About the Cohort Default Rate
Federal student loan borrowers generally have to begin repaying their loans six months
after graduating, leaving school, or dropping below half-time enrollment. If borrowers
make no payments for any period of 270 days, or roughly 9 months, they will default
on their student loans.
The U.S. Department of Education (Dept) tracks the number and percentage of federal
student loan borrowers who default on their student loans within three years of entering
repayment. This is the Cohort Default Rate, commonly referred to as “three-year” CDRs.
The Department of Education releases official cohort default rates for each school
that is eligible to participate in the federal student loan program once per year.
The current rates (FY 2020) were released in August 2023 and the FY 2021 rates should
be released in August 2024. The national cohort default rate average and Arkansas
Tech's cohort default rate is currently 0% due to the moratorium on student loan payments
and interest charges that was in effect until August 31, 2023.
Helpful Definitions for Deciphering the CDR
Cohort Default Period
The three-year period that begins on October 1st of the fiscal year when the borrower
enters repayment and ends on September 30th of the second fiscal year following the
year in which the borrower entered repayment. This is the period during which a borrower’s
default affects the school’s cohort default rate.
Cohort Default Rate (CDR)
The percentage of a school's borrowers who enter repayment on federal student loans
during a federal fiscal year (October 1 to September 30) and default within the cohort default period.
Cohort Fiscal ear or Cohort Year
The fiscal year for which the cohort default rate is calculated. For example, when
calculating the 2017 cohort default rate, the cohort fiscal year is FY 2017 (October
1, 2016 to September 30, 2017).
Failure to repay a debt. Loans must be repaid. Making no payments on student loans,
that are in repayment status, for 270 days will cause loans to go in a default status.
Defaulting on student loans is very detrimental to your credit.
Federal Fiscal Year
October 1 to September 30 - Cohort default rates are based on federal fiscal years.
Federal fiscal years begin October 1st of a calendar year and end on September 30th
of the following calendar year. Each federal fiscal year refers to the calendar year
in which it ends.
When your federal and state income tax refunds are intercepted and applied toward
the repayment of your defaulted loan.
When your employer is required to withhold a portion of your pay and send it to your
loan holder to repay your defaulted loan.
ARKANSAS TECH UNIVERSITY'S THREE-YEAR OFFICIAL COHORT DEFAULT RATES1
|Number in default
|Number in repayment
consequences of default
The consequences of defaulting can not only impact your ability to borrow but can
impact your finances as well. Consequences may include the following:
- The entire unpaid balance of your loan and any interest you owe becomes immediately
- Your loans may be turned over to a collection agency.
- You can be sued for the entire amount of your loan.
- You will be liable for the costs associated with collecting your loan, including costs
and attorney fees
- Your wages may be garnished.
- Your federal and state income tax refunds may be taken for treasury offset.
- The federal government may withhold part of your Social Security benefit payments.
- Your defaulted loans will appear on your credit history for up to 7 years after the
default claim is paid.
- It make take years to reestablish a good credit record.
- You may not be able to purchase or sell assets, such as real estate.
- You will not receive additional federal financial aid until you repay the loan in
full or make arrangements to repay what you already owe and make at least six consecutive,
on-time, monthly payments.
- You may be ineligible for assistance under most federal benefits programs.
- You can no longer receive deferment or forbearance, and you lose eligibility for other
loan repayment benefits, such as the ability to choose a specific repayment plan.
- Subsidized interest benefits will be denied.
- You may not be able to renew a professional licenses.
- You may be prohibited from enlisting in the Armed Forces.
- Your school may withhold your academic transcript until your defaulted student loan
is satisfied. The academic transcript is the property of the school, and it is the
school's decision - not the US Department of Education's or your loan holder's - whether
to release the transcript to you.
- YOU WILL STILL OWE THE FULL AMOUNT OF YOUR LOAN.
1Federal Student Aid Default Management