Q1: We understand that ED will electronically transmit the official cohort default rates (CDRs) soon. How will a school know if it is eligible to submit adjustments or appeals of its official rate?
A1: The school should review its official CDR information, and use the following chart to determine which adjustments or appeals the school may be eligible to submit.
School Eligibility to Submit Adjustments and Appeals
for Official Cohort Default Rate
|School may submit…||…if subject to…|
|Official Cohort Default Rate||No sanction?||Loss of eligibility?||Provisional certification?|
|2-year CDRs||3-year CDRs|
|Uncorrected Data Adjustment||Yes||Yes||Yes||Yes|
|New Data Adjustment||Yes||Yes||Yes||Yes|
|Erroneous Data Appeal||No||Yes||Yes||Yes|
|Loan Servicing Appeal||Yes||Yes||Yes||Yes|
|Economically Disadvantaged Appeal||No||Yes||No||Yes|
|Participation Rate Index Appeal||No||Yes||No||Yes|
|Average Rates Appeal||No||Yes||No||Yes|
|Thirty or Fewer Borrowers Appeal||No||Yes||No||Yes|
Q2: If a school subject to sanctions submits adjustments or appeals of its official CDR, is there anything the school should consider while it waits for ED's determination?
A2: A school subject to sanctions that submits an adjustment or appeal of its official CDR should carefully consider whether to originate and disburse new Direct loans more than 30 days after ED transmitted the notice of its CDR.
If ED determines that none of the requests for adjustment or appeals qualify a school for continued eligibility, the school will incur certain liabilities for Direct loans the school originated and disbursed more than 30 days after the date on which the school received notice of its CDR. More information on these liabilities can be found in Part 4 of ED's Cohort Default Rate Guide.
To avoid liabilities, a school may choose to suspend its participation in the Federal Direct Loan Program during the adjustment and appeal process.
Subsequent disbursements of Pell grant and Direct loan commitments made prior to a school's loss of eligibility may continue to be made in some circumstances. See 34 CFR 668.26 for more details regarding such disbursements.
ED has posted an e-announcement today regarding the schedule for releasing official CDRs and eCDR notification packages to schools for fiscal year (FY) 2010 2-year CDRs and FY 2009 3-year CDRs this month.
Stay tuned to Shoptalk for new TG tools that will assist schools in understanding more about the CDR adjustment and appeals process.