Cohort Default Rate (CDR) is the federal government’s standard accountability metric for colleges. It refers to the percentage of a college’s graduates from a specific year who default on their student loans.
The problem is it’s a super-easy test to pass: As long as fewer than 40 percent of your alumni default on their student loans within three years of entering repayment, and as long as your CDR doesn’t go above 30 percent for three straight years, you’re good. That’s why only 11 colleges have been penalized in the last decade–even though almost 500 colleges had CDRs over 25 percent in 2014.
Failing to repay your student loans does not necessarily mean you’re in default on those loans. Repayment is a higher standard than merely not defaulting. Because it takes about a year of not making your regular payments to enter default–and that’s only if you don’t enter deference or forbearance first.
Okay, so if we look at repayment rates instead of default rates, what do we find? As Michael Stratford notes, writing for Inside Higher Ed, we find:
“..for every borrower who defaults on a student loan, there are many more who are unable to make progress in repaying their loans and are watching their balances grow, years after attending college, according to data released this month by the Obama administration.
More than one out of every three student loan borrowers nationwide failed to make any progress repaying his or her loans within three years, according to the data. By contrast, the national three-year default rate on federal loans was 13.7 percent last year.”
Read the rest from Statford or Dr. Andrew Kelly’s testimony before congress last month on “Reforming Higher Education Finance to Align the Incentives of Colleges, Students, and Taxpayers.”