NASFAA Statement on FY2009 Cohort Default Rates

The fiscal year (FY) 2009 official Cohort Default Rate (CDR) increased to 8.8 percent, up from 7 percent for FY2008. The FY2009 CDR measures the percentage of students whose first loan repayments came due between Oct. 1, 2008 and Sept. 30, 2009 and who defaulted before Sept. 30, 2010. The CDR has been creeping up from the historic low of 4.5 percent for the 2003 cohort.

Research shows that many factors affect borrowers’ chances of successfully repaying their student loan and avoiding default. These factors include:

  • Borrower characteristics like family income and academic preparedness in high school
  • In-college variables like student success, counseling and level of loan debt
  • Post-college variables like employment and income

"Rising default rates are another indicator of the rough economic landscape students face after college," says NASFAA President Justin Draeger. "Financial aid administrators across the country are doing a remarkable job in helping students successfully repay their loans in the face of decreasing operational budgets, increased regulatory burden, increasing student loan indebtedness and -- most notably -- a jobless recovery.  Even though schools cannot control many of the elements that lead to default, colleges embrace the concept that they can have a positive impact on student loan repayment rates by helping struggling students succeed academically; helping them set realistic expectations in terms of salary and work goals; and by counseling them on smart borrowing, repayment options and avoiding default."

"Effective one-on-one loan counseling in the financial aid office helps ensure students exhaust other forms of aid before borrowing, don't over-borrow, and understand all the terms, repayment obligations, and consequences of default," Draeger says.

NASFAA provides tips for borrowers struggling to repay their student loans.