TICAS Analysis of Official Three-Year Cohort Default Rates (FY18)
CDRs released yesterday are 1st to capture emergency loan payment relief benefits that provided vital economic support to ~33m borrowers during the pandemic & helped prevent a wave of defaults during the crisis. FY18’s 7.3% is a new overall 3-yr CDR low. https://t.co/hyrp0I354g
— TICAS (@TICAS_org) September 30, 2021
While the FY18 CDRs show more than 115k fewer borrowers who defaulted compared to last year’s cohort, this year’s lower CDRs reflect the impact of this major policy intervention more so than colleges’ own actions to set their students up for repayment success.
— TICAS (@TICAS_org) September 30, 2021
Since its establishment three decades ago, the CDR has been the federal government’s single most important tool for holding colleges accountable to unacceptable levels of default risk, and use of the CDR has demonstrated that schools can and do meaningfully reduce default rates.
— TICAS (@TICAS_org) September 30, 2021
For borrowers, default is the worst #studentloan outcome and has serious consequences, including adding significantly to the cost of the loan. These latest CDR data show that over 300,600 borrowers who entered repayment in FY18 defaulted by the end of FY20.
— TICAS (@TICAS_org) September 30, 2021
As in prior years, compared to public and private non-profit colleges, #4profit colleges have the highest rates of default (11.2%) and students who attended for-profit colleges account for vastly disproportionate share of #studentloan defaults. pic.twitter.com/jizAtGqYa0
— TICAS (@TICAS_org) September 30, 2021
This unintended impact of emergency repayment relief on college accountability will continue for years to come, resulting in CDRs that are much lower than would be otherwise expected, even as the end of the payment pause could lead to a wave of delinquencies and defaults.
— TICAS (@TICAS_org) September 30, 2021
Holding colleges accountable for unacceptable default risks remains imperative, & while there are steps policymakers should take to strengthen the CDR, impact of the payment pause on CDRs highlights shortcomings of an accountability structure that relies on only a single metric.
— TICAS (@TICAS_org) September 30, 2021
