Challenge and Appeal Cohort Default Rates

1. Session 15 Challenge and Appeal Cohort Default Rates Donna Bellflower and Nichelle Alston | Dec. 2015 U.S. Department of Education 2015 FSA Training Conference for Financial Aid Professionals

2. Presentation Purpose The purpose of this presentation is to:

3. Understanding and Managing CDR The CDR Calculation Process

4. Cohort Default Period The phrase “cohort default period” refers to the three-year period that begins on October 1 of the fiscal year when the borrower enters repayment and ends on September 30 of the second fiscal year following the fiscal year in which the borrower entered repayment. This is the period during which a borrower’s default affects the school’s cohort default rate.

5. What is a 3-Year 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 (DL) during that fiscal year and default (or meet the other specified condition) within the cohort default period. For schools with 29 or fewer borrowers entering repayment during a fiscal year, the cohort default rate is an “average rate” based on borrowers entering repayment over a three-year period.

6. Non-Average Rate Formula *Federal Family Education Loans (FFELs) and/or William D. Ford Federal Direct Loans (DL)

7. Average Rate Formula *Federal Family Education Loans (FFELs) and/or William D. Ford Federal Direct Loans (DL)

8. Understanding and Managing CDR Sanctions

9. 3-Year Cohort Default Rate SANCTIONS *Except in the event of a successful adjustment or appeal a school will lose eligibility as indicated above for the remainder of the fiscal year in which the school is notified of its sanction and for the following two fiscal years.

10. Understanding and Managing CDR The Loan Record Detail Report

11. The LRDR Import Tool The LRDR Import tool may be found on the Default Management website under the CDR Guide /Templates section

12. The LRDR Import Tool The LRDR Import Tool is a new tool that can be used to easily load data generated from the LRDR into the Microsoft Excel spreadsheet application, and is designed to assist schools with reviewing and analyzing their LRDR extract files. An LRDR contains information on the loans that were used to calculate a school’s draft or official cohort default rate (CDR) and is distributed as part of the eCDR notification package. Each eCDR package received contains an extract-type LRDR (message class SHCDREOP). When the LRDR extract is loaded into the LRDR Import Tool, the file is converted into a spreadsheet with assigned column headings, creating a view of the data that is manageable and easy to review for discrepancies and accurate data.

13. Instructions are located on the first tab

14. Reading the LRDR

15. Body Section - Line 1 Borrower

16. Body Section - Line 2 Loan Information

17. SUMMARY – bottom of last page of LRDR

18. Further Review: LRDR • For more information on the LRDR, including codes please see chapter 2.2 and 2.3 of the CDR Guide

19. Understanding and Managing CDR Special Circumstances

20. Special Circumstances How do special circumstances effect the cohort default rate?

21. Special Circumstances

22. Special Circumstances cont’d

23. Special Circumstances cont’d

24. Special Circumstances cont’d

25. Special Circumstances cont’d

26. Special Circumstances cont’d

27. Understanding and Managing CDR Challenges, Adjustments, and Appeals

28. Challenges, Adjustments, and Appeals

30. Incorrect Data Challenges (IDC) See chapters 4.1 CDR guide

31. Incorrect Data Challenges (IDC) IDC: A school has “DATA” to show that borrowers on the LRDR are incorrectly reported. See chapter 4.1 of the CDR guide. When should a school file an IDC? During the Draft Period. Why File? The correction of incorrect data will impact the official rate. Possible incorrect data may be: • Borrower did not enter repayment during cohort year • Borrower did not default for CDR purposes during the monitoring period • Other borrowers entered repayment during cohort period How to File? Use the LRDR codes to determine how borrowers are counted for the cohort year. Submit the IDC if the data you have reported to NSLDS contradicts the information on the LRDR. Ensure that you have the borrower’s SSN, name, basis of alleged error and copies of relevant supporting documentation.

32. Participation Rate Index Challenges/Appeals (PRI) See chapters 4.2 and 4.8 of the CDR guide

33. Participation Rate Index Challenges/Appeals (PRI) PRI: Alleges that a school should not be subject to loss of eligibility or potential placement on provisional certification based solely on its CDR because the school has a PRI that meets a specific criteria. See chapters 4.2 and 4.8 of the CDR guide. When should a school file a PRI? During Draft and/or Official Periods. Why File? The draft CDR suggests that the school will be subject to loss of eligibility or potential provisional certification after the release of the official CDR. The official CDR release confirms that the school is subject to sanction or provisional certification. How to File? Using paper submission, a school must send its PRI challenge to the Department within 45 calendar days for the draft process, or 30 calendar days for the PRI appeal for the official process.

34. Uncorrected Data Adjustments (UDA) See chapter 4.3 of the CDR guide

35. Uncorrected Data Adjustments (UDA) UDA:Reflects changes that were correctly agreed to by a data manager (DM), as a result of an IDC submitted after the release of the draft CDR, but not reflected in the official release. See chapter 4.3 of the CDR guide. When should a school file a UDA? During the Official Period. Why File? The school’s LRDR report indicates that one or more borrower’s agreed upon changes from the IDC are not reflected in the official CDR. An adjustment may possibly decrease the current CDR. How to File? This adjustment is filed through the eCDR Appeals system. The system will compare the LRDR for the draft and official rates and determine if agreed upon changes were made.

36. New Data Adjustment (NDA) See chapter 4.4 of the CDR guide

37. New Data Adjustment (NDA) NDA: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. See chapter 4.4 of the CDR guide. When should a school file an NDA? During the Official Period. Why File? A school’s review of the LRDR for the draft and official rates show data newly included, excluded, or otherwise changed during the period between the calculation of the draft and official CDR. If errors are confirmed by the DM, a school’s rate will be adjusted. How to File? This adjustment is available via eCDR Appeals only for most recent cohort of borrowers, used to calculate most recent official rate.

38. Erroneous Data Appeals (ER) See chapter 4.5 of the CDR guide

39. Erroneous Data Appeals (ER) ER: Alleges that a school’s LRDR for the official rate includes disputed data from the IDC, or incorrect new data. Because of the new and/or disputed data, a school’s official CDR is inaccurate. See chapter 4.5 of the CDR guide. When should a school file an ER? During the Official Period. Why File? A school’s official CDR includes new and/or disputed data, is subject to sanctions or provisional certification based solely on the official CDR, the successful ER either by itself or in combination with a UDA or LSA will result in a recalculated CDR below the sanction threshold. How to File? This adjustment is filed by paper submission. A school begins the process by sending its ER to the DM responsible for the loan within 15 calendar days of the timeframe begin date.

40. Loan Servicing Appeals (LSA) See chapter 4.6 of the CDR guide

41. Loan Servicing Appeals (LSA) LSA: Alleges a school’s official cohort default rate includes defaulted Federal Family Education Loans (FFELs) or William D. Ford Federal Direct Loans (DL) that are considered improperly serviced for CDR purposes. See chapter 4.6 of the CDR guide. When should a school file an IDC? During the Official Period. Why File? A school believes that the CDR calculation includes one or more defaulted FFEL or DL improperly serviced for CDR purposes. How to File? A school begins the process by sending its request for loan servicing records to the relevant DM(s) responsible for a loan within 15 calendar days of the timeframe begin date via the eCDR Appeals System.

42. Loan Servicing Appeals (LSA) When is a defaultedFFELconsidered improperly serviced for cohort default rate purposes?

43. Loan Servicing Appeals (LSA) When is a defaulted Direct Loan or FFEL PUT to the Department considered improperly serviced for cohort default rate purposes?

44. Economically Disadvantaged Appeals (EDA) See chapter 4.7 of the CDR guide

45. Economically Disadvantaged Appeals (EDA) EDA: Alleges that a school should not be subject to loss of eligibility (or potential placement on provisional certification if based on two successive three‐year rates of 30.0% or more), because it has a high number of low‐income students and meets the placement or completion thresholds. See chapter 4.7 of the CDR guide. When should a school file an EDA? During the Official Period. Why File? If an EDA is successful, it exempts the school from loss of eligibility or placement on provisional certification until the next official cohort default rates are released. How to File? Within 30 calendar days, an eligible school may submit a paper copy of an EDA along with the management’s written assertion to the Department. Within 60 calendar days, the school must submit an independent auditor’s opinion to the Department.

46. Understanding and Managing CDR Contact Information and Additional Resources

47. On the Horizon Gainful Employment Program CDR Graduate PLUS CDR PLUS CDR Data Challenge Appeal System

48. Additional Resources: CDR Guide:

49. Additional Resources: eCDR User Guides The eCDR Appeals User Guides are designed to lead users through the online, paper-less IDC, UDA, NDA, and LSA processes. These User Guides assume a basic knowledge of cohort default rates and associated processes. They complement the CDR Guide. In the event of any discrepancy between the IDC, UDA, NDA or LSA User Guides and the CDR Guide, the CDR Guide is the authoritative source for regulatory considerations and constraints. • What's New with eCDR Appeals User Guide • eCDR Appeals IDC User Guide • eCDR Appeals UDA User Guide • eCDR Appeals NDA User Guide • eCDR Appeals LSA User Guide

50. Additional Resources: eCDR Demonstrations • Federal Student Aid has also recorded short online demonstration sessions of the system for schools and Data Managers as a training aid: • School demonstration sessions • Registration for eCDR Appeals • Preparing and submitting an IDC • Preparing and submitting a NDA • Preparing and submitting a UDA