The 411 on Cohort Default Rates

Explainers | February 9, 2010
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Each year, the federal government spends billions of dollars to provide grants and loans to college students. To ensure that these funds are not wasted, the federal government has developed an accountability metric known as the cohort default rate (CDR). CDRs, or the percentage of borrowers who default on their student loans within two years of graduating or dropping out, are calculated annually for every college and university that participates in the federal student aid program. While these rates have been used for years, the U.S. Department of Education recently released a new set of CDRs that provide better information about the longer-term borrowing prospects for students at individual schools. In this short video explainer, Policy Analyst Ben Miller explains the ins and outs of cohort default rates and why the new rates have important implications for students, parents, and schools.

Cohort default rate data are an important measure for parents and students to know, Miller argues. "Parents and students can use CDR data to identify high-default schools. These data can also help prospective students anticipate their long-term repayment outcomes based on the experiences of previous borrowers and make more informed decisions about where to attend college."

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