Understanding and Managing CDR Challenge and Appeal Process

1. Session 25 Understanding and Managing the CDR Challenge and Appeal Process Donna Bellflower and Franka Dennis | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. Presentation Purpose The purposes of this presentation are to: • Review Cohort Default purpose, sanctions and benefits • Clarify how understanding the loan record report aids with the management of filing adjustments, challenges and/or appeals • Explain how special circumstance effect cohort rates • Discuss when, why and how to submit requests for adjustments, challenges and/or appeals

3. 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.

4. 3-Year Cohort Default RateSANCTIONS

5. 3-Year Cohort Default Rate BENEFITSEffective with the Release of the FY 2011 3-year Cohort Default Rates

6. The Loan Record Detail Report (LRDR) The first step to CDR management of Challenges, Adjustments and Appeals

7. Reading the LRDR

8. Body Section- Line 1 Borrower

9. Body Section- Line 2 Loan Information

10. SUMMARY – bottom of last page of LRDR

11. Interpreting the LRDR Codes

12. Special Circumstances How do special circumstances effect the cohort default rate? Special circumstances only effect the cohort default rate calculation if the school timely submits documentation of the special circumstance to the data manager.

13. Special Circumstances

14. Special Circumstances cont’d

15. Special Circumstances cont’d

16. Special Circumstances cont’d

17. Special Circumstances cont’d

18. Special Circumstances cont’d

19. Challenges, Adjustments, and Appeals

20. When and Why Submit • After reviewing your CDR for either the Draft or Official period, you have the option to submit a request for an adjustment, challenge, or appeal. Most of these requests are submitted through the eCDR Appeal system • Why submit? If a school’s CDR contains incorrect data causing the rates to be inaccurate, or if there are exceptional mitigating circumstances that would remove the school from being subjected to sanctions, an adjustment, challenge, orappeal should be filed • A review of the LRDR is required for most submissions

21. 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

22. 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

23. 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

24. 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

25. 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 loanwithin 15 calendar days of the timeframe begin date

26. 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.

27. When is a defaultedFFELconsidered improperly serviced for cohort default rate purposes?

28. When is a defaulted Direct Loan or FFEL PUT to the Department considered improperly serviced for cohort default rate purposes?

29. 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.

30. Other Cohort Default Rate Appeals Average Rate Appeals • A school whose 3 most recent CDRs are at or above 30% is not subject to sanction if at least 2 of the 3 CDRs were calculated as average rates and would have been less than 30% if calculated using only data for those cohort fiscal years alone, or, if most recent CDR is above 40% and was calculated as an average rate, the school is not subject to sanction. See chapter 4.9 of the CDR guide • Before notice of official rate Department will make an initial determination that school may qualify for an average rate appeal • If school qualifies they will receive notice of that determination at the same time they receive notice of official rate

31. Other Cohort Default Rate Appeals Thirty-or-Fewer Borrower Appeals • If combined total of all three years of borrowers entering repayment is less than 30, there will be no loss of eligibility. See chapter 4.10 of the CDR guide • Before notice of official rate Department will make an initial determination that school may qualify for a thirty-or-fewer borrower appeal • If school qualifies they will receive notice of that determination at the same time they receive notice of official rate

32. Appeals, Adjustment and Challenge Quick Reference

33. Appeals, Adjustment and Challenge Quick Reference

34. Appeals, Adjustment and Challenge Quick Reference

35. Additional Resources • Chapter 2.1 of the Cohort Default Rate Guide • Contains tables listing these and other special circumstances and how they affect the cohort default rate, beginning on page 2.1-10. • Chapter 3.1 of the Cohort Default Rate Guide • Contains helpful information regarding how a school should prepare for the draft and official cohort default rate release, how a school can determine if they should submit a cohort default rate challenge/adjustment/appeal, and types of supporting documentation. • Chapter 4 of the Cohort Default Rate Guide • Contains information on each type of challenge/adjustment/appeal.

36. Submitting Appeals/Adjustments • Use eCDR Appeals at ecdrappeals.ed.gov) to submit IDC, UDA, LSA, and NDA • At this time, all other CDR appeals will continue to be submitted via hard copy

37. Contact Information Phone: 202-377-4259 E-mail: FSA.Schools.Default.Management@ed.gov Website: ifap.ed.gov/DefaultManagement/ DefaultManagement.html E-Appeals: https://ecdrappeals.ed.gov/ecdra/ index.html Operations Performance Division 202-377-4259

38. QUESTIONS?