 4.1.1 Time Frame for Submitting an Incorrect Data Challenge . . . . . . . . . . . . . . . . . . . . . . . .4.1 - 1

Figure 4.1.2 Sample School Incorrect Data Challenge Spreadsheet to Data Manager . . . . . . . . . . .4.1 - 5

Figure 4.1.3 Sample School Incorrect Data Challenge Letter to Data Manager. . . . . . . . . . . . . . . . . 4.1 - 7

Figure 4.1.4 Sample Data Manager Incorrect Data Challenge Response Spreadsheet to School . . . 4.1 - 10

Figure 4.1.5 Sample Data Manager Incorrect Data Challenge Response Letter to School. . . . . . . . . 4.1 - 11

School to Data Manager Incorrect Data Challenge Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 - 14

Data Manager to School Incorrect Data Challenge Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 - 14

Figure 4.2.1 Time Frame for Submitting a Participation Rate Index Challenge . . . . . . . . . . . . . . . . . 4.2 - 1

Figure 4.2.2 Cohort Default Rates a School Can Use to Submit a 

Participation Rate Index Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 - 1

Figure 4.2.3 Date Ranges for Acceptable 12-Month Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 - 3

Figure 4.2.4 Acceptable and Unacceptable 12-Month Periods for Cohort FY 2001 . . . . . . . . . . . . . . 4.2 - 3

Figure 4.2.5 Sample School Participation Rate Index Challenge Spreadsheet 

to Default Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 - 7 

Figure 4.2.6 Sample School Participation Rate Index Challenge Letter to Default Management . . . . 4.2 - 9

School to Default Management Participation Rate Index Challenge Checklist . . . . . . . . . . . 4.2 - 10

Figure 4.3.1 Time Frame for Submitting an Uncorrected Data Adjustment . . . . . . . . . . . . . . . . . . . 4.3 - 1

Figure 4.3.2 Sample School Uncorrected Data Adjustment Spreadsheet to Default Management . . 4.3 - 4

Figure 4.3.3 Sample School Uncorrected Data Adjustment Letter to Default Management. . . . . . . . 4.3 - 5

School to Default Management Uncorrected Data Adjustment Checklist . . . . . . . . . . . . . . . . . . 4.3 - 8

Figure 4.4.1 Time Frame for Submitting a New Data Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 1 

Figure 4.4.2 Sample School New Data Adjustment Allegations Spreadsheet to Data Manager. . . . . 4.4 - 5 

Figure 4.4.3 Sample School New Data Adjustment Allegations Letter to Data Manager . . . . . . . . . . 4.4 - 7

Table of Figures

Figures- ii
Figure 4.4.4 Sample Data Manager New Data Adjustment Allegations Response 

Spreadsheet to School. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 11

Figure 4.4.5 Sample Data Manager New Data Adjustment Allegations Response 

Letter to School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 13 

Figure 4.4.6 Sample School New Data Adjustment Spreadsheet to Default Management. . . . . . . . . 4.4 - 15 

Figure 4.4.7 Sample School New Data Adjustment Letter to Default Management . . . . . . . . . . . . . . 4.4 - 17 

School to Data Manager New Data Adjustment Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 19

Data Manager to School New Data Adjustment Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 19

School to Default Management New Data Adjustment Checklist . . . . . . . . . . . . . . . . . . . . . . . . 4.4 - 20

Figure 4.5.1 Time Frame for Submitting an Erroneous Data Appeal . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 1

Figure 4.5.2 Sample School Erroneous Data Appeal Allegations Spreadsheet to Data Manager. . . . 4.5 - 5

Figure 4.5.3 Sample School Erroneous Data Appeal Allegations Letter to Data Manager . . . . . . . . . 4.5 - 7

Figure 4.5.4 Sample Data Manager Erroneous Data Appeal Allegations Response 

Spreadsheet to School. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 11

Figure 4.5.5 Sample Data Manager Erroneous Data Appeal Allegations 

Response Letter to School. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 13

Figure 4.5.6 Sample School Erroneous Data Appeal Spreadsheet to Default Management. . . . . . . . 4.5 - 15

Figure 4.5.7 Sample School Erroneous Data Appeal Letter to Default Management . . . . . . . . . . . . . 4.5 - 17 

School to Data Manager Erroneous Data Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 21

Data Manager to School Erroneous Data Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 22

School to Default Management Erroneous Data Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . 4.5 - 22

Figure 4.6.1 Time Frame for Submitting a Loan Servicing Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 1

Figure 4.6.2 Sample School Letter Requesting Loan Servicing Records to Data Manager . . . . . . . . 4.6 - 7

Figure 4.6.3 Sample Data Manager Payment Request for Loan Servicing Records 

Letter to School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 11

Figure 4.6.4 Sample Data Manager Response to a Request for Loan Servicing Records

Spreadsheet to School. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 12

Figure 4.6.5 Sample Data Manager Response to a Request for Loan Servicing Records 

Letter to School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 15

Figure 4.6.6 Sample School Loan Servicing Appeal Spreadsheet to Default Management . . . . . . . . 4.6 - 18

Figure 4.6.7 Sample School Loan Servicing Appeal Letter to Default Management . . . . . . . . . . . . . 4.6 - 19 

School to Data Manager Loan Servicing Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 21

Data Manager to School Loan Servicing Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 22

School to Default Management Loan Servicing Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . 4.6 - 22

Figure 4.7.1 Time Frame for Submitting an Economically Disadvantaged Appeal. . . . . . . . . . . . . . . 4.7 - 1

Figure 4.7.2 Date Ranges for Acceptable 12-Month Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 - 2 

Figure 4.7.3 Acceptable and Unacceptable 12-Month Periods for Cohort FY 2001 . . . . . . . . . . . . . . 4.7 - 2 

Figure 4.7.4 Sample School Low Income Rate Spreadsheet to Default Management . . . . . . . . . . . . 4.7 - 8

Figure 4.7.5 Sample School Placement Rate Spreadsheet to Default Management . . . . . . . . . . . . . 4.7 - 9 

Figure 4.7.6 Sample School Completion Rate Spreadsheet to Default Management . . . . . . . . . . . . . 4.7 - 9 

Figure 4.7.7 Sample School Economically Disadvantaged Appeal 

Letter to Default Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 - 11

Table of Figures

Figures - iii
Figure 4.7.8 Sample School Economically Disadvantaged Appeal Letter 

to Independent Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 - 13

Figure 4.7.9 Sample Written Opinion Letter from Independent Auditor to School . . . . . . . . . . . . . . . 4.7 - 15

Figure 4.7.10 Sample School Independent Auditor’s Written Opinion 

Submittal Letter to Default Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 - 17

School Economically Disadvantaged Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 - 19

Independent Auditor to School Economically Disadvantaged Appeal Checklist . . . . . . . . . . . . . 4.7 - 19

Figure 4.8.1 Time Frame for Submitting a Participation Rate Index Appeal . . . . . . . . . . . . . . . . . . . 4.8 - 1

Figure 4.8.2 Cohort Default Rates a School Can Use to Submit a 

Participation Rate Index Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 - 1

Figure 4.8.3 Date Ranges for Acceptable 12-Month Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 - 3

Figure 4.8.4 Acceptable and Unacceptable 12-Month Periods for Cohort FY 2001 . . . . . . . . . . . . . . 4.8 - 3

Figure 4.8.5 Sample School Participation Rate Index Appeal 

Spreadsheet to Default Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 - 7

Figure 4.8.6 Sample School Participation Rate Index Appeal Letter to Default Management . . . . . . 4.8 - 9

School to Default Management Participation Rate Index Appeal Checklist . . . . . . . . . . . . . . . . . 4.8 - 10

Figure 4.9.1 Time Frame for Submitting an Average Rates Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 - 1

School to Default Management Average Rates Appeal Checklist . . . . . . . . . . . . . . . . . . . . . . . . 4.9 - 4

Figure 4.10.1 Time Frame for Submitting a Thirty-or-Fewer Borrowers Appeal . . . . . . . . . . . . . . . . . 4.10 - 1

School to Default Management Thirty-or-Fewer Borrowers Appeal Checklist . . . . . . . . . . . . . . . 4.10 - 2

Figure 4.11.1 Borrower Incorrectly Reported Due to Inaccurate Date Entered Repayment . . . . . . . . . 4.11 - 5

Figure 4.11.2 Borrower Incorrectly Reported Due To Inaccurate Default Status . . . . . . . . . . . . . . . . . 4.11 -6 

Figure 4.11.3 Borrower Incorrectly Reported Due To Multiple Loan Allegations . . . . . . . . . . . . . . . . . 4.11 - 7

Figure 4.11.4 Borrower Incorrectly Included Allegations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 8

Figure 4.11.5 Borrower Incorrectly Excluded Allegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 8

Figure 4.11.6 Blank Incorrect Data Challenge/New Data Adjustment/

Erroneous Data Appeal Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 12

Figure 4.11.7 Blank Participation Rate Index Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 14

Figure 4.11.8 Blank Uncorrected Data Adjustment/New Data Adjustment Spreadsheet . . . . . . . . . . . 4.11 - 16

Figure 4.11.9 Blank Loan Servicing Appeal Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 18

Figure 4.11.10 Blank Low Income Rate Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 20

Figure 4.11.11 Blank Placement Rate Spreadsheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 22

Figure 4.11.12 Blank Completion Rate Spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 - 24

Full-Sized Blank Spreadsheets at end of Chapter 4.11

Incorrect Data Challenge / New Data Adjustment / Erroneous Data Appeal Spreadsheet

Participation Rate Index Spreadsheet

Uncorrected Data Adjustment / New Data Adjustment Spreadsheet

Loan Servicing Appeal Spreadsheet

Low Income Rate Spreadsheet

Placement Rate Spreadsheet

Completion Rate Spreadsheet

Table of Figures

Figures- iv
Introduction

Introduction

Part

I

Chapter

1.1

Chapter

1.1

Introduction

What is the “Cohort Default Rate Guide?”. . . . . . . . . . . . . 1.1-1

What kind of cohort default rates 

are not covered in this Guide?. . . . . . . . . . . . . 1.1-1

How is this Guide organized?. . . . . . . . . . . . . 1.1-2

How does this version of the Guide differ 

from previous versions of the Guide?. . . . . . . . . . . . . 1.1-3

How does a school or data manager use this Guide? . . . . . . . . . . . . 1.1-4

How can a school or data manager 

provide feedback on this Guide?. . . . . . . . . . . . . 1.1-6
helv con

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Introduction 

What is the “Cohort Default Rate Guide?”

The “Cohort Default Rate Guide” (Guide) is a publication that the 

U.S. Department of Education (the Department) designed to assist

schools with their Federal Family Education Loan (FFEL) Program 

and William D. Ford Federal Direct Loan (Direct Loan) Program cohort

default rate data. This Guide should be used as a reference tool in

understanding cohort default rates and processes. This Guide is

effective until the Department withdraws it, changes it, or publishes

other guidance. Therefore, do not discard this publication. An 

electronic version of this Guide is available at 

http://sfa4schools.sfa.ed.gov

or

http://www.ifap.ed.gov

The information found in this Guide does not supersede or alter 

any regulatory or statutory requirements that are in effect. If the

information in this Guide conflicts with the regulations or statute,

the regulations and/or statute take precedence. The legislation

authorizing the FFEL and Direct Loan programs can be found in 

Title IV of the Higher Education Act (HEA) of 1965, as amended.

The regulations for cohort default rates are primarily in Subpart M 

of Section 668 of the Code of Federal Regulations (CFR).

What kind of cohort default rates are not covered in this Guide?

The Department also publishes FFEL cohort default rates for guaranty

agencies and lenders. For information on guaranty agency and lender

cohort default rates, call the Department at 1-202-401-7482 or visit

the Department’s website at 

http://sfa4schools.sfa.ed.gov

or

http://www.ed.gov/offices/OSFAP/IGAL

In addition, the Department publishes Federal Perkins Loan Program

cohort default rates for schools. For information on Federal Perkins

Loan Program cohort default rates, call the Department at 

1-202-708-7741.

Introduction Chapter 1.1

CHAPTER 1.1 - 

Introduction

Page 1.1 - 1
How is this Guide organized?

The material in this Guide is organized into four parts. Each part is

further divided into chapters. The four parts are

Part I Introduction

Part One consists of this introduction.

Part II General Information

Part Two consists of six chapters.

 Five of these chapters cover calculating cohort default

rates (2.1), cohort default rate effects (2.2), the loan record

detail report (2.3), change in status and evasion (2.4), and

Department offices and addresses (2.5).

 The final chapter (2.6) contains various tools to assist a

school in reading a loan record detail report and reading

detailed repayment information. These tools include data

manager codes and data manager contact information.

Part III Strategy

Part Three consists of three chapters.

 The first two chapters contain school cohort default rate

strategies (3.1) and data manager cohort default rate

strategies (3.2).

 The final chapter (3.3) contains various strategy-related

tools. These tools include repayment information, school

records spreadsheets, and data manager monthly status

reports.

Part IV Challenges, Adjustments, and Appeals

Part Four consists of 11 chapters.

 The first eight chapters in Part Four deal with the eight

types of challenges, adjustments, and appeals a school

may initiate. The next two chapters (4.9 and 4.10) discuss

the two types of appeals the Department usually initiates.

All 10 of these chapters contain detailed discussions of the

challenge, adjustment, or appeal that is the subject of the

chapter.

Chapter 1.1 Introduction

Page 1.1 - 2

CHAPTER 1.1 -

Introduction
 The final chapter (4.11) contains tools to assist a school

when submitting a challenge, adjustment, or appeal and,

when appropriate, tools to assist a data manager when

responding to a challenge, adjustment, or appeal.

There is also a contents section at the beginning of the Guide and

there are three reference sections at the end of the Guide.

 The contents section includes a two-page overview of the

Guide’s contents, a detailed table of contents that lists every

section of each chapter, and a table of figures that lists each

figure that appears in the Guide.

 The reference sections consist of a glossary containing brief

definitions of some of the important terms used in the Guide,

an index showing the page number where important terms are

located within the Guide, and an appendix that reprints the CFR

section relevant to cohort default rates.

How does this version of the Guide differ from previous versions of the

Guide?

There are several major changes in this version of the Guide from

previous versions of the Guide. These include

 combining the two former guides, the “Draft Cohort Default

Rate Guide” and the “Official Cohort Default Rate Guide,” into

one guide;

 incorporating the new regulations that became effective on 

July 1, 2001

 creating the strategy and reference sections;

 referring to the Direct Loan Servicer, guaranty agencies, and, in

certain circumstances, Default Management, lenders, and FFEL

servicers as data managers;

 combining school information and data manager information

relating to the various challenges, adjustments, and appeals

into the same chapter instead of dividing the information into

separate chapters;

 rewriting the Guide to make it clearer and easier to understand

and use; and

 redesigning the Guide so that future changes can be handled

by sending out supplements.

Introduction Chapter 1.1

CHAPTER 1.1 - 

Introduction

Page 1.1 - 3
How does a school or data manager use this Guide?

Figure 1.1.1 provides examples of how a reader should use the Guide

based on the reader’s situation.

Chapter 1.1 Introduction

Page 1.1 - 4

CHAPTER 1.1 -

Introduction

then

 A school representative

• not familiar with cohort default rates

• looking for general information

 A school representative

• not familiar with cohort default rates

• received a draft or official cohort

 default rate notification letter

 A school representative

• familiar with cohort default rates

• looking for information on actions

 the school can take prior to the

 release of the draft or official

 cohort default rates

 A representative of a school

 contemplating a change in status

 A representative of a school that has

received a notice of provisional certification

 A data manager representative

• not familiar with cohort default rates

• looking for general information

 A data manager representative

• not familiar with cohort default rates

• looking for information about a

 specific challenge, adjustment,

 or appeal

 A data manager representative

• familiar with cohort default rates

• looking for information about a

 specific challenge, adjustment,

 or appeal

If you fit this description:

Chapter

4.5

Chapter

3.1

Chapter

2.1

Chapter

2.3

Chapter

2.2

Chapter

2.1

Chapter

2.3

Chapter

2.2

Part

IV

Chapter

2.4

Chapter

2.1

Chapter

2.3

Chapter

2.2

Chapter

2.1

Chapter

2.3

Chapter

2.2

Reference these areas of the Guide:

see

see

see

see

see

see

then

see

then

Part

IV

See the relevant chapter

in Part IV dealing with

the specific challenge,

adjustment, or appeal

 A school representative

• not familiar with cohort default rates

• looking for information on actions

 the school can take prior to the

 release of the draft or official

 cohort default rates

Chapter

2.1

Chapter

2.3

Chapter

2.2 see

 A school representative

• familiar with cohort default rates

• received a draft or official cohort

 default rate notification letter

Chapter

3.1 see

then

see

Chapter

3.1

then

then

see

then

Chapter

3.1

Chapter

3.2

Figure 1.1.1

How to Use this Guide
The Guide uses a two-thirds/one-third layout, where two-thirds of the

page contains text and one-third of the page is a margin. The margins

contain illustrations designed to assist you with understanding the

material in the Guide. The margins also provide a space for notes that

you may wish to take while reading the Guide.

In the margin at the start of each chapter you will find a reference to

the section of the CFR that applies to that chapter. You will find the

sections of the CFR dealing with cohort default rates in Appendix A.

Introduction Chapter 1.1

CHAPTER 1.1 - 

Introduction

Page 1.1 - 5
How can a school or data manager provide feedback on this Guide?

The Department is interested in receiving feedback regarding the

new Guide. If you have questions, comments, or suggestions concerning the content, format, and/or structure of this Guide, please

photocopy, fill out, and return the user comment page or call the

Department’s Default Management office at 1-202-708-6048. You

may also send comments via email to

SFA.schools.default.management@ed.gov

A user comment page is at the end of this chapter. If sent by commercial overnight mail/courier delivery, the address is

U.S. Department of Education

Default Management

830 First Street, NE

Washington, DC 20002

If sent by U.S. Postal Service, the address is

U.S. Department of Education

Default Management

400 Maryland Avenue, SW

Washington, DC 20202-5353

Chapter 1.1 Introduction

Page 1.1 - 6

CHAPTER 1.1 -

Introduction
Introduction Chapter 1.1

CHAPTER 1.1 - 

Introduction

Page 1.1 - 7

User Comments on the Cohort Default Rate Guide

Please answer the following questions.

Was the Guide easy to understand? YES NO

Did you like the separation of information? YES NO

Did this format make it easier for you

to prepare a challenge or response? YES NO

Did this format make it easier for you 

to prepare an adjustment or response? YES NO

Did this format make it easier for you 

to prepare an appeal or response? YES NO

Were the instructions and spreadsheets 

easy to follow and understand? YES NO

Are there issues not discussed in the Guide 

that you would like to see in future editions? YES NO

General Comments

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

The following information is optional. The Department may contact you 

for further clarification on your comments.

Organization Name: _______________________________

School OPE ID # (if applicable): _______________________________

Organization Mailing Address: _______________________________

_______________________________

_______________________________

Person completing this form: _______________________________

Telephone number: _______ - _______ - ____________

Email address: _______________________________

helv con

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700/600
Chapter 1.1 Introduction

Page 1.1 - 8

CHAPTER 1.1 -

Introduction
General

Information

Calculating Cohort Default Rates

Cohort Default Rate Effects

Loan Record Detail Report

Change in Status and Evasion

Department Offices and Addresses 

General Information Tools

Part

II

Chapter

2.1

Chapter

2.6

Chapter

2.5

Chapter

2.4

Chapter

2.3

Chapter

2.2

Chapter

2.1

Calculating

Cohort

Default

Rates

What is a cohort default rate? . . . . . . . . . . . . . 2.1-1

Which types of loans are included

in the cohort default rate calculation? . . . . . . . . . . . . . 2.1-2

When are cohort default rates sent to schools? . . . . . . . . . . . . . 2.1-3

Who receives cohort default rates? . . . . . . . . . . . . . 2.1-3

What are the consequences of cohort default rates? . . . . . . . . . . . . . 2.1-5

What are the time frames for cohort default rates? . . . . . . . . . . . . . 2.1-6

How does the Department calculate

a school’s cohort default rate? . . . . . . . . . . . . . 2.1-7

Which formula does the Department use

to calculate a school’s draft cohort default rate? . . . . . . . . . . . . . 2.1-9

Which formula does the Department use

to calculate a school’s official cohort default rate? . . . . . . . . . . . . . 2.1-9

What is an unofficial cohort default rate? . . . . . . . . . . . . . 2.1-9

How does the Department determine which loans are placed

in the denominator of the cohort default rate calculation? . . . . . . . . . . . . . 2.1-9

How does the Department determine which loans are placed

in the numerator of the cohort default rate calculation? . . . . . . . . . . . . . 2.1-10

How do consolidation loans affect the numerator

of the cohort default rate calculation? . . . . . . . . . . . . . 2.1-11

How does loan rehabilitation affect the numerator

of the cohort default rate calculation? . . . . . . . . . . . . . 2.1-11

Are there any special circumstances that affect how a borrower

will be included in the cohort default rate calculation? . . . . . . . . . . . . . 2.1-12

What effects do Department actions have

on the cohort default rate calculation? . . . . . . . . . . . . . 2.1-16
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Calculating Cohort Default Rates

What is a cohort default rate?

For schools having 30 or more borrowers entering repayment in 

a fiscal year, the school’s cohort default rate is the percentage of a

school’s borrowers who enter repayment on certain Federal Family

Education Loans (FFELs) and/or William D. Ford Federal Direct Loans

(Direct Loans) during that fiscal year and default (or meet other

specified conditions) within the cohort default period. For schools

with 29 or fewer borrowers entering repayment during a fiscal year,

the cohort default rate data includes borrowers entering repayment

over a three-year period.

The phrase “cohort default period” refers to the two-year period that

begins on October 1 of the fiscal year when the borrower enters

repayment and ends on September 30 of the following fiscal year.

This is the period during which a borrower’s default affects the

school’s cohort default rate.

Cohort default rates are based on federal fiscal years. Federal fiscal

years begin on October 1 of a calendar year and end on September

30 of the following calendar year. Each federal fiscal year refers to the

calendar year in which it ends.

The phrase “cohort fiscal year” refers to the fiscal year for which the

cohort default rate is calculated. For example, when calculating the

1999 cohort default rate, the cohort fiscal year is FY 1999 (October 1,

1998 to September 30, 1999).

The phrase “other specified conditions” refers to two different situations. The first relates to borrowers who obtain Direct Loans to attend

non-degree-granting proprietary schools. In addition to the other

criteria for default, a borrower who receives a Direct Loan to attend a

non-degree-granting proprietary school is also considered in default

for the purpose of calculating that school’s cohort default rate if,

during the cohort default period in question, the borrower is in

repayment for 360 days under the income contingent repayment

(ICR) plan with scheduled payments that are

 less than 15 dollars per month and 

 less than the interest accruing on the loan.

The second situation occurs when, before the end of the cohort

default period, the school’s owner, agent, contractor, employee, or 

any other affiliated entity or individual makes a payment to prevent 

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 1

34 CFR 668.182

34 CFR 668.183
a borrower’s default on a loan that entered repayment during the

cohort fiscal year. In such a situation, the borrower is considered in

default for cohort default rate purposes. For the purposes of this

Guide, the phrase “other specified conditions” will always refer to

these situations.

Which types of loans are included in the cohort default rate calculation?

The FFELs included in the cohort default rate calculation are

 subsidized Federal Stafford Loans and unsubsidized Federal

Stafford Loans (collectively referred to as Federal Stafford Loans)

and

 Federal Supplemental Loans for Students (Federal SLS loans).

Federal SLS loans have not been made since July 1, 1994.

However, it is possible for a Federal SLS loan to be included

in a current cohort default rate calculation under certain 

circumstances.

The Direct Loans included in the cohort default rate calculation are

 Federal Direct Subsidized Stafford/Ford Loans and Federal

Direct Unsubsidized Stafford/Ford Loans (collectively referred 

to as Direct Stafford/Ford Loans).

The following loans are not included in the cohort default rate 

calculation:

 Federal PLUS Loans;

 Federal Direct PLUS Loans;

 Federal Insured Student Loans (FISLs); and 

 Federal Perkins Loans. (Please note that Federal Perkins Loans

have separate cohort default rate calculations.)

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 2

CHAPTER 2.1 - Calculating

Cohort Default Rates
Federal Consolidation Loans and Federal Direct Consolidation Loans

are not directly included in the cohort default rate calculation.

However, the status of a consolidation loan may affect the cohort

default rate calculation. Please refer to the section of this chapter

entitled,“How do consolidation loans affect the numerator of the

cohort default rate calculation?” for more information on how 

consolidation loans may affect the cohort default rate calculation.

When are cohort default rates sent to schools?

The U.S. Department of Education (the Department) calculates cohort

default rates twice each year. Generally, the Department sends draft

cohort default rates to schools in January or February. After schools

receive their draft cohort default rate data, schools are provided an

opportunity to identify and correct any inaccuracies by submitting 

an incorrect data challenge. The Department then calculates and

releases the official cohort default rates. Official cohort default rates

are generally released to schools and the public approximately six

months after the release of the draft cohort default rates. However,

the official cohort default rates must be released no later than

September 30th each year.

Who receives cohort default rates?

The Department provides draft cohort default rates only to schools

and does not release them to the public. The Department sends draft

cohort default rates to all schools that the Department’s records

indicate 

 are eligible to participate in any of the Title IV programs and 

 have borrowers that entered repayment on FFELs or Direct

Loans during the current or prior two cohort fiscal years.

When the Department provides a school with a draft cohort default

rate, the school will also receive any new supplements to this Guide,

as well as the cohort fiscal year loan record detail report listing all of

the borrowers included in the school’s draft cohort default rate

calculation.

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 3

The Department

calculates cohort

default rates

twice each year
The Department provides official cohort default rates to schools and

also makes them available to the public. The Department releases

official cohort default rates for all schools that the Department’s

records indicate 

 are eligible to participate in any of the Title IV programs and 

 have borrowers that entered repayment on FFELs or Direct

Loans during the current or prior two cohort fiscal years.

When the Department provides a school with an official cohort

default rate, the school will also receive any new supplements to this

Guide. If the school’s official cohort default rate is 10.0 percent or

greater, the Department will provide the school with a loan record

detail report listing all the borrowers included in the official cohort

default rate calculation. If a school is subject to sanction because of

three consecutive years of a cohort default rate that is 25.0 percent 

or greater, the school will receive loan record detail reports for the

current and prior two cohort fiscal years. Similarly, if a school’s official

cohort default rate is an average rate, it will receive loan record detail

reports for the current and prior two cohort fiscal years.

A school may also request an electronic copy of the loan record detail

report for the draft or official cohort default rates. See Chapter 2.3,

“Loan Record Detail Report,” for information on requesting an electronic copy.

Official cohort default rate information for schools, guaranty agencies, and lenders will also be available through the National Student

Loan Data System (NSLDS). At the time of publication of this Guide,

the NSLDS cohort default rate list screens were still under development. Default Management will create a “General Information Tools:

Cohort Default Rate List” supplement for this Guide once these lists

are in final form. This supplement will be mailed to schools and data

managers and will be available at

http://www.ed.gov/offices/OSFAP/defaultmanagement/cdr.html

The instructions will eventually be in Chapter 2.6,“General

Information Tools.”

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 4

CHAPTER 2.1 - Calculating

Cohort Default Rates
The public can request a listing of all of the official cohort default

rates in the form of a press package. The press package also contains

a listing of those schools that are subject to sanction as a result of

high official cohort default rates. For a copy of the most recent press

package, call 1-202-708-9396 or visit the Department’s website at 

http://sfa4schools.sfa.ed.gov

or

http://www.ifap.ed.gov

What are the consequences of cohort default rates?

Official cohort default rates are important because they may affect a

school’s eligibility to participate in the Title IV programs administered

by the Department.

In addition, a school with low cohort default rates may be eligible for

certain benefits. Some schools with low official cohort default rates

may be exempt from certain loan disbursement requirements. It is

important to note that some of these benefits are scheduled to

expire on September 30, 2002. For more information on the benefits

associated with low cohort default rates, see Chapter 2.2,“Cohort

Default Rate Effects.”

Draft cohort default rates are important because the data used to

calculate the draft cohort default rate forms the basis of a school’s

official cohort default rate. Although there are no sanctions or benefits associated with a school’s draft cohort default rate, it is important

for schools to review the data used to calculate the draft cohort

default rate. A school that fails to challenge the accuracy of the data

used to calculate its draft cohort default rate through an incorrect

data challenge may not challenge the accuracy of that same data

when it receives its official cohort default rate.

In addition, in certain circumstances a school may be able to avoid

sanctions associated with its official cohort default rate by submitting

a successful participation rate index challenge based on its draft

cohort default rate. The school should review its enrollment data in

relation to its draft cohort default rate to determine if it is eligible to

submit a participation rate index challenge.

For more information on the importance of cohort default rates, see

Chapter 2.2,“Cohort Default Rate Effects.” For more information on

challenges, adjustments, and appeals, see Chapter 3.1,“School

Strategies,” and Part IV,“Challenges, Adjustments, and Appeals.”

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 5

Official cohort

default rates 

may affect a

school’s eligibility

to participate in

the Title IV 

programs 

administered by

the Department
What are the time frames for cohort default rates?

Figure 2.1.1 outlines the time frames used when calculating cohort

default rates for schools with 30 or more borrowers in repayment 

for the cohort fiscal years 1999 through 2005. This chart does not

address average cohort default rates for schools with less than 30

borrowers in repayment. The first column in the table shows the

cohort fiscal year. The second column shows the borrowers included

in the cohort default rate calculation for that cohort fiscal year.

Borrowers in the denominator are those who entered repayment

during the time period in column three. Borrowers in the numerator

are those who entered repayment and who defaulted or met other

specified conditions during the time period listed in column three.

The third column shows the time periods used for the numerator 

and the denominator listed in the second column.

In a mathematical formula, the numerator is always listed first and 

the denominator listed second; the mathematical formulas in this

Guide will be written this way. However, in the text of this Guide the

denominator will always be discussed before the numerator is discussed. This is because the numerator is a subset of the denominator

in all of the formulas contained in this Guide.

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 6

CHAPTER 2.1 - Calculating

Cohort Default Rates

Cohort

Fiscal Year

Borrowers in the Numerator

Borrowers in the Denominator

Time Period (Numerator)

Time Period (Denominator)

1999

Borrowers who entered repayment in 1999

and defaulted in 1999 or 2000

Borrowers who entered repayment in 1999

10/01/1998 to 09/30/2000

10/01/1998 to 09/30/1999

2000

Borrowers who entered repayment in 2000

and defaulted in 2000 or 2001

Borrowers who entered repayment in 2000

10/01/1999 to 09/30/2001

10/01/1999 to 09/30/2000

2001

Borrowers who entered repayment in 2001

and defaulted in 2001 or 2002

Borrowers who entered repayment in 2001

10/01/2000 to 09/30/2002

10/01/2000 to 09/30/2001

2002

Borrowers who entered repayment in 2002

and defaulted in 2002 or 2003

Borrowers who entered repayment in 2002

10/01/2001 to 09/30/2003

10/01/2001 to 09/30/2002

2003

Borrowers who entered repayment in 2003

and defaulted in 2003 or 2004

Borrowers who entered repayment in 2003

10/01/2002 to 09/30/2004

10/01/2002 to 09/30/2003

2004

Borrowers who entered repayment in 2004

and defaulted in 2004 or 2005

Borrowers who entered repayment in 2004

10/01/2003 to 09/30/2005

10/01/2003 to 09/30/2004

2005

Borrowers who entered repayment in 2005

and defaulted in 2005 or 2006

Borrowers who entered repayment in 2005

10/01/2004 to 09/30/2006

10/01/2004 to 09/30/2005

Figure 2.1.1

Time Frames for 

Cohort Default Rates
How does the Department calculate a school’s cohort default rate?

The formula the Department uses for calculating a school’s cohort

default rate depends on the number of borrowers from that school

entering repayment in a particular cohort fiscal year and the number

of cohort default rates previously calculated for the school.

Note that cohort default rates are based on the number of borrowers

who enter repayment, not the number and type of loans that enter

repayment. A borrower with multiple loans from the same school

whose loans enter repayment during the same cohort fiscal year will

be included in the formula only once for that cohort fiscal year.

The two types of formulas used to calculate a school’s cohort default

rate are the Non-Average Rate Formula and the Average Rate

Formula. For each of these formulas, the cohort default rate is

obtained by dividing the numerator by the denominator and then

expressing the result as a percentage. The number of borrowers

included in the numerator and the denominator vary, however,

depending on the type of formula used.

Non-Average Rate Formula

Non-Average Rate Formula: The Non-Average Rate Formula is used for

a school with 30 or more borrowers entering repayment during a

cohort fiscal year.

Non-Average Rate Calculation: For this calculation, the denominator is

the number of borrowers who entered repayment in the cohort fiscal

year; the numerator is the number of borrowers who entered repayment in the cohort fiscal year and who defaulted or met other

specified conditions in the cohort default period.

Non-Average Rate Example: School A, a degree-granting school, had

90 borrowers enter repayment in the cohort fiscal year (denominator). Of those, 8 borrowers defaulted in the cohort default period

(numerator). School A’s cohort default rate is calculated by dividing 

8 by 90 (8 ÷ 90 = 0.088) and expressing the result (0.088) as a percentage to produce a non-average cohort default rate of 8.8 percent

(0.088 x 100 = 8.8).

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 7

Number of borrowers who

entered repayment in the

cohort fiscal year and who

defaulted or met other

specified conditions in the

cohort default period

Number of

borrowers

who entered 

repayment in

the cohort

fiscal year

Cohort

Default ÷ = Rate

8 borrowers 

defaulted ÷ 90 total borrowers in repayment = 8.8 percent

cohort

default

rate
Average Rate Formula

Average Rate Formula: The Average Rate Formula is used to calculate

the official cohort default rate for a school with 29 or fewer borrowers

entering repayment during a cohort fiscal year if that school had a

cohort default rate calculated for the two previous cohort fiscal years.

Average Rate Calculation: The denominator for the average cohort

default rate is the number of borrowers who entered repayment 

in the cohort fiscal year and the two preceding cohort fiscal years.

The numerator for the average cohort default rate is the number of

borrowers who entered repayment in the cohort fiscal year and the

two preceding cohort fiscal years and who defaulted or met other

specified conditions in the cohort default period for the cohort fiscal

year in which they entered repayment.

Average Rate Example: School B, a degree-granting school, certified

loans for the following students: 29 borrowers who entered repayment in the cohort fiscal year (of whom 2 defaulted in that cohort

default period), 44 borrowers who entered repayment in the fiscal

year immediately preceding the cohort fiscal year (of whom 7

defaulted in the associated cohort default period), and 50 borrowers

who entered repayment in the fiscal year two years prior to the

cohort fiscal year (of whom 3 defaulted in the associated cohort

default period). The 123 borrowers (29 + 44 + 50 = 123) who entered

repayment in these three fiscal years constitute the denominator.

The numerator consists of the 12 borrowers (2 + 7 + 3 = 12) who

defaulted in the relevant cohort default periods. School B’s cohort

default rate is calculated by dividing 12 by 123 (12 ÷ 123 = 0.097) 

and expressing the result (0.097) as a percentage to produce an

average cohort default rate of 9.7 percent (0.097 x 100 = 9.7).

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 8

CHAPTER 2.1 - Calculating

Cohort Default Rates

Number of borrowers who

entered repayment in the

cohort fiscal year and the two

preceding cohort fiscal years

and who defaulted or met

other specified conditions in

the cohort default period for

the cohort fiscal year in which

they entered repayment

Number of 

borrowers 

who entered 

repayment in the

cohort fiscal year

and the two

preceding cohort

fiscal years

Cohort

Default ÷ = Rate

12 borrowers 

defaulted ÷123 total borrowers in repayment = 9.7percent

cohort

default

rate
Which formula does the Department use to calculate a school’s draft

cohort default rate?

The Department always uses the non-average rate formula for calculating a school’s draft cohort default rate. The draft cohort default 

rate is based only on a school’s current cohort fiscal year data (the

number of borrowers from that school entering repayment in a

particular cohort fiscal year and the number of borrowers defaulting

or meeting other specified conditions during the associated cohort

default period). Therefore, schools with 29 or fewer borrowers entering repayment cannot use the draft cohort default rate to anticipate

their official cohort default rate. Schools with 29 or fewer borrowers

entering repayment must perform a manual calculation using the

average rate formula to anticipate their official cohort default rate.

Which formula does the Department use to calculate a school’s official

cohort default rate?

The Department uses the non-average rate formula and the average

rate formula to calculate a school’s official cohort default rate,

depending on the number of borrowers entering repayment.

What is an unofficial cohort default rate?

An official cohort default rate cannot be calculated for a school with

29 or fewer borrowers entering repayment during a cohort fiscal year

if the school did not have an official or unofficial cohort default rate

calculated for either or both of the two previous cohort fiscal years.

Such a school will have an unofficial cohort default rate calculated

using the non-average formula and current year data. An unofficial

cohort default rate does not meet the statutory definition of a cohort

default rate. Therefore, it cannot be used to determine sanctions or

benefits.

How does the Department determine which loans are placed in the

denominator of the cohort default rate calculation?

Borrowers are included in the denominator of the cohort default rate

calculation based on when their loans entered repayment. Except for

an average cohort default rate calculation, borrowers included in the

denominator of a cohort default rate calculation are the borrowers

with relevant loans that entered repayment during that cohort fiscal

year. Borrowers included in the denominator of an average cohort

default rate calculation are the borrowers who entered repayment on

relevant loans during that cohort fiscal year or the prior two cohort

fiscal years.

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 9
A Federal Stafford Loan or Direct Stafford/Ford Loan enters repayment under the requirements applicable to the type of loan. In most

cases, they enter repayment after a six-month grace period that

begins when the borrower separates (graduates or withdraws) from

school or drops below half-time enrollment. The official repayment

date is the first day following the end of the six-month grace period.

Use of this date is dependent on the school providing timely notification of any change in a student’s enrollment status to NSLDS or the

data manager. If the school does not provide timely notification, the

data manager will use the best information available to determine

the repayment date. This date will be used for purposes of calculating

the school’s cohort default rate.

A Federal SLS loan enters repayment on the day after the borrower

separates from school or drops below half-time enrollment, unless

the borrower also has a Federal Stafford Loan that was obtained

during the same period of continuous enrollment. In that event, the

repayment date of the Federal SLS loan for cohort default rate purposes is the same as the repayment date for the Federal Stafford

Loan; generally, this is the first day following the end of the six-month

grace period.

Under these guidelines, which the Department implemented beginning with the FY 1993 cohort default rates, a Federal SLS loan that

was reported as entering repayment prior to FY 1993 might also

meet the criteria to be included in FY 1993 or later. To prevent the

possibility of double-counting loans, any Federal SLS loan that was

reported in a cohort default rate prior to FY 1993 will not be reported

in a later cohort default rate.

How does the Department determine which loans are placed in the

numerator of the cohort default rate calculation?

Borrowers must be included in the denominator of the cohort default

rate calculation in order to be included in the numerator of the

cohort default rate calculation. A FFEL or Direct Loan borrower is

included in the numerator if the borrower defaults or meets the

“other specified conditions” defined previously in this chapter.

For cohort default rate purposes, a FFEL is considered to be in default

only if the guaranty agency has paid a default claim to the lender

holding the loan. The claim paid date, which is the date the guaranty

agency reimburses the lender for the defaulted loan, is used to

determine if the borrower will be placed in the numerator of the

calculation. If the claim paid date falls within the cohort default

period, the borrower is included in both the denominator and numerator of the cohort default rate calculation.

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 10

CHAPTER 2.1 - Calculating

Cohort Default Rates
For cohort default rate purposes, a Direct Loan is considered to be in

default after 360 days of delinquency (or after 270 days if the borrower’s first day of delinquency was before October 7, 1998). If the default

date falls within the cohort default period, the borrower will be

included in both the denominator and the numerator of the cohort

default rate calculation.

How do consolidation loans affect the numerator of the cohort default

rate calculation?

Although Federal Consolidation Loans and Direct Consolidation

Loans are not directly included in the cohort default rate calculation,

a defaulted consolidation loan may cause a borrower to be included

in the numerator of the cohort default rate calculation. This occurs if

the consolidation loan defaults within the cohort default period that

is applicable to the underlying loan(s).

For example, Elizabeth entered into repayment on several Federal

Stafford Loans in January of the cohort fiscal year. Because Elizabeth

entered into repayment in January, she will be included in the

denominator of the cohort default rate calculation. After entering

into repayment on the Federal Stafford Loans, Elizabeth elects to

consolidate the loans into a Federal Consolidation Loan. Elizabeth

fails to make payments on the Federal Consolidation Loan and the

loan defaults in June of the following calendar year. Even though the

underlying Federal Stafford Loan did not default, Elizabeth will be

included in the numerator of the cohort default rate calculation

because a claim was paid on the Federal Consolidation Loan during

the cohort default period.

How does loan rehabilitation affect the numerator of the cohort default

rate calculation?

Student loan rehabilitation is a method by which a borrower may

resolve the status of defaulted loans. For a FFEL or Direct Loan to be

eligible for rehabilitation* the borrower must make 12 consecutive

on-time voluntary monthly payments. The loan is then rehabilitated

and the borrower is no longer considered to be in default for cohort

default rate purposes.

For cohort default rate calculation purposes, if the borrower rehabilitates the loan before the end of the cohort default period, the

borrower is not included in the numerator because the borrower is

no longer considered to be in default. If the borrower rehabilitates

the loan after the end of the cohort default period, the borrower is

considered in default and is included in the numerator.

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 11

*In accordance with

sections 428 F(a)

and 435(m)(2)(C) 

of the HEA and 

34 CFR 682.405 

(for FFELs) 

and with section

455(a)(1) of the HEA 

and 34 CFR 685.211(f ) 

(for Direct Loans)
Are there any special circumstances that affect how a borrower will be

included in the cohort default rate calculation?

The following tables outline some examples of special circumstances

that affect the cohort default rate calculation. These special circumstances only affect the cohort default rate calculation if the school

timely submits documentation of the special circumstance to the

data manager. To use these tables, read down the left side column

until you find an applicable situation, then read across to see how 

the cohort default rate calculation is affected.

Figure 2.1.2 outlines special circumstances involving schools.

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 12

CHAPTER 2.1 - Calculating

Cohort Default Rates

Situation How it Affects the Denominator How it Affects the Numerator

A borrower separates from

the school that disbursed

the loans but enrolls at that

school or a different school

before the end of the grace

period.

The borrower is included in

the cohort fiscal year when

the borrower actually enters

repayment. If the date a borrower

enters repayment is delayed by

the borrower re-enrolling in

school, then the borrower's

inclusion in a cohort default rate

calculation will also be delayed.

The borrower is included if the

borrower defaulted or met other

specified conditions during the cohort

default period.

A borrower obtained more

than one loan to attend a

school and the repayment

dates for each of the loans

fall into different cohort fiscal

years.

The borrower is included in the

cohort fiscal years when the

borrower entered repayment.

The borrower will appear in

two different cohort default rate

calculations for the same school

if the borrower has two loans that

enter repayment in different

cohort fiscal years.

The borrower is included if the

borrower defaulted or met other

specified conditions during the relevant

cohort default periods. The borrower

will appear in different cohort default

rate calculations for the same school if

the borrower has multiple loans, enters

repayment in separate cohort fiscal

years, and defaults or meets other

specified conditions during those cohort

default periods.

A borrower takes out loans at

more than one school.

The borrower is included in the

cohort fiscal years when the

borrower entered repayment for

each school where the borrower

obtained loans.

The borrower is included for the

schools at which the defaulted loans

were obtained if the borrower defaulted

or met other specified conditions during

those cohort default periods.

A school, its owner,

its agent, contractor,

employee, or another entity or

individual associated with the

school makes a payment on

the borrower's loan in order

to avoid default during the

cohort default period.

The borrower is included in the

cohort fiscal year when the

borrower entered repayment.

The borrower is included because the

loan meets other specified conditions

during the cohort default period.

Figure 2.1.2

Special Circumstances 

Involving Schools
Figure 2.1.3 outlines special circumstances involving repayment.

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 13

Situation How it Affects the Denominator How it Affects the Numerator

The borrower enters

repayment and subsequently

obtains a deferment or

forbearance on the loan.

The borrower is included in

the cohort fiscal year when the

borrower entered repayment.

Deferments or forbearances do

not alter the date the borrower

entered repayment.

The borrower is included if the

borrower defaulted or met other

specified conditions during the

cohort default period.

A borrower consolidates one

or more defaulted loans.

The borrower is included in the

cohort fiscal years when the

borrower entered repayment on

the underlying loans (the loans

that the borrower consolidated),

not based on the date that the

consolidation loan entered

repayment.

Even though the borrower has

regained eligibility for Title IV funds

by consolidating, the borrower is still

considered to be in default for the

purpose of calculating the school's

cohort default rate.

A borrower requested

and was granted a revised

repayment schedule that

started before the date the

borrower was originally

scheduled to enter

repayment.

The borrower is included in the

cohort fiscal year when the early

repayment schedule begins. The

early repayment date becomes the

repayment date.

The borrower is included if the

borrower defaulted or met other

specified conditions during the

cohort default period.

A borrower paid the loan

in full before the date the

loan was scheduled to

enter repayment.

The borrower is included in

the cohort fiscal year that the

borrower paid the loan in full.

The paid-in-full date becomes

the new repayment date.

The borrower is not included because

the borrower did not default.

A borrower paid the loan

in full after defaulting or

meeting other specified

conditions during the cohort

default period but without

rehabilitating the loan within

the cohort default period.

The borrower is included in the

cohort fiscal year when the

borrower entered repayment.

The borrower is included because

the loan was not successfully

rehabilitated for cohort default rate

purposes within the cohort default

period.

Figure 2.1.3

Special Circumstances 

Involving Repayment
Figure 2.1.4 outlines special circumstances involving loans that were

discharged, canceled, or refunded.

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 14

CHAPTER 2.1 - Calculating

Cohort Default Rates

Situation How it Affects the Denominator How it Affects the Numerator

The borrower's loan was

discharged due to death,

bankruptcy, disability, or

other type of loan discharge

before the borrower entered

repayment.

The borrower is included in the

cohort fiscal year based on the

date the loan was discharged.

The date of discharge becomes

the date of repayment.

The borrower is not included because

the borrower did not default.

The borrower's loan was

discharged due to death,

bankruptcy, disability, or

other type of loan discharge

after the borrower enters

repayment but before the

end of the cohort default

period and before the

borrower defaults or meets

other specified conditions.

The borrower is included in

the cohort fiscal year when the

borrower entered repayment.

The borrower is not included because

the borrower did not default.

The borrower enters

repayment and defaults

or meets other specified

conditions during the cohort

period. Subsequently, the

loan is discharged due to

death, bankruptcy, disability,

or other type of loan

discharge.

The borrower is included in

the cohort fiscal year when the

borrower entered repayment.

The borrower is included because

the borrower defaulted or met other

specified conditions during the cohort

default period.

A loan was fully refunded, or

canceled, within 120 days of

loan disbursement.

Canceled loans are not included

in the cohort default rate

calculation.

The borrower is not included because

canceled loans are not included in the

cohort default rate calculation.

A loan was partially refunded

within 120 days of loan

disbursement.

The borrower is included in

the cohort fiscal year when the

borrower entered repayment on

the portion of the loan that was

not refunded.

The borrower is included if the

borrower defaulted or met other

specified conditions during the

cohort default period.

Figure 2.1.4

Special Circumstances 

Involving Loans That Were

Discharged, Canceled, or

Refunded
Figure 2.1.5 outlines special circumstances involving loans that were

repurchased.

Calculating Cohort Default Rates Chapter 2.1

CHAPTER 2.1 - Calculating

Cohort Default Rates

Page 2.1 - 15

Situation How it Affects the Denominator How it Affects the Numerator

A lender repurchased a defaulted

loan because the guaranty agency

determined that the lender did not

meet the insurance requirements

and, as a result, the loan lost

insurance and became an

uninsured loan.

The borrower is not included

because uninsured loans are

not included in the cohort

default rate calculation.

The borrower is not included

because uninsured loans are

not included in the cohort

default rate calculation.

A lender immediately repurchased

a loan because the lender

incorrectly submitted the default

claim to the guaranty agency and

does not submit another default

claim within the cohort default

period.

The borrower is included in the

cohort fiscal year when the

borrower entered repayment.

The borrower is not included

because the borrower is not

in default.

A lender immediately repurchased

a loan because the lender

incorrectly submitted the default

claim to the guaranty agency and

later submits another default claim

that is paid within the cohort

default period.

The borrower is included in the

cohort fiscal year when the

borrower entered repayment.

The borrower is included

because the subsequent

default claim was paid within

the cohort default period.

A lender made a courtesy

repurchase of a defaulted

loan because the borrower

established a new repayment

plan or for other reasons.

The borrower is included in the

cohort fiscal year when the

borrower entered repayment.

The borrower is included

because the original valid

default claim was paid during

the cohort default period.

Figure 2.1.5

Special Circumstances 

Involving Loans That 

Were Repurchased
What effects do Department actions have on the cohort default rate

calculation?

Figure 2.1.6 shows the effects various Department actions have on

the cohort default rate calculation as a result of an adjustment and/or

appeal.

Chapter 2.1 Calculating Cohort Default Rates

Page 2.1 - 16

CHAPTER 2.1 - Calculating

Cohort Default Rates

If the

Department:

And the borrower

has no other loans

included in the

cohort default rate

calculation:

And the borrower has

other loans that are

not in default included

in the cohort default rate

calculation:

And the borrower has

other loans that are

in default included in

the cohort default rate

calculation:

Adds a

defaulted loan

+D

+N +N

No effect.

Regardless of

circumstance, if the

borrower has other

loans in default,

the borrower is

already included in

both the numerator

and denominator.

Subtracts a

defaulted loan

-D

-N -N

Adds a

non-defaulted loan +D No effect.

Subtracts a

non-defaulted loan -D No effect.

Changes a

defaulted loan to

a non-defaulted

loan

-N -N

Changes a

non-defaulted loan

to a defaulted

loan

+N +N

Legend:

+D Increase Denominator by one. +N Increase Numerator by one.

-D Decrease Denominator by one. -N Decrease Numerator by one.

Figure 2.1.6

Effects of Department

Actions on Cohort 

Default Rate Calculation
Chapter

2.2

Cohort

Default

Rate

Effects

Why are cohort default rates important?. . . . . . . . . . . . . 2.2-1

Are there any sanctions or benefits

associated with draft cohort default rates?. . . . . . . . . . . . . 2.2-1

Will a school’s draft cohort default rate and

official cohort default rate be the same?. . . . . . . . . . . . . 2.2-1

Are there any benefits for schools with

low official cohort default rates?. . . . . . . . . . . . . 2.2-2

Are there any sanctions associated with

high official cohort default rates?. . . . . . . . . . . . . 2.2-3

Can a school avoid the sanctions associated 

with high official cohort default rates? . . . . . . . . . . . . 2.2-4

Do cohort default rate sanctions apply to 

Historically Black Colleges or Universities,

Tribally Controlled Community Colleges,

and Navajo Community Colleges? . . . . . . . . . . . . 2.2-5

Are there any consequences if a school submits

adjustments and/or appeals but fails to avoid sanctions? . . . . . . . . . . . . 2.2-5

If a school is subject to sanction,

when does the sanction take effect?. . . . . . . . . . . . . 2.2-6

How does a school withdraw from or reapply

for participation in the Title IV loan programs? . . . . . . . . . . . . 2.2-7

Cohort Default Rate Effects

Why are cohort default rates important?

Defaulted federal student loans cost taxpayers money. Cohort default

rate sanctions and benefits provide an incentive to schools to work

with their borrowers to reduce default. Sanctions also can prevent a

school with a high percentage of defaulters from continuing to

participate in the Federal Family Education Loan (FFEL), William D.

Ford Federal Direct Loan (Direct Loan), and Federal Pell Grant programs. As a result, cohort default rates help save taxpayers money.

Are there any sanctions or benefits associated with draft cohort default

rates?

There are no sanctions or benefits associated with draft cohort

default rates. Draft cohort default rates are important because the

data used to calculate the draft cohort default rate forms the basis 

of a school’s official cohort default rate. Although there are no 

sanctions or benefits associated with a school’s draft cohort default

rate, it is important to review the data used to calculate the draft

cohort default rate for accuracy. A school that fails to challenge the

accuracy of its draft cohort default rate data through an incorrect

data challenge may not contest the accuracy of that same data when

it receives its official cohort default rate. Therefore, it is critical that 

all schools review their draft cohort default rate data when the U.S.

Department of Education (the Department) releases it. See Chapter

4.1,“Incorrect Data Challenge,” for more information about incorrect

data challenges.

In addition, in certain circumstances a school may be able to avoid

the sanctions associated with its official cohort default rate by submitting a successful participation rate index challenge based on its

draft cohort default rate. See Chapter 4.2,“Participation Rate Index

Challenge,” for more information about participation rate index

challenges.

Will a school’s draft cohort default rate and official cohort default rate

be the same?

A school’s draft cohort default rate and official cohort default rate will

not necessarily be the same. The National Student Loan Data System

(NSLDS), which contains the data used to calculate cohort default

rates, is updated regularly. As a result, a school’s draft cohort default

rate data may differ from its official cohort default rate data even if

the school does not challenge the draft cohort default rate data.

Cohort Default Rate Effects Chapter 2.2

CHAPTER 2.2 -

Cohort Default Rate Effects

Page 2.2 - 1

It is critical

that all schools

review their draft

cohort default

rate data

34 CFR 668.187

34 CFR 682.603 

34 CFR 682.604

34 CFR 685.301 

34 CFR 685.303 
Are there any benefits for schools with low official cohort default rates?

There are two types of benefits that are available to certain schools

with low official cohort default rates. Figure 2.2.1 outlines the 

benefits.

These benefits take effect as soon as the school receives its official

cohort default rate notification letter or notification of a successful

adjustment and/or appeal from Default Management.

Schools no longer qualify for these benefits starting 30 calendar days

after receiving notice from Default Management of an official cohort

default rate that exceeds the benefit thresholds.

Chapter 2.2 Cohort Default Rate Effects

Page 2.2 - 2

CHAPTER 2.2 -

Cohort Default Rate Effects

Eligible School Benefits

Any school whose three

most recent official cohort

default rates are less than

10.0 percent (including an

eligible home institution

certifying or originating

loans to cover the cost

of attendance in a study

abroad program).

May deliver or disburse loan proceeds in

a single installment to a student if that

student's loan period is less than or equal

to one semester, one trimester, one

quarter, or for non-term-based schools or

schools with non-standard terms, four

months.

May choose not to delay the delivery or

disbursement of the first installment of loan

proceeds for first-year first-time borrowers.

These benefits are currently scheduled to

end on September 30, 2002.

A school whose most

recent official cohort

default rate is less than

5.0 percent and is an

eligible home institution

that is certifying or

originating loans to cover

the cost of attendance in

a study abroad program.

May deliver or disburse loan proceeds in a

single installment to a student studying

abroad regardless of the length of the

student's loan period.

May choose not to delay the delivery or

disbursement of the first installment of loan

proceeds for first-year first-time borrowers

studying abroad.

Figure 2.2.1

Benefits for Schools 

with Low Official 

Cohort Default Rates
Are there any sanctions associated with high official cohort default

rates?

Sanctions apply when a school’s official cohort default rate is at or

above certain percentages. Figure 2.2.2 outlines those sanctions.

A school is not subject to the loss of Federal Pell Grant Program

eligibility if, prior to October 7, 1998, the school requested in writing

to withdraw from or lost its eligibility to participate in the FFEL

and/or Direct Loan programs and has not subsequently participated

in those programs. In addition, a school is not subject to the loss of

Federal Pell Grant Program eligibility if it did not certify any FFELs

and/or originate any Direct Loans on or after July 7, 1998. A school

that resumes participation in the FFEL or Direct Loan programs is 

no longer eligible for either of these Federal Pell Grant Program 

exemptions.

Cohort Default Rate Effects Chapter 2.2

CHAPTER 2.2 -

Cohort Default Rate Effects

Page 2.2 - 3

School Sanction

A school's three most

recent official cohort

default rates are 25.0

percent or greater.

Except in the event of a successful

adjustment or appeal, such a school will

lose FFEL, Direct Loan, and Federal Pell

Grant eligibility for the remainder of the

fiscal year in which the school is notified of

its sanction and for the following two fiscal

years.

A school's current official

cohort default rate is

greater than 40.0

percent.

Except in the event of a successful

adjustment or appeal, such a school will

lose FFEL and Direct Loan eligibility for the

remainder of the fiscal year in which the

school is notified of its sanction and for the

following two fiscal years.

Figure 2.2.2

Sanctions for Schools 

with High Official 

Cohort Default Rates
Can a school avoid the sanctions associated with high official cohort

default rates?

If a school is notified that it is subject to sanction, the school may

submit an adjustment or appeal to attempt to avoid that sanction.

Adjustments and appeals are available to schools after the release 

of the official cohort default rates. Challenges are available to schools

after the release of the draft cohort default rates. Figure 2.2.3 summarizes the actions a school may take. (Schools not subject to loss of

eligibility and schools subject to provisional certification based on

cohort default rates may only take a limited number of these actions.

See Chapter 3.1,“School Strategies,” for an overview of the actions

schools may take.) For more information, including detailed explanations of each action and the time frames for taking an action, see Part

IV of this Guide,“Challenges, Adjustments, and Appeals.”

A school is not subject to sanction based on an unofficial cohort

default rate.

Chapter 2.2 Cohort Default Rate Effects

Page 2.2 - 4

CHAPTER 2.2 -

Cohort Default Rate Effects

Draft/

Official Type of Action Purpose

Incorrect Data Challenge

Correct data before the official cohort default rates are

released.

Participation Rate Index

Challenge

Demonstrate a low borrower participation rate to avoid a

sanction with the anticipated official cohort default rate.

official Uncorrected Data Adjustment

Contest a data error that was agreed upon in the draft

process but is still reflected in the official cohort default

rate data.

official New Data Adjustment

Contest official cohort default rate data that was not

included in draft cohort default rate data or that is

different from the draft cohort default rate data.

official Erroneous Data Appeal

Contest official cohort default rate data that was not

included in the draft cohort default rate data (new data)

and/or contest the data manager's decision (disputed

data).

official Loan Servicing Appeal Contest servicing of the borrower's loan account.

official Economically Disadvantaged

Appeal

Demonstrate a high number of low income students and

high placement or completion rates.

official Participation Rate Index Appeal Demonstrate a low borrower participation rate.

official Average Rates Appeal Demonstrate a low number of borrowers.

official Thirty-or-Fewer Borrowers

Appeal Demonstrate a low number of borrowers.

Figure 2.2.3

Challenges, Adjustments,

and Appeals Table
Do cohort default rate sanctions apply to Historically Black Colleges or

Universities, Tribally Controlled Community Colleges, and Navajo

Community Colleges?

A Historically Black College or University, Tribally Controlled

Community College, or Navajo Community College, as defined in

statute, is not subject to loss of eligibility or provisional certification

based on its official cohort default rate if the school

 submits in a timely manner an acceptable default management

plan (such as that found in Appendix B to 34 CFR 668 Subpart

M);

 engages in a timely manner an independent third party to assist

in implementing the default management plan; and

 demonstrates, on a yearly basis, that the default management

plan has been successfully implemented, that the school has

made substantial improvement in its cohort default rate during

that year, and that it continues to engage an independent third

party.

It is important to note that this exemption is scheduled to end on

June 30, 2004.

Are there any consequences if a school submits adjustments and/or

appeals but fails to avoid sanctions?

In addition to losing eligibility, a school that submits adjustments

and/or appeals but fails to avoid sanctions is liable for certain costs

associated with the FFELs it certified and delivered and/or the Direct

Loans it originated and disbursed during the adjustment and appeal

process. Liabilities are not calculated for loans that were delivered or

disbursed more than 45 calendar days after the school submitted its

completed adjustment or appeal to the Department. Schools may

avoid this liability if they choose not to certify or originate loans

during the adjustment and appeal process.

Cohort Default Rate Effects Chapter 2.2

CHAPTER 2.2 -

Cohort Default Rate Effects

Page 2.2 - 5
If a school is subject to sanction, when does the sanction take effect?

Figure 2.2.4 summarizes the effective date of sanctions.

A school that loses eligibility may continue to honor unpaid loan

commitments and make certain second disbursements after notification of the loss of eligibility if the school meets certain criteria listed

in the CFR. The criteria can be found at 34 CFR 668.26(d).

The official cohort default rates must be released no later than

September 30th. If, however, cohort default rates are not issued until

after that date, a school’s loss of eligibility would continue only for

the remainder of the fiscal year in which the cohort default rates are

issued and for the following fiscal year. For example, if the

Department issues cohort default rates for FY 1999 on October 2,

2001, then a loss of eligibility that is based on the FY 1999 cohort

default rate would continue only for the remainder of FY 2002 (the

fiscal year in which the cohort default rates were issued) and to the

end of FY 2003.

Chapter 2.2 Cohort Default Rate Effects

Page 2.2 - 6

CHAPTER 2.2 -

Cohort Default Rate Effects

School is Not

Currently Under Sanction

School is

Currently Under Sanction

School Does Not

Timely Submit

Adjustment or

Appeal

The school's participation ends 30

calendar days after the date the

school first receives notice that it

is subject to the loss of eligibility.

The school's previous loss of eligibility

remains in effect and the school will

receive an additional sanction.

School Does

Timely Submit

Adjustment or

Appeal, but

Adjustment or

Appeal is

Unsuccessful

The school's participation ends on

the date that the school receives

the Department's final decision

indicating that the adjustment

and/or appeal was unsuccessful.

A school may choose not to

participate during this period to

avoid incurring a liability.

The school's previous loss of eligibility

remains in effect and the new loss of

eligibility is effective when the school

receives the Department's final decision

indicating that the school's adjustment or

appeal was unsuccessful. The new loss of

eligibility does not replace the previous loss;

however, it may overlap the previous loss

and extend the length of time that a school

is unable to participate in the FFEL, Direct

Loan, or Federal Pell Grant programs.

School Does

Timely Submit

Adjustment or

Appeal, and

Adjustment or

Appeal is

Successful

The Department will withdraw

the notification that the school is

subject to a loss of eligibility.

The Department will withdraw the

notification that the school is subject to an

additional loss of eligibility. However, the

previous loss of eligibility remains in effect.

Figure 2.2.4

Effective Date 

of Sanctions
How does a school withdraw from or reapply for participation in the

Title IV loan programs?

A school should contact the Case Management and Oversight Office

at 1-202-205-0183 for information on withdrawing from the FFEL

Program and Direct Loan Operations at 1-202-708-9951 for information on withdrawing from the Direct Loan Program.

A school that loses FFEL, Direct Loan, or Federal Pell Grant eligibility

may reapply for participation when the sanction period ends. A

school should apply online at

http://www.eligcert.ed.gov

Cohort Default Rate Effects Chapter 2.2

CHAPTER 2.2 -

Cohort Default Rate Effects

Page 2.2 - 7
Chapter 2.2 Cohort Default Rate Effects

Page 2.2 - 8

CHAPTER 2.2 -

Cohort Default Rate Effects
Chapter

2.3

Loan

Record

Detail

Report

What is a loan record detail report? . . . . . . . . . . . . . 2.3-1

Why should a school review its loan record detail report? . . . . . . . . . . . . . 2.3-1

Which schools receive hardcopy loan record detail reports? . . . . . . . . . . . . . 2.3-2

What is an electronic loan record detail report? . . . . . . . . . . . . . 2.3-3

Can a school request a hardcopy or electronic

loan record detail report from the Department? . . . . . . . . . . . . . 2.3-4

Are the loan record detail reports subject to the Privacy Act? . . . . . . . . . . . . . 2.3-4

How does a school read a loan record detail report? . . . . . . . . . . . . . 2.3-5

How does a school identify the data manager of a loan? . . . . . . . . . . . . . 2.3-16
helv n

cond
Loan Record Detail Report

What is a loan record detail report?

A loan record detail report contains information on the loans that

were used to calculate a school’s draft or official cohort default rate.

The loan record detail report lists a school’s Federal Family Education

Loan (FFEL) and/or William D. Ford Federal Direct Loan (Direct Loan)

activity, including but not limited to

 the number of borrowers who entered repayment during a

given fiscal year, and

 the loan status of those borrowers.

It is important that schools maintain a copy of all loan record 

detail reports received from the U.S. Department of Education 

(the Department). The Department provides loan record detail

reports at the release of the draft cohort default rates and the 

release of the official cohort default rates. The loan record detail

reports will be useful if a school files a challenge, adjustment, or

appeal at a later date. The loan record detail reports are also useful 

for comparing draft cohort default rates to official cohort default

rates and for comparing cohort default rates from one cohort fiscal

year to the next.

The Department provides loan record detail reports using loan

information that schools, data managers, and various offices within

the Department submit to the National Student Loan Data System

(NSLDS).

Why should a school review its loan record detail report?

After the release of the draft cohort default rates each year, a school

should review its loan record detail report for the draft cohort default

rates to verify the accuracy of the loan information. Because the

official cohort default rate will be used to determine if the school 

is subject to sanction or eligible for benefits, it is important for the

school to verify the accuracy of the draft cohort default rate data

before the official cohort default rates are calculated and released.

If the school does not challenge draft cohort default rate data that

the school believes is incorrect, the school forfeits the right to submit

certain types of adjustments and appeals when the official cohort

default rates are released.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 1

It is important

that schools

maintain a copy

of all loan record

detail reports
A school should review its loan record detail report for the official

cohort default rates to verify the accuracy of the data used to calculate its official cohort default rate. The Department uses the official

cohort default rate to determine if a school is subject to sanction or

eligible for benefits. If a school finds errors in the cohort default rate

data, the school may be eligible to file an uncorrected data adjustment, new data adjustment, and/or erroneous data appeal. See

Chapter 3.1,“School Strategies,” for additional information.

For more information on how the Department calculates draft and

official cohort default rates, see Chapter 2.1,“Calculating Cohort

Default Rates.”

NSLDS receives regular updates from numerous data providers. As a

result, a school’s loan record detail report for the draft cohort default

rates may differ from its loan record detail report for the official

cohort default rates due to the addition of new data or changes in

the data. New data occurs when the loan data reported to NSLDS

changes during the period between the draft cohort default rate

calculation and the official cohort default rate calculation for the

same cohort fiscal year. New data can be identified by comparing 

the loan record detail reports for the draft and official cohort default

rates for the same year and determining if any loan data is newly

included, excluded, or changed in any manner. If new data appears in

a school’s official cohort default rate calculation, the school may be

eligible to submit an adjustment and/or appeal of its official cohort

default rate based on allegations of new data errors.

Which schools receive hardcopy loan record detail reports?

For draft cohort default rates, the Department sends hardcopy loan

record detail reports to all Title IV eligible schools for which a draft

cohort default rate is provided.

For official cohort default rates, the Department sends the most

recent loan record detail report in a hardcopy format to Title IV

eligible schools if their official cohort default rate is 10.0 percent or

greater. If a school’s three most recent official cohort default rates are

25.0 percent or greater or if a school’s most recent official cohort

default rate is an average cohort default rate, the Department sends

the school its three most recent loan record detail reports for the

official cohort default rates. If a school receives a loan record detail

report for a previous cohort fiscal year, the loan record detail report

will not reflect any changes that the Department agreed to as a result

of a previous adjustment and/or appeal. The school must refer to the

adjustment and/or appeal determination letter for information on

cohort default rate changes.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 2

CHAPTER 2.3 - 

Loan Record Detail Report
Figure 2.3.1 summarizes which loan record detail reports a school will

receive.

What is an electronic loan record detail report?

An electronic loan record detail report is an electronic version of the

hardcopy loan record detail report. This electronic loan record detail

report contains the same information as, and eventually will replace,

the hardcopy loan record detail report. Electronic loan record detail

reports are available to all schools that receive a draft or official

cohort default rate.

An electronic loan record detail report provides schools with a more

efficient way to review, sort, and analyze their cohort default rate

data. Schools are strongly encouraged to use electronic loan record

detail reports and may request one at any time.

Any school that requests an electronic loan record detail report and

has an average rate for the requested cohort fiscal year will automatically receive data for the prior two cohort fiscal years along with the

data for the requested cohort fiscal year. All non-average rate schools

will receive data only for the requested cohort fiscal year.

A U.S. school can request an electronic loan record detail report using

the NSLDS website. See the instructions for requesting an electronic

loan record detail report in Chapter 2.6,“General Information Tools.”

The electronic loan record detail report is available as a preformatted

report (report) or as a data file extract (extract). The report is representative of the hardcopy loan record detail report and can be

accessed using standard word processing software. The extract allows

a school to query the cohort default rate data based on the school’s

needs.

Any school involved in a change in status can request a loan record

detail report for any of the other schools involved in the change of

status after the change occurred. See Chapter 2.4,“Change in Status

and Evasion,” for more information about changes in status.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 3

When a school receives a: The Department will provide the:

Draft cohort default rate Most recent loan record detail report

for the draft cohort default rates

Official cohort default rate that is

10.0 percent or greater

Most recent loan record detail report

for the official cohort default rates

Official cohort default rate that is

25.0 percent or greater for three

consecutive years

Three most recent loan record detail

reports for the official cohort default

rates

Average official cohort default

rate

Three most recent loan record detail

reports for the official cohort default

rates

Figure 2.3.1

Loan Record Detail 

Reports at a Glance
Can a school request a hardcopy or electronic loan record detail report

from the Department?

If a school did not receive a hardcopy loan record detail report and it

intends to submit a cohort default rate adjustment and/or appeal, the

school must request the loan record detail report within 15 calendar

days of receiving its official cohort default rate notification letter. See

the instructions for requesting an electronic loan record detail report

in Chapter 2.6,“General Information Tools.”

A school without NSLDS access or a school unable to obtain a loan

record detail report through NSLDS can request a hardcopy or electronic loan record detail report directly from Default Management.

To do so, the school should contact Default Management’s hotline 

at 1-202-708-9396 or send an email to

SFA.schools.default.management@ed.gov

Because some foreign schools do not have access to the NSLDS

online system, a foreign school that wants an electronic copy of its

loan record detail report must request the electronic copy from

Default Management.

Are the loan record detail reports subject to the Privacy Act?

Because loan record detail reports contain personal identification

information about borrowers who received loans under the FFEL 

and Direct Loan programs, the Privacy Act of 1974 and the Family

Educational Rights and Privacy Act (FERPA) apply to all cohort default

rate loan data, including the loan record detail reports. State and 

local laws and regulations may also govern the use of this material.

Recipients must take appropriate steps to ensure that this material 

is used and discarded properly.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 4

CHAPTER 2.3 - 

Loan Record Detail Report

The Privacy Act

of 1974 and 

the Family

Educational

Rights and

Privacy Act

(FERPA) apply to

all cohort default

rate loan data,

including the 

loan record 

detail reports
How does a school read a loan record detail report?

There are three sections to a loan record detail report: the title, body,

and summary. Figure 2.3.2 is a sample loan record detail report. Like

all of the sample loan record detail reports in this chapter, the title is

shaded blue, the body is white, and the summary is shaded tan.

Title

The title section is located at the top of each page of the loan record

detail report. This section includes information identifying the school

name, Office of Postsecondary Education Identification Number (OPE

ID – this is called the Organization ID Number on the loan record

detail report), and address. It lists the cohort fiscal year and the date

the cohort default rate was calculated, and it shows the school’s

program type, which will be FFEL, Direct Loan, or Dual. The title

section also specifies whether the loan record detail report is for 

the draft or official cohort default rates and indicates that the loan

record detail report was generated for a school, not a data manager.

All dates in the loan record detail report are listed in a MM/DD/CCYY

format, where MM is the month, DD is the day, CC is the century, and

YY is the year.

The title section shows the number of years included in the cohort

default rate calculation. On the loan record detail report for the

official cohort default rates, this figure will be either a “1” or a “3”

because an official cohort default rate might be an average rate

based on three cohort fiscal years worth of data. This figure will

always be a “1” on the loan record detail report for the draft cohort

default rates.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 5

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- -----

0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD 0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB 0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

Figure 2.3.2

Sample Loan Record 

Detail Report
Body

The body of the loan record detail report follows the title section.

On each page with data there are two horizontal rows set off by

hashed lines. These rows contain headers for the data contained in

the body of the loan record detail report. The data listed under the

headers provides information on the loans used to calculate the

school’s cohort default rate. The headers correspond to the various

data elements provided for each loan. Each loan has two rows of

information. The second row of information is indented by several

spaces.

The following pages contain a description of each element in the

body section of the loan record detail report. Each element listing

contains

 a letter that corresponds to the element on the sample loan

record detail report (identifying letters have been added to the

body on the sample loan record detail reports to correspond

with each header),

 the element title as it appears on the loan record detail report,

and 

 a brief description of the element.

The first row of loan data contains eight elements. Figure 2.3.3 is a

sample loan record detail report highlighting these eight elements.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 6

CHAPTER 2.3 - 

Loan Record Detail Report

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- ----- 0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD 0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB 0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

A B C D E F G H

A B C D E F G H

Figure 2.3.3

Sample Loan Record 

Detail Report with

Identifiers A-H
The first four elements in the first row of loan data identify the 

borrower associated with the loan. These are

A. SSN: The borrower’s Social Security Number.

B. Last Name: The borrower’s last name.

C. First/M.I.: The borrower’s first name and middle initial.

D. D.O.B.: The borrower’s date of birth.

The last four elements in the first row of loan data are

E. Original School: The OPE ID of the school that originally certified

or originated the loan.

F. Class Begin Date: The date the loan period began.

G. Class End Date: The date the loan period ended.

H. Academic Level: The academic level of the borrower when the

loan was obtained. Figure 2.3.4 lists the codes used to identify

the academic level.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 7

Code Description

1 Freshman/First Year

2 Sophomore/Second Year

3 Junior/Third Year

4 Senior/Fourth Year

5 Fifth Year/Other

A First Year Graduate/Professional

B Second Year Graduate/Professional

C Third Year Graduate/Professional

D Beyond Third Year Graduate/Professional

G Graduate/Professional

N Not Available

Figure 2.3.4

Academic Level Codes
The second row of loan data contains 14 elements. Figure 2.3.5 is a

sample loan record detail report highlighting the first four elements

in the second row of the loan data. These are

I. Originating Lender/Servicer/Holder: The entity that provided

the loan to the borrower.

J. Current Lender/Servicer/Holder: The loan holder at the time 

the cohort default rate was calculated.

K. Loan Type: The type of FFEL or Direct Loan the borrower

obtained. Figure 2.3.6 lists the codes used to identify the 

loan type.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 8

CHAPTER 2.3 - 

Loan Record Detail Report

Code Description

CL FFEL Consolidated Loan

D1 Direct Subsidized Loan

D2 Direct Unsubsidized Loan

D4 Direct PLUS Loan

D5 Direct Unsubsidized Consolidation Loan

D6 Direct Subsidized Consolidation Loan

D7 Direct PLUS Consolidation Loan

PL FFEL PLUS Loan

RF FFEL Refinanced Loan

SF FFEL Subsidized Stafford Loan

SL FFEL Supplemental Loans for Students Loan

SU FFEL Unsubsidized Stafford Loan

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- ----- 0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD 0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB 0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

Figure 2.3.6

Loan Type Codes

I J K L

I J K L

Figure 2.3.5

Sample Loan Record 

Detail Report with

Identifiers I-L
L. Loan Stat: The loan status at the time the cohort default rate

was calculated. Figure 2.3.7 lists the codes used to identify the

loan status.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 9

Code Description

*AL Abandoned Loan

BC Bankruptcy Claim, Discharged

BK Bankruptcy Claim, Active

CA Canceled

*CS Closed School Discharge

DA Deferred

DB Defaulted, Then Bankrupt, Active, Chapter 13

DC Defaulted, Compromise

DD Defaulted, Then Died

DE Death

*DF Defaulted, Unresolved

DI Disability

DK Defaulted, Then Bankrupt, Discharged, Chapter 13

DL Defaulted, In Litigation

*DN Defaulted, Paid in Full Through Consolidation Loan

DO Defaulted, Then Bankrupt, Active, Other

DP Defaulted, Paid in Full

*DR Defaulted Loan Included in Roll-Up Loan

DS Defaulted, Then Disabled

DT Defaulted, Collection Terminated

DU Defaulted, Unresolved

DW Defaulted, Write-Off

DX Defaulted, Six Consecutive Payments

*DZ Defaulted, Six Consecutive Payments, Then Missed Payment

FB Forbearance

*FC False Certification Discharge

*IA Loan Originated

ID In School or Grace Period

*IG In Grace Period

*IM In Military Grace

OD Defaulted, Then Bankrupt, Discharged, Other

PC Paid in Full Through Consolidation Loan

PF Paid in Full

*PM Presumed Paid in Full

*PN Non-Defaulted, Paid in Full Through Consolidation Loan

RF Refinanced

RP In Repayment

*UA Temporarily Uninsured-No Default Claim Requested

*UB Temporarily Uninsured-Default Claim Denied

*UC Permanently Uninsured/Unreinsured-No Default Claim Requested

*UD Permanently Uninsured/Unreinsured-Default Claim Denied

UI Unreinsured

*XD Defaulted, Six Consecutive Payments

Figure 2.3.7

Loan Status Codes

*Loan status codes 

effective July 1, 2001
Figure 2.3.8 is a sample loan record detail report highlighting the

next six elements in the second row of loan data. These six elements

are

M. Claim Rsn/Code: The claim reason code identifies why a claim

was paid on a FFEL or if a Direct Loan is considered in default

because the borrower has defaulted or met other specified

conditions. Figure 2.3.9 lists the codes used to identify the 

claim reason.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 10

CHAPTER 2.3 - 

Loan Record Detail Report

Code Description

BC FFEL Bankruptcy, Chapter 13

BO FFEL Bankruptcy, Other

CS FFEL Closed School

DE FFEL Death

DF FFEL Default

DI FFEL Disability

EX FFEL Exempt

FC FFEL False Certification

IN Direct Loan, Income Contingent Negative Amortization

IX Direct Loan, Defaulted Loan

Figure 2.3.9

Claim Reason Codes

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1

 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic

 SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2

 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- ----- 0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD

0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB

0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

M N O P Q R

M N O P Q R

Figure 2.3.8

Sample Loan Record 

Detail Report with

Identifiers M-R
N. Default/NegAm Date: This is the date a guaranty agency paid a

default claim to a lender (claim paid date) on a FFEL or the day a

Direct Loan is considered in default either because the borrower

has defaulted (default date) or met other specified conditions

resulting in negative amortization (NegAm date). The claim paid

date, default date, or NegAm date determines if a loan is included in the numerator of the cohort default rate calculation.

O. Repay Date: The date the borrower entered into repayment 

on the loan. This date determines if a loan is included in the

denominator of the cohort default rate calculation.

P. Amount: The original principal amount of the loan.

Q. Guarantor/Servicer: The data manager responsible for the loan.

See the data manager codes and addresses in Chapter 2.6,

“General Information Tools.”

R. Guaranty Loan/Date: The date that the guaranty agency insured

a FFEL or the first date of disbursement for a Direct Loan.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 11
Figure 2.3.10 is a sample loan record detail report highlighting the

final four elements in the second row of loan data. These elements

are

S. Enrollment Stat Code: The borrower’s enrollment status at the

time the cohort default rate was calculated. The enrollment

status code does not necessarily reflect the borrower’s enrollment at the school that is listed on the loan record detail report.

The enrollment status code may reflect a subsequent enrollment by the borrower at a different school. Figure 2.3.11 lists

the enrollment status codes.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 12

CHAPTER 2.3 - 

Loan Record Detail Report

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- ----- 0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD 0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB 0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

T U V

T U V

Figure 2.3.10

Sample Loan Record 

Detail Report with

Identifiers S-V

Code Description

A Approved leave of absence

D Deceased

F Full-time

G Graduated

H Half-time or more, but less than full-time

L Less than half-time

N Not available

W Withdrawn

X Never attended

Z No record found

Figure 2.3.11

Enrollment Status Codes

S

S
T. Enrollment Stat Date: The last date the borrower’s enrollment

status changed. If no date is available, the data manager may

use 01/01/1900. The enrollment status date does not necessarily

reflect the borrower’s enrollment at the school that is listed on

the loan record detail report. The enrollment status date may

reflect a subsequent enrollment by the borrower at a different

school.

U. Usage 1: This code identifies how the borrower is used in the

school’s cohort default rate calculation. Figure 2.3.12 lists the

Usage 1 codes.

V. Usage 2: This code identifies how the borrower is counted in

each individual loan program. Figure 2.3.13 lists the Usage 2

codes.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 13

Code Description

D Denominator only

B Both Numerator and Denominator

N Not used

E Eligible, but not counted

Figure 2.3.12

Usage 1 Codes

Code Description

How Borrower is Included

in the Cohort Default Rate

Calculation

FD FFEL Denominator

FB FFEL Numerator and Denominator

DD Direct Loan Denominator

DB Direct Loan Numerator and Denominator

IC Direct Loan Program

NegAm/ICR Numerator and Denominator

N FFEL/Direct Loan

Not included in the cohort default

rate calculation

E FFEL/Direct Loan Eligible, but not counted or used in

the cohort default rate calculation

Figure 2.3.13

Usage 2 Codes
Summary

The last section of the loan record detail report provides a summary

of the data contained in the loan record detail report. Figure 2.3.14 

is the sample loan record detail report with the summary section

shaded tan. Looking down the left side, the first three rows of the

summary show

 the Total Dollars in Default, which is the total outstanding

principal balance (including any interest that has accrued on 

the loan since it went into default) for the defaulted loans that

are included in the cohort default rate calculation;

 the Total Dollars in Repayment, which is the total dollar volume

for loans that have entered repayment during the cohort fiscal

year in question; and

 the Total Insurance Claim Payments, which is the actual amount

of guaranty agency claims paid to lenders on FFELs.

Because the Total Dollars in Default also includes interest, this figure

will not match the Total Insurance Claim Payments, which does not

include interest.

The summary then shows the figures used in the cohort default rate

calculation. The numerator is represented by two elements: Actual

Numerator Count and Report Count for the numerator. The actual

numerator count is the total number of unduplicated borrowers

included in the numerator of the cohort default rate calculation. The

report numerator count represents the unduplicated borrowers listed

on the loan record detail report with a “B” in the Usage 1 Code field.

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 14

CHAPTER 2.3 - 

Loan Record Detail Report

 U.S. DEPARTMENT OF EDUCATION RATE CALCULATION DATE: XX/XX/XXXX

 NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS) PAGE NO: 1 COHORT YEAR xxxx DRAFT LOAN RECORD DETAIL REPORT (SCHOOL)

 Attention: Alexander Peachum Organization ID Number: 999999

 Name: Graphic Tech

 Address: 9765 Arts Lane

 City: Coral City State: Iowa

 Country: United States Postal Code: 12345 Program Type: FFEL Years: 1

----------------------------------------- STUDENT ----------------------------------------- Original -------- CLASS ------ Academic SSN Last name First/M.I. D.O.B School Begin Date End Date Level

 ----------- ----------------------------------- ------------- ---------- -------- ---------- --------- -------- 0 - LENDER/SVCR/HOLDER - -- Loan - Claim Rsn/ DEFAULT/ Guarantor/ Guaranty Enrollment Stat/ Usage Originating Current Type Stat Code NegAm Date Repay Date Amount Servicer Loan/Date Code Date 1 2 ----------- --------- ---- ---- ---------- ----------- ---------- ------ --------- ---------- ---------------- -----

0001-01-0001 CHARM JIM K 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SF RP 00/00/0000 09/27/1997 $ 1,236 666 10/19/1995 W 06/14/1996 D FD 0001-01-0001 CHARM JIM J 03/23/1976 00XXXXXX 10/02/1995 06/14/1996 1

 8888888888 9999999999 SU RP 00/00/0000 09/27/1997 $ 1,389 666 10/19/1995 W 06/14/1996 E E 0002-00-0001 XU DENZEL A 04/19/1976 00XXXXXX 10/02/1995 06/14/1996 1 0101 0101 D1 DU IX 09/17/1998 03/20/1997 $ 2,625 0101 12/26/1995 W 09/20/1996 B DB 0003-00-0001 JACKSON MARK R 04/04/1976 00XXXXXX 10/02/1995 06/14/1996 1

 0101 0101 D1 DA 00/00/0000 12/15/1996 $ 2,625 0101 10/15/1995 W 03/20/1999 D DD

 FFEL DIRECT DUAL

 ------------- ------------- -------------

 TOTAL DOLLARS IN DEFAULT : 1,071,266 7,875 0 (Based on Outstanding Principle Balance)

 TOTAL DOLLARS IN REPAYMENT : 6,950,053 44,625 0 (Based on Outstanding Principle Balance)

 TOTAL INSURANCE CLAIM PAYMENTS: 0

 ************* = Not Available

 Actual Numerator Count : 134 Report Count : 134(B Usage 1 Codes only)

 Actual Denominator Count: 842 Actual Default Rate: 15.9 Report Count : 842(D & B Usage 1 Codes)

 INDIVIDUAL PROGRAM TALLY: FFEL: 134/842 DIRECT: 3/20

Appealed Rate flag: N (D=Direct, I=Indirect, N=No Appeal, U=Unknown) IC: 0 (Negative Amortization Only)

0 End of Loan Record Detail Report Report Generation Date: XX/XX/99

-Default Rate Usage 1: D = Denominator, B = Numerator/Denominator, N = Not Used, E = Eligible but not counted

 Default Rate Usage 2: FD = FFEL Denominator, FB=FFEL Numerator/Denominator, DD = Direct Denominator,DB=Direct Numerator/Denominator, IC = ICR (Negative Amortization Only), N = Not Used, E = Eligible but not counted

 INFORMATION PROTECTED BY THE PRIVACY ACT OF 1974 AS AMENDED

Figure 2.3.14

Sample Loan Record 

Detail Report - Summary

Section in Tan
The denominator is also represented by two elements: Actual

Denominator Count and the Report Count for the denominator.

The actual denominator count is the total number of unduplicated

borrowers included in the denominator of the cohort default rate

calculation. The report denominator count represents the unduplicated borrowers listed on the loan record detail report with a “D” or “B”

in the Usage 1 Code field.

The actual counts and the report counts may differ on the loan

record detail report for the official cohort default rates if the school’s

cohort default rate was changed due to a cohort default rate adjustment and/or appeal. The changes resulting from the cohort default

rate adjustment and/or appeal are reflected in the actual counts but

not in the report counts.

Placed among these elements is the element for the Actual Default

Rate. The actual default rate is only based on one cohort fiscal year 

of data, which is, in most cases, the school’s cohort default rate.

However, if a school has 29 or fewer borrowers entering repayment 

in the cohort default rate calculation or if the school has a combined,

substituted, or merged cohort default rate, the actual default rate will

not reflect the school’s cohort default rate.

The summary then shows the school’s Individual Program Tally.

The individual program tally is not a school’s cohort default rate.

The individual program tally is purely informational; it tells the 

school the number of borrowers identified with each loan program

and the number of those borrowers who have defaulted or met 

other specified conditions.

The Appealed Rate Flag element follows the individual program

tallies. The appealed rate flag indicates whether the cohort default

rate has been changed due to a cohort default rate adjustment

and/or appeal. Figure 2.3.15 lists the appealed rate flag codes.

Loan Record Detail Report Chapter 2.3

CHAPTER 2.3 - 

Loan Record Detail Report

Page 2.3 - 15

Code Description

D Direct – School's cohort default rate altered due to the

school's adjustment/appeal

I Indirect – School's cohort default rate altered due to an

adjustment/appeal filed by a different school in a

combination/substitution/merger

N No appeal – School's cohort default rate not altered by

an adjustment/appeal

U Unknown – Adjustment/Appeal status unknown for a

cohort default rate prior to FY 1993

Figure 2.3.15

Appealed Rate 

Flag Codes
The final element in the summary is the IC (income contingent) field.

The IC field identifies the number of Direct Loan borrowers in the

cohort default rate calculation who attended a non-degree-granting

proprietary school and are considered in default because they have

been under an income contingent repayment plan for a specified

period of time with scheduled monthly payments that are less than

$15 and less than the interest accruing on the loan. If the school is

not a non-degree-granting proprietary school or if it does not have

any borrowers meeting these criteria, this field will be zero.

How does a school identify the data manager of a loan?

As mentioned, the element in the body of the loan record detail

report titled “Guarantor/Servicer” shows the data manager responsible for a loan. A school can use this number to obtain the name and

address of the data manager. This “Guarantor/Servicer” number is

used on the spreadsheets for submitting a challenge, adjustment,

and/or appeal. See the data manager codes and addresses in Chapter

2.6,“General Information Tools.”

Chapter 2.3 Loan Record Detail Report

Page 2.3 - 16

CHAPTER 2.3 - 

Loan Record Detail Report
Chapter

2.4

Change in

Status and

Evasion

What is a change in status? . . . . . . . . . . . . . 2.4-1

How does a school’s change in status 

affect the school’s cohort default rate? . . . . . . . . . . . . . 2.4-2

What types of actions are considered attempts 

to evade cohort default rate consequences? . . . . . . . . . . . . . 2.4-4
helv n

cond
Change in Status and Evasion

What is a change in status?

There are three types of change in status for cohort default rate

purposes:

 Acquisition or Merger of Schools.

The first type of change in status

occurs when one of two things

happens: either one existing

school acquires another existing

school (acquisition of schools) or

two existing schools combine to

form one new school (merger of

schools).

 Acquisition of Branches or Locations.

The second type of change in

status occurs when an existing

school acquires a branch or

location of another school. This

type of change in status results

in one expanded school and

one former parent school.

 Branches or Locations Becoming Schools.

The third type of change in

status occurs when a branch or

location of an existing school

becomes an independent new

school. This type of change in

status results in one new school

and one former parent school.

A campus or other entity is considered a school for cohort default

purposes if it has its own OPE ID.

Change in Status and Evasion Chapter 2.4

CHAPTER 2.4 - Change

in Status and Evasion

Page 2.4 - 1

34 CFR 668.184

34 CFR 668.188
How does a school’s change in status affect the school’s cohort default

rate?

A school involved in a merger, acquisition, or other change in status

should be aware that the change may affect the application and

calculation of its cohort default rates and that certain sanctions may

be applicable to the school after the change in status. After a change

in status, cohort default rates are applied to a school according to the

type of change in status. Figure 2.4.1 outlines the cohort default rate

effects of various types of changes in status.

Chapter 2.4 Change in Status and Evasion

Page 2.4 - 2

CHAPTER 2.4 - Change

in Status and Evasion

Figure 2.4.1

Effect on Cohort Default

Rates for Various Types 

of Changes in Status

Type of

Change in

Status

Historical

Cohort Default Rates

for the New School

Subsequent Three Year

Cohort Default Rates

for the New School

Fourth Year and

Subsequent Year

Cohort Default Rates

for the New School

Cohort Default

Rates for the

Former Parent

School

Acquisition

or Merger

of Schools

The new school's

historical cohort default

rates will be the cohort

default rates of the school

involved in the change in

status that has the highest

total number of borrowers

entering repayment in the

two most recent cohort

fiscal years for which

cohort default rates have

been published.

The new school's cohort

default rates are

determined by including

all the applicable

borrowers from each

school involved in the

acquisition or merger in

the cohort default rate

calculation.

The new school's cohort

default rates are

determined by including

all the applicable

borrowers from each

school involved in the

acquisition or merger in

the cohort default rate

calculation.

The former

parent school

no longer

exists.

Acquisition

of Branches

or Locations

The expanded school's

historical cohort default

rates will be the cohort

default rates of the

acquiring school.

The expanded school's

first three cohort default

rates published after the

date of the change in

status will be calculated

using all the applicable

borrowers from both the

acquiring school and the

school from which the

branch or location was

acquired, including all of

its locations.

The expanded school's

fourth cohort default rate

published after the date

of the change in status

and the cohort default

rates in subsequent

cohort fiscal years will

be calculated using only

the applicable borrowers

from the acquiring

school.

The former

parent school's

cohort default

rates are not

affected by the

change in

status.

Branches

or Locations

Becoming

Schools

The new school's

historical cohort default

rates will be the cohort

default rates of the former

parent school.

The new school's first

three cohort default rates

published after the date of

the change in status will

be calculated using all the

applicable borrowers from

both the new school and

the former parent school,

including all of its

locations.

The new school's fourth

cohort default rate

published after the date

of the change in status

and for cohort default

rates in subsequent

cohort fiscal years will

be calculated using only

the applicable borrowers

from the new school.

The former

parent school's

cohort default

rates are not

affected by the

change in

status.
Because different cohort default rates may be applied to a school as a

result of a change in status, the school’s eligibility may be jeopardized

as a result of a change in status. All schools contemplating a change

in status should submit a letter to Default Management at the U.S.

Department of Education (the Department) before making the

change. The letter should

 explain the proposed change in status,

 include the details of the change in status (for example, if the

change is part of a teach-out), and

 request guidance regarding the consequences, if any, the

change in status will have on the school’s cohort default rate

and the school’s Title IV program eligibility.

The school should send a copy of the letter to Case Management

and, if appropriate, to the school’s Direct Loan Schools Relations

contact. See Chapter 2.5,“Department Offices and Addresses,” for

Case Management and Direct Loan Schools Relations addresses.

Default Management will send a written response indicating how the

historical, current, and future cohort default rates will be calculated

based on the proposed change in status. Schools can use this

response to evaluate whether the change in status will be beneficial

or detrimental to the schools involved in the change.

If a school decides to change its status, the school must submit an

application to report the change and request approval for the change

for Title IV program purposes. For more information on submitting a

change request, visit

http://www.eligcert.ed.gov

Once a change in status occurs, any of the schools whose cohort

default rates are affected by the change in status can request a loan

record detail report for any of the other schools whose borrowers are

included in its cohort default rates as a result of the change in status.

See Chapter 2.3,“Loan Record Detail Report,” for information on

requesting a loan record detail report. Further, after a change in

status, a school may submit a challenge, adjustment, or appeal based

on the data for another school’s borrowers, under the same requirements that would be applicable to the other school, if the loans for

those borrowers affect the school’s cohort default rate.

Under certain circumstances, a school involved in a change in status

may be required to assume the sanctions of another school involved

in the change in status if the change is considered an attempt to

evade cohort default rate sanctions.

Change in Status and Evasion Chapter 2.4

CHAPTER 2.4 - Change

in Status and Evasion

Page 2.4 - 3
What types of actions are considered attempts to evade cohort default

rate consequences?

A school has attempted to evade cohort default sanctions if all the

following conditions are met:

❖ The eligible school and the school subject to sanction are both

parties to a transaction that results in change of ownership,

change in control, merger, consolidation, acquisition, change 

of name, change of address, location becoming a freestanding

school, purchase or sale, transfer of assets, assignment, change

of identification number, contract for services, addition or

closure of one or more locations or branches or educational

programs, or any other change in whole or in part in the

school’s structure or identity.

❖ Before the change occurred, one of the schools involved in the

change in status was subject to a sanction based on its cohort

default rate.

❖ Following the change in status, the eligible school offers an

educational program at substantially the same address at which

the sanctioned school had offered an educational program

before the change.

❖ There is a commonality of ownership or management between

the eligible school and the sanctioned school, as the sanctioned

school existed before the change. A commonality of ownership

or management exists if, at each school, the same person, or a

member of that person’s family, directly or indirectly holds or

held a managerial role or has or had the ability to substantially

affect the school’s actions.

All schools contemplating a change in status should submit a letter

to Default Management before making the change. The letter should

❖ explain the proposed change in status,

❖ include the details of the change in status (for example, if the

change is part of a teach-out), and

❖ request guidance regarding the consequences, if any, the

change in status will have on the school’s cohort default rate

and the school’s Title IV program eligibility.

The school should send a copy of the letter to Case Management

and, if appropriate, to the school’s Direct Loan Schools Relations.

See Chapter 2.5,“Department Offices and Addresses,” for Case

Management and Direct Loan Schools Relations addresses.

Chapter 2.4 Change in Status and Evasion

Page 2.4 - 4

CHAPTER 2.4 - Change

in Status and Evasion
Default Management will determine if the change in status is considered an attempt to evade cohort default rate consequences and will

send a written response indicating if the eligible school will be subject to sanction and, if so, the scope and duration of the sanction.

If a school that is already subject to sanction combines with another

school, the new school has the same challenge, adjustment, and

appeal options as the school that was subject to sanction before the

change in status. That is, if the school that was subject to sanction

before the change in status had exhausted all means of challenge,

adjustment, and/or appeal, the new school has no challenge, adjustment, and/or appeal rights. If the school that was subject to sanction

before the change in status did not exhaust all means of challenge,

adjustment, and/or appeal, the new school may request a challenge,

adjustment, and/or appeal, but only under the same time frames and

other requirements that were applicable to the sanctioned school.

Change in Status and Evasion Chapter 2.4

CHAPTER 2.4 - Change

in Status and Evasion

Page 2.4 - 5
Chapter 2.4 Change in Status and Evasion

Page 2.4 - 6

CHAPTER 2.4 - Change

in Status and Evasion
Chapter

2.5

Department

Offices and

Addresses

Introduction . . . . . . . . . . . . . 2.5-1

Default Management . . . . . . . . . . . . . 2.5-2

Case Management . . . . . . . . . . . . . 2.5-3

Direct Loan Schools Relations . . . . . . . . . . . . . 2.5-4

Other Department Offices . . . . . . . . . . . . . 2.5-6
helv n cond
Department Offices and Addresses

Introduction

The U.S. Department of Education (the Department) was established

on May 4, 1980 by Congress in the Department of Education

Organization Act (Public Law 96-88 of October 1979). The

Department’s mission is to ensure equal access to education and 

to promote educational excellence for all Americans.

There are a number of offices within the Department. One of those

offices, the Office of Student Financial Assistance Programs (SFA), is

responsible for oversight of the Title IV programs the Department

administers. SFA’s mission is to help put America through school.

Within SFA are three major channels: Schools, Students, and Financial

Partners. Each of these channels has responsibility for some aspect of

the Title IV programs.

There are several offices within the Schools Channel. Three of these

are relevant for schools concerned about Federal Family Education

Loan (FFEL) and William D. Ford Federal Direct Loan (Direct Loan)

cohort default rates. These offices are Default Management, Case

Management, and Direct Loan Schools Relations.

Default Management calculates and releases school FFEL and 

Direct Loan cohort default rates and works with schools and data

managers in the cohort default rate challenge, adjustment, and

appeal process. Case Management and Direct Loan Schools Relations

provide technical assistance and assist schools with developing

default management plans and practicing good default prevention

practices. Institutional Improvement Specialists (IIS) work for Case

Management in carrying out these duties; Client Account Managers

(CAMs) perform similar functions for Direct Loan Schools Relations.

Department Offices and Addresses Chapter 2.5

CHAPTER 2.5 - Department

Offices and Addresses

Page 2.5 - 1
Default Management

The Department’s Default Management

 responds to general and specific inquiries about draft and

official cohort default rates;

 oversees the calculation of draft and official cohort default rates;

 disseminates cohort default rates in print and on the Internet;

 works with partners in the negotiated rule-making process;

 fulfills requests for various forms of draft and official cohort

default rate data;

 provides the draft and official loan record detail report to

schools;

 notifies schools with official cohort default rates above the

sanction threshold of their loss of eligibility to participate in 

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

 publishes the “Cohort Default Rate Guide;”

 provides training through conference appearances to schools

and guaranty agencies on cohort default rate information and

the cohort default rate challenge, adjustment, and appeal

requirements;

 reviews and responds to schools’ challenges, adjustments, and

appeals and data managers’ challenge, adjustment, and appeal

responses; and

 assists schools in identifying the implications of their cohort

default rate situation and the challenges, adjustments, and

appeals that schools are eligible to submit.

Default Management can be contacted at

 Telephone: 1-202-708-6048

 Hotline: 1-202-708-9396

 Email: SFA.schools.default.management@ed.gov

 URL:

http://www.ed.gov/offices/OSFAP/defaultmanagment/cdr.html

Chapter 2.5 Department Offices and Addresses

Page 2.5 - 2

CHAPTER 2.5 - Department

Offices and Addresses
When contacting Default Management by overnight mail/courier

delivery, the address is

U.S. Department of Education

Default Management

830 First Street, NE

Washington, DC 20002

When contacting by U.S. Postal Service, the address is

U.S. Department of Education

Default Management

400 Maryland Avenue, SW

Washington, DC 20202-5353

Default Management does not provide technical assistance to

schools for establishing and developing a default management plan

except for schools seeking an exemption under 34 CFR 668.198.

Other schools in need of technical assistance for establishing and

developing a default management plan should contact their Case

Management team or their Direct Loan Schools Relations contact.

Case Management

The Department’s Case Management

 reviews and approves school applications for participation,

 reviews school compliance audits and financial statements,

 provides training and technical assistance to schools,

 performs on-site compliance reviews and analyses of reports 

on schools and their agents,

 assists schools with establishing and developing default 

management plans,

 assists schools in default management and default prevention

practices, and

 handles address changes from schools.

Department Offices and Addresses Chapter 2.5

CHAPTER 2.5 - Department

Offices and Addresses

Page 2.5 - 3
Figure 2.5.1 shows contact information for Case Management. Each

case team is made up of team members located in Washington, DC,

and the regional office.

Direct Loan Schools Relations 

The Department’s Direct Loan Schools Relations

 provides training and technical assistance to schools on

EDExpress, return of Title IV funds, satisfactory academic

progress, and practices;

Chapter 2.5 Department Offices and Addresses

Page 2.5 - 4

CHAPTER 2.5 - Department

Offices and Addresses

Headquarters (HQ) or

Regional Office (Region) States Served Phone Number Address

HQ - DC Case

Management Assists all states 1-202-260-3616

Case Management

400 Maryland Avenue S.W.

Washington, DC 20202

Boston Case Team CT, MA, ME, NH, RI, VT 1-617-223-9338

Room 502

JW McCormack Post Office and

Courthouse Building

Boston, MA 02109-4557

New York Case Team NJ, NY, PR, VI 1-212-264-4022

Room 1206

75 Park Place

New York, NY 10007

Philadelphia Case Team DC, DE, MD,

PA, VA, WV 1-215-656-6442

Suite 511

The Wannamaker Bldg.

100 Penn Square East

Philadelphia, PA 19107

Atlanta Case Team AL, FL, GA,

MS, NC, SC 1-404-562-6315

Room 18T20B

61 Forsyth Street, SW

Atlanta, GA 30303

Chicago Case Team IL, MN, OH, WI 1-312-886-8767

Room 830

111 North Canal Street

Chicago, IL 60606-7206

Dallas Case Team AR, LA, NM,

OK, TX 1-214-880-3044

Suite 2720

1999 Bryan Street

Dallas, TX 75201-6817

Kansas City Case Team IA, KS, KY,

MO, NE, TN 1-816-880-4053

Suite 900

10220 North Executive Hill Blvd. Kansas City, MO 64153

Denver Case Team CO, MI, MT, ND,

SD, UT, WY 1-303-844-3677

Suite 800

1391 North Speer Blvd.

Denver, CO 80204-2512

San Francisco Case Team AZ, CA, HI,

NV, Islands 1-415-556-4295

Room 266

50 United Nations Plaza

San Francisco, CA 94102-4987

Seattle Case Team AK, ID, IN,

OR, WA 1-206-615-2594

Suite 1600

701 Fifth Avenue

Seattle, WA 98104

Figure 2.5.1

Case Management

Contacts
 assists schools with establishing and developing their default

management plans;

 assists schools in default management and default prevention

practices; and

 provides conference appearances and outreach to school and

lending communities.

Figure 2.5.2 shows contact information for Direct Loan Schools

Relations. Each team is made up of team members located in

Washington, DC, and the regional office.

Department Offices and Addresses Chapter 2.5

CHAPTER 2.5 - Department

Offices and Addresses

Page 2.5 - 5

Headquarters (HQ) or

Regional Office (Region) States Served Phone Number Address

HQ - DC Direct Loan

Schools Relations Assists all states 1-202-260-6008

Direct Loan Schools Relations

400 Maryland Avenue S.W.

Washington, DC 20202

Region 1 CT, MA, ME,

NH, RI, VT 1-617-565-6911

3rd Floor, Room 341

10 Causeway Street

Boston, MA 02222

Region 2 NJ, NY, PR, VI 1-212-264-8012

12th Floor

75 Park Place

New York, NY 10007

Region 3 DC, DE, MD,

PA, VA, WV 1-215-656-5929

Suite 513

The Wannamaker Building

100 Penn Square East

Philadelphia, PA 19107

Region 4 AL, FL, GA, KY,

MS, NC, SC, TN 1-404-562-6259

Room 18T20A

61 Forsyth Street, SW

Atlanta, GA 30303

Region 5 IL, IN, MI, OH, WI 1-312-886-8766

Room 830

111 North Canal Street

Chicago, IL 60606-7206

Region 6 AR, LA, NM,

OK, TX 1-214-880-2405

Suite 2735

1999 Bryan Street

Dallas, TX 75201-6817

Region 7 IA, KS,

MO, NE 1-816-880-4090

Suite 900

10220 North Executive Hill Blvd.

Kansas City, MO 64153

Region 8 CO, MN, MT, ND, SD, UT, WY 1-303-844-3677

Suite 800

1391 North Speer Boulevard

Denver, CO 80204-2512

Region 9 AZ, CA,

HI, NV 1-415-556-4201

Room 121

50 United Nations Plaza

San Francisco, CA 94102-4987

Region 10 AK, ID,

OR, WA 1-206-615-2231

Suite 1600

701 Fifth Avenue

Seattle, WA 98104

Figure 2.5.2

Direct Loan Schools

Relations Contacts
Other Department Offices

U.S. Department of Education

 Telephone: 1-800-872-5327 

(Spanish-speaking operators available)

1-202-401-2000

 TTY: 1-800-437-0833

 Email: usa.learn@ed.gov

 URL: http://www.ed.gov

Student Financial Assistance (SFA) Schools Portal

All of the following websites on this page can be accessed

through the Schools Portal website. The portal also displays 

SFA news headlines and a calendar of events. The user can

customize the portal for panels and links.

 Telephone: 1-800-433-7327

 Email: sfa.customer.support@ed.gov

 URL: http://sfa4schools.sfa.ed.gov

SFA Information for Financial Aid Professionals (IFAP)

Regulation Compilations, Federal Registers, Reauthorization

information, Dear Partner letters, Training information

 Telephone: 1-800-433-7327

 Email: sfa.customer.support@ed.gov

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

SFA Customer Service Call Center

Provides general assistance to schools and students

 Telephone: 1-800-433-7327 

(Spanish-speaking operators available)

 TTY: 1-800-730-8913

 Email: sfa.customer.support@ed.gov

 URL: http://www.ifap.ed.gov/customerbranch.html

Chapter 2.5 Department Offices and Addresses

Page 2.5 - 6

CHAPTER 2.5 - Department

Offices and Addresses
Default Collections

Responsible for collection of individual defaulted loans assigned

to the Department

 Telephone: 1-800-621-3115 

(Spanish-speaking operators available)

 TTY: 1-800-730-8913

 Email: dcshelp@ncs.com

 URL: http://www.ed.gov/OFFICES/OSFAP/DCS

Partner Services Default Coordination Team

Provides general assistance to loan partners, including lender

and guaranty agency cohort default rates

 Telephone: 1-202-401-7482

 URL: http://www.ed.gov/OFFICES/OSFAP/IGAL

National Student Loan Data System (NSLDS)

 Telephone: 1-800-999-8219

 Email: nsldscoe@raytheon.com

 URL: https://www.nsldsfap.ed.gov 

CPS/WAN Technical Support

 Telephone: 1-800-330-5947

 TTY: 1-800-511-5806

 Email: cpswan@ncs.com

 URL: http://www.ed.gov/OFFICES/OSFAP/sfatech

Postsecondary Education Participants System (PEPS)

 URL: http://www.ed.gov/OFFICES/OSFAP/PEPS

Department Offices and Addresses Chapter 2.5

CHAPTER 2.5 - Department

Offices and Addresses

Page 2.5 - 7
Chapter 2.5 Department Offices and Addresses

Page 2.5 - 8

CHAPTER 2.5 - Department

Offices and Addresses
Chapter

2.6

General

Information

Tools

Instructions for Requesting Cohort Default Rates

from the National Student Loan Data System (NSLDS) . . . . . . . . . . . . . 2.6-1

General Information About the 

Electronic Loan Record Detail Report . . . . . . . . . . . . . 2.6-1

Instructions for Requesting an

Electronic Loan Record Detail Report . . . . . . . . . . . . . 2.6-2

Electronic Loan Record Detail Extract File Layout and

Detailed Repayment Information Extract File Layout . . . . . . . . . . . . . 2.6-4

Alphabetical Data Manager Contacts . . . . . . . . . . . . . 2.6-10

Numerical Data Manager Contacts . . . . . . . . . . . . . 2.6-11
helv n

cond
General Information Tools

Instructions for Requesting Cohort Default Rates from the National

Student Loan Data System (NSLDS)

Default Management will send out instructions for requesting cohort

default rates from NSLDS at a later time.

General Information About the Electronic Loan Record Detail Report

An electronic loan record detail report is an electronic version of the

hardcopy loan record detail report. See Chapter 2.3,“Loan Record

Detail Report,” for information on reading a loan record detail report.

This electronic loan record detail report contains the same information as, and eventually will replace, the hardcopy loan record detail

report. Electronic loan record detail reports are available to all schools

that receive a draft or official cohort default rate notification letter.

The electronic loan record detail report is available as a preformatted

report (report) or as a data file extract (extract). The report is representative of the hardcopy loan record detail report and can be

accessed using standard word processing software. The extract allows

a school to query the cohort default rate data based on the school’s

needs.

An electronic loan record detail report provides schools with a 

more efficient way to review, sort, and analyze their cohort default

rate data. Schools are strongly encouraged to use electronic loan

record detail reports and may request one at any time. However,

if a school did not receive a hardcopy loan record detail report and

intends to submit a cohort default rate adjustment and/or appeal,

the school must request the loan record detail report within 15

calendar days of receiving its official cohort default rate notification

letter.

Any school that requests an electronic loan record detail report and

has an average rate for the requested cohort fiscal year will automatically receive data for the prior two cohort fiscal years along with the

data for the requested cohort fiscal year. All non-average rate schools

will receive data only for the requested cohort fiscal year.

General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 1
Instructions for Requesting an Electronic Loan Record Detail Report

A school or data manager may request a loan record detail report

only for their entity. A school or data manager may not request a loan

record detail report for another school or data manager.

A U.S.school can request an electronic loan record detail report using

the NSLDS website.Once the request has been made,the loan record

detail report is delivered to the Student Aid Internet Gateway (SAIG,

which replaces the Title IV Wide Area Network) mailbox associated

with the NSLDS User ID that made the request.

There are two types of NSLDS User IDs: an online services User ID 

and an online services and batch User ID. Because both User IDs 

have SAIG mailboxes, both can be used to request an electronic loan

record detail report.However, if the online services User ID is used,

the loan record detail report will be placed in the mailbox associated

with that User ID and not in the mailbox associated with the online

services and batch User ID.To obtain additional information, contact

NSLDS Customer Service at 1-800-999-8219 or CPS/WAN Technical

Support at 1-800-330-5947.

Because some foreign schools do not have access to the NSLDS

online system, a foreign school that wants an electronic copy of its

loan record detail report must request the electronic copy from

Default Management.

Exact descriptions for navigating NSLDS in order to request the

electronic loan record detail report or extract were not available at

the time of publication for this Guide because the loan record detail

report screens were still under development.Default Management

will create a “General Information Tools: Instructions for Requesting

an Electronic Loan Record Detail Report”supplement for this Guide

once these lists are in final form.This supplement will be mailed to

schools and data managers and will be available at

http://ifap.ed.gov/drmaterials/changelog.html 

You may also wish to visit NSLDS online at 

https://www.nsldsfap.ed.gov 

or

http://sfa4schools.sfa.ed.gov

Contact NSLDS Customer Service at 1-800-999-8219 for password

assistance.

Chapter 2.6 General Information Tools

Page 2.6 - 2

CHAPTER 2.6 - General

Information Tools
The following are steps to access EDconnect after making a request

for an electronic loan record detail report.

Step 1: Before downloading the electronic loan record detail

report from the SAIG mailbox, ensure the ID you used

when logging on to the NSLDS website is set up in the

EDconnect software. If this has not been done, contact

CPS/WAN Technical Support at 1-800-330-5947.

Step 2: Log onto the EDconnect

software using the User ID

associated with the NSLDS

User ID that made the request

for the electronic loan record

detail report.

Step 3: Select “Now” from the Transmission menu.

Step 4: Once EDconnect has finished

processing the Transmission

Now request, select “Mailbox

Query” from the New option

on the File menu.

Step 5: EDconnect will provide a list of those files that are available for download. From the list of files available to be

downloaded, identify the electronic loan record detail

report that was requested.

The electronic loan record detail reports will be listed 

using SAIG message classes. The message classes for the

electronic loan record detail reports consist of 

eight characters:

 SHCDREOP for extract files

 SHCDRROP for report files

General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 3
Step 6: Place a check mark in the Move to TQ column, next to the

message class associated with the requested electronic

loan record detail report.

Step 7: Select “Now” from the Transmission menu. EDconnect will

download the file to the designated directory. At this

point, a school can rename the file prior to saving it. A

school may wish to name a file for the date the file was

downloaded.

Step 8: Access the file.

For questions about the SAIG mailbox or downloading files, contact

CPS/WAN Technical Support at 1-800-330-5947.

Requests for an average rate will have three cohort fiscal years of data

in the message class.

Electronic Loan Record Detail Extract File Layout and Detailed

Repayment Information Extract File Layout

The extract file layout contains:

 positions,

 field lengths,

 field formats,

 field names, and

 field descriptions.

Chapter 2.6 General Information Tools

Page 2.6 - 4

CHAPTER 2.6 - General

Information Tools
The file layout is divided into three sections:

 Header Record Layout. This is the layout for the single header

record of the file. This record contains general information

about the detail records contained in the file. Figure 2.6.1 

displays the Header Record Layout.

General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 5

Position

From

Position

To

Field

Length

Field

Format Name Description of Field Content

1 20 20 Character Filler Filler

21 21 1 Numeric Record Type

Indicator used to identify the header

record. Value must be "1" (one).

22 29 8 Numeric

Organization

ID Number

The eight-digit OPE ID code used to

identify the school receiving the loan

record detail report.

30 143 114 Character Filler Filler

144 203 60 Character

Organization

Name

School's name

204 253 50 Character Address School's address

254 273 20 Character City School's city

274 275 2 Character State School's state

276 295 20 Character Country School's country

296 304 9 Numeric Zip Code School's zip code

305 312 8 Date Request Date

Identifies the request date of the loan

record detail report; format is

CCYYMMDD.

313 320 8 Date

Rate Calculation

Date

Identifies the date the rate was

calculated; format is CCYYMMDD.

321 324 4 Date Cohort Year

Identifies the cohort fiscal year

associated with the report; format is

CCYY.

325 331 7 Character Title IV Program

Identifies the program type of loans

included in the loan record detail report.

332 334 3 Character Filler Filler

335 335 1 Numeric Filler Filler

Figure 2.6.1

Header Record Layout
Chapter 2.6 General Information Tools

Page 2.6 - 6

CHAPTER 2.6 - General

Information Tools

 Detail Layout. This is the layout for the detail records in the 

file. These records contain all of the student and loan-specific 

information. Figure 2.6.2 displays the Detail Record Layout.

Position

From

Position

To

Field

Length

Field

Format Name Description of Field Content

1 20 20 Character Filler Filler

21 21 1 Character Record Type Indicator used to identify the detail record.

Value must be "2" (two).

22 29 8 Character School Code

An eight-digit OPE ID code used to identify

the school submitting the loan record

detail report request.

30 37 8 Character Filler Filler

38 46 9 Character SSN Title IV recipient's or beneficiary's Social

Security Number.

47 47 1 Character Usage 1 Code Identifies how the loan is counted in the

school's cohort default rate calculation.

48 65 18 Character Filler Filler

66 100 35 Character Current

Last Name

Title IV recipient's or beneficiary's current

last name.

101 112 12 Character Current

First Name

Title IV recipient's or beneficiary's current

first name.

113 113 1 Character Student

Middle Initial

Title IV recipient's or beneficiary's middle

initial.

114 121 8 Numeric Student

Date of Birth

Title IV recipient's or beneficiary's date of

birth.

122 129 8 Character Original

School Code

OPE ID code for the school that certified/

originated the loan for the borrower.

130 137 8 Numeric Begin Class Date The date classes were scheduled to begin

for the loan period covered by the loan.

138 145 8 Numeric End Class Date The date classes were scheduled to end

for the loan period covered by the loan.

146 146 1 Character Academic Level

Student's academic or grade level in

school at the beginning of the specific

period covered by the loan.

147 152 6 Character Original Lender/

Servicer Code

Code for entity that provided the loan to

the student; identifies the originating

holder of the loan.

153 156 4 Character Filler Filler

157 162 6 Character Current Lender/

Servicer Code Current lender code.

163 166 4 Character Current Lender/

Servicer Branch Current lender branch.

167 168 2 Character Loan Type The type of loan.

169 170 2 Character Loan Status Code The status of the borrower's loan.

171 178 8 Numeric Loan Status Code

Date Effective date of the loan status code.

Figure 2.6.2

Detail Record Layout

(part 1 of 2)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 7

Position

From

Position

To

Field

Length

Field

Format Name Description of Field Content

179 186 8 Numeric Repay Date Date loan entered repayment.

187 192 6 Numeric Amount Full amount of the loan.

193 195 3 Character

Code for

Guarantor/

Servicer

Entity that guaranties the loan on behalf

of the Department or entity that the

Department contracts with to service

Direct Loans.

196 203 8 Numeric Guaranty Loan

Date

Date that the guaranty agency insured a

FFEL or the first date of disbursement

for a Direct Loan.

204 211 8 Numeric Default NegAm

Date

Date that a default claim was paid on a

FFEL or the day of default, for cohort

default rate purposes, for Direct Loans

or the day certain Direct Loans are

considered in default, for cohort default

rate purposes, if the loan has been in an

income contingent repayment plan with

payments of less than $15 per month

that resulted in negative amortization for

a certain period of time.

212 213 2 Character Claim Reason Code

Identifies the reason a claim was paid

on a FFEL or if a Direct Loan has

defaulted or, for some Direct Loan, if the

loan entered into an income contingent

repayment plan that resulted in negative

amortization.

214 234 21 Character Filler Filler

235 235 1 Character Enrollment Code Student's enrollment status at the time

the cohort default rate was calculated.

236 243 8 Numeric Enrollment Code

Date

Effective date of the Enrollment Status

Code. If no data is available, the

guaranty agency or Direct Loan servicer

may use 01/01/1900.

244 244 1 Character Program Type Identifies loan program type

“F” (FFEL) or “D” (Direct Loan).

245 249 5 Character Filler Filler

250 255 6 Numeric Claim Amount The claim amount.

256 261 6 Numeric Outstanding

Principal Balance The original dollar amount of the loan.

262 263 2 Character Usage 2 Code

Identifies how the borrower is counted in

each individual loan program (i.e., the

FFEL Program and/or the Direct Loan

Program).

264 320 57 Character Filler Filler

321 324 4 Character Cohort Fiscal Year Identifies the cohort fiscal year; format is

CCYY.

325 335 11 Character Filler Filler

Figure 2.6.2 (cont.) - Detail Record Layout (part 2 of 2)
Chapter 2.6 General Information Tools

Page 2.6 - 8

CHAPTER 2.6 - General

Information Tools

 Trailer Record Layout. This is the layout for the single trailer

record of the file. This record contains selected summary 

calculations for the detail records contained in the file.

Figure 2.6.3 is the Trailer Record Layout.

Position

From

Position

To

Field

Length

Field

Format Name Description of Field Content

1 20 20 Character Filler Filler

21 21 1 Character Record Type Indicator used to identify the trailer

record. Value must be “3” (three).

22 29 8 Character School Code

An eight-digit OPE code used to identify

the school receiving the loan record

detail report.

30 31 2 Character Filler Filler

32 39 8 Numeric

Actual

Numerator

Count

The total number of unduplicated

borrowers reported in the numerator of

the cohort default rate. The report count

for the numerator represents the

unduplicated borrowers listed with a “B”

in the Usage 1 Code field.

40 47 8 Numeric

Actual

Denominator

Count

The total number of unduplicated

borrowers reported in the denominator

of the cohort default rate. The report

count for the denominator represents the

unduplicated borrowers listed with a

“D” or “B” in the Usage 1 Code field.

48 55 8 Numeric Report Count

Identifies the unduplicated number of

borrowers included in the numerator of

the cohort default rate calculation.

56 63 8 Numeric Report Count

Identifies the unduplicated number of

borrowers included in the denominator

of the cohort default rate calculation.

64 71 8 Numeric IC

Identifies the number of borrowers

meeting income contingency repayment

conditions on the loan record detail

report.

72 79 8 Numeric Individual

Program Tally

The total number of unduplicated

borrowers counted in the numerator of

the FFEL Program.

80 87 8 Numeric Individual

Program Tally

The total number of unduplicated

borrowers counted in the denominator of

the FFEL Program.

88 95 8 Numeric Individual

Program Tally

The total number of unduplicated

borrowers counted in the numerator of

the Direct Loan Program.

Figure 2.6.3

Trailer Record Layout 

(part 1 of 2)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 9

Position

From

Position

To

Field

Length

Field

Format Name Description of Field Content

96 103 8 Numeric Individual

Program Tally

The total number of unduplicated

borrowers counted in the denominator

of the Direct Loan Program.

104 135 32 Numeric Filler Filler

136 136 1 Character Appealed Rate

Flag

Identifies if the cohort default rate has

been revised due to an adjustment/

appeal.

137 146 10 Numeric

Dual Total

Dollars in

Default

Total dollars in default. The FFEL

Program and Direct Loan Program

entries within this field indicate the total

dollar volume of defaulted loans included

in the cohort default rate calculation.

147 156 10 Numeric

Dual Total

Dollars in

Repayment

Total dollars in repayment. The FFEL

Program and Direct Loan Program

entries within this field indicate the total

dollar volume for loans that have

entered into repayment during the cohort

fiscal year in question.

157 166 10 Numeric

FFEL Total

Dollars in

Default

Dollars in default on FFEL Program.

167 176 10 Numeric

FFEL Total

Dollars in

Repayment

Dollars in repayment on FFEL Program.

177 186 10 Numeric

Direct Total

Dollars in

Default

Dollars in default on Direct Loan

Program.

187 196 10 Numeric

Direct Total

Dollars in

Repayment

Dollars in repayment on Direct Loan

Program.

197 206 10 Numeric

Total Insurance

Claim

Payments

Identifies the total dollar amount for

insurance claim payments.

207 320 114 Character Filler Filler

321 324 4 Date Trailer Sort

Cohort Year

Identifies the cohort fiscal year; format is

CCYY.

325 335 11 Character Filler Filler

Figure 2.6.3 (cont.) - Trailer Record Layout (part 2 of 2)
Chapter 2.6 General Information Tools

Page 2.6 - 10

CHAPTER 2.6 - General

Information Tools

Alphabetical Data Manager Contacts

The contact list that follows contains codes for the data manager 

for Federal Family Education Loans (FFELs) and William D. Ford Direct

Loans (Direct Loans) included on a school’s loan record detail report

and detailed repayment information. The list is in alphabetical order

by state followed by the data manager code.

If the data manager code is known, see the section of this chapter

entitled “Numerical Data Manager Contacts.”

Figure 2.6.4 lists Data Manager Codes in alphabetical order.

State and/or Territory Data Manager Code

Alabama 701

Alaska 702

American Samoa no number code

Arizona 804

Arkansas 705

California 706

Colorado 708

Connecticut 709

Delaware 710

Direct Loan Servicer 0101

District of Columbia 611

Educational Credit Management Corporation (ECMC) 927 and 951

Federated States of Micronesia,

Marshall Islands, Republic of Palau

no number code

Florida 712

Georgia 713

Guam no number code

Hawaii 815

Idaho 716

Illinois 717

Indiana 718

Iowa 719

Kansas 620

Kentucky 721

Louisiana 722

Maine 723

Maryland 724

Massachusetts 725

Michigan 726

Minnesota 727

Mississippi 728

Missouri 729

Montana 730

Nebraska 731

Figure 2.6.4

Alphabetical Data

Manager Codes 

(part 1 of 2)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 11

Numerical Data Manager Contacts

The contact list that follows contains the names, addresses, telephone

numbers, email and website addresses (if available), and points of

contact for FFELs and Direct Loans included on a school’s loan record

detail report and detailed repayment information. The list is in

numerical order by the data manager code as identified on the loan

record detail report or the detailed repayment information, followed

by the name of the state/territory/entity primarily associated with the

identified code. A data manager should contact Default Management

when any changes occur. In addition, if a school discovers that the

information listed for a data manager is incorrect, it should contact

Default Management.

If the data manager code is not known, see the section of this chapter

entitled “Alphabetical Data Manager Contacts.”

State and/or Territory Data Manager Code

Nevada 732

New Hampshire 733

New Jersey 734

New Mexico 735

New York 736

North Carolina 737

North Dakota 738

Northern Mariana Islands no number code

Ohio 739

Oklahoma 740

Oregon 741

Pennsylvania 742

Puerto Rico 772

Rhode Island 744

South Carolina 745

South Dakota 746

Tennessee 747

Texas 748

U.S. Department of Education 555, 627, and 631

USA Funds 800

Utah 749

Vermont 750

Virgin Islands 778

Virginia 751

Washington 753

West Virginia 654

Wisconsin 755

Wyoming 656

Figure 2.6.4 (cont.)

Alphabetical Data

Manager Codes 

(part 2 of 2)
Chapter 2.6 General Information Tools

Page 2.6 - 12

CHAPTER 2.6 - General

Information Tools

Figure 2.6.5 lists the data manager contact information in numerical

order.

0101 Direct Loan Servicing Center

U.S. Department of Education

Direct Loan Servicer

Attn: Default Rate Appeals Section

501 Bleecker Street

Utica, NY 13501

School Services Representative

1-888-877-7658

http://www.dlservicer.ed.gov/schools

555 U.S. Department of Education

By commercial overnight mail/courier delivery:

U.S. Department of Education

Default Management

830 First Street, NE

Washington, DC 20002

By U.S. Postal Service:

U.S. Department of Education

Default Management

400 Maryland Avenue, SW

Washington, DC 20202-5353

1-202-708-9396

http://www.ed.gov

This is the address for FFEL Program loans currently

maintained by the Department. For Direct Loan Program

loans, see Code 0101.

611 District of Columbia

American Student Assistance Corporation

Attn: Cohort Section

330 Stuart Street

Boston, MA 02116

Ms. Sue Pottenger

1-800-999-9080 ext. 3209

pottenger@amsa.com

http://www.amsa.com

620 Kansas

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

627 U.S. Department of Education

See the address in Box 555

631 U.S. Department of Education

See the address in Box 555

654 West Virginia

Pennsylvania Higher Education Assistance Agency

Attn: Program Review

HQ4

1200 North 7th Street

Harrisburg, PA 17102-1444

Ms. Lisa Hoffman

1-717-720-2180

lhoffman@pheaa.org

http://www.pheaa.org

656 Wyoming

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Figure 2.6.5

Numerical Data Manager

Contacts (part 1 of 8)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 13

701 Alabama

Kentucky Higher Education Assistance Authority

Attn: Policy and Client Services Branch

1050 U.S. 127 South

Frankfort, KY 40601-4323

Ms. Elaine Brumback

1-502-696-7278

ebrumback@kheaa.com

http://www.kheaa.com

702 Alaska

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

705 Arkansas

Student Loan Guaranty Foundation of Arkansas

Attn: Ms. Brenda Steele

219 South Victory

Little Rock, AR 72201-1884

Ms. Brenda Steele

1-501-688-7648

bsteele@slgfa.org

http://www.slgfa.org

706 California

EDFUND

Attn: Loan Detail Information Office

Cohort Default Rate Appeals and Disputes

3300 Zinfandel Drive

P.O. Box 419045

Rancho Cordova, CA 95741-9045

Ms. Kevis Foley-Bumgardner

1-916-526-8068

kfoley@edfund.org

http://www.edfund.org

708 Colorado

Colorado Student Loan Program

Attn: Compliance, Training & Investigation Dept.

999 18th Street, Suite 425

Denver, CO 80202-2471

Mr. Eric Cronkright

1-303-305-3282

ecronkright@cslp.org

http://www.cslp.org

709 Connecticut

Connecticut Student Loan Foundation

Attn: Manager of Guarantee Operations

P.O. Box 1009

525 Brook Street

Rocky Hill, CT 06067

Ms. Sandy Barsom

1-860-257-4001 ext. 247

sbarsom@mail.cslf.org

http://www.cslf.com

710 Delaware

Pennsylvania Higher Education Assistance Agency

Attn: Program Review

HQ4

1200 North 7th Street

Harrisburg, PA 17102-1444

Ms. Lisa Hoffman

1-717-720-2180

lhoffman@pheaa.org

http://www.pheaa.org

712 Florida

Florida Department of Education

Bureau of Student Financial Assistance

Attn: Ms. Reita Kelley

Northwood Centre

1940 North Monroe Street; Suite 70

Tallahassee, FL 32303-4759

Ms. Reita Kelley

1-850-410-5252

1-800-366-3475

kelleyr@mail.doe.state.fl.us

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 2 of 8)
Chapter 2.6 General Information Tools

Page 2.6 - 14

CHAPTER 2.6 - General

Information Tools

713 Georgia

Georgia Higher Education Assistance Corporation

Attn: Program Administration

2082 East Exchange Place, Suite 200

Tucker, GA 30084-5305

Ms. Carole Jones

1-770-724-9137

carole@mail.gsfc.state.ga.us

http://www.gsfc.org

716 Idaho

Northwest Education Loan Association

Attn: School Compliance Representative

500 Coleman Building

811 First Avenue

Seattle, WA 98104

Ms. Linda Shannon

1-206-461-5325

lindas@nela.net

http://www.nela.net

717 Illinois

Illinois Student Assistance Commission

Attn: Compliance Analyst

1755 Lake Cook Road

Deerfield, IL 60015

Ms. Terry Dallas

1-847-948-8500 ext. 3306

tdallas@isac.org

http://www.isac-online.org

718 Indiana

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

719 Iowa

Iowa College Student Aid Commission

Attn: Associate Director, Claims and Collections

200 10th Street, 4th Floor

Des Moines, IA 50309-3609

Mr. Brian Mohr

1-515-242-3356

brian.mohr@csac.state.ia.us

http://www.state.ia.us/government/icsac

721 Kentucky

Kentucky Higher Education Assistance Authority

Attn: Policy and Client Services Branch

1050 U.S. 127 South

Frankfort, KY 40601-4323

Ms. Elaine Brumback

1-502-696-7278

ebrumback@kheaa.com

http://www.kheaa.com

722 Louisiana

Louisiana Office of Student Financial Assistance

Attn: Program Review

1885 Wooddale Boulevard

Baton Rouge, LA 70806

Ms. Blair Daggs

1-225-922-0584

1-800-259-5626 ext. 0584

bdaggs@osfa.state.la.us

http://www.osfa.state.la.us

723 Maine

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 3 of 8)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 15

724 Maryland

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

725 Massachusetts

American Student Assistance Corporation

Attn: Cohort Section

330 Stuart Street

Boston, MA 02116

Ms. Sue Pottenger

1-800-999-9080 ext. 3209

pottenger@amsa.com

http://www.amsa.com

726 Michigan

Michigan Higher Education Assistance Authority

Attn: Audit and Program Review Section

Hannah Building, First Floor

608 W. Allegan Road

Lansing, MI 48933-1524

Mr. Dan Tryon

1-517-373-4981

tryond@state.mi.us

727 Minnesota

Great Lakes Higher Education Guaranty

Corporation

Attn: Ms. Lori Yaun

2401 International Lane

Madison, WI 53704

Ms. Lori Yaun

1-608-246-1622

lyaun@glhec.org

http://www.glhec.org

728 Mississippi

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

729 Missouri

Missouri Student Loan Program

Attn: Senior Associate for Compliance

3515 Amazonas Drive

Jefferson City, MO 65109-5717

Ms. Ruth Chrismore

1-573-751-8748

ruth.chrismore@mocbhe.gov

http://www.cbhe.state.mo.us

730 Montana

Montana Guaranteed Student Loan Program

Attn: Compliance Officer

2500 Broadway

Helena, MT 59601

Mr. Ron Muffick

1-406-444-0369

1-800-537-7508

rmuffick@mgslp.state.mt.us

http://www.mgslp.state.mt.us

731 Nebraska

NSLP

Attn: Program Review and Compliance

1300 O Street

Lincoln, NE 68508

Ms. Dorothy Confer

1-402-479-6959

dorothyc@nslp.org

http://www.nslp.org

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 4 of 8)
Chapter 2.6 General Information Tools

Page 2.6 - 16

CHAPTER 2.6 - General

Information Tools

732 Nevada

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

733 New Hampshire

New Hampshire Higher Education

Assistance Foundation

Attn: Director of Compliance

4 Barrell Court

Concord, NH 03302

Mr. Lonny Meloon

1-603-227-5309

lmeloon@gsmr.org

http://www.nhheaf.org OR http://www.gsmr.org

734 New Jersey

New Jersey Higher Education

Student Assistance Authority

Attn: Mr. Derek V. Gatling

4 Quakerbridge Plaza Building

P.O. Box 548

Trenton, NJ 08625

Mr. Derek V. Gatling

1-609-588-3996

dgatling@hesaa.org

http://www.hesaa.org

735 New Mexico

New Mexico Student Loan Guarantee Corporation

Attn: Compliance and Program Review Office

3900 Osuna, N.E.

Albuquerque, NM 87109

Ms. Carolyn Holder

1-505-345-8821 ext. 261

holderc@nmslgc.org

http://www.nmslgc.org

736 New York

New York State Higher Education Services Corporation

Attn: Lender Service

99 Washington Avenue

Albany, NY 12255

Mr. Larry LaVallee

1-518-473-1670

llavallee@hesc.com

http://www.hesc.com

737 North Carolina

North Carolina State Education Assistance Authority

Attn: Claim Accounting and Compliance Review

10 Alexander Drive

Research Triangle Park, NC 27709

Ms. Robbin Sutton

1-919-248-4629

RobbinS@ncseaa.edu

http://www.ncseaa.edu

738 North Dakota

Student Loans of North Dakota

Attn: Compliance Officer

715 East Broadway

Bismarck, ND 58501

Ms. Char Feist

1-701-328-5753

cfeist@state.nd.us

http://www.banknd.com/slnd

739 Ohio

For NON-DEFAULTED LOANS

Great Lakes Higher Education Guaranty Corporation

Attn: Ms. Lori Yaun

2401 International Lane

Madison, WI 53704

Ms. Lori Yaun

1-608-246-1622

lyaun@glhec.org

http://www.glhec.org

For DEFAULTED LOANS

See the address in box 555

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 5 of 8)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 17

740 Oklahoma

Oklahoma State Regents for Higher Education

Guaranteed Student Loan Program

Attn: Ms. Mary Heid

421 Northwest 13th Street

Oklahoma City, OK 73104

Ms. Mary Heid

1-405-234-4489

mheid@ogslp.org

http://www.ogslp.org

741 Oregon

Oregon Student Assistance Commission

Attn: Program Review

1500 Valley River Drive Suite 100

Eugene, OR 97401

Ms. Barbara Briggs

1-541-687-7376

barbara.l.briggs@state.or.us

http://www.osac.state.or.us

742 Pennsylvania

Pennsylvania Higher Education Assistance Agency

Attn: Program Review

HQ4

1200 North 7th Street

Harrisburg, PA 17102-1444

Ms. Lisa Hoffman

1-717-720-2180

lhoffman@pheaa.org

http://www.pheaa.org

744 Rhode Island

Rhode Island Higher Education Assistance Authority

Attn: Cohort Appeals

560 Jefferson Boulevard

Warwick, RI 02886-1320

Mr. Charles Totoro

1-401-736-1141

ctotoro@riheaa.org

http://www.riheaa.org

745 South Carolina

South Carolina State Education Assistance Authority

Attn: Mr. Mike Fox

Interstate Center, Suite 212

16 Berryhill Road

Columbia, SC 29212

Mr. Mike Fox

Ms. Sherry Highbaugh

1-803-798-7960

mike_fox@slc.sc.edu

seaass@slc.sc.edu

http://www.slc.sc.edu

746 South Dakota

Education Assistance Corporation

Attn: Vice President of Preclaim, Claim,

and Collection

115 First Avenue, S.W.

Aberdeen, SD 57401

Ms. Ellen Welke

1-605-622-4340

ewelke@eac-easci.org

http://www.eac-easci.org

747 Tennessee

Tennessee Student Assistance Corporation

Attn: School Relations Specialist

Suite 1950

404 James Robertson Parkway

Nashville, TN 37243-0820

Ms. Stephanie Aylor

1-615-741-1346

saylor@mail.state.tn.us

http://www.state.tn.us/tsac

748 Texas

Texas Guaranteed Student Loan Corporation

Attn: Compliance Analyst

2929 Longhorn Boulevard, Suite 106

Austin, TX 78758

Mr. Ken Johnson

1-512-219-4701

ken.johnson@tgslc.org

http://www.tgslc.org/tgslc

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 6 of 8)
Chapter 2.6 General Information Tools

Page 2.6 - 18

CHAPTER 2.6 - General

Information Tools

749 Utah

Utah Higher Education Assistance Authority

Attn: Manager of Compliance and Program Review

Three Triad Center, Suite 550

355 West North Temple

Salt Lake City, UT 84180-1205

Mr. Jed Spencer

1-801-321-7220

jspencer@utahsbr.edu

http://www.uheaa.org

750 Vermont

Vermont Student Assistance Corporation

Attn: Manager of School Policy and Compliance

The Champlain Mill

1 Main Street

Winooski, VT 05404

Ms. Marcia Vance

1-802-654-3770 ext. 273

1-800-660-3561 ext. 273

vance@vsac.org

http://www.vsac.org

751 Virginia

ECMC Guarantee Servicing

Attn: Compliance Specialist

7325 Beaufont Springs Drive, Suite 200

Richmond, VA 23225-5546

Ms. Linda Woodley

1-888-775-3262 ext. 8024

lwoodley@ecmc.org

http://www.ecmc.org

753 Washington

Northwest Education Loan Association

Attn: School Compliance Representative

500 Coleman Building

811 First Avenue

Seattle, WA 98104

Ms. Linda Shannon

1-206-461-5325

lindas@nela.net

http://www.nela.net

755 Wisconsin

Great Lakes Higher Education Guaranty Corporation

Attn: Ms. Lori Yaun

2401 International Lane

Madison, WI 53704

Ms. Lori Yaun

1-608-246-1622

lyaun@glhec.org

http://www.glhec.org

772 Puerto Rico

Great Lakes Higher Education Guaranty Corporation

Attn: Ms. Lori Yaun

2401 International Lane

Madison, WI 53704

Ms. Lori Yaun

1-608-246-1622

lyaun@glhec.org

http://www.glhec.org

778 Virgin Islands

Great Lakes Higher Education Guaranty Corporation

Attn: Ms. Lori Yaun

2401 International Lane

Madison, WI 53704

Ms. Lori Yaun

1-608-246-1622

lyaun@glhec.org

http://www.glhec.org

800 USA Funds

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 7 of 8)
General Information Tools Chapter 2.6

CHAPTER 2.6 - General

Information Tools

Page 2.6 - 19

804 Arizona

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

815 Hawaii

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

927 Educational Credit Management Corporation

(ECMC)

ECMC Guarantee Servicing

Attn: Compliance Specialist

7325 Beaufont Springs Drive, Suite 200

Richmond, VA 23225-5546

Ms. Linda Woodley

1-888-775-3262 ext. 8024

lwoodley@ecmc.org

http://www.ecmc.org

951 Educational Credit Management Corporation

(ECMC)

ECMC Guarantee Servicing

Attn: Compliance Specialist

7325 Beaufont Springs Drive, Suite 200

Richmond, VA 23225-5546

Ms. Linda Woodley

1-888-775-3262 ext. 8024

lwoodley@ecmc.org

http://www.ecmc.org

American Samoa (no number code)

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Federated States of Micronesia, Marshall Islands,

and Republic of Palau (no number code)

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Guam (no number code)

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Northern Mariana Islands

(no number code)

USA Funds

Attn: Mr. Bruce Bement

Suite 230

Crosspoint Plaza One

10475 Crosspoint Blvd.

Indianapolis, IN 46256-3323

Mr. Bruce Bement

1-317-806-1256

bbement@usafunds.org

http://www.usafunds.org

Figure 2.6.5 (cont.) - Numerical Data Manager Contacts (part 8 of 8)
Chapter 2.6 General Information Tools

Page 2.6 - 20

CHAPTER 2.6 - General

Information Tools
Strategy

School Strategies

Data Manager Strategies

Strategy Tools

Part

III

Chapter

3.1

Chapter

3.2

Chapter

3.3

Chapter

3.1 School 

Strategies

Why should a school review this chapter? . . . . . . . . . . . . . 3.1-1

What strategies can a school employ in relation to the

release of the draft and official cohort default rates? . . . . . . . . . . . . . 3.1-2

What is repayment information? . . . . . . . . . . . . . 3.1-4

What are the benefits of reviewing repayment information? . . . . . . . . . . . . . 3.1-4

What types of repayment information are available? . . . . . . . . . . . . . 3.1-5

What actions can a school take to help process

the draft and official cohort default rates? . . . . . . . . . . . . . 3.1-6

How does a school prepare for the release

of the cohort default rates? . . . . . . . . . . . . . 3.1-6

When are cohort default rates sent to schools? . . . . . . . . . . . . . 3.1-7

How does a school review its cohort default rate data? . . . . . . . . . . . . . 3.1-8

How does a school determine if it should

submit a challenge, adjustment, or appeal? . . . . . . . . . . . . . 3.1-9

Why should a school that is not subject to sanction

contest inaccurate data on the loan record detail report? . . . . . . . . . . . . . 3.1-12

How does a school determine if there is 

inaccurate data on the loan record detail report? . . . . . . . . . . . . . 3.1-13

How does a school contest inaccurate 

data on the loan record detail report? . . . . . . . . . . . . . 3.1-14

How does a school contend that it has exceptional

mitigating circumstances that should prevent the school 

from being subject to sanction due to its cohort default rate? . . . . . . . . . . . . . 3.1-15

What are the time frames for submitting 

a challenge, adjustment, or appeal? . . . . . . . . . . . . . 3.1-17

How does a school or data manager use the time frames chart? . . . . . . . . . . . . . 3.1-17
helv n cond

helv l cond
School Strategies

Why should a school review this chapter?

Schools should review this Guide for information regarding cohort

default rates. This chapter contains basic strategies to prepare a

school for the release of the cohort default rates as well as strategies

to help a school determine if it needs to submit a challenge, adjustment, or appeal and, if so, which challenges, adjustments, or appeals

the school is eligible to submit.

The U.S. Department of Education’s (the Department’s) Default

Management will send out supplements for the Guide with the draft

and official cohort default rates. Schools should review the supplements to determine what information has changed. Schools should

then incorporate the supplements into the appropriate sections of

the Guide.

Default Management suggests that schools read the Department’s

publication “Ensuring Student Loan Repayment,” a handbook of best

student loan practices based on the Department’s October 2000

student loan symposium. This publication is available at the Student

Financial Aid (SFA) Schools Portal at 

http://sfa4schools.sfa.ed.gov

and at the Information for Financial Aid Professionals (IFAP) website

at 

http://ifap.ed.gov

click on “electronic announcements,” then select “2001,” and scroll to

the hyperlink “01/19/01.”

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 1
What strategies can a school employ in relation to the release of the

draft and official cohort default rates?

It is important that a school determine who will have responsibility

for reviewing cohort default rate related matters. Default Management will send cohort default rate correspondence to the school

president’s office. If the president’s office will not be responsible for

reviewing the correspondence, it is important that the president’s

office know who at the school is responsible for reviewing the correspondence and immediately forward correspondence to that office.

It is equally important that there be a free flow of enrollment status

information between the school office in charge of that information

and the school office reviewing cohort default rate matters. The

school should ensure that contacts are in place between those

offices.

The school may wish to establish data manager, Default Management, and Case Management contacts within the school organization

and provide updates to data managers, Default Management, and

Case Management when those contacts change. A school should

work with its Case Management team or Client Account Manager

(CAM) to discuss default prevention strategies or default management plans. For more information on contacting the Department,

see Chapter 2.5,“Department Offices and Addresses.”

The Department recommends that schools send all cohort default

rate correspondence and enrollment information correspondence to

all entities via certified mail or commercial delivery and maintain the

documentation that shows the correspondence was timely sent. A

school should keep copies of all relevant electronic and hardcopy

correspondence between the school and data managers, lenders,

servicers, and the Department.

A school should contact all relevant data managers to determine

what reports are available from the data manager to track student

status on a regular basis. If the school gets information from the data

managers, and the information is incorrect, the school should contact

the data managers to discuss how to update the information.

Chapter 3.1 School Strategies

Page 3.1 - 2

CHAPTER 3.1 - 

School Strategies

It is important

that a school

determine 

who will have 

responsibility for

reviewing cohort

default rate 

related matters
On at least a monthly basis, the school should review the repayment information available through the National Student Loan 

Data System (NSLDS) and compare this data with the school’s data.

The school must timely submit, in accordance with Department

regulations, changes in a student’s enrollment status to NSLDS and

follow up with a screen print to NSLDS to show timely submission.

The school should check the NSLDS error report to verify that

changes were accepted. If the changes were not accepted, the 

school should resubmit the information. Contact NSLDS Customer

Service at 1-800-999-8219 for submission assistance. The school

should maintain documentation of the information submitted to

NSLDS.

A Historically Black College or University, Tribally Controlled

Community College, or Navajo Community College that believes 

it will be subject to sanction after release of the official cohort 

default rates may wish to consider establishing a default management plan. See Chapter 2.2,“Cohort Default Rate Effects,” for

additional information.

A school may wish to develop a checklist, specific to the school’s

needs, of the activities the school needs to do before, during, and

after the release of the draft and official cohort default rates.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 3

helv n cond
What is repayment information?

Repayment information is a default management tool provided to

schools by the Department through NSLDS. NSLDS provides, on a

monthly basis, school-specific repayment information regarding

students who 

 have obtained Federal Family Education Loans (FFELs) and

William D. Ford Federal Direct Loans (Direct Loans) to attend 

the school and 

 have entered into repayment on those loans in the first 12

months of the most recent 24-month period.

All schools that participate in any of the Title IV programs and have

students who meet the above criteria may access the repayment

information.

Repayment information is provided solely as a service to help schools

track loans and correct errors associated with loans that recently

entered into repayment. The information does not represent a

school’s cohort default rate. The Department will continue to calculate cohort default rates at the prescribed intervals and will base the

cohort default rate calculation on data that is in NSLDS at the time of

the calculation.

What are the benefits of reviewing repayment information?

Repayment information can assist schools in a number of ways:

 Repayment information allows schools to monitor when borrowers enter repayment. Schools that monitor borrowers’

repayment status can use the information to make sure that the

borrowers who have just entered repayment are aware of all of

the repayment options available to them. This information can

help a borrower avoid default.

 Repayment information helps schools ensure the data reported

to NSLDS is accurate. Schools that monitor borrowers’ repayment and default status can contact data managers as errors

occur instead of waiting until the release of the cohort default

rates to correct inaccuracies.

The repayment information does not provide information regarding a

borrower’s delinquency status. For more information about a borrower’s possible delinquency status, a school should contact the data

manager or loan holder for information about the borrower’s loan

status.

Chapter 3.1 School Strategies

Page 3.1 - 4

CHAPTER 3.1 - 

School Strategies

Repayment 

information helps

schools ensure

the data reported

to NSLDS is 

accurate
What types of repayment information are available?

Repayment information is available in a summary format or in a

detailed file format.

The summary format provides a school with 

 the number of borrowers who entered into repayment in the

first 12 months of the most recent 24-month period and

 the number of those borrowers who entered into repayment in

the first 12 months of the most recent 24-month period and

defaulted or met other specified conditions during that

24-month period.

See the “Repayment Information Tools” section of Chapter 3.3,

“Strategy Tools,” for information on obtaining summary repayment

information.

The detailed file format provides a school with 

 an individual listing of all the selected borrowers tallied in the

summary format and

 information about each of the relevant loans for each borrower

included on the report.

A school can only request a detailed file format for the most recent

24-month period. Therefore, it is important that a school monitor its

repayment information on a monthly basis and, if desired, download

the most recent detailed file format on a monthly basis.

See the “Repayment Information Tools” section of Chapter 3.3,

“Strategy Tools,” for information on obtaining detailed repayment

information.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 5
What actions can a school take to help process the draft and official

cohort default rates? 

A school can begin cohort default rate preparations prior to the

release of the draft or official cohort default rates. After the release 

of the draft or official cohort default rates, a school should review 

its cohort default rate data. The school should then determine if it

wishes to submit a challenge, adjustment, or appeal based upon 

that data.

How does a school prepare for the release of the cohort default rates?

There are a number of things a school can do to prepare for the

release of the cohort default rates.

 Be aware of the school’s current cohort default rate status. The

challenges, adjustments, or appeals a school can and should

submit will be determined by whether or not the school is

currently under sanction, and by which challenges, adjustments,

and appeals the school has submitted in the past.

 Identify its two most recent prior official cohort default rates.

Since some sanctions or benefits may be based on a school’s

three most recent official cohort default rates, schools will 

need to be aware of the prior cohort default rates to understand

the consequences of their current cohort default rates. Schools

can find this information on prior official cohort default rate

notification letters. If the school’s cohort default rate was

changed as the result of an adjustment or appeal, it can find 

this information in the determination letter the school received

from Default Management.

 Begin preparing challenge, adjustment, and appeal materials.

There are a number of spreadsheets and letters used in each

challenge, adjustment, and appeal. See the individual challenge,

adjustment, and appeal chapters in Part IV for information on

these spreadsheets and letters and how a school uses them.

If a school has not previously created electronic copies of the

various spreadsheets and letters it should do so at this time.

The instructions for creating the spreadsheets are in the

“Spreadsheet Tools” section of Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools.” If a school has already created

electronic copies of the various spreadsheets and letters, it

should locate those electronic copies and verify that they are

ready for use.

Chapter 3.1 School Strategies

Page 3.1 - 6

CHAPTER 3.1 - 

School Strategies
Further, a school can begin calculating its participation rate index 

for a participation index rate challenge prior to the release of the

draft cohort default rates. See Chapter 4.2,“Participation Rate Index

Challenge,” for more information. Similarly, a school can begin calculating its low income rate and placement rate or low income rate 

and completion rate for an economically disadvantaged appeal or 

its participation rate index for a participation rate index appeal prior

to the release of the official cohort default rates. See Chapter 4.7,

“Economically Disadvantaged Appeal,” and Chapter 4.8,“Participation

Rate Index Appeal,” for more information.

Finally, a school can create a spreadsheet of its students who obtain

FFELs and Direct Loans. See the section of this chapter entitled “How

does a school determine if there is inaccurate data on the loan record

detail report?” for more information.

When are cohort default rates sent to schools?

The Department sends cohort default rates to schools twice each

year. Generally, the Department sends draft cohort default rates to

schools in January or February. After schools receive their draft cohort

default rate data, schools are provided an opportunity to identify and

correct any inaccuracies by submitting an incorrect data challenge.

The Department then releases the official cohort default rates. Official

cohort default rates are generally released to schools, and are made

available to the public, approximately six months after the release of

the draft cohort default rates. However, the official cohort default

rates must be released no later than September 30th.

The Department sends cohort default rate correspondence to the

school president. School financial aid officials should coordinate with

the president’s office to ensure that the correspondence is timely

routed to the office that will be reviewing the cohort default rate

information. The cohort default rate process time frames begin when

the cohort default rate correspondence is received at the president’s

office. The release dates for the draft and official cohort default rates

will be posted at the SFA Schools Portal at

http://sfa4schools.sfa.ed.gov

and at the IFAP website

http://www.ifap.ed.gov

After the release dates are posted, the office at the school responsible

for reviewing the cohort default rates may wish to inform the president’s office of the pending release of the cohort default rates and of

the need to immediately route the cohort default rate correspondence to the office reviewing the cohort default rates.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 7

The release dates

for the draft and

official cohort

default rates will

be posted at the

SFA Schools

Portal
How does a school review its cohort default rate data?

The school will receive a letter each year when the Department sends

the draft cohort default rates to the schools. Most schools will also

receive a loan record detail report for the draft cohort default rates

listing all the borrowers contained in the draft cohort default rate

calculation. The school should compare the information in the loan

record detail report for the draft cohort default rates to the school’s

own records to ensure the accuracy of the data in the loan record

detail report for the draft cohort default rates.

The school will receive a notification letter when the Department

releases the official cohort default rates. The letter will inform the

school of its official cohort default rate and inform the school of 

any sanctions or benefits associated with the school’s official cohort

default rate. (See Chapter 2.2,“Cohort Default Rate Effects,” for additional information about cohort default rate sanctions and cohort

default rate benefits.) This information will enable the school to

determine the consequences of its current cohort default rate.

If the school’s official cohort default rate is 10.0 percent or greater, the

school will receive a loan record detail report for the current official

cohort default rates listing all the borrowers included in the official

calculation. (A school can also request a copy of the loan record detail

report. See Chapter 2.3,“Loan Record Detail Report,” for information

on requesting a copy.) 

The school should compare the loan record detail report for the

official cohort default rates to both the school’s own records and 

to the loan record detail report for the draft cohort default rates. If

the school submitted an incorrect data challenge, the school should

review the data managers’ incorrect data challenge responses and

correction letters from Default Management (if any) and compare

these to the loan record detail report for the official cohort default

rates.

The draft cohort default rate listed on the loan record detail report

for the draft cohort default rates will not be accurate for average rate

schools or schools that have undergone a change in status. An average rate school should calculate its draft cohort default rate using the

current cohort default rate data and averaging that data with the

school’s two most recent official cohort default rate data. A school

that has undergone a change in status should see Chapter 2.4,

“Change in Status and Evasion,” for information on calculating its

cohort default rate.

Chapter 3.1 School Strategies

Page 3.1 - 8

CHAPTER 3.1 - 

School Strategies
The official cohort default rate listed on the loan record detail report

for the official cohort default rates will also not be accurate for average rate schools or schools that have undergone a change in status.

An average rate school or a school that has undergone a change in

status can find its official cohort default rate on the official cohort

default rate notification letter.

Because loan record detail reports contain personal identification

information about borrowers who received loans under the FFEL 

and Direct Loan programs, the Privacy Act of 1974 and the Family

Educational Rights and Privacy Act (FERPA) apply to all cohort default

rate loan data, including the loan record detail reports. State and 

local laws and regulations may also govern the use of this material.

Recipients must take appropriate steps to ensure that this material is

used and discarded properly.

How does a school determine if it should submit a challenge,

adjustment, or appeal? 

There are a number of challenges, adjustments, and appeals a school

can pursue after the release of the draft and official cohort default

rates. Schools may submit challenges after the release of the draft

cohort default rates; schools may submit adjustments and appeals

after the release of the official cohort default rates.

The challenges, adjustments, and appeals fall into two main 

categories:

 Challenges, adjustments, and appeals that contend that the 

loan record detail report contains inaccurate data and that as a

result, the school’s cohort default rate is inaccurate. If a school

submits one of these challenges, adjustments, or appeals, and

the challenge, adjustment, or appeal is successful, the school’s

cohort default rate may be lowered, raised, or not affected. If the

school’s cohort default rate is lowered, the school may avoid a

sanction or become eligible for a benefit.

 Challenges and appeals that contend that the school has 

exceptional mitigating circumstances that should remove 

the school from being subject to cohort default rate sanction.

If a school submits one of these challenges or appeals, and the

challenge or appeal is successful, the school may avoid sanctions. However, the school’s cohort default rate will not be

affected.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 9
The type of challenge, adjustment, or appeal a school should submit

depends on the school’s situation. Figure 3.1.1 details which schools

are eligible to submit the different challenges, adjustments, and

appeals. See the relevant chapter in Part IV for a list of the materials 

a school must submit with each challenge, adjustment, or appeal.

Chapter 3.1 School Strategies

Page 3.1 - 10

CHAPTER 3.1 - 

School Strategies

Submission

Type

Basis Which Schools Can Take Action? For More

Information

Incorrect

Data

Challenge

Inaccurate

Data

Any school that believes there is inaccurate data

in the loan record detail report for the draft cohort

default rates.

See Chapter 4.1,

“Incorrect Data

C d hallenge,” an

34 CFR 668.185(b)

Participation

Rate Index

Challenge

Exceptional

Mitigating

Circumstances

Any school that

 believes it will be subject to sanction after the

release of the official cohort default rates and

 has a participation rate index of less than 0.0375

for a sanction based on three consecutive cohort

default rates that are 25.0 percent or greater or

less than 0.06015 for a sanction based on a cohort

default rate that is greater than 40.0 percent.

See Chapter 4.2,

“Participation Rate

Index Challenge,”

and

34 CFR 668.185(c)

Uncorrected

Data

Adjustment

Inaccurate

Data

Any school that timely submitted an incorrect data

challenge if

 the data manager reviewing the incorrect data

challenge agreed to make changes to the cohort

default rate data and

 the agreed upon changes are not reflected in the

school's loan record detail report for the official

cohort default rates.

See Chapter 4.3,

“Uncorrected Data

A d djustment,” an

34 CFR 668.190

New Data

Adjustment

Inaccurate

Data

Any school that believes there is new, incorrect data

in the loan record detail report for the official cohort

default rates.

See Chapter 4.4,

“New Data

A d djustment,” an

34 CFR 668.191

Erroneous

Data Appeal

Inaccurate

Data

Any school that is subject to sanction if

 the school believes there is new, incorrect

data in the loan record detail report for the

official cohort default rates or

 the school still disputes the accuracy of cohort

default rate data it challenged in an incorrect

data challenge.

See Chapter 4.5,

“Erroneous Data

A d ppeal,” an

34 CFR 668.192

Figure 3.1.1

Schools Eligible to Submit

a Challenge, Adjustment,

or Appeal (part 1 of 2)
School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 11

Submission

Type

Basis Which Schools Can Take Action? For More

Information

Loan

Servicing

Appeal

Inaccurate

Data

Any school that believes its loan record detail report

for the official cohort default rates contains defaulted

FFELs or Direct Loans that were improperly serviced

for cohort default rate purposes.

See Chapter 4.6,

“Loan Servicing

A ”d ppeal, an

34 CFR 668.193

Economically

Disadvantaged

Appeal

Exceptional

Mitigating

Circumstances

Any school that is subject to sanction if

 in the case of a non-degree-granting school, the

school's low income rate is two-thirds or more

and the school's placement rate is 44.0 percent

or

more or,

 in the case of a degree-granting school, the

school's low income rate is two-thirds or more

and the school's completion rate is 70.0 percent

or more.

See Chapter 4.7,

“Economically

Disadvantaged

A ”d ppeal, an

34 CFR 668.194

Participation

Rate Index

Appeal

Exceptional

Mitigating

Circumstances

Any school that

 is subject to sanction and

 has a participation rate index of less than 0.0375

for a sanction based on three consecutive cohort

default rates that are 25.0 percent or greater or

less than 0.06015 for a sanction based on a

cohort default rate that is greater than 40.0

percent.

See Chapter 4.8,

“Participation Rate

I ”d ndex Appeal, an

34 CFR 668.195

Average Rates

Appeal

Exceptional

Mitigating

Circumstances

Any school that is

 subject to sanction based on three consecutive

official cohort default rates that are 25.0 percent

or greater if at least two of those cohort default

rates were average rates and would have been

less than 25.0 percent if they were calculated

using only data for those cohort fiscal years alone

or

 subject to sanction because of an official

cohort default rate that is greater than 40.0

percent if the official cohort default rate was

calculated as an average rate.

See Chapter 4.9,

“Average Rates

A ”d ppeal, an

34 CFR 668.196

Thirty-orFewer

Borrowers

Appeal

Exceptional

Mitigating

Circumstances

Any school that is subject to sanction and has

a total of 30 or fewer borrowers included in the

denominator of the three most recent cohort fiscal

years used to calculate the official cohort default

rates.

See Chapter 4.10,

“Thirty-or-Fewer

Borrowers Appeal,”

and 34 CFR

668.197

Figure 3.1.1 (cont.) - Schools Eligible to Submit a Challenge, Adjustment, or Appeal (part 2 of 2)
A school should be aware that it must timely submit a challenge,

adjustment, or appeal. There are different time frames for submitting

the various challenges, adjustments, and appeals. See the section of

this chapter titled “What are the time frames for submitting a challenge, adjustment, or appeal?” for an overview of these time frames.

A school should review these time frames to determine which challenge, adjustment, or appeal requires the most immediate attention.

In some cases, a school must request information from a data 

manager before the school makes a final submission to Default

Management. When a school receives a data manager’s response,

the school must decide if it will make a final submission. The final

submission must also be made within a prescribed time frame.

Again, see the section of this chapter titled “What are the time 

frames for submitting a challenge, adjustment, or appeal?” for an

overview of these time frames.

Why should a school that is not subject to sanction contest inaccurate

data on the loan record detail report?

There are a number of reasons why a school that is not subject to

sanction should contest inaccurate data on the loan record detail

report:

 Contesting inaccurate data helps maintain data integrity and

accuracy.

 Contesting inaccurate data may lead to a reduction in the

school’s cohort default rate that would make the school eligible

for the benefits available to schools with low cohort default

rates. See Chapter 2.2,“Cohort Default Rate Effects,” for information on the benefits available for schools with low cohort

default rates.

 Contesting the accuracy of the data may help prevent a school

from becoming provisionally certified based solely on the

school’s official cohort default rate. See Chapter 4.5,“Erroneous

Data Appeal,” for more information on provisional certification.

Chapter 3.1 School Strategies

Page 3.1 - 12

CHAPTER 3.1 - 

School Strategies

Contesting 

inaccurate data

helps maintain

data integrity 

and accuracy
How does a school determine if there is inaccurate data on the loan

record detail report?

A school should review the loan record detail report by comparing

the school’s records to the information on the loan record detail

report. A school can simplify this process by creating a spreadsheet or

database using information from the school’s records. This Guide only

discusses spreadsheets; a school should consult its technical staff to

discuss database creation. It is important to note that a school does

not need to wait until the release of the cohort default rates to create

the school’s spreadsheet.

Figure 3.1.2 is a sample school records spreadsheet. The instructions

for creating and completing the school records spreadsheet are in

the “School Tools” section of Chapter 3.3,“Strategy Tools.”

Once the school has completed the spreadsheet, it should compare

the spreadsheet to the loan record detail report, to the repayment

information from NSLDS, or to information on data manager, lender,

or loan servicer reports. The school should ask the following questions:

 Is each data element on the school’s spreadsheet the same as

the corresponding element on the loan record detail report

(incorrectly reported)?

 Are there loans on the loan record detail report that are not on

the school’s spreadsheet (incorrectly included)?

 Are there loans on the school’s spreadsheet that are not on the

loan record detail report (incorrectly excluded)?

If there are differences between the school’s data and the data on the

sources mentioned, the school should examine its records and the

other sources (for example, the NSLDS borrower enrollment history)

to determine the possible causes for each difference. If the school

believes there is inaccurate data on the loan record detail report, it

should contest the data.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 13

Type: School Records Spreadsheet

Date 02/02/2002 Page 1 of 3

A B C D E F G H I J K L

1

Borrower's

SSN

Borrower's

Name

Type of

Loan

Loan

Period

Loan

Status

Enrollment

Status

Code

Enrollment

Status

Date

LDA or

LTH

Date

Entered

Repayment

Default/

NegAm

Date

Claim

Reason

Code

Comments

2 1 y 11-11-1111 J F onz, Shirle S

09/01/2000 -

0 D 5/24/2001 IF 0 1 A 0/05/200 N A / N A / N A / N/

3 2 n 22-22-2222 G U rady, Whitma S

09/01/2000 -

0 P 5/24/2001 RG 1 0 1 5/24/200 0 1 5/24/200 1 A 1/25/200 N A / N/

Figure 3.1.2

Sample School Records

Spreadsheet
How does a school contest inaccurate data on the loan record detail

report?

Figure 3.1.3 outlines the five challenges, adjustments, and appeals

that enable a school to contest inaccurate data on a loan record

detail report.

Chapter 3.1 School Strategies

Page 3.1 - 14

CHAPTER 3.1 - 

School Strategies

Submission

Type Why Submit? Which Schools Can Take Action? Effect

Incorrect

Data

Challenge

A school believes that the

loan record detail report for

the draft cohort default rates

contains incorrect data.

All schools (if a school does not

challenge the accuracy of data in an

incorrect data challenge, the school

cannot contest the accuracy of that

data later in an uncorrected data

adjustment or an erroneous data

appeal based on disputed data).

If successful, NSLDS

will be corrected and

the corrected data

will be used when

calculating the

school's official

cohort default rate.

Uncorrected

Data

Adjustment

A school believes that the

loan record detail report for

the official cohort default

rates contains data that

should have been corrected

as a result of its incorrect

data challenge.

All schools that submitted a

successful incorrect data challenge,

if the official cohort default rate data

does not reflect the changes agreed

to as part of the incorrect data

challenge process.

If successful, NSLDS

will be corrected and

Default Management

will recalculate the

school's cohort

default rate.

New Data

Adjustment

A school believes that the

loan record detail report for

the official cohort default

rates contains new, incorrect

data.

All schools, although those schools

that are subject to sanction should

submit an erroneous data appeal

instead.

If successful, NSLDS

will be corrected and

Default Management

will recalculate the

school's cohort

default rate.

Erroneous

Data Appeal

A school believes that the

loan record detail report for

the official cohort default

rates contains new, incorrect

data and/or contains disputed

data that was included in an

incorrect data challenge.

Schools that are subject to sanction

and schools that are subject to

provisional certification due solely to

cohort default rates (if a school does

not challenge the accuracy of data

in an incorrect data challenge, the

school cannot contest the accuracy

of that data in an erroneous data

appeal).

If successful, NSLDS

will be corrected and

Default Management

will recalculate the

school's cohort

default rate.

Loan

Servicing

Appeal

A school believes that the

loan record detail report for

the official cohort default

rates contains defaulted

loans that were improperly

serviced for cohort default

rate purposes.

All schools that have defaulted

loans included in the loan record

detail report for the official cohort

default rates.

If successful, Default

Management will

recalculate the

school's cohort

default rate.

Figure 3.1.3

Challenges, Adjustments,

and Appeals that Can 

Affect a School’s Cohort

Default Rate 
How does a school contend that it has exceptional mitigating 

circumstances that should prevent the school from being subject 

to sanction due to its cohort default rate?

Figure 3.1.4 outlines the challenges and appeals a school may submit

when it believes it has exceptional mitigating circumstances that

should prevent the school from being subject to cohort default rate

sanction.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 15

Submission

Type

Why Submit? Which Schools

Can Take Action? Effect

Participation

Rate Index

Challenge

A school believes that it may be subject

to sanction with the release of the official

cohort default rates but also believes that

it should not be subject to sanction because

of its low participation rate index.

All schools, but

only those that

will be subject to

sanction when the

official cohort

default rates are

released will

benefit.

If successful, the school

will not be subject to the

anticipated sanction. If

the school successfully

challenges based on a

prior official cohort default

rate, that cohort default rate

will not be the basis for

a future sanction.

Economically

Disadvantaged

Appeal

A school believes that it should not be subject to

sanction because of the number of low income

students attending the school and the school's

placement rate (for a non-degree-granting

school) or the school's completion

rate (for a degree-granting school).

Schools that are

subject to

sanction.

If successful, the school

will not be subject to

sanction for that cohort

fiscal year.

Participation

Rate Index

Appeal

A school believes that it should not be subject

to sanction because of its low participation rate

index.

Schools that are

subject to

sanction.

If successful, the school

will not be subject to the

sanction for that cohort

fiscal year. If the school's

participation rate index for a

cohort fiscal year is 0.0375

or less, the cohort default

rate for that cohort fiscal

year will not be the basis for

a future sanction.

Average Rates

Appeal

A school will not be subject to sanction based on

three consecutive cohort default rates of 25.0

percent or greater if at least two of these cohort

default rates were calculated as average rates

and would have been less than 25.0 percent if

they were calculated using only data for those

cohort fiscal years alone. A school will not be

subject to sanction based on a cohort default

rate that is greater than 40.0 percent if that

cohort default rate is an average rate.

Schools that are

subject to

sanction.

If successful, the school

will not be subject to

sanction for that cohort

fiscal year.

Thirty-orFewer

Borrowers

Appeal

A school will not be subject to sanction if a total

of 30 or fewer borrowers entered repayment in

the three most recent cohort fiscal years is used

to calculate its cohort default rate.

Schools that are

subject to

sanction.

If successful, the school

will not be subject to

sanction for that cohort

fiscal year.

Figure 3.1.4

Challenges and Appeals

that Show a School Has

Exceptional Mitigating

Circumstances 
Chapter 3.1 School Strategies

Page 3.1 - 16

CHAPTER 3.1 - 

School Strategies

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30

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45

Days

15

Days

20

Days

30

Days

60

Days

30

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30

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30

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Days

15

Days

20

Days

30

Days

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30

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See Chapter 3.1, “School Strategies,”

for information on how to use this chart.

Challenges,

Adjustments,

and Appeals

Time Frames

Figure 3.1.5- Challenges, Adjustments, and Appeals Time Frames
A school that believes it has exceptional mitigating circumstances

does not need to wait for the release of the cohort default rates to

begin preparing a challenge or appeal. For example, a school with a

low number of borrowers that believes it will be subject to sanction

can begin preparing its participation rate index challenge or participation rate index appeal prior to the release of the cohort default

rates.

What are the time frames for submitting a challenge, adjustment, or

appeal?

Figure 3.1.5 outlines the time frames for submitting a challenge,

adjustment, or appeal. A school or data manager should not rely

exclusively on this chart when submitting or responding to a challenge, adjustment, or appeal. For more details on these time frames

and the challenge, adjustment, or appeal process, see the appropriate

chapter in Part IV.

How does a school or data manager use the time frames chart?

The challenge, adjustment, or appeal process begins on the date that

a school receives its draft cohort default rate, official cohort default

rate, notice of loss of eligibility, or notice of provisional certification.

This date is represented by the word “Start” in a circle.

The time frames in the chart identify the number of calendar days 

for completing a process. The time frame begins either at “Start” or on

the date a subsequent action is completed. For example, if a school 

is waiting for a response from a data manager, the time frame begins

on the date the school receives the response. If a school is waiting for

responses from more than one data manager, the time frame for

completion begins on the date that the school receives the final

response from the last data manager.

The columns on the time frame chart represent the 10 challenges,

adjustments, and appeals. Challenges are shown in the first two

columns and are submitted after release of the draft cohort default

rates. Adjustments and appeals are shown in the remaining columns

and are submitted after the release of the official cohort default rates.

The rows on the time frame chart represent the various steps that

can be taken as part of a challenge, adjustment, or appeal. The steps

are marked by time frames surrounded by either a circle, square, or

stop sign. A circle represents a school time frame. A square represents

a data manager or Department time frame. A stop sign represents a

school’s final time frame for submission.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 17
To determine if a specific step is part of a specific challenge, adjustment, or appeal, follow the row representing the specific step across

the row to the column representing the specific challenge, adjustment, or appeal. If there is a time frame in the box where the row

intersects the column, that specific step is a part of that specific

challenge, adjustment, or appeal.

For example, a school wishes to know if it must submit anything to a

data manager as part of a participation rate index appeal. The school

would follow the row named “School sends data manager challenge

or request for information” to the column named “Participation Rate

Index Appeal.” Because there is no time frame in this location, the

school does not need to submit anything to a data manager as part

of a participation rate index appeal.

The chart can also be read in the other direction. That is, a school or

data manager can start at the top of the column for a specific challenge, adjustment, or appeal and read down the column. If there is a

time frame on a step, the step is a part of that specific challenge,

adjustment, or appeal.

For example, a school wishes to know the steps for submitting an

economically disadvantaged appeal. The school would follow the

“Economically Disadvantaged Appeal” column down from the top

and see that three steps are involved: the school receives notice, the

school submits a manager’s written assertion, and the school submits

the completed challenge, adjustment, or appeal.

However, some steps in a specific challenge, adjustment, or appeal

are not mandatory steps. A mandatory step is designated by an

orange-colored time frame with a solid border. A step that is required

only in certain circumstances is designated by a purple-colored time

frame with a dotted border.

Figure 3.1.6 shows a portion of the time frame for submitting a loan

servicing appeal. If the data manager requires a school to pay a fee

for loan servicing records for a loan servicing appeal, the school must

pay the fee before receiving the records. The time frame for the data

manager to notify the school of the need to make payment and the

time frame for the school to make payment (the two middle frames)

have dotted purple borders, indicating that not every data manager

may require payment of a fee. The first and last frames shown, however, are mandatory steps, and therefore have solid orange borders.

When confronted with a purple time frame, a school or data manager

must determine if the time frame (and the step the time frame represents) applies. If the step applies, the time frame begins on the same

date that it would if the time frame were orange.

Chapter 3.1 School Strategies

Page 3.1 - 18

CHAPTER 3.1 - 

School Strategies

School sends data

manager request for

loan servicing records.

Data manager

notifies school of any

fee for providing

records.

School pays the fee,

if charged.

Data manager

sends loan servicing

records.

20

Days

15

Days

20

Days

15

Days

Figure 3.1.6

Excerpt from Time Frame

for Submitting a Loan

Servicing Appeal
If the step does not apply, the time frame for the next required action

is determined as if the purple time frames with the dotted borders

were not there. The time frame for the next required action begins on

the date that the last required action was completed.

As mentioned, the final deadlines for a school are marked with a 

stop sign. The only exceptions to these final deadlines apply to new

data adjustments, erroneous data appeals, and/or loan servicing

appeals. Normally, the school’s final deadline is 30 calendar days 

after receiving a response from a data manager. However, if the

school makes submissions to more than one data manager, the

school’s 30-calendar-day time frame does not begin until the school

has received responses from every data manager to which the school

made a submission. Further, if the school is submitting more than one

of a new data adjustment, an erroneous data appeal, or a loan servicing appeal, the school’s final deadline is the later of

 30 calendar days of receipt of the last response to all of the

school’s new data adjustment allegations,

 30 calendar days of receipt of the last response to all of the

school’s erroneous data appeal allegations, or

 30 calendar days of receipt of the last response to all of the

school’s requests for loan servicing records.

School Strategies Chapter 3.1

CHAPTER 3.1 - 

School Strategies

Page 3.1 - 19
Chapter 3.1 School Strategies

Page 3.1 - 20

CHAPTER 3.1 - 

School Strategies
Chapter

3.2

Data

Manager

Strategies

Why should a data manager review this chapter? . . . . . . . . . . . . . 3.2-1

What strategies can a data manager employ before

the release of the draft and official cohort default rates? . . . . . . . . . . . . . 3.2-1

What strategies can a data manager employ to help

process challenges, adjustments, and appeals? . . . . . . . . . . . . . 3.2-2

What should a data manager do if it receives

an incorrect submission from a school? . . . . . . . . . . . . . 3.2-4

What should a data manager do if the school’s

challenge, adjustment, or appeal is successful? . . . . . . . . . . . . . 3.2-5

How does a data manager keep the Department

informed about its cohort default rate actions? . . . . . . . . . . . . . 3.2-5
helv n cond
Data Manager Strategies

Why should a data manager review this chapter?

Data managers should review this Guide for information regarding

cohort default rates. This chapter contains basic strategies to prepare

a data manager for the release of the cohort default rates as well as

strategies to help a data manager process challenges, adjustments,

and appeals.

The U.S. Department of Education’s (the Department’s) Default

Management will send out supplements for the Guide with the 

draft and official cohort default rates. Data managers should review

the supplements to determine what information has changed. Data

managers should then incorporate the supplements into the appropriate sections of the Guide.

What strategies can a data manager employ before the release of the

draft and official cohort default rates?

There are a number of strategies a data manager can employ before

the release of the draft and official cohort default rates:

 determine data manager staff responsible for processing all

cohort default rate challenges, adjustments, and appeals;

 establish school and Department cohort default rate contacts

within the data manager organization and provide updates to

schools and Default Management when those contacts change;

 notify Default Management if data manager address or 

corporate structure changes;

 identify staff responsible for enrollment changes;

 keep copies of all relevant correspondence between the 

data manager and schools, lenders, and the Department;

 timely submit, in accordance with Department regulations,

changes in a borrower’s loan information to the National

Student Loan Data System (NSLDS) and print NSLDS screens

to show acceptance of data manager changes;

Data Manager Strategies Chapter 3.2

CHAPTER 3.2 - 

Data Manager Strategies

Page 3.2 - 1
 develop a plan to assist schools that enhances understanding 

of what reports and information a school can obtain from the

data manager and describes how a school can correct the

information; and

 use this Guide as a reference when discussing cohort default

rate matters with schools.

A data manager may wish to develop a checklist, specific to the 

data manager’s needs, of the activities the data manager needs to 

do before, during, and after the release of the draft and official cohort

default rates.

A data manager should also begin preparations for the release of 

the cohort default rates. A data manager should prepare and send

monthly status reports to Default Management. Further, there are a

number of spreadsheets and letters used in each challenge, adjustment, and appeal. See the individual challenge, adjustment, and

appeal chapters in Part IV for information on these spreadsheets and

letters and how a data manager uses them. The instructions for

creating and completing the spreadsheets are in the “Spreadsheet

Tools” section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.” If a data manager has not previously created electronic copies

of the various spreadsheets and letters it should do so before the

release of the cohort default rates. If a data manager has already

created electronic copies of the various spreadsheets and letters, it

should locate those electronic copies and verify that they are ready

for use.

What strategies can a data manager employ to help process challenges,

adjustments, and appeals?

There are a number of things a data manager should do as part of

the challenge, adjustment, and appeal process.

 A data manager should date stamp school challenge,

adjustment, or appeal submissions when the submissions 

are received. The data manager response time frames begin 

when the package is first received by the data manager.

Therefore, a data manager may wish to keep the package for

proof of the receipt date until the challenge, adjustment, or

appeal process is finished.

 A data manager should check the date a school received its

cohort default rate notification letter on the electronic file sent

by Default Management to determine if the school is timely in

its submission. If the date is not listed on the report, or if the file

cannot be opened, the data manager should contact Default

Management for the date.

Chapter 3.2 Data Manager Strategies

Page 3.2 - 2

CHAPTER 3.2 - 

Data Manager Strategies

A data manager

should prepare

and send monthly

status reports 

to Default

Management
 A data manager should contact Default Management to discuss

eligibility issues if the data manager receives any adjustments

or appeals from a school on the Department’s sanction list.

When the official cohort default rates are released, the sanction

list is made available online at 

http://www.ed.gov/offices/OSFAP/defaultmanagement/cdr.html

 A data manager should review prior challenge, adjustment,

and/or appeal responses if the data manager believes the

school is attempting to submit a challenge, adjustment, or

appeal for a borrower who was previously the subject of a

challenge, adjustment, or appeal.

 A data manager should contact a school as soon as possible 

if the school does not include all the appropriate challenge,

adjustment, or appeal materials.

 A data manager should make sure comments are entered in the

comment column of the spreadsheets, particularly if the data

manager disagrees with the school. The data manager should

make sure the comment is clear and that supporting documentation is attached to the spreadsheet. The data manager may

use abbreviations as long as the data manager provides a list of

those abbreviations.

 A data manager should contact Default Management if assistance is needed to make a determination on a school’s data,

supporting documentation, or other information submitted 

as part of the challenge, adjustment, or appeal process.

 A data manager should send copies of its challenge, adjustment, or appeal responses to Default Management as the

responses are processed. The data manager should not wait 

to send all the copies as one batch.

 A data manager should send all cohort default rate correspondence to all entities via certified mail or commercial delivery

and maintain the documentation that shows the correspondence was timely sent. This information will be sent to Default

Management as part of the monthly status report.

 A data manager should inform schools and Default

Management if the data manager is unable to comply 

with time frames due to the data manager’s workload.

Data Manager Strategies Chapter 3.2

CHAPTER 3.2 - 

Data Manager Strategies

Page 3.2 - 3

helv n cond
What should a data manager do if it receives an incorrect submission

from a school?

A data manager should contact a school as soon as possible if a

school incorrectly asks for guidance about or submits a participation

rate index challenge, economically disadvantaged appeal, participation rate index appeal, average rates appeal, or thirty-or-fewer

borrowers appeal to the data manager. The data manager should

inform the school that the materials or question must be submitted

to Default Management within the appropriate time frame. The data

manager must also inform Default Management of the incorrect

submission.

If the data manager receives a challenge, adjustment, or appeal but

the data manager does not hold the loans, the data manager should

notify the school and Default Management that the challenge, adjustment, or appeal must be submitted to the appropriate data manager

and remind the school that the challenge, adjustment, or appeal must

be submitted to the appropriate data manager within the appropriate time frame.

There will be some instances where the data manager was the 

former holder of the loans but those loans have been assigned to 

the Department and the loan record detail report does not yet reflect

the assignment. In that event, the data manager should send the

school and Default Management a notice stating that the loans have

been assigned to the Department. The data manager should instruct

schools to send the request to Default Management within 15 calendar days of receipt of the data manager’s letter.

Chapter 3.2 Data Manager Strategies

Page 3.2 - 4

CHAPTER 3.2 - 

Data Manager Strategies
What should a data manager do if the school’s challenge, adjustment, or

appeal is successful?

After a school’s successful incorrect data challenge, the data manager

must update NSLDS and the data manager’s internal records with the

new information prior to the calculation of the next official cohort

default rates. The data manager must also submit to NSLDS any

subsequent incorrect data challenge changes submitted to the data

manager by Default Management.

After a data manager is informed by Default Management that a

school’s new data adjustment, uncorrected data adjustment, or

erroneous data appeal was successful, the data manager must

update NSLDS and the data manager’s internal records with the 

new information prior to the calculation of the next draft cohort

default rates.

A data manager must ensure that the data is successfully entered

into NSLDS. A data manager should review the NSLDS error report.

Contact NSLDS Customer Service at 1-800-999-8219 for submission

assistance.

How does a data manager keep the Department informed about its

cohort default rate actions?

Data managers send monthly reports to Default Management 

listing the status of all cohort default rate related requests the data

manager has received. The monthly status report is a cumulative list

of requests that data managers receive from schools after the release

of the draft cohort default rates or the official cohort default rates.

This process minimizes the need for Default Management to contact

a data manager. These status reports will assist Default Management

in monitoring the time frames associated with the cohort default 

rate process. The monthly status reports should be sent to Default

Management within seven calendar days after the end of each

month.

If the data manager does not receive any requests from schools, it

should submit a blank monthly status report to Default Management

indicating that it has not received any requests. If the data manager

does not review a response because of an untimely submission, the

data manager should note this on the monthly status report.

Data Manager Strategies Chapter 3.2

CHAPTER 3.2 - 

Data Manager Strategies

Page 3.2 - 5

A data manager

must ensure 

that the data 

is successfully

entered into

NSLDS
A data manager should not submit copies of its responses to schools

to Default Management with its monthly report. Copies of these

responses should be sent to Default Management at the same time

the data manager sends the response to the school.

Once the data manager has responded to all of the requests received,

and the data manager has not received any subsequent requests, the

data manager should send Default Management an updated status

report marked “FINAL.“ After the data manager sends Default

Management the final report, the data manager does not send any

more monthly status reports until the next cohort default rates are

released. Figure 3.2.1 is a sample monthly status report. The instructions for creating and completing the status report are in the “Data

Manager Tools” section of Chapter 3.3,“Strategy Tools.”

Chapter 3.2 Data Manager Strategies

Page 3.2 - 6

CHAPTER 3.2 - 

Data Manager Strategies

Type: Monthly Status Report Month and Year: March 2003

Cohort FY: Draft 2001 Number of Schools: 1

From: State Guaranty Agency

Data Manager Code: 111

To: Default Management

Date 04/01/2003 Page 1 of 1

A B C D E F G H I J

1

School's

OPE ID

School's

Name

Type of

Request

Cohort

FY

Date School

Submitted

Request

Date Data

Manager

Submitted

Response

Service

Type

Tracking

Number

Date School

Signed for

Response

Comments

2 0 h 99999 G C raphic Tec I 1 D 2 3 00 0 3 2/14/200 0 S 3/02/200 U 5 P 1 3 234 03/05/200

3

4

5

6

Figure 3.2.1

Sample Data Manager

Monthly Status Report to

Default Management
Chapter

3.3

Strategy

Tools

Repayment Information Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-1

What types of repayment information are available? . . . . . . . . . . . . . 3.3-1

How does a school obtain summary repayment information? . . . . . . . . . . . . . 3.3-2

How does a school obtain detailed repayment information? . . . . . . . . . . . . . 3.3-3

How does a school read a detailed 

repayment information extract file? . . . . . . . . . . . . . 3.3-7

Is repayment information subject to the Privacy Act? . . . . . . . . . . . . . 3.3-7

School Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-8

Data Manager Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-10

Data Manager Monthly Status Report Instructions . . . . . . . . . . . . . 3.3-10

Which Department address does a data manager

use for submitting a monthly status report? . . . . . . . . . . . . . 3.3-12

Full-Sized Blank Spreadsheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3-12
helv n cond
Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 1

Strategy Tools

Repayment Information Tools

What types of repayment information are available?

Repayment information is available in a summary format or in a

detailed file format.

The summary format provides a school with 

 the number of borrowers who entered into repayment in 

the first 12 months of the most recent 24-month period and

 the number of those borrowers who entered into repayment 

in the first 12 months of the most recent 24-month period 

and defaulted or met other specified conditions during that

24-month period.

A school will be able to access summary repayment information

associated with up to 17 different 24-month periods. For example,

in February 2004 a school decides to request summary repayment

information. Figure 3.3.1 details the 24-month periods for which the

school can request summary repayment information for February

2004.

24-Month Periods

February 1, 2002 to January 31, 2004

January 1, 2002 to December 31, 2003

December 1, 2001 to November 30, 2003

November 1, 2001 to October 31, 2003

October 1, 2001 to September 30, 2003

September 1, 2001 to August 31, 2003

August 1, 2001 to July 31, 2003

July 1, 2001 to June 30, 2003

June 1, 2001 to May 31, 2003

May 1, 2001 to April 30, 2003

April 1, 2001 to March 31, 2003

March 1, 2001 to February 28, 2003

February 1, 2001 to January 31, 2003

January 1, 2001 to December 31, 2002

December 1, 2000 to November 30, 2002

November 1, 2000 to October 31, 2002

October 1, 2000 to September 30, 2002

Figure 3.3.1

24-Month Periods Available

to School in February 2004
The detailed file format provides a school with 

 an individual listing of all the selected borrowers tallied in the

summary format and

 information about each of the relevant loans for each borrower

included on the report.

This information is the same type of data provided on a school’s loan

record detail report.

The detailed file format repayment information is only available 

for the most recent 24-month period. That is, a school can request

detailed repayment information only for the 24-month period that

ends on the last day of the month before the month in which the

school makes the request. For example, in February 2004 a school

decides to request detailed repayment information. The school may

only request information for the 24-month period that began on

February 1, 2002 and ended on January 31, 2004.

Because a school can only request a detailed file format for the most

recent 24-month period, it is important that a school monitor its

repayment information on a monthly basis and, if desired, download

the most recent detailed file format on a monthly basis.

To access a school’s repayment information, an individual at the

school must have an NSLDS User ID. This is a restricted data system,

and each school has been assigned an individual User ID and password. To obtain an NSLDS User ID, contact CPS/WAN Technical

Support at 1-800-330-5947.

How does a school obtain summary repayment information?

Summary repayment information is available from the U.S.

Department of Education’s (the Department’s) National Student Loan

Data System (NSLDS) website at 

https://www.nsldsfap.ed.gov

The NSLDS website can also be accessed through

http://sfa4schools.sfa.ed.gov 

Chapter 3.3 Strategy Tools

Page 3.3 - 2

CHAPTER 3.3 - 

Strategy Tools
Step 1: Log on to the NSLDS website by entering the 

NSLDS User ID and password and clicking “Logon.”

Step 2: Read the Privacy Act statement and confirm that you are

an authorized user of NSLDS and that you will adhere to

the Privacy Act by clicking “I Agree.”

Step 3: Once logged on to NSLDS, select the “Org” tab from the

main menu bar at the top of the screen.

Step 4: Under the “Org” tab select “Repayment Information.”

Step 5: View the school’s summary repayment information.

How does a school obtain detailed repayment information?

Detailed file format repayment information is requested using the

NSLDS website at 

https://www.nsldsfap.ed.gov

The NSLDS website can also be accessed through

http://sfa4schools.sfa.ed.gov

Once the request has been made via the NSLDS website, the detailed

file format is delivered to the Student Aid Internet Gateway (SAIG,

which replaces the Title IV Wide Area Network) mailbox associated

with the NSLDS User ID making the request. EDconnect software is

used to download the detailed file format from the user’s SAIG mailbox. Therefore, in order to request detailed file format repayment

information, the requestor must have an NSLDS User ID, a SAIG

account, and EDconnect software.

Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 3

helv n cond
There are two types of NSLDS User IDs: an online services User ID and

an online services and batch User ID. Because both User IDs have

SAIG mailboxes, both can be used to request detailed repayment

information. However, if the online services only User ID is used, the

detailed file format will be placed in the mailbox associated with that

User ID and not in the mailbox associated with the online services

and batch User ID. To obtain an NSLDS User ID, a SAIG account,

EDconnect software, or additional information, contact CPS/WAN

Technical Support at 1-800-330-5947.

The following provides a step-by-step description of how to request

and download the detailed file format repayment information.

Step 1: Log on to the NSLDS website by entering the user’s NSLDS

User ID and password and clicking “Logon.”

Step 2: Read the Privacy Act statement and confirm that you are

an authorized user of NSLDS and that you will adhere to

the Privacy Act by clicking “I Agree.”

Step 3: Once logged on to NSLDS, select the “Report” tab from the

menu bar at the top of the screen.

Step 4: Under the Report function, click on the blue number box

to the left side of the screen for the “School Repayment

Info Loan Detail.”

Step 5: Select either “Extract” or

“Report.”This option will

determine the format of

the file that is provided.

An extract allows a school to customize the data. Schools

can query and sort the repayment information based on

the school’s individual needs.

A report can be accessed using standard word processing

software. When selecting a report, it is important to narrow

the parameters of the report by entering the desired

School ID (OPE ID) and cohort fiscal year. Also enter the

output medium for the report (Download, RMDS, or WAN).

Chapter 3.3 Strategy Tools

Page 3.3 - 4

CHAPTER 3.3 - 

Strategy Tools
Step 6: Make a Loan Selection.

This option will determine

which loans are included

in the file that is provided.

 The selection “ALL” will generate a detailed file that

contains all of the loans included in the denominator

only and numerator only reports.

 The selection “DENOMINATOR ONLY” will generate 

a detailed file that contains all of the loans that

entered repayment during the first 12 months of the

most recent 24-month period and did not default

during that 24-month period.

 The selection “NUMERATOR ONLY” will generate a

detailed file that contains only those loans that

entered repayment during the first 12 months of 

the most recent 24-month period and defaulted

during that 24-month period.

Step 7: Select the appropriate Sort By option. This option will

determine the order of the borrowers if the school elects

to receive a report file. However, an

option must be entered, even if the

school has requested an extract file.

 The selection “SSN” will sort the borrowers in Social

Security Number order.

 The selection “CLAIM CODE, SSN” will sort the borrowers by claim code and then by Social Security

Number.

 The selection “LOAN STATUS, SSN” will sort the borrowers by loan status code and then by Social

Security Number.

Step 8: Read the statement regarding the content of the file

requested and click “Submit.”

Step 9: Verify that the information is correct and click “Confirm.”

After completing these steps, a school can return to Step 5

and select the other option if the school so wishes. That is,

a school that selects an extract at Step 5 can return to that

step and also select a report.

Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 5
Step 10: A message will appear indicating the request was successfully submitted.

If the repayment information is requested before 10 a.m.

EST, the file should be available by the end of that business

day. If the repayment information is requested after 10

a.m. EST, the file should be available by the next business

day.

Step 11: Before downloading the repayment information from the

SAIG mailbox, ensure the ID you used when logging on to

the NSLDS website is set up in the EDconnect software.

If this has not been done, contact CPS/WAN Technical

Support at 1-800-330-5947.

Step 12: Log onto the EDconnect

software using the User ID

associated with the NSLDS

User ID that made the request

for repayment information.

Step 13: Select “Now” from the Transmission menu.

Step 14: Once EDconnect has finished

processing the Transmission

Now request, select “Mailbox

Query” from the New option

on the File menu.

Step 15: EDconnect will provide a list of those files that are available for download. From the list of files available to be

downloaded, identify the repayment information that was

requested.

The message classes for repayment information consist of

eight digits:

 SHNOTEOP for extract files

 SHNOTROP for report files

Chapter 3.3 Strategy Tools

Page 3.3 - 6

CHAPTER 3.3 - 

Strategy Tools
Step 16: Place a check mark in the Move to TQ column next to the

message class associated with the requested repayment

information.

Step 17: Select “Now” from the Transmission menu. EDconnect 

will download the file to the designated directory. At 

this point, a school can rename the file prior to saving it.

A school may wish to name a file for the date the file was

downloaded.

Step 18: Access the file.

For questions about the SAIG mailbox or downloading files, contact

CPS/WAN Technical Support at 1-800-330-5947.

How does a school read a detailed repayment information extract file?

The layout of the repayment information extract file follows the

layout of the electronic loan record detail report extract file. See

Chapter 2.6,“General Information Tools,” for a guide to the extract 

file.

Is repayment information subject to the Privacy Act?

Because repayment information contains personal identification

information about borrowers who received loans under the Federal

Family Education Loan (FFEL) and William D. Ford Federal Direct 

Loan (Direct Loan) programs, the Privacy Act of 1974 and the Family

Educational Rights and Privacy Act (FERPA) apply to all repayment

information. State and local laws and regulations may also govern 

the use of this material. Recipients must take appropriate steps to

ensure that this material is used and discarded properly.

Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 7
School Tools

Figure 3.3.2 is a blank school records spreadsheet. There is also a 

full-sized blank school records spreadsheet at the end of this chapter.

A school may photocopy and use the full-sized blank spreadsheet 

or create its own spreadsheet using the layout provided. The

“Spreadsheet Tools” section in Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools,” has more information on creating and completing

spreadsheets. The spreadsheet should contain the following:

 Left-side Header: Enter the title shown in Figure 3.3.2.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

For each Column A through L, on Row 1 enter the title as shown in

Figure 3.3.1. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Borrower’s SSN: Enter the Social Security Numbers

(SSNs) of all the school’s FFEL and Direct Loan borrowers.

 Column B, Borrower’s Name: Enter the names of the individuals

whose SSNs are listed in Column A.

 Column C, Type of Loan: Enter the code for the loan using the

loan type codes from Figure 2.3.6 in Chapter 2.3,“Loan Record

Detail Report.”

 Column D, Loan Period: Enter the starting date and ending date

of the loan period.

 Column E, Loan Status: Enter the loan status at the time the

cohort default rate was calculated. Use the codes found in

Figure 2.3.7 in Chapter 2.3,“Loan Record Detail Report.”

Chapter 3.3 Strategy Tools

Page 3.3 - 8

CHAPTER 3.3 - 

Strategy Tools

Type: School Records Spreadsheet

Date __/__/__ Page __ of ___

A B C D E F G H I J K L

1

Borrower's

SSN

Borrower's

Name

Type of

Loan

Loan

Period

Loan

Status

Enrollment

Status

Code

Enrollment

Status

Date

LDA or

LTH

Date

Entered

Repayment

Default/

NegAm

Date

Claim

Reason

Code

Comments

2

3

Left-side Header titles:

Type: School Records 

Spreadsheet

Figure 3.3.2

Blank School Records

Spreadsheet
 Column F, Enrollment Status Code: Enter the borrower’s enrollment status at the time the cohort default rate was calculated.

Use the codes found in Figure 2.3.11 in Chapter 2.3,“Loan

Record Detail Report.”

 Column G, Enrollment Status Date: Enter the date the borrower’s

enrollment status last changed.

 Column H, LDA or LTH: Enter the borrower’s last date of attendance (LDA) or the date the borrower dropped below half-time

enrollment (LTH) for each borrower listed in Column A.

 Column I, Date Entered Repayment: Enter the date the loan

entered repayment. The school will need to estimate actual

repayment dates if the school does not maintain this information. Generally, a school can do this by adding six months to 

the students’ last dates of attendance or less-than-half-time

dates to account for their grace periods. If a school knows of 

a reason why a borrower’s repayment date was delayed (for

example, if the student enrolled in another school before 

entering repayment or if the student entered active duty in 

the armed services), the school should try to adjust for those 

circumstances.

 Column J, Default/NegAm Date: Enter the date a guaranty

agency paid a default claim to a lender on a FFEL or the date

that a Direct Loan became 360 days delinquent or met other

specified conditions.

 Column K, Claim Reason Code: Enter the reason why a FFEL or

Direct Loan is considered in default. Use the codes found in

Figure 2.3.9 in Chapter 2.3,“Loan Record Detail Report.”

 Column L, Comments: Appropriate comments would include a

listing of any entities the school sent information to, the date

the information was sent, and whether or not the school has

proof the information was timely sent. Appropriate comments

would also indicate if the loan was discharged and why,

whether or not the borrower re-enrolled at another school,

or if a portion of the loan was canceled or repaid.

Once the spreadsheet is created and completed, the school should

save the spreadsheet and update it each month. The school should

save the spreadsheet each month under a different name so the

spreadsheet is not overwritten and lost. That way, the school will 

have a historical record that can be used for statistics, tracking, and

the challenge, adjustment, and appeal process.

Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 9
Data Manager Tools

Data Manager Monthly Status Report Instructions

Figure 3.3.3 is a blank monthly status report. There is a full-sized 

blank monthly status report at the end of this chapter. A data 

manager may photocopy and use the full-sized blank monthly 

status report or create its own monthly status report using the 

layout provided. The “Spreadsheet Tools” section in Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” has more information 

on creating and completing spreadsheets. The status report should

contain the following:

 Left-side Header: Enter the titles shown in Figure 3.3.3. After

each title, enter the information appropriate to that title. When

entering the cohort fiscal year, indicate draft or official as appropriate.

 Right-side Header: Enter the titles shown in Figure 3.3.3.

After each title, enter the information appropriate to that title.

After “Number of Schools:” enter the total number of different

schools from Column A. Do not count a school more than once.

The “Number of Schools,” cannot be entered until the remainder

of the spreadsheet is created and completed.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

Chapter 3.3 Strategy Tools

Page 3.3 - 10

CHAPTER 3.3 - 

Strategy Tools

Type: Monthly Status Report Month and Year:

Cohort FY: Number of Schools:

From:

Data Manager Code:

To: Default Management

Date __/__/____ Page __ of ___

A B C D E F G H I J

1

School's

OPE ID

School's

Name

Type of

Request

Cohort

FY

Date School

Submitted

Request

Date Data

Manager

Submitted

Response

Service

Type

Tracking

Number

Date School

Signed for

Response

Comments

2

3

4

5

6

Left-side Header titles:

Type: Monthly Status Report

Cohort FY:

From:

Data Manager Code:

To: Default Management

Right-side Header titles:

Month and Year:

Number of Schools:

Figure 3.3.3

Blank Data Manager

Monthly Status Report
For each Column A through I, on Row 1 enter the title as shown in

Figure 3.3.3. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, School’s OPE ID: Enter the OPE ID numbers of all the

schools that have submitted requests to the data manager.

 Column B, School’s Name: Enter the names of the schools whose

OPE IDs are listed in Column A.

 Column C, Type of Request: Enter the type of request the school

submitted. If the school submits multiple types of requests,

enter a separate line for each request. Use the following codes:

 IDC – Incorrect Data Challenge

 NDA – New Data Adjustment

 ER – Erroneous Data Appeal

 LS – Loan Servicing Appeal

 Column D, Cohort FY: Enter the cohort fiscal year used in the

request.

 Column E, Date School Submitted Request: Enter the date the

school request was postmarked by the delivery service.

 Column F, Date Data Manager Submitted Response: Enter the

date the data manager response was postmarked by the delivery service.

 Column G, Service Type: Enter the type of service delivery the

data manager used to deliver a response to a school.

 Column H, Tracking Number: Enter the tracking number the

delivery service assigned to the response.

 Column I, Date School Signed for Response: Enter the date the

school signed for the response from the data manager.

 Column J, Comments: Enter any appropriate comments.

The data manager should indicate whether the request is an

original or subsequent request. If a subsequent request, the 

data manager should list the reason for the subsequent request

(clarification of response, replacement of illegible records, etc.).

The data manager should also enter a comment if the data

manager did not review the request because of an untimely

submission or because the school was not eligible to submit 

a challenge, adjustment, or appeal.

Strategy Tools Chapter 3.3

Strategy Tools

CHAPTER 3.3 - 

Page 3.3 - 11
Which Department address does a data manager use for submitting a

monthly status report?

The data manager should send monthly status reports to Default

Management via commercial courier or the U.S. Postal Service. If sent

by commercial overnight mail/courier delivery, the address is

U.S. Department of Education

Default Management 

ATTN: Monthly Status Report

830 First Street, NE

Washington, DC 20002

If sent by U.S. Postal Service, the address is

U.S. Department of Education

Default Management

ATTN: Monthly Status Report

400 Maryland Avenue, SW

Washington, DC 20202-5353

A data manager should not send monthly status reports to any other

addresses at the Department.

A data manager may be able to submit a monthly status report via

electronic mail. Default Management will notify data managers each

cycle how electronic mail will be accepted.

Default Management recommends that a data manager send all

correspondence return receipt requested or via commercial

overnight mail/courier delivery. This will be useful to a data manager

if it is asked to authenticate the timeliness of its response. A data

manager should maintain the documentation that verifies the receipt

of the monthly status report as well as all documentation submitted

as a part of the monthly status report process.

Full-Sized Blank Spreadsheets

The following two pages contain full-sized versions of the report

spreadsheets that were discussed earlier:

 School Records Spreadsheet

 Monthly Status Report

Chapter 3.3 Strategy Tools

Page 3.3 - 12

CHAPTER 3.3 - 

Strategy Tools
Type: School Records Spreadsheet

Date ___/___/______ Page __ of ___

A B C D E F G H I J K L

1

s'r e worr oB

NSS

s'r e worr oB

e maN

epyT

f o

naoL

naoL

doir eP

naoL

sut at S

t ne mll or nE

sut at S

edoC

t ne mll or nE

et aD sut at S

r o ADL

HTL

et aD

der et nE

t ne myapeR

/tl uaf eD

mAgeN

et aD

mi al C

nosaeR

edoC

st ne mmoC

23456789

01112131415161718191021222324252
Type: Monthly Status Report Month and Year:

Cohort FY: Number of Schools:From:Data Manager Code:To: Default ManagementDate ___/___/______ Page __ of ___

A B C D E F G H I J

1

s'l oohcS

DI EPO e maN s'l oohcS f o epyT t seuqeR tr ohoC YF l oohcS et aD detti mbuS t seuqeR at aD et aD r egana M detti mbuS esnopseR eci vr eS epyT gni kcar T r eb muN l oohcS et aD r of dengi S esnopseR st ne mmoC

2345678901112131415161718191021222324252
Challenges, Adjustments,

and Appeals

Incorrect Data 

Challenge

Participation Rate

Index Challenge

Uncorrected Data

Adjustment

New Data

Adjustment

Erroneous Data

Appeal

Loan Servicing 

Appeal

Part

IV

Chapter

4.1

Chapter

4.5

Chapter

4.4

Chapter

4.3

Chapter

4.2

Chapter

4.6

Chapter

4.11 

Chapter

4.10

Chapter

4.9

Chapter

4.8

Economically

Disadvantaged Appeal

Participation Rate

Index Appeal

Average Rates

Appeal

Thirty-or-Fewer

Borrowers Appeal

Challenge, Adjustment,

and Appeal Tools

Chapter

4.7

Chapter

4.1

Incorrect

Data

Challenge

What is an incorrect data challenge? . . . . . . . . . . . . . 4.1-1

Which schools are eligible to submit 

an incorrect data challenge? . . . . . . . . . . . . . 4.1-1

What benefit will a school gain from 

submitting an incorrect data challenge? . . . . . . . . . . . . . 4.1-2

What roles do the Department and data managers

have in a school’s incorrect data challenge? . . . . . . . . . . . . . 4.1-3

How does a school submit an incorrect data challenge? . . . . . . . . . . . . . 4.1-4

How does a school identify the data manager of a loan? . . . . . . . . . . . . . 4.1-6

How does a data manager respond to

a school’s incorrect data challenge? . . . . . . . . . . . . . 4.1-6

Which Department address does a data manager use for

submitting a copy of its incorrect data challenge response? . . . . . . . . . . . . . 4.1-12

What does Default Management do with a data manager’s 

incorrect data challenge response? . . . . . . . . . . . . . 4.1-13

What does a school do with a data manager’s 

incorrect data challenge response? . . . . . . . . . . . . . 4.1-13
helv n

cond
Incorrect Data Challenge

What is an incorrect data challenge?

After the release of the draft cohort default rates, the U.S. Department

of Education (the Department) provides schools an opportunity to

review the draft data and, if necessary, work with the data manager

responsible for the loans to correct any errors. The process of correcting data is called an incorrect data challenge. This process was

formerly referred to as a draft data challenge.

Figure 4.1.1 shows the time frame for submitting an incorrect data

challenge.

Which schools are eligible to submit an incorrect data challenge?

Any school that receives a draft cohort default rate, including those

with draft cohort default rates below 25.0 percent, is provided the

opportunity to challenge its most recent draft cohort default rate.

Because the draft data forms the basis for a school’s official cohort

default rate, it is important that every school review its loan record

detail report for the draft cohort default rates and, if necessary,

submit an incorrect data challenge. Even schools that have withdrawn from the Federal Family Education Loan (FFEL) and/or William

D. Ford Federal Direct Loan (Direct Loan) programs should review 

the loan record detail report for the draft cohort default rates and,

if appropriate, submit an incorrect data challenge.

Challenging draft cohort default rate data enables a school to request

a correction to what it believes to be inaccurate data contained in the

school’s loan record detail report for the draft cohort default rates. A

loan record detail report for the draft cohort default rates contains

inaccurate data if 

 a borrower’s data was incorrectly reported in the draft cohort

default rate calculation,

 a borrower was incorrectly included in the draft cohort default

rate calculation, and/or

 a borrower was incorrectly excluded from the draft cohort

default rate calculation.

Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 1

Incorrect

Data

Challenge

34 CFR 668.185(b)

School receives draft

cohort default rate.

School sends data

manager Incorrect Data

Challenge.

Data manager

sends Incorrect Data

Challenge response.

Key:

45

Days

30

Days

Start

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.1.1

Time Frame for Submitting

an Incorrect Data Challenge

34 CFR 668.185(b)
It is important to correct inaccurate data through an incorrect data

challenge for a number of reasons:

 A school will not have a second opportunity to submit an

incorrect data challenge; in its review, the school needs to

ensure that no discrepancies exist among its records, the 

information obtained from outside sources, and the loan 

record detail report for the draft cohort default rates.

 The loan information used to calculate the draft cohort default

rate will be used to calculate the school’s official cohort default

rate; the school needs to ensure that this data is accurate

because official cohort default rates can result in certain 

benefits for the school or sanctions against the school.

 An incorrect data challenge will preserve a school’s right to

submit an uncorrected data adjustment if the agreed upon

changes are not reflected in the official cohort default rate.

 An incorrect data challenge will preserve a school’s right to

submit an erroneous data appeal on the basis of disputed 

data if the school is subject to sanction after the release of 

the official cohort default rates.

What benefit will a school gain from submitting an incorrect data

challenge? 

If it is determined that the draft cohort default rate data is inaccurate,

and the data manager responsible for the inaccurate data agrees to

make a change to the data, the school’s official cohort default rate

should reflect the change. The change to the data may lower, raise,

or not affect the cohort default rate.

If the agreed upon changes are not reflected in the official cohort

default rate, a school may submit an uncorrected data adjustment 

to the Department’s Default Management after the release of the

official cohort default rates to request that Default Management

make the manual change to the school’s cohort default rate.

If the data manager does not agree to change the data in a school’s

incorrect data challenge and the school is subject to sanction after

the release of the official cohort default rates, the school may submit

an erroneous data appeal based on the data the school believes is

inaccurate if that data was included in the school’s incorrect data

challenge.

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 2

CHAPTER 4.1 - 

Incorrect Data Challenge

A school will not

have a second

opportunity 

to submit an

incorrect data

challenge
What roles do the Department and data managers have in a school’s

incorrect data challenge?

A data manager is required to review a school’s incorrect data 

challenge allegations if the incorrect data challenge allegations 

are submitted in a timely manner and the data manager has responsibility for the loans. If a school submits incorrect data challenge

allegations to the wrong entity, the incorrect data challenge allegations will not be reviewed and the school could miss the deadline.

The guarantor/servicer code on the loan record detail report identifies the data manager for a loan. See Chapter 2.3,“Loan Record Detail

Report,” for information on determining the data manager for a loan.

The data manager must respond to the school’s incorrect data challenge allegations within 30 calendar days of receipt. However, the

data manager must not review incorrect data challenge allegations 

if the school did not send the incorrect data challenge allegations

within the 45-calendar-day time frame. If the data manager does not

respond within 30 calendar days, the school should advise Default

Management in writing of the delay.

The Department has two roles in the incorrect data challenge

process. The primary role is to review a data manager’s response 

to a school’s incorrect data challenge to ensure that the response 

is correct.

The Department’s other role is to respond to a school’s incorrect 

data challenge if the Department is the data manager for the loans

being challenged. The Department is the data manager for FFELs 

the Department holds and for all Direct Loans.

Default Management is responsible for responding to a school’s

incorrect data challenge for FFELs that the Department holds. These

loans are primarily identified in the loan record detail report with a

guarantor/servicer code of 555. See the “Alphabetical Data Manager

Contacts” section of Chapter 2.6,“General Information Tools,” for a

listing of other codes that identify the Department as the holder of 

a loan.

The Department’s Direct Loan servicer is responsible for responding

to a school’s incorrect data challenge for all Direct Loans, even those

that are in default. These loans are identified in the loan record detail

report with a guarantor/servicer code of 0101.

Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 3
How does a school submit an incorrect data challenge?

Timing is critical when submitting an incorrect data challenge. In

order to submit an incorrect data challenge, a school must review 

the loan record detail report for the draft cohort default rates to

determine if the loan record detail report contains any inaccurate

data. If the school believes the loan record detail report contains

inaccurate data, it should submit an incorrect data challenge listing

the school’s incorrect data allegations to the data manager responsible for the loan with the inaccurate data. The school must submit the

incorrect data challenge within 45 calendar days of receipt of the

hardcopy loan record detail report for the draft cohort default rates.

Chapter 3.1,“School Strategies,” outlines a method a school can

follow to determine if the loan record detail report contains inaccurate data. The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools,” lists examples of incorrect data challenge allegations a school may submit as a part of an incorrect data

challenge.

A school must list separate incorrect data challenge allegations for

each loan record that the school believes contains inaccurate data.

If one data manager is responsible for all the loans, the school must

list all the allegations in one incorrect data challenge. However, if

there are multiple data managers involved, the school must submit

a separate incorrect data challenge to each data manager. For example, a school believes the loan record detail report contains three

loans with inaccurate data. Two of the loans are held by one data

manager; the other loan is held by a different data manager. The

school must prepare two separate incorrect data challenges, one for

each data manager, listing only the loans held by each data manager.

If a school submits an incorrect data challenge to the wrong entity,

the incorrect data challenge will not be reviewed and the school

could miss the deadline for challenging the draft data. Incorrect data

challenges are not sent to Default Management unless the school is

challenging a FFEL that the Department holds.

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 4

CHAPTER 4.1 - 

Incorrect Data Challenge

School receives draft

cohort default rate.

School sends data

manager Incorrect Data

Challenge.

Data manager

sends Incorrect Data

Challenge response.

45

Days

30

Days

Start
The incorrect data challenge must include the following items:

 A completed incorrect data challenge spreadsheet that lists 

the inaccurate data reflected on the loan record detail report.

Figure 4.1.2 is a sample school incorrect data challenge 

spreadsheet to a data manager. The instructions for creating 

and completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

 Copies of the appropriate pages from the loan record detail

report(s).

The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” lists examples of 

the loan record detail report pages a school should submit as 

a part of an incorrect data challenge.

 Copies of relevant supporting documentation.

The “Incorrect Data Challenge, New Data Adjustment,

and Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” contains examples

of the type of supporting documentation a school must submit

to support the incorrect data challenge allegation.

Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 5

Type: Incorrect Data Challenge Number of Borrowers: 3

Cohort FY: 2001 Number of Loans: 2

From: Graphic Tech

Code: 099999

To: State Guaranty Agency

Code: 111

Date 02/14/2003 Page 1 of 1

A B C D E F G H I J K

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments Agree/Disagree

2 0 t 10-10-0101 H F artsgrove, Mat S1 9 1 0 2/21/199 0 2 6/22/200 06/25/200

FY 2001

FY 2000

- B

+D

Incorrect date entered

repayment based on incorrect

l A ast day of attendance N/

3 1 w 01-01-1010 F F reerkson, Dre S1 A N A / N A / N 1 / F B Y 200 -

Loan was fully repaid

a A nd canceled N/

4 1 w 01-01-1010 F U reerkson, Dre S1 A N A / N A / N 1 / F B Y 200 -

Loan was fully repaid

a A nd canceled N/

5

6

Figure 4.1.2

Sample School 

Incorrect Data Challenge

Spreadsheet to

Data Manager
 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting an incorrect data challenge, and the cohort fiscal year to which the incorrect data

challenge applies. The letter must feature a subject line that

reads “Subject: Cohort FY [insert cohort fiscal year being used 

in the incorrect data challenge] Incorrect Data Challenge.”The

letter must include a certification that the information provided

is true and correct under penalty of perjury. The school’s

President/CEO/Owner must sign the letter, and the signature

must be followed by a signature block showing the signer’s

name and job title. Figure 4.1.3 is a sample school incorrect 

data challenge letter to a data manager.

The Department recommends that a school send all incorrect data

challenge correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a school if it

is asked to authenticate the timeliness of its incorrect data challenge.

A school should maintain the documentation that verifies the receipt

of the incorrect data challenge as well as all electronic and hardcopy

documentation submitted as a part of the incorrect data challenge

process. If a school does not meet the 45-calendar-day time frame for

submitting an incorrect data challenge, the incorrect data challenge

will not be reviewed.

The data manager must respond to a school’s incorrect data 

challenge within 30 calendar days of receiving the incorrect data

challenge. If the data manager disagrees with a school’s incorrect

data challenge allegations, it must provide documentation to 

support its decision.

How does a school identify the data manager of a loan?

The guarantor/servicer code on the loan record detail report shows

the data manager responsible for a loan. A school can use this number to obtain the name and address of the data manager. See the

“Numerical Data Manager Contacts” section in Chapter 2.6,“General

Information Tools,” for a listing of data manager codes and addresses.

How does a data manager respond to a school’s incorrect data 

challenge?

Timing is critical when responding to a school’s incorrect data challenge. A data manager is required to respond to a school’s timely

submitted incorrect data challenge for those loans for which the

entity is the data manager and send a copy of the response to

Default Management. However, a data manager must not review a

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 6

CHAPTER 4.1 - 

Incorrect Data Challenge
Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 7

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

February 14, 2003

ATTN: Lesa Neiers OPE ID 099999

Compliance Officer

State Guaranty Agency

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

Subject: Cohort FY 2001 Incorrect Data Challenge

Dear Ms. Neiers:

Graphic Tech, OPE ID 099999, is challenging the cohort FY 2001 draft cohort default

rate data found in our loan record detail report for the draft cohort default rates. Please

see the enclosed spreadsheet, pages from the loan record detail report for the draft

cohort default rates, and supporting documentation. 

I, the undersigned, certify under penalty of perjury, that all information submitted in

support of this incorrect data challenge is true and correct.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

Figure 4.1.3 - Sample School Incorrect Data Challenge

Letter to Data Manager
school’s incorrect data challenge if the 45-calendar-day time frame

for a school to submit the incorrect data challenge has expired. If the

school’s due date falls on a weekend or a federal holiday, a school

may send its incorrect data challenge to the data manager no later

than the next federal business day.

Before denying a school’s incorrect data challenge on the basis of 

a late submission, a data manager should verify the actual date the

school received its hardcopy loan record detail report for the draft

cohort default rates from Default Management. If the school did 

not submit the incorrect data challenge in a timely manner, the data

manager must not review any part of the incorrect data challenge.

In its response to the school, the data manager should explain that 

it is unable to review the incorrect data challenge because the school

missed the regulatory deadline. The data manager must also send a

copy of the response to Default Management.

The data manager must respond to a timely submitted incorrect data

challenge within 30 calendar days of receiving the incorrect data

challenge. In its incorrect data challenge response, the data manager

will address each of the school’s timely submitted incorrect data

challenge allegations. If the data manager does not respond within

30 calendar days, the school should advise Default Management in

writing of the delay.

If the incorrect data challenge is timely, a data manager must review

each incorrect data challenge allegation submitted by the school.

The data manager should determine the following:

 The data manager should determine if the incorrect data challenge allegations presented by the school are based on loans

that the data manager currently holds.

If the data manager does not hold the loans, the data manager

should notify the school and Default Management that the

incorrect data challenge must be submitted to the appropriate

data manager and remind the school that the incorrect data

challenge must be submitted to the appropriate data manager

within 45 calendar days of the school’s receipt of its hardcopy

loan record detail report for the draft cohort default rates.

There will be some instances where the data manager was the

former holder of the loans but those loans have been assigned

to the Department and the loan record detail report for the

draft cohort default rates does not yet reflect the assignment.

In that event, the data manager should send the school and

Default Management a notice stating that the loans have been

assigned to the Department. The school then has until the later

of the initial 45-calendar-day deadline or 15 calendar days after

receipt of the letter from the data manager to submit the

incorrect data challenge to Default Management.

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 8

CHAPTER 4.1 - 

Incorrect Data Challenge

School receives draft

cohort default rate.

School sends data

manager Incorrect Data

Challenge.

Data manager

sends Incorrect Data

Challenge response.

45

Days

30

Days

Start
 The data manager should determine if all relevant material is

present.

See the section of this chapter entitled “How does a school

submit an incorrect data challenge?” for information on the

materials a school is required to submit with its incorrect data

challenge. If a school fails to provide the data manager with all

of the necessary information, the data manager must ask the

school to submit the missing information. However, the school

must submit this additional information to the data manager

within the initial 45-calendar-day deadline for submitting

incorrect data challenges. If the school does not submit the

additional information within the deadline, the data manager

must not review the incorrect data challenge allegation.

 The data manager should determine if its documentation

supports or refutes each of the incorrect data challenge 

allegations listed on the school’s spreadsheet.

The data manager should agree with the school if the data

manager’s documentation supports the school’s claim or if the

school has demonstrated that the data manager has failed to

take into account correct information the school timely sent to

the data manager or the National Student Loan Data System

(NSLDS).

The data manager should disagree with the school if the data

manager’s documentation refutes the school’s claim or if the

school failed to demonstrate that the correct information was

timely submitted to the data manager or NSLDS. The data

manager must explain to the school why it disagrees with the

school and send the school a copy of the data manager’s supporting documentation. The data manager must send a copy 

of the response and the supporting documentation to Default

Management.

After making its determinations, the data manager must compile 

a list of the data manager’s responses to the school’s list of alleged

errors. The data manager must record the responses to each of the

alleged errors on an incorrect data challenge response spreadsheet

and provide comments on why the data manager agrees or disagrees

with each of the school’s incorrect data challenge allegations. If the

data manager agrees that a change should be made, it must correct

the data in its internal data system and in NSLDS. Before the release

of the official cohort default rates, the data manager must ensure 

that the changes it agreed to make were successfully loaded into

NSLDS. The data manager should check the NSLDS error report.

Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 9
The data manager must provide supporting documentation if the

data manager disagrees with the school’s incorrect data challenge

allegations. In addition, if the data manager’s response indicates that

a loan has been repurchased, the data manager should provide the

original claim paid date, the repurchase date, the reason the loan was

repurchased, and the default date if any subsequent claim was filed.

The data manager’s response must include the following:

 A spreadsheet of the data manager’s responses to the school’s

list of alleged errors.

Figure 4.1.4 is a sample data manager incorrect data challenge

response spreadsheet to a school. The instructions for creating

and completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

 Copies of supporting documentation for each incorrect data

challenge allegation with which the data manager disagreed.

 A letter on the data manager’s letterhead with the school’s

name and OPE ID number.

The letter must indicate that the data manager is responding to

the school’s incorrect data challenge and state the cohort fiscal

year to which the response applies. The letter must feature a

subject line that reads “Subject: Cohort FY [insert cohort fiscal

year being used in the challenge] Incorrect Data Challenge

Response.”The letter must include a statement that a copy 

of the response has been sent to Default Management. The

responsible data manager official must sign the letter, and the

signature must be followed by a signature block showing the

signer’s name and job title. Figure 4.1.5 is a sample data manager incorrect data challenge response letter.

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 10

CHAPTER 4.1 - 

Incorrect Data Challenge

Type: Incorrect Data Challenge Number of Borrowers: 3

Cohort FY: 2001 Number of Loans: 2

From: State Guaranty Agency

Code: 111

To: Graphic Tech

Code: 099999

Date 03/01/2003 Page 1 of 1

A B C D E F G H I J K

1

Borrower's

SSN Borrower's Name

Type

of

Loans

Number

of

Loans

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments Agree/Disagree

2 0 t 10-10-0101 H F artsgrove, Mat S1 9 1 0 2/21/199 0 2 6/22/200 06/25/200

FY 2001

FY 2000

- B

+D

School sent enrollment status

c e hange on 01/15/2000 Agre

3 1 w 01-01-1010 F F reerkson, Dre S1 9 1 0 0/01/199 0 1 4/02/200 1 1 2/02/200 F t Y 200 No effec

School says loan repaid but

n e o supporting documentation Disagre

4 1 w 01-01-1010 F U reerkson, Dre S1 9 1 0 0/01/199 0 1 4/02/200 1 1 2/02/200 F t Y 200 No effec

School says loan repaid but

n e o supporting documentation Disagre

5

Figure 4.1.4

Sample Data Manager

Incorrect Data Challenge

Response Spreadsheet 

to School
Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 11

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

March 1, 2003

Alexander Peachum OPE ID 099999

President

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

Subject: Cohort FY 2001 Incorrect Data Challenge Response

Dear Mr. Peachum:

This is State Guaranty Agency’s response to the cohort FY 2001 incorrect data 

challenge that Graphic Tech, OPE ID 099999, submitted on February 14, 2003. 

Please see the enclosed spreadsheet. 

For each “Agree” in the “Agree/Disagree” column of the spreadsheet we will update 

the National Student Loan Data System (NSLDS) and our internal records. You should

check your loan record detail report for the official cohort default rates to ensure that 

the change was made, and if not, submit an uncorrected data adjustment to Default

Management.

For each “Disagree” in the “Agree/Disagree” column of the spreadsheet we have

reviewed our records and determined that they do not support the allegation. We have

included a comment stating our position and attached copies of the documentation supporting our position. We will not make a change to NSLDS or to our internal records.

Sincerely,

Yvonne Carter

CEO

Enclosures

cc: U.S. Department of Education 

Default Management

S

G

A

tate

uaranty

gency

Figure 4.1.5 - Sample Data Manager Incorrect 

Data Challenge Response Letter to School
The data manager sends its response to the school and a copy of the

response to Default Management.

If a data manager is unable to respond within 30 calendar days of

receiving the school’s incorrect data challenge, it should send the

school a letter on its official letterhead explaining the circumstances

causing the delay, telling the school when it will respond, and indicating that Default Management has been informed of the delay.

If a data manager can respond to only a portion of a school’s incorrect data challenge allegations within 30 calendar days, it should hold

that portion of the response until it can provide a response to all of

the school’s incorrect data challenge allegations. The data manager

should send a letter to the school and Default Management that

provides the information outlined above.

Which Department address does a data manager use for submitting 

a copy of its incorrect data challenge response?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section of Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A data manager should not send incorrect data challenge materials to any other

addresses at the Department.

Default Management recommends that a data manager send all

correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a data manager if it is

asked to authenticate the timeliness of its response. A data manager

should maintain the documentation that verifies the receipt of the

incorrect data challenge response as well as all other electronic and

hardcopy documentation submitted as a part of the incorrect data

challenge process.

The data manager can use this information when submitting monthly status reports to Default Management. For additional information

on monthly status reports, see Chapter 3.2,“Data Manager Strategies.”

Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 12

CHAPTER 4.1 - 

Incorrect Data Challenge
What does Default Management do with a data manager’s incorrect data

challenge response?

Default Management reviews data manager responses to schools’

incorrect data challenges to ensure that the responses are correct.

If Default Management determines that the data manager responses

are not correct, Default Management will notify the data manager

and the school prior to the release of the official cohort default rates

that the data manager’s responses were incorrect and will provide

the correct responses. Default Management will instruct the data

manager to resubmit the corrected data to NSLDS. The data manager

must ensure that NSLDS is correctly updated. The data manager must

also ensure that its internal records are correctly updated.

What does a school do with a data manager’s incorrect data challenge

response?

The incorrect data challenge process is considered complete when

the data manager responds to the school’s incorrect data challenge.

However, in those cases where the data manager’s response is

unclear, incorrect, missing, or incomplete, the school may submit a

request to the data manager for clarification. A school must submit

the request to the data manager within 15 calendar days of the

receipt of the incorrect data challenge response. The school must

send a copy of the inquiry letter to Default Management. The data

manager should respond to the school’s inquiry within 20 calendar

days of receiving the inquiry and send a copy of the response to

Default Management.

A school cannot appeal a data manager’s incorrect data challenge

response to Default Management during the draft process. The

school should keep the data manager’s incorrect data challenge

response to review and to compare the response to the school’s 

loan record detail report for the official cohort default rates.

Incorrect Data Challenge Chapter 4.1

CHAPTER 4.1 - 

Incorrect Data Challenge

Page 4.1 - 13

A school cannot

appeal a data

manager’s 

incorrect data

challenge

response to

Default

Management

during the 

draft process
Chapter 4.1 Incorrect Data Challenge

Page 4.1 - 14

CHAPTER 4.1 - 

Incorrect Data Challenge

School to Data Manager Incorrect Data Challenge Checklist

Determine

❑ Does the loan record detail report for the draft cohort default rates contain 

inaccurate data? (See page 4.1-1)

Submit to Data Manager 

❑ Spreadsheet (See page 4.1-5)

❑ Relevant Pages of Loan Record Detail Report (See page 4.1-5)

❑ Supporting Documentation (See page 4.1-5)

❑ Letter (See page 4.1-6)

Data Manager to School Incorrect Data Challenge Checklist

Determine 

❑ Was the school submission timely? (See page 4.1-7)

❑ Does the data manager hold the loans? (See page 4.1-7)

❑ Is all the material present? (See page 4.1-8)

❑ Does the data manager agree or disagree with the school? (See page 4.1-8)

Response to School 

❑ Spreadsheet (See page 4.1-10)

❑ Supporting Documentation (See page 4.1-10)

❑ Letter (See page 4.1-10)

Follow-Up 

❑ Send copy of response to Default Management (See page 4.1-12)

❑ Update NSLDS and internal records (if necessary) (See page 4.1-9)

❑ Send monthly status report to Default Management (See page 4.1-12)
Chapter

4.2

Participation

Rate Index

Challenge

What is a participation rate index challenge? . . . . . . . . . . . . . 4.2-1

Which cohort default rate can be used

to determine a participation rate index challenge? . . . . . . . . . . . . . 4.2-1

Which schools are eligible to submit 

a participation rate index challenge? . . . . . . . . . . . . . 4.2-2

What benefit will a school gain from submitting

a participation rate index challenge? . . . . . . . . . . . . . 4.2-2

Are participation rate index challenges 

based on a specific period of time? . . . . . . . . . . . . . 4.2-2

How does a school calculate its participation rate index? . . . . . . . . . . . . . 4.2-4

Does a school need to wait until the draft cohort default rate

is released to prepare its participation rate index challenge? . . . . . . . . . . . . . 4.2-6

What roles do the Department and data managers have

in a school’s participation rate index challenge? . . . . . . . . . . . . . 4.2-6

How does a school submit a participation rate index challenge? . . . . . . . . . . . . . 4.2-7

Which Department address does a school use

for submitting a participation rate index challenge? . . . . . . . . . . . . . 4.2-8

What happens after the school submits

the participation rate index challenge? . . . . . . . . . . . . . 4.2-10

What happens to a school’s participation rate index challenge

after the release of the official cohort default rates? . . . . . . . . . . . . . 4.2-10
helv n

cond
Participation Rate Index Challenge

What is a participation rate index challenge?

A school is not subject to a sanction based on its cohort default rates 

if its participation rate index is 0.0375 or less (for a sanction based on

three consecutive cohort default rates of 25.0 percent or greater) or

0.06015 or less (for a sanction based on one cohort default rate over

40.0 percent). In other words, if a school can demonstrate that the

number of students who obtain loans is very low in relation to the

number of regular students at the school, the school will be able to

avoid sanction.

Figure 4.2.1 shows the time frame for submitting a participation rate

index challenge.

Which cohort default rate can be used to determine a participation rate

index challenge?

A school can submit a participation rate index challenge for either

the most recent draft cohort default rate or for either of the two most

recent official cohort default rates, depending on the nature of the

anticipated sanction to which the school may be subject. For example, take a sequence of years: This Year, Last Year, and Two Years Ago.

A school’s draft cohort default rate for This Year indicates that the

school will be subject to sanction after release of the official cohort

default rates. If the sanction will be due to three consecutive years 

of an official cohort default rate that is 25.0 percent or greater, the

school can submit a participation rate index challenge based on the

draft cohort default rate for This Year, the official cohort default rate

for Last Year, and/or the official cohort default rate for Two Years Ago.

If the sanction will be due to an official cohort default rate for This

Year that is greater than 40.0 percent, the school can submit a participation rate index challenge based on the draft cohort default rate for

This Year. Figure 4.2.2 summarizes the cohort default rates a school

can use to submit a participation rate index challenge.

Participation Rate Index Challenge Chapter 4.2

CHAPTER 4.2 - Participation

Rate Index Challenge

Page 4.2 - 1

Participation

Rate Index

Challenge

34 CFR 668.185(c)

School receives draft

cohort default rate.

School sends

Department completed

Participation Rate Index

Challenge.

Key:

Start

45

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.2.1

Time Frame for Submitting

a Participation Rate Index

Challenge

34 CFR 668.185(c)

Nature of Sanction This Year Last Year Two Years Ago

Three consecutive

years of cohort default

rates that are 25.0

percent or greater

Yes – Draft

Cohort Default

Rate

Yes – Official

Cohort Default

Rate

Yes – Official

Cohort Default

Rate

Current cohort default

rate that is greater

than 40.0 percent

Yes – Draft

Cohort Default

Rate

No No

Figure 4.2.2

Cohort Default Rates a

School Can Use to Submit

a Participation Rate Index

Challenge
Which schools are eligible to submit a participation rate index 

challenge?

Any school, regardless of its draft cohort default rate, can submit 

a participation rate index challenge. However, only those schools 

that will be subject to sanction after the release of the official cohort

default rates will receive any benefit from submitting a participation

rate index challenge.

What benefit will a school gain from submitting a participation rate

index challenge?

If a school submits a successful participation rate index challenge 

for an anticipated sanction, the school is not subject to that sanction

when its next official cohort default rate is published. If the school’s

challenge was based on a prior official cohort default rate, the school

will not be subject to a subsequent loss of eligibility based on that

official cohort default rate.

Are participation rate index challenges based on a specific period of

time?

The school may base the participation rate index challenge on any

12-month period that ended during the six months immediately

preceding the start of the cohort fiscal year for which the school is

submitting the participation rate index challenge. Because a school

can choose to submit a participation rate index challenge based on

its most recent draft cohort default rate or either of its two most

recent official cohort default rates, the time period will differ based

on the cohort fiscal year used by the school.

The federal fiscal year always begins on October 1. As a result, the 

six months immediately preceding the start of a fiscal year will always

begin on April 1 and always end on September 30. Therefore, the 

12-month period the school uses must end no earlier than April 1

and no later than September 30. In order for a 12-month period to

end between April 1 and September 30, it must begin no earlier 

than April 2 and no later than October 1 of the preceding year.

Chapter 4.2 Participation Rate Index Challenge

Page 4.2 - 2

CHAPTER 4.2 - Participation

Rate Index Challenge
Figure 4.2.3 is a chart that can be used to determine an acceptable

12-month period. To choose an acceptable 12-month period, a school

should first determine which cohort fiscal year the school will use.

The school then picks a start date from the range listed in the

“Acceptable 12-Month Period Begins Between” column. The end date

will be 12 months after the start date, which will fall in the range

listed in the “Acceptable 12-Month Period Ends Between” column.

Figure 4.2.4 shows an acceptable and some unacceptable 12-month

periods for cohort FY 2001.

A school can select the most beneficial 12-month period available.

In other words, a school can identify the acceptable 12-month period

during which it had the lowest percentage of borrowers and use that

period when calculating its participation rate index.

If a school selects an unacceptable 12-month period, the U.S. Department of Education’s (the Department’s) Default Management will 

not review any portion of the school’s participation rate index challenge and the participation rate index challenge will be denied and

returned to the school. A school may contact Default Management 

at 1-202-708-9396 to discuss whether the school has selected an

acceptable 12-month period.

Participation Rate Index Challenge Chapter 4.2

CHAPTER 4.2 - Participation

Rate Index Challenge

Page 4.2 - 3

Cohort

Fiscal Year

Cohort Fiscal Year

Start Date

Acceptable 12-Month Period

Begins Between

Acceptable 12-Month Period

Ends Between

1998 10/01/1997 04/02/1996 - 10/01/1996 04/01/1997 - 09/30/1997

1999 10/01/1998 04/02/1997 - 10/01/1997 04/01/1998 - 09/30/1998

2000 10/01/1999 04/02/1998 - 10/01/1998 04/01/1999 - 09/30/1999

2001 10/01/2000 04/02/1999 - 10/01/1999 04/01/2000 - 09/30/2000

2002 10/01/2001 04/02/2000 - 10/01/2000 04/01/2001 - 09/30/2001

2003 10/01/2002 04/02/2001 - 10/01/2001 04/01/2002 - 09/30/2002

2004 10/01/2003 04/02/2002 - 10/01/2002 04/01/2003 - 09/30/2003

2005 10/01/2004 04/02/2003 - 10/01/2003 04/01/2004 - 09/30/2004

Figure 4.2.3

Date Ranges for Acceptable

12-Month Periods

12-Month Period Status Reason

04/02/1999-04/01/2000 Acceptable

Starts within acceptable

range; ends 12 months later

within acceptable range

04/02/1999-04/02/2000 Unacceptable

Starts within acceptable

range; ends more than 12

months later

04/01/1999-03/31/2000 Unacceptable Starts and ends outside

acceptable range

Figure 4.2.4

Acceptable and

Unacceptable 12-Month

Periods for Cohort FY 2001
How does a school calculate its participation rate index?

After selecting the 12-month period, the school determines the total

number of regular students enrolled at least half time and for at least

one day during any part of the 12-month period. It is not necessary

for the student’s entire enrollment period to fall within the 12-month

period. The total number of students is the denominator. The school

then determines the total number of those students who borrowed a

Federal Family Education Loan (FFEL) or William D. Ford Federal Direct

Loan (Direct Loan) for a loan period that overlaps any part of the 

12-month period. The total number of borrowers is the numerator.

A regular student is a student who enrolled or was accepted for

enrollment at a school for the purpose of obtaining a degree, certificate, or other recognized educational credential offered by that

school. To be included in the participation rate index calculation, the

borrower must be a student who was enrolled at least half-time and

enrolled at least one day during the selected 12-month period.

Once the school has divided the total number of FFEL and Direct

Loan borrowers by the total number of regular students, the school

multiplies the result by the cohort default rate upon which the school

is basing the participation rate index challenge. The result is the

participation rate index. A participation rate index is calculated as

follows:

If a school has fewer than 30 borrowers who entered repayment in

the cohort fiscal year for which the participation rate index is calculated, the participation rate index for that cohort fiscal year may be

calculated using either 

 the cohort default rate that would result from applying the 

non-average rate formula or

 the cohort default rate that would result from applying the

average rate formula.

See Chapter 2.1,“Calculating Cohort Default Rates,” for information

on the formulas used to calculate cohort default rates.

Chapter 4.2 Participation Rate Index Challenge

Page 4.2 - 4

CHAPTER 4.2 - Participation

Rate Index Challenge

Total borrowers in 

12-month period

Total regular

students in 

12-month period

Participation

Rate Index

÷

=

Total

borrowers

in 12-

month

period 

Total

regular

students in

12-month

period ( ÷ ) School’s

cohort

default

rate

x
To avoid sanction based on three consecutive years of an official

cohort default rate that is 25.0 percent or greater, a school must have

a participation rate index of 0.0375 or less. To avoid sanction based

on an official cohort default rate that is greater than 40.0 percent, a

school must have a participation rate index of 0.06015 or less.

For example, School A’s draft cohort default rate for the current

cohort fiscal year is 25.0 percent. School A’s two most recent official

cohort default rates were 26.0 percent and 28.0 percent. As a result,

if School A’s official cohort default rate for this cohort fiscal year is

also 25.0 percent, School A will be subject to sanction because it will

have three consecutive years of official cohort default rates that are

25.0 percent or greater.

School A decides to base its participation rate index challenge on the

draft cohort default rate for the current cohort fiscal year. School A

had a total of 200 regular students enrolled on at least a half-time

basis during any part of the selected 12-month period relating to the

current cohort fiscal year. Of those 200 students, 31 obtained FFELs or

Direct Loans for a loan period that overlapped the 12-month period.

School A’s participation rate index is 0.03875.

Because the participation rate index is greater than 0.0375, School A’s

participation rate index challenge would be unsuccessful.

As another example, School B’s draft cohort default rate is 50.0 percent. School B’s two most recent official cohort default rates were

20.0 percent and 31.0 percent. As a result, if School B’s official cohort

default rate is also 50.0 percent, School B will be subject to sanction

because it will have an official cohort default rate that is greater than

40.0 percent.

School B should base its participation rate index challenge on the

draft cohort default rate for the current cohort fiscal year. School B

had a total of 100 regular students enrolled on at least a half-time

basis during any part of the 12-month period relating to the current

cohort fiscal year. Of these 100 students, 10 obtained FFELs or Direct

Loans for a loan period that overlapped the 12-month period. School

B’s participation rate index is 0.05.

Because the participation rate index is less than 0.06015, School B’s

participation rate index challenge would be successful.

Participation Rate Index Challenge Chapter 4.2

CHAPTER 4.2 - Participation

Rate Index Challenge

Page 4.2 - 5

31

borrowers 

÷ 200

total 

students

= 25.0 percent

draft cohort 

default rate ( )x 0.03875

participation

rate index

10

borrowers 

÷ 100

total 

students

50.0

draft cohort 

percent =

default rate ( )x 0.05

participation

rate index
However, if School B’s two most recent official cohort default rates are

25.0 percent and 31.0 percent, School B is also subject to sanction

because it will have three consecutive official cohort default rates

that are 25.0 percent or greater. In that event, the participation rate

index would have to be 0.0375 or less for the participation rate index

challenge to be successful.

Does a school need to wait until the draft cohort default rate is released

to prepare its participation rate index challenge?

If a school is submitting a participation rate index challenge using a

previous cohort fiscal year’s official cohort default rate, it can prepare

a complete participation rate index challenge before it receives its

current year draft cohort default rate.

If a school is submitting a participation rate index challenge using 

the current cohort fiscal year, it cannot perform the final step in the

process (multiplying the participation ratio by the draft cohort

default rate) until the school receives its draft cohort default rate.

However, a school can perform the initial steps to identify the data 

to include in the calculation before it receives its draft cohort default

rate if it believes its current cohort fiscal year official cohort default

rate will incur sanctions. In that way, a school can save time when it

receives its draft cohort default rate.

What roles do the Department and data managers have in a school’s

participation rate index challenge?

Schools submit participation rate index challenges directly to Default

Management for review and consideration. Default Management is

responsible for determining whether schools meet the established

participation rate index criteria. Therefore, there is no role for data

managers.

If a school submits a participation rate index challenge to the wrong

entity or address, the participation rate index challenge might not be

reviewed and the school could miss the deadline for submitting the

participation rate index challenge to Default Management.

If a data manager receives a participation rate index challenge 

from a school, it should immediately contact the school to inform 

it that the participation rate index challenge must be sent to Default

Management. The data manager should also indicate that the participation rate index challenge must be sent to Default Management

within the initial 45-calendar-day time frame. The data manager

should then notify Default Management that the data manager 

has contacted the school.

Chapter 4.2 Participation Rate Index Challenge

Page 4.2 - 6

CHAPTER 4.2 - Participation

Rate Index Challenge
How does a school submit a participation rate index challenge?

Timing is critical when submitting a participation rate index challenge. A school must send its participation rate index challenge to

Default Management within 45 calendar days of receiving its hardcopy loan record detail report for the draft cohort default rates.

The participation rate index challenge must include the following

items:

 A participation rate index challenge spreadsheet.

Figure 4.2.5 is a sample participation rate index challenge

spreadsheet. The instructions for creating and completing the

spreadsheet are in the “Spreadsheet Tools” section of Chapter

4.11,“Challenge, Adjustment, and Appeal Tools.”

Using the information on the spreadsheet and the participation

rate index formula, a school must calculate its participation rate

index. As mentioned, to avoid sanction based on three consecutive years of an official cohort default rate that is 25.0 percent or

greater, a school must have a participation rate index of 0.0375

or less. To avoid sanction based on an official cohort default rate

that is greater than 40.0 percent, a school must have a participation rate index of 0.06015 or less. If both sanctions apply, the

participation rate index must be 0.0375 or less.

If a school does not have any students who received FFELs or

Direct Loans with loan periods that overlapped any part of the

selected 12-month period, the school does not have to submit a

spreadsheet to Default Management. However, the school must

send Default Management a letter that identifies the 12-month

period and indicates that the school did not have any students

who received loans with loan periods that overlapped the 

12-month period.

Participation Rate Index Challenge Chapter 4.2

CHAPTER 4.2 - Participation

Rate Index Challenge

Page 4.2 - 7

Figure 4.2.5

Sample School

Participation Rate Index

Challenge Spreadsheet to

Default Management

Type: Participation Rate Index Challenge Cohort Default Rate: 50.0%

Cohort FY: 2001 12-Month Period: 09/01/1999 – 08/31/2000

From: Graphic Tech Total Borrowers: 2

Code: 099999 Total Regular Students: 50

To: Default Management PRI: 0.02

Code: N/A

Date 02/14/2003 Page 1 of 1

A B C D E

1

Student's

SSN

Student's

Name S ) tudent's Enrollment Dates L d oan Type (if any Loan Perio

2 1 y 11-11-1111 R 0 oss, Bets 0 L 8/15/1999 – 05/26/200 F 0 FE 08/15/1999 – 05/26/200

3 2 n 22-22-2222 A 0 dams, Joh 0 L 8/15/1999 – 05/26/200 D 9 08/15/1999 – 12/30/199

4 3 a 33-33-3333 W 9 ashington, Marth 0 o 8/15/1999 – 12/30/199 N A N/
 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting a participation rate

index challenge, the relevant cohort default rate on which the

challenge is based, and a certification that the information

provided is true and correct under penalty of perjury. The school

must also note its participation rate index and the 12-month

period the school selected. The letter must feature a subject line

that reads “Subject: Cohort FY [insert cohort fiscal year being

used in the challenge] Participation Rate Index Challenge.”

The school’s President/CEO/Owner must sign the letter, and the

signature must be followed by a signature block showing the

signer’s name and job title. Figure 4.2.6 is a sample participation

rate index challenge letter.

Schools are not required to submit an independent auditor’s 

attestation to support the school’s participation rate index challenge.

If a school is submitting a participation rate index challenge for

multiple cohort default rates, it should submit all the participation

rate index challenges in the same mailing to Default Management.

However, the school still needs to submit separate documentation 

for each participation rate index challenge.

Which Department address does a school use for submitting a 

participation rate index challenge? 

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send participation rate index challenge materials to any

other addresses at the Department.

Default Management recommends that a school send all participation rate index challenge correspondence return receipt requested 

or via commercial overnight mail/courier delivery. This will be useful

to a school if it is asked to authenticate the timeliness of its submission. A school should maintain the documentation that verifies the

receipt of the participation rate index challenge as well as all electronic and hardcopy documentation submitted as a part of the

participation rate index challenge process. If a school does not meet

the 45-calendar-day time frame for submitting a participation rate

index challenge, the participation rate index challenge will not be

reviewed.

Chapter 4.2 Participation Rate Index Challenge

Page 4.2 - 8

CHAPTER 4.2 - Participation

Rate Index Challenge

School receives draft

cohort default rate.

School sends

Department completed

Participation Rate Index

Challenge.

Start

45

Days
Participation Rate Index Challenge Chapter 4.2

CHAPTER 4.2 - Participation

Rate Index Challenge

Page 4.2 - 9

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

February 14, 2003

U.S. Department of Education OPEID 099999

Default Management

ATTN: Participation Rate Index Challenge

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2001 Participation Rate Index Challenge

To Whom It May Concern:

Graphic Tech, OPE ID 099999, is submitting a participation rate index challenge based

on our cohort FY 2001 draft cohort default rate. According to our calculations, our participation rate index is 0.02. This index is calculated using a 12-month period that began

on September 1, 1999 and ended on August 31, 2000. Please see the enclosed spreadsheet. 

I, the undersigned, certify under penalty of perjury, that all information submitted in

support of this participation rate index challenge is true and correct.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosure

Figure 4.2.6 - Sample School Participation Rate Index 

Challenge Letter to Default Management
What happens after the school submits the participation rate index

challenge?

Default Management will review, using the standard of review

described in 34 CFR 668.185(c), only the information submitted with

the participation rate index challenge and will not review information

submitted after the 45-calendar-day deadline. Default Management

will send the school written notification of Default Management’s

decision before the official cohort default rates are published. Default

Management’s decision is final and no further administrative review

is provided.

If a school’s participation rate index challenge is successful, the school

is not subject to sanction when its next official cohort default rate is

published. In addition, if a school’s participation rate index challenge

is based on a prior official cohort default rate, the school is not subject to any subsequent sanction based on that official cohort default

rate. However, a successful participation rate index challenge based

on a school’s most recent draft cohort default rate does not excuse

the school from any subsequent sanction.

What happens to a school’s participation rate index challenge after the

release of the official cohort default rates?

After the release of the official cohort default rates, Default Management will recalculate the school’s participation rate index challenge

based on the school’s official cohort default rate. If the school meets

the requirements for a successful participation rate index appeal, the

school will not be subject to sanction regardless of the success of its

participation rate index challenge. If the school’s recalculated participation rate index is 0.0375 or less, the school will not be subject to a

subsequent sanction based on that official cohort default rate.

Chapter 4.2 Participation Rate Index Challenge

Page 4.2 - 10

CHAPTER 4.2 - Participation

Rate Index Challenge

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School to Default Management Participation Rate Index Challenge Checklist 

Determine

❑ Will the school be subject to sanction after the release of the official 

cohort default rates? (See page 4.2-2)

❑ What is the school’s participation rate index? (See page 4.2-4)

Submit to Default Management 

❑ Spreadsheet (See page 4.2-7)

❑ Letter (See page 4.2-8)
Chapter

4.3

Uncorrected

Data

Adjustment

What is an uncorrected data adjustment? . . . . . . . . . . . . . 4.3-1

Which schools are eligible to submit

an uncorrected data adjustment? . . . . . . . . . . . . . 4.3-2

What benefit will a school gain from submitting 

an uncorrected data adjustment? . . . . . . . . . . . . . 4.3-2

What roles do data managers have in a 

school’s uncorrected data adjustment? . . . . . . . . . . . . . 4.3-2

How does a school submit 

an uncorrected data adjustment? . . . . . . . . . . . . . 4.3-3

Which Department address does a school use for

submitting an uncorrected data adjustment? . . . . . . . . . . . . . 4.3-6

What happens after the school submits 

the uncorrected data adjustment? . . . . . . . . . . . . . 4.3-6
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Uncorrected Data Adjustment

What is an uncorrected data adjustment?

An uncorrected data adjustment is a request submitted to the U.S.

Department of Education’s (the Department’s) Default Management

to ensure that a school’s official cohort default rate calculation

reflects changes that were correctly agreed to as a result of an incorrect data challenge that the school submitted after the release of the

draft cohort default rates.

A school should submit an uncorrected data adjustment when

 it submitted a timely challenge of its draft cohort default rate

data,

 the data manager reviewing the incorrect data challenge

agreed to make changes to the cohort default rate data, and

 the agreed upon changes are not reflected in the school’s 

loan record detail report for the official cohort default rates.

If a school does not submit an uncorrected data adjustment after 

the release of the official cohort default rates, the school will not have

the opportunity to submit an uncorrected data adjustment at a later

time.

Figure 4.3.1 shows the time frame for submitting an uncorrected data

adjustment.

Uncorrected Data Adjustment Chapter 4.3

CHAPTER 4.3 - Uncorrected

Data Adjustment

Page 4.3 - 1

Uncorrected

Data

Adjustment

34 CFR 668.190

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends

Department completed

Uncorrected Data

Adjustment.

Key:

Start

15

Days

20

Days

30

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.3.1

Time Frame for Submitting

an Uncorrected Data

Adjustment

34 CFR 668.190
Which schools are eligible to submit an uncorrected data adjustment?

Any school that receives an official cohort default rate may request

that Default Management adjust its cohort default rate. This includes

schools that are not subject to sanction and schools that have withdrawn from the Federal Family Education Loan (FFEL) and/or William

D. Ford Federal Direct Loan (Direct Loan) programs. A school can only

request an adjustment of its most recent official cohort default rate.

What benefit will a school gain from submitting an uncorrected data

adjustment?

If, as a result of an uncorrected data adjustment (or as the result 

of a school’s submission of any adjustment or appeal), Default

Management determines that a school’s official cohort default rate

calculation data is incorrect, Default Management will recalculate 

the cohort default rate using the corrected data. This may lower,

raise, or not affect the cohort default rate. If the school is subject to

sanction and the cohort default rate is lowered below the sanction

level, the school is no longer subject to that sanction. In addition, a

school that would otherwise be subject to sanction in a later year

may avoid being subject to that sanction.

However, even though Default Management may revise a cohort

default rate, subsequent copies of the loan record detail report for

the official cohort default rates will not reflect the change. Therefore,

it is important for a school to keep a copy of Default Management’s

final determination letter as the official record of the school’s revised

cohort default rate.

What roles do data managers have in a school’s uncorrected data

adjustment?

Schools submit uncorrected data adjustments directly to Default

Management for review and consideration. However, a school is

required to send a copy of its uncorrected data adjustment to the

data manager associated with the uncorrected data.

If Default Management notifies a data manager that a school’s 

uncorrected data adjustment was successful, the data manager 

must correct the data both in the data manager’s internal system 

and in the National Student Loan Data System (NSLDS). Before the

release of the draft cohort default rates, the data manager must

ensure that the changes are successfully loaded into NSLDS.

Chapter 4.3 Uncorrected Data Adjustment

Page 4.3 - 2

CHAPTER 4.3 - Uncorrected

Data Adjustment
If a school submits an uncorrected data adjustment to the wrong

entity or address, the uncorrected data adjustment will not be

reviewed and the school could miss the deadline for submitting 

the uncorrected data adjustment.

If a data manager receives an uncorrected data adjustment from 

a school, the data manager should immediately contact the school 

to inform it that the uncorrected data adjustment must be sent to

Default Management. The data manager should also indicate that 

the request must be sent to Default Management within 30 calendar

days of the school receiving its loan record detail report for the

official cohort default rates. The data manager should then notify

Default Management that the data manager has contacted the

school.

How does a school submit an uncorrected data adjustment?

Timing is critical when submitting an uncorrected data adjustment.

A school must send its uncorrected data adjustment to Default

Management within 30 calendar days of receiving the loan record

detail report for the official cohort default rates.

If a school does not receive a loan record detail report for the official

cohort default rates, and the school believes it might have grounds

for an uncorrected data adjustment, it must request the loan record

detail report for the official cohort default rates within 15 calendar

days of receiving the official cohort default rate notification letter. See

Chapter 2.3,“Loan Record Detail Report,” for information on requesting a loan record detail report for the official cohort default rates.

If a school believes the loan record detail report for the official cohort

default rates contains uncorrected data, it should submit an uncorrected data adjustment to Default Management. If a school submits

an uncorrected data adjustment to the wrong entity, the adjustment

will not be reviewed and the school could miss the deadline for

submitting the uncorrected data adjustment to Default

Management.

Upon receiving the loan record detail report for the official cohort

default rates, a school should compare the loan record detail report

for the draft cohort default rates to the loan record detail report for

the official cohort default rates and the data manager’s response to

the school’s incorrect data challenge to determine if agreed upon

changes have been made. If the school believes the loan record detail

report for the official cohort default rates contains uncorrected data,

it should submit an uncorrected data adjustment. The school must 

do so within 30 calendar days of receipt of the loan record detail

report for the official cohort default rates.

Uncorrected Data Adjustment Chapter 4.3

CHAPTER 4.3 - Uncorrected

Data Adjustment

Page 4.3 - 3

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends

Department completed

Uncorrected Data

Adjustment.

Start

15

Days

20

Days

30

Days
The uncorrected data adjustment must include the following items:

 A completed uncorrected data adjustment spreadsheet that

lists the uncorrected data that the data manager agreed to

change in its incorrect data challenge response but is not

reflected in the loan record detail report for the official cohort

default rates.

Figure 4.3.2 is a sample uncorrected data adjustment spreadsheet. Instructions for creating and completing the spreadsheet

are in the “Spreadsheet Tools”section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools.”

 A copy of the data manager’s response to the school’s incorrect

data challenge.

The school should include copies of the incorrect data challenge responses the school received after the release of the

draft cohort default rates from the relevant data managers 

that show that the data managers agreed to the changes.

 A letter on the school’s letterhead.

Figure 4.3.3 is a sample uncorrected data adjustment letter. The

letter must include the school’s OPE ID number and a statement

indicating that the school is submitting an uncorrected data

adjustment for the current cohort fiscal year. The letter must

feature a subject line that reads “Subject: Cohort FY [insert

cohort fiscal year used in the adjustment] Uncorrected Data

Adjustment.”The school must also note if it is submitting any

other adjustments or appeals. The letter must include a certification that the information provided is true and correct under

penalty of perjury. The letter must also include a notation that

Chapter 4.3 Uncorrected Data Adjustment

Page 4.3 - 4

CHAPTER 4.3 - Uncorrected

Data Adjustment

Type: Uncorrected Data Adjustment Number of Borrowers: 1

Cohort FY: 2002 Number of Loans: 2

From: Coralville College

Code: 098998

To: Default Management

Code: N/A

Date 10/14/2004 Page 1 of 1

A B C D E F

1

Borrower's

SSN

Borrower's

Name

Type of

Loans

Number

of Loans

Date Data Manager

Agreed

Data Manager

Code

2 4 r 44-44-4444 T 1 horkelson, Pete D1 4 0 1 5/05/200 10

3 4 r 44-44-4444 T 2 horkelson, Pete D1 4 0 1 5/05/200 10

4

5

Figure 4.3.2

Sample School

Uncorrected Data

Adjustment Spreadsheet 

to Default Management
Uncorrected Data Adjustment Chapter 4.3

CHAPTER 4.3 - Uncorrected

Data Adjustment

Page 4.3 - 5

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

1-987-654-3211

October 14, 2004

U.S. Department of Education OPE ID 098998

Default Management

ATTN: Uncorrected Data Adjustment

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2002 Uncorrected Data Adjustment

To Whom It May Concern:

Coralville College, OPE ID 098998, is submitting a cohort FY 2002 uncorrected 

data adjustment. Please see the enclosed spreadsheet and a copy of the incorrect 

data challenge response from the data manager stating that a change is warranted. 

Coralville College is submitting its uncorrected data adjustment at this time; however,

the school is also planning on submitting an economically disadvantaged appeal.

I, the undersigned, certify under penalty of perjury, that all information submitted in

support of this uncorrected data adjustment is true and correct.

Thank you for your consideration. 

Sincerely,

Serena Rooney

President, Coralville College

Enclosures

cc: Direct Loan Servicer

Figure 4.3.3 - Sample School Uncorrected Data 

Adjustment Letter to Default Management
the school is sending a copy of the letter and the spreadsheet

to the relevant data managers. The school’s President/CEO/

Owner must sign the letter, and the signature must be followed

by a signature block showing the signer’s name and job title.

If the school does not submit the uncorrected data adjustment in a

timely manner, Default Management will not review the uncorrected

data adjustment and will return all uncorrected data adjustment

materials to the school.

Which Department address does a school use for submitting an 

uncorrected data adjustment? 

See the section entitled,“Which address does a school or data 

manager use for submitting challenge, adjustment, or appeal 

materials to Default Management?” in Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools,” for the address for Default

Management. A school should not send uncorrected data 

adjustment materials to any other addresses at the Department.

Default Management recommends that a school send all uncorrected

data adjustment correspondence return receipt requested or via

commercial overnight mail/courier delivery. This will be useful to a

school if it is asked to authenticate the timeliness of its uncorrected

data adjustment. A school should maintain the documentation that

verifies the receipt of the uncorrected data adjustment as well as all

the electronic and hardcopy documentation submitted as a part of

the uncorrected data adjustment process. If a school does not meet

the 30-calendar-day time frame for submitting an uncorrected data

adjustment, the uncorrected data adjustment will not be reviewed.

What happens after the school submits the uncorrected data 

adjustment?

Default Management will review only the information submitted 

with the uncorrected data adjustment and will not review information submitted after the deadline. Default Management will send 

the school and each involved data manager written notification of

Default Management’s decision. Default Management’s decision is

final and no further administrative review is provided.

Chapter 4.3 Uncorrected Data Adjustment

Page 4.3 - 6

CHAPTER 4.3 - Uncorrected

Data Adjustment

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends

Department completed

Uncorrected Data

Adjustment.

Start

15

Days

20

Days

30

Days
Default Management is responsible for determining whether a data

manager correctly agreed to make a change to a school’s cohort

default rate data during the incorrect data challenge process and

whether the change is reflected in the loan record detail report for

the official cohort default rates. If Default Management so determines

using the standard of review described in 34 CFR 668.189(f ), Default

Management will recalculate the school’s cohort default rate based

on the correct data.

If the school was notified that it was subject to sanction and the

uncorrected data adjustment is successful and the revised cohort

default rate is below the sanction level, Default Management will

withdraw that sanction notice. If the school was notified that it was

subject to sanction and the uncorrected data adjustment is unsuccessful or if the uncorrected data adjustment is successful but the

revised cohort default rate remains above the sanction level, and 

the school has no other outstanding appeals and adjustments,

Default Management will notify the school of the effective date 

of that sanction.

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the FFELs 

it certified and delivered and/or the Direct Loans it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submitted its completed adjustment and/or appeal to the Department. Schools may avoid this

liability if they choose not to certify or originate loans during the

adjustment and appeal process.

Uncorrected Data Adjustment Chapter 4.3

CHAPTER 4.3 - Uncorrected

Data Adjustment

Page 4.3 - 7
Chapter 4.3 Uncorrected Data Adjustment

Page 4.3 - 8

CHAPTER 4.3 - Uncorrected

Data Adjustment

School to Default Management Uncorrected Data Adjustment Checklist

Determine

❑ Does the loan record detail report for the official cohort default rates contain 

data that a data manager agreed to correct? (See page 4.3-1)

Submit to Default Management 

❑ Spreadsheet (See page 4.3-4)

❑ Copy of Data Manager Incorrect Data Challenge Response (See page 4.3-4)

❑ Letter (See page 4.3-4)

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Chapter

4.4

New Data

Adjustment

What is a new data adjustment? . . . . . . . . . . . . . 4.4-1

What is new data? . . . . . . . . . . . . . 4.4-1

What if the new data is correct? . . . . . . . . . . . . . 4.4-1

Which schools are eligible to submit a new data adjustment? . . . . . . . . . . . . . 4.4-2

What benefit will a school gain from

submitting a new data adjustment? . . . . . . . . . . . . . 4.4-3

What roles do the Department and data managers 

have in a school’s new data adjustment? . . . . . . . . . . . . . 4.4-3

How does a school submit new data 

adjustment allegations to a data manager? . . . . . . . . . . . . . 4.4-4

How does a school identify the data manager of a loan? . . . . . . . . . . . . . 4.4-8

How does a data manager respond to a 

school’s new data adjustment allegations? . . . . . . . . . . . . . 4.4-8

Which Department address does a data manager use for submitting

a copy of its new data adjustment allegations response? . . . . . . . . . . . . . 4.4-12

What does a school do with the data manager’s 

new data adjustment allegations response? . . . . . . . . . . . . . 4.4-14

Which Department address does a school use

for submitting a new data adjustment? . . . . . . . . . . . . . 4.4-16

What happens after the school submits the new data adjustment? . . . . . . . . . . . . . 4.4-16
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New Data Adjustment

What is a new data adjustment?

A new data adjustment allows a school to challenge the accuracy of

“new data” included in the school’s most recent official cohort default

rate.

Figure 4.4.1 shows the time frame for submitting a new data adjustment.

What is new data?

New data occurs when loan data reported to the National Student 

Loan Data System (NSLDS) changes during the period between the

calculation of the draft and official cohort default rates. NSLDS is

continuously provided with new or updated information. Because 

the draft cohort default rates are calculated approximately six

months before the official cohort default rates are calculated, the

data used to calculate the draft cohort default rates may be different

from the data used to calculate the official cohort default rates.

New data can be identified by comparing the loan record detail

reports for the draft and official cohort default rates for the same

cohort fiscal year and determining if any loan data is newly included,

excluded, or changed in any manner. The school should then determine if the new data results in the loan data being reported

incorrectly.

The following are examples of new data:

 A loan is included in a school’s draft cohort default rate 

calculation but is not included in its official cohort default 

rate calculation.

 A loan is included in a school’s draft cohort default rate 

calculation as a non-defaulted loan but is included in its 

official cohort default rate calculation as a defaulted loan.

What if the new data is correct?

If the new data in the loan record detail report for the official cohort

default rates is correct, a school cannot submit a new data adjustment. A school can only submit a new data adjustment when the

new data is incorrect. Therefore, for the purposes of the remainder of

this chapter, any mention of “new data” refers to “new incorrect data.”

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 1

Figure 4.4.1

Time Frame for Submitting

a New Data Adjustment

New

Data

Adjustment

34 CFR 668.191

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager New Data

Adjustment allegations.

Data manager

sends New Data

Adjustment response.

School requests

clarification,

replacement, or

Department records.

Data manager

sends school

information.

School sends

Department completed

New Data Adjustment.

If school is also filing an Erroneous Data

Appeal and/or a Loan Servicing Appeal,

it may submit all of them together,

by the date that the latest is due.

Key:

Start

15

Days

20

Days

15

Days

20

Days

15

Days

20

Days

30

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

34 CFR 668.191
Which schools are eligible to submit a new data adjustment?

Any school that receives an official cohort default rate may request

that the U.S. Department of Education’s (the Department’s) Default

Management adjust its cohort default rate. This includes schools 

that are not subject to sanction and schools that have withdrawn

from the Federal Family Education Loan (FFEL) and/or William D. Ford

Federal Direct Loan (Direct Loan) programs. A school can only request

an adjustment of its most recent official cohort default rate.

The school begins the process by asking the data manager responsible for the loan to review the school’s new data adjustment

allegations. If the data manager agrees with the school’s new data

adjustment allegations, the school then submits a new data adjustment to Default Management. However, if the data manager does not

agree with the school, the school may not submit a new data adjustment to Default Management.

A school that is subject to sanction should not submit a new data

adjustment. Rather, a school subject to sanction should submit 

an erroneous data appeal because the school can appeal a data

manager’s adverse ruling on an erroneous data appeal to Default

Management. For more information on erroneous data appeals, see

Chapter 4.5,“Erroneous Data Appeal.”

A school should submit a new data adjustment if 

 a loan on the loan record detail report for the official cohort

default rates is newly included, excluded, or changed in some

manner when compared to the loan record detail report for 

the draft cohort default rates, and

 the school believes the loan is being incorrectly used in the

official cohort default rate calculation.

If the loan data is reported in the same manner in the loan record

detail report for the draft and official cohort default rates, the school

may not submit a new data adjustment.

If a school does not submit a new data adjustment after the release

of the official cohort default rates, the school will not have the opportunity to submit a new data adjustment at a later time.

Chapter 4.4 New Data Adjustment

Page 4.4 - 2

CHAPTER 4.4 -

New Data Adjustment

A school that 

is subject to 

sanction should

not submit a new

data adjustment
What benefit will a school gain from submitting a new data adjustment?

If, as a result of a new data adjustment (or as the result of a school’s

submission of any adjustment or appeal), Default Management

determines that a school’s official cohort default rate calculation 

data is incorrect, Default Management will recalculate the cohort

default rate using the corrected data. This may lower, raise, or not

affect the cohort default rate. If the school is subject to sanction and

the cohort default rate is lowered below the sanction level, the school

is no longer subject to that sanction. In addition, a school that would

otherwise be subject to sanction in a later year may avoid being

subject to that sanction.

However, even though Default Management may revise a cohort

default rate, subsequent copies of the loan record detail report for

the official cohort default rates will not reflect the change. Therefore,

it is important for a school to keep a copy of Default Management’s

final determination letter as the official record of the school’s revised

cohort default rate.

What roles do the Department and data managers have in a school’s

new data adjustment?

A data manager is required to review a school’s new data adjustment

allegations if the new data adjustment allegations are submitted in a

timely manner and the data manager has responsibility for the loans.

If a school submits new data adjustment allegations to the wrong

entity, the new data adjustment allegations will not be reviewed and

the school could miss the deadline. The guarantor/servicer code on

the loan record detail report identifies the data manager for a loan.

See Chapter 2.3,“Loan Record Detail Report,” for information on

determining the data manager for a loan.

The data manager must respond to the school’s new data adjustment

allegations within 20 calendar days of receipt. However, the data

manager must not review new data adjustment allegations if the

school did not send the new data adjustment allegations within the

15-calendar-day time frame. If the data manager does not respond

within 20 calendar days, the school should advise Default

Management in writing of the delay.

The Department has two roles in the new data adjustment process.

The primary role is to review a school’s new data adjustment, which

is submitted to Default Management once the school has received

confirmation from the data manager that a change to the data is

warranted. If the data manager indicates that a change is not 

warranted, the school cannot submit those new data adjustment

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 3
allegations to Default Management as a part of a new data adjustment. If Default Management determines that the data manager

correctly agreed that changes are warranted to the new data identified by the school, Default Management will recalculate the school’s

cohort default rate based on the correct data and notify the school.

The Department’s other role is to respond to a school’s new data

adjustment allegations if the Department is the data manager for the

loans. The Department is the data manager for FFELs the Department

holds and for all Direct Loans.

Default Management is responsible for responding to a school’s 

new data adjustment allegations for FFELs that the Department

holds. These loans are primarily identified in the loan record detail

report with a guarantor/servicer code of 555. See the “Alphabetical

Data Manager Contacts” section of Chapter 2.6,“General Information

Tools,” for a listing of other codes that identify the Department as the

holder of a loan.

The Department’s Direct Loan servicer is responsible for responding

to a school’s new data adjustment allegations regarding all Direct

Loans, even those that are in default. These loans are identified in 

the loan record detail report with a guarantor/servicer code of 0101.

How does a school submit new data adjustment allegations to a data

manager?

Timing is critical when submitting a new data adjustment. A school

begins the process by submitting new data adjustment allegations to

the data manager responsible for a loan within 15 calendar days of

receiving the loan record detail report for the official cohort default

rates. Chapter 3.1,“School Strategies,” outlines a method a school can

follow to determine if the loan record detail report contains inaccurate data. The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools,” lists examples of new data adjustment allegations a school may submit as a part of a new data

adjustment.

If a school does not receive a loan record detail report for the official

cohort default rates, and the school believes it may have grounds for

a new data adjustment, it must request the loan record detail report

for the official cohort default rates within 15 calendar days of receiving the official cohort default rate notification letter. See Chapter 2.3,

“Loan Record Detail Report,” for information on requesting a loan

record detail report for the official cohort default rates.

Chapter 4.4 New Data Adjustment

Page 4.4 - 4

CHAPTER 4.4 -

New Data Adjustment

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager New Data

Adjustment allegations.

Data manager

sends New Data

Adjustment response.

School requests

clarification,

replacement, or

Department records.

Data manager

sends school

information.

School sends

Department completed

New Data Adjustment.

If school is also filing an Erroneous Data

Appeal and/or a Loan Servicing Appeal,

it may submit all of them together,

by the date that the latest is due.

Start

15

Days

20

Days

15

Days

20

Days

15

Days

20

Days

30

Days
Upon receiving the loan record detail report for the official cohort

default rates, a school should compare the loan record detail reports

for the draft and official cohort default rates to determine if any loan

data has changed between the loan record detail reports and, if so,

whether the changes result in the loan being reported incorrectly. If

the school believes the loan record detail report for the official cohort

default rates contains new and inaccurate data, it should submit a

new data adjustment.

As mentioned, a school that is subject to sanction should not submit

a new data adjustment. Rather, a school subject to sanction should

submit an erroneous data appeal because the school can appeal a

data manager’s adverse ruling on an erroneous data appeal to

Default Management.

A school must list separate new data adjustment allegations for each

loan record that the school believes contains new data. If one data

manager is responsible for all the loans, the school must list all the

allegations in one submission. However, if there are multiple data

managers involved, the school must submit separate new data

adjustment allegations to each data manager. For example, a school

believes the loan record detail report contains three loans with new

data. Two of the loans are held by one data manager; the other loan 

is held by a different data manager. The school must prepare two

separate new data adjustment allegations packages, one for each

data manager, listing only the loans held by each data manager.

The materials must include the following items:

 A new data adjustment allegations spreadsheet that lists the

new data reflected on the loan record detail report.

Figure 4.4.2 is a sample school new data adjustment allegations

spreadsheet to a data manager. Instructions for creating and

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 5

Type: New Data Adjustment Number of Borrowers: 2

Cohort FY: 2001 Number of Loans: 3

From: Coralville College

Code: 098998

To: State Guaranty Agency

Code: 111

Date 10/17/2003 Page 1 of 1

A B C D E F G H I J K

1

Borrower's

SSN Borrower's Name

Type

of

Loans

Number

of

Loans

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments

Agree/

Disagree

2 8 e 88-88-8888 L F oman, Conni S1 0 0 1 7/15/200 0 A 1/16/200 N 1 / F D Y 200 + A N A / N/

3 9 y 99-99-9999 P F etrie, Krist S2 8 0 9 5/17/199 1 1 1/18/199 09/15/200

FY 2001

FY 2000

- B

+ A B N A / N/

4

Figure 4.4.2

Sample School 

New Data Adjustment

Allegations Spreadsheet 

to Data Manager
completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

 Copies of the appropriate pages from the relevant loan record

detail report(s) to demonstrate that the loans are new data.

The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” lists examples of 

the loan record detail report pages a school should submit as 

a part of a new data adjustment.

 Copies of relevant supporting documentation.

The “Incorrect Data Challenge, New Data Adjustment,

and Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” contains examples

of the type of supporting documentation a school must submit

to support a new data adjustment allegation.

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting new data adjustment

allegations, and the cohort fiscal year to which the new data

adjustment allegations apply. The letter must feature a subject

line that reads “Subject: Cohort FY [insert cohort fiscal year

being used in the new data adjustment] New Data Adjustment

Allegations.”The letter must also include a certification sentence

that the information provided is true and correct under penalty

of perjury and a notation that the school is sending a copy of

the letter and the spreadsheet to Default Management. The

school’s President/CEO/Owner must sign the letter, and the

signature must be followed by a signature block showing the

signer’s name and job title. Figure 4.4.3 is a sample school new

data adjustment allegations letter to a data manager.

Chapter 4.4 New Data Adjustment

Page 4.4 - 6

CHAPTER 4.4 -

New Data Adjustment
New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 7

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

1-987-654-3211

October 17, 2003

ATTN: Lesa Neiers OPE ID 098998

Compliance Officer

State Guaranty Agency

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

Subject: Cohort FY 2001 New Data Adjustment Allegations

Dear Ms. Neiers:

Coralville College, OPE ID 098998, is submitting a list of new data adjustment allegations for cohort FY 2001 for review by State Guaranty Agency. Please see the enclosed

spreadsheet, relevant pages from the loan record detail report for the draft and official

cohort default rates, and supporting documentation. 

I, the undersigned, certify under penalty of perjury that all information submitted in 

support of this new data adjustment is true and correct. 

Thank you for your consideration. 

Sincerely,

Serena Rooney

President, Coralville College

Enclosures

cc: U.S. Department of Education, 

Default Management

Figure 4.4.3 - Sample School New Data Adjustment

Allegations Letter to Data Manager
The school must send a copy of the letter and the new data adjustment allegations spreadsheet to Default Management at the same

time it sends the new data adjustment allegations package to the

data manager. The school does not need to send the pages of the

loan record detail reports or the relevant supporting documentation

to Default Management at that time unless the school is making new

data adjustment allegations about a FFEL that the Department holds.

Default Management recommends that a school send all new data

adjustment correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a school if 

it is asked to authenticate the timeliness of its submission. A school

should maintain the documentation which verifies the receipt of 

the materials as well as all electronic and hardcopy documentation

submitted as a part of the new data adjustment process. If a school

does not meet the 15-calendar-day time frame for submitting new

data adjustment allegations, the new data adjustment allegations 

will not be reviewed.

How does a school identify the data manager of a loan?

The guarantor/servicer code on the loan record detail report shows

the data manager responsible for a loan. A school can use this number to obtain the name and address of the data manager. See the

“Numerical Data Manager Contacts” section in Chapter 2.6,“General

Information Tools,” for a listing of data manager codes and addresses.

How does a data manager respond to a school’s new data adjustment

allegations?

Timing is critical when responding to a school’s new data adjustment

allegations. A data manager is required to respond to a school’s

timely submitted new data adjustment allegations for those loans 

for which the entity is the data manager and send a copy of the

response to Default Management. However, the data manager must

not review new data adjustment allegations if the 15-calendar-day

time frame for a school to submit new data adjustment allegations

has expired. If the school’s due date falls on a weekend or a federal

holiday, a school may send its new data adjustment allegations to 

the data manager no later than the next federal business day.

Chapter 4.4 New Data Adjustment

Page 4.4 - 8

CHAPTER 4.4 -

New Data Adjustment

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager New Data

Adjustment allegations.

Data manager

sends New Data

Adjustment response.

School requests

clarification,

replacement, or

Department records.

Data manager

sends school

information.

School sends

Department completed

New Data Adjustment.

If school is also filing an Erroneous Data

Appeal and/or a Loan Servicing Appeal,

it may submit all of them together,

by the date that the latest is due.

Start

15

Days

20

Days

15

Days

20

Days

15

Days

20

Days

30

Days
Before denying a school’s new data adjustment allegations on the

basis of a late submission, a data manager should verify the actual

date the school received its hardcopy loan record detail report for 

the official cohort default rates from Default Management. If the

school did not submit the new data adjustment allegations in a

timely manner, the data manager must not review any part of the

submission. In its response to the school, the data manager should

explain that it is unable to review the new data adjustment allegations because the school missed the regulatory deadline. The data

manager must also send a copy of the response to Default

Management.

The data manager must respond to timely submitted new data

adjustment allegations within 20 calendar days of receiving the

submission. In its new data adjustment allegations response, the data

manager will address each of the school’s timely submitted new data

adjustment allegations. If the data manager does not respond within

20 calendar days, the school should advise Default Management in

writing of the delay.

If the new data adjustment submission is timely, a data manager

must review each new data adjustment allegation submitted by the

school. The data manager should determine the following:

 The data manager should determine if the new data adjustment

allegations presented by the school are based on loans that the

data manager currently holds.

If the data manager does not hold the loans, the data manager

should notify the school and Default Management that the new

data adjustment allegations must be submitted to the appropriate data manager and remind the school that the new data

adjustment allegations must be submitted to the appropriate

data manager within 15 calendar days of the school’s receipt of

its loan record detail report for the official cohort default rates.

There will be some instances where the data manager was the

former holder of the loans but those loans have been assigned

to the Department and the loan record detail report for the

official cohort default rates does not yet reflect the assignment.

In that event, the data manager should send the school and

Default Management a notice stating that the loans have 

been assigned to the Department. The school then has until 15

calendar days after receipt of the letter from the data manager

to submit the new data adjustment allegations to Default

Management.

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 9
 The data manager should determine if all relevant material is

present.

See the section of this chapter entitled “How does a school

submit new data adjustment allegations to a data manager?”

for information on the materials a school is required to submit

with its incorrect data challenge. If a school fails to provide the

data manager with all of the necessary information, the data

manager must ask the school to submit the missing information. However, the school must submit this additional information to the data manager within the initial 15-calendar-day

deadline for submitting new data adjustment allegations. If 

the school does not submit the additional information within

the deadline, the data manager must not review the new data

adjustment allegation.

 The data manager should determine if its documentation

supports or refutes each of the new data adjustment allegations

listed on the school’s spreadsheet.

The data manager should agree with the school if the data

manager’s documentation supports the school’s claim or if the

school has demonstrated that the data manager has failed to

take into account correct information the school timely sent to

the data manager or NSLDS.

The data manager should disagree with the school if the data

manager’s documentation refutes the school’s claim or if the

school failed to demonstrate that the correct information was

timely submitted to the data manager or NSLDS. The data

manager must explain to the school why it disagrees with the

school and send the school a copy of the data manager’s supporting documentation. The data manager must send a copy 

of the response and the supporting documentation to Default

Management.

After making its determinations, the data manager must compile a

list of the data manager’s responses to the school’s list of new data

adjustment allegations. The data manager must record the responses

to each of the new data adjustment allegations on a new data adjustment allegations response spreadsheet and provide comments on

why the data manager agrees or disagrees with each of the school’s

new data adjustment allegations. If the data manager agrees that a

change should be made, it must correct the data in its internal data

system and in NSLDS. Before the release of the draft cohort default

rates, the data manager must ensure that the changes they agreed to

make were successfully loaded into NSLDS. The data manager should

check the NSLDS error report.

Chapter 4.4 New Data Adjustment

Page 4.4 - 10

CHAPTER 4.4 -

New Data Adjustment
The data manager must provide supporting documentation if the

data manager disagrees with the school’s new data adjustment

allegations. In addition, if the data manager’s response indicates that

a loan has been repurchased, the data manager should provide the

original claim paid date, the repurchase date, the reason the loan was

repurchased, and the default date if any subsequent claim was filed.

The data manager new data adjustment allegations response should

include the following:

 A spreadsheet of the data manager’s responses to the school’s

list of new data adjustment allegations.

Figure 4.4.4 is a sample data manager new data adjustment

allegations response spreadsheet to a school. The instructions

for creating and completing the spreadsheet are in the

“Spreadsheet Tools” section of Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools.”

 Copies of supporting documentation for each new data adjustment allegation with which the data manager disagreed.

 A letter on the data manager’s letterhead with the school’s

name and OPE ID number.

The letter must indicate that the data manager is responding 

to the school’s new data adjustment allegations and include the

cohort fiscal year to which the response applies. The letter must

feature a subject line that reads “Subject: Cohort FY [insert

cohort fiscal year being used in the new data adjustment] New

Data Adjustment Allegations Response.”The letter must also

include a statement that a copy of the new data adjustment

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 11

Type: New Data Adjustment Number of Borrowers: 2

Cohort FY: 2001 Number of Loans: 3

From: State Guaranty Agency

Code: 111

To: Coralville College

Code: 098998

Date 10/31/2003 Page 1 of 1

A B C D E F G H I J K

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments

Agree/

Disagree

2 8 e 88-88-8888 L F oman, Conni S1 0 0 1 7/15/200 0 A 1/16/200 N 1 / F D Y 200 +

School submitted enrollment

s e tatus change on 07/31/2000 Agre

3 9 y 99-99-9999 P F etrie, Krist S2 0 0 0 4/12/200 1 1 0/13/200 0 1 8/15/200 F e Y 200 No chang

School submitted enrollment

status change on 02/20/2001;

u e ntimely Disagre

4

Figure 4.4.4

Sample Data Manager 

New Data Adjustment

Allegations Response

Spreadsheet to School
allegations response has been sent to Default Management.

The responsible data manager official must sign the letter, and

the signature must be followed by a signature block showing

the signer’s name and job title. Figure 4.4.5 is a sample data

manager new data adjustment allegations response letter.

The data manager must send its new data adjustment allegations

response within 20 calendar days of receiving the new data adjustment allegations from the school. The data manager sends its new

data adjustment allegations response to the school and a copy of the

new data adjustment allegations response to Default Management.

If a data manager is unable to respond within 20 calendar days of

receiving the school’s new data adjustment allegations, it should

send the school a letter on its official letterhead explaining the

circumstances causing the delay, telling the school when it will

respond, and indicating that Default Management has been 

informed of the delay.

If a data manager can respond to only a portion of a school’s new

data adjustment allegations within 20 calendar days, it should hold

that portion of the response until it can provide a response to all of

the school’s new data adjustment allegations. The data manager

should send a letter to the school and Default Management that

provides the information outlined above.

Which Department address does a data manager use for submitting a

copy of its new data adjustment allegations response?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A data manager should not send new data adjustment materials to any other

addresses at the Department.

Default Management recommends that a data manager send 

all correspondence return receipt requested or via commercial

overnight mail/courier delivery. This will be useful to a data manager

if it is asked to authenticate the timeliness of its response. A data

manager should maintain the documentation that verifies the receipt

of the new data adjustment allegations response as well as all other

electronic and hardcopy documentation submitted as a part of the

new data adjustment process.

The data manager can use this information when submitting monthly status reports to Default Management. For additional information

on monthly status reports, see Chapter 3.2,“Data Manager Strategies.”

Chapter 4.4 New Data Adjustment

Page 4.4 - 12

CHAPTER 4.4 -

New Data Adjustment
New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 13

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

October 31, 2003

Serena Rooney OPE ID 098998

President

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

Subject: Cohort FY 2001 New Data Adjustment Allegations Response

Dear Ms. Rooney:

This is State Guaranty Agency’s response to the cohort FY 2001 new data adjustment

allegations Coralville College, OPE ID 098998, submitted on October 17, 2003. Please

see the enclosed spreadsheet.

For each “Agree” in the “Agree/Disagree” column of the spreadsheet we will update 

the National Student Loan Data System (NSLDS) and our internal records. You should

submit the allegation to Default Management.

For each “Disagree” in the “Agree/Disagree” column of the spreadsheet we have

reviewed our records and determined that they do not support the allegation. We have

included a comment stating our position and attached copies of the documentation supporting our position. We will not make a change to NSLDS or to our internal records.

Sincerely,

Yvonne Carter

CEO

Enclosures

cc: U.S. Department of Education

Default Management

S

G

A

tate

uaranty

gency

Figure 4.4.5 - Sample Data Manager New Data Adjustment

Allegations Response Letter to School
What does a school do with the data manager’s new data adjustment

allegations response?

Timing is critical after receiving a data manager’s new data adjustment allegations response. In those cases where the data manager’s

new data adjustment allegations response is unclear, incorrect,

missing, or incomplete, the school may submit a request to the data

manager for a clarification. The school must submit the request to the

data manager within 15 calendar days of the receipt of the new data

adjustment allegations response. The school should also send a copy

of the inquiry letter to Default Management. The data manager must

respond to the school’s inquiry within 20 calendar days of receiving

the inquiry and send a copy of the response to Default Management.

A school cannot appeal a data manager’s new data adjustment

allegations response to Default Management.

Within 30 calendar days of receiving the last response to all of the

school’s new data adjustment allegations, the school must decide

how to proceed and prepare a response to Default Management

accordingly. If the response indicates that there is no new data in 

the school’s official cohort default rate calculation, the school can

proceed no further and must then notify Default Management that

the school is withdrawing the new data adjustment.

If the data manager agrees with any of the school’s new data adjustment allegations, the school should submit a new data adjustment 

to Default Management. Only Default Management can make the

recommended changes to the school’s cohort default rate.

If the school continues with the new data adjustment, it must submit

a new data adjustment to Default Management within 30 calendar

days of receiving the last response to the school’s new data adjustment allegations with the following exception: If the school is

submitting the new data adjustment to Default Management along

with a timely erroneous data appeal and/or a timely loan servicing

appeal, the school may submit all materials by the later of 

 within 30 calendar days of receipt of the last response to all of

the school’s new data adjustment allegations,

 within 30 calendar days of receipt of the last response to all of

the school’s erroneous data appeal allegations, or

 within 30 calendar days of receipt of the last response to all of

the school’s requests for loan servicing records.

Chapter 4.4 New Data Adjustment

Page 4.4 - 14

CHAPTER 4.4 -

New Data Adjustment

School receives

official cohort default

rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager New Data

Adjustment allegations.

Data manager

sends New Data

Adjustment response.

School requests

clarification, replacement, or

Department records.

Data manager

sends school

information.

School sends

Department completed

New Data Adjustment.

If school is also filing an Erroneous Data

Appeal and/or a Loan Servicing Appeal,

it may submit all of them together,

by the date that the latest is due.

Start

15

Days

20

Days

15

Days

20

Days

15

Days

20

Days

30

Days
If the school does not submit the new data adjustment in a timely

manner, Default Management will not review the new data adjustment and will return all new data adjustment materials to the school.

The school must submit to Default Management the following:

 A spreadsheet that lists the new data adjustment allegations

with which the data manager agreed.

Figure 4.4.6 is a sample school new data adjustment spreadsheet to Default Management. Instructions for creating and

completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

 Copies of the data manager new data adjustment allegations

responses confirming that a change is warranted.

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting a new data adjustment,

and the cohort fiscal year to which the new data adjustment

applies. The letter must feature a subject line that reads

“Subject: Cohort FY [insert cohort fiscal year being used in the

new data adjustment] New Data Adjustment.”The letter must

also include a certification that the information provided is true

and correct under penalty of perjury, a list of any other adjustments or appeals the school intends to submit to Default

Management, and a notation that the school is sending a 

copy of the letter and the spreadsheet to the data manager(s).

New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 15

Type: New Data Adjustment Number of Borrowers: 1

Cohort FY: 2001 Number of Loans: 1

From: Coralville College

Code: 098998

To: Default Management

Code: N/A

Date 11/15/2003 Page 1 of 1

A B C D E F

1

Borrower's

SSN

Borrower's

Name

Type of

Loans

Number

of Loans

Date Data

Manager Agreed

Data

Manager

Code

2 8 e 88-88-8888 L F oman, Conni S1 3 1 1 0/31/200 11

3

4

Figure 4.4.6

Sample School New Data

Adjustment Spreadsheet to

Default Management
The school’s President/CEO/Owner must sign the letter, and 

the signature must be followed by a signature block showing

the signer’s name and job title. Figure 4.4.7 is a sample school

new data adjustment letter to Default Management.

Which Department address does a school use for submitting a new data

adjustment?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools,” for the address for Default Management. A school

should not send new data adjustment materials to any other addresses at the Department.

Default Management recommends that a school send all new data

adjustment correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a school if 

it is asked to authenticate the timeliness of its new data adjustment.

A school should maintain the documentation which verifies the

receipt of the new data adjustment as well as all electronic and

hardcopy documentation submitted as a part of the new data 

adjustment process. If a school does not meet the 30-calendar-day

time frame for submitting a new data adjustment, the new data

adjustment will not be reviewed.

What happens after the school submits the new data adjustment?

Default Management will review only the information submitted 

with the new data adjustment and will not review information submitted after the deadline. Default Management will send the school

and each involved data manager written notification of Default

Management’s decision. The data manager must ensure that NSLDS 

is correctly updated. The data manager must also ensure that its

internal records are correctly updated. Default Management’s decision is final and no further administrative review is provided.

If Default Management determines, using the standard of review

described in 34 CFR 668.189(f ), that a school’s cohort default calculation data is incorrect, Default Management will recalculate the cohort

default rate based on the corrected data.

If the school was notified that it was subject to sanction and the 

new data adjustment is successful and the revised cohort default 

rate is below the sanction level, Default Management will withdraw

that sanction notice. If the school was notified that it was subject 

to sanction and the new data adjustment is unsuccessful (or if the

new data adjustment is successful but the revised cohort default rate

Chapter 4.4 New Data Adjustment

Page 4.4 - 16

CHAPTER 4.4 -

New Data Adjustment
New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 17

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

1-987-654-3211

November 15, 2003

U.S. Department of Education OPE ID 098998

Default Management

ATTN: New Data Adjustment

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2001 New Data Adjustment

To Whom It May Concern:

Coralville College, OPE ID 098998, is requesting a new data adjustment to its cohort

FY 2001 official cohort default rate. Please see the enclosed spreadsheet and copies of

data manager new data adjustment allegation responses for those new data adjustment

allegations with which the data managers agreed.

I, the undersigned, certify under penalty of perjury that all information submitted in 

support of this new data adjustment is true and correct.

Coralville College is not submitting any other adjustments or appeals to Default

Management.

Thank you for your consideration. 

Sincerely,

Serena Rooney

President, Coralville College

Enclosures

cc: State Guaranty Agency

Figure 4.4.7 - Sample School New Data Adjustment 

Letter to Default Management
remains above the sanction level), and the school has no other outstanding adjustments or appeals, Default Management will notify 

the school of the effective date of that sanction.

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the FFELs 

it certified and delivered and/or the Direct Loans it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submitted its completed adjustment and/or appeal to the Department. Schools may avoid this

liability if they choose not to certify or originate loans during the

adjustment and appeal process.

Chapter 4.4 New Data Adjustment

Page 4.4 - 18

CHAPTER 4.4 -

New Data Adjustment
New Data Adjustment Chapter 4.4

CHAPTER 4.4 -

New Data Adjustment

Page 4.4 - 19

Data Manager to School New Data Adjustment Checklist 

Determine 

❑ Was the school submission timely? (See page 4.4-8)

❑ Does the data manager hold the loans? (See page 4.4-9)

❑ Is all the material present? (See page 4.4-10)

❑ Does the data manager agree or disagree with the school? (See page 4.4-10)

Response to School 

❑ Spreadsheet (See page 4.4-11)

❑ Supporting Documentation (See page 4.4-11)

❑ Letter (See page 4.4-11)

Follow-Up 

❑ Send copy of response to Default Management (See page 4.4-12)

❑ Update NSLDS and internal records (if necessary) (See page 4.4-10)

❑ Send monthly status report to Default Management (See page 4.4-12)

School to Data Manager New Data Adjustment Checklist 

Determine

❑ Does the loan record detail report for the official cohort default rates contain 

new data? (See page 4.4-1)

Submit to Data Manager 

❑ Spreadsheet (See page 4.4-5)

❑ Relevant Pages of Loan Record Detail Report (See page 4.4-6)

❑ Supporting Documentation (See page 4.4-6)

❑ Letter (See page 4.4-6)

helv con

helv condbld

myriad

700/600
Chapter 4.4 New Data Adjustment

Page 4.4 - 20

CHAPTER 4.4 -

New Data Adjustment

School to Default Management New Data Adjustment Checklist 

Determine 

❑ Did the data manager agree with any of the new data adjustment allegations?

(See page 4.4-14)

❑ Does the school have outstanding erroneous data appeal allegations or 

outstanding requests for loan servicing records? (See page 4.4-14)

Submit to Default Management 

❑ Withdrawal Notice (See page 4.4-14)

OR

❑ Spreadsheet (See page 4.4-15)

❑ Copy of Data Manager New Data Adjustment Response (See page 4.4-15)

❑ Letter (See page 4.4-15)
Chapter

4.5

Erroneous

Data

Appeal

What is an erroneous data appeal? . . . . . . . . . . . . . 4.5-1

What is new data? . . . . . . . . . . . . . 4.5-1

What if the new data is correct? . . . . . . . . . . . . . 4.5-1

What is disputed data? . . . . . . . . . . . . . 4.5-2

Which schools are eligible to submit an erroneous data appeal? . . . . . . . . . . . . . 4.5-2

What benefit will a school gain from 

submitting an erroneous data appeal? . . . . . . . . . . . . . 4.5-3

What roles do the Department and data managers 

have in a school’s erroneous data appeal? . . . . . . . . . . . . . 4.5-3

How does a school submit erroneous data 

appeal allegations to a data manager? . . . . . . . . . . . . . 4.5-4

How does a school identify the data manager of a loan? . . . . . . . . . . . . . 4.5-8

How does a data manager respond to a 

school’s erroneous data appeal allegations? . . . . . . . . . . . . . 4.5-8

Which Department address does a data manager use for submitting 

a copy of its erroneous data appeal allegations response? . . . . . . . . . . . . . 4.5-12

What does a school do with the data manager’s 

erroneous data appeal allegations response? . . . . . . . . . . . . . 4.5-14

Which Department address does a school use 

for submitting an erroneous data appeal? . . . . . . . . . . . . . 4.5-18

What happens after the school submits the erroneous data appeal? . . . . . . . . . . . . . 4.5-18

How does provisional certification affect a school’s 

ability to submit an erroneous data appeal? . . . . . . . . . . . . . 4.5-19
helv n

cond
Erroneous Data Appeal

What is an erroneous data appeal?

An erroneous data appeal alleges that because of “new data” and/or

“disputed data” included in the official cohort default rate calculation,

a school’s official cohort default rate is inaccurate.

Figure 4.5.1 shows the time frame for submitting an erroneous data

appeal.

What is new data? 

New data occurs when loan data reported to the National Student 

Loan Data System (NSLDS) changes during the period between the 

calculation of the draft and official cohort default rates. NSLDS is

continuously provided with new or updated information. Because 

the draft cohort default rates are calculated approximately six

months before the official cohort default rates are calculated, the

data used to calculate the draft cohort default rates may be different

from the data used to calculate the official cohort default rates.

New data can be identified by comparing the loan record detail

reports for the draft and official cohort default rates for the same

cohort fiscal year and determining if any loan data is newly included,

excluded, or changed in any manner. The school should then determine if the new data results in the loan data being reported

incorrectly.

The following are examples of new data:

 A loan is included in a school’s draft cohort default rate 

calculation but is not included in its official cohort default rate

calculation.

 A loan is included in a school’s draft cohort default rate calculation as a non-defaulted loan but is included in its official cohort

default rate calculation as a defaulted loan.

What if the new data is correct?

If the new data in the loan record detail report for the official cohort

default rates is correct, a school cannot submit an erroneous data

appeal based on new data. A school can only submit an erroneous

data appeal when the new data is incorrect. Therefore, for the purposes of this chapter, any mentions of “new data” refer to “new incorrect

data.”

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 1

Figure 4.5.1

Time Frame for Submitting

an Erroneous Data Appeal

Erroneous

Data

Appeal

34 CFR 668.192

School receives

notice of loss or

notice of provisional

certification.

School sends data

manager Erroneous

Data Appeal allegations.

Data manager

sends Erroneous Data

Appeal response.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Erroneous Data Appeal.

If school is also filing a New Data

Adjustment and/or Loan Servicing

Appeal, it may submit all of them

together, by the date the latest is due.

Key:

Start

20

Days

15

Days

20

Days

30

Days

15

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

34 CFR 668.192
What is disputed data?

Disputed data occurs when

 a school submitted an incorrect data challenge allegation,

 the data manager for the loan disagreed with the incorrect data

challenge allegation,

 the school believed the data manager was incorrect, and 

 the same alleged error exists in the school’s official cohort

default rate data.

Which schools are eligible to submit an erroneous data appeal?

In order to submit an erroneous data appeal, a school must meet all

of the following criteria:

 The school’s official cohort default rate calculation must include

new and/or disputed data.

 The school must be subject to official cohort default rate sanctions or provisional certification based solely on the school’s

cohort default rate.

 The school’s successful erroneous data appeal, either by itself 

or in combination with an uncorrected data adjustment, a new

data adjustment, or a loan servicing appeal, will result in a

recalculated cohort default rate below the sanction threshold.

A school may submit an erroneous data appeal for any of the official

cohort default rates upon which its sanction is based as long as the

school has not previously appealed that official cohort default rate 

on the basis of erroneous data and has not previously been subject

to sanction based on that official cohort default rate.

If a school is not subject to sanction, the school might be eligible to

submit an uncorrected data adjustment or a new data adjustment.

For more information on uncorrected data adjustments, see Chapter

4.3,“Uncorrected Data Adjustment.” For more information on new

data adjustments, see Chapter 4.4,“New Data Adjustment.”

In certain circumstances, a school that is subject to provisional certification based solely on its cohort default rate is eligible to submit an

erroneous data appeal. See the section of this chapter entitled “How

does provisional certification affect a school’s ability to submit an

erroneous data appeal?” for additional information.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 2

CHAPTER 4.5 -

Erroneous Data Appeal
What benefit will a school gain from submitting an erroneous data

appeal?

If, as a result of an erroneous data appeal (or as the result of a school’s

submission of any adjustment or appeal), the U.S. Department of

Education’s (the Department’s) Default Management determines 

that a school’s official cohort default rate calculation data is incorrect,

Default Management will recalculate the cohort default rate using

the corrected data. This may lower, raise, or not affect the cohort

default rate. If the school is subject to sanction and the cohort 

default rate is lowered below the sanction level, the school is no

longer subject to that sanction. In addition, a school that would

otherwise be subject to sanction in a later year may avoid being

subject to that sanction.

However, even though Default Management may revise a cohort

default rate, subsequent copies of the loan record detail report for

the official cohort default rates will not reflect the change. Therefore,

it is important for a school to keep a copy of Default Management’s

final determination letter as the official record of the school’s revised

cohort default rate.

What roles do the Department and data managers have in a school’s

erroneous data appeal?

A data manager is required to review a school’s erroneous data

appeal allegations if the erroneous data appeal allegations are submitted in a timely manner and the data manager has responsibility

for the loans. If a school submits erroneous data appeal allegations 

to the wrong entity, the erroneous data appeal allegations will not 

be reviewed and the school could miss the deadline. The guarantor/

servicer code on the loan record detail report identifies the data

manager for a loan. See Chapter 2.3,“Loan Record Detail Report,”

for information on determining the data manager for a loan.

The data manager must respond to the school’s erroneous data

appeal allegations within 20 calendar days of receipt. However, the

data manager must not review erroneous data appeal allegations 

if the school did not send the erroneous data appeal allegations

within the 15-calendar-day time frame. If the data manager does 

not respond within 20 calendar days, the school should advise

Default Management in writing of the delay.

The Department has two roles in the erroneous data appeal process.

The primary role is to review a school’s erroneous data appeal, which

is submitted to Default Management once the school has received

data manager responses for all of the school’s erroneous data appeal

allegations.

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 3

If a school’s

cohort default

rate is lowered

below the 

sanction level,

the school is no

longer subject 

to that sanction 
The Department’s other role is to respond to a school’s erroneous

data appeal allegations if the Department is the data manager for 

the loans. The Department is the data manager for Federal Family

Education Loans (FFELs) the Department holds and for all William D.

Ford Federal Direct Loans (Direct Loans).

Default Management is responsible for responding to a school’s

erroneous data appeal allegations for FFELs that the Department

holds. These loans are primarily identified in the loan record detail

report with a guarantor/servicer code of 555. See the “Alphabetical

Data Manager Contacts” section of Chapter 2.6,“General Information

Tools,” for a listing of other codes that identify the Department as the

holder of a loan.

The Department’s Direct Loan servicer is responsible for responding

to a school’s erroneous data appeal allegations regarding all Direct

Loans, even those that are in default. These loans are identified in the

loan record detail report with a guarantor/servicer code of 0101.

How does a school submit erroneous data appeal allegations to a data

manager?

Timing is critical when submitting an erroneous data appeal. A school

begins the process by sending its erroneous data appeal allegations

to the data manager responsible for a loan within 15 calendar days 

of receiving the official cohort default rate notification letter. Chapter

3.1,“School Strategies,” outlines a method a school can follow to

determine if the loan record detail report contains inaccurate data.

The “Incorrect Data Challenge, New Data Adjustment, and Erroneous

Data Appeal Tools” section of Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools,” lists examples of erroneous data appeal allegations a school may submit as a part of an erroneous data appeal.

Upon receiving the loan record detail report for the official cohort

default rates, a school should compare the loan record detail reports

for the draft and official cohort default rates to determine if any loan

data has changed between the loan record detail reports and, if so,

whether the changes result in the loan being reported incorrectly.

The school should also determine if the loan record detail report

contains any disputed data. If either situation exists, the school

should submit erroneous data appeal allegations to the data 

manager for the loan.

A school must list separate erroneous data appeal allegations for

each loan record that the school believes contains new and/or disputed data. If one data manager is responsible for all the loans, the

school must list all the erroneous data appeal allegations in one

submission. However, if there are multiple data managers involved,

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 4

CHAPTER 4.5 -

Erroneous Data Appeal

School receives

notice of loss or

notice of provisional

certification.

School sends data

manager Erroneous

Data Appeal allegations.

Data manager

sends Erroneous Data

Appeal response.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Erroneous Data Appeal.

If school is also filing a New Data

Adjustment and/or Loan Servicing

Appeal, it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days
the school must submit separate erroneous data appeal allegations

to each data manager. For example, a school believes the loan record

detail report contains three loans with new and/or disputed data.

Two of the loans are held by one data manager; the other loan is held

by a different data manager. The school must prepare two separate

erroneous data appeal allegations packages, one for each data manager, listing only the loans held by each data manager.

The materials must include the following items:

 An erroneous data appeal allegations spreadsheet that lists the

erroneous data.

Figure 4.5.2 is a sample school erroneous data appeal allegations

spreadsheet to a data manager. The instructions for creating

and completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,,“Challenge, Adjustment, and Appeal

Tools.”

 Copies of the appropriate pages from the relevant loan record

detail report(s) to demonstrate that the loans are new data or

disputed data.

The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” lists examples of 

the loan record detail report pages a school should submit 

as a part of an erroneous data appeal.

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 5

Type: Erroneous Data Appeal Number of Borrowers: 2

Cohort FY: 2003 Number of Loans: 2

From: Graphic Tech

Code: 099999

To: State Guaranty Agency

Code: 111

Date 10/12/2005 Page 1 of 1

A B C D E F G H I J K L

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Basis of

Alleged

Error

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments

Agree/

Disagree

2 1 a 11-11-1111 C F onnell, Aniss S1 w N 3 e 0 3 2/11/200 0 A 8/12/200 N 3 / F D Y 200 + A N A / N/

3 2 b 22-22-2222 M F ackey, Cale S1 d D 2 ispute 1 3 1/18/200 0 A 1/16/200 N 3 / F N Y 200 -

Borrower passed away

prior to scheduled date

e A ntered repayment N/

4

5

Figure 4.5.2

Sample School 

Erroneous Data Appeal

Allegations Spreadsheet

to Data Manager
 Copies of relevant supporting documentation.

The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” contains examples

of the type of supporting documentation a school must submit

to support an erroneous data appeal allegation.

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting erroneous data appeal

allegations, and the cohort fiscal years to which the erroneous

data appeal allegations apply. The letter must feature a subject

line that reads “Subject: Cohort FY [insert cohort fiscal years

being used in the appeal] Erroneous Data Appeal Allegations.”

The letter must also include a certification that the information

provided is true and correct under penalty of perjury and a

notation that the school is sending a copy of the letter and the

spreadsheet to Default Management. The school’s President/

CEO/Owner must sign the letter, and the signature must be

followed by a signature block showing the signer’s name and

job title. Figure 4.5.3 is a sample school erroneous data appeal

allegations letter to a data manager.

If a school is submitting erroneous data appeal allegations for multiple official cohort default rates, the school should submit all the

erroneous data appeal allegations in the same mailing to the data

manager and to Default Management. However, the school still needs

to submit separate documentation for each erroneous data appeal.

The school must send a copy of the letter and the erroneous data

appeal allegations spreadsheet to Default Management at the same

time it sends the complete erroneous data appeal allegations package to the data manager. The school does not need to send the

pages of the loan record detail reports or the relevant supporting

documentation to Default Management at that time unless the

school is making allegations about a FFEL that the Department holds.

Default Management recommends that a school send all erroneous

data appeal allegations correspondence return receipt requested or

via commercial overnight mail/courier delivery. This will be useful to a

school if it is asked to authenticate the timeliness of its submission. A

school should maintain the documentation which verifies the receipt

of the materials as well as all electronic and hardcopy documentation

submitted as a part of the erroneous data appeal process. If a school

does not meet the 15-calendar-day time frame for submitting erroneous data appeal allegations, the erroneous data appeal allegations

will not be reviewed.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 6

CHAPTER 4.5 -

Erroneous Data Appeal
Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 7

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

October 12, 2005

ATTN: Lesa Neiers OPE ID 099999

Compliance Officer

State Guaranty Agency

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

Subject: Cohort FY 2003 Erroneous Data Appeal Allegations

Dear Ms. Neiers:

Graphic Tech, OPE ID 099999, is submitting a list of erroneous data appeal allegations

for cohort FY 2003 for review by State Guaranty Agency. Please see the enclosed

spreadsheet, relevant pages of the loan record detail reports for the draft and official

cohort default rates, and supporting documentation. 

I, the undersigned, certify under penalty of perjury that all information submitted in 

support of this erroneous data appeal is true and correct. 

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

cc: U.S. Department of Education, 

Default Management 

Figure 4.5.3 - Sample School Erroneous Data Appeal

Allegations Letter to Data Manager
How does a school identify the data manager of a loan?

The guarantor/servicer code on the loan record detail report shows

the data manager responsible for a loan. A school can use this number to obtain the name and address of the data manager. See the

“Numerical Data Manager Contacts” section in Chapter 2.6,“General

Information Tools,” for a listing of data manager codes and addresses.

How does a data manager respond to a school’s erroneous data appeal

allegations?

Timing is critical when responding to a school’s erroneous data

appeal. The data manager should first determine if the school is

eligible to submit an erroneous data appeal. See the section of this

chapter entitled “Which schools are eligible to submit an erroneous

data appeal?” for information on determining if a school is eligible.

A data manager is required to respond to a school’s timely submitted

erroneous data appeal allegations for those loans for which the entity

is the data manager and send a copy of the response to Default

Management. However, the data manager must not review erroneous

data appeal allegations if the 15-calendar-day time frame for a school

to submit erroneous data appeal allegations has expired. If the

school’s due date falls on a weekend or a federal holiday, a school

may send its erroneous data appeal allegations to the data manager

no later than the next federal business day.

Before denying a school’s erroneous data appeal allegations on the

basis of a late submission, a data manager should verify the actual

date the school received its hardcopy loan record detail report for the

official cohort default rates from Default Management. If the school

did not submit the erroneous data appeal allegations in a timely

manner, the data manager must not review any part of the submission. In its response to the school, the data manager should explain

that it is unable to review the erroneous data appeal allegations

because the school missed the regulatory deadline. The data manager must also send a copy of the response to Default Management.

The data manager must respond to timely submitted erroneous 

data appeal allegations within 20 calendar days of receiving the

submission. In its erroneous data appeal allegations response, the

data manager will address each of the school’s timely submitted

erroneous data appeal allegations. If the data manager does not

respond within 20 calendar days, the school should advise Default

Management in writing of the delay.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 8

CHAPTER 4.5 -

Erroneous Data Appeal

School receives

notice of loss or

notice of provisional

certification.

School sends data

manager Erroneous

Data Appeal allegations.

Data manager

sends Erroneous Data

Appeal response.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Erroneous Data Appeal.

If school is also filing a New Data

Adjustment and/or Loan Servicing

Appeal, it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days
If the school is eligible to submit an erroneous data appeal and the

erroneous data appeal submission is timely, a data manager must

review each erroneous data appeal allegation submitted by the

school. The data manager should determine the following:

 The data manager should determine if the erroneous data

appeal allegations presented by the school are based on loans

that the data manager currently holds.

If the data manager does not hold the loans, the data manager

should notify the school and Default Management that the

erroneous data appeal allegations must be submitted to the

appropriate data manager and remind the school that the

erroneous data appeal allegations must be submitted to the

appropriate data manager within 15 calendar days of the

school’s receipt of its loan record detail report for the official

cohort default rates.

There will be some instances where the data manager was the

former holder of the loans but those loans have been assigned

to the Department and the loan record detail report for the

official cohort default rates does not yet reflect the assignment.

In that event, the data manager should send the school and

Default Management a notice stating that the loans have been

assigned to the Department. The school then has until 15

calendar days after receipt of the letter from the data manager

to submit the erroneous data appeal allegations to Default

Management.

 The data manager should determine if all relevant material is

present.

See the section of this chapter entitled “How does a school

submit erroneous data appeal allegations to a data manager?”

for information on the materials a school is required to submit

with its erroneous data appeal. If a school fails to provide the

data manager with all of the necessary information, the data

manager must ask the school to submit the missing information. However, the school must submit this additional information to the data manager within the initial 15-calendar-day

deadline for submitting erroneous data appeal allegations. If 

the school does not submit the additional information within

the deadline, the data manager must not review the erroneous

data appeal allegation.

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 9
 The data manager should determine if its documentation

supports or refutes each of the erroneous data appeal allegations listed on the school’s spreadsheet.

The data manager should agree with the school if the data

manager’s documentation supports the school’s claim or if the

school has demonstrated that the data manager has failed to

take into account correct information the school timely sent to

the data manager or NSLDS.

The data manager should disagree with the school if the data

manager’s documentation refutes the school’s claim or if the

school failed to demonstrate that the correct information was

timely submitted to the data manager or NSLDS. The data

manager must explain to the school why it disagrees with the

school and send the school a copy of the data manager’s supporting documentation. The data manager must send a copy of

the response and the supporting documentation to Default

Management.

After making its determinations, the data manager must compile a

list of the data manager’s responses to the school’s list of erroneous

data appeal allegations. The data manager must record the responses

to each of the erroneous data appeal allegations on an erroneous

data appeal allegations response spreadsheet and provide comments

on why the data manager agrees or disagrees with each of the

school’s erroneous data appeal allegations. If the data manager

agrees that a change should be made, it must correct the data in its

internal data system and in NSLDS. Before the release of the draft

cohort default rates, the data manager must ensure that the changes

they agreed to make were successfully loaded into NSLDS. The data

manager should check the NSLDS error report.

The data manager must provide supporting documentation if the

data manager disagrees with the school’s erroneous data appeal

allegations. In addition, if the data manager’s response indicates that

a loan has been repurchased, the data manager should provide the

original claim paid date, the repurchase date, the reason the loan was

repurchased, and the default date if any subsequent claim was filed.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 10

CHAPTER 4.5 -

Erroneous Data Appeal
The data manager’s erroneous data appeal allegations response

should include the following:

 A spreadsheet of the data manager’s responses to the school’s

list of allegations.

Figure 4.5.4 is a sample data manager erroneous data appeal

allegations response spreadsheet to a school. The instructions

for creating and completing the spreadsheet are in the

“Spreadsheet Tools” section of Chapter 4.11,“Challenge,

Adjustment, and Appeal Tools.”

 Copies of supporting documentation for each allegation with

which the data manager disagreed.

 A letter on the data manager’s letterhead with the school’s

name and OPE ID number.

The letter must indicate that the data manager is responding 

to the school’s erroneous data appeal allegations and include

the cohort fiscal years to which the erroneous data appeal

allegations response applies. The letter must feature a subject

line that reads “Subject: Cohort FY [insert cohort fiscal years

being used in the appeal] Erroneous Data Appeal Allegations

Response.”The letter must also include a statement that a 

copy of the response has been sent to Default Management.

The responsible data manager official must sign the letter,

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 11

Type: Erroneous Data Appeal Number of Borrowers: 2

Cohort FY: 2003 Number of Loans: 2

From: State Guaranty Agency

Code: 111

To: Graphic Tech

Code: 099999

Date 10/30/2005 Page 1 of 1

A B C D E F G H I J K L

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Basis of

Alleged

Error

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments

Agree/

Disagree

2 1 a 11-11-1111 C F onnell, Aniss S1 w N 8 e 1 9 2/07/199 0 A 6/08/199 N/

FY

1 e 999 No Chang

The most recent enrollment

notification from the school

shows the last date of

attendance is 12/07/1998.

There is no documentation

of 02/11/2003 as last date

o e f attendance. Disagre

3 2 b 22-22-2222 M F ackey, Cale S1 d D 2 ispute 1 3 1/18/200 0 A 1/16/200 N/

FY

2 N 003 -

School timely submitted a

letter and a copy of

d e eath certificate. Agre

4

5

Figure 4.5.4

Sample Data Manager

Erroneous Data Appeal

Allegations Response

Spreadsheet to School
and the signature must be followed by a signature block showing the signer’s name and job title. Figure 4.5.5 is a sample data

manager erroneous data appeal allegations response letter to a

school.

The data manager must send its erroneous data appeal allegations

response within 20 calendar days of receiving the erroneous data

appeal allegations from the school. The data manager sends its

erroneous data appeal allegations response to the school and a copy

of the erroneous data allegations response to Default Management.

If the school submitted allegations for multiple cohort fiscal years,

the data manager should prepare separate responses for each cohort

fiscal year. However, the data manager should send the separate

responses in the same mailing.

If a data manager is unable to respond within 20 calendar days of

receiving the school’s erroneous data appeal allegations, it should

send the school a letter on its official letterhead explaining the

circumstances causing the delay, telling the school when it will

respond, and indicating that Default Management has been 

informed of the delay.

If a data manager can respond to only a portion of a school’s erroneous data appeal allegations within 20 calendar days, it should hold

that portion of the response until it can provide a response to all of

the school’s erroneous data appeal allegations. The data manager

should send a letter to the school and Default Management that

provides the information outlined above.

Which Department address does a data manager use for submitting a

copy of its erroneous data appeal allegations response?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools,” for the address for Default Management. A data

manager should not send erroneous data appeal materials to any

other addresses at the Department.

Default Management recommends that a data manager send 

all correspondence return receipt requested or via commercial

overnight mail/courier delivery. This will be useful to a data manager

if it is asked to authenticate the timeliness of its response. A data

manager should maintain the documentation that verifies the receipt

of the erroneous data appeal allegations response as well as all other

electronic and hardcopy documentation submitted as a part of the

erroneous data appeal process.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 12

CHAPTER 4.5 -

Erroneous Data Appeal
Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 13

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

October 30, 2005

Alexander Peachum OPE ID 099999

President

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

Subject: Cohort FY 2003 Erroneous Data Appeal Allegations Response

Dear Mr. Peachum:

This is State Guaranty Agency’s response to the cohort FY 2003 erroneous data appeal

allegations Graphic Tech, OPE ID 099999, submitted on October 12, 2005. Please see

the enclosed spreadsheet. 

For each “Agree” in the “Agree/Disagree” column of the spreadsheet we will update 

the National Student Loan Data System (NSLDS) and our internal records. You should

submit the allegation to Default Management.

For each “Disagree” in the “Agree/Disagree” column of the spreadsheet we have

reviewed our records and determined that they do not support the allegation. We have

included a comment stating our position and attached copies of the documentation 

supporting our position. We will not make a change to NSLDS or to our internal

records. If you disagree with our determination, you should submit the allegation to

Default Management.

Sincerely,

Yvonne Carter

CEO

Enclosures

cc: U.S. Department of Education 

Default Management 

S

G

A

tate

uaranty

gency

Figure 4.5.5 - Sample Data Manager Erroneous Data 

Appeal Allegations Response Letter to School
The data manager can use this information when submitting monthly status reports to Default Management. For additional information

on monthly status reports, see Chapter 3.2,“Data Manager Strategies.”

What does a school do with the data manager’s erroneous data appeal

allegations response?

Timing is critical after receiving a data manager’s erroneous data

appeal response. In those cases where the data manager’s erroneous

data appeal allegations response is unclear, incorrect, missing, or

incomplete, the school may submit a request to the data manager 

for a clarification. The school must submit the request to the data

manager within 15 calendar days of the receipt of the erroneous 

data appeal allegations response. The school should also send a copy

of the inquiry letter to Default Management. The data manager must

respond to the school’s inquiry within 20 calendar days of receiving

the inquiry and send a copy of the response to Default Management.

Within 30 calendar days of receiving the last response to all of the

school’s erroneous data appeal allegations, the school must decide

how to proceed and prepare a response to Default Management

accordingly. The school should do one of three things:

 If the data manager’s erroneous data appeal allegations

response indicates that there is erroneous data in the school’s

official cohort default rate calculation, the school should submit

an erroneous data appeal to Default Management. Only the

Department can make the recommended changes to the

school’s cohort default rate.

 If the data manager’s erroneous data appeal allegations

response indicates that there is no erroneous data in the

school’s official cohort default rate calculation and the school

agrees with the data manager’s erroneous data appeal allegations response, the school should notify Default Management

that the school is withdrawing the erroneous data appeal.

 If the data manager’s erroneous data appeal allegations

response indicates that there is no erroneous data in the

school’s official cohort default rate calculation and the school

disagrees with the data manager’s erroneous data appeal

allegations response, the school should submit an erroneous

data appeal to Default Management.

No matter what course of action the school chooses to follow, it 

must send its erroneous data appeal or withdrawal letter to Default

Management within 30 calendar days of receiving the last response

to the school’s erroneous data appeal allegations with the following

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 14

CHAPTER 4.5 -

Erroneous Data Appeal

School receives

notice of loss or

notice of provisional

certification.

School sends data

manager Erroneous

Data Appeal allegations.

Data manager

sends Erroneous Data

Appeal response.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Erroneous Data Appeal.

If school is also filing a New Data

Adjustment and/or Loan Servicing

Appeal, it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days
exception: If the school is submitting the erroneous data appeal 

to Default Management along with a timely new data adjustment

and/or a timely loan servicing appeal, the school may submit all

materials by the later of

 within 30 calendar days of receipt of the last response to all of

the school’s new data adjustment allegations,

 within 30 calendar days of receipt of the last response to all of

the school’s erroneous data appeal allegations, or

 within 30 calendar days of receipt of the last response to all of

the school’s requests for loan servicing records.

If the school does not submit the erroneous data appeal in a timely

manner, Default Management will not review the erroneous data

appeal and will return all erroneous data appeal materials to the

school. If a school is submitting an erroneous data appeal for multiple

official cohort default rates, it should submit all the erroneous data

appeals in the same mailing to Default Management. However, the

school still needs to submit separate documentation for each erroneous data appeal.

The school must submit to Default Management the following:

 A spreadsheet that lists the erroneous data appeal allegations

reflected on the loan record detail report.

Figure 4.5.6 is a sample school erroneous data appeal spreadsheet to Default Management. The instructions for creating and

completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 15

Type: Erroneous Data Appeal Number of Borrowers: 2

Cohort FY: 2003 Number of Loans: 2

From: Graphic Tech

Code: 099999

To: Default Management

Code: N/A

Date 11/13/2005 Page 1 of 1

A B C D E F G H I J K L M

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Basis of

Alleged

Error

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments

Agree/

Disagree

Data

Manager

Code

2 111-11-1111

Connell,

A F nissa S1 w N 3 e 0 3 2/11/200 0 A 8/12/200 N/

FY

2 D 003 +

Data Manager disagreed

and stated borrower's

last date of attendance

w A as December 7, 1998. N 1 / 11

3 222-22-2222

Mackey,

C F aleb S1 d D 2 ispute 1 3 1/18/200 0 A 1/16/200 N/

FY

2 N 003 -

See Data Manager

r A esponse N 1 / 11

4

Figure 4.5.6

Sample School Erroneous

Data Appeal Spreadsheet

to Default Management
 Copies of relevant supporting documentation.

The “Incorrect Data Challenge, New Data Adjustment, and

Erroneous Data Appeal Tools” section of Chapter 4.11,

“Challenge, Adjustment, and Appeal Tools,” contains examples

of the type of supporting documentation a school must submit

to support an erroneous data appeal allegation.

 Copies of the data manager incorrect data challenge responses

for disputed data.

 Copies of the data manager erroneous data appeal allegations

responses.

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting an erroneous data

appeal, and a reference to the applicable cohort fiscal years to

which the appeal applies. The letter must feature a subject line

that reads “Subject: Cohort FY [insert cohort fiscal years being

used in the appeal] Erroneous Data Appeal.”The letter must also

include a certification that the information provided is true and

correct under penalty of perjury and a list of any other adjustments and appeals the school intends to submit to Default

Management. Finally, there must be a notation that the school 

is sending a copy of the letter and the spreadsheet to the data

manager(s). The school’s President/CEO/Owner must sign the

letter, and the signature must be followed by a signature block

showing the signer’s name and job title. Figure 4.5.7 is a sample

school erroneous data appeal letter to Default Management.

If the school does not submit the erroneous data appeal in a timely

manner, Default Management will not review the erroneous data

appeal and will return all erroneous data appeal materials to the

school.

If a school is submitting erroneous data appeal allegations for multiple official cohort default rates, the school should submit all the

erroneous data appeal allegations in the same mailing to the data

manager and to Default Management. However, the school still needs

to submit separate documentation for each erroneous data appeal.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 16

CHAPTER 4.5 -

Erroneous Data Appeal
Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 17

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

November 13, 2005

U.S. Department of Education OPE ID 099999

Default Management

ATTN: Erroneous Data Appeal

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2003 Erroneous Data Appeal

To Whom It May Concern:

Graphic Tech, OPE ID 099999, is submitting an erroneous data appeal to its cohort 

FY 2003 official cohort default rate. Please see the enclosed spreadsheet and supporting

documentation. Also enclosed are copies of the data manager erroneous data appeal 

allegation responses and the data manager incorrect data challenge responses. 

I, the undersigned, certify under penalty of perjury that all information submitted in 

support of this erroneous data appeal is true and correct. 

Graphic Tech is also submitting a loan servicing appeal to the Department.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

cc: State Guaranty Agency

Figure 4.5.7 - Sample School Erroneous Data

Appeal Letter to Default Management
Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 18

CHAPTER 4.5 -

Erroneous Data Appeal

Which Department address does a school use for submitting an 

erroneous data appeal?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send erroneous data appeal materials to any other

addresses at the Department.

Default Management recommends that a school send all erroneous

data appeal correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a school if it

is asked to authenticate the timeliness of its erroneous data appeal. A

school should maintain the documentation which verifies the receipt

of the erroneous data appeal as well as all electronic and hardcopy

documentation submitted as a part of the erroneous data appeal

process. If a school does not meet the time frame for submitting an

erroneous data appeal, the erroneous data appeal will not be

reviewed.

What happens after the school submits the erroneous data appeal?

Default Management will review only the information submitted 

with the erroneous data appeal and will not review information

submitted after the deadline. Default Management will send the

school and each involved data manager written notification of

Default Management’s decision. The data manager must ensure 

that NSLDS is correctly updated. The data manager must also ensure

that its internal records are correctly updated. Default Management’s

decision is final and no further administrative review is provided.

If Default Management determines, using the standard of review

described in 34 CFR 668.189(f ), that a school’s official cohort default

calculation data is incorrect, Default Management will recalculate 

the cohort default rate based on the corrected data.

If the school was notified that it was subject to sanction and the

erroneous data appeal is successful and the revised cohort default

rate is below the sanction level, Default Management will withdraw

that sanction notice. If the school was notified that it was subject to

sanction and the erroneous data appeal is unsuccessful and the

school has no other outstanding adjustments or appeals (or if the

erroneous data appeal is successful but the revised cohort default

rate remains above the sanction level), Default Management will

notify the school of the effective date of that sanction.
Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 19

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the FFELs 

it certified and delivered and/or the Direct Loans it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submits its completed adjustment

and/or appeal to the Department. Schools may avoid this liability if

they choose not to certify or originate loans during the adjustment

and appeal process.

How does provisional certification affect a school’s ability to submit an

erroneous data appeal?

To participate in the Department’s Title IV programs, a school must

demonstrate that it is capable of adequately administering those

programs under the standards provided in the Title IV program

regulations. In order to demonstrate administrative capability, a

school must meet several requirements, including the requirement

that the school’s three most recent official cohort default rates are

each less than 25.0 percent. If the school has impaired administrative

capability solely because of its official cohort default rate, the

Department may provisionally certify the school.

A school that is provisionally certified solely due to its official cohort

default rates can submit an erroneous data appeal. If the erroneous

data appeal is successful, Default Management will recalculate the

school’s cohort default rate using the corrected data. If as a result of

the recalculation the school’s three most recent cohort default rates

are all less than 25.0 percent, the Department will withdraw the

provisional certification.

A school must wait until it receives notice of provisional certification

to submit an erroneous data appeal outside of the regular appeal

process. A school should not submit an erroneous data appeal solely

because it believes it may be subject to provisional certification in the

future. If a school does submit an erroneous data appeal without first

receiving notice of provisional certification, the erroneous data

appeal will not be reviewed.

A school that is

provisionally

certified solely

due to its official

cohort default

rates can submit

an erroneous

data appeal
The process for submitting an erroneous data appeal for schools 

that receive a notice of provisional certification is the same as it is 

for those schools appealing at the time of the release of the official

cohort default rates except for the following differences:

 Schools subject to provisional certification are notified by Case

Management, not Default Management. Case Management will

notify Default Management of the provisional certification.

 The school will not automatically receive a loan record detail

report with the notice of provisional certification. As a result,

a school subject to provisional certification that wishes to

submit an erroneous data appeal must request a copy of the

school’s loan record detail report within 15 calendar days of

receipt of the notice of provisional certification. See Chapter 2.3,

“Loan Record Detail Report,” for information on requesting a

loan record detail report. The time frames for submitting the

erroneous data appeal based upon provisional certification 

are based first upon the date the school receives the notice 

of provisional certification and then upon the date the school

receives the loan record detail report.

Within 15 calendar days after receiving the loan record detail report,

the school must send its erroneous data appeal allegations to each

relevant data manager and a copy to Default Management. See the

section of this chapter entitled “How does a school submit erroneous

data appeal allegations to a data manager?” for the process for submitting the erroneous data appeal allegations to a data manager.

Within 20 calendar days after receiving the school’s erroneous data

appeal allegations, the data manager must send a response to the

school and a copy to Default Management. See the section of this

chapter entitled “How does a data manager respond to a school’s

erroneous data appeal allegations?” for additional information about

responding to a school’s erroneous data appeal allegations.

Upon receipt of the school’s erroneous data appeal allegations, the

data manager should contact Default Management to obtain the

date that the school received its notice of provisional certification

and its loan record detail report in order to verify the timeliness of

the school’s submission. If the submission is not timely, or if the

school has not received a notice of provisional certification, the data

manager must not review any portion of the school’s erroneous data

appeal allegations. The data manager should send the school a letter

explaining why the erroneous data appeal allegations are not being

reviewed and send a copy of the letter to Default Management.

Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 20

CHAPTER 4.5 -

Erroneous Data Appeal

School receives

notice of loss or

notice of provisional

certification.

School sends data

manager Erroneous

Data Appeal allegations.

Data manager

sends Erroneous Data

Appeal response.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Erroneous Data Appeal.

If school is also filing a New Data

Adjustment and/or Loan Servicing

Appeal, it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days
Within 30 calendar days after receiving the last response to its erroneous data appeal allegations, the school must submit its erroneous

data appeal to Default Management. If the school is submitting an

erroneous data appeal for more than one cohort fiscal year, it should

send the erroneous data appeals to the Department in one mailing.

However, the school still needs to submit separate documentation for

each erroneous data appeal. See the section of this chapter entitled

“What does a school do with the data manager’s erroneous data

appeal allegations response?” for additional information on submitting an erroneous data appeal to Default Management.

Default Management will review only the information submitted 

with the erroneous data appeal and will not review information

submitted after the deadline. Default Management will send the

school and each involved data manager written notification of

Default Management’s decision. The data manager must ensure 

that NSLDS is correctly updated. The data manager must also ensure

that its internal records are correctly updated. Default Management’s

decision is final and no further administrative review is provided.

If Default Management determines, using the standard of review

described in 34 CFR 668.189(f ), that a school’s official cohort default

calculation data is incorrect, Default Management will recalculate 

the cohort default rate based on the corrected data. If the erroneous

data appeal is successful and the cohort default rate is recalculated

below 25.0 percent, Case Management will provide the school with a

Program Participation Agreement (PPA) to sign.

Erroneous Data Appeal Chapter 4.5

CHAPTER 4.5 -

Erroneous Data Appeal

Page 4.5 - 21

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myriad

700/600

School to Data Manager Erroneous Data Appeal Checklist 

Determine

❑ Does loan record detail report for the official cohort default rates contain 

new data or disputed data? (See page 4.5-1)

❑ Is the school subject to sanction (See page 4.5-2)

❑ Is the school subject to provisional certification based solely on the school’s

cohort default rate? (See page 4.5-19)

Submit to Data Manager 

❑ Spreadsheet (See page 4.5-5)

❑ Relevant Pages of Loan Record Detail Report (See page 4.5-5)

❑ Supporting Documentation (See page 4.5-6)

❑ Letter (See page 4.5-6)
Chapter 4.5 Erroneous Data Appeal

Page 4.5 - 22

CHAPTER 4.5 -

Erroneous Data Appeal

Data Manager to School Erroneous Data Appeal Checklist 

Determine

❑ Is the school subject to sanction? (See page 4.5-18)

❑ Is the school subject to provisional certification based solely on the school’s

cohort default rate? (See page 4.5-20)

❑ Was the school submission timely? (See page 4.5-8)

❑ Does the data manager hold the loans? (See page 4.5-9)

❑ Is all the material present? (See page 4.5-9)

❑ Does the data manager agree or disagree with school? (See page 4.5-10)

Response to School 

❑ Spreadsheet (See page 4.5-11)

❑ Supporting Documentation (See page 4.5-11)

❑ Letter (See page 4.5-11)

Follow-Up 

❑ Send copy of response to Default Management (See page 4.5-12)

❑ Update NSLDS and internal records (if necessary) (See page 4.5-10)

❑ Send monthly status report to Default Management (See page 4.5-13)

School to Default Management Erroneous Data Appeal Checklist 

Determine

❑ Did the data manager agree with any of the erroneous data appeal 

allegations? (See page 4.5-14)

❑ Does the school agree or disagree with the data manager’s decision? 

(See page 4.5-14)

❑ Does the school have outstanding new data adjustment allegations or 

outstanding requests for loan servicing records? (See page 4.5-15)

Submit to Default Management 

❑ Withdrawal Notice (See page 4.5-15)

OR

❑ Spreadsheet (See page 4.5-15)

❑ Supporting Documentation (See page 4.5-16)

❑ Copy of Data Manager Incorrect Data Challenge Response and/or 

Erroneous Data Appeal Response (See page 4.5-16)

❑ Letter (See page 4.5-16)
Chapter

4.6

Loan

Servicing

Appeal

What is a loan servicing appeal? . . . . . . . . . . . . . 4.6-1

When is a defaulted FFEL considered improperly

serviced for cohort default rate purposes? . . . . . . . . . . . . . 4.6-1

When is a defaulted Direct Loan considered improperly

serviced for cohort default rate purposes? . . . . . . . . . . . . . 4.6-2

Which schools are eligible to submit a loan servicing appeal? . . . . . . . . . . . . . 4.6-3

What benefit will a school gain from submitting a loan servicing appeal? . . . . . . . . . . . . . 4.6-3

What roles do the Department and data managers 

have in a school’s loan servicing appeal? . . . . . . . . . . . . . 4.6-4

How does a school submit a request for loan servicing records? . . . . . . . . . . . . . 4.6-5

How does a school identify the data manager of a loan? . . . . . . . . . . . . . 4.6-6

What does a data manager do when it receives 

a school’s request for loan servicing records? . . . . . . . . . . . . . 4.6-8

What if the data manager requires that a fee 

be paid to obtain loan servicing records? . . . . . . . . . . . . . 4.6-10

How does a data manager respond after determining that

it is appropriate to send the loan servicing records? . . . . . . . . . . . . . 4.6-12

Which Department address does a data manager use for submitting 

a copy of the response to a request for loan servicing records? . . . . . . . . . . . . . 4.6-16

What does the school do with the data manager’s response

to the school’s request for loan servicing records? . . . . . . . . . . . . . 4.6-16

Which Department address does a school use 

for submitting a loan servicing appeal? . . . . . . . . . . . . . 4.6-20

What happens after the school submits the loan servicing appeal? . . . . . . . . . . . . . 4.6-20
helv n

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Loan Servicing Appeal

What is a loan servicing appeal?

A loan servicing appeal is an appeal that alleges a school’s official

cohort default rate includes defaulted Federal Family Education

Loans (FFELs) or William D. Ford Federal Direct Loans (Direct Loans)

that are considered improperly serviced for cohort default rate

purposes. For this Guide,“improperly serviced” always means 

“improperly serviced for cohort default rate purposes only.”

Figure 4.6.1 shows the time frame for submitting a loan servicing

appeal.

When is a defaulted FFEL considered improperly serviced for cohort

default rate purposes?

A defaulted FFEL is considered improperly serviced for cohort default

rate purposes if one or more of the following occur:

 The borrower never made a loan payment, and the school can

document that the lender was required but failed to send at

least one letter (other than the final demand letter) urging the

borrower to make payments on the loan.

 The borrower never made a loan payment, and the school can

document that the lender was required but failed to attempt at

least one telephone call to the borrower.

 The borrower never made a loan payment, and the school can

document that the lender was required but failed to submit a

request for pre-claims assistance or default aversion assistance

to the guaranty agency.

 The borrower never made a loan payment, and the school can

document that the lender was required but failed to send a final

demand letter to the borrower.

 The borrower never made a loan payment, and the school can

document that the lender was required but failed to submit a

certification (or other documentation) to the guaranty agency

to demonstrate that the lender performed skip tracing.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 1

Loan

Servicing

Appeal

34 CFR 668.193

School receives official

cohort default rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager request for

loan servicing records.

Data manager

notifies school of any

fee for providing

records.

School pays the fee,

if charged.

Data manager

sends loan servicing

records.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Loan Servicing Appeal.

If school is also filing a New Data

Adjustment and/or Erroneous Data

Appeal,it may submit all of them

together, by the date the latest is due.

Key:

Start

20

Days

15

Days

20

Days

30

Days

15

Days

20

Days

15

Days

20

Days

15

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.6.1

Time Frame for Submitting

a Loan Servicing Appeal

34 CFR 668.193
For cohort default rate purposes, skip tracing must be performed if

the lender receives information before the 241st day of delinquency

indicating that the borrower’s address of record is incorrect. Skip

tracing is not required for cohort default rate purposes if the lender

has the borrower’s correct address but does not have a record of the

borrower’s correct telephone number. (Prior to October 7, 1998, for

cohort default rate purposes, performance of skip tracing had to be

shown if the lender received information before the 151st day of

delinquency indicating an incorrect address for the borrower.)

If the borrower makes at least one loan payment or if the lender

timely performs all of the above-listed activities as appropriate, the

loan is considered properly serviced for cohort default rate purposes.

However, servicing and collection activities performed after sending

the final demand letter will not be considered when determining if a

loan has been properly serviced.

When is a defaulted Direct Loan considered improperly serviced for

cohort default rate purposes?

A defaulted Direct Loan is considered improperly serviced for cohort

default rate purposes if one or more of the following occur:

 The borrower never made a loan payment, and the school can

document that the Direct Loan servicer was required but failed

to send at least one letter (other than the final demand letter)

urging the borrower to make payments on the loan.

 The borrower never made a loan payment, and the school can

document that the Direct Loan servicer was required but failed

to attempt at least one telephone call to the borrower.

 The borrower never made a loan payment, and the school can

document that the Direct Loan servicer was required but failed

to send a final demand letter to the borrower.

 The borrower never made a loan payment, and the school can

document that the Direct Loan servicer was required but failed

to document that skip tracing was performed if the Direct Loan

servicer determined it did not have the borrower’s current

address.

If the borrower makes at least one loan payment or if the Direct 

Loan servicer timely performs all of the above-listed activities as

appropriate, the loan is considered properly serviced for cohort

default rate purposes. However, servicing and collection activities

performed after sending the final demand letter will not be considered when determining if a loan has been properly serviced.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 2

CHAPTER 4.6 - 

Loan Servicing Appeal
Which schools are eligible to submit a loan servicing appeal?

Any school that receives an official cohort default rate may submit a

loan servicing appeal if it believes that its official cohort default rate

calculation includes one or more defaulted FFELs or Direct Loans 

that were improperly serviced for cohort default rate purposes. This

includes schools that are not subject to sanction and schools that

have withdrawn from the FFEL and/or Direct Loan programs.

Any school may submit a loan servicing appeal for its most recent

official cohort default rate. In general, schools that are subject to

sanction may submit a loan servicing appeal for any official cohort

default rate upon which the loss of eligibility is based. However, a

school may not submit a loan servicing appeal for an official cohort

default rate if the school previously submitted a loan servicing appeal

for that official cohort default rate. Further, a school may not submit a

loan servicing appeal for an official cohort default rate that was the

basis, either entirely or partially, of a previous sanction.

What benefit will a school gain from submitting a loan servicing appeal?

If, as a result of a loan servicing appeal (or as the result of a school’s

submission of any adjustment or appeal), the U.S. Department of

Education’s (the Department’s) Default Management determines that

a school’s official cohort default rate calculation includes defaulted

loans that were improperly serviced for cohort default rate purposes,

Default Management will remove those loans (or, if applicable, a valid

statistical projection of the total number of borrowers who defaulted

due to improper loan servicing) from the cohort default rate calculation and will recalculate the cohort default rate using the remaining

data. This may lower or not affect the cohort default rate. If the school

is subject to sanction and the cohort default rate is lowered below

the sanction level, the school is no longer subject to that sanction. In

addition, a school that would otherwise be subject to sanction in a

later year may avoid being subject to that sanction.

However, even though Default Management may revise a cohort

default rate, subsequent copies of the loan record detail report for

the official cohort default rates will not reflect the change. Therefore,

it is important for a school to keep a copy of Default Management’s

final determination letter as the official record of the school’s revised

cohort default rate.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 3
What roles do the Department and data managers have in a school’s

loan servicing appeal?

A data manager is required to review a school’s request for loan

servicing records if the request is submitted in a timely manner and

the data manager has responsibility for the loans. If a school submits

a request to the wrong entity, the request will not be reviewed and

the school could miss the deadline. The guarantor/servicer code on

the loan record detail report identifies the data manager for a loan.

Data managers are responsible for providing loan servicing records

for the loans they hold. The data manager may charge a fee not to

exceed $10 per borrower file. If the data manager chooses to charge 

a fee, it is not required to provide the records until after the school

pays the full fee in a timely manner.

The data manager must respond to the school’s request within 20

calendar days. However, the data manager must not review a request

for loan servicing records if the school did not timely send the

request for loan servicing records or make the payment within the

appropriate 15-calendar-day time frame. If the data manager does

not respond within 20 calendar days, the school should advise

Default Management in writing of the delay.

The Department has two roles in the loan servicing appeal process.

The primary role is to review a school’s loan servicing appeal, which is

submitted to Default Management once the school has received loan

servicing records from the data manager and has determined that

the loans were improperly serviced for cohort default rate purposes.

The Department’s other role is to respond to a school’s request for

loan servicing records if the Department is the data manager for the

loans. The Department is the data manager for FFELs the Department

holds and for all Direct Loans.

Default Management is responsible for responding to a school’s

request for loan servicing records for FFELs that the Department

holds. These loans are primarily identified in the loan record detail

report with a guarantor/servicer code of 555. See the “Alphabetical

Data Manager Contacts” section in Chapter 2.6,“General Information

Tools,” for a listing of other codes that identify the Department as the

holder of a loan.

The Department’s Direct Loan servicer is responsible for responding

to a school’s request for loan servicing records for all Direct Loans,

even those that are in default. These loans are identified in the loan

record detail report with a guarantor/servicer code of 0101.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 4

CHAPTER 4.6 - 

Loan Servicing Appeal
How does a school submit a request for loan servicing records?

Timing is critical when submitting a loan servicing appeal. A school

begins the process by sending its request for loan servicing records

to the data manager responsible for a loan within 15 calendar days of

receiving the loan record detail report for the official cohort default

rates.

If a school does not receive a loan record detail report for the official

cohort default rates, and the school believes it may have grounds for

a loan servicing appeal, it must request the loan record detail report

for the official cohort default rates within 15 calendar days of receiving the official cohort default rate notification letter. See Chapter 2.3,

“Loan Record Detail Report,” for information on requesting a loan

record detail report for the official cohort default rates.

If a school believes the official cohort default rate calculation contains

a defaulted loan that was improperly serviced for cohort default rate

purposes, the school should request loan servicing records from the

data manager. However, a school cannot file a loan servicing appeal

on a loan that is considered in default because the loan met other

specified conditions.

The loan servicing records are the collection and payment history

records regarding a borrower that are

 submitted to the guaranty agency by the lender and used by

the guaranty agency in determining whether to pay a default

claim or

 maintained by the Direct Loan servicer and used by the Direct

Loan servicer in determining the cohort default rate.

A school cannot request specific loan servicing records. If the data

manager holds loans for 99 or fewer borrowers from the school, the

data manager will select loan servicing records for all the borrowers.

If the data manager holds loans for 100 or more borrowers, the data

manager will select loan servicing records for a representative sample

of the borrowers. The representative sample may or may not include

the specific records a school wishes to review.

If one data manager is responsible for all the loans, the school will

request loan servicing records only from that data manager. However,

if there are multiple data managers involved, the school must prepare

separate loan servicing records requests for each data manager,

listing only the loans held by each data manager. For example, a

school believes the loan record detail report contains three defaulted

loans that were improperly serviced for cohort default rate purposes.

Two of the loans are held by one data manager; the other loan is held

by a different data manager. The school must prepare two separate

requests for loan servicing records, one for each data manager.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 5

School receives official

cohort default rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager request for

loan servicing records.

Data manager

notifies school of any

fee for providing

records.

School pays the fee,

if charged.

Data manager

sends loan servicing

records.

School requests

clarification, replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Loan Servicing Appeal.

If school is also filing a New Data

Adjustment and/or Erroneous Data

Appeal,it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days

20

Days

15

Days

20

Days

15

Days
The request for loan servicing records must include the following:

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is requesting loan servicing records,

and the cohort fiscal years to which the request applies. The

letter must feature a subject line that reads “Subject: Cohort FY

[insert cohort fiscal years being used in the appeal] Request for

Loan Servicing Records.”The letter must also include a notation

that the school is sending a copy of the letter to Default

Management. The school’s President/CEO/Owner must sign the

letter, and the signature must be followed by a signature block

showing the signer’s name and job title. Figure 4.6.2 is a sample

school letter requesting loan servicing records from a data

manager.

 A copy of the entire relevant loan record detail report for the

official cohort default rates being appealed.

The school must send a copy of the letter to Default Management at

the same time it sends the request to the data manager. The school

does not need to send copies of the loan record detail reports to

Default Management at that time unless the school is requesting

loan servicing records for a loan that the Department holds.

If a school that is subject to sanction is submitting requests for loan

servicing records for multiple official cohort default rates, the school

should submit all the requests in the same mailing to the data manager and Default Management. However, the school still needs to

prepare separate requests for each cohort fiscal year.

Default Management recommends that a school send all correspondence return receipt requested or via commercial overnight mail/

courier delivery. This will be useful to a school if it is asked to authenticate the timeliness of its submission. A school should maintain the

documentation that verifies the receipt of the materials as well as

copies of all electronic and hardcopy documentation submitted as a

part of the loan servicing appeal process. If a school does not meet

the 15-calendar-day time frame for requesting loan servicing records,

the request will not be reviewed.

How does a school identify the data manager of a loan?

As mentioned, the guarantor/servicer code on the loan record detail

report shows the data manager responsible for a loan. A school can

use this number to obtain the name and address of the data manager. See the “Numerical Data Manager Contacts” section in Chapter 2.6,

“General Information Tools,” for a listing of data manager codes and

addresses.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 6

CHAPTER 4.6 - 

Loan Servicing Appeal
Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 7

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

1-987-654-3211

October 2, 2003

ATTN: Lesa Neiers, Compliance Officer OPEID 098998

State Guaranty Agency

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

Subject: Cohort FY 2001 Request for Loan Servicing Records

Dear Ms. Neiers:

Coralville College, OPE ID 098998, is requesting the loan servicing records for the

defaulted loans guaranteed and currently maintained by your agency and included in 

our school’s cohort FY 2001 official cohort default rate. Please see the enclosed loan

record detail report for the official cohort default rates. 

Thank you for your consideration. 

Sincerely,

Serena Rooney

President, Coralville College

Enclosure

cc: U.S. Department of Education, 

Default Management 

Figure 4.6.2 - Sample School Letter Requesting 

Loan Servicing Records to Data Manager
What does a data manager do when it receives a school’s request for

loan servicing records?

Timing is critical when a data manager receives a school’s request for

loan servicing records. A data manager is required to respond to a

school’s timely submitted request for loan servicing records for those

loans for which the entity is the data manager and send a copy of the

response to Default Management. However, the data manager must

not review a request for loan servicing records if the 15-calendar-day

time frame for a school to submit the request for loan servicing

records has expired. If the school’s due date falls on a weekend or a

federal holiday, a school may send its request for loan servicing records to the data manager no later than the next federal business day.

Before denying a school’s request for loan servicing records on the

basis of a late submission, a data manager should verify the actual

date the school received its loan record detail report for the official

cohort default rates from Default Management. If the school did not

submit the request for loan servicing records in a timely manner, the

data manager must not review any part of the request. In its response

to the school, the data manager should explain that it is unable to

review the request for loan servicing records because the school

missed the regulatory deadline. The data manager must also send a

copy of the response to Default Management.

The data manager must respond to a timely submitted request for

loan servicing records within 20 calendar days of receiving the submission. If the data manager does not respond within 20 calendar

days, the school should advise Default Management in writing of 

the delay.

If the request for loan servicing records is timely, the data manager

must review the request. The data manager should determine the

following:

 The data manager should determine if the request is 

appropriate.

Any school may submit a loan servicing appeal for its most

recent official cohort default rate. In general, schools that are

subject to sanction may submit a loan servicing appeal for any

official cohort default rate upon which the loss of eligibility is

based. Default Management will inform data managers each

cycle of this information. However, a school may not submit a

loan servicing appeal for an official cohort default rate if the

school previously submitted a loan servicing appeal for that

official cohort default rate. Further, a school may not submit a

loan servicing appeal for an official cohort default rate that was

the basis, either entirely or partially, of a previous sanction.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 8

CHAPTER 4.6 - 

Loan Servicing Appeal

School receives official

cohort default rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager request for

loan servicing records.

Data manager

notifies school of any

fee for providing

records.

School pays the fee,

if charged.

Data manager

sends loan servicing

records.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Loan Servicing Appeal.

If school is also filing a New Data

Adjustment and/or Erroneous Data

Appeal,it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days

20

Days

15

Days

20

Days

15

Days
 The data manager should determine if the request for loan

servicing records by the school is based on loans that the data

manager currently holds.

If the data manager does not hold the loans, the data manager

should notify the school that the request for loan servicing

records must be submitted to the appropriate data manager

and remind the school that the request for loan servicing

records must be submitted to the appropriate data manager

within 15 calendar days of the school’s receipt of its loan record

detail report for the official cohort default rates.

There will be some instances where the data manager was the

former holder of the defaulted loans but those loans have been

assigned to the Department and the loan record detail report

for the official cohort default rates does not yet reflect the

assignment. In that event, the data manager should send the

school and Default Management a notice stating that the loans

have been assigned to the Department. The school then has

until 15 calendar days after receipt of the letter from the data

manager to submit the request for loan servicing records to

Default Management.

 The data manager should determine if all relevant material is

present.

See the section of this chapter entitled “How does a school

submit a request for loan servicing records?” for information 

on the materials a school is required to submit with its request

for loan servicing records. If a school fails to provide the data

manager with all of the necessary information, the data manager must ask the school to submit the missing information.

However, the school must submit this additional information to

the data manager within the initial 15-calendar-day deadline for

submitting the request for loan servicing records. If the school

does not submit the additional information within the deadline,

the data manager must not review the request for loan servicing records.

If the request is timely and appropriate, the data manager must

determine if the data manager is required to provide loan servicing

records for all of the loans or for a representative sample of the loans.

If a data manager currently holds defaulted loans associated with 99

or fewer borrowers in a school’s official cohort default rate calculation, the data manager is required to provide loan servicing records

associated with each defaulted loan included in the official cohort

default rate calculation. Loans that are considered in default for other

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 9
specified conditions are not included. If a data manager currently

holds defaulted loans associated with 100 or more borrowers in a

school’s official cohort default rate calculation, the data manager

should identify a representative sample of the borrowers and only

provide the loan servicing records for those borrowers included in

the representative sample.

To select a representative sample, the data manager should first

identify all of its borrowers with defaulted loans in the loan record

detail report for the official cohort default rate that the school is

appealing. Loans that are considered in default for other specified

conditions are not included. The data manager should then identify a

sample that is large enough such that the estimate derived from the

sample is acceptable at a 95 percent confidence level with a plus or

minus 5 percent confidence interval. The data manager is required to

supply servicing records for each defaulted loan that is associated

with a borrower included in the sample.

The Department has provided guidance to guaranty agencies on

how to determine a representative sample. Guaranty agencies should

refer to the Dear Guaranty Agency Director letter dated June 1994 for

information on determining appropriate sample sizes. A copy of the

Dear Guaranty Agency Director letter can be obtained by contacting

Default Management at 1-202-708-9396.

If a data manager is required to provide loan servicing records for

a representative sample, a school may not request loan servicing

records for specific loans. If a school requests loan servicing records

for specific loans, the data manager should inform the school that,

because the data manager is supplying loan servicing records for a

representative sample of loans, the specific loan servicing records the

school requests may or may not be provided.

What if the data manager requires that a fee be paid to obtain loan

servicing records?

Timing is critical when requesting a fee for loan servicing records.

If the data manager charges a fee, the data manager must send the

school a request for payment and send Default Management a copy

of the payment request within 20 calendar days of receiving the

request for loan servicing records. The fee may not exceed $10 per

borrower file.

Figure 4.6.3 is a sample payment request for loan servicing records

letter. The letter must include a description of the method used to

select the representative sample. The data manager must also send

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 10

CHAPTER 4.6 - 

Loan Servicing Appeal
Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 11

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

October 7, 2003

Serena Rooney OPE ID 098998

President

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

Subject: Cohort FY 2001 Payment Request for Loan Servicing Records

Dear Ms. Rooney:

This is State Guaranty Agency’s response to the request by Coralville College, 

OPE ID 098998, for loan servicing records. State Guaranty Agency has identified 

156 borrowers with 167 defaulted loans that are guaranteed by our agency and included

in the FY 2001 loan record detail report for the official cohort default rates. Based on a

total population of 156 borrowers we have determined that the representative sample 

of loan servicing records will consist of 119 borrowers and 125 loans. State Guaranty

Agency used the method outlined in the Department’s June 1994 Dear Guaranty Agency

Director letter to select the representative sample.

Prior to providing the loan servicing records associated with the 119 borrowers’ defaulted loans, the State Guaranty Agency is requesting payment of $1,190.00. This payment

is due within 15 calendar days of your school’s receipt of this request.

Please see the enclosed spreadsheet.

Sincerely,

Yvonne Carter

CEO

Enclosure

cc: U.S. Department of Education, 

Default Management 

S

G

A

tate

uaranty

gency

Figure 4.6.3 - Sample Data Manager Payment Request

for Loan Servicing Records Letter to School
the school a list, in Social Security Number (SSN) order, of the 

borrowers included in the sample and the number of defaulted 

loans belonging to each borrower found in the loan record detail

report for the official cohort default rates.

The school should send a notice along with its payment. The notice

may be modeled on Figure 4.6.2, the sample loan servicing records

request letter.

If the school does not make payment in full within 15 calendar days

of receiving the request for payment, the data manager must notify

the school and Default Management that payment in full was not

timely received and that the school has waived its right to receive

loan servicing records from that data manager.

How does a data manager respond after it determines that it is 

appropriate to send the loan servicing records?

Timing is critical when sending loan servicing records. Within 20

calendar days of receiving a request for loan servicing records (if the

data manager does not charge a fee for loan servicing records) or 20

calendar days of receiving payment (if the data manager charges a

fee for the loan servicing records), the data manager must send the

loan servicing records to the school.

When sending the school loan servicing records, the data manager

response should include the following:

 A spreadsheet of the borrowers included in the representative

sample and the defaulted loans for each borrower or an alternative method that provides the required information.

Figure 4.6.4 is a sample data manager loan servicing appeal

response spreadsheet to a school. The instructions for creating

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 12

CHAPTER 4.6 - 

Loan Servicing Appeal

Type: Response to a Request for Loan Servicing Records Number of Borrowers: 119

Cohort FY: 2001 Number of Loans: 125

From: State Guaranty Agency

Code: 111

To: Coralville College

Code: 098998

Date 10/07/2003 Page 1 of 10

A B C D E F G H I J K L M N

1

Borrower's

SSN

Borrower's

Name

Type

of

Defaulted

Loans

Number

of

Defaulted

Loans

Payment

Made?

Date

Letter Sent

Date Call

Attempted

Date

Pre-claims

Assistance

Requested

Date Final

Demand

Letter Sent

Address

Known?

Date of

Skip

Tracing

Activity

Illegible

Record?

Missing

Record?

Improperly

Serviced?

2 7 a 77-77-7777 G F reen, Marci S 1oN 1 0 1 4/08/200 0 o 5/07/200 N 2 1 s 1/07/200 Y A e N o / N oN s Ye

3 7 a 77-77-7777 G U reen, Marci S 2oN 1 0 1 4/08/200 0 o 5/07/200 N 2 1 s 1/07/200 Y A e N o / N oN s Ye

4 8 e 88-88-8888 K F ent, Dal S 2oN 1 1 2 2/08/200 0 2 1/06/200 0 o 5/16/200 N s Y A e N o / N oN s Ye

5 9 y 99-99-9999 C F lark, Shirle S 1oN 1 1 1 1/10/200 1 1 1/12/200 1 2 2/15/200 0 s 1/04/200 Y A e N o / N oN oN

6 9 y 99-99-9999 C U lark, Shirle S 1oN 1 1 1 1/10/200 1 1 1/12/200 1 2 2/15/200 0 s 1/04/200 Y A e N o / N oN oN

Figure 4.6.4

Sample Data Manager

Response to a Request for

Loan Servicing Records

Spreadsheet to School
and completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

The only information a data manager is required to provide is in

columns A-D of the sample data manager loan servicing appeal

response spreadsheet. Although columns E-N of the sample

data manager loan servicing appeal response spreadsheet are

completed, a data manager is not required to complete these

columns. However, a data manager may choose to complete the

spreadsheet in order to assist a school. The data manager may

also use an alternative method to assist a school.

 Copies of all loan servicing records relating to loans included in

the representative sample (or, if the total number of defaulted

borrowers is less than 100, copies of loan servicing records for

each defaulted borrower).

 A letter on the data manager’s letterhead with the school’s

name and OPE ID number.

The letter must indicate that the data manager is responding 

to the school’s request for loan servicing records and the cohort

fiscal years to which the request applies. The letter must feature

a subject line that reads “Subject: Cohort FY [insert cohort fiscal

years being used in the appeal] Loan Servicing Records

Response.”The letter must state the total number of defaulted

borrowers in the official cohort default rate calculation with

loans serviced by the data manager and the total number of

borrowers and loans for which loan servicing records are provided. If the data manager sends a representative sample, the

letter must state the method used to determine the sample.

The letter must also include a statement that a copy of the 

letter and the list of borrowers have been sent to Default

Management. The responsible data manager official must sign

the letter, and the signature must be followed by a signature

block showing the signer’s name and job title.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 13
Figure 4.6.5 is a sample data manager response to a request for

loan servicing records letter.

The data manager then sends its response to the school. The data

manager must also send a copy of the letter and a copy of the list of

borrowers to Default Management. The data manager does not need

to send copies of the loan servicing records to Default Management.

If the school submitted requests for loan servicing records for multiple cohort fiscal years, the data manager should prepare separate

responses for each cohort fiscal year. However, the data manager

should send the separate responses to the school and Default

Management in the same mailing.

If a data manager is unable to respond within 20 calendar days of

receiving the school’s request for loan servicing records, it should

send the school a letter on its official letterhead explaining the

circumstances causing the delay, telling the school when it will

respond, and indicating that Default Management has been 

informed of the delay.

If a data manager can respond to only a portion of a school’s request

for loan servicing records within 20 calendar days, it should hold that

portion of the response until it can provide a response to all of the

school’s request. The data manager should send a letter to the school

and Default Management that provides the information outlined

above.

A data manager can assist schools in reading the collection history 

by identifying the relevant collection activities for each loan. This 

may be done by completing the records portion of the loan servicing

spreadsheet as shown in Figure 4.6.4, by highlighting the collection

activities in the actual collection records provided to the school, or by

creating a summary sheet outlining the abbreviation/codes associated with specific collection activities.

Within 15 days of receiving the loan servicing records, a school may

request replacement records for missing or illegible records from the

data manager. The data manager has 20 calendar days to respond.

The data manager must either replace the missing or illegible records

or notify the school and Default Management in writing that no

additional or improved copies are available.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 14

CHAPTER 4.6 - 

Loan Servicing Appeal
Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 15

132 Ocean Front Road

Black Diamond Bay, Nebraska 13213-0132

October 7, 2003

Serena Rooney OPE ID 098998

President

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

Subject: Cohort FY 2001 Response to a Request for Loan Servicing Records

Dear Ms. Rooney:

This is State Guaranty Agency's response to the request by Coralville College, 

OPE ID 098998, for loan servicing records. State Guaranty Agency has identified 

156 borrowers with 167 defaulted loans that are guaranteed by our agency and included 

in your school’s cohort FY 2001 loan record detail report for the official cohort default

rates. Based on a total population of 156 borrowers, we have determined that the representative sample of loan servicing records provided to your school will consist of 119

borrowers and 125 defaulted loans. State Guaranty Agency used the method outlined in

the Department’s June 1994 Dear Guaranty Agency Director letter to select the representative sample.

Please see the enclosed spreadsheet and a copy of the loan servicing records.

Sincerely,

Yvonne Carter

CEO

Enclosures

cc: U.S. Department of Education, 

Default Management 

S

G

A

tate

uaranty

gency

Figure 4.6.5 - Sample Data Manager Response to a

Request for Loan Servicing Records Letter to School
Which Department address does a data manager use for submitting a

copy of the response to a request for loan servicing records?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools,” for the address for Default Management. A data

manager should not send a response to a request for loan servicing

records to any other addresses at the Department.

Default Management recommends that a data manager send all

correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a data manager 

if it is asked to authenticate the timeliness of its response. A data

manager should maintain the documentation that verifies the 

receipt of the response to the request for loan servicing records 

as well as all other electronic and hardcopy documentation submitted as a part of the loan servicing appeal process.

The data manager can use this information when submitting monthly status reports to Default Management. For additional information

on monthly status reports, see Chapter 3.2,“Data Manager Strategies.”

What does the school do with the data manager’s response to the

school’s request for loan servicing records?

Timing is critical for schools after receiving loan servicing records.

The school must review the loan servicing records and determine

how it will proceed. If the school receives a data manager summary of

the information in the loan servicing records, the school should still

review the records to ensure that the summary is accurate. If a school

finds that a record identified as part of the representative sample is

missing or illegible, the school may request replacement records from

the data manager. The school has 15 calendar days to request the

missing and/or illegible records. The data manager has 20 calendar

days to respond to the request. The data manager must either replace

the missing and/or illegible records or notify the school and Default

Management in writing that no additional or improved copies are

available.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 16

CHAPTER 4.6 - 

Loan Servicing Appeal

School receives official

cohort default rate.

School requests loan

record detail report, if

not sent with notice.

Department sends

loan record detail

report.

School sends data

manager request for

loan servicing records.

Data manager

notifies school of any

fee for providing

records.

School pays the fee,

if charged.

Data manager

sends loan servicing

records.

School requests

clarification,

replacement, or

Department records

Data manager

sends school

information.

School sends

Department completed

Loan Servicing Appeal.

If school is also filing a New Data

Adjustment and/or Erroneous Data

Appeal,it may submit all of them

together, by the date the latest is due.

Start

20

Days

15

Days

20

Days

30

Days

15

Days

20

Days

15

Days

20

Days

15

Days
Within 30 calendar days of receiving the last response to all of the

school’s requests for loan servicing records, the school must decide

how to proceed and prepare a response to Default Management

accordingly. If the records indicate that there are no improperly

serviced loans for cohort default rate purposes in the school’s official

cohort default rate calculation, the school should notify Default

Management that the school is withdrawing the appeal.

If the records indicate that there are improperly serviced loans for

cohort default rate purposes included in the school’s official cohort

default calculation, the school should submit a loan servicing appeal

to Default Management. The school must submit the loan servicing

appeal within 30 calendar days of receiving the last response to 

its request for loan servicing records with the following exception:

If the school is submitting the loan servicing appeal to Default

Management along with a timely new data adjustment and/or a

timely erroneous data appeal, the school may submit all materials 

by the later of 

 within 30 calendar days of receipt of the last response to all of

the school’s new data adjustment allegations,

 within 30 calendar days of receipt of the last response to all of

the school’s erroneous data appeal allegations, or

 within 30 calendar days of receipt of the last response to all of

the school’s requests for loan servicing records.

If the school does not submit the loan servicing appeal in a timely

manner, Default Management will not review the loan servicing

appeal and will return all loan servicing appeal materials to the

school. If a school is submitting a loan servicing appeal for multiple

cohort default rates, it should submit all the loan servicing appeals in

the same mailing to Default Management. However, the school still

needs to submit separate documentation for each loan servicing

appeal.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 17
The school must submit to Default Management the following:

 Copies of the data manager responses to the school’s requests

for records.

 A spreadsheet that lists the allegations.

Figure 4.6.6 is a sample school loan servicing appeal spreadsheet to Default Management. The instructions for creating 

and completing the spreadsheet are in the “Spreadsheet Tools”

section of Chapter 4.11,“Challenge, Adjustment, and Appeal

Tools.”

If the school receives a completed spreadsheet from a data

manager, the school is still responsible for reviewing the loan

servicing records and ensuring that the information the data

manager listed on the spreadsheet is correct. The school should

remove any loans that were properly serviced for cohort default

rate purposes from the spreadsheet before sending the spreadsheet to Default Management. For example, compare Figure

4.6.6 to Figure 4.6.4. In Figure 4.6.6, borrower Shirley Clark has

been removed because her loans were properly serviced for

cohort default rate purposes.

 Copies of the loan servicing records. The school should not send

loan servicing records for loans that were properly serviced for

cohort default rate purposes.

 A letter on the school’s letterhead.

Figure 4.6.7 is a sample school loan servicing appeal letter to

Default Management. The letter must include the school’s OPE

ID number, a statement indicating that the school is submitting

a loan servicing appeal, and a reference to the applicable cohort

fiscal years to which the loan servicing appeal applies. The letter

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 18

CHAPTER 4.6 - 

Loan Servicing Appeal

Figure 4.6.6

Sample School Loan

Servicing Appeal

Spreadsheet to Default

Management

Type: Loan Servicing Appeal Number of Borrowers: 2

Cohort FY: 2001 Number of Loans: 5

From: Coralville College

Code: 098998

To: Default Management

Code: N/A

Date 11/02/2003 Page 1 of 1

A B C D E F G H I J K L M N O

1

Borrower's

SSN

Borrower's

Name

Type

of

Defaulted

Loans

Number

of

Defaulted

Loans

Payment

Made?

Date

Letter Sent

Date Call

Attempted

Date

Pre-claims

Assistance

Requested

Date Final

Demand

Letter Sent

Address

Known?

Date of

Skip

Tracing

Activity

Illegible

Record?

Missing

Record?

Improperly

Serviced?

Data

Manager

Code

2 7 a 77-77-7777 G F reen, Marci S 1oN 1 0 1 4/08/200 0 o 5/07/200 N 2 1 s 1/07/200 Y A e N o / N oN s Y 1 e 11

3 7 a 77-77-7777 G U reen, Marci S 2oN 1 0 1 4/08/200 0 o 5/07/200 N 2 1 s 1/07/200 Y A e N o / N oN s Y 1 e 11

4 8 e 88-88-8888 K F ent, Dal S 2oN 1 1 2 2/08/200 0 2 1/06/200 0 o 5/16/200 N s Y A e N o / N oN s Y 1 e 11
Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 19

Coralville College

5029 Greta Avenue

Coral City, Iowa 12345-5029

1-987-654-3211

November 2, 2003

U.S. Department of Education OPE ID 098998

Default Management

ATTN: Loan Servicing Appeal

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2001 Loan Servicing Appeal

To Whom It May Concern:

Coralville College, OPE ID 098998, is submitting an appeal of its cohort FY 2001 

official cohort default rate based on allegations of improperly serviced loans. Please 

see the enclosed correspondence, spreadsheet, and loan servicing records, as identified

on the spreadsheet.

I, the undersigned, certify under penalty of perjury that all information submitted in 

support of this loan servicing appeal is true and correct.

Coralville College has also submitted an uncorrected data adjustment.

Thank you for your consideration.

Sincerely,

Serena Rooney

President, Coralville College

Enclosures

cc: State Guaranty Agency

Figure 4.6.7 - Sample School Loan Servicing 

Appeal Letter to Default Management
must feature a subject line that reads “Subject: Cohort FY [insert

cohort fiscal years being used in the loan servicing appeal] Loan

Servicing Appeal.”The letter must also include a certification

that the information provided is true and correct under penalty

of perjury and a list of any other adjustments and appeals the

school intends to submit to Default Management. Finally, there

must be a notation that the school is sending a copy of the

letter and the spreadsheet to the data managers of the relevant

loans. The school’s President/CEO/Owner must sign the letter,

and the signature must be followed by a signature block showing the signer’s name and job title.

If a school that is subject to sanction is submitting requests for loan

servicing records for multiple official cohort default rates, the school

should submit all the requests in the same mailing to Default

Management and the data manager. However, the school still needs

to prepare separate requests for each cohort fiscal year.

Which Department address does a school use for submitting a loan

servicing appeal? 

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send loan servicing appeal materials to any other addresses at the Department.

Default Management recommends that a school send all loan 

servicing appeal correspondence return receipt requested or via

commercial overnight mail/courier delivery. This will be useful to a

school if it is asked to authenticate the timeliness of its submission.

A school should maintain the documentation that verifies the receipt

of the loan servicing appeal as well as all electronic and hardcopy

documentation submitted as a part of the loan servicing appeal

process. If a school does not meet the time frame for submitting a

loan servicing appeal, the loan servicing appeal will not be reviewed.

What happens after the school submits the loan servicing appeal?

Default Management will review only the information submitted 

with the loan servicing appeal and will not review information submitted after the deadline. Default Management will send the school

and each involved data manager written notification of Default

Management’s decision. Default Management’s decision is final and

no further administrative review is provided.

Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 20

CHAPTER 4.6 - 

Loan Servicing Appeal
If Default Management determines, using the standard of review

described in 34 CFR 668.189(f ), that a school’s official cohort default

rate calculation includes defaulted loans that were improperly 

serviced for cohort default rate purposes, Default Management 

will remove the loans (or, if applicable, a valid statistical projection 

of the total number of borrowers who defaulted due to improper

loan servicing) from the cohort default rate calculation and will

recalculate the cohort default rate based on the remaining data.

If the school was notified that it was subject to sanction and the 

loan servicing appeal is successful and the revised cohort default 

rate is below the sanction level, Default Management will withdraw

that sanction notice. If the school was notified that it was subject 

to sanction and the loan servicing appeal is unsuccessful (or if the

loan servicing appeal is successful but the revised cohort default 

rate remains above the sanction level), and the school has no other 

outstanding adjustments or appeals, Default Management will notify

the school of the effective date of that sanction.

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the FFELs 

it certified and delivered and/or the Direct Loans it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submitted its completed adjustment and/or appeal to the Department. Schools may avoid this

liability if they choose not to certify or originate loans during the

adjustment and appeal process.

Loan Servicing Appeal Chapter 4.6

CHAPTER 4.6 - 

Loan Servicing Appeal

Page 4.6 - 21

School to Data Manager Loan Servicing Appeal Checklist 

Determine

❑ Does the loan record detail report for the official cohort default rates 

contain defaulted loans that were improperly serviced for cohort 

default rate purposes? (See page 4.6-1)

Submit to Data Manager 

❑ Loan Record Detail Report (See page 4.6-6)

❑ Letter (See page 4.6-6)

❑ Fee for Loan Servicing Records (if required) (See page 4.6-12)

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Chapter 4.6 Loan Servicing Appeal

Page 4.6 - 22

CHAPTER 4.6 - 

Loan Servicing Appeal

Data Manager to School Loan Servicing Appeal Checklist 

Determine

❑ Was the school submission timely? (See page 4.6-8)

❑ Does the data manager hold the loans? (See page 4.6-9)

❑ Is all the material present? (See page 4.6-9)

❑ Does data manager hold more than 99 loans for school? (See page 4.6-9)

❑ If so, what is a representative sample of the loans? (See page 4.6-10)

❑ Is there a fee for the loan servicing records and, if so, how much is it? 

(See page 4.6-10)

❑ Has the school paid the fee for loan servicing records (if required)? 

(See page 4.6-12)

Response to School 

❑ Request for fee (See page 4.6-10)

OR

❑ Spreadsheet (See page 4.6-12)

❑ Loan Servicing Records (See page 4.6-13)

❑ Letter (See page 4.6-13)

Follow-Up 

❑ Send copy of response to Default Management (See page 4.6-14)

❑ Send monthly status report to Default Management (See page 4.6-16)

School to Default Management Loan Servicing Appeal Checklist 

Determine

❑ Do loan servicing records show that the loan record detail report for the 

official cohort default rates contains loans that were improperly serviced

for cohort default rate purposes? (See page 4.6-17)

❑ Does the school have outstanding new data adjustment allegations or 

erroneous data appeal allegations? (See page 4.6-17)

Submit to Default Management 

❑ Withdrawal Notice (See page 4.6-17)

OR

❑ Copy of Data Manager Loan Servicing Appeal Response (See page 4.6-18)

❑ Spreadsheet (See page 4.6-18)

❑ Copy of Loan Servicing Records (See page 4.6-18)

❑ Letter (See page 4.6-18)
Chapter

4.7

Economically

Disadvantaged

Appeal

What is an economically disadvantaged appeal? . . . . . . . . . . . . . 4.7-1

What benefit will a school gain from submitting

an economically disadvantaged appeal? . . . . . . . . . . . . . 4.7-1

Are economically disadvantaged appeals 

based on a specific period of time? . . . . . . . . . . . . . 4.7-2

How does a school calculate its low income rate? . . . . . . . . . . . . . 4.7-3

How does a non-degree-granting school calculate its placement rate? . . . . . . . . . . . . . 4.7-4

How does a degree-granting school calculate its completion rate? . . . . . . . . . . . . . 4.7-6

Does a school need to wait until it receives a notice

of loss of eligibility to calculate its low income rate and

placement rate or low income rate and completion rate? . . . . . . . . . . . . . 4.7-8

How does a school submit an economically disadvantaged appeal? . . . . . . . . . . . . . 4.7-8

Which Department address does a school use for

submitting an economically disadvantaged appeal? . . . . . . . . . . . . . 4.7-12

How does an independent auditor review 

the management’s written assertion? . . . . . . . . . . . . . 4.7-12

What happens after the school submits

the independent auditor’s written opinion? . . . . . . . . . . . . . 4.7-16

What roles do data managers have in a

school’s economically disadvantaged appeal? . . . . . . . . . . . . . 4.7-18
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Economically Disadvantaged Appeal

What is an economically disadvantaged appeal?

An economically disadvantaged appeal alleges that a school should

not be subject to sanction because it has a high number of low

income students. There are two types of economically disadvantaged

appeals: an economically disadvantaged appeal based on low income

rate and placement rate and an economically disadvantaged appeal

based on low income rate and completion rate.

The type of economically disadvantaged appeal a school may submit

depends on whether the school is a non-degree-granting school or a

degree-granting school. For an economically disadvantaged appeal

to be successful, a non-degree-granting school must submit an

independent auditor’s written opinion that

 the school’s low income rate (generally, the percentage of

students with low incomes) is two-thirds or more and

 the school’s placement rate (generally, the percentage of 

students who became employed in the occupation for 

which the school trained them) is 44 percent or more.

For an economically disadvantaged appeal to be successful, a 

degree-granting school must submit an independent auditor’s 

written opinion that

 the school’s low income rate (generally, the percentage of

students with low incomes) is two-thirds or more and

 the school’s completion rate (generally, the percentage of

students who completed their program) is 70 percent or more.

Figure 4.7.1 shows the time frame for submitting an economically

disadvantaged appeal.

What benefit will a school gain from submitting an economically 

disadvantaged appeal?

If an economically disadvantaged appeal is successful, the school is

exempt from sanctions based on that cohort default rate until the

next official cohort default rates are released. However, a successful

economically disadvantaged appeal does not change a school’s

official cohort default rate.

Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 1

Figure 4.7.1

Time Frame for Submitting

an Economically

Disadvantaged Appeal

Economically

Disadvantaged

Appeal

34 CFR 668.194

School receives

notice of loss.

School sends

Department the

management's

written assertion.

School sends

Department completed

Economically

Disadvantaged Appeal.

Key:

30

Days

60

Days

Start

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

34 CFR 668.194
Are economically disadvantaged appeals based on a specific period of

time?

The school must base the economically disadvantaged appeal on 

any 12-month period that ended during the six months immediately

preceding the start of the cohort fiscal year for which the school is

submitting the economically disadvantaged appeal. The time period

will differ based on the cohort fiscal year used by the school.

The federal fiscal year always begins on October 1. As a result, the 

six months immediately preceding the start of a fiscal year will always

begin on April 1 and always end on September 30. Therefore, the 

12-month period the school uses must end no earlier than April 1

and no later than September 30. In order for a 12-month period to

end between April 1 and September 30, it must begin no earlier 

than April 2 and no later than October 1 of the preceding year.

Figure 4.7.2 is a chart that can be used to determine an acceptable

12-month period. To choose an acceptable 12-month period, a school

should first determine which cohort fiscal year the school will use.

The school then picks a start date from the range listed in the

“Acceptable 12-Month Period Begins Between” column. The end date

will be 12 months after the start date, which will fall in the range

listed in the “Acceptable 12-Month Period Ends Between” column.

Figure 4.7.3 shows an acceptable and some unacceptable 12-month

periods for cohort FY 2001.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 2

CHAPTER 4.7 - Economically

Disadvantaged Appeal

12-Month Period Status Reason

04/02/1999-04/01/2000 Acceptable

Starts within acceptable

range; ends 12 months later

within acceptable range

04/02/1999-04/02/2000 Unacceptable

Starts within acceptable

range; ends more than 12

months later

04/01/1999-03/31/2000 Unacceptable Starts and ends outside

acceptable range

Figure 4.7.3

Acceptable and

Unacceptable 12-Month

Periods for Cohort FY 2001

Cohort

Fiscal Year

Cohort Fiscal Year

Start Date

Acceptable 12-Month Period

Begins Between

Acceptable 12-Month Period

Ends Between

FY 1999 10/01/1998 04/02/1997 - 10/01/1997 04/01/1998 - 09/30/1998

FY 2000 10/01/1999 04/02/1998 - 10/01/1998 04/01/1999 - 09/30/1999

FY 2001 10/01/2000 04/02/1999 - 10/01/1999 04/01/2000 - 09/30/2000

FY 2002 10/01/2001 04/02/2000 - 10/01/2000 04/01/2001 - 09/30/2001

FY 2003 10/01/2002 04/02/2001 - 10/01/2001 04/01/2002 - 09/30/2002

FY 2004 10/01/2003 04/02/2002 - 10/01/2002 04/01/2003 - 09/30/2003

FY 2005 10/01/2004 04/02/2003 - 10/01/2003 04/01/2004 - 09/30/2004

Figure 4.7.2

Date Ranges for Acceptable

12-Month Periods
A school can select the most beneficial 12-month period available. In

other words, a non-degree-granting school can identify the acceptable 12-month period with the highest low income rate and the

highest placement rate. Similarly, a degree-granting school can

identify the acceptable 12-month period with the highest low

income rate and the highest completion rate.

If a school selects an unacceptable 12-month period, the U.S.

Department of Education’s (the Department’s) Default Management

will not review any portion of the school’s economically disadvantaged appeal and the economically disadvantaged appeal will be

denied and returned to the school. A school may contact Default

Management at 1-202-708-9396 to discuss whether the school has

selected an acceptable 12-month period.

How does a school calculate its low income rate?

After selecting the 12-month period, the school determines the

number of students who were enrolled in an eligible Title IV program

during any part of the 12-month period. To be included in the calculation, the student must have been enrolled at least half-time and

enrolled at least one day during any part of the selected 12-month

period. The school then determines the number of these students

who are considered low income students.

A student is considered to be a low income student if 

 for an award year that overlaps the selected 12-month period,

the student has an expected family contribution (EFC) that is

equal to or less than the largest EFC 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 

 for a calendar year that overlaps the selected 12-month period,

the student has an adjusted gross income (AGI) that, when

added to the AGI of the student’s parents (if the student is a

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

married independent student), is less than the amount listed in

the Department of Health and Human Services (HHS) poverty

guidelines for the size of the student’s family unit, which can be

found on the HHS website at

http://aspe.os.dhhs.gov/poverty/poverty.htm 

An award year begins on July 1 of one year and ends on June 30 of

the following year. A calendar year begins on January 1 and ends on

December 31.

Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 3

A school can

select the most

beneficial 

12-month period

available
To determine the low income rate, the school divides the number 

of low income students enrolled at least half-time in an eligible

program during any part of the selected 12-month period (the

numerator) by the total number of students enrolled at least halftime in an eligible program during any part of the selected 12-month

period (the denominator). The result is the low income rate.

In order for the economically disadvantaged appeal to be successful,

the low income rate must be at least two-thirds.

For example, a school had a total of 200 regular students enrolled at

least half-time in an eligible program and enrolled at least one day

during the selected 12-month period. Of those, 80 were eligible to

receive at least one-half of the maximum Federal Pell Grant and 60

others were below the poverty level. Therefore, a total of 140 students

are considered low income. The school’s low income rate is calculated

as follows:

How does a non-degree-granting school calculate its placement rate?

As mentioned, only non-degree-granting schools can submit an

economically disadvantaged appeal based on the school’s low

income rate and placement rate. Degree-granting schools can only

submit an economically disadvantaged appeal based on the school’s

low income rate and completion rate. For information on calculating

a completion rate, see the section of this chapter entitled “How does

a degree-granting school calculate its completion rate?”

When calculating placement rates, a school must use the same selected 12-month period it used in calculating its low income rate. The

school first determines the denominator, which is the number of

former students initially enrolled at least half-time in an eligible 

Title IV program who meet the following criteria:

 The student was originally scheduled to complete his or her

program during the selected 12-month period. The student’s

actual last date of attendance does not need to fall within the

selected 12-month period.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 4

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Low income students

enrolled at least 

half-time in an eligible

program during any

part of the selected 

12-month period

Total regular students

enrolled at least 

half-time in an eligible

program during any

part of the selected 

12-month period

Low

Income ÷ = Rate

140low income

students ÷200 regularstudents=70.0percent

low income

rate
The date a student was originally scheduled to complete is

based on the student’s initial enrollment status. For a student

who was initially enrolled full-time, the date is based on the

amount of time specified in the school’s enrollment contract,

catalog, or other materials for a full-time student to complete

the program. For a student who was initially enrolled less than

full-time, the date is based on the amount of time specified 

by the school for the student to complete the program if the

student remained enrolled in that enrollment status throughout

the program.

 The student was enrolled in the program beyond the point 

at which he or she would have received a 100 percent tuition

refund. A student who withdrew before the point at which he 

or she would have received a 100 percent tuition refund is not

included in the calculation.

These “former students” are included in the placement rate. A student

is not included in the placement rate if, on the date that is one year

after the student’s originally scheduled completion date, he or she is

still enrolled in the same program and is making satisfactory

progress.

After determining the number of “former students” (the denominator), the school then determines the numerator, which is the number

of these “former students” who have been placed in jobs for which

the school provided training. A student is considered a placed student if the student meets one of the following three criteria:

 The student was employed on the date that is one year and 

one day after the student’s last date of attendance at the school

in an occupation for which the school provided training. For

example, if the student’s last date of attendance was August 31,

the date that is one year and one day after the student’s last

date of attendance is September 1 of the following year. A

student is not considered successfully placed if the school 

was the employer.

 The student was employed for at least 13 weeks (91 days)

between the date the student first enrolled and the date that is

one year and one day after the student’s last date of attendance

at the school in an occupation for which the school provided

training. A student’s employment while in school can be considered as long as the employment was in an occupation for which

the school was providing training to the student. A student is

not considered successfully placed if the school was the

employer.

Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 5
 The student entered active duty in the U.S. Armed Forces within

one year after his or her last date of attendance at the school.

These are the “placed students” (the numerator).

The school then divides the number of “placed students” (the numerator) by the total number of “former students” (the denominator). The

result is the placement rate.

In order for the appeal to be successful, the placement rate must be

at least 44.0 percent.

For example, a school had a total of 50 “former students.” Of those,

17 met the first criteria (employed on the date one year and one 

day after the last date of attendance), 6 met the second criteria

(employed for 13 weeks), and 2 met the third criteria (Armed

Services). Therefore, the school has a total of 25 “placed students.”

The school’s placement rate is calculated as follows:

How does a degree-granting school calculate its completion rate?

As mentioned, only degree-granting schools can submit an economically disadvantaged appeal based on the school’s low income rate

and completion rate. Non-degree-granting schools can only submit

an economically disadvantaged appeal based on the school’s low

income rate and placement rate. For information on calculating a

placement rate, see the section of this chapter entitled “How does 

a non-degree-granting school calculate its placement rate?”

When calculating completion rates, a school must use the same

selected 12-month period it used in calculating its low income rate.

The school first determines the denominator, which is the number 

of regular students initially enrolled on a full-time basis in a Title IV

eligible program who were originally scheduled to complete their

programs during the selected 12-month period. The date a student

was originally scheduled to complete is based on the amount of time

specified in the school’s enrollment contract, catalog, or other materials for a full-time student to complete the program. A student’s actual

last date of attendance does not need to fall within the selected 

12-month period.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 6

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Placed Students Former Students Placement ÷ = Rate

25 placed

students ÷ 50 formerstudents = 50.0percent placement

rate
After determining the number of “regular students” (the denominator), the school then determines the numerator, which is the number

of “regular students” who completed their program. A student is

considered to have completed a program if the student meets one 

of the following four criteria:

 The student completed the educational program in which he 

or she was enrolled.

 The student transferred to a higher-level program at another

school.

 The student remained enrolled and was making satisfactory

academic progress at the end of the selected 12-month period.

 The student entered active duty in the U.S. Armed Forces within

one year after his or her last date of attendance at the school.

These are the “completed students” (the numerator).

The school then divides the “completed students” (the numerator) by

the total number of “regular students” (the denominator). The result is

the completion rate.

In order for the appeal to be successful, the completion rate must be

at least 70.0 percent.

For example, a school had a total of 50 “regular students.” Of those,

17 met the first criteria (completed the program in which they were

enrolled), 12 met the second criteria (transferred to a higher-level

program), 8 met the third criteria (still enrolled and making satisfactory academic progress), and 2 met the fourth criteria (Armed Services).

Therefore, the school had a total of 39 “completed students.”The

school’s completion rate is calculated as follows:

Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 7

39completed

students ÷ 50 totalstudents = 78.0percent completion

rate

Completed

Students

Regular

Students

Completion ÷ = Rate
Does a school need to wait until it receives a notice of loss of eligibility

to calculate its low income rate and placement rate or low income rate

and completion rate?

It is important to note that a school does not need to wait until

receiving the notice of loss of eligibility to begin preparing materials

to submit as part of its management’s written assertion. If the school

believes that it will be subject to sanction after release of the official

cohort default rates, and the school believes that it should not be

subject to sanction because of its low income rate and placement

rate or because of its low income rate and completion rate, the school

should calculate its low income rate and placement rate or low

income rate and completion rate in advance of the release of the

official cohort default rates.

How does a school submit an economically disadvantaged appeal?

Timing is critical when submitting an economically disadvantaged

appeal. Within 30 calendar days of receiving the school’s notice of

loss of eligibility, the school must determine if it is eligible to submit

an economically disadvantaged appeal and, if so, submit its management’s written assertion to Default Management. Within 60 calendar

days of receiving the school’s notice of loss of eligibility, the school

must submit an independent auditor’s opinion to Default Management.

The school must compile a spreadsheet of the students that qualify

to be included in the school’s low income rate and a spreadsheet of

the students that qualify to be included in either the school’s placement rate (if the school is a non-degree-granting school) or the

completion rate (if the school is a degree-granting school).

The following two figures (Figures 4.7.4 and 4.7.5) are examples for a

non-degree-granting school submitting an economically disadvantaged appeal based on low income rate and placement rate. Figure

4.7.4 is a sample low income rate spreadsheet for this scenario, and 

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 8

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Type: Low Income Rate 12-Month Period: 06/15/2000 – 06/14/2001

Cohort FY: 2002 Award Years: 1999-2000, 2000-2001

From: Graphic Tech Calendar Years: 2000, 2001

Code: 099999 Low Income Students: 140

To: Default Management Total Students: 200

Code: N/A Low Income Rate: 70%

Date 10/22/2004 Page 1 of 1

A B C D E F

1

Student's

SSN

Student's

Name

Student's

Enrollment Dates

Economically

Disadvantaged

EFC and

Award Year

AGI, Family Size,

and Calendar Year

2 1 a 11-11-1111 S 0 iebert, Angel 0 s 8/25/2000 – 12/30/200 Y 1 e 0 A / 2000-200 N/

3 2 k 22-22-2222 B 0 ennett, Dere 0 o 8/24/1999 – 06/15/200 N A N A / N/

4 3 k 33-33-3333 B 1 rewbaker, Mar 0 s 8/25/2000 – 05/16/200 Y A e N 1 / $4,300 / 1 / 200

Figure 4.7.4

Sample School Low Income

Rate Spreadsheet to

Default Management
Figure 4.7.5 is the corresponding sample placement rate spreadsheet.

Figure 4.7.6 is a sample completion rate spreadsheet for a degreegranting school submitting an economically disadvantaged appeal

based on low income rate and completion rate. The school must also

submit a low income rate spreadsheet even though there is no

sample low income spreadsheet for this school in the Guide.

Instructions for creating and completing spreadsheets are in the

“Spreadsheet Tools” section of Chapter 4.11,“Challenge, Adjustment,

and Appeal Tools.”

Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 9

Type: Placement Rate 12-Month Period: 06/15/2000 – 06/14/2001

Cohort FY: 2002 Placed Students: 25

From: Graphic Tech Total Students: 50

Code: 099999 Placement Rate: 50%

To: Default Management

Code: N/A

Date 10/22/2004 Page 1 of 1

A B C D E F G H I

1

Student's

SSN

Student's

Name

Student's

Scheduled

Completion

Date

Student's

Enrollment

Dates

Student's

Program

of Study

Student

Placed

Student's

Employment

Dates

Student's

Job

Description

Student's

Employer:

Name, Address,

and Phone

2 1 a 11-11-1111 S 0 iebert, Angel 12/30/200

08/25/2000 to

12/30/2000

Graphic

D s esign Ye

04/03/2001

t r o Present Web Designe

TangledWeb.com

68 Forsyth

Canary, Mo 66666

1-313-131-3131

3 2 k 22-22-2222 B 0 ennett, Dere 06/15/200

08/24/1999 to

06/15/2000

Graphic

D s esign Ye

05/31/2001

t r o Present Web Designe

TangledWeb.com

68 Forsyth

Canary, Mo 66666

1-313-131-3131

4 3 k 33-33-3333 B 0 rewbaker, Mar 12/30/200

08/25/2000 to

05/16/2001

Graphic

D o esign N A N A / N A / N/

Type: Completion Rate 12-Month Period: 06/30/1998 – 06/29/1999

Cohort FY: 2000 Completed Students: 39

From: Coralville College Total Students: 50

Code: 098998 Completion Rate: 78%

To: Default Management

Code: N/A

Date 10/30/2002 Page 1 of 1

A B C D E F G H I J

1

Student's

SSN

Student's

Name

Student's

Scheduled

Completion

Date

Student's

Enrollment

Dates

Student

Completed

Completed

Program

Date

Student's

Program of

Study

Student Transfers to

Higher Program:

Date, School Name,

School Address,

Program

Student's

GPA

Date Student

Entered Armed

Services

2 111-11-1111

Lindemann,

M 9 arcia 05/17/199

08/26/1995 to

0 s 5/17/1999 Y 9 e 0 A 5/17/199 N A / N A / N A / N/

3 222-22-2222

Vincent,

R 9 ichard 05/17/199

08/26/1995 to

0 s 5/16/1998 Y A e N A / N A / N A / N 8 / 06/01/199

4 333-33-3333

Smith,

A 8 bigail 12/15/199

01/28/1995 to

0 s 5/15/2000 Y A e N A / N A / N 0 / 4 A . N/

5 444-44-4444

Wilson,

H 9 annah 05/17/199

08/26/1995 to

0 s 5/17/1999 Y A e N/

Marine

Biology

08/14/1999

Orlando State University,

121 Water Street,

Orlando, Florida

Master's of

M A arine Biology N A / N/

6 555-55-5555

Michaels,

L 9 ily 05/17/199

08/26/1995 to

1 o 2/30/1995 N A N A / N A / N A / N A / N/

Sample School Placement

Rate Spreadsheet to

Default Management

Sample School Completion

Rate Spreadsheet to

Default Management

Figure 4.7.5 (above)

Figure 4.7.6 (below)
After completing the spreadsheets, the school should calculate 

either its low income rate and its placement rate (if it is a nondegree-granting school) or its low income rate and its completion

rate (if it is a degree-granting school). For schools submitting economically disadvantaged appeals based on the school’s low income

rate and placement rate, the low income rate must be two-thirds or

greater and the placement rate must be 44.0 percent or greater for

the appeal to be successful. For schools submitting economically

disadvantaged appeals based on the school’s low income rate and

completion rate, the low income rate must be two-thirds or greater

and the completion rate must be 70.0 percent or greater for the

appeal to be successful.

The school then submits its management’s written assertion to

Default Management. The school must submit the following:

 The low income rate spreadsheet.

 The placement rate spreadsheet (if the school is a non-degreegranting school) or the completion rate spreadsheet (if the

school is a degree-granting school).

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting economically disadvantaged appeal data and the type of economically disadvantaged

appeal (either low income rate and placement rate or low

income rate and completion rate) the school is submitting. The

letter must feature a subject line that reads “Subject: Cohort FY

[insert cohort fiscal year being used in the appeal] Economically

Disadvantaged Appeal.”The letter must include a certification

that the information provided is true and correct under penalty

of perjury, a list of any other adjustments and/or appeals the

school is submitting to Default Management, and a statement

that the school is sending its management’s written assertion to

an independent auditor. The school’s President/CEO/Owner

must sign the letter, and the signature must be followed by a

signature block showing the signer’s name and job title. Figure

4.7.7 is a sample school economically disadvantaged appeal

letter to Default Management.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 10

CHAPTER 4.7 - Economically

Disadvantaged Appeal

School receives

notice of loss.

School sends

Department the

management's

written assertion.

School sends

Department completed

Economically

Disadvantaged Appeal.

30

Days

60

Days

Start
Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 11

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

October 22, 2004

U.S. Department of Education OPE ID 099999

Default Management

ATTN: Economically Disadvantaged Appeal

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2002 Economically Disadvantaged Appeal

To Whom It May Concern:

Graphic Tech, OPE ID 099999, is submitting a cohort FY 2002 economically disadvantaged appeal based on the school’s low income rate and placement rate. It is our management’s written assertion that Graphic Tech has a low income rate of 70.0 percent and

a placement rate of 50.0 percent for the 12-month period beginning on June 15, 2000

and ending on June 14, 2001. Please see the enclosed spreadsheets. 

Graphic Tech has employed Alliance Auditing to review our management’s written

assertion.

I, the undersigned, certify under penalty of perjury that all information submitted to you

is true and correct.

Graphic Tech has also timely submitted an uncorrected data adjustment.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

cc: Alliance Auditing

Figure 4.7.7 - Sample School Economically Disadvantaged

Appeal Letter to Default Management
Which Department address does a school use for submitting an 

economically disadvantaged appeal?

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send economically disadvantaged appeal materials to 

any other addresses at the Department.

Default Management recommends that a school send all economically disadvantaged appeal correspondence return receipt requested 

or via commercial overnight mail/courier delivery. This will be useful

to a school if it is asked to authenticate the timeliness of its submission. A school should maintain the documentation that verifies the

receipt of the economically disadvantaged appeal as well as all

written and hardcopy documentation submitted as a part of the

economically disadvantaged appeal process. If a school does not

meet the 30-calendar-day time frame for submitting its management’s written assertion, the economically disadvantaged appeal 

will not be reviewed.

How does an independent auditor review the management’s written

assertion?

To complete the school’s economically disadvantaged appeal, an

independent auditor must review and attest to the management’s

written assertion. The school must submit the following materials to

an independent auditor:

 The low income spreadsheet.

 The placement rate spreadsheet (if the school is a non-degreegranting school) or the completion rate spreadsheet (if the

school is a degree-granting school).

 Any other materials the auditor requests.

 A letter on the school’s letterhead. Figure 4.7.8 is a sample

school letter to an auditor.

The letter should include the school’s OPE ID number, a statement indicating that the school is submitting to the auditor

economically disadvantaged appeal data, and the type of

economically disadvantaged appeal (either low income rate 

and placement rate or low income rate and completion rate) 

the school is submitting. The letter should also include a subject

line that reads “Subject: Cohort FY [insert cohort fiscal year

being used in the appeal] Economically Disadvantaged Appeal.”

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 12

CHAPTER 4.7 - Economically

Disadvantaged Appeal
Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 13

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

October 22, 2004

ATTN: Mr. Anthony Falduto OPE ID 099999

Alliance Auditing

5220 Brick Street

Evanstown, Wisconsin 97697-6976 

Subject: Cohort FY 2002 Economically Disadvantaged Appeal

Dear Mr. Falduto:

Graphic Tech, OPE ID 099999, is filing a cohort FY 2002 economically disadvantaged

appeal based on the school’s low income rate and placement rate. We ask you to review

our written assertions in accordance with the standards of the American Institute of

Certified Public Accountants (AICPA), the Government Auditing Standards issued 

by the Comptroller General of the United States, and the economically disadvantaged

appeal criteria under 34 CFR 668.194 to determine if our written assertion meets the

requirements for an economically disadvantaged appeal and is fairly stated in all material respects. You should note that our deadline for submitting an independent auditor’s

written opinion to the U.S. Department of Education is November 29, 2004. Please see

the enclosed spreadsheets.

I, the undersigned, certify under penalty of perjury that all information submitted to you

is true and correct.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

Figure 4.7.8 - Sample School Economically 

Disadvantaged Appeal Letter to Independent Auditor
The letter should also include a request that the auditor review

the written assertions in accordance with the standards of the

American Institute of Certified Public Accountants (AICPA), the

Government Auditing Standards issued by the Comptroller

General of the United States, and the economically disadvantaged appeal criteria under 34 CFR 668.194. Finally, the letter

should include a statement indicating that the deadline for

submitting the independent auditor’s written opinion is within

60 calendar days of the school receiving the notice of loss of

eligibility and a certification that the information provided is

true and correct under penalty of perjury.

The school’s President/CEO/Owner should sign the letter, and

the signature should be followed by a signature block showing

the signer’s name and job title.

Upon reviewing the management’s written assertion and any other

documentation that the auditor deems appropriate, the auditor must

provide an opinion as to whether the written assertion demonstrates

that the school meets the criteria for an economically disadvantaged

appeal under 34 CFR 668.194. The report must also indicate if the

written assertions are fairly stated in all material respects. A school

submitting an economically disadvantaged appeal must submit the

independent auditor’s written opinion to Default Management

within 60 calendar days of receiving the notice of loss of eligibility.

The engagement which forms the basis of the independent auditor’s

written opinion must be an examination-level compliance attestation

engagement performed in accordance with the AICPA’s Statement on

Standards for Attestation Engagements, Compliance Attestation

(AICPA, Professional Standards, Volume 1, AT sec. 500), as amended. A

school may contact the AICPA order department at 1-888-777-7077

to obtain a copy of its standards or visit the AICPA website at

http://www.aicpa.org

The attestation must also be performed in accordance with the

Government Auditing Standards issued by the Comptroller General

of the United States.

The written opinion must be in the form of a letter to the school with

the school’s name, the school’s OPE ID number, the Cohort fiscal year

to which the appeal applies, and the auditor’s opinions. The letter

should feature a subject line that reads “Subject: Cohort FY [insert

cohort fiscal year being used in the appeal] Economically

Disadvantaged Appeal.”The auditor must sign the letter, and the

signature must be followed by a signature block showing the signer’s

name and job title. Figure 4.7.9 is a sample auditor’s written opinion

letter to a school.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 14

CHAPTER 4.7 - Economically

Disadvantaged Appeal
Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 15

5220 Brick Street

Evanstown, Wisconsin 97697-6976

1-555-666-7777

November 21, 2004

Alexander Peachum OPE ID 099999

President

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

Subject: FY Cohort 2002 Economically Disadvantaged Appeal

Dear Mr. Peachum:

We have examined the written assertions of the management of Graphic Tech, OPE ID 099999, stating 

that the information contained in the economically disadvantaged appeal the school submitted is complete,

accurate, and determined in accordance with the requirements of Section 668.194 of Title 34 of the Code 

of Federal Regulations (34 CFR 668.194). The management of Graphic Tech is responsible for the school’s

compliance with those requirements. Our responsibility is to express an opinion on management’s written

assertions about the institution’s compliance based on our examination.

Our examination was made in accordance with standards established by the American Institute of Certified

Public Accountants (AICPA) and the Government Auditing Standards issued by the Comptroller General of

the United States accordingly. We also examined, on a test basis, evidence about Graphic Tech’s compliance

with 34 CFR 668.194, and performed other procedures that we considered necessary under the circumstances. We believe our examination provides a reasonable basis for our opinion. Our examination does not

provide a legal determination on Graphic Tech’s compliance with specified requirements. 

In our opinion, management’s written assertion that Graphic Tech has a low income rate of 70.0 percent 

and a placement rate of 50.0 percent for the 12-month period beginning on June 15, 2000 and ending on

June 14, 2001, is complete, accurate, and determined in accordance with the requirements set forth in 

34 CFR 668.194, and is fairly stated in all material respects.

This report is intended solely for the information of an audit committee, management, and the U.S.

Department of Education. However, this report is a matter of public record and its distribution is not limited.

Thank you for your consideration. 

Sincerely,

Anthony Falduto

President, Alliance Auditing

cc: U.S. Deparment of Education

Default Management

A A

A L L I A N C E

A U D I T I N G

Figure 4.7.9 - Sample Written Opinion Letter 

from Independent Auditor to School 
The school is responsible for sending the independent auditor’s

written opinion to Default Management within the 60-calendar-day

deadline. If the school does not submit the written opinion within 60

calendar days of the school receiving the notice of loss of eligibility,

Default Management will not review the economically disadvantaged

appeal and will return all economically disadvantaged appeal materials to the school.

The school must submit the following materials to Default

Management

 The independent auditor’s written opinion.

 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting an economically disadvantaged appeal, and the type of economically disadvantaged

appeal (either low income rate and placement rate or low

income rate and completion rate) the school is submitting. The

letter must feature a subject line that reads “Subject: Cohort FY

[insert cohort fiscal year being used in the appeal] Economically

Disadvantaged Appeal.”The letter must also include a certification that the information provided is true and correct under

penalty of perjury and a list of any other adjustments and

appeals the school intends to submit to Default Management.

The school’s President/CEO/Owner must sign the letter, and the

signature must be followed by a signature block showing the

signer’s name and job title. Figure 4.7.10 is a sample school

independent auditor’s written opinion submittal letter to

Default Management.

What happens after the school submits the independent auditor’s

written opinion?

Default Management will review, using the standard of review

described in 34 CFR 668.189(f ), only the information submitted 

with the economically disadvantaged appeal and will not review

information submitted after the 60-calendar-day deadline. Default

Management will send the school written notification of Default

Management’s decision. Default Management’s decision is final and

no further administrative review is provided.

If the school was notified that it was subject to sanction and 

the economically disadvantaged appeal is successful, Default

Management will withdraw the notice of loss of eligibility.

If the school was notified that it was subject to sanction and 

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 16

CHAPTER 4.7 - Economically

Disadvantaged Appeal

School receives

notice of loss.

School sends

Department the

management's

written assertion.

School sends

Department completed

Economically

Disadvantaged Appeal.

30

Days

60

Days

Start
Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 17

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

November 30, 2004

U.S. Department of Education OPE ID 099999

Default Management

ATTN: Economically Disadvantaged Appeal

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2002 Economically Disadvantaged Appeal

To Whom It May Concern:

Graphic Tech, OPE ID 099999, is submitting a cohort FY 2002 economically disadvantaged appeal based on our low income rate and placement rate. I, the undersigned, certify under penalty of perjury, that our low income rate is 70.0 percent, our placement rate

is 50.0 percent, and that all other information submitted in support of this economically

disadvantaged appeal is true and correct. Please see the attached spreadsheets for the

low income rate and placement rate, along with the independent auditor's attestations 

on our school's management assertions.

Graphic Tech is submitting its economically disadvantaged appeal at this time; however,

the school has also submitted an uncorrected data adjustment.

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosures

Figure 4.7.10 - Sample School Independent Auditor’s Written

Opinion Submittal Letter to Default Management 
the economically disadvantaged appeal is unsuccessful, and the

school has no other outstanding adjustments or appeals, Default

Management will notify the school of the effective date of the 

sanction.

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the Federal

Family Education Loans (FFELs) it certified and delivered and/or the

William D. Ford Federal Direct Loans (Direct Loans) it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submitted its completed adjustment and/or appeal to the Department. Schools may avoid this

liability if they choose not to certify or originate loans during the

adjustment and appeal process.

What roles do data managers have in a school’s economically 

disadvantaged appeal?

Schools submit economically disadvantaged appeals directly to

Default Management for review and consideration. Default

Management is responsible for determining whether schools 

meet the established economically disadvantaged appeal criteria.

Therefore, there is no role for data managers.

If a school submits an appeal to the wrong entity or address, the

appeal might not be reviewed and the school could miss the deadline for submitting the appeal to Default Management.

If a data manager receives an economically disadvantaged appeal

from a school, it should immediately contact the school to inform

it that the appeal must be sent to Default Management. The data

manager should also indicate that the request must be sent to

Default Management within the appropriate time frame. The 

data manager should then notify Default Management that the 

data manager has contacted the school.

Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 18

CHAPTER 4.7 - Economically

Disadvantaged Appeal
Economically Disadvantaged Appeal Chapter 4.7

CHAPTER 4.7 - Economically

Disadvantaged Appeal

Page 4.7 - 19

helv con

helv condbld

myriad

700/600

School Economically Disadvantaged Appeal Checklist

Determine

❑ Is the school subject to sanction? (See page 4.7-1)

❑ What is the school’s low income rate? (See page 4.7-3)

❑ For a non-degree-granting school, what is the school’s placement rate? 

(See page 4.7-4)

❑ For a degree-granting school, what is the school’s completion rate? 

(See page 4.7-6)

Submit to Default Management 

❑ Spreadsheet (See page 4.7-8)

❑ Letter (See page 4.7-10)

Submit to Independent Auditor

❑ Spreadsheets (See page 4.7-12)

❑ Other Requested Materials (See page 4.7-12)

❑ Letter (See page 4.7-12)

After receiving independent auditor’s response:

Submit to Default Management

❑ Copy of Independent Auditor’s Response (See page 4.7-16)

❑ Letter (See page 4.7-16)

Independent Auditor to School Economically Disadvantaged Appeal Checklist 

Determine

❑ Does school meet criteria? (See page 4.7-14)

Submit to School

❑ Written Opinion (See page 4.7-14)
Chapter 4.7 Economically Disadvantaged Appeal

Page 4.7 - 20

CHAPTER 4.7 - Economically

Disadvantaged Appeal
Chapter

4.8

Participation

Rate Index

Appeal

What is a participation rate index appeal? . . . . . . . . . . . . . 4.8-1

Which cohort default rate can be used

to determine a participation rate index appeal? . . . . . . . . . . . . . 4.8-1

Which schools are eligible to submit 

a participation rate index appeal? . . . . . . . . . . . . . 4.8-2

What benefit will a school gain from submitting

a participation rate index appeal? . . . . . . . . . . . . . 4.8-2

Are participation rate index appeals 

based on a specific period of time? . . . . . . . . . . . . . 4.8-2

How does a school calculate its participation rate index? . . . . . . . . . . . . . 4.8-4

Does a school need to wait until the official cohort default rate

is released to prepare its participation rate index appeal? . . . . . . . . . . . . . 4.8-6

What roles do the Department and data managers have

in a school’s participation rate index appeal? . . . . . . . . . . . . . 4.8-6

How does a school submit a participation rate index appeal? . . . . . . . . . . . . . 4.8-7

Which Department address does a school use

for submitting a participation rate index appeal? . . . . . . . . . . . . . 4.8-8

What happens after the school submits

the participation rate index appeal? . . . . . . . . . . . . . 4.8-10
helv n

cond
Participation Rate Index Appeal

What is a participation rate index appeal?

A school is not subject to a sanction based on its cohort default rates 

if its participation rate index is 0.0375 or less (for a sanction based on

three consecutive cohort default rates of 25.0 percent or greater) or

0.06015 or less (for a sanction based on one cohort default rate over

40.0 percent). In other words, if a school can demonstrate that the

number of students who obtain loans is very low in relation to the

number of regular students at the school, the school will be able to

avoid sanction.

Figure 4.8.1 shows the time frame for submitting a participation rate

index appeal.

Which cohort default rate can be used to determine a participation rate

index appeal?

A school can submit a participation rate index appeal for any cohort

default rates upon which a sanction is based, depending on the

sanction to which the school is subject. For example, take a sequence

of cohort fiscal years: This Year, Last Year, and Two Years Ago.

If a school is subject to sanction due to three consecutive years of an

official cohort default rate that is 25.0 percent or greater, the school

can submit a participation rate index appeal based on the official

cohort default rate for This Year, Last Year, and/or Two Years Ago. If the

sanction is due to an official cohort default rate for This Year that is

greater than 40.0 percent, the school can submit a participation rate

index appeal based on the official cohort default rate for This Year.

Figure 4.8.2 summarizes the cohort default rates a school can use to

submit a participation rate index appeal.

Participation Rate Index Appeal Chapter 4.8

CHAPTER 4.8 - Participation

Rate Index Appeal

Page 4.8 - 1

Figure 4.8.1

Time Frame for Submitting

a Participation Rate 

Index Appeal

Participation

Rate Index

Appeal

34 CFR 668.195

School receives

notice of loss.

.

School sends

Department completed

Participation Rate

Index Appeal.

Key:

Start

30

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

34 CFR 668.195

Nature of Sanction This Year Last Year Two Years Ago

Three consecutive

years of cohort default

rates that are 25.0

percent or greater

Yes – Official

Cohort Default

Rate

Yes – Official

Cohort Default

Rate

Yes – Official

Cohort Default

Rate

Current cohort default

rate that is greater

than 40.0 percent

Yes – Official

Cohort Default

Rate

No No

Figure 4.8.2

Cohort Default Rates a

School Can Use to Submit

a Participation Rate Index

Appeal
Which schools are eligible to submit a participation rate index appeal?

Only a school that is subject to sanction because of its official cohort

default rate may submit a participation rate index appeal. To avoid

sanction based on three consecutive years of an official cohort

default rate that is 25.0 percent or greater, a school must have a

participation rate index of 0.0375 or less. To avoid sanction based on

an official cohort default rate that is greater than 40.0 percent, a

school must have a participation rate index of 0.06015 or less.

What benefit will a school gain from submitting a participation rate

index appeal?

The U.S. Department of Education (the Department) will withdraw 

a notice of loss of eligibility for a school that submits a successful

participation rate index appeal. If a school’s participation rate index 

is 0.0375 or less, the Department will also excuse the school from any

subsequent loss of eligibility that would be based on that cohort

default rate.

Are participation rate index appeals based on a specific period of time?

The school may base the participation rate index appeal on any 

12-month period that ended during the six months immediately

preceding the start of the cohort fiscal year for which the school is

submitting the participation rate index appeal. A school subject to

sanction because of three consecutive cohort default rates of 25.0

percent or greater can choose to submit a participation rate index

appeal based on any of its three most recent official cohort default

rates. Therefore, the time period will differ based on the cohort fiscal

year used by the school.

The federal fiscal year always begins on October 1. As a result, the six

months immediately preceding the start of a fiscal year will always

begin on April 1 and always end on September 30. Therefore, the 

12-month period the school uses must end no earlier than April 1

and no later than September 30. In order for a 12-month period to

end between April 1 and September 30, it must begin no earlier than

April 2 and no later than October 1 of the preceding year.

Chapter 4.8 Participation Rate Index Appeal

Page 4.8 - 2

CHAPTER 4.8 - Participation

Rate Index Appeal
Figure 4.8.3 is a chart that can be used to determine an acceptable

12-month period. To choose an acceptable 12-month period, a school

should first determine which cohort fiscal year the school will use.

The school then picks a start date from the range listed in the

“Acceptable 12-Month Period Begins Between” column. The end date

will be 12 months after the start date, which will fall in the range

listed in the “Acceptable 12-Month Period Ends Between” column.

Figure 4.8.4 shows an acceptable and some unacceptable 12-month

periods for cohort FY 2001.

A school can select the most beneficial 12-month period available.

In other words, a school can identify the acceptable 12-month period

during which it had the lowest percentage of borrowers and use that

period when calculating its participation rate index.

If a school selects an unacceptable 12-month period, Default

Management will not review any portion of the school’s participation

rate index appeal and the participation rate index appeal will be

denied and returned to the school. A school may contact Default

Management at 1-202-708-9396 to discuss whether the school has

selected an acceptable 12-month period.

Participation Rate Index Appeal Chapter 4.8

CHAPTER 4.8 - Participation

Rate Index Appeal

Page 4.8 - 3

Cohort

Fiscal Year

Cohort Fiscal Year

Start Date

Acceptable 12-Month Period

Begins Between

Acceptable 12-Month Period

Ends Between

1998 10/01/1997 04/02/1996 - 10/01/1996 04/01/1997 - 09/30/1997

1999 10/01/1998 04/02/1997 - 10/01/1997 04/01/1998 - 09/30/1998

2000 10/01/1999 04/02/1998 - 10/01/1998 04/01/1999 - 09/30/1999

2001 10/01/2000 04/02/1999 - 10/01/1999 04/01/2000 - 09/30/2000

2002 10/01/2001 04/02/2000 - 10/01/2000 04/01/2001 - 09/30/2001

2003 10/01/2002 04/02/2001 - 10/01/2001 04/01/2002 - 09/30/2002

2004 10/01/2003 04/02/2002 - 10/01/2002 04/01/2003 - 09/30/2003

2005 10/01/2004 04/02/2003 - 10/01/2003 04/01/2004 - 09/30/2004

Figure 4.8.3

Date Ranges for Acceptable

12-Month Periods

12-Month Period Status Reason

04/02/1999-04/01/2000 Acceptable

Starts within acceptable

range; ends 12 months later

within acceptable range

04/02/1999-04/02/2000 Unacceptable

Starts within acceptable

range; ends more than 12

months later

04/01/1999-03/31/2000 Unacceptable Starts and ends outside

acceptable range

Figure 4.8.4

Acceptable and

Unacceptable 12-Month

Periods for Cohort FY 2001
How does a school calculate its participation rate index?

After selecting the 12-month period, the school determines the total

number of regular students enrolled at least half time and for at least

one day during any part of the 12-month period. It is not necessary

for the student’s entire enrollment period to fall within the 12-month

period. The total number of students is the denominator. The school

then determines the total number of those students who borrowed a

Federal Family Education Loan (FFEL) or William D. Ford Federal Direct

Loan (Direct Loan) for a loan period that overlaps any part of the 

12-month period. The total number of borrowers is the numerator.

A regular student is a student who enrolled or was accepted for

enrollment at a school for the purpose of obtaining a degree, certificate, or other recognized educational credential offered by that

school. To be included in the participation rate index calculation, the

borrower must be a student who was enrolled at least half-time and

enrolled at least one day during the selected 12-month period.

Once the school has divided the total number of FFEL and Direct

Loan borrowers by the total number of regular students, the school

multiplies the result by the cohort default rate upon which the school

is basing the participation rate index appeal. The result is the participation rate index. A participation rate index is calculated as follows:

If a school has fewer than 30 borrowers who entered repayment in

the cohort fiscal year for which the participation rate index is calculated, the participation rate index for that cohort fiscal year may be

calculated using either 

 the cohort default rate that would result from applying the 

non-average rate formula or

 the cohort default rate that would result from applying the

average rate formula.

See Chapter 2.1,“Calculating Cohort Default Rates,” for information

on the formulas used to calculate cohort default rates.

Chapter 4.8 Participation Rate Index Appeal

Page 4.8 - 4

CHAPTER 4.8 - Participation

Rate Index Appeal

Total borrowers in 

12-month period

Total regular

students in ÷ 12-month period

Participation = Rate Index

Total

borrowers

in 12-

month

period 

Total

regular

students in

12-month

period ( ÷ ) School’s

cohort

default

rate

x
To avoid sanction based on three consecutive years of an official

cohort default rate that is 25.0 percent or greater, a school must have

a participation rate index of 0.0375 or less. To avoid sanction based

on an official cohort default rate that is greater than 40.0 percent, a

school must have a participation rate index of 0.06015 or less.

For example, School A’s official cohort default rate is 25.0 percent.

School A’s two most recent official cohort default rates were 26.0

percent and 28.0 percent. As a result, School A is subject to sanction

because it has three consecutive official cohort default rates that are

25.0 percent or greater.

School A decides to base its participation rate index appeal on the

official cohort default rate for the current cohort fiscal year. School A

had a total of 200 regular students enrolled on at least a half-time

basis during any part of the selected 12-month period relating to the

current cohort fiscal year. Of those 200 students, 31 obtained FFELs or

Direct Loans for a loan period that overlapped the 12-month period.

School A’s participation rate index is 0.03875.

Because the participation rate index is greater than 0.0375, School A’s

participation rate index appeal would be unsuccessful.

As another example, School B’s official cohort default rate is 50.0

percent. School B’s two most recent official cohort default rates 

were 20.0 percent and 31.0 percent. As a result, School B is subject 

to sanction only because of an official cohort default rate that is

greater than 40.0 percent.

School B should base its participation rate index appeal on the

official cohort default rate for the current cohort fiscal year. School B

had a total of 100 regular students enrolled on at least a half-time

basis during any part of the selected 12-month period relating to the

current cohort fiscal year. Of these 100 students, 10 obtained FFELs or

Direct Loans for a loan period that overlapped the 12-month period.

School B’s participation rate index is 0.05.

Participation Rate Index Appeal Chapter 4.8

CHAPTER 4.8 - Participation

Rate Index Appeal

Page 4.8 - 5

31

borrowers 

÷ 200

total 

students

= 25.0 percent

official cohort 

default rate ( )x 0.03875

participation

rate index

10

borrowers 

÷ 100

total 

students

50.0

official cohort 

percent =

default rate ( )x 0.05

participation

rate index
Because the participation rate index is less than 0.06015, School B’s

participation rate index appeal would be successful. However, if

School B’s two most recent official cohort default rates are 25.0

percent and 31.0 percent, School B is also subject to sanction because

it will have three consecutive official cohort default rates that are 25.0

percent or greater. In that event, the participation rate index would

have to be 0.0375 or less for the participation rate index appeal to be

successful.

Does a school need to wait until the official cohort default rate is

released to prepare its participation rate index appeal?

If a school is submitting a participation rate index appeal using a

previous cohort fiscal year’s official cohort default rate, it can prepare

a complete participation rate index appeal before it receives its

current year official cohort default rate.

If a school is submitting a participation rate index appeal using the

current cohort fiscal year, it cannot perform the final step in the

process (multiplying the participation ratio by the official cohort

default rate) until the school receives its official cohort default rate.

However, a school can perform the initial steps to identify the data to

include in the calculation before it receives its official cohort default

rate if it believes its current cohort fiscal year official cohort default

rate will incur sanctions. In that way, a school can save time when it

receives its official cohort default rate.

What roles do the Department and data managers have in a school’s

participation rate index appeal?

Schools submit participation rate index appeals directly to Default

Management for review and consideration. Default Management is

responsible for determining whether schools meet the established

participation rate index criteria. Therefore, there is no role for data

managers.

If a school submits an appeal to the wrong entity or address,

the appeal might not be reviewed and the school could miss the

deadline for submitting the appeal to Default Management.

If a data manager receives a participation rate index appeal from 

a school, it should immediately contact the school to inform it 

that the appeal must be sent to Default Management. The data

manager should also indicate that the request must be sent to

Default Management within the 30-calendar-day time frame. The

data manager should then notify Default Management that the 

data manager has contacted the school.

Chapter 4.8 Participation Rate Index Appeal

Page 4.8 - 6

CHAPTER 4.8 - Participation

Rate Index Appeal
How does a school submit a participation rate index appeal?

Timing is critical when submitting a participation rate index appeal.

A school must submit a participation rate index appeal to Default

Management within 30 calendar days of receiving the notice of loss

of eligibility. The participation rate index appeal must include the

following items:

 A participation rate index appeal spreadsheet.

Figure 4.8.5 is a sample participation rate index appeal 

spreadsheet. The instructions for creating and completing 

the spreadsheet are in the “Spreadsheet Tools” section of

Chapter 4.11,“Challenge, Adjustment, and Appeal Tools.”

Using the information on the spreadsheet and the participation

rate index formula, a school must calculate its participation rate

index. As mentioned, to avoid sanction based on three consecutive years of an official cohort default rate that is 25.0 percent or

greater, a school must have a participation rate index of 0.0375

or less. To avoid sanction based on an official cohort default rate

that is greater than 40.0 percent, a school must have a participation rate index of 0.06015 or less. If both sanctions apply, the

participation rate index must be 0.0375 or less.

If a school does not have any students who received FFELs or

Direct Loans with loan periods that overlapped any part of the

selected 12-month period, the school does not have to submit a

spreadsheet to Default Management. However, to avoid sanctions, the school must send Default Management a letter that

identifies the 12-month period and indicates that the school did

not have any students who received loans with loan periods

that overlapped the 12-month period.

Participation Rate Index Appeal Chapter 4.8

CHAPTER 4.8 - Participation

Rate Index Appeal

Page 4.8 - 7

Type: Participation Rate Index Appeal Cohort Default Rate: 50.0%

Cohort FY: 2001 12-Month Period: 09/01/1999 -08/31/2000

From: Graphic Tech Total Borrowers: 2

Code: 099999 Total Regular Students: 50

To: Default Management PRI: 0.02

Code: N/A

Date 10/14/2003 Page 1 of 1

A B C D E

1

Student's

SSN

Student's

Name S ) tudent's Enrollment Dates L d oan Type (if any Loan Perio

2 1 y 11-11-1111 R 0 oss, Bets 0 L 8/15/1999 – 05/26/200 F 0 FE 08/15/1999 – 05/26/200

3 2 n 22-22-2222 A 0 dams, Joh 0 L 8/15/1999 – 05/26/200 D 9 08/15/1999 – 12/30/199

4 3 a 33-33-3333 W 9 ashington, Marth 0 o 8/15/1999 – 12/30/199 N A N/

Figure 4.8.5

Sample School

Participation Rate Index

Appeal Spreadsheet to

Default Management
 A letter on the school’s letterhead.

The letter must include the school’s OPE ID number, a statement

indicating that the school is submitting a participation rate

index appeal, the relevant cohort fiscal years on which the

appeal is based, a certification that the information provided is

true and correct under penalty of perjury, and a list of the other

adjustments or appeals the school intends to submit to Default

Management. The school must also note its participation rate

index and the 12-month period the school selected. The letter

must feature a subject line that reads “Subject: Cohort FY [insert

cohort fiscal year being used in the appeal] Participation Rate

Index Appeal.”The school’s President/CEO/Owner must sign the

letter, and the signature must be followed by a signature block

showing the signer’s name and job title. Figure 4.8.6 is a sample

participation rate index appeal letter.

Schools are not required to submit an independent auditor’s attestation to support the school’s participation rate index appeal.

If a school is submitting a participation rate index appeal for multiple

cohort default rates, it should submit all the participation rate index

appeals in the same mailing to Default Management. However, the

school still needs to submit separate documentation for each participation rate index appeal.

Which Department address does a school use for submitting a 

participation rate index appeal? 

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send participation rate index appeal materials to any

other addresses at the Department.

Default Management recommends that a school send all participation rate index appeal correspondence return receipt requested or

via commercial overnight mail/courier delivery. This will be useful to a

school if it is asked to authenticate the timeliness of its submission. A

school should maintain the documentation that verifies the receipt of

the participation rate index appeal as well as all electronic and hardcopy documentation submitted as a part of the participation rate

index appeal process. If a school does not meet the 30-calendar-day

time frame for submitting a participation rate index appeal, the

participation rate index appeal will not be reviewed.

Chapter 4.8 Participation Rate Index Appeal

Page 4.8 - 8

CHAPTER 4.8 - Participation

Rate Index Appeal

School receives

notice of loss.

.

School sends

Department completed

Participation Rate

Index Appeal.

Start

30

Days
Participation Rate Index Appeal Chapter 4.8

CHAPTER 4.8 - Participation

Rate Index Appeal

Page 4.8 - 9

Graphic Tech

9765 Arts Lane

Coral City, Iowa 12345-9765

1-987-654-3210

October 14, 2003

U.S. Department of Education OPE ID 099999

Default Management

ATTN: Participation Rate Index Appeal

400 Maryland Avenue, SW

Washington, DC 20202-5353

Subject: Cohort FY 2001 Participation Rate Index Appeal

To Whom It May Concern:

Graphic Tech, OPE ID 099999, is submitting a participation rate index appeal based on

our cohort FY 2001 official cohort default rate. Our participation rate index is 0.02. This

index is calculated using a 12-month period that began on September 1, 1999 and ended

on August 31, 2000. I, the undersigned, certify under penalty of perjury that all information submitted in support of this participation rate index appeal is true and correct. 

Graphic Tech is submitting its participation rate index appeal at this time; however, the

school has also timely submitted an uncorrected data adjustment. 

Please see the enclosed spreadsheet. 

Thank you for your consideration. 

Sincerely,

Alexander Peachum

President, Graphic Tech

Enclosure

Figure 4.8.6 - Sample School Participation Rate Index 

Appeal Letter to Default Management
What happens after the school submits the participation rate index

appeal?

Default Management will review, using the standard of review

described in 34 CFR 668.189(f ), only the information submitted with

the participation rate index appeal and will not review information

submitted after the 30-calendar-day deadline. Default Management

will send the school written notification of Default Management’s

decision. Default Management’s decision is final and no further

administrative review is provided.

If the school was notified that it was subject to sanction and the

participation rate index appeal is successful, Default Management

will withdraw the notice of loss of eligibility. If the school’s recalculated participation rate index is 0.0375 or less, the school will not be

subject to a subsequent sanction based on that official cohort default

rate. If the school was notified that it was subject to sanction and the

participation rate index appeal is unsuccessful, and the school has no

other outstanding adjustments or appeals, Default Management will

notify the school of the effective date of the sanction.

A school that submits an adjustment and/or an appeal but fails to

avoid sanctions is liable for certain costs associated with the FFELs 

it certified and delivered and/or the Direct Loans it originated and

disbursed during the adjustment and appeal process. Liabilities are

not calculated for loans that were delivered or disbursed more than

45 calendar days after the school submitted its completed adjustment and/or appeal to the Department. Schools may avoid this

liability if they choose not to certify or originate loans during the

adjustment and appeal process.

Chapter 4.8 Participation Rate Index Appeal

Page 4.8 - 10

CHAPTER 4.8 - Participation

Rate Index Appeal

School to Default Management Participation Rate Index Appeal Checklist 

Determine

❑ Is the school subject to sanction? (See page 4.8-2)

❑ What is the school’s participation rate index? (See page 4.8-4)

Submit to Default Management 

❑ Spreadsheet (See page 4.8-7)

❑ Letter (See page 4.8-8)

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Chapter

4.9

Average

Rates

Appeal

What is an average rates appeal?. . . . . . . . . . . . . 4.9-1

How does a school qualify for a successful average rates appeal

if the school is subject to sanction because of three consecutive

cohort default rates that are 25.0 percent or greater?. . . . . . . . . . . . . 4.9-1

How does a school qualify for a successful average rates

appeal if the school is subject to sanction because of a

cohort default rate that is greater than 40.0 percent?. . . . . . . . . . . . . 4.9-2

How does the average rates appeal process begin?. . . . . . . . . . . . . 4.9-2

What if a school disagrees with the initial 

determination by Default Management?. . . . . . . . . . . . . 4.9-3

Which Department address does a school use 

for submitting an average rates appeal?. . . . . . . . . . . . . 4.9-3

Average Rates Appeal

What is an average rates appeal?

A school facing sanction based on three consecutive official cohort

default rates of 25.0 percent or greater is not subject to that sanction

if at least two of these official cohort default rates are average rates

and would have been less than 25.0 percent if they had been calculated using only the data for that cohort fiscal year alone.

In addition, a school facing sanction based on one official cohort

default rate that is greater than 40.0 percent is not subject to that

sanction if the official cohort default rate was calculated as an average rate.

Figure 4.9.1 shows the time frame for submitting an average rates

appeal.

How does a school qualify for a successful average rates appeal if the

school is subject to sanction because of three consecutive cohort

default rates that are 25.0 percent or greater?

Take a sequence of cohort fiscal years: This Year, Last Year, and Two

Years Ago.

School A, a degree-granting school, certified loans for the following

students:

 7 borrowers who entered repayment This Year 

(of whom none defaulted in the cohort default period),

 26 borrowers who entered repayment Last Year 

(of whom 6 defaulted in that cohort default period), and 

 35 borrowers who entered repayment Two Years Ago 

(of whom 12 defaulted in that cohort default period).

The 18 borrowers (0 + 6 + 12 = 18) who entered repayment and

defaulted are divided by the 68 total borrowers (7 + 26 + 35 = 68) 

to give School A an average cohort default rate for This Year of 26.4

percent. School A had an average cohort default rate for Last Year of

27.6 percent and a non-average cohort default rate for Two Years Ago

of 34.2 percent. Therefore, School A is subject to sanction for This Year

because of three consecutive years of an official cohort default rate

that is 25.0 percent or greater.

Average Rates Appeal Chapter 4.9

CHAPTER 4.9 -

Average Rates Appeal

Page 4.9 - 1

34 CFR 668.196

Average

Rates

Appeal

34 CFR 668.196

School receives

notice of loss.

School sends

Department completed

Average Rates Appeal.

Key:

Start

30

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.9.1

Time Frame for Submitting

an Average Rates Appeal
However, School A had an average cohort default rate for both This

Year and Last Year. Therefore, School A meets the criteria that at least

two of the three most recent official cohort default rates be average

rates. The next criteria is to determine if those cohort default rates

would be less than 25.0 percent if they were calculated using only

data from those cohort fiscal years alone.

If School A’s cohort default rate for This Year was calculated using

only data from This Year, the cohort default rate for This Year would

be 0.0 percent (0 ÷ 7 = 0). If School A’s cohort default rate for Last Year

was calculated using only data from Last Year, the cohort default rate

for Last Year would be 23.0 percent (6 ÷ 26 = .230).

Because the two cohort fiscal years with average cohort default rates

would have been less than 25.0 percent if the rates were calculated

using only data from those years alone, School A’s average rates

appeal will be successful, and the school will not be subject to sanction.

See Chapter 2.1,“Calculating Cohort Default Rates,” for more information on average rates.

How does a school qualify for a successful average rates appeal if the

school is subject to sanction because of a cohort default rate that is

greater than 40.0 percent?

As mentioned, a school facing sanction based on one official cohort

default rate that is greater than 40.0 percent is not subject to that

sanction if the official cohort default rate was calculated as an average rate. Therefore, if the cohort default rate that is greater than 40.0

percent is an average cohort default rate, the school’s average rates

appeal will be successful, and the school will not be subject to sanction.

How does the average rates appeal process begin?

The U.S. Department of Education’s (the Department’s) Default

Management will automatically determine if a school meets the

criteria associated with an average rates appeal. This initial determination will take place prior to the release of the official cohort default

rates. Default Management will notify the school if it is not subject to

sanction at the same time Default Management notifies the school of

its official cohort default rate.

In addition, if a school’s official cohort default rate changes 

because of an adjustment or appeal the school submitted, Default

Management will automatically determine if the change in the

cohort default rate results in the school meeting the criteria for an

average rates appeal.

Chapter 4.9 Average Rates Appeal

Page 4.9 - 2

CHAPTER 4.9 -

Average Rates Appeal
What if a school disagrees with the initial determination by Default

Management?

If a school disagrees with the initial determination by Default

Management, the school may submit an average rates appeal to

Default Management. For a school attempting to avoid a sanction

based on three consecutive years of a cohort default rate that is 25.0

percent or greater, the average rates appeal must include supporting

documentation showing that two of the three official cohort default

rates in question were calculated as average rates and would be less

than 25.0 percent if calculated only for those cohort fiscal years

alone. For a school attempting to avoid a sanction based on a cohort

default rate that is greater than 40.0 percent, the average rates appeal

must include supporting documentation showing that the current

cohort default rate is an average rate. For all average rates appeals, a

school must include a certification from the school’s chief executive

officer that all information is true and correct. A school must send 

the average rates appeal within 30 calendar days of receiving the

Department’s notice of a loss of eligibility.

Which Department address does a school use for submitting an average

rates appeal? 

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send average rates appeal materials to any other addresses at the Department.

Default Management recommends that a school send all average

rates appeal correspondence return receipt requested or via commercial overnight mail/courier delivery. This will be useful to a school if 

it is asked to authenticate the timeliness of its submission. A school

should maintain the documentation that verifies the receipt of the

average rates appeal as well as all electronic and hardcopy documentation submitted as a part of the average rates appeal process. If a

school does not meet the time frame for submitting an average rates

appeal, the average rates appeal will not be reviewed.

Average Rates Appeal Chapter 4.9

CHAPTER 4.9 -

Average Rates Appeal

Page 4.9 - 3

School receives

notice of loss.

School sends

Department completed

Average Rates Appeal.

Start

30

Days
Chapter 4.9 Average Rates Appeal

Page 4.9 - 4

CHAPTER 4.9 -

Average Rates Appeal

School to Default Management Average Rates Appeal Checklist 

Determine

❑ Is the school subject to sanction and, if so, what type? 

(See page 4.9-1)

❑ If the school is subject to sanction because of three consecutive cohort default

rates that are 25.0 percent or greater, were two of those cohort default rates

calculated as average rates? (See page 4.9-1)

❑ If so, would those cohort default rates be less than 25.0 percent if they were

calculated using only that year’s cohort default rate data alone? 

(See page 4.9-1)

❑ If the school is subject to sanction because of a cohort default rate that is 

greater than 40.0 percent, was the cohort default rate calculated as an 

average rate? (See page 4.9-2)

❑ Did the Department automatically grant the school an average rates appeal? 

(See page 4.9-2)

Submit to Default Management 

❑ Supporting Documentation (See page 4.9-3)

❑ Certification (See page 4.9-3)

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Chapter

4.10

Thirty-orFewer

Borrowers

Appeal

What is a thirty-or-fewer borrowers appeal? . . . . . . . . . . . 4.10-1

How does a school qualify for a successful 

thirty-or-fewer borrowers appeal? . . . . . . . . . . . 4.10-1

How does the thirty-or-fewer borrowers appeal process begin? . . . . . . . . . . . 4.10-1

What if a school disagrees with the initial 

determination by Default Management? . . . . . . . . . . . 4.10-2

Which Department address does a school use for 

submitting a thirty-or-fewer borrowers appeal? . . . . . . . . . . . 4.10-2

Thirty-or-Fewer Borrowers Appeal

What is a thirty-or-fewer borrowers appeal?

If a combined total of thirty or fewer borrowers entered repayment in

the three most recent cohort fiscal years used to calculate a school’s

cohort default rates, the school is not subject to sanction.

Figure 4.10.1 shows the time frame for submitting a thirty-or-fewer

borrowers appeal.

How does a school qualify for a successful thirty-or-fewer borrowers

appeal?

Take a sequence of cohort fiscal years: This Year, Last Year, and Two

Years Ago.

School A, a degree-granting school that is subject to sanction, had 

 3 borrowers enter repayment This Year,

 10 borrowers enter repayment Last Year, and 

 5 borrowers enter repayment Two Years Ago.

The combined total number of borrowers who entered repayment 

in School A’s three most recent cohort fiscal years is 18 borrowers 

(3 + 10 + 5 = 18). Because this number is less than thirty, School A’s

thirty-or-fewer borrowers appeal is successful and the school is not

subject to sanction.

How does the thirty-or-fewer borrowers appeal process begin?

The U.S. Department of Education’s (the Department’s) Default

Management will automatically determine if a school meets the

criteria associated with a thirty-or-fewer borrowers appeal. This initial

determination will take place prior to the release of the official cohort

default rates. Default Management will notify the school that it is not

subject to sanction at the same time Default Management notifies

the school of its official cohort default rate.

In addition, if a school’s official cohort default rate changes 

because of an adjustment or appeal the school submitted, Default

Management will automatically determine if the change in the

cohort default rate results in the school meeting the criteria for a

thirty-or-fewer borrowers appeal.

Thirty-or-Fewer Borrowers Appeal Chapter 4.10

CHAPTER 4.10 - Thirty-orFewer Borrowers Appeal

Page 4.10 - 1

34 CFR 668.197

Thirty-or-Fewer

Borrowers

Appeal

34 CFR 668.197

School receives

notice of loss.

.

School sends

Department completed

Thirty-or-Fewer

Borrowers Appeal.

Key:

Start

30

Days

Dept. or data

manager’s

deadline

School 

deadline

School’s

last

deadline

Action not

always

required

Figure 4.10.1

Time Frame for Submitting

a Thirty-or-Fewer

Borrowers Appeal
What if a school disagrees with the initial determination by Default

Management?

If a school disagrees with the initial determination by Default

Management, the school may submit a thirty-or-fewer borrowers

appeal to Default Management. The thirty-or-fewer borrowers appeal

must include supporting documentation showing that there were 

a total of thirty or fewer borrowers in the three most recent cohort

fiscal years used to calculate its cohort default rates. The school must

include a certification from the school’s chief executive officer that all

information is true and correct. The school must send the thirty-orfewer borrowers appeal within 30 calendar days of receiving the

Department’s notice of a loss of eligibility.

Which Department address does a school use for submitting a 

thirty-or-fewer borrowers appeal? 

See the “Which address does a school or data manager use for 

submitting challenge, adjustment, or appeal materials to Default

Management?” section in Chapter 4.11,“Challenge, Adjustment, and

Appeal Tools,” for the address for Default Management. A school

should not send thirty-or-fewer borrowers appeal materials to any

other addresses at the Department.

Default Management recommends that a school send all thirty-orfewer borrowers appeal correspondence return receipt requested or

via commercial overnight mail/courier delivery. This will be useful to 

a school if it is asked to authenticate the timeliness of its submission.

A school should maintain the documentation that verifies the receipt

of the thirty-or-fewer borrowers appeal as well as all electronic and

hardcopy documentation submitted as a part of the thirty-or-fewer

borrowers appeal process. If a school does not meet the time frame

for submitting a thirty-or-fewer borrowers appeal, the thirty-or-fewer

borrowers appeal will not be reviewed.

Chapter 4.10 Thirty-or-Fewer Borrowers Appeal

Page 4.10 - 2

CHAPTER 4.10 - Thirty-orFewer Borrowers Appeal

School to Default Management Thirty-or-Fewer Borrowers Appeal Checklist 

Determine

❑ Is the school subject to sanction? (See page 4.10-1)

❑ Did the school have thirty or fewer borrowers enter repayment in the three 

most recent cohort fiscal years? (See page 4.10-1)

❑ Did the Department automatically grant the school a thirty-or-fewer 

borrowers appeal? (See page 4.10-1)

Submit to Default Management 

❑ Supporting Documentation (See page 4.10-2)

❑ Certification (See page 4.10-2)

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School receives

notice of loss.

.

School sends

Department completed

Thirty-or-Fewer

Borrowers Appeal.

Start

30

Days
Chapter

4.11

Challenge,

Adjustment,

and Appeal

Tools

Which address does a school or data manager 

use for submitting challenge, adjustment, or

appeal materials to Default Management? . . . . . . . . . . . . . 4.11-1

Incorrect Data Challenge, New Data Adjustment,

and Erroneous Data Appeal Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11-2

What types of loan record detail report allegations may a

school submit as a part of an incorrect data challenge,

new data adjustment, or erroneous data appeal? . . . . . . . . . . . . . 4.11-2

What supporting documentation does a

school need to submit with its allegations? . . . . . . . . . . . . . 4.11-2

Does a school need to submit loan record

detail report pages with its allegations? . . . . . . . . . . . . . 4.11-3

What specific allegations and supporting

documentation can a school submit? . . . . . . . . . . . . 4.11-4

Spreadsheet Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11-9

General Spreadsheet Information . . . . . . . . . . . . . 4.11-9

Incorrect Data Challenge / New Data Adjustment /

Erroneous Data Appeal Spreadsheet Instructions . . . . . . . . . . . . . 4.11-12

Participation Rate Index Spreadsheet Instructions . . . . . . . . . . . . . 4.11-14

Uncorrected Data Adjustment / New Data Adjustment 

Spreadsheet Instructions . . . . . . . . . . . . . 4.11-16

Loan Servicing Appeal Spreadsheet Instructions . . . . . . . . . . . . . 4.11-18

Low Income Rate Spreadsheet Instructions . . . . . . . . . . . . . 4.11-20

Placement Rate Spreadsheet Instructions . . . . . . . . . . . . . 4.11-22

Completion Rate Spreadsheet Instructions . . . . . . . . . . . . . 4.11-24

Full-Sized Blank Spreadsheets . . . . . . . . . . . . . 4.11-26
helv n

cond
Challenge, Adjustment, and Appeal

Tools

Which address does a school or data manager use for submitting

challenge, adjustment, or appeal materials to Default Management?

A school or data manager should send challenge, adjustment, or

appeal materials to Default Management via commercial courier 

or the U.S. Postal Service. Default Management will not accept any

challenge, adjustment, or appeal correspondence by facsimile (fax)

or email.

If sent by commercial overnight mail/courier delivery, the address is

U.S. Department of Education

Default Management

ATTN: (Insert type of challenge, adjustment, or appeal here)

830 First Street, NE

Washington, DC 20002

If sent by U.S. Postal Service, the address is

U.S. Department of Education

Default Management

ATTN: (Insert type of challenge, adjustment, or appeal)

400 Maryland Avenue, SW

Washington, DC 20202-5353

A school or data manager should not send challenge, adjustment, or

appeal materials to any other addresses at the U.S. Department of

Education (the Department).

Default Management recommends that all challenge, adjustment, or

appeal correspondence be sent via return receipt requested or via

overnight courier delivery. A school or data manager should maintain

the documentation that verifies the receipt of the correspondence as

well as all electronic and hardcopy documentation submitted as a

part of the challenge, adjustment, or appeal process.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 1
Incorrect Data Challenge, New Data Adjustment,

and Erroneous Data Appeal Tools

What types of loan record detail report allegations may a school submit

as a part of an incorrect data challenge, new data adjustment, or 

erroneous data appeal? 

When submitting an incorrect data challenge, new data adjustment,

or erroneous data appeal, a school must submit allegations about the

accuracy of the data used to calculate the school’s cohort default

rate. The allegations usually fall into three main categories:

 The school alleges that the loan record detail report incorrectly

reports a data element and the data element should be

changed (incorrectly reported).

 The school alleges that the loan record detail report incorrectly

includes a borrower whose repayment date does not fall within

the cohort fiscal year and the borrower should be removed

from the cohort default rate calculation (incorrectly included).

 The school alleges that the loan record detail report incorrectly

excludes a borrower who entered repayment within the cohort

fiscal year and the borrower should be added to the cohort

default rate calculation (incorrectly excluded).

What supporting documentation does a school need to submit with its

allegations?

A school must submit documentation to support its allegations.

Relevant supporting documentation includes, but is not limited to,

the following:

 a copy of a letter to the relevant data manager that informs the

entity of the borrower’s last date of attendance or less-thanhalf-time date and proof that the documentation was timely

sent to the data manager;

 a dated copy of a Student Status Confirmation Report (SSCR)

that confirms the borrower’s last date of attendance or lessthan-half-time date and proof that the documentation was

timely submitted;

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 2

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools
 a screen print from the SSCR function within the National

Student Loan Data System (NSLDS) that confirms the borrower’s

last date of attendance or less-than-half-time date was timely

recorded within NSLDS; or

 a copy of a canceled check, front and back, or other documentation showing that the borrower’s loan was fully refunded and

canceled within 120 days of disbursement by the lender.

A school may contact the data manager for additional information 

on types of supporting documentation the school should submit to

support an allegation. In addition to submitting documentation to

support the allegation, the school must also submit proof that the

supporting documentation was timely submitted to the data manager or NSLDS.

If the data a school submits was never originally submitted to the

relevant data manager or NSLDS, or if the data was not submitted in 

a timely manner, the data manager should respond that the issue in

question was determined based on the best information available at

the time and that, as a result, no change is warranted for cohort

default rate purposes.

Does a school need to submit loan record detail report pages with its

allegations?

A school must always submit the appropriate pages of the loan

record detail report to support its allegations. The school should

include the loan record detail report page where the school is 

alleging the borrower data has been

 incorrectly reported,

 incorrectly included, or

 incorrectly excluded.

In certain circumstances the school must submit multiple loan record

detail report pages from the same cohort fiscal year. If the borrower

has multiple loans that appear on more than one page, the school

should include each page where the borrower appears. If the borrower is missing from the cohort default rate calculation, and the missing

borrower would have appeared at the bottom of one page or the top

of the next page, the school should include both pages.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 3
In other circumstances the school must submit loan record detail

report pages from multiple cohort fiscal years. If the school alleges

that a borrower was incorrectly reported in one cohort fiscal year and

should have been reported in another cohort fiscal year, the school

must include the relevant loan record detail report pages from both

cohort fiscal years.

Finally, in some circumstances the school must submit pages from

the loan record detail report for the draft cohort default rates and 

the loan record detail report for the official cohort default rates. If 

the school is alleging that the loan record detail report for the official

cohort default rates contains new data, the school must show the

page(s) from the loan record detail report for the draft cohort default

rates where the borrower initially appeared or should have appeared

and the page(s) from the loan record detail report for the official

cohort default rates where the new data appears or should have

appeared.

What specific allegations and supporting documentation can a school

submit?

On the following pages are five charts that outline allegations a

school might submit. The allegations listed in this section are common allegations; a school may submit an allegation not covered in

this section.

To use the charts, read down the left-hand column named

“Allegation.” Once you find an allegation that is appropriate to your

situation (if you are a representative of a school) or an allegation a

school has submitted (if you are a representative of a data manager),

read across the chart to find an explanation of the allegation and a

listing of the documentation required to support the allegation.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 4

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools
Figure 4.11.1 outlines several situations where a school believes a

borrower was incorrectly reported on a loan record detail report

because of an incorrect date entered repayment. If the date were

changed, the borrower would either remain in the current cohort

fiscal year or move to a different cohort fiscal year. In all of these

situations the school must provide proof of timely submission of any

required documentation. The school should also provide loan record

detail report pages from the cohort fiscal year where the borrower is

included and/or excluded and, if applicable, loan record detail report

pages from the cohort fiscal year where the school believes the

borrower should be included.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 5

Allegation What does the school allege? What is the school

requesting?

What supporting

documentation should

the school enclose?

Incorrect last date

of attendance or

less-than-half-time

enrollment date

That the correct change in

enrollment status was timely

submitted to the data manager

or NSLDS

That the date entered

repayment be changed

Documentation of the

enrollment status change

Unexpired grace

period

That the borrower re-enrolled

at least half-time at their school

or another school before the

grace period ended

That the date entered

repayment be changed

Documentation of the

enrollment status change

Death, disability,

bankruptcy, or other

type of discharge

before expiration

of grace period

That the loan was discharged

before the borrower entered

repayment

That the date entered

repayment be changed

to the date the loan was

discharged

Documentation that the

loan was discharged

before the scheduled

date entered repayment

Loan paid in full

prior to expiration

of grace period

That the loan was paid in full

before the borrower entered

repayment

That the date entered

repayment be changed

to the date the loan was

paid in full

Documentation that the

loan was paid in full

before the scheduled

date entered repayment

Repayment began

before expiration

of grace period

That the borrower began

making scheduled loan

payments before the expiration

of the grace period

That the date entered

repayment be changed

to the date the borrower

started repayment

Documentation showing

that the borrower made

a full scheduled payment

before the scheduled

date entered repayment

Federal SLS loan

and Federal Stafford

Loan not linked

That the borrower's Federal

SLS loan and Federal Stafford

Loan should be linked because

the loans were obtained during

the same period of continuous

enrollment

That the date entered

repayment be changed

so that the Federal SLS

loan and Federal Stafford

Loan are linked in the

same cohort default rate

calculation

Documentation showing

that the loans were

obtained in the same

period of continuous

enrollment

Figure 4.11.1

Borrower Incorrectly

Reported Due to Inaccurate

Date Entered Repayment
Figure 4.11.2 outlines several situations where a school believes a

borrower was incorrectly reported in default on a loan record detail

report. If the default were removed, the borrower would be removed

from the numerator of the cohort default rate calculation and would

remain only in the denominator of the cohort default rate calculation.

In all of these situations the school must provide proof of timely

submission of any required documentation. The school should also

provide loan record detail report pages from the cohort fiscal year

where the borrower is incorrectly reported in default.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 6

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Allegation What does the school allege? What supporting documentation

should the school enclose?

Insufficient delinquency

period

That the borrower did not receive the

entire pre-default delinquency period

The delinquency report from the

data manager demonstrating the

actual delinquency period

In-school deferment That the borrower received an

in-school deferment and did not

default during the cohort default

period

The in-school deferment

documentation

Forbearance That the borrower received a

forbearance and did not default

during the cohort default period

The forbearance documentation

Death, disability,

bankruptcy, or other

type of loan discharge

before default occurred

That the loan was discharged before

the borrower defaulted during the

cohort default period

Documentation that the loan was

discharged before the default

Loan was repurchased and

no subsequent claim paid

That the lender repurchased the loan

due to incorrect claim submission and

no subsequent default claim was paid

on the loan during the cohort default

period

(Note: Repurchases due to courtesy or

a new repayment plan will not remove

the loan from default in the cohort

default rate calculation)

The delinquency report from the

data manager

Rehabilitation achieved That the borrower successfully

rehabilitated the loan for cohort

default rate purposes

The borrower's repayment record

from the servicer

Loan did not default for

cohort default rate purposes

Loan did not default or loan did not

default during the cohort default

period

The borrower's repayment record

from the servicer or the delinquency

report from the data manager

demonstrating the actual

delinquency period

Figure 4.11.2

Borrower Incorrectly

Reported Due To 

Inaccurate Default Status
Figure 4.11.3 outlines three situations where a school believes a

borrower is incorrectly reported on a loan record detail report

because the borrower has multiple loans. In all of these situations 

the school must provide proof of timely submission of any required

documentation.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 7

Allegation What does the

school allege?

What is the school

requesting?

What supporting

documentation

should the school

enclose?

Which loan record

detail report pages

should the school

enclose?

Wrong social

security number

– borrower is

counted more

than once in a

cohort default

rate calculation

That the borrower

has been included

more than once in

the cohort default

rate calculation

because of two

different social

security numbers

The removal of the

incorrect social security

number and removal of

the data if the loan is

duplicated or the

addition of the data

under the correct social

security number if the

loan is not a duplicated

loan

Documentation of

the correct social

security number

The pages from the

cohort fiscal years

where the borrower

has been included

under each social

security number

Borrower has

multiple loans

in one cohort

default rate

calculation that

belong in

several cohort

default rate

calculations

That the borrower

had one or more

breaks in enrollment

and used the entire

grace period before

obtaining more

loans

A change to the date

entered repayment and

the removal of one or

more loans from the

same cohort fiscal year

and the addition

of those loans to the

correct cohort fiscal

year

Documentation of

the enrollment

status change

The pages from the

cohort fiscal year

where the borrower

is included and, if

applicable, the

cohort fiscal year

where the borrower

should be included

Borrower has

multiple loans

that should be

included in only

one cohort

default rate

calculation

That the borrower

was continuously

enrolled at least

half-time and did

not use the entire

grace period

A change to the date

entered repayment and

that all loans be moved

to the correct cohort

fiscal year

Documentation of

the enrollment

status history

The pages from the

cohort fiscal year

where the borrower

is included and, if

applicable, the

cohort fiscal year

where the borrower

should be included

Figure 4.11.3

Borrower Incorrectly

Reported Due To 

Multiple Loan Allegations
Figure 4.11.4 outlines two situations where a school believes a borrower was incorrectly included on a loan record detail report. If the

allegation were upheld, the borrower would be removed from the

numerator and denominator of the cohort default rate calculation.

In both of these situations the school must provide proof of timely

submission of any required documentation. The school should also

provide loan record detail report pages from the cohort fiscal year

where the borrower is incorrectly included.

Figure 4.11.5 outlines a situation where a school believes a borrower

was incorrectly excluded on a loan record detail report because of 

an incorrect date entered repayment. If the date entered repayment

were changed, the borrower would be included in the cohort default

rate calculation. The school must provide proof of timely submission

of any required documentation. The school should also provide loan

record detail report pages from the cohort fiscal year where the

borrower is incorrectly excluded.

There is one special allegation in which a non-degree-granting

proprietary school believes that the cohort default rate calculation

incorrectly includes a Direct Loan in default under other specified

conditions. The school should ask the Direct Loan servicer to verify

that the criteria for including the loan as defaulted have been met.

If the Direct Loan servicer concludes that the loan’s status has been

determined accurately, and the loan meets the criteria to be counted

as a defaulted loan, the Direct Loan servicer will send the school the

repayment record for the loan. The school then reviews that record

and, if it disagrees or questions the determination, the school may

request clarification from the Direct Loan servicer within 15 calendar

days. The Direct Loan Servicer then has 20 calendar days to respond

to the school. If the Direct Loan servicer believes the loan’s status has

been determined incorrectly and agrees to remove the borrower

from the numerator of the cohort default rate calculation, the Direct

Loan servicer will not send repayment information to the school.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 8

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Figure 4.11.4

Borrower Incorrectly

Included Allegations

Figure 4.11.5

Borrower Incorrectly

Excluded Allegation

Allegation What does the school allege? What supporting documentation

should the school enclose?

Incorrect last date of

attendance or less-thanhalf-time enrollment date

That the correct enrollment status

information was timely submitted to

the data manager or NSLDS

Documentation of the enrollment

status change

Allegation What does the school allege? What supporting documentation

should the school enclose?

Loan fully

cancelled

That the loan was fully cancelled within 120 days

of disbursement (partially cancelled loans are

included in the cohort default rate calculation)

Copies of the front and back of the

cancelled check or documentation of

an electronic funds transfer

Loan does not

meet insurance

requirements

That the lender did not meet the insurance

requirements and the loan became an uninsured

loan

Information from the data manager

that the loan was repurchased by the

lender
Spreadsheet Tools

General Spreadsheet Information

This chapter contains instructions for creating and completing the

spreadsheets used when a school is submitting or a data manager is

responding to challenges, adjustments, and appeals. Where possible,

instructions for similar spreadsheets have been combined. There is a

reduced version of a blank spreadsheet with each set of instructions.

The spreadsheets should be created in landscape format using a

spreadsheet software application such as Excel or Lotus 1-2-3.

After creating the spreadsheet electronically, a school or data 

manager should save a blank copy of the electronic spreadsheet 

as a template for future use. The template should be updated if

Default Management issues updates to the spreadsheets. The 

school or data manager should then complete the spreadsheet.

There are several things a school or data manager should do when

creating and completing a spreadsheet. They include

 entering Social Security Numbers (SSNs) in a 000-00-0000

format;

 entering names in a Last Name, First Name format;

 entering dates in a MM/DD/CCYY format where M is month,

D is Day, C is century, and Y is year;

 using the loan type codes from Figure 2.3.6 in Chapter 2.3,

“Loan Record Detail Report;”

 entering data according to the school’s records (when a school

completes the spreadsheets) or entering data according to the

data manager’s records (when a data manager completes the

spreadsheets) or the loan record detail report (if that data is

accurate); and

 entering multiple loans of the same type with the same data on

the same line and multiple loans of different types or with

different data on separate lines.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 9
When completing the left-side header titles, the following information is requested:

Type: Enter the type of challenge, adjustment, or appeal 

being submitted.

Cohort FY: Enter the cohort fiscal year submitted.

From: Enter the entity completing the spreadsheet, either a

school or a data manager.

Code: Enter the appropriate code for the entity completing 

the spreadsheet, either the OPE ID for a school or the 

data manager code for a data manager.

To: Enter the entity to which the spreadsheet will be 

submitted, either a school, a data manager, an independent auditor, or Default Management.

Code: Enter the appropriate code for the entity to which the

spreadsheet will be submitted, either the OPE ID for a

school, the data manager code for a data manager, or 

N/A (not applicable) for Default Management or an

independent auditor.

There are also several optional things that can be done when creating and completing the spreadsheet to make the spreadsheet easier

to read. They include

 bolding the spreadsheet titles,

 centering and bolding the column titles,

 making sure the columns are wide enough to fit all text,

 adding borders to the cells,

 repeating the information in the column headings at the top of

each page (most software packages can do this automatically–

check the software package’s help function for assistance),

 sorting the spreadsheet by SSN or Last Name,

 printing a test copy to review for readability (a school or data

manager may need to insert several lines prior to Row 1 in order

to create sufficient space between the header and the spreadsheet), and

 setting up automatic pagination so that the specific page

number and the total number of pages show in the footer 

on each page.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 10

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:
After the spreadsheet is created and completed, the spreadsheet

should be printed on 8 1/2” x 11” paper in a landscape layout. The

spreadsheet should be saved so it can be used again later in the

process. For example, by cutting and pasting, a school could reuse 

an incorrect data challenge spreadsheet as an uncorrected data

adjustment spreadsheet or an erroneous data appeal spreadsheet.

You should note that some spreadsheet programs limit the amount

of information that can be placed in a header. If you get an error

message that states the header has exceeded the maximum space

limit, try abbreviating some of the titles in the header. As an alternative, you can list some of the titles in the first few lines of the

spreadsheets instead of in the header. However, if you list titles in the

first few lines of the spreadsheet, make sure you set the spreadsheet

program to repeat those lines on all of the pages of the spreadsheet.

There are also full-sized blank spreadsheets at the end of this chapter.

A school or data manager may photocopy and use the full-sized

blank spreadsheets instead of creating their own spreadsheets. If a

school or data manager photocopies and uses the full-sized blank

spreadsheet, they should remember to return the full-sized blank

spreadsheet to this chapter of the Guide. They should also remember

to circle the appropriate titles on the spreadsheet, since many of the

spreadsheets are designed to be multi-purpose, covering several

different challenge, adjustment, or appeal types.

A school or data manager may also obtain electronic templates 

of the spreadsheets from Default Management. Contact Default

Management at 1-202-708-6048 for additional information.

After the spreadsheet is completed, it should be sent to the 

appropriate location (for a school, this will be to a data manager, an

independent auditor, or Default Management; for a data manager,

this will be a school or Default Management) along with the other

challenge, adjustment, or appeal materials.

Although a school is required to submit a hardcopy of a spreadsheet

to a data manager, some data managers may be willing to accept an

electronic copy of a spreadsheet in addition to the hardcopy of a

spreadsheet. Submitting an electronic copy in addition to the hardcopy may speed processing. A school should contact the relevant

data manager to see if the data manager will accept an electronic

copy in addition to the hardcopy.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 11
Incorrect Data Challenge / New Data Adjustment / Erroneous Data

Appeal Spreadsheet Instructions

Figure 4.11.6 is an example of a blank incorrect data challenge/

new data adjustment/erroneous data appeal spreadsheet that 

can be used by either a data manager or a school.

 Left-side Header: Enter the titles shown in Figure 4.11.6. After

each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.6.

After each title, enter the information appropriate to that title.

The information cannot be entered until the remainder of the

spreadsheet is created and completed. After “Number of

Borrowers:” enter the borrowers from Column A. Do not count 

a borrower more than once. After “Number of Loans:” enter the

total loans from Column D.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

For each Column A through M, on Row 1 enter the title as shown in

Figure 4.11.6. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Borrower’s SSN: Enter the SSNs of all the borrowers.

 Column B, Borrower’s Name: Enter the names of the individuals

whose SSNs are listed in Column A.

 Column C, Type of Loan: Enter the code for the loan.

 Column D, Number of Loans: Enter the number of loans the

borrower received for the loan type listed in Column C for 

that data manager.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 12

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: Number of Borrowers:

Cohort FY: Number of Loans:

From:

Code:

To:

Code:

Date __/__/_____ Page __ of ___

A B C D E F G H I J K L M

1

Borrower's

SSN

Borrower's

Name

Type

of

Loans

Number

of

Loans

Basis of

Alleged

Error

Earlier of

LDA or

LTH

Date

Entered

Repayment

CPD, DD,

ICRD, or

N/A

Cohort

FY(s)

Effect on

Calculation Comments Agree/Disagree

Data

Manager

Code

2

3

Figure 4.11.6

Blank Incorrect Data

Challenge/New Data

Adjustment/Erroneous Data

Appeal Spreadsheet

Right-side Header Titles:

Number of Borrowers:

Number of Loans:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Incorrect Data Challenge

• School to Data Manager

• Data Manager to School

New Data Adjustment

• School to Data Manager

• Data Manager to School

Erroneous Data Appeal 

• School to Data Manager

• Data Manager to School 

• School to Default Management
 Column E, Basis of Alleged Error: Enter “Disputed” if the errors are

alleged on the basis of disputed data or “New” if the errors are

alleged on the basis of new data. Include this column only when

creating an erroneous data appeal spreadsheet.

 Column F, Earlier of LDA or LTH: Enter the earlier of the student’s

last date of attendance (LDA) or the date the student dropped

below half-time enrollment (LTH) based on the school’s records

(if a school is completing the spreadsheet) or the data manager’s records (if the data manager is completing the spreadsheet)

for each borrower listed in Column A.

 Column G, Date Entered Repayment: Enter the date the loan

entered repayment (DER) based on the school’s records or the

data manager’s records for each borrower listed in Column A.

 Column H, CPD, DD, ICRD, or N/A: Enter the CPD (claim paid date),

DD (default date), or ICRD (Income Contingent Repayment

date), or enter “N/A” if the loan has not defaulted, based on the

school’s records or the data manager’s records for each borrower listed in Column A.

 Column I, Cohort FY(s): Enter the cohort fiscal year(s) of the

cohort default rate(s) which may be changed as a result of the

data correction.

 Column J, Effect on Calculation: Enter N (numerator), D (denominator), or B (both numerator and denominator), accompanied

by a plus or minus sign (such as +D or –D) to show how the

school or the data manager believes the information will affect

the cohort default rate calculation.

 Column K, Comments: Enter any comments. A data manager

should make a comment to identify why the data manager

agreed or disagreed. The data manager should also provide

documentation to support the data manager’s determination.

 Column L, Agree/Disagree: A data manager should enter “agree”

or “disagree” depending on whether the data manager agrees 

or disagrees with the school’s allegation. This column will be

completed only by data managers.

 Column M, Data Manager Code: Enter the code for the data

manager that sent the letters listed in Column D. Include this

column when creating an erroneous data spreadsheet to

Default Management.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 13
Participation Rate Index Spreadsheet Instructions

Figure 4.11.7 is an example of a blank participation rate index spreadsheet.

 Left-side Header: Enter the titles shown in Figure 4.11.7.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.7.

After each title, enter the information appropriate to that title.

After “Cohort Default Rate” enter the cohort default rate used 

in the participation rate index challenge or the participation

rate index appeal. After “12-Month Period” enter the selected 

12-month period. The information in the next three lines cannot

be entered until the remainder of the spreadsheet is created

and completed. After “Total Borrowers:” enter the borrowers

from Column D. After “Total Regular Students:” enter the total

students from Column A. After “PRI:” enter the participation rate

index. Calculate the participation rate index by dividing the total

borrowers by the total regular students and multiplying the

result by the cohort default rate.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 14

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: Cohort Default Rate:

Cohort FY: 12-Month Period:

From: Total Borrowers:

Code: Total Regular Students:

To: PRI:

Code:

Date ___/___/_____ Page __ of ___

A B C D E

1

Student's

SSN

Student's

Name

Student's Enrollment Dates

Loan Type

(if any) Loan Period

2

3

4

5

6

Figure 4.11.7

Blank Participation Rate

Index Spreadsheet

Right-side Header Titles:

Cohort Default Rate:

12-Month Period:

Total Borrowers:

Total Regular Students:

PRI:

Use for:

Participation Rate Index Challenge

• School to Default Management

Participation Rate Index Appeal

• School to Default Management

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:
For each Column A through E, on Row 1 enter the title as shown in

Figure 4.11.7. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Student’s SSN: Enter the SSNs of all the regular 

students enrolled on at least a half-time basis during any part 

of the selected 12-month period. These are the students who

will be counted in the denominator of the participation rate

index.

 Column B, Student’s Name: Enter the names of the students

whose SSNs are listed in Column A.

 Column C, Student’s Enrollment Dates: Enter the student’s beginning enrollment date and ending enrollment date.

 Column D, Loan Type (if any): Enter the type of loan (FFEL or DL)

for those students in Column A who received loans with a loan

period that overlaps the selected 12-month period. Enter “No” if

the student did not receive a loan or the loan period does not

overlap the 12-month period. These are the borrowers who will

be included in the numerator of the participation rate index.

 Column E, Loan Period: Enter the beginning date and ending

date of the loan period. If Column D is marked “No,” enter “N/A.”

If the borrower has more than one loan, list the loan periods

associated with each loan. However, the borrower is only counted once in the participation rate index calculation.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 15
Uncorrected Data Adjustment / New Data Adjustment Spreadsheet

Instructions

Figure 4.11.8 is an example of a blank uncorrected data adjustment/

new data adjustment spreadsheet.

 Left-side Header: Enter the titles shown in Figure 4.11.8.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.8.

After each title, enter the information appropriate to that title.

The information cannot be entered until the remainder of 

the spreadsheet is created and completed. After “Number of

Borrowers:” enter the borrowers from Column A. Do not count 

a borrower more than once. After “Number of Loans:” enter the

total loans from Column D.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 16

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: Number of Borrowers:

Cohort FY: Number of Loans:

From:

Code:

To:

Code:

Date ___/___/_____ Page __ of ___

A B C D E F

1

Borrower's

SSN

Borrower's

Name

Type of

Loans

Number

of Loans

Date Data Manager

Agreed

Data Manager

Code

2

3

4

5

6

Figure 4.11.8

Blank Uncorrected Data

Adjustment/New Data

Adjustment Spreadsheet

Right-side Header Titles:

Number of Borrowers:

Number of Loans:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Uncorrected Data Adjustment

• School to Default Management

New Data Adjustment

• School to Default Management
For each Column A through F, on Row 1 enter the title as shown in

Figure 4.11.8. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Borrower’s SSN: Enter the SSNs of all the borrowers 

for whom the school is requesting an adjustment.

 Column B, Borrower’s Name: Enter the names of the individuals

whose SSNs are listed in Column A.

 Column C, Type of Loans: Enter the code for the loan.

 Column D, Number of Loans: Enter the number of loans the

borrower received for the loan type listed in Column C for 

that data manager.

 Column E, Date Data Manager Agreed: For each borrower in

Column A, enter the date of the data manager response letter

from the Incorrect Data Challenge for an uncorrected data

adjustment spreadsheet or for the new data adjustment allegations response for a new data adjustment spreadsheet.

 Column F, Data Manager Code: Enter the code for the data

manager that sent the response letters listed in Column E.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 17
Loan Servicing Appeal Spreadsheet Instructions

Figure 4.11.9 is an example of a blank loan servicing appeal spreadsheet that can be used by either a data manager or a school.

 Left-side Header: Enter the titles shown in Figure 4.11.9.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.9.

After each title, enter the information appropriate to that title.

The information cannot be entered until the remainder of the

spreadsheet is created and completed. After “Number of

Borrowers:” enter the borrowers from Column A. Do not count 

a borrower more than once. After “Number of Loans:” enter the

total loans from Column D.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

For each Column A through O, on Row 1 enter the title as shown in

Figure 4.11.9. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Borrower’s SSN: Enter the SSNs of all the borrowers in

the sample.

 Column B, Borrower’s Name: Enter the names of the individuals

whose SSNs are listed in Column A.

 Column C, Type of Defaulted Loans: Enter the code for the loan.

 Column D, Number of Defaulted Loans: Enter the number of loans

the borrower received for the loan type listed in Column C for

that data manager.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 18

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: Number of Borrowers:

Cohort FY: Number of Loans:

From:

Code:

To:

Code:

Date __/__/_____ Page __ of ___

A B C D E F G H I J K L M N O

1

Borrower's

SSN

Borrower's

Name

Type

of

Defaulted

Loans

Number of

Defaulted

Loans

Payment

Made?

Date

Letter

Sent

Date Call

Attempted

Date

Pre-Claims

Assistance

Requested

Date Final

Demand

Letter

Sent

Address

Known?

Date of

Skip

Tracing

Activity

Illegible

Record?

Missing

Record?

Improperly

Serviced?

Data

Manager

Code

2

3

Figure 4.11.9

Blank Loan Servicing

Appeal Spreadsheet

Right-side Header Titles:

Number of Borrowers:

Number of Loans:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Loan Servicing Appeal

• Data Manager to School 

• School to Default Management
 Column E, Payment Made?: Enter “Yes” or “No.”

 Column F, Date Letter Sent: Enter the date a letter other than the

final demand letter was sent. If no letter other than the final

demand letter was sent, enter “No.”

 Column G, Date Call Attempted: Enter the date an attempt was

made to contact the borrower by telephone. If no telephone 

call was attempted, enter “No.”

 Column H, Date Pre-Claims Assistance Requested: Enter the date

pre-claims assistance was requested. If pre-claims assistance was

not requested, enter “No.” If the loan is a Direct Loan, enter

“N/A.”

 Column I, Date Final Demand Letter Sent: Enter the date the final

demand letter was sent. If no final demand letter was sent, enter

“No.”

 Column J, Address Known?: Enter “Yes” or “No.”

 Column K, Date of Skip Tracing Activity: Enter the date the skip

tracing took place if the borrower’s address was unknown. If

skip tracing did not take place or skip tracing was not required,

enter “No.” If the borrower’s address was known, enter “N/A.”

 Column L, Illegible Record?: Enter “Yes” if the loan serving record

the data manager provided was illegible. If the loan servicing

record was legible, enter “No.”

 Column M, Missing Record?: Enter “Yes” if the data manager failed

to provide a loan servicing record. If the data manager provided

a loan servicing record, enter “No.”

 Column N, Improperly Serviced?: Enter “Yes” for each loan that is

improperly serviced for cohort default rate purposes. See the

definition of improperly serviced in Chapter 4.6,“Loan Servicing

Appeal." If a loan is properly serviced for cohort default rate

purposes, it should be deleted from the spreadsheet and should

not be sent to Default Management for review.

 Column O, Data Manager Code: Enter the code for the data

manager that sent the letters listed in Column F. This column

should only be included when completing a school loan 

servicing appeal spreadsheet to Default Management.

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 19
Low Income Rate Spreadsheet Instructions

Figure 4.11.10 is an example of a blank low income rate spreadsheet.

 Left-side Header: Enter the titles shown in Figure 4.11.10.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.10.

After each title, enter the information appropriate to that title.

After “12-Month Period:” enter the selected 12-month period.

After “Award Years:” enter the award years coinciding with the

12-month period. After “Calendar Years:” enter the calendar

years coinciding with the 12-month period. The information in

the next three lines cannot be entered until the remainder of

the spreadsheet is created and completed. After “Low Income

Students:” enter the students from Column D. After “Total

Students:” enter the students from Column A. After “Low Income

Rate:” enter the low income rate. Calculate the low income rate

by dividing the low income students by the total students.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 20

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: 12-Month Period:

Cohort FY: Award Years:

From: Calendar Years:

Code: Low Income Students:

To: Total Students:

Code: Low Income Rate:

Date __/__/____ Page __ of ___

A B C D E F

1

Student's

SSN

Student's

Name

Student's

Enrollment Dates

Economically

Disadvantaged

EFC and

Award Year

AGI, Family Size,

and Calendar Year

2

3

4

5

6

Figure 4.11.10

Blank Low Income Rate

Spreadsheet

Right-side Header Titles:

12-Month Period:

Award Years:

Calendar Years:

Low Income Students:

Total Students:

Low Income Rate:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Economically Disadvantaged Appeal

• School to Independent Auditor 

• School to Default Management
For each Column A through F, on Row 1 enter the title as shown in

Figure 4.11.10. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Student’s SSN: Enter the SSNs of all the students

enrolled on at least a half-time basis in a Title IV eligible program during any part of the selected 12-month period. These

are the students who will be counted in the denominator of 

the low income rate calculation.

 Column B, Student’s Name: Enter the names of the students

whose SSNs are listed in Column A.

 Column C, Student’s Enrollment Dates: Enter the student’s beginning enrollment date and ending enrollment date.

 Column D, Economically Disadvantaged: Enter “Yes” if the student

meets the criteria for low income outlined in the section of

Chapter 4.7,“Economically Disadvantaged Appeal,” entitled

”How does a school calculate its low income rate?” If the student

is not considered low income, enter “No.”These are the students

who will be counted in the numerator of the low income rate

calculation.

 Column E, EFC and Award Year: Enter the student’s EFC and the

applicable award year if the student is considered low income

because of his or her EFC. Enter the information in the following

format: EFC/Award Year. If Column D is marked “No,” enter “N/A.”

If the student is considered low income because of his or her

AGI, enter “N/A.”

 Column F, AGI, Family Size, and Calendar Year: Enter the student’s

AGI, family size, and the applicable calendar year if the student

is considered low income because of his or her AGI. Enter the

information in the following format: AGI/Family Size/Calendar

Year. If Column D is marked “No,” enter “N/A.” If the student is

considered low income because of his or her EFC, enter “N/A.”

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 21
Placement Rate Spreadsheet Instructions

Figure 4.11.11 is an example of a blank placement rate 

spreadsheet.

 Left-side Header: Enter the titles shown in Figure 4.11.11.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.11.

After each title, enter the information appropriate to that title.

After “12-Month Period” enter the selected 12-month period.

The information in the next three lines cannot be entered until

the remainder of the spreadsheet is created and completed.

After “Placed Students” enter the students from Column F.

After “Total Students” enter the students from Column A. After

“Placement Rate:” enter the placement rate. Calculate the placement rate by dividing the placed students by the total students.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 22

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: 12-Month Period:

Cohort FY: Placed Students:

From: Total Students:

Code: Placement Rate:

To:

Code:

Date ___/___/____ Page __ of ___

A B C D E F G H I

1

Student's

SSN

Student's

Name

Student's

Scheduled

Completion

Date

Student's

Enrollment

Dates

Student's

Program

of Study

Student

Placed

Student's

Employment

Dates

Student's

Job

Description

Student's

Employer:

Name, Address

and Phone

2

3

4

5

6

Figure 4.11.11

Blank Placement Rate

Spreadsheet

Right-side Header Titles:

12-Month Period:

Placed Students:

Total Students:

Placement Rate:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Economically Disadvantaged Appeal

• School to Independent Auditor 

• School to Default Management
For each Column A through I, on Row 1 enter the title as shown in

Figure 4.11.11. Then, beginning with Row 2, enter the corresponding

information as listed below:

 Column A, Student’s SSN: Make an entry for each student 

who meets the criteria for inclusion outlined in the section 

of Chapter 4.7,“Economically Disadvantaged Appeal,” entitled

“How does a non-degree granting school calculate its 

placement rate?”These are the students who will be counted 

in the denominator of the placement rate calculation.

 Column B, Student’s Name: Enter the names of the students

whose SSNs are listed in Column A.

 Column C, Student’s Scheduled Completion Date: Enter the 

student’s scheduled completion date.

 Column D, Student’s Enrollment Dates: Enter the student’s 

beginning enrollment date and ending enrollment date.

 Column E, Student’s Program of Study: Enter the student’s 

program of study. Do not use abbreviations.

 Column F, Student Placed: Enter “Yes” if the student meets the

criteria for placement outlined in the section of Chapter 4.7,

“Economically Disadvantaged Appeal,” entitled “How does a

non-degree-granting school calculate its placement rate?” If 

the student does not meet these criteria, enter “No.”These are

the students who will be counted in the numerator of the

placement rate calculation.

 Column G, Student’s Employment Dates: For every student with 

a “Yes” in Column F, enter the student’s beginning employment

date and ending employment date. If the student is still

employed, enter “present” as the student’s ending employment

date. If there is a “No” in Column F, enter “N/A.”

 Column H, Student’s Job Description: For every student with a

“Yes” in Column F, enter the student’s job description. Do not 

use abbreviations. If there is a “No” in Column F, enter “N/A.”

 Column I, Student’s Employer: Name, Address, and Phone: For

every student with a “Yes” in Column F, enter the employer’s

name, address, and telephone number. If there is a “No” in

Column F, enter “N/A.”

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 23
Completion Rate Spreadsheet Instructions

Figure 4.11.12 is an example of a blank completion rate 

spreadsheet.

 Left-side Header: Enter the titles shown in Figure 4.11.12.

After each title, enter the information appropriate to that title.

 Right-side Header: Enter the titles shown in Figure 4.11.12.

After each title, enter the information appropriate to that title.

After “12-Month Period” enter the selected 12-month period.

The information in the next three lines cannot be entered until

the remainder of the spreadsheet is created and completed.

After “Completed Students” enter the students from Column E.

After “Total Students” enter the students from Column A. After

“Completion Rate:” enter the completion rate. Calculate the

completion rate by dividing the completed students by the

total students.

 Footer: Include a footer showing the date the spreadsheet was

prepared and the page number.

For each Column A through J, on Row 1 enter the title as shown in

Figure 4.11.12. Then, beginning with Row 2, enter the corresponding

information as listed below:

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 24

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Type: 12-Month Period:

Cohort FY: Completed Students:

From: Total Students:

Code: Completion Rate:

To:

Code:

Date ___/___/_____ Page __ of ___

A B C D E F G H I J

1

Student's

SSN

Student's

Name

Student's

Scheduled

Completion

Date

Student's

Enrollment

Dates

Student

Completed

Completed

Program

Date

Student's

Program

of Study

Student

Transfers to

Higher Program:

Date, School

Name, School

Address,

Program

Student's

GPA

Date

Student

Entered

Armed

Services

2

3

4

5

6

Figure 4.11.12

Blank Completion Rate

Spreadsheet

Right-side Header Titles:

12-Month Period:

Completed Students:

Total Students:

Completion Rate:

Left-side Header Titles:

Type:

Cohort FY:

From:

Code:

To:

Code:

Use for:

Economically Disadvantaged Appeal

• School to Independent Auditor 

• School to Default Management
 Column A, Student’s SSN: Enter the SSNs for the former regular

students initially enrolled on a full-time basis in a Title IV eligible

program who were originally scheduled to complete their

programs during the selected 12-month period. These are the

students who will be counted in the denominator of the completion rate calculation.

 Column B, Student’s Name: Enter the names of the students

whose SSNs are listed in Column A.

 Column C, Student’s Scheduled Completion Date: Enter the 

student’s scheduled completion date.

 Column D, Student’s Enrollment Dates: Enter the student’s 

beginning enrollment date and ending enrollment date.

 Column E, Student Completed: Enter “Yes” if the student meets

the criteria outlined in the “How does a degree-granting 

school calculate its completion rate?” section of Chapter 4.7,

“Economically Disadvantaged Appeal.” If the student does not

meet these criteria, enter “No.”These are the students who will

be counted in the numerator of the completion rate calculation.

 Column F, Completed Program Date: Enter the completion date

for every student who met the completion criteria by completing the program. If the student did not meet the completion

criteria, enter “N/A.”

 Column G, Student’s Program of Study: Enter the student’s 

program of study for every student who met the completion

criteria by transferring to a higher level program. Do not use

abbreviations. If the student did not transfer to a higher level

program, enter “N/A.”

 Column H, Student Transfers to Higher Program: Date, School

Name, School Address, Program: For every student with an entry

other than “N/A” in Column G, enter the school name, school

address, program, and date. If there is no entry or “N/A” in

Column G, enter “N/A.”

 Column I, Student’s GPA: Enter the Grade Point Average (GPA) on

the last day of the 12-month period for every student who met

the completion criteria by remaining enrolled and maintaining

satisfactory academic progress. If the student did not remain

enrolled, enter “N/A.”

 Column J, Date Student Entered Armed Services: Enter the entry

date for every student who met the completion criteria by

entering the Armed Services. If the student did not enter the

Armed Services, enter “N/A.”

Challenge, Adjustment, and Appeal Tools Chapter 4.11

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools

Page 4.11 - 25
Full-Sized Blank Spreadsheets

The following pages contain seven full-sized versions of the sample

spreadsheets created in this chapter. A school or data manager may

photocopy and use the full-sized blank spreadsheets instead of

creating their own spreadsheets. In order, they include

 Incorrect Data Challenge / New Data Adjustment / Erroneous

Data Appeal Spreadsheet

 Participation Rate Index Spreadsheet

 Uncorrected Data Adjustment / New Data Adjustment

Spreadsheet

 Loan Servicing Appeal Spreadsheet

 Low Income Rate Spreadsheet 

 Placement Rate Spreadsheet

 Completion Rate Spreadsheet

Chapter 4.11 Challenge, Adjustment, and Appeal Tools

Page 4.11 - 26

CHAPTER 4.11 - Challenge,

Adjustment, and Appeal Tools
Type: Incorrect Data Challenge / New Data Adjustment / Erroneous Data Appeal Number of Borrowers:

Cohort FY: Number of Loans:From:

Code:

To:

Code:

Date ___/___/______ Page __ of ___

A B C D E F G H I J K L M

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2345678901112131415161718191021222324252
Type: Participation Rate Index Cohort Default Rate:

Cohort FY: 12-Month Period:From: Total Borrowers:

Code: Total Regular Students:

To: PRI:

Code:

Date ___/___/______ Page __ of ___

A B C D E

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Type: Uncorrected Data Adjustment / New Data Adjustment Number of Borrowers:

Cohort FY: Number of Loans:From:

Code:

To:

Code:

Date ___/___/______ Page __ of ___

A B C D E F

1

s'r e worr oB

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2345678901112131415161718191021222324252
Type: Loan Servicing Appeal Number of Borrowers:

Cohort FY: Number of Loans:From:

Code:

To:

Code:

Date ___/___/______ Page __ of ___

A B C D E F G H I J K L M N O

1

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2345678901112131415161718191021222324252
Type: Low Income Rate 12-Month Period:

Cohort FY: Award Years:From: Calendar Years:

Code: Low Income Students:

To: Total Students:

Code: Low Income Rate:

Date ___/___/______ Page __ of ___

A B C D E F

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2345678901112131415161718191021222324252
Type: Placement Rate 12-Month Period:

Cohort FY: Placed Students:From: Total Students:

Code: Placement Rate:

To:

Code:

Date ___/___/______ Page __ of ___

A B C D E F G H I

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2345678901112131415161718191021222324252
Type: Completion Rate 12-Month Period:

Cohort FY: Completed Students:From: Total Students:

Code: Completion Rate:

To:

Code:

Date ___/___/______ Page __ of ___

A B C D E F G H I J

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Glossary

A . . . . . . . . . . . . . .1

B C . . . . . . . . . . . . . .2

D . . . . . . . . . . . . . .3

E . . . . . . . . . . . . . .5

F . . . . . . . . . . . . . .6

G H I . . . . . . . . . . . . . .7

L . . . . . . . . . . . . . .8

M . . . . . . . . . . . . . .9

N . . . . . . . . . . . . .10

O P . . . . . . . . . . . . .11

R S . . . . . . . . . . . . .12

T U W . . . . . . . . . . . . .13
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Adjustment: An action a school can bring after the release of the

official cohort default rates. There are two types of

adjustments: an uncorrected data adjustment and 

a new data adjustment.

AGI: Abbreviation used to refer to adjusted gross income.

Allegation: For cohort default purposes, a school statement about

the accuracy of specific loan information data on the

loan record detail report.

Appeal: An action a school can bring after release of the official

cohort default rates. There are six types of appeals: an

erroneous data appeal, a loan servicing appeal, an

economically disadvantaged appeal, a participation

rate index appeal, an average rates appeal, and a thirtyor-fewer borrowers appeal.

Average Rate: One of two methods of calculating an official cohort

default rate. The average rate formula is used to calculate the official cohort default rate for a school with 

29 or fewer borrowers entering repayment during a

cohort fiscal year that had a cohort default rate calculated for the two previous cohort fiscal years.

Average Rates Appeal: As described in Section 668.196 of Title 34 of

the Code of Federal Regulations (34 CFR 668.196). A

school facing sanction based on three consecutive

official cohort default rates of 25.0 percent or greater 

is not subject to that sanction if at least two of these

official cohort default rates are average rates and

would have been less than 25.0 percent if they had

been calculated using only the data for that cohort

fiscal year alone. In addition, a school facing sanction

based on one official cohort default rate that is greater

than 40.0 percent is not subject to that sanction if the

official cohort default rate was calculated as an 

average rate.

Award Year: The period of time from July 1 of one year to June 30

of the following year. The year used in some Title IV

programs.

Glossary

Glossary

Glossary - 1

A
Benefit: Advantage granted to schools with low official cohort

default rates. Schools with low official cohort default

rates may be exempt from certain loan disbursement

requirements.

CAM: Abbreviation used to refer to Client Account Manager.

Case Management: The office within SFA that reviews school compliance with the student financial assistance regulations.

CFR: Abbreviation used to refer to the Code of Federal

Regulations.

Challenge: An action a school can bring after release of the draft

cohort default rates. There are two types of challenges:

an incorrect data challenge and a participation rate

index challenge.

Claim Paid Date: The date a guaranty agency reimburses a lender for

a defaulted FFEL. This date is used to determine if the

borrower will be placed in the numerator of the cohort

default rate calculation. If the claim paid date falls

within the cohort default period, the borrower is

included in both the denominator and numerator of

the cohort default rate calculation.

Client Account Manager: The individual agents within Direct Loan

Schools Relations.

Cohort Default Period: The two-year period that begins on October 1

of the fiscal year when the borrower enters repayment

and ends on September 30 of the following fiscal year.

Cohort Default Rate Calculation: As described in 34 CFR 668.183. The

percentage of a school’s borrowers who enter repayment on certain FFELs and/or Direct Loans and default

(or meet other specified conditions).

Cohort Fiscal Year: The fiscal year for which the cohort default rate is

calculated.

Commonality of Ownership: A commonality of ownership or management exists between schools if, at each school, the

same person, or a member of that person’s family,

directly or indirectly holds or held a managerial role 

or has or had the ability to substantially affect the

school’s actions.

Glossary

Glossary - 2

Glossary

B

C
Completion Rate: As described in 34 CFR 668.194(c). The percentage

of students enrolled at a school who completed their

program. Used by degree-granting schools when

submitting an economically disadvantaged appeal.

Consolidation: The process of repaying an existing loan account with

a new loan. Generally, the borrower combines multiple

loans into one new loan.

CPD: Abbreviation used to refer to the claim paid date.

Data Manager: Depending on the loan, a data manager may be the

Direct Loan Servicer, a guaranty agency, or in some

instances, Default Management.

Data Manager Code: A code number used to identify the data 

manager for a loan. Another name for the

Guarantor/Servicer Code.

Date Entered Repayment: The date when the borrower begins repayment on a loan. Generally, the date entered repayment

occurs after the end of a grace period.

DD: Abbreviation used to refer to the default date.

Default: Except in other specified conditions, a FFEL is considered to be in default for cohort default rate purposes

only if the guaranty agency has paid a default claim 

on the loan to the lender. Except in other specified

conditions, a Direct Loan is considered to be in default

for cohort default rate purposes after 360 days of

delinquency (or after 270 days of delinquency, if 

the borrower’s first day of delinquency was before 

October 7, 1998).

Default Date: Except in other specified circumstances, the default

date on a FFEL for cohort default rate purposes is the

claim paid date. Except in other specified circumstances, the default date on a Direct Loan for cohort

default rate purposes is the 361st day of delinquency

(or the 271st day of delinquency, if the borrower’s first

day of delinquency was before October 7, 1998).

Default Management: The office within SFA that calculates and 

releases school cohort default rates and works with

schools and data managers in the cohort default rate

challenge, adjustment, and appeal process.

Glossary

Glossary

Glossary - 3

D
Degree-Granting School: A school that offers an associate, baccalaureate, graduate, or professional degree. A school should

refer to its Eligibility and Certification Approval Report

if the school is uncertain about its degree-granting

status.

Delinquency: A borrower who misses a regularly scheduled payment

is considered in delinquency. The more payments the

borrower misses, the longer the delinquency.

Denominator: There are two elements when dividing numbers: the

numerator and the denominator. The numerator is 

the number that is divided and is listed first in a mathematical equation; the denominator is the number the

numerator is divided by and is listed second in a

mathematical equation.

Department: Abbreviation used to refer to the U.S. Department of

Education.

DER: Abbreviation used to refer to the date entered repayment.

Direct Loan: Abbreviation used to refer to the William D. Ford

Federal Direct Loan Program or to a loan made 

under that program.

Direct Loan Schools Relations: The office within SFA that provides

technical assistance mainly to Direct Loan schools.

Direct Loan Servicer: The data manager responsible for Direct Loans.

Direct Stafford/Ford Loans: Term used to refer to Federal Direct

Subsidized Stafford/Ford Loans and Federal Direct

Unsubsidized Stafford/Ford Loans.

Disputed Data: Disputed data occurs when a school submitted an

incorrect data challenge, the data manager for the 

loan disagreed with the challenge, the school believed

the data manager was incorrect, and the same data are

used to calculate the school’s official cohort default

rate.

Glossary

Glossary - 4

Glossary
Economically Disadvantaged Appeal: As described in 34 CFR 668.194.

An appeal alleging that a school should not be subject

to sanction because it has a high number of low

income students. There are two types of economically

disadvantaged appeals: an economically disadvantaged appeal based on low income rate and placement

rate and an economically disadvantaged appeal based

on low income rate and completion rate.

EFC: Abbreviation used to refer to the Expected Family

Contribution.

Eligibility: The ability to participate in one or more of the Title IV

programs the Department administers. A school that 

is sanctioned for high official cohort default rates is

subject to a loss of eligibility in certain Title IV programs.

Eligible Program: An educational program at a school that meets the

criteria for Title IV program eligibility.

Erroneous Data Appeal: As described in 34 CFR 668.192. An appeal

that alleges that because of new data and/or disputed

data included in the official cohort default rate calculation, a school’s official cohort default rate data is

inaccurate.

Evasion: An attempt to avoid cohort default rate sanctions by

changing a school’s name, location, OPE ID, or other

status.

Expected Family Contribution: The amount a student and his or her

family is expected to contribute to the student’s postsecondary educational expenses.

Glossary

Glossary

Glossary - 5

E
Family Educational Rights and Privacy Act: Along with the Privacy Act

of 1974, a law governing the release of private information. These laws apply to all cohort default rate loan

data because this data contains personal identification

information about borrowers who received loans

under the FFEL and Direct Loan programs. State and

local laws and regulations may also govern the use of

this material.

Federal Family Education Loan Program: Full name of the FFEL

Program. The Federal Family Education Loan Program

comprises three loan programs: subsidized Federal

Stafford Loans and unsubsidized Federal Stafford

Loans (collectively referred to as Federal Stafford

Loans), Federal PLUS Loans, and Federal Consolidation

Loans. Only Federal Stafford Loans are directly included

in the cohort default rate calculation. Federal

Supplemental Loans for Students (Federal SLS loans)

were formerly part of the Federal Family Education

Loan Program. However, Federal SLS loans have not

been made since July 1, 1994. It is possible for a Federal

SLS loan to be included in a current cohort default rate

calculation under certain circumstances.

Federal Fiscal Year: A federal fiscal year begins on October 1 of the

calendar year and ends on September 30 of the next

calendar year. A federal fiscal year is always identified

by the calendar year when the fiscal year ends. Also

referred to as a fiscal year.

Federal Stafford Loans: Term used to refer to subsidized Federal

Stafford Loans and unsubsidized Federal Stafford

Loans.

FERPA: Abbreviation used to refer to the Family Educational

Rights and Privacy Act.

FFEL: Abbreviation used to refer to the Federal Family

Education Loan Program. For the purposes of this

Guide, FFEL is also used to refer to those FFELs that 

are included in the cohort default rate calculation.

Fiscal Year: Another name for federal fiscal year.

FY: Abbreviation used to refer to a specific fiscal year, such

as FY 2000. The specific year is always the calendar year

when the fiscal year ends.

Glossary

Glossary - 6

Glossary

F
GPA: Abbreviation used to refer to the grade point average.

Grace Period: For Federal Stafford Loans and Direct Stafford/Ford

Loans, the six-month period that generally begins

when a borrower separates (graduates or withdraws)

from school or drops below half-time enrollment.

Guarantor/Servicer Code: A code number used to identify the data

manager for a loan. Another name for the data manager code.

Guaranty Agency: The data manager responsible for FFELs not held

by the Department.

HEA: Abbreviation used to refer to the Higher Education Act

(HEA) of 1965, as amended.

Higher Education Act of 1965: The original legislation authorizing the

creation of the Title IV programs.

ICRD: Abbreviation used to refer to the income-contingent

repayment date.

IIS: Abbreviation used to refer to Institutional

Improvement Specialist.

Improperly Serviced Loan: As described in 34 CFR 668.193(b). If the

holder of a loan fails to perform certain activities when

servicing the loan, the loan is considered improperly

serviced. For this Guide,“improperly serviced” always

means “improperly serviced for cohort default rate

purposes only.”

Inaccurate Data: Information on the loan record detail report that is

incorrectly reported, incorrectly included, or incorrectly

excluded.

Income-Contingent Repayment Date: The date that the borrower 

who received a Direct Loan to attend a non-degreegranting proprietary school is considered in default

because other specified conditions relating to incomecontingent repayment apply. Also referred to as

negative amortization date.

Glossary

Glossary

Glossary - 7

G

I

H
Income-Contingent Repayment Plan: A repayment plan for Direct

Loans based on the borrower’s income.

Incorrect Data Challenge: As described in 34 CFR 668.185(b). After 

the release of the draft cohort default rates, the

Department provides schools with an opportunity to

review the draft cohort default rate data and, if necessary, work with the data manager responsible for the

loans to correct any errors. The process of correcting

data is called an incorrect data challenge. This process

was formerly referred to as a draft data challenge.

Institutional Improvement Specialist: An individual agent within Case

Management.

Last Date of Attendance: The date that a student leaves school entirely (graduates or withdraws). The last date of attendance

is the day before the borrower’s grace period begins.

LDA: Abbreviation used to refer to the last date of attendance.

Less-Than-Half-Time Date: The date that a student’s enrollment status

drops to less than half-time. The less-than-half-time

date is the day before the borrower’s grace period

begins.

Liability: Certain costs associated with FFELs and Direct Loans

that a school must pay if the school continued to

certify and deliver or originate and disburse loans

while the school’s unsuccessful adjustment and/or

appeal was pending.

Loan Record Detail Report: A loan record detail report contains

information on the loans that were used to calculate 

a school’s draft or official cohort default rate. The loan

record detail report lists a school’s FFEL and/or Direct

Loan activity, including but not limited to the number

of borrowers who entered repayment during a given

cohort fiscal year, the number of borrowers who

defaulted in the cohort period, and the loan status 

of those borrowers.

Glossary

Glossary - 8

Glossary

L
Loan Servicing Appeal: As described in 34 CFR 668.193. An appeal

alleging that a school’s official cohort default rate

includes defaulted FFELs or Direct Loans that are

considered improperly serviced for cohort default 

rate purposes and used in determining cohort default

rates.

Loan Servicing Records: Records that detail the servicing activities 

a loan holder performed when servicing a loan. For

FFELs, loan servicing records are the collection and

payment history records that are 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. For Direct Loans, loan servicing

records are the collection and payment history records

that are maintained by the Direct Loan Servicer.

Low Income Rate: As described in 34 CFR 668.194(b). The percentage

of students with low incomes enrolled at a school.

Used when submitting an economically disadvantaged

appeal.

LTH: Abbreviation used to refer to the less-than-halftime

date.

Management’s Written Assertion: The materials a school submits to

an independent auditor and to Default Management

as part of the school’s economically disadvantaged

appeal. An independent auditor must review the

management’s written assertion.

Monthly Status Report: A cumulative list of challenge, adjustment,

and appeal requests that data managers receive from

schools after the release of the draft cohort default

rates and the official cohort default rates. Monthly

status reports assist Default Management in monitoring the time frames associated with the cohort default

rate process. The monthly status report is sent to

Default Management within seven calendar days 

of the end of each month.

Glossary

Glossary

Glossary - 9

M
N/A: Abbreviation used to refer to the term “not applicable.”

National Student Loan Data System: The Department’s database of

federal student loan information. This information is

used to calculate a school’s cohort default rate.

NegAm: Abbreviation used to refer to the negative amortization date.

Negative Amortization Date: Another name for income-contingent

repayment date.

New Data: New data occurs when data reported to NSLDS is

newly reported, included, or excluded between the

calculation of the draft and official cohort default 

rates. For the purposes of this Guide, any mention of

“new data” refers to “new incorrect data.”

New Data Adjustment: As described in 34 CFR 668.191. A new data

adjustment is a course of action that provides a school

with the opportunity to challenge the accuracy of new

data included in the school’s official cohort default rate

that was not reflected in the draft cohort default rate.

Non-Average Rate: One of two methods of calculating an official

cohort default rate. The non-average-rate formula is

used for a school with 30 or more borrowers entering

repayment during a cohort fiscal year.

Non-Degree-Granting School: A school that does not offer an associate, baccalaureate, graduate, or professional degree.

A school should refer to its Eligibility and Certification

Approval Report if the school is uncertain about its

degree-granting status.

NSLDS: Abbreviation used to refer to the National Student

Loan Data System.

Numerator: There are two elements when dividing numbers: the

numerator and the denominator. The numerator is the

number that is divided and is listed first in a mathematical equation; the denominator is the number the

numerator is divided by and is listed second in a

mathematical equation.

Glossary

Glossary - 10

Glossary

N
Office of Student Financial Assistance: The office within the

Department that is responsible for managing the

operational functions supporting the Title IV programs.

Other Specified Conditions: In addition to those borrowers who

default, borrowers who meet certain conditions are

also considered to be in default for cohort default rate

purposes. The first condition involves borrowers who

receive a Direct Loan to attend a non-degree-granting

proprietary school. Such a borrower is considered in

default for the purposes of calculating a cohort default

rate if, during the cohort default period in question, the

borrower is in repayment for 360 days under the

income contingent repayment plan with scheduled

payments that are less than 15 dollars per month and

less than the interest accruing on the loan.

The second condition occurs when a school owner,

agent, contractor, employee, or any other affiliated

entity or individual makes a payment before the end 

of the cohort default period to prevent a borrower’s

default on a loan that entered repayment during the

cohort fiscal year. In such a situation, the borrower is

considered in default for cohort default rate purposes.

Overlap: To have one or more calendar days in common. For

example, an award year overlaps a 12-month period if

any calendar day that is included in the award year is

also included in the 12-month period.

Participation Rate Index: As described in 34 CFR 668.195(b). The 

percentage of a school’s students who participated 

in (borrowed under) the FFEL and/or Direct Loan

programs multiplied by the school’s cohort default

rate.

Participation Rate Index Appeal: As described in 34 CFR 668.195. A

type of appeal that contends a school should not be

subject to sanction because the number of students

who obtained loans to attend the school is very low 

in relation to the number of regular students at the

school. A participation rate index appeal is submitted

after the release of the official cohort default rates.

Glossary

Glossary

Glossary - 11

P

O
Participation Rate Index Challenge: As described in 34 CFR 668.185(c).

A type of challenge that contends a school should not

be subject to sanction because the number of students

who obtained loans to attend the school is very low in

relation to the number of regular students at the

school. A participation rate index challenge is submitted after the release of the draft cohort default rates.

Placement Rate: As described in 34 CFR 668.194(d). The percentage of

students enrolled at a school who became employed

in the occupation for which the school trained them.

Used by non-degree-granting schools when submitting an economically disadvantaged appeal.

Privacy Act of 1974: Along with the Family Educational Rights and

Privacy Act, a law governing the release of private

information. These laws apply to all cohort default rate

loan data because this data contains personal identification information about borrowers who received

loans under the FFEL and Direct Loan programs. State

and local laws and regulations may also govern the use

of this material.

Regular Student: A student who enrolled or was accepted for 

enrollment at a school for the purpose of obtaining 

a degree, certificate, or other recognized educational

credential offered by that school.

Sanction: Penalties the Department imposes on a school with

high official cohort default rates. The sanctions associated with high official cohort default rates occur when

a school’s three most recent official cohort default

rates are 25.0 percent or greater or when a school’s

most recent official cohort default rate is greater than

40.0 percent. These sanctions include a loss of eligibility to participate in certain Title IV programs.

SFA: Abbreviation used to refer to the Office of Student

Financial Assistance.

SSN: Abbreviation used to refer to the Social Security

Number.

Glossary

Glossary - 12

Glossary

S

R
Thirty-or-Fewer Borrowers Appeal: As described in 34 CFR 668.197.

A school that has a total of 30 or fewer borrowers

included in the three most recent cohort fiscal years 

is not subject to sanction.

12-Month Period: When submitting a participation rate index 

challenge, economically disadvantaged appeal, or

participation rate index appeal, a school must select 

a 12-month period on which to base the action. The

school may base the action on any 12-month period

that ended during the six months immediately preceding the start of the cohort fiscal year for which the

school is submitting the action.

Uncorrected Data Adjustment: As described in 34 CFR 668.190. A

request submitted to Default Management to ensure

that a school’s official cohort default rate calculation

reflects changes that a data manager agreed to in its

incorrect data challenge response.

Unofficial Rate: An official rate cannot be calculated for a school with

29 or fewer borrowers entering repayment during a

cohort fiscal year if the school did not have a cohort

default rate calculated for either or both of the two

previous cohort fiscal years. Such a school will have an

unofficial cohort default rate calculated using the nonaverage rate formula and current cohort fiscal year

data. An unofficial cohort default rate does not meet

the statutory definition of a cohort default rate.

Therefore, it cannot be used to determine sanctions or

benefits.

William D. Ford Federal Direct Loan Program: Full name of the Direct

Loan Program. The William D. Ford Federal Direct Loan

Program comprises three loan programs: Federal Direct

Subsidized Stafford/Ford Loans and Federal Direct

Unsubsidized Stafford/Ford Loans (collectively referred

to as Direct Stafford/Ford Loans), Direct Plus Loans, and

Direct Consolidation Loans. Only Direct Stafford/Ford

Loans are directly included in the cohort default rate

calculation.

Glossary

Glossary

Glossary - 13

U

T

W
Glossary

Glossary - 14

Glossary
Index of

Key Terms

A . . . . . . . . . . . . . .1

B C . . . . . . . . . . . . . .2

D . . . . . . . . . . . . . .4

E . . . . . . . . . . . . . .7

F . . . . . . . . . . . . . .8

G GG H I . . . . . . . . . . . . . .9

L . . . . . . . . . . . . .10

M N . . . . . . . . . . . . .12

O P . . . . . . . . . . . .14

R . . . . . . . . . . . . .16

S T . . . . . . . . . . . .17

U W . . . . . . . . . . . . .18
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Adjustment

types, 2.2-4, Fig. 2.2.3, Chapters 4.3 – 4.4

eligibility for, Chapters 4.3 – 4.4

consequences of unsuccessful, 2.2-5

as a cohort default rate strategy, 3.1-9 – 3.1-12, Fig. 3.1.1

that claim inaccurate data, 3.1-9, 3.1-14, Fig. 3.1.3

Allegation

types, 4.11-2

supporting documentation, 4.11-2 – 4.11-3

and loan record detail report, 4.11-3 – 4.11-4

specific, 4.11-4 – 4.11-8

inaccurate date entered repayment, 4.11-5, Fig. 4.11.1

inaccurate default status, 4.11-6, Fig. 4.11.2

multiple loans, 4.11-7, Fig. 4.11.3

incorrectly included, 4.11-8, Fig. 4.11.4

incorrectly excluded, 4.11-8, Fig. 4.11.5

Appeal

types, 2.2-4, Fig. 2.2.3, Chapters 4.4 – 4.10

eligibility for, Chapters 4.4 – 4.10

consequences of unsuccessful, 2.2-5

as a cohort default rate strategy, 3.1-9 – 3.1-12, Fig. 3.1.1

that claim inaccurate data, 3.1-9, 3.1-14, Fig. 3.1.3

that claim exceptional mitigating circumstances, 3.1-9, 3.1-15,

Fig. 3.1.4

Average Rate

formula, 2.1-8

calculation, 2.1-8

example, 2.1-8

Average Rates Appeal

generally, Chapter 4.9

defined, 4.9-1 – 4.9-2

Default Management initiated, 4.9-2

appeal of Default Management determination, 4.9-3

address for submitting, 4.9-3, 4.11-1

Index of Key Terms

Index of Key Terms

Index - 1

A
Benefit

defined, 2.2-2, Fig. 2.2.1

Case Management

and change in status, 2.4-3, 2.4-4

and the Department, 2.5-1

duties, 2.5-3

contacting, 2.5-4, Fig. 2.5.1

Challenge

types, 2.2-4, Fig. 2.2.3, Chapters 4.1 – 4.2

eligibility for, Chapters 4.1 – 4.2

as a cohort default rate strategy, 3.1-9 – 3.1-12, Fig. 3.1.1

that claim inaccurate data, 3.1-9, 3.1-14, Fig. 3.1.3

that claim exceptional mitigating circumstances, 3.1-9, 3.1-15,

Fig. 3.1.4

Change in Status

types, 2.4-1

and cohort default rate, 2.4-2, Fig. 2.4.1

submitting change request, 2.4-3

requesting loan record detail report, 2.4-3

and sanctions, 2.4-3

avoiding, 2.4-5

evasion, 2.4-4 (see also Evasion)

Claim Paid Date

used to determine if loan is in numerator, 2.1-10

Client Account Manager

and Direct Loan Schools Relations, 2.5-1

schools need to work with, 3.1-2

Code of Federal Regulations

and the “Cohort Default Rate Guide,” 1.1-1, 1.1-5

Cohort Default Period

defined, 2.1-1

time periods, 2.1-6, Fig. 2.1.1

Index of Key Terms

Index - 2

Index of Key Terms

B

C
Cohort Default Rate

defined, 2.1-1

importance of, 2.2-1

draft, 2.1-5, 2.2-1

official, 2.1-5, 2.2-2 – 2.2-3, Fig. 2.2.1 – 2.2.2

and benefits (see Benefit)

and sanctions (see Sanction)

when released, 2.1-3

draft, 2.1-3

official, 2.1-3

who receives, 2.1-3 – 2.1-4

draft, 2.1-3

official, 2.1-4

calculating, 2.1-2 – 2.1-3, 2.1-7 – 2.1-9, Chapter 2.1

non-average rate, 2.1-7

average rate, 2.1-8

unofficial rate, 2.1-9

loans included, 2.1-2 – 2.1-3

denominator, 2.1-9 – 2.1-10

numerator, 2.1-10 – 2.1-11

special circumstances, 2.1-12 – 2.1-15

involving schools, 2.1-12, Fig. 2.1.2

involving repayment, 2.1-13, Fig. 2.1.3

involving discharge, 2.1-14, Fig. 2.1.4

involving repurchase, 2.1-15, Fig. 2.1.5

effects, 2.1-16, Fig. 2.1.6, Chapter 2.2

“Cohort Default Rate Guide”

defined, 1.1-1

electronic version available, 1.1-1

relationship to regulatory and statutory requirements, 1.1-1

how organized, 1.1-2 – 1.1-3

differences from previous version, 1.1-3

using, 1.1-4 – 1.1-5, Fig. 1.1.1

providing feedback on, 1.1-6 – 1.1-7

reviewing and updating, 3.1-1, 3.2-1

Cohort Default Rate Notification Letter (see Notification Letter)

Cohort Default Rate Strategies

school, 3.1-2, 3.1-3, 3.1-6 – 3.1-9, Chapter 3.1

data manager, 3.2-1 – 3.2-5, Chapter 3.2

Cohort Fiscal Year

defined, 2.1-1

time periods, 2.1-6, Fig. 2.1.1

Index of Key Terms

Index of Key Terms

Index - 3
Commonality of Ownership 

defined, 2.4-4

Completion Rate

defined, 4.7-6 – 4.7-7

calculating, 4.7-6 – 4.7-7

formula, 4.7-7

example, 4.7-7

acceptable rate, 4.7-7

preparing before release of cohort default rates, 4.7-8

spreadsheet, 4.7-9, Fig. 4.7.6

creating, 4.11-24 – 4.11-25, Fig. 4.11.12

Consolidation

and numerator of cohort default rate calculation, 2.1-11

Data Manager

defined, 1.1-3

identifying, 2.3-11, 2.3-16, 2.6-10 – 2.6-11, Fig. 2.6.4

addresses of, 2.6-11 – 2.6-19, Fig. 2.6.5

role in incorrect data challenge, 4.1-3, 4.1-6 – 4.1-12

time frame for responding, 4.1-8

denying, 4.1-6 – 4.1-9

data manager response materials to school, 4.1-10 – 4.1-12

spreadsheet, 4.1-10, Fig. 4.1.4

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

letter, 4.1-10 – 4.1-11, Fig. 4.1.5

address for submitting, 4.1-12, 4.11-1

role in participation rate index challenge, 4.2-6

role in uncorrected data adjustment, 4.3-2 – 4.3-3

role in new data adjustment, 4.4-3 – 4.4-4, 4.4-8 – 4.4-13

time frame for responding, 4.4-9

denying, 4.4-8 – 4.4-10

data manager response materials to school, 4.4-11 – 4.4-13

spreadsheet, 4.4-11, Fig. 4.4.4

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

letter, 4.4-11 – 4.4-13, Fig. 4.4.5

address for submitting, 4.4-12, 4.11-1

role in erroneous data appeal, 4.5-3 – 4.5-4, 4.5-8 – 4.5-14

time frame for responding, 4.5-8

denying, 4.5-8 – 4.5-10

data manager response materials to school, 4.5-11 – 4.5-13

spreadsheet, 4.5-11, Fig. 4.5.4

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

letter, 4.5-11 – 4.5-13, Fig. 4.5.5

address for submitting, 4.5-12, 4.11-1

Index of Key Terms

Index - 4

Index of Key Terms

D
Data Manager (cont.)

role in loan servicing appeal, 4.6-4, 4.6-8 – 4.6-16

time frame for responding, 4.6-8

denying, 4.6-8 – 4.6-9

providing loan servicing records 

(see Loan Servicing Records)

data manager response materials to school, 4.6-12 – 4.6-15

spreadsheet, 4.6-12, Fig. 4.6.4

creating, 4.11-18 – 4.11-19, Fig. 4.11.9

loan servicing records, 4.6-13

letter, 4.6-13 – 4.6-15, Fig. 4.6.5

address for submitting, 4.6-16, 4.11-1

role in economically disadvantaged appeal, 4.7-18

role in participation rate index appeal, 4.8-6

Data Manager Code (see also Guarantor/Servicer Code)

Date Entered Repayment

for Federal Stafford Loans, 2.1-9 – 2.1-10

for Direct Stafford Loans, 2.1-9 – 2.1-10

on loan record detail report, 2.3-10 – 2.3-11, Fig. 2.3.8

Default

defined, 2.1.10 – 2.1-11

on loan record detail report, 2.3-10 – 2.3-11, Fig. 2.3.8

Default Management

and feedback to the “Cohort Default Rate Guide,” 1.1-5

and requesting loan record detail report, 2.3-4

assistance with change in status, 2.4-3 – 2.4-5

role in determining evasion, 2.4-4 – 2.4-5

and the Department, 2.5-1

duties, 2.5-2

contacting, 2.5-3

and monthly status reports, 3.2-5 – 3.2-6

role in incorrect data challenge, 4.1-3, 4.1-13

role in participation rate index challenge, 4.2-6, 4.2-10

role in uncorrected data adjustment, 4.3-2, 4.3-6 – 4.3-7

role in new data adjustment, 4.4-3 – 4.4-4, 4.4-16

role in erroneous data appeal, 4.5-3 – 4.5-4, 4.5-18

role in loan servicing appeal, 4.6-3 – 4.6-4, 4.6-20 – 4.6-21

role in economically disadvantaged appeal, 4.7-16

role in participation rate index appeal, 4.8-2, 4.8-6, 4.8-10

role in average rates appeal, 4.9-2

role in thirty-or-fewer borrowers appeal, 4.10-1

Degree-Granting School

and economically disadvantaged appeal, 4.7-1

Index of Key Terms

Index of Key Terms

Index - 5
Denominator 

generally, 2.1-6

and cohort default rate calculation, 2.1-9 – 2.1-10

special circumstances, 2.1-12 – 2.1-15

involving schools, 2.1-12, Fig. 2.1.2

involving repayment, 2.1-13, Fig. 2.1.3

involving discharge, 2.1-14, Fig. 2.1.4

involving repurchase, 2.1-15, Fig. 2.1.5

and participation rate index, 4.2-4, 4.8-4

and low income rate, 4.7-4

and placement rate, 4.7-4 – 4.7-6

and completion rate, 4.7-6 – 4.7-7

Department

mission, 2.5-1

and Default Management, 2.5-1

and Case Management, 2.5-1

and Direct Loan Schools Relations, 2.5-1

SFA channels, 2.5-1

contacting, 2.5-6 – 2.5-7

offices, Chapter 2.5

Direct Loan Program

defined for cohort default rate purposes, 2.1-2

Direct Loan Schools Relations

and change in status, 2.4-3, 2.4-4

and the Department of Education, 2.5-1

duties, 2.5-4 – 2.5-5

contacting, 2.5-5, Fig. 2.5.2

Direct Loan Servicer

as data manager, 1.1-3

Disputed Data

defined, 4.5-2

Draft Cohort Default Rate (see Cohort Default Rate)

Index of Key Terms

Index - 6

Index of Key Terms
Economically Disadvantaged Appeal

defined, 4.7-1

which schools should submit, 4.7-1

benefits of submitting, 4.7-1

data manager role (see Data Manager)

Default Management role (see Default Management)

calculating low income rate (see Low Income Rate)

calculating placement rate (see Placement Rate)

calculating completion rate (see Completion Rate)

submitting, 4.7-8 – 4.7-18

time frame for submitting, 4.7-1, 4.7-8

preparing before release of cohort default rates, 4.7-8

management’s written assertion, 4.7-8 – 4.7-10

spreadsheets, 4.7-8 – 4.7-10, Fig. 4.7.4 – 4.7.6

creating, 4.11-21 – 4.11-25, Fig. 4.11.10 – 4.11.12

letter, 4.7-10 – 4.7-11, Fig. 4.7.7

address for submitting, 4.7-12, 4.11-1

independent auditor (see Independent Auditor)

school submission materials to independent auditor,

4.7-12 – 4.7-14

spreadsheets, 4.7-12 – 4.7-13

letter, 4.7-12 – 4.7-14, Fig. 4.7.8

what does school do with independent auditor’s opinion, 4.7-16

submission to Default Management, 4.7-16 – 4.7-17

time frame for submission to Default Management, 4.7-16

school submission materials to Default Management,

4.7-16 – 4.7-17

independent auditor’s opinion, 4.6-16

letter, 4.7-16 – 4.7-17, Fig. 4.7.10

address for submitting, 4.7-12, 4.11-1

what happens after submitting, 4.7-16, 4.7-18

Eligibility (see Title IV Eligibility)

Index of Key Terms

Index of Key Terms

Index - 7

E
Erroneous Data Appeal

defined, 4.5-1

which schools should submit, 4.5-2

benefits of submitting, 4.5-3

data manager role (see Data Manager)

Default Management role (see Default Management)

submitting, 4.5-4 – 4.5-18

time frame for submitting, 4.5-1, 4.5-4

allegations, 4.5-4, 4.11-2

submission materials, 4.5-5 – 4.5-7

spreadsheet, 4.5-5, Fig. 4.5.2

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

loan record detail report, 4.5-5, 4.11-3 – 4.11-4

supporting documentation, 4.5-6, 4.11-2 – 4.11-3

letter, 4.5-6 – 4.5-7, Fig. 4.5.3

data manager response (see Data Manager)

what does school do with data manager response,

4.5-14 – 4.5-18

submission to Default Management, 4.5-14 – 4.5-15

time frame for submission to Default Management, 4.5-14

school submission materials to Default Management,

4.5-15 – 4.5-18

spreadsheet, 4.5-15, Fig. 4.5.6

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

supporting documentation, 4.5-16

data manager responses, 4.5-16

letter, 4.5-16 – 4.5-17, Fig. 4.5.7

address for submitting, 4.5-18, 4.11-1

what happens after submitting, 4.5-18

provisional certification and (see Provisional Certification)

Evasion

defined, 2.4-4

Default Management determination, 2.4-5

Exceptional Mitigating Circumstance

strategies for schools, 3.1-9, 3.1-15, Fig. 3.1.4

Family Educational Rights and Privacy Act (FERPA)

and loan record detail report data, 2.3-4, 3.1-9

and repayment information, 3.3-7

Federal Family Education Loan Program (see FFEL Program)

Federal Fiscal Year

defined, 2.1-1

Index of Key Terms

Index - 8

Index of Key Terms

F
Federal Pell Grant Program

loss of eligibility to participate in, 2.2-3

Federal Perkins Loan Program

cohort default rates for, 1.1-1

FFEL Program

defined for cohort default rate purposes, 2.1-2

Fiscal Year (see Federal Fiscal Year)

Guarantor/Servicer Code

on loan record detail report, 2.3-10 – 2.3-11, 2.3-16, Fig. 2.3.8

used to identify data manager, 2.6-10 – 2.6-11, Fig. 2.6.4

used to locate data manager address, 2.6-11 – 2.6-19, Fig. 2.6.5

Guaranty Agency

as data manager, 1.1-3

Higher Education Act

and the “Cohort Default Rate Guide,” 1.1-1

Historically Black Colleges and Universities

and avoiding sanctions, 2.2.5

Improperly Serviced Loan

cohort default rate purposes only, 4.6-1 – 4.6-2

for FFELs, 4.6-1 – 4.6-2

for Direct Loans, 4.6-2

Inaccurate Data

defined, 4.1-1, 4.11-2

how to determine, 3.1-13

why contest, 3.1-12

how to contest, 3.1-14, Fig. 3.1.3

Income-Contingent Repayment Plan

and other specified conditions, 2.1-1

Index of Key Terms

Index of Key Terms

Index - 9

G

H

I
Incorrect Data Challenge

generally, Chapter 4.1

defined, 4.1-1

which schools should submit, 4.1-1

benefits of, 4.1-2

data manager role (see Data Manager)

Default Management role (see Default Management)

submitting, 4.1-4 – 4.1-13

time frame for submitting, 4.1-1, 4.1-4

allegations, 4.1-4, 4.11-2

school submission materials to data manager, 4.1-5 – 4.1-6

spreadsheet, 4.1-5, Fig. 4.1.2

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

loan record detail report, 4.1-5, 4.11-3 – 4.11-4

supporting documentation, 4.1-5, 4.11-2 – 4.11-3

letter, 4.1-6 – 4.1-7, Fig. 4.1.3

data manager response (see Data Manager)

what does school do with data manager response, 4.1-13

Independent Auditor

and economically disadvantaged appeal, 4.7-12 – 4.7-15

standards of review, 4.7-14

letter to school, 4.7-14 – 4.7-15, Fig. 4.7.9

Institutional Improvement Specialist

and Case Management, 2.5-1

Last Date of Attendance (see also Less-Than-Halftime Date)

used to determine date entered repayment, 2.1-9 – 2.1-10

Less-Than-Halftime Date (see also Last Date of Attendance)

used to determine date entered repayment, 2.1-9 – 2.1-10

Liability

associated with unsuccessful adjustment or appeal, 2.2-5

Index of Key Terms

Index - 10

Index of Key Terms

L
Loan Record Detail Report

defined, 2.3-1

Department provides, 2.1-4

why review, 2.3-1 – 2.3-2

which schools receive, 2.3-2 – 2.3-3, Fig. 2.3.1

requesting, 2.3-3 – 2.3-4

requesting due to change in status, 2.4-3

reading, 2.3-5 – 2.3-16, Fig. 2.3.2 – 2.3.15

electronic, 2.3-3 – 2.3-4

requesting electronic, 2.3-3, 2.6-1 – 2.6-4

reading electronic, 2.3-4, 2.6-4 – 2.6-9, Fig. 2.6.1 – 2.6.3

contesting (see Inaccurate Data)

pages to submit with allegations (see Allegations)

Loan Servicing Appeal

generally, Chapter 4.6

defined, 4.6-1

improperly serviced loans (see Improperly Serviced Loans)

which schools should submit, 4.6-3

benefits of submitting, 4.6-3

data manager role (see Data Manager)

Default Management role (see Default Management)

submitting to data manager, 4.6-5 – 4.6-7

time frame for submitting, 4.6-1, 4.6-5

request for records, 4.6-5 – 4.6-7

school submission materials, 4.4-5 – 4.4-7

loan record detail report, 4.6-6

letter, 4.6-5 – 4.6-7, Fig. 4.6.2

data manager response (see Data Manager)

what does school do with data manager response,

4.6-16 – 4.6-20

submission to Default Management, 4.6-16 – 4.6-17

time frame for submission to Default Management, 4.6-17

school submission materials to Default Management,

4.6-18 – 4.6-20

spreadsheet, 4.6-18, Fig. 4.6.6

creating, 4.11-18 – 4.11-19, Fig. 4.11.9

copies of loan servicing records, 4.6-18 – 4.6-20

letter, 4.6-18 – 4.6-20, Fig. 4.6.7

address for submitting, 4.6-20, 4.11-1

what happens after submitting, 4.6-20 – 4.6-21

Index of Key Terms

Index of Key Terms

Index - 11
Loan Servicing Record

defined, 4.6-5

providing, 4.6-8 – 4.6-11

selecting records, 4.6-10

representative sample, 4.6-10

charging a fee, 4.6-10, Fig. 4.6.3

Loan Type

on loan record detail report, 2.3-8, Fig. 2.3.5 – 2.3.6

Low Income Rate

defined, 4.7-2 – 4.7-4

12-month period, 4.7-2 – 4.7-3

selecting, 4.7-2, Fig. 4.7.2

acceptable, 4.7-2, Fig. 4.7.3

consequences of unacceptable, 4.7-3

calculating, 4.7-2 – 4.7-4

formula, 4.7-3 – 4.7-4

example, 4.7-4

acceptable rate, 4.7-4

preparing before release of cohort default rates, 4.7-8

spreadsheet 4.7-8 – 4.7-9, Fig. 4.7.4

creating, 4.11-20 – 4.11-21, Fig. 4.11.10

Management’s Written Assertion 

(see Economically Disadvantaged Appeal)

Monthly Status Report

defined, 3.2-5

creating, 3.3-10 – 3.3-11, Fig. 3.3.3

address for submitting, 3.3-12

electronic submission, 3.3-12

National Student Loan Data System (see NSLDS)

Navajo Community College

and avoiding sanctions, 2.2.5

Negative Amortization

on loan record detail report, 2.3-11

New Data

defined, 4.4-1

on loan record detail report, 2.3-2

and erroneous data appeal, 4.5-1

Index of Key Terms

Index - 12

Index of Key Terms

M

N
New Data Adjustment

generally, Chapter 4.4

defined, 4.4-1

which schools should submit, 4.4-2

benefits of submitting, 4.4-3

data manager role (see Data Manager)

Default Management role (see Default Management)

submitting, 4.4-4 – 4.4-18

time frame for submitting, 4.4-1, 4.4-4

allegations, 4.4-4, 4.11-2

school submission materials to data manager, 4.4-5 – 4.4-8

spreadsheet, 4.4-5 – 4.4-6, Fig. 4.4.2

creating, 4.11-12 – 4.11-13, Fig. 4.11.6

loan record detail report, 4.4-6, 4.11-3 – 4.11-4

supporting documentation, 4.4-6, 4.11-2 – 4.11-3

letter, 4.4-6 – 4.4-8, Fig. 4.4.3

data manager response (see Data Manager)

what does school do with data manager response,

4.4-14 – 4.4-17

submission to Default Management, 4.4-14

time frame for submission to Default Management, 4.4-14

school submission materials to Default Management,

4.4-15 – 4.4-17

spreadsheet, 4.4-15, Fig. 4.4.6

creating, 4.11-16 – 4.11-17, Fig. 4.11.8

data manager response, 4.4-15

letter, 4.4-15 – 4.4-17, Fig. 4.4.7

address for submitting, 4.4-16, 4.11-1

what happens after submitting, 4.4-16, 4.4-18

Non-Average Rate

formula, 2.1-7

calculation, 2.1-7

example, 2.1-7

Non-Degree-Granting School

and economically disadvantaged appeal, 4.7-1

Notification Letter

official, 3.1-8

Index of Key Terms

Index of Key Terms

Index - 13
NSLDS

data used in loan record detail report, 2.3-1

updated regularly, 2.2-1, 2.3-2

reviewing, 3.1-3

submitting changes to, 3.1-3

contacting, 2.5-7

use of repayment information to ensure accuracy of, 3.1-4

Numerator

generally, 2.1-6

and cohort default rate calculation, 2.1-10 – 2.1-15

special circumstances, 2.1-12 – 2.1-15

involving schools, 2.1-12, Fig. 2.1.2

involving repayment, 2.1-13, Fig. 2.1.3

involving discharge, 2.1-14, Fig. 2.1.4

involving repurchase, 2.1-15, Fig. 2.1.5

and participation rate index, 4.2-4, 4.8-4

and low income rate, 4.7-4

and placement rate, 4.7-5 – 4.7-6

and completion rate, 4.7-7

Office of Student Financial Assistance

relationship to the Department, 2.5-1

website, 2.5-6

call center, 2.5-6

Official Cohort Default Rate (see Cohort Default Rate)

Other Specified Conditions

defined, 2.1-1 – 2.1-2

on loan record detail report, 2.3-11

Participation Rate Index

12-month period, 4.2-2 – 4.2-3, 4.8-2 – 4.8-3

selecting, 4.2-3 – 4.2-4, 4.8-2 – 4.8-3, Fig. 4.2.3, Fig. 4.8.3

acceptable, 4.2-3 – 4.2-4, 4.8-3 – 4.8-4, Fig. 4.2.4,

Fig. 4.8.4

consequences of unacceptable, 4.2-3, 4.8-3

calculating, 4.2-2 – 4.2-6, 4.8-2 – 4.8-6

formula, 4.2-4, 4.8-4

example, 4.2-5 – 4.2-6, 4.8-5 – 4.8-6

acceptable rate, 4.2-5, 4.8-5

preparing before release of cohort default rates, 4.2-6, 4.8-6

Index of Key Terms

Index - 14

Index of Key Terms

P

O
Participation Rate Index Appeal

generally, Chapter 4.8

defined, 4.8-1

which schools should submit, 4.8-2

benefits of submitting, 4.8-2

data manager role (see Data Manager)

Default Management role (see Default Management)

calculating a participation rate index 

(see Participation Rate Index)

submitting a participation rate index appeal, 4.8-7 – 4.8-9

time frame for submitting, 4.8-1, 4.8-7

preparing before release of cohort default rates, 4.8-6

school submission materials to Default Management,

4.8-7 – 4.8-9

spreadsheet, 4.8-7, Fig. 4.8.5

creating, 4.11-14 – 4.11-15, Fig. 4.11.7

letter, 4.8-8 – 4.8-9, Fig. 4.8.6

address for submitting, 4.8-8, 4.11-1

what happens after submission, 4.8-10

Participation Rate Index Challenge

generally, Chapter 4.2

defined, 4.2-1

which schools should submit, 4.2-2

benefits of submitting, 4.2-2

data manager role (see Data Manager)

Default Management role (see Default Management)

calculating a participation rate index 

(see Participation Rate Index)

submitting a participation rate index challenge, 4.2-7 – 4.2-9

time frame for submitting, 4.2-1, 4.2-7

preparing before release of cohort default rates, 4.2-6

school submission materials to Default Management,

4.2-7 – 4.2-9

spreadsheet, 4.2.7, Fig. 4.2.5

creating, 4.11-14 – 4.11-15, Fig. 4.11.7

letter, 4.2-8 – 4.2-9, Fig. 4.2.6

address for submitting, 4.2-8, 4.11-1

what happens after submission, 4.2-10

Index of Key Terms

Index of Key Terms

Index - 15
Placement Rate

defined, 4.7-4 – 4.7-6

calculating, 4.7-4 – 4.7-6

formula, 4.7-6

example, 4.7-6

acceptable rate, 4.7-6

preparing before release of cohort default rates, 4.7-8

spreadsheet 4.7-8 – 4.7-9, Fig. 4.7.5

creating, 4.11-22 – 4.11-23, Fig. 4.11.11

Privacy Act of 1974

and loan record detail report data, 2.3-4, 3.1-9

and repayment information, 3.3-7

Provisional Certification

defined, 4.5-19

school subject to can submit erroneous data appeal,

4.5-19 – 4.5-21

when can a school submit, 4.5-20

time frame for submitting, 4.5-20

Rehabilitation 

and numerator of cohort default rate calculation, 2.1-11

Repayment (see Date Entered Repayment)

Repayment Information

defined, 3.1-4

benefits of reviewing, 3.1-4

types, 3.1-5, 3.3-1 – 3.3-2

summary, 3.1-5, 3.3-1

detailed, 3.1-5, 3.3-2

obtaining, 3.3-2 – 3.3-7

summary, 3.3-2 – 3.3-3

detailed, 3.3-2 – 3.3-7

reading, 3.3-7, 2.6-4 – 2.6-9, Fig. 2.6.1 – 2.6.3

Representative Sample (see Loan Servicing Records)

Index of Key Terms

Index - 16

Index of Key Terms

R
Sanction

defined, 2.2-3, Fig. 2.2.2

thresholds, 2.2-3, Fig. 2.2.2

avoiding, 2.2-4 – 2.2.5

Historically Black Colleges and Universities, 2.2-5

Tribally Controlled Community College, 2.2-5

Navajo Community College, 2.2-5

effective date of, 2.2-6, Fig. 2.2.4

Schools Channel

and the Department, 2.5-1

Special Institution

and avoiding sanctions, 2.2-5

and strategy, 3.1-3

Status, Change in (see Change in Status)

Strategies (see Cohort Default Rate Strategies)

Student Loan Rehabilitation (see Rehabilitation)

Supporting Documentation

specific, 4.11-2 – 4.11-3, 4.11-4 – 4.11-8

inaccurate date entered repayment, 4.11-5, Fig. 4.11.1

inaccurate default status, 4.11-6, Fig. 4.11.2

multiple loans, 4.11-7, Fig. 4.11.3

incorrectly included, 4.11-8, Fig. 4.11.4

incorrectly excluded, 4.11-8, Fig. 4.11.5

Thirty-or-Fewer Borrowers Appeal

generally, Chapter 4.10

defined, 4.10-1

Default Management initiated, 4.10-1

appeal of Default Management determination, 4.10-2

address for submitting, 4.10-2, 4.11-1

Title IV Eligibility

loss of, 2.2-5

effective date of, 2.2-6, Fig. 2.2.4

regaining, 2.2-7

Index of Key Terms

Index of Key Terms

Index - 17

S

T
Tool

general information, Chapter 2.6

strategy, Chapter 3.3

challenge, adjustment, and appeal, Chapter 4.11

general spreadsheet instructions, 4.11-9 – 4.4-11

Tribally Controlled Community College

and avoiding sanctions, 2.2.5

Uncorrected Data Adjustment

generally, Chapter 4.3

defined, 4.3-1

which schools should submit, 4.3-2

benefits of submitting, 4.3-2

data manager role (see Data Manager)

Default Management role (see Default Management)

submitting an uncorrected data adjustment, 4.3-3 – 4.3-6

time frame for submitting, 4.3-1, 4.3-3

school submission materials to Default Management,

4.3-4 – 4.3-6

spreadsheet, 4.3-4, Fig. 4.3.2

creating, 4.11-16 – 4.11-17, Fig. 4.11.8

data manager response to incorrect data challenge, 4.3-4

letter, 4.3-4 – 4.3-6, Fig. 4.3.3

address for submitting, 4.3-6, 4.11-1

what happens after submission, 4.3-6 – 4.3-7

Unofficial Rate

defined, 2.1-9

U.S. Department of Education (see Department)

William D. Ford Federal Direct Loan Program 

(see Direct Loan Program)

Index of Key Terms

Index - 18

Index of Key Terms

U

W
Appendix A

Wednesday,

November 1, 2000

Part VII

Department of

Education

34 CFR Parts 668, 682, 685, and 690

Student Assistance General Provisions,

Federal Family Education Loan Program,

William D. Ford Federal Direct Loan

Program, and Federal Pell Grant

Program; Final Rule

65632 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Parts 668, 682, 685, and 690

RIN 1845–AA17

Student Assistance General

Provisions, Federal Family Education

Loan Program, William D. Ford Federal

Direct Loan Program, and Federal Pell

Grant Program

AGENCY: Office of Postsecondary

Education, Department of Education.

ACTION: Final regulations.

SUMMARY: The Secretary amends the

Student Assistance General Provisions,

Federal Family Education Loan (FFEL)

Program, William D. Ford Federal Direct

Loan (Direct Loan) Program, and Federal

Pell Grant Program regulations. In these

final regulations, the requirements for

the loan default reduction and

prevention measures are moved to a

new subpart and revised for clarity and

consistency. The Secretary also makes

various substantive changes to these

requirements.

DATES: These regulations are effective

July 1, 2001.

FOR FURTHER INFORMATION CONTACT:

Kenneth Smith, U.S. Department of

Education, 400 Maryland Avenue, SW.,

ROB–3, room 3045, Washington, DC

20202–5447. Telephone: (202) 708–

8242. If you use a telecommunications

device for the deaf (TDD), you may call

the Federal Information Relay Service

(FIRS) at 1–800–877–8339.

Individuals with disabilities may

obtain this document in an alternative

format (e.g., Braille, large print,

audiotape, or computer diskette) on

request to the contact person listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION: On August

2, 2000, we published a notice of

proposed rulemaking (NPRM) for the

Student Assistance General Provisions,

FFEL Program, Direct Loan Program,

and Federal Pell Grant Program in the

Federal Register (65 FR 47590). In the

preamble to the NPRM, we discussed on

pages 47591 through 47601 the major

changes proposed in that document.

That discussion will not be repeated

here. To fully understand the changes,

we strongly encourage a review of the

preamble of the NPRM. The following

list summarizes those major changes:

• Moving the regulations governing

the calculation of cohort default rates

and challenges to those rates that were

in previous § 668.17 to a new subpart M

of part 668, revising the regulations for

clarity and consistency, and removing

Appendix D to part 668.

• In § 668.184, providing detailed

regulations for determining an

institution’s cohort default rate after

certain types of institutional

restructuring.

• In §§ 668.185(c) and 668.195,

amending certain regulations for a

participation rate index challenge or

appeal.

• In § 668.187(a)(1), imposing a loss

of participation from the FFEL and

Direct Loan programs against an

institution having a cohort default rate

greater than 40 percent, without

requiring the use of a proceeding under

subpart G of part 668.

• In § 668.187(a)(2), imposing a loss

of participation in the FFEL Program

against an institution with three

consecutive cohort default rates of 25

percent or greater, even if Direct Loans

are included in those cohort default

rates, without the use of a proceeding

under subpart G of part 668.

• In § 668.188, providing for the

application of an institution’s loss of

eligibility to a related or successor

institution when certain criteria are met,

to prevent an institution from evading

the consequences of cohort default rates.

• In § 668.192, allowing an institution

that is provisionally certified under

§ 668.16(m) to submit an erroneous data

appeal.

• In § 668.193, allowing all

institutions to appeal their most recent

cohort default rates on the basis of

improper loan servicing or collection.

• In § 668.194, restoring certain

eligibility criteria, inadvertently omitted

in previous regulations, and revising

submission requirements for an

economically disadvantaged appeal.

• In § 668.196, providing for the

submission of an average rates appeal by

an institution that is subject to loss of

participation based on a cohort default

rate greater than 40 percent.

• In § 668.197, providing for the

submission of a thirty-or-fewer

borrowers appeal by an institution that

is subject to loss of participation based

on a cohort default rate greater than 40

percent.

• In § 668.198, exempting a special

institution that is in compliance with

this section from a loss of eligibility

based on a cohort default rate greater

than 40 percent.

These final regulations contain

several significant changes from the

NPRM. We fully explain these changes

in the Analysis of Comments and

Changes elsewhere in this preamble.

Effect of Regulations on Rights or

Obligations

These final regulations will be a new

subpart M of part 668 of the

Department’s regulations. This new

subpart is a reorganization of provisions

governing the cohort default rate

calculation and challenge process,

which are currently in 34 CFR 668.17.

As discussed elsewhere in this

preamble, a few of these provisions have

also been revised. Generally, these

changes do not affect procedural or

substantive rights of any party.

However, there are a few instances in

which those rights have been modified.

To the extent that an institution has or

had a right or obligation under § 668.17

before the effective date of these

regulations, the institution’s exercise or

failure to exercise that right or meet that

obligation is binding after the effective

date of these regulations. These final

regulations govern all rights and

obligations that may apply to an

institution or other party after their

effective date.

Analysis of Comments and Changes

The regulations in this document

were developed through the use of

negotiated rulemaking. Section 492 of

the Higher Education Act of 1965, as

amended (HEA) requires that, before

publishing any proposed regulations to

implement programs under Title IV of

the HEA, the Secretary obtain public

involvement in the development of the

proposed regulations. After obtaining

advice and recommendations, the

Secretary must conduct a negotiated

rulemaking process to develop the

proposed regulations.

These regulations were published in

proposed form on August 2, 2000,

following the completion of the

negotiated rulemaking process. The

Secretary invited comments on the

proposed regulations by September 18,

2000, and 17 comments were received.

An analysis of the comments and of the

changes in the regulations since

publication of the NPRM follows.

We discuss substantive issues under

the sections of the regulations to which

they pertain. Generally, we do not

address technical and other minor

changes and suggested changes the law

does not authorize the Secretary to

make.

General

Comments: In general, the

commenters supported the proposed

regulations and commended us for our

efforts to make the requirements for

cohort default rates clearer and more

consistent. One commenter specifically

supported the removal of the previous

Appendix D to part 668, stating that it

is important to give institutions the

flexibility they need to manage cohort

default rates.

Discussion: We appreciate the

commenters’ support for the proposed

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65633

regulations and the work of the

members of the negotiated rulemaking

committee that resulted in the proposed

regulations.

Changes: None.

Provisional Certification

(§ 668.16(m)(2)(i))

Comments: None.

Discussion: As we stated in the

preamble to the NPRM (65 FR 47599),

during negotiated rulemaking we agreed

to change the regulations to allow

institutions to submit erroneous data

appeals to contest provisional

certification under § 668.16(m). We have

subsequently reviewed the processes for

implementing this new appeal and have

determined that there is no need to

provisionally certify every institution

that has one cohort default rate that falls

between 25 percent and 40 percent. In

some cases, it may be just as effective to

apply other current safeguards to

address this issue at the institution and

to protect the Federal Government’s

interest. Improved reporting practices, a

holistic case management approach, the

availability of technical assistance, and

other current safeguards may be

adequate to address, in some cases,

issues associated with an excessive

cohort default rate.

Changes: We have revised

§ 668.16(m)(2)(i) to provide for the

Secretary’s discretion in provisionally

certifying an institution under that

paragraph.

Submission Deadlines (§ 668.182(c))

Comments: Three commenters agreed

with our use of a consistent definition

for ‘‘days’’ throughout these regulations,

instead of using ‘‘calendar days’’ as a

measure for some requirements and

‘‘working days’’ as a measure for other

requirements. One commenter agreed

with our proposal to define ‘‘days’’ as

‘‘calendar days’’ because ‘‘calendar

days’’ is easier to understand, while the

concept of a ‘‘working day’’ may lend

itself to different interpretations and is

more difficult to monitor.

However, one commenter questioned

whether the change from calendar days

to working days would allow

institutions less time to comply with the

regulations. Another commenter

recommended that the regulations

define ‘‘days’’ as ‘‘working days’’

because it would allow institutions

more time to submit requests and

appeals during the cohort default rate

process. This commenter stated that

requiring an institution to submit a

completed appeal within 30 calendar

days may place an undue burden on

institutions that are also trying to

perform the other administrative

functions required for participation in

the Title IV, HEA programs.

Discussion: In general, these

regulations allow institutions the same

amount of time, or more, to submit

challenges, requests for adjustments, or

appeals, when compared to previous

regulations. The only exception is if an

institution has to pay a fee to a data

manager during a loan servicing appeal,

under § 668.193(c)(5). Previously, an

institution had 15 working days to pay

this fee; under the new regulations, an

institution has 15 calendar days to pay

this fee.

We do not agree that the term ‘‘days’’

should mean ‘‘working days’’ in subpart

M of part 668. We also do not agree that

it is unreasonable to require an

institution to submit a completed appeal

within 30 calendar days. In fact, it is our

experience that almost every institution

meets the deadline.

Changes: None.

Entering Repayment on Federal

Supplemental Loans for Students (SLS)

Program Loans (§ 668.182(f)(2))

Comments: One commenter stated

that there were inaccuracies in proposed

§ 668.182(f)(2) in the definition of the

date that a Federal SLS loan enters

repayment for the purposes of

calculating a cohort default rate.

Proposed § 668.182(f)(2)(i) stated that

a Federal SLS loan is considered to

enter repayment at the same time as the

borrower’s Federal Stafford loan enters

repayment, if the borrower received a

Federal Stafford loan for the same loan

period. The commenter noted that 34

CFR 682.200 and 682.209(a)(2)(iii) do

not require that the borrower receive the

Federal SLS and Federal Stafford loans

for the same loan period. Instead, under

those sections, the Federal SLS and

Federal Stafford loans must be obtained

during the same period of continuous

enrollment, which may include one or

more loan periods, for the Federal SLS

loan to enter repayment at the same

time as the Federal Stafford loan.

In addition, under proposed

§ 668.182(f)(2)(ii), for all other purposes,

a Federal SLS loan would be considered

to enter repayment on the day after the

student ceased to be enrolled at the

institution on at least a half-time basis

in an educational program leading to a

degree, certificate, or other recognized

educational credential. The commenter

stated that loans do not enter repayment

because a student ceases to be enrolled

at least half-time at a particular

institution; they enter repayment

because the student ceases to be

enrolled at least half-time. A student

might continue his or her studies at

another institution, and the loans would

not enter repayment until the student

ceased to be enrolled at least half-time

at that second institution.

Discussion: We agree with the

commenter.

Changes: We have revised

§ 668.182(f)(2) to correct the errors the

commenter described.

Entering Repayment on Consolidation

Loans (§ 668.183(b))

Comments: None.

Discussion: After further review, we

have concluded that the language in

proposed §§ 668.182(f)(3)(ii) and

668.183(b)(2), which describes the

inclusion of loans made under the

Federal Consolidation Loan Program

and the Federal Direct Consolidation

Loan Program in the calculation of

cohort default rates, is unnecessarily

complex.

Changes: We have removed proposed

§§ 668.182(f)(3)(ii) and 668.183(b)(2)

and revised § 668.183(b)(1) to clarify the

inclusion of consolidation loans in the

calculation of a cohort default rate.

Calculation of Cohort Default Rates for

Proprietary, Non-degree-granting

Institutions (§ 668.183(c)(1)(iii))

Comments: Under § 668.183(c)(1)(iii),

certain loans that are repaid under the

Direct Loan Program’s income

contingent repayment plan are

considered to be in default for the

purpose of calculating a non-degreegranting proprietary institution’s cohort

default rate. As noted in the preamble

to the NPRM (65 FR 47591), this

provision does not make any change to

current regulations and was presented

to the negotiating committee only as

part of the overall restructuring of the

regulations.

One commenter agreed that these

regulations are appropriate and stated

that degree-granting institutions with

historically low default rates should not

be subject to this regulatory provision.

Seven commenters argued that these

regulations are inappropriate. They

claimed that these regulations unfairly

target non-degree-granting proprietary

institutions. Several commenters argued

that if these requirements are

appropriate for non-degree-granting

proprietary institutions, then they

should be appropriate for, and applied

to, all types of institutions.

The commenters believed that there is

not a significant risk that an institution

could have a low cohort default rate

even though a large proportion of its

former students are making only

minimal or no payments under the

income contingent repayment plan.

They did not believe that this risk is an

adequate reason for the special

65634 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

treatment of loans being repaid through

income contingent repayment included

in the proposed regulations. They noted

that, since this requirement applies only

to borrowers who are repaying Direct

Loans, it may make some institutions

reluctant to participate in the Direct

Loan Program or to counsel borrowers to

apply for Direct Consolidation Loans.

The commenters also argued that this

provision is contrary to the purpose of

the Direct Loan Program’s income

contingent repayment plan. They

contended that this repayment plan was

designed to help students repay their

loans, even if the students are starting

new careers or are unable to work full

time, and that this repayment plan is a

legitimate option for all eligible

borrowers.

Discussion: We appreciate the

commenters’ concerns, but continue to

believe that this is a potential area for

abuse. Without this provision, an

institution could have a low cohort

default rate, even though a large

proportion of its former students are

making only minimal or no payments

on their loans. Though an institution

cannot require all its borrowers to

choose one repayment plan, it can,

through its counseling, increase the

likelihood of a borrower’s choosing to

repay under the Direct Loan Program’s

income contingent repayment plan.

We also continue to believe that this

provision should apply only to nondegree-granting proprietary institutions.

As we stated in the preamble to the

NPRM, our experience and data show

that student borrowers at non-degreegranting proprietary institutions are at a

higher risk of default than other student

borrowers. The cohort default rates of

non-degree-granting proprietary

institutions are, on average, consistently

higher than those of other institutions.

Since non-degree-granting proprietary

institutions provide students with

education or training needed to secure

employment, a borrower’s ability to

make substantial payments on a loan

reflects the value of the education or

training provided by the institution in

the marketplace.

Changes: None.

Reinsurance and Default

(§ 668.183(c)(2)(ii))

Comments: None.

Discussion: Proposed

§ 668.183(c)(2)(ii) stated that a borrower

is not considered to be in default based

on a loan that is no longer reinsured by

us. This statement is not correct. A loan

that is no longer reinsured by us is

removed from the cohort completely:

the borrower is neither counted in the

cohort nor considered to be a defaulter.

However, this is not the situation that

we intended to address in this

paragraph, and since it is inherent in the

cohort default rate process that a loan

must be reinsured by us to be included

in the calculation, it does not need to be

stated explicitly in regulations.

We had intended for

§ 668.183(c)(2)(ii) to address situations

in which a lender repurchases a loan,

before the end of the fiscal year

immediately following the fiscal year in

which it entered repayment, having

recognized that the lender’s claim for

insurance on the loan was submitted or

paid in error. In those situations, the

loan is not considered to be in default.

Changes: We have revised

§ 668.183(c)(2)(ii) to provide that, for the

purposes of calculating a cohort default

rate, a borrower is not considered to be

in default on certain repurchased loans.

Change in Status and Change in

Institutional Structure or Identity

(§ 668.184(a)(3))

Comments: None.

Discussion: Section 668.184 describes

how an institution’s cohort default rate

is determined after certain changes in

institutional structure or identity. Under

§ 668.188, a loss of eligibility imposed

against one institution is also applied to

one or more other institutions, in certain

circumstances, following a change in

institutional structure or identity.

Because these separate provisions both

deal with changes in institutional

structure or identity, we believe that,

without clarification, there may be

confusion about whether both

provisions could apply to the same

institution based on the same

circumstance.

The application of one of these

sections to an institution does not

preclude the application of the other

section to that same institution based on

the same circumstance. The sections are

separate requirements. A determination

of an institution’s cohort default rate

under § 668.184 does not preclude the

application of a loss of eligibility under

§ 668.188, and the application of a loss

of eligibility under § 668.188 does not

preclude the determination of an

institution’s cohort default rate under

§ 668.184.

Changes: We have renumbered

proposed § 668.184(a)(3) as

§ 668.184(a)(4) and added a new

§ 668.184(a)(3) to clarify that a change of

status that affects the calculation of an

institution’s cohort default rate under

§ 668.184 may also affect that

institution’s eligibility to participate in

Title IV, HEA programs under § 668.187

or § 668.188.

Data Manager’s Ability To Deny a

Challenge, Request for Adjustment, or

Appeal (§§ 668.185(a)(4) and

668.189(c))

Comments: Three commenters noted

that proposed §§ 668.185(a)(4) and

668.189(c) state that the Department

may deny a school’s challenge, request

for adjustment, or appeal if an

institution does not comply with the

requirements in the Cohort Default Rate

Guide. The commenters suggested that

guarantors, as data managers, should

have the same latitude to deny noncompliant challenges and appeals as the

Department.

Discussion: Only the Secretary may

deny an institution’s challenge, request

for adjustment, or appeal. Data

managers do not have the authority to

make this determination. If a data

manager receives an institution’s

request for information during the

cohort default rate process but is unable

to respond because the request lacks

necessary information or is not in the

required format, then the data manager

must ask the institution to submit the

missing information or to submit the

request in the required format. However,

there is no change to the timeframe for

the institution’s submission; the

institution must send its corrected

request for information to the data

manager within the original timeframe.

Changes: None.

Request for Loan Record Detail Report

(§ 668.186(c)(1))

Comments: None.

Discussion: In proposed

§ 668.186(c)(1), awkward language

could have been read to mean that an

institution could not request less than

two loan record detail reports at a time.

Most institutions will only need to

request one loan record detail report at

a time.

Changes: We have revised

§ 668.186(c)(1) to clarify that an

institution may request any loan record

detail report that lists loans included in

its cohort default rate calculation.

Loss of Participation for Institutions

With Cohort Default Rates Exceeding 40

Percent (§ 668.187(a)(1))

Comments: One commenter

supported changes in § 668.187(a)(1),

stating that the new regulations would

provide institutions that have one

cohort default rate over 40 percent with

the same opportunities to challenge,

request an adjustment, or appeal as

those afforded to institutions with three

consecutive cohort default rates of 25

percent or more. The commenter stated

that the new regulations provide a more

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65635

equitable process for schools with one

cohort rate over 40 percent.

Discussion: We agree with the

commenter.

Changes: None.

Preventing Evasion of the Consequences

of Cohort Default Rates (§ 668.188(a)(2))

Comments: In the preamble to the

NPRM (65 FR 47597), we stated that, in

general, an institution is offering an

educational program at ‘‘substantially

the same address’’ as an ineligible

institution if its site is the same as the

ineligible institution’s site or is

physically located close enough to the

ineligible institution’s site to

demonstrate that the educational

programs it provides are intended to

serve the same population.

Four commenters felt that this

statement was an overly broad

interpretation of the regulatory criterion,

and they asked us to revise our

interpretation in this preamble. Some

commenters contended that this

interpretation would be impossible to

apply consistently, because it would

require an extensive analysis of the

population served by the institutions.

The commenters also noted that the

statement in the preamble to the NPRM

could be read to suggest that we will

treat institutions that are located miles

apart as being located at ‘‘substantially

the same address.’’ Three commenters

stated that, as distance learning becomes

more accepted for all or parts of a

program, any school that uses

computerized instruction over the

internet could be considered to be

serving the same population.

The commenters argued that

‘‘substantially the same address’’ should

refer to the same building, an adjacent

building, the same block, across the

street, etc. They stated that these were

the examples offered during negotiated

rulemaking, to gain consensus for this

requirement, and that the consensus

achieved during negotiated rulemaking

did not include the broad interpretation

they believed was reflected in the

preamble to the NPRM.

Discussion: The purpose of § 668.188

is to keep institutions from evading the

consequences of their cohort default

rates through the use of measures such

as branching, consolidation, change of

ownership or control, or any similar

devices. Limiting the interpretation of

‘‘substantially the same address’’ to the

specific locations the commenters

suggest would not be appropriate for

many circumstances. An institution that

was able to relocate outside those

specific parameters while continuing to

serve the same population of students

could, in effect, continue to function as

the same institution and evade the

consequences of its cohort default rates.

For example, after Institution A

becomes ineligible to participate in the

FFEL and Direct Loan programs, its

owner changes Institution A’s name to

Institution B and moves it 10 blocks

away from Institution A’s site.

Institutions A and B are located in a

small city, where no other institutions

provide the same type of educational

programs, and they serve the same

population of students. One week after

Institution A becomes ineligible,

Institution B opens for business with the

same owner and staff. Under the

interpretation that the commenters

suggest, Institution A’s prior loss of

eligibility would not be applied to

Institution B because their sites are

located 10 blocks apart rather than in

adjacent buildings, on the same block,

across the street, etc.

This result does not serve the goals of

section 435(m)(3) of the HEA, which

these regulations are intended to

implement. In the example, Institution

B was created from Institution A merely

by changing the name and location. The

institutions are owned by the same

person, and since they are located in a

small city, they provided the same

educational programs to the same

population of students. It is clear that

the change in status was instituted in

order to evade the consequences of

Institution A’s cohort default rates, and

also that Institution A is continuing to

function as Institution B. In this case,

limiting the interpretation of

‘‘substantially the same address’’ to the

specific locations the commenters

mention would only prompt the owner

to locate Institution B at least one

building beyond that narrowly-defined

area. It would not prevent Institution B

from evading the consequences of

Institution A’s cohort default rates.

During the negotiated rulemaking

discussions, we did not intend to limit

the interpretation of this provision to a

specific geographical area. If we had

intended to create a narrowly-defined

rule, we would have defined that

geographical area specifically in the

regulatory language, rather than using

the more general term, ‘‘substantially

the same address.’’ The statement

included in the preamble to the NPRM

was intended to provide an explanation

of the circumstances under which that

term could extend further than a

narrowly-defined geographical area.

We recognize that this approach may

result in some uncertainty among

institutions contemplating various

changes in status. For this reason, a

procedure is included in these

regulations for institutions to make

inquiries to us. If an institution is

undergoing a change in institutional

structure or identity and is unsure

whether its site is located at

‘‘substantially the same address’’ as

another institution’s site, it may contact

us for an initial determination under

§ 668.188(d).

Changes: None.

Initial Determination of the Effect of an

Anticipated Change on an Institution’s

Eligibility (§ 668.188(d))

Comments: None.

Discussion: Proposed § 668.188(d)

encourages an institution to contact us

for an initial determination of the effect

of an anticipated change on the

institution’s eligibility. As written, the

proposed regulations did not specify the

format for the institution’s request or for

our response. To ensure that an initial

determination is adequately

documented, both the institution’s

request for the initial determination and

our response need to be in writing.

Changes: We have revised

§ 668.188(d) to require institutions’

requests for initial determinations and

our responses to be in writing.

Requirements for Data Managers’

Responses (§ 668.189(e)(2))

Comments: None.

Discussion: Proposed § 668.189(e)(2)

stated that correspondence sent to us by

a data manager as part of the cohort

default rate process ‘‘should’’ be in a

format acceptable to us. On further

consideration, however, we have

determined that the use of the word

‘‘should’’ created an ambiguity. The

paragraph did not specify whether it

required or merely encouraged data

managers to send us correspondence in

a format acceptable to us. This

ambiguity needs to be resolved.

The word ‘‘should’’ was added to

§ 668.189(e)(2) during negotiations.

Non-Federal negotiators asked us to

change proposed language, which

provided that the data ‘‘must be in a

format acceptable to us,’’ to ‘‘should be

in a format acceptable to us.’’ They

made this request so the requirement for

data managers would be less rigid and

more similar to requirements for

institutions, under § 668.189(c), which

state that we ‘‘may’’ (instead of ‘‘will’’)

deny an institution’s request for

adjustment or appeal if it does not meet

certain requirements.

On further consideration, however,

we have determined that changing the

language did not make the provisions

similar, since an institution risks the

denial of its appeal if its request is not

in an acceptable format. In contrast, a

guaranty agency would not be subject to

65636 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

any consequence for not providing data

in an acceptable format.

Changes: We have revised

§ 668.189(e)(2) to clarify the

requirement for data managers by

making it more similar to the

corresponding requirement for

institutions, under § 668.189(c). The

revised regulations allow guaranty

agencies some flexibility, but they also

allow the Secretary to require a guaranty

agency to provide data in a specified

format.

Submission of Erroneous Data Appeals

(§ 668.192(a)(2))

Comments: None.

Discussion: Proposed § 668.192(a)(2)

did not fully explain the circumstances

under which an institution may submit

an erroneous data appeal. The proposed

regulations stated that an institution

may submit an erroneous data appeal if

a comparison of its loan record detail

reports, for the draft and official cohort

default rates, shows that certain data

have been newly included, excluded, or

otherwise changed. However, in order

for an institution to submit an erroneous

data appeal for that new data, it must

also dispute the data’s accuracy. Though

this requirement is included in

§ 668.192(c), as it relates to our

determination on an erroneous data

appeal, it also needs to be clearly stated

for institutions in § 668.192(a)(2).

Changes: We have revised

§ 668.192(a)(2) to more clearly reflect

the criteria for an erroneous data appeal.

Requirements for Submitting Loan

Servicing Appeals (§ 668.193(c)(2))

Comments: None.

Discussion: Under proposed

§ 668.193(c)(2), an institution that is

requesting loan servicing records would

send the data manager the ‘‘list of

students that we provided to you.’’ This

phrase refers to the ‘‘loan record detail

report,’’ which is defined in

§ 668.182(h). To avoid confusion, we

have decided to use the term ‘‘loan

record detail report’’ in § 668.193(c)(2).

Changes: In § 668.193(c)(2), we have

changed ‘‘list of students that we

provided to you’’ to ‘‘loan record detail

report.’’

Summaries of Eligibility and

Submission Requirements for

Challenges, Adjustments, and Appeals

(Appendix A to Subpart M of Part 668)

Comments: After the NPRM was

published, we sent a formatted copy of

the proposed Appendix A to a focus

group comprised of eight

representatives of the financial aid

community. We asked for their

comments on the usefulness and

understandability of the tables in

Appendix A. Three commenters

responded to our request. Although the

commenters appeared to generally

understand the tables, their responses

identified certain areas in which the

tables and their introductions need to be

improved.

Discussion: We appreciate the

commenters’ help and have accepted

most of their suggestions.

Changes: We have revised the first

table, under ‘‘I. Summary of Submission

Eligibility,’’ so that it contains a ‘‘Yes’’

or a ‘‘No’’ in each cell, and we have

reformatted the table so that its

information is arranged and identified

more consistently. In the second table,

under ‘‘II. Summary of Submission

Deadlines,’’ we have made several

minor formatting and text changes and

have rewritten the introductory

language to more clearly specify the

starting date for each timeframe

described in the table, including the

starting dates for timeframes when an

action is not always required (identified

in the table by a dotted border).

However, we did not make all of the

changes that the commenters suggested:

• Instead of removing the information

associated with the draft cohort default

rate process from the first table and

adding a separate table for that

information, we have specified within

the first table that sanctions are never

based on draft cohort default rates.

• We have not included page

numbers with citations. It would be

impossible to keep the page numbers

updated so that they would always

identify the text as it is first printed in

the Federal Register and subsequently

printed in each year’s version of the

Code of Federal Regulations.

• We have not re-ordered the

columns in the second table so that

challenges, adjustments, and appeals are

presented in the order of their

appearance in the regulations. When

printed in the Code of Federal

Regulations, this table will be divided in

half and printed on facing pages. If the

columns were arranged in the order of

the requirements’ appearance in the

regulations, the columns for §§ 668.191

and 668.192 would be printed on

different pages, and it would not be

possible to note their common

submission requirements.

• We have not included definitions of

the terms ‘‘you’’, ‘‘we’’, and ‘‘data

manager’’ in Appendix A. This

appendix will be published in the Code

of Federal Regulations as part of subpart

M of part 668. It will not be separated

from this subpart by other regulations or

appendices, so there is no need to repeat

these definitions.

• Instead of explaining in the second

table the reason that a school would not

receive a loan record detail report with

its cohort default rate, we have included

this information as an example in the

introductory language for the table.

There is no space in the table to insert

this explanation.

Executive Order 12866

We have reviewed these final

regulations in accordance with

Executive Order 12866. Under the terms

of the order we have assessed the

potential costs and benefits of this

regulatory action.

The potential costs associated with

the final regulations are those resulting

from statutory requirements and those

we have determined to be necessary for

administering these programs effectively

and efficiently.

In assessing the potential costs and

benefits—both quantitative and

qualitative—of these final regulations,

we have determined that the benefits of

the regulations justify the costs.

We have also determined that this

regulatory action does not unduly

interfere with State, local, and tribal

governments in the exercise of their

governmental functions.

We summarized the potential costs

and benefits of these final regulations in

the preamble to the NPRM (65 FR

47590).

Paperwork Reduction Act of 1995

The Paperwork Reduction Act of 1995

does not require you to respond to a

collection of information unless it

displays a valid Office of Management

and Budget (OMB) control number. We

display the valid OMB control number

assigned to the collection of information

in these final regulations at the end of

the affected sections of the regulations.

Intergovernmental Review

The Federal Supplemental

Educational Opportunity Grant Program

and the Leveraging Educational

Assistance Partnership are subject to

Executive Order 12372 and the

regulations in 34 CFR part 79. One of

the objectives of the Executive order is

to foster an intergovernmental

partnership and a strengthened

federalism by relying on processes

developed by State and local

governments for coordination and

review of proposed Federal financial

assistance.

In accordance with the order, we

intend this document to provide early

notification of our specific plans and

actions for these programs.

The Federal Family Education Loan,

Federal Supplemental Loans for

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65637

Students, Federal Work-Study, Federal

Perkins Loan, Federal Pell Grant, and

William D. Ford Federal Direct Loan

programs are not subject to Executive

Order 12372 and the regulations in 34

CFR part 79.

Assessment of Educational Impact

In the NPRM we requested comments

on whether the proposed regulations

would require transmission of

information that any other agency or

authority of the United States gathers or

makes available.

Based on the response to the NPRM

and on our review, we have determined

that these final regulations do not

require transmission of information that

any other agency or authority of the

United States gathers or makes

available.

Electronic Access to This Document

You may view this document in text

or Adobe Portable Document Format

(PDF) on the Internet at the following

sites:

http://ocfo.ed.gov/fedreg.htm

http://ifap.ed.gov/dev_csb/new/

home.nsf

To use PDF you must have Adobe

Acrobat Reader, which is available free

at the first of the previous sites. If you

have questions about using PDF, call the

U.S. Government Printing Office (GPO),

toll free, at 1–888–293–6498; or in the

Washington, DC, area at (202) 512–1530.

Note: The official version of this document

is the document published in the Federal

Register. Free Internet access to the official

edition of the Federal Register and the Code

of Federal Regulations is available on GPO

Access at: http://www.access.gpo.gov/nara/

index.html.

(Catalog of Federal Domestic Assistance

Numbers: 84.007 Federal Supplemental

Educational Opportunity Grant Program;

84.032 Federal Family Education Loan

Program; 84.032 Federal PLUS Program;

84.032 Federal Supplemental Loans for

Students Program; 84.033 Federal WorkStudy Program; 84.038 Federal Perkins Loan

Program; 84.063 Federal Pell Grant Program;

84.069 Leveraging Educational Assistance

Partnership; and 84.268 William D. Ford

Federal Direct Loan Program)

List of Subjects

34 CFR Part 668

Administrative practice and

procedure, Colleges and universities,

Consumer protection, Education, Grant

programs—education, Loan programs—

education, Reporting and recordkeeping

requirements, Student aid, Vocational

education.

34 CFR Parts 682 and 685

Administrative practice and

procedure, Colleges and universities,

Loan programs—education, Reporting

and recordkeeping requirements,

Student aid, Vocational education.

34 CFR Part 690

Colleges and universities, Education

of disadvantaged, Grant programs—

education, Reporting and recordkeeping

requirements, Student aid.

Dated: October 24, 2000.

Richard W. Riley,

Secretary of Education.

For the reasons discussed in the

preamble, the Secretary amends parts

668, 682, 685, and 690 of title 34 of the

Code of Federal Regulations as follows:

PART 668—STUDENT ASSISTANCE

GENERAL PROVISIONS

1. The authority citation for Part 668

is amended to read as follows:

Authority: 20 U.S.C. 1001, 1002, 1003,

1085, 1088, 1091, 1092, 1094, 1099c, and

1099c–1, unless otherwise noted.

§ 668.14 [Amended]

2. In § 668.14, paragraph (b)(15)(iii) is

removed.

3. Section 668.16 is amended—

A. In paragraph (m)(1), by removing

‘‘an FFEL Program cohort default rate, a

Direct Loan cohort rate, or where

applicable, a weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate’’.

B. In paragraph (m)(1)(i), by removing

‘‘As defined in § 668.17’’ and adding, in

its place, ‘‘Calculated under subpart M

of this part’’.

C. By revising paragraph (m)(2).

§ 668.16 Standards of administrative

capability.

* * * * *

(m) * * *

(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, the Secretary allows the

institution to continue to participate in

the Title IV, HEA programs but may

provisionally certify the institution in

accordance with § 668.13(c); and

(ii) The institution may appeal the

loss of full participation in a Title IV,

HEA program under paragraph (m)(1) of

this section by submitting an erroneous

data appeal in writing to the Secretary

in accordance with and on the grounds

specified in subpart M of this part;

* * * * *

§ 668.17 [Removed and reserved]

4. Section 668.17 is removed and

reserved.

§ 668.26 [Amended]

5. In § 668.26, paragraph (a)(6) is

amended by removing ‘‘§ 668.17(c)’’ and

adding, in its place, ‘‘subpart M of this

part’’.

§ 668.46 [Amended]

6. In § 668.46, paragraph (c)(7) is

amended by removing ‘‘Appendix E to

this part’’, and adding, in its place,

‘‘appendix A to this subpart’’.

7. Section 668.85 is amended—

A. By revising paragraph (b)(1)(ii).

B. In paragraph (b)(3), by removing

the third sentence.

§ 668.85 Suspension proceedings.

* * * * *

(b) * * *

(1) * * *

(ii) Specifies the proposed effective

date of the suspension, which is at least

20 days after the date of mailing of the

notice of intent;

* * * * *

8. Section 668.86 is amended—

A. By revising paragraph (b)(1)(ii).

B. In paragraph (b)(3), by removing

the third sentence.

§ 668.86 Limitation or termination

proceedings.

* * * * *

(b) * * *

(1) * * *

(ii) Specifies the proposed effective

date of the limitation or termination,

which is at least 20 days after the date

of mailing of the notice of intent;

* * * * *

§ 668.90 [Amended]

9. In § 668.90, paragraphs (a)(1)(iii)(D)

and (a)(3)(iv) are removed; and

paragraphs (a)(3)(v), (a)(3)(vi), and

(a)(3)(vii) are redesignated as paragraphs

(a)(3)(iv), (a)(3)(v), and (a)(3)(vi),

respectively.

§ 668.171 [Amended]

10. In § 668.171, paragraph (b)(1) is

amended by removing ‘‘appendices F

and G’’ and adding, in its place,

‘‘appendices A and B to this subpart’’.

§ 668.172 [Amended]

11. Section 668.172 is amended—

A. In the heading for paragraph (a), by

removing ‘‘Appendices F and G’’, and

adding, in its place, ‘‘Appendices A and

B’’.

B. In paragraph (a), by removing

‘‘appendices F and G to this part’’ and

adding, in its place, ‘‘appendices A and

B to this subpart’’.

C. In paragraph (b), by removing

‘‘appendix F’’ and adding, in its place,

‘‘appendix A’’; and by removing

65638 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

‘‘appendix G’’ and adding, in its place,

‘‘appendix B’’.

12. A new subpart M is added to Part

668 to read as follows:

Subpart M—Cohort Default Rates

Sec.

668.181 Purpose of this subpart.

668.182 Definitions of terms used in this

subpart.

668.183 Calculating and applying cohort

default rates.

668.184 Determining cohort default rates

for institutions that have undergone a

change in status.

668.185 Draft cohort default rates and your

ability to challenge before official cohort

default rates are issued.

668.186 Notice of your official cohort

default rate.

668.187 Consequences of cohort default

rates on your ability to participate in

Title IV, HEA programs.

668.188 Preventing evasion of the

consequences of cohort default rates.

668.189 General requirements for adjusting

official cohort default rates and for

appealing their consequences.

668.190 Uncorrected data adjustments.

668.191 New data adjustments.

668.192 Erroneous data appeals.

668.193 Loan servicing appeals.

668.194 Economically disadvantaged

appeals.

668.195 Participation rate index appeals.

668.196 Average rates appeals.

668.197 Thirty-or-fewer borrowers appeals.

668.198 Relief from the consequences of

cohort default rates for special

institutions.

Appendix A to Subpart M of Part 668—

Summaries of eligibility and submission

requirements for challenges, adjustments,

and appeals.

Appendix B to Subpart M of Part 668—

Sample default management plan for

special institutions to use when complying

with § 668.198.

§ 668.181 Purpose of this subpart.

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 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.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 668.182 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 § 668.183(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.

(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

§ 668.183(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 § 668.185.

(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 half-time 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.

(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 § 668.186. 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)

§ 668.183 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.

(2) Second, under paragraph (c) of this

section, we identify the borrowers in the

cohort (or cohorts) who are considered

to be in default. 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) 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.

(c) Identify the borrowers in a cohort

who are in default. (1) Except as

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65639

provided in paragraph (c)(2) of this

section, for the purposes of this subpart

a borrower in a cohort for a fiscal year

is considered to be in default if—

(i) Before the end of the following

fiscal year, the 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, the 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);

(iii) You are a proprietary, nondegree-granting institution, and before

the end of the following fiscal year, the

borrower has been in repayment for 360

days, under the Direct Loan Program’s

income contingent repayment plan, on a

loan used to include the borrower in

your cohort (or that repaid a loan that

was used to include the borrower in

your cohort), with scheduled payments

that are less than 15 dollars per month

and are less than the amount of interest

accruing on the loan; or

(iv) Before the end of the following

fiscal year, you 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.

(2) A borrower is not considered to be

in default based on a loan that is, before

the end of the 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 § 668.184, if there

are—

(1) Thirty or more borrowers in your

cohort for a fiscal year, your cohort

default rate is the percentage that is

derived by dividing—

(i) The number of borrowers in the

cohort who are in default, as determined

under paragraph (c) of this section; by

(ii) The number of borrowers in the

cohort, as determined under paragraph

(b) of this section.

(2) Fewer than 30 borrowers in your

cohort for a fiscal year, your cohort

default rate is the percentage that is

derived by dividing—

(i) The 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) 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)

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

1099c)

§ 668.184 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 § 668.187 or § 668.188.

(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 §§ 668.185

and 668.189.

(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 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 § 668.183.

(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 § 668.183;

(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 § 668.183; 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 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 § 668.183; 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

§ 668.183.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 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

65640 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

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 by

a data manager.

(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, 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 § 668.190, or in an erroneous data

appeal, under § 668.192.

(c) Participation rate index

challenges. (1)(i) You may challenge an

anticipated loss of eligibility under

§ 668.187(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 § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if your participation

rate index is equal to or less than 0.0375

for any of those three cohorts’ fiscal

years.

(2) For a participation rate index

challenge, your participation rate index

is calculated as described in

§ 668.195(b), except that—

(i) The draft cohort default rate is

considered to be your most recent

cohort default rate; and

(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 § 668.183(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 based on your

participation rate index challenge, you

will not lose eligibility under § 668.187

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. However, if

your successful challenge of a loss of

eligibility under paragraph (c)(1)(ii) 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 § 668.187(a)(2), 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)

§ 668.186 Notice of your official cohort

default rate.

(a) We notify you of your cohort

default rate after we calculate it. 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.

(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.

(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 (f) 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.

(2) Except as provided in paragraphs

(e) and (f) 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).

(e) 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—

(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.

(f) Requests for adjustments and

appeals. (1) A loss of eligibility under

this section does not take effect while

your request for adjustment or appeal,

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65641

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 (f)(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 (g) of

this section, you may choose to suspend

your participation in the FFEL and

Direct Loan programs during the

adjustment or appeal process.

(g) Liabilities during the adjustment or

appeal process. If you continued to

participate in the FFEL or Direct Loan

Program under paragraph (f)(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.

(h) 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;

(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,

you are subject to a loss of eligibility

that has already been imposed against

another institution under § 668.187 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 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

(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

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 § 668.189.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 668.189 General requirements for

adjusting official cohort default rates and

for appealing their consequences.

(a) Remaining eligible. You do not

lose eligibility under § 668.187 if—

(1) We recalculate your cohort default

rate, and it is below the percentage

65642 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

threshold for the loss of eligibility as the

result of—

(i) An uncorrected data adjustment

submitted under this section and

§ 668.190;

(ii) A new data adjustment submitted

under this section and § 668.191;

(iii) An erroneous data appeal

submitted under this section and

§ 668.192; or

(iv) A loan servicing appeal submitted

under this section and § 668.193; or

(2) You meet the requirements for—

(i) An economically disadvantaged

appeal submitted under this section and

§ 668.194;

(ii) A participation rate index appeal

submitted under this section and

§ 668.195;

(iii) An average rates appeal

submitted under this section and

§ 668.196; or

(iv) A thirty-or-fewer borrowers

appeal submitted under this section and

§ 668.197.

(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.

(2) You may not request an

adjustment or appeal a cohort default

rate, under § 668.190, § 668.191,

§ 668.192, or § 668.193, more than once.

(3) You may not request an

adjustment or appeal a cohort default

rate, under § 668.190, § 668.191,

§ 668.192, or § 668.193, if you

previously lost your eligibility to

participate in a Title IV, HEA program,

under § 668.187, 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—

(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 § 668.190 or

§ 668.191, or an appeal, under § 668.192

or § 668.193—

(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

(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 § 668.187, 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 § 668.192(a) to

avoid 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)

§ 668.190 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 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, 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—

(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) You must send the relevant data

manager, or data managers, and us a

request for a new data adjustment,

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65643

including all supporting documentation,

within 15 days after you receive your

loan record detail report from us.

(3) 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) 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

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

(5) 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) 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) 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)(7)(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.

(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.

(a) Eligibility. Except as provided in

§ 668.189(b), you may appeal the

calculation of a cohort default rate upon

which a loss of eligibility, under

§ 668.187, 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

§ 668.185(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.

(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 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—

(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

§ 668.191(b)(7)(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.

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 668.193 Loan servicing appeals.

(a) Eligibility. Except as provided in

§ 668.189(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

§ 668.187 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:

(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

65644 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

sample, as described in paragraph (d) of

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

(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 § 668.191(b)(7)(i) or

§ 668.192(b)(6)(i).

(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. However, for the

purposes of this paragraph, the data

manager does not identify a borrower as

defaulted due to repayment under the

Direct Loan Program’s income

contingent repayment plan, under

§ 668.183(c)(1)(iii).

(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 default rate.

(3) Our recalculation of your cohort

default rate does not affect the number

of borrowers who are considered to be

in default due to payments made under

the Direct Loan Program’s income

contingent repayment plan, under the

criteria in § 668.183(c)(1)(iii).

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 668.194 Economically disadvantaged

appeals.

(a) Eligibility. As described in this

section, you may appeal a notice of a

loss of eligibility under § 668.187 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.

(b) Low income rate. (1) Your low

income rate is the percentage of your

students, as described in paragraph

(b)(2) of this section, who—

(i) For an award year that overlaps the

12-month period selected under

paragraph (b)(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 (b)(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.

(c) Completion rate. (1) Your

completion rate is the percentage of

your students, as described in paragraph

(c)(2) of this section, who—

(i) Completed the educational

programs in which they were enrolled;

(ii) Transferred from your institution

to a higher level educational program;

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65645

(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.

(d) Placement rate. (1) Except as

provided in paragraph (d)(2) of this

section, your placement rate is the

percentage of your students, as

described in paragraphs (d)(3) and (d)(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 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.

(e) 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—

(1) For a student who is initially

enrolled full-time, 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.

(f) 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 (g) of

this section.

(g) 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

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.

(h) Determination. You do not lose

eligibility under § 668.187 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)

§ 668.195 Participation rate index appeals.

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

notice of a loss of eligibility under

§ 668.187(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.

(2) You may appeal a notice of a loss

of eligibility under § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if your participation

rate index is equal to or less than 0.0375

for any of those three 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 § 668.183(d)(2), you may

calculate your participation rate index

for that fiscal year using either that

average rate or the cohort default rate

that would be calculated for the fiscal

year alone using the method described

in § 668.183(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 the notice of your loss of

eligibility.

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

eligibility under § 668.187 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, under

paragraph (d)(1) of this section, we also

excuse you from any subsequent loss of

eligibility under § 668.187(a)(2) that

would be based on the official cohort

default rate for that fiscal year.

65646 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

(Approved by the Office of Management

and Budget under control number 1845–

0022)

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

1099c)

§ 668.196 Average rates appeals.

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

notice of a loss of eligibility under

§ 668.187(a)(1), based on one cohort

default rate over 40 percent, if that

cohort default rate is calculated as an

average rate under § 668.183(d)(2).

(2) You may appeal a notice of a loss

of eligibility under § 668.187(a)(2),

based on three cohort default rates of 25

percent or greater, if at least two of those

cohort default rates—

(i) Are calculated as average rates

under § 668.183(d)(2); and

(ii) Would be less than 25 percent if

calculated for the fiscal year alone using

the method described in § 668.183(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 § 668.187 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)

§ 668.197 Thirty-or-fewer borrowers

appeals.

(a) Eligibility. You may appeal a

notice of a loss of eligibility under

§ 668.187 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 § 668.187 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;

(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, 2000, or 2001, 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, 2002, have a

cohort default rate that is 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.

(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

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65647

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—

(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.

(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, 2000, or 2001.

(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)

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.

BILLING CODE 4000–01–P

BILLING CODE 4000–01–C

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

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

65648 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

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.

BILLING CODE 4000–01–P

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65649

BILLING CODE 4000–01–C

65650 Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations

Appendix B to Subpart M of Part 668—

Sample Default Management 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 plan in accordance with

§ 668.198. 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 developing a default

management 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 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.

2. Identify and allocate the personnel,

administrative, and financial resources

appropriate to implement the default

management 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.

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.

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.

IV. 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.

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 plan.

Appendix A to Part 668 [Removed]

13. Appendix A to Part 668 is

removed.

Appendix B to Part 668 [Redesignated

as Appendix A to Subpart B of Part

668]

14. Appendix B to Part 668 is

redesignated as Appendix A to Subpart

B of Part 668.

Appendix C to Part 668 [Redesignated

as Appendix A to Subpart B of Part

668]

15. Appendix C to Part 668 is

redesignated as Appendix B to Subpart

B of Part 668.

Appendix D to Part 668 [Removed]

16. Appendix D to Part 668 is

removed.

Appendix E to Part 668 [Redesignated

as Appendix A to Subpart D of Part

668]

17. Appendix E to Part 668 is

redesignated as Appendix A to Subpart

D of Part 668.

Appendix F to Part 668 [Redesignated

as Appendix A to Subpart L of Part 668]

18. Appendix F to Part 668 is

redesignated as Appendix A to Subpart

L of Part 668.

Appendix G to Part 668 [Redesignated

as Appendix B to Subpart L of Part 668]

19. Appendix G to Part 668 is

redesignated as Appendix B to Subpart

L of Part 668.

Appendix H to Part 668 [Removed]

20. Appendix H to Part 668 is

removed.

PART 682—FEDERAL FAMILY

EDUCATION LOAN (FFEL) PROGRAM

21. The authority citation for Part 682

continues to read as follows:

Authority: 20 U.S.C. 1071 to 1087–2,

unless otherwise noted.

22. In § 682.401, paragraph (b)(15) is

revised to read as follows:

§ 682.401 Basic program agreement.

* * * * *

(b) * * *

(15) Guaranty agency verification of

default data. A guaranty agency must

meet the requirements and deadlines

provided for it in subpart M of 34 CFR

part 668 for the cohort default rate

process.

* * * * *

23. In § 682.410, paragraph (c)(1)(i)(C)

is revised to read as follows:

§ 682.410 Fiscal, administrative, and

enforcement requirements.

* * * * *

(c) * * *

(1) * * *

(i) * * *

(C) Each participating school, located

in a State for which the guaranty agency

is the principal guaranty agency, that

has a cohort default rate, as described in

subpart M of 34 CFR part 668, for either

of the 2 immediately preceding fiscal

years, as defined in 34 CFR 668.182,

that exceeds 20 percent, unless the

school is under a mandate from the

Secretary under subpart M of 34 CFR

part 668 to take specific default

reduction measures or if the total dollar

amount of loans entering repayment in

each fiscal year on which the cohort

default rate over 20 percent is based

does not exceed $100,000; or

* * * * *

§ 682.601 [Amended]

24. In § 682.601, paragraph (a)(6) is

amended by removing ‘‘§ 668.17’’ and

adding, in its place, ‘‘subpart M of 34

CFR part 668’’.

§ 682.603 [Amended]

25. In § 682.603, paragraph (g) is

amended by removing ‘‘an FFEL cohort

default rate, Direct Loan cohort rate, or

weighted average cohort rate’’ and

Federal Register / Vol. 65, No. 212 / Wednesday, November 1, 2000 / Rules and Regulations 65651

adding, in its place, ‘‘a cohort default

rate’’.

§ 682.604 [Amended]

26. Section 682.604 is amended—

A. In paragraphs (c)(5)(i), (c)(5)(ii),

(c)(10)(i)(B), and (c)(10)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan Program cohort rate, or weighted

average cohort rate’’ and adding, in its

place, ‘‘a cohort default rate, calculated

under subpart M of 34 CFR part 668,’’.

B. By removing paragraph (f)(3).

C. By redesignating paragraphs (f)(4)

and (f)(5) as paragraphs (f)(3) and (f)(4),

respectively.

D. By removing paragraph (g)(3).

E. By redesignating paragraphs (g)(4)

and (g)(5) as paragraphs (g)(3) and (g)(4),

respectively.

PART 685—WILLIAM D. FORD

FEDERAL DIRECT LOAN PROGRAM

27. The authority citation for Part 685

continues to read as follows:

Authority: 20 U.S.C. 1087a et seq., unless

otherwise noted.

§ 685.301 [Amended]

28. Section 685.301 is amended—

A. In paragraphs (b)(8)(i)(A)(2) and

(b)(8)(i)(B), by removing ‘‘a Direct Loan

Program cohort rate, FFEL cohort

default rate, or weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate, calculated under subpart M

of 34 CFR part 668,’’.

B. In paragraph (b)(8)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan cohort rate, or weighted average

cohort rate’’ and adding, in its place, ‘‘a

cohort default rate, calculated under

subpart M of 34 CFR part 668,’’.

§ 865.303 [Amended]

29. Section 685.303 is amended—

A. In paragraphs (b)(4)(i)(A) and

(b)(4)(i)(B), by removing ‘‘a Direct Loan

Program cohort rate, FFEL cohort

default rate, or weighted average cohort

rate’’ and adding, in its place, ‘‘a cohort

default rate, calculated under subpart M

of 34 CFR part 668,’’.

B. In paragraph (b)(4)(ii), by removing

‘‘an FFEL cohort default rate, Direct

Loan cohort rate, or weighted average

cohort rate’’, and adding, in its place, ‘‘a

cohort default rate, calculated under

subpart M of 34 CFR part 668,’’.

§ 685.304 [Amended]

30. Section 685.304 is amended—

A. By removing paragraph (a)(4).

B. By redesignating paragraphs (a)(5),

(a)(6), and (a)(7) as paragraphs (a)(4),

(a)(5), and (a)(6), respectively.

C. By removing paragraph (b)(5).

D. By redesignating paragraphs (b)(6)

and (b)(7) as paragraphs (b)(5) and

(b)(6), respectively.

PART 690—FEDERAL PELL GRANT

PROGRAM

31. The authority citation for Part 690

continues to read as follows:

Authority: 20 U.S.C. 1070a, unless

otherwise noted.

§ 690.7 [Amended]

32. Section 690.7 is amended—

A. In paragraph (c)(1), by removing

‘‘34 CFR 668.17’’ and adding, in its

place, ‘‘subpart M of 34 CFR part 668’’.

B. In paragraph (c)(2), by removing

‘‘34 CFR 668.17(b)’’ and adding, in its

place, ‘‘34 CFR 668.187’’.

[FR Doc. 00–27741 Filed 10–31–00; 8:45 am]

BILLING CODE 4000–01–P