After three years of steady decline, the three-year national student loan cohort default rate increased slightly, according to newly released data from the Department of Education (ED).
The annual data – publicly released on Wednesday – show the national cohort default rate increased from 11.3 percent for borrowers whose loans went into repayment in FY 2013 to 11.5 percent for borrowers whose loans entered repayment in FY 2014. ED changed its formula for calculating cohort default rates several years ago to capture the percentage of loans in default three years after beginning repayment. Previously, cohort default rates followed loan repayment for two years.
The federal default rate captured in the new data measures the percentage of borrowers who entered repayment between Oct. 1, 2013 and Sept. 30, 2014 and subsequently defaulted prior to Sept. 30, 2016. During that time, more than 5 million borrowers entered repayment, compared with the 5.2 million during the previous cohort.
The default rate for public institutions overall held steady at 11.3 percent, while the default rate for private nonprofit and proprietary institutions increased from 7 percent to 7.4 percent, and from 15 percent to 15.5 percent, respectively. Within the public sector, the default rate for two-year institutions decreased slightly from 18.5 percent to 18.3 percent. The default rate for four-year public institutions increased slightly from 7.3 percent to 7.5 percent.
Cohort default rates also varied widely between U.S. states and territories, from lows of under 7 percent in North Dakota (6.4 percent), Massachusetts (6.5 percent), and Vermont (6.9 percent) to highs of more than 15 percent in New Mexico (18.2 percent) and West Virginia (18.3 percent).
Individual institutions with default rates 30 percent or higher for three consecutive years, greater than 40 percent for one year – or both – are subject to sanctions, including a loss of eligibility for one or more federal student aid programs. Under the new data, 10 institutions (seven proprietary schools, two public, and one private institution) are subject to sanctions, unless they successfully appeal to ED.
Those schools are:
IL – Chicago – Larry's Barber College
KY – Cumberland – Southeast Kentucky Community and Technical College
ND – Bismarck – United Tribes Technical College
ND – Minot – Headquarters Academy of Hair Design
NY – Hempstead – Long Island Barber Institute (The)
OH – Columbus – Daymar College
SC – Walterboro – Cosmetics Arts Institute
TN – Madison – Nashville Barber and Style Academy
TX – Houston – Jay's Technical Institute
VA – Culpeper – Culpeper Cosmetology Training Center
Publication Date: 9/27/2017