Cohort default rate is the percentage of an institution’s federal student-loan borrowers who enter repayment in a given fiscal year and default within the following three fiscal years.
How it is measured
Cohort default rate = number of borrowers in the cohort who default within the three-year window ÷ number of borrowers in the cohort who entered repayment × 100.
The cohort consists of borrowers whose loans entered repayment during the fiscal year. Subsequent default status is tracked for three years. Draft rates are released for institutional review before official rates are published.
Example: 1,000 borrowers from an institution enter repayment in fiscal year 2022. Within the next three fiscal years, 80 default. The cohort default rate is 8 percent. If the rate stays above the sanction threshold for three consecutive years, Title IV eligibility is at risk.
How it differs
Gainful employment examines program-level debt relative to earnings. Median debt describes borrowing amounts, not repayment outcomes. A low graduation rate can coexist with a low default rate if the students who borrow successfully repay.
Common errors
Confusing the three-year cohort default rate with an annual default percentage. Assuming every delinquent borrower is counted as in default. Comparing rates across institutions without noting differences in the share of students who borrow.
References
- 1. Federal Student Aid cohort default rateThree-year default measure
- 2. 34 CFR 668 Subpart NSanctions for high rates
Cohort default rate is the percentage of an institution’s federal student-loan borrowers who enter repayment in a given fiscal year and default within the following three fiscal years.