Cohort Default Rate Continues to Drop Across All Higher Ed Sectors

Archived Information

Cohort Default Rate Continues to Drop Across All Higher Ed Sectors

September 30, 2015

The U.S. Department of Education announced today that the official three-year federal student loan cohort default rate has declined to 11.8 percent for students who entered repayment in FY 2012. That drop was across all sectors of higher education—public, private and for-profit institutions.

The default rate for FY 2011 was 13.7 percent.

"The Obama Administration has taken historic steps to give borrowers more options to manage their student debt and stay on track to repayment and to hold institutions accountable for improving student outcomes," said Secretary of Education Arne Duncan. "However, even with these promising signs of progress, we know much work remains ahead. I hope that Congress will join us in efforts to improve student outcomes and improve accountability in higher education."

Helping Protect Americans from Burdensome Debt

Easing the burden of debt is a core priority for the Administration which is why the President unveiled the Student Aid Bill of Rights earlier this year to ensure strong consumer protections for borrowers. As part of the President's directives, the Department is working with the Consumer Financial Protection Bureau, Department of Treasury and other federal agencies to continually improve the federal student lending program.

Recent data indicate increasing numbers of student loan borrowers are taking advantage of the Obama Administration's efforts to ease the burden of student debt. Thanks to a wide variety of increased traditional, targeted and social media outreach, as well as changes to the contracts of federal student loan servicers to incentivize better outreach to borrowers, more than 3.9 million Direct Loan borrowers are currently enrolled in income-driven repayment plans. Enrollments in IDR plans have increased more than 50 percent over the past year and are at an all-time high with our servicers enrolling more than 5,000 borrowers in income-driven plans daily. In addition, the Department is working with the Treasury Department to improve the recertification process as the President directed.

Additionally, the Administration recently launched the new College Scorecard to complement the Financial Aid Shopping Sheet and help students and families make informed decisions before enrolling in college. The Scorecard empowers students and families with clear, easily accessible, and critical information on college performance, including the first-ever nationally comparable data on post-college earnings.

The Department is also taking steps to protect students and taxpayers by requiring career colleges to do a better job of preparing students for gainful employment and holding abusive for-profit colleges accountable to students and taxpayers.

The cohort default rate is one of the Department's tools for preventing lowest performing schools from receiving student aid. Unfortunately, Congress is trying to take away other important tools the Department has to improve accountability and transparency in higher education. Among other concerns, Republican bills would halt efforts to bar poor performing career college programs from accessing student aid, enabling schools that don't deliver what they promise to students to keep getting federal student aid funding. In addition, the bills would eliminate the requirement that states authorize schools within their jurisdictions to operate and that states create a complaint system for students so that students have a place to go when schools aren't performing and states have the information they need to investigate schools that are not keeping up their end of the bargain.

Breakdown of Cohort Default Rates by Institution Type

The default rates announced today were calculated using the cohort of borrowers who entered repayment on their Direct Loans or FFEL Program loans between Oct. 1, 2011, and Sept. 30, 2012, and who defaulted before Sept. 30, 2014. During this time, more than 5.1 million borrowers entered repayment, and about 611,000 defaulted on their loans. These borrowers attended 6,121 postsecondary schools across the country.

The three-year rate decreased over last year's rates for all sectors, decreasing from 12.9 percent to 11.7 percent for public institutions and from 7.2 percent to 6.8 percent for private non-profit institutions. The default rate decreased at for-profit institutions from 19.1 percent to 15.8 percent, though the sector still has the highest three-year rate.


The Higher Education Opportunity Act of 2008 amended the law to require that, starting in 2014, sanctions against institutions with high cohort default rates would be based on the three three-year cohort default rates.

All institutions with a default rate that is equal to or greater than 30 percent must establish a default prevention task force that prepares a plan to identify the factors causing the school's cohort default rate to exceed 30 percent and submit the plan to the Department.

Schools with high default rates may lose eligibility to participate in one or more federal student aid programs. This year, two public community colleges, one private non-profit institution, and 12 for-profit schools are subject to loss of eligibility for default rates that either were 30 percent or greater for three consecutive years, or were more than 40 percent for the latest year, or both. These schools face loss of eligibility in for the federal student aid programs unless they submit successful appeals to the Department. The list of institutions subject to sanction is provided below.

The Department's Federal Student Aid (FSA) office provides extensive assistance to higher education institutions, including webinars and online training; state, regional and national association training forums, and face-to-face training events. To ensure the highest quality of student-centered servicing, FSA recently the released the recommendations from an interagency task force on best practices in performance based contracting to better ensure that servicers help borrowers make affordable monthly payments.

Information on the national student loan default rate, as well as rates for individual schools, states, types of postsecondary institutions and other details, are available here.

List of institutions subject to loss of eligibility sanctions:

  • Umpqua Community College (OR)
  • Eastern West Virginia Community & Technical College
  • Ohio State College of Barber Styling (OH)
  • Guti, the Premier Beauty and Wellness Academy (FL)
  • Capstone College (CA)
  • L T International Beauty School (PA)
  • Florida Barber Academy (FL)
  • Jay's Technical Institute (TX)
  • Memphis Institute of Barbering (TN)
  • Northwest Career College (NV)
  • Northwest Regional Technology Institute (PA)
  • Coast Career Institute (CA)
  • San Diego College (CA)
  • Profile Institute of Barber-Styling (GA)
  • United Tribes Technical College (ND)