ED Releases Updated Data on Nonpayment Rates by Institution, Warns of High Cohort Default Rates
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) on Wednesday released updated data on institutions' nonpayment rates, warning that schools could be at risk of losing access to federal student assistance due to potentially high cohort default rates (CDR).
ED first released data on institutions’ nonpayment rates in July last year, as part of an effort to provide institutions with a resource to better understand the delinquency and default risks associated with their most recent borrowers. An institution’s nonpayment rate is the percentage of Direct Loan borrowers who entered repayment since January 2020 and whose federal student loans were more than 90 days delinquent at the time the data were collected, in May 2025.
On Wednesday, ED released updated data on institutions’ nonpayment rates, finding that over 1,800 institutions have nonpayment rates at or exceeding 25%.
While an institution’s nonpayment rate is different from its CDR, the department notes that both rates are indicative of an institution’s success in counseling borrowers about their student loan debt. ED also warned that institutions with a high nonpayment rate are at “serious risk” of losing access to their federal student assistance due to high cohort default rates in the future.
“The Department reinforces and reemphasizes its concern that institutions that have high nonpayment rates are at serious risk of later having a high CDR and, thus, losing eligibility for all federal student assistance,” the electronic announcement reads. “As such, the Department strongly encourages institutions with high nonpayment rates to update, maintain, and execute their default management and prevention plans as soon as possible.”
This updated nonpayment data is part of the Trump administration’s broader effort to get borrowers back into repayment, which included requesting that institutions reach out to their borrowers with repayment information.
During NASFAA’s annual Leadership & Legislative Conference & Expo, Richard Lucas, acting chief operating officer of Federal Student Aid (FSA), urged schools to conduct “productive and sustained outreach” to former students who are delinquent or in default on their federal student loans, stressing that schools need to monitor their CDR or risk losing access to federal student assistance.
In Wednesday’s electronic announcement, ED reminded institutions that if their CDR is greater than or equal to 30% in a single year, they are required to develop and submit a default prevention plan to the department. ED also strongly encourages institutions with high nonpayment rates to also create a default prevention plan.
Additionally, ED will provide a list of best practices for institutions to consider when developing their own default management and prevention, and will hold a webinar on this topic on Wednesday, February 25.
The electronic announcement included other strategies institutions may want to utilize to help borrowers get back into repayment, such as collaborating with institutional partners or completing an analysis of their delinquent borrowers to identify contact information and facilitate targeted outreach.
Publication Date: 2/19/2026
Jenny A | 2/25/2026 11:20:56 AM
I cannot agree more with the comments here. Schools are stretched so thin and the Department should not blame schools for their low staff and servicer lack of ability to manage the repayment process.
Amy P | 2/19/2026 3:46:00 PM
Real question - what exactly do we hope to accomplish by "counseling borrowers about their student loan debt"? My experience of being "counselled" in this fashion was that my response was "thanks for letting me know but if I want to stay in school it's either this or put everything on a credit card". I realize that schools have serious incentives towards reducing student loan debt and avoiding defaults but if we have no alternative to offer what is the point? And if they already have loans they are more likely to default if they drop out.
Amy P | 2/19/2026 3:31:09 PM
Actually, Jeff, it turns out that "financial literacy" doesn't actually work - and that's from economist Lewis Mandell, who was the founder of the modern financial literacy movement (https://psmag.com/economics/quest-improve-americas-financial-literacy-failure-sham-72309/). In the end, if students can't afford to pay out of pocket they will either borrow, drop out, or take the ten-years-to-graduate plan. We can't financial-literacy our way out of stagnating wages and soaring college and housing costs.
David S | 2/19/2026 1:4:53 PM
“The Department reinforces and reemphasizes its concern that institutions...," said one of the four remaining employees at the US Department of Education, the agency that oversees the largest loan program in American history.
Jeff T | 2/19/2026 11:51:05 AM
Most students don't receive adequate, or any, financial literacy education at the primary or secondary level, so not surprisingly they enter college utterly clueless about the consequences of borrowing. Entrance counseling isn't enough, never has been. Every postsecondary institution should require a course offering a deep dive into debt management, consumer finances, and basic financial literacy. While we wait for Congress to enact laws that actually promote degree attainment, and hold loan servicers accountable, financial literacy is the best way to address the student debt crisis. It's important to understand that student loan borrowers over the age of 50 owe more than borrowers under the age of 25. Older borrowers slightly out number younger borrowers and they owe significantly more. Has anyone seen a breakdown of defaulted borrowers by age? My guess is that younger borrowers, while borrowing less, are defaulting more often than their older counterparts.
Ryan W | 2/19/2026 10:52:44 AM
Totally agree, Charles. Even when schools have tried to enhance loan counseling, we've generally been told we're impeding access to federal aid and cannot have extra requirements so we can't both be doing nothing and not allowed to do anything. It should not be a surprise that loans need to be repaid, but the ongoing disaster of loan servicing across presidential administrations is as much, if not more, responsible for terrible loan repayment as things schools are doing. Trying to fully lay blame on schools for individual student behavior is non-sensical.
Charles M | 2/19/2026 9:26:19 AM
I don't believe our "success in counseling borrowers about their student loan debt" has significantly changed, compared to pre-COVID CDR rates. What has changed, in my option, is the Department's (and potentially servicers) ability to effectively manage the loan repayment process. If primary responsibility of the repayment process lies with the Department and servicers, more of this EA should be directed at their efforts. ED's mismanagement of the repayment process should not be an indicator of a school's "success in counseling borrowers about their student loan debt."
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