Analyzing the New Cohort Default Rate Data

The U.S. Department of Education today released cohort default rates (CDR) by college, which reflects the percentage of students who default on their loans within three years of entering repayment. This is a big deal for colleges, as any college that had a CDR of more than 30% for three consecutive years could lose its federal financial aid eligibility. I analyzed what we can learn from CDRs—a limited amount—in a blog post earlier this week.

And then things got interesting in Washington. The Department of Education put out a release yesterday noting that some students with loans from multiple servicers (known as “split servicers”) were current on some loans and defaulting on others. In this release, ED noted that the split servicer students were being dropped from CDRs over the last three years—but only if a college was close to the eligibility threshold. This led many to question whether ED was serious about using CDRs as an accountability tool, as well as trying to glean implications for the upcoming college ratings system.

The summary data for cohort default rates by year and sector is available here, and shows a decline from a 14.7% default rate in Fiscal Year 2010 to 13.7% in FY 2011. Default rates in each major sector of higher education also fell, led by a decline from 21.8% to 19.1% in the for-profit sector. However, a comparison of the FY 2009 and 2010 data in this release with the FY 2009 and 2010 data in last year’s release shows no changes from last year–before the split servicer change was adopted. Something doesn’t seem to be right there.

Twenty-one colleges are subject to sanctions under the new CDRs, all but one of which (Ventura Adult and Continuing Education) are for-profit. Most of the colleges subject to sanctions are small beauty or cosmetology institutions and reflect a very small percentage of total enrollment. We don’t know how many other colleges would have crossed over 30%, if not for the split servicer changes.

This year’s data show some very fortunate colleges. Among colleges with a sufficiently high participation rate, six institutions had CDRs of between 29 and 29.9 percent after being over 30% in the previous two years. They are led by Paris Junior College, with a 29.9% CDR in FY 2011 after being over 40% in the previous years. Other colleges weren’t so lucky. For example, the Aviation Institute of Maintenance was at 38.9% in FY 2009, 36.1% in FY 2010, and improved to 31.1% to 2011—but is still subject to sanctions.

FY 2011 CDRs, FY 2009 & 2010 above 30%
Name FY 2011 FY 2010 FY 2009
SEARCY BEAUTY COLLEGE 9.3 30.7 38.2
NEW CONCEPT MASSAGE AND BEAUTY SCHOOL 9.7 30.1 35.2
UNIVERSITY OF ANTELOPE VALLEY 12 31.8 30.6
PAUL MITCHELL THE SCHOOL ESCANABA 12.1 40 68.7
SAFFORD COLLEGE OF BEAUTY CULTURE 13.1 36.8 36.3
COMMUNITY CHRISTIAN COLLEGE 13.9 33.3 38.8
UNIVERSITY OF SOUTHERNMOST FLORIDA 14.6 30.8 35.1
SOUTHWEST UNIVERSITY AT EL PASO 15.5 36.1 37.5
CENTRO DE ESTUDIOS MULTIDISCIPLINARIOS 15.6 39.2 50.9
VALLEY COLLEGE 17.2 36.9 32.7
AMERICAN BROADCASTING SCHOOL 17.5 30.8 44.6
SUMMIT COLLEGE 17.6 30.9 30.5
VALLEY COLLEGE 19.4 56.5 37.5
AMERICAN UNIVERSITY OF PUERTO RICO 21 31.2 36.6
BRYAN UNIVERSITY 21.1 30.2 30.4
SOUTH CENTRAL CAREER CENTER 22 32.6 35.1
PAUL MITCHELL THE SCHOOL ARKANSAS 22 37.5 30
D-JAY’S SCHOOL OF BEAUTY, ARTS & SCIENCES 22.2 37.5 41.9
PAUL MITCHELL THE SCHOOL GREAT LAKES 22.2 34.6 33.9
KILGORE COLLEGE 22.7 30.2 33.5
ANTONELLI COLLEGE 22.8 33 35.1
OLD TOWN BARBER COLLEGE 23 37.7 40
OZARKA COLLEGE 23.1 41.8 35
TESST COLLEGE OF TECHNOLOGY 23.4 33.7 32
CENTURA COLLEGE 23.7 32 35
RUST COLLEGE 23.7 32 31.6
CARSON CITY BEAUTY ACADEMY 23.8 31.8 43.3
BACONE COLLEGE 24.1 32 30
KAPLAN CAREER INSTITUTE 24.1 32.5 33.6
TECHNICAL CAREER INSTITUTES 24.3 38.8 34.9
VICTOR VALLEY COMMUNITY COLLEGE 24.6 32.6 31
SOUTHWESTERN CHRISTIAN COLLEGE 24.6 32.7 43.1
AMERICAN BEAUTY ACADEMY 24.8 35.7 34.6
CENTURA COLLEGE 24.8 31.5 34.7
DENMARK TECHNICAL COLLEGE 25 30.8 31.6
MILAN INSTITUTE OF COSMETOLOGY 25 32.4 41.5
TREND BARBER COLLEGE 25 43.5 60.5
JACKSONVILLE BEAUTY INSTITUTE 25.2 33.3 41.7
CONCEPT COLLEGE OF COSMETOLOGY 25.3 41.5 34.2
EASTERN OKLAHOMA STATE COLLEGE 25.4 31.8 30
OTERO JUNIOR COLLEGE 25.5 34.2 38.2
LANGSTON UNIVERSITY 25.5 32.5 32.9
COLLEGEAMERICA DENVER 25.5 34.8 38.3
AVIATION INSTITUTE OF MAINTENANCE 25.8 36.9 39.6
EMPLOYMENT SOLUTIONS 26 38.5 30
SANFORD-BROWN COLLEGE 26.2 31.6 31.5
CAMBRIDGE INSTITUTE OF ALLIED HEALTH AND TECHNOLOGY 26.6 33.3 35
ANTELOPE VALLEY COLLEGE 26.9 32.6 33.2
UNIVERSITY OF ARKANSAS COMMUNITY COLLEGE AT BATESVILLE 26.9 30.6 31.6
CC’S COSMETOLOGY COLLEGE 27.4 40.3 35.9
MILWAUKEE CAREER COLLEGE 27.6 34.1 32.7
NTMA TRAINING CENTERS OF SOUTHERN CALIFORNIA 27.8 32.1 34.2
CONCORDIA COLLEGE ALABAMA 27.9 31.4 37.5
NORTH AMERICAN TRADE SCHOOLS 28 31 31.1
AVIATION INSTITUTE OF MAINTENANCE 28.1 37.9 39.8
MEDIATECH INSTITUTE 28.4 33.3 33.3
SEBRING CAREER SCHOOLS 29 54.1 57.5
MOHAVE COMMUNITY COLLEGE 29.3 32.7 36.7
CHERYL FELL’S SCHOOL OF BUSINESS 29.4 38 31.2
AVIATION INSTITUTE OF MAINTENANCE 29.4 36.1 38.9
KLAMATH COMMUNITY COLLEGE 29.4 33 31.7
PARIS JUNIOR COLLEGE 29.9 40.7 41.5
STYLEMASTERS COLLEGE OF HAIR DESIGN 30.6 46.6 37
LASSEN COLLEGE 30.8 37.1 37.7
AVIATION INSTITUTE OF MAINTENANCE 31.1 37.5 32.2
CHARLESTON SCHOOL OF BEAUTY CULTURE 31.7 37.5 34
PALLADIUM TECHNICAL ACADEMY 33 39.4 46.2
L T INTERNATIONAL BEAUTY SCHOOL 38.1 37.7 38
TIDEWATER TECH 38.6 42.7 55
JAY’S TECHNICAL INSTITUTE 40.6 53.8 51.5
OHIO STATE COLLEGE OF BARBER STYLING 41.1 37.8 32.9
MEMPHIS INSTITUTE OF BARBERING 44.7 47.2 44.4
FLORIDA BARBER ACADEMY 46.5 41.7 32.5
SAN DIEGO COLLEGE 49.3 34 35.7

Fully 35 colleges with sufficient participation rates had CDRs between 29.0% and 29.9% in FY 2011, including a mix of small for-profit colleges, HBCUs, and community colleges. The University of Arkansas-Pine Bluff, a designated minority-serving institution, has had CDRs of 29.9%, 29.2%, and 29.8% in the last three years. Mt. San Jacinto College and Harris-Stowe State University also had CDRs just under 30% in each of the last three years. Only 19 colleges, representing a mix of institutional types, had CDRs between 30.0% and 30.9%. This includes Murray State College in Oklahoma, which was at 30.0% in FY 2011, 28.9% in FY 2010, and 31.1% in FY 2009. Forty-three colleges were between 28.0% and 28.9%.

FY 2011 CDRs between 29 and 31 percent
Name FY 2011 FY 2010 FY 2009
OHIO TECHNICAL COLLEGE 29 24.1 21.3
DAYMAR COLLEGE 29 28.9 46.2
SEBRING CAREER SCHOOLS 29 54.1 57.5
L’ESPRIT ACADEMY 29.1 0 0
BLACK RIVER TECHNICAL COLLEGE 29.1 27.9 26.6
NEW SCHOOL OF RADIO & TELEVISION 29.1 26.2 28.1
LOUISBURG COLLEGE 29.2 28.7 24.7
MOHAVE COMMUNITY COLLEGE 29.3 32.7 36.7
HARRIS SCHOOL OF BUSINESS 29.3 25.6 17.8
INTELLITEC MEDICAL INSTITUTE 29.3 27.1 24.7
GALLIPOLIS CAREER COLLEGE 29.3 33.9 29.4
CHERYL FELL’S SCHOOL OF BUSINESS 29.4 38 31.2
COLLEGE OF THE SISKIYOUS 29.4 27.7 27.1
AVIATION INSTITUTE OF MAINTENANCE 29.4 36.1 38.9
KLAMATH COMMUNITY COLLEGE 29.4 33 31.7
COLORLAB ACADEMY OF HAIR, THE 29.4 24.3 12.5
DIGRIGOLI SCHOOL OF COSMETOLOGY 29.4 21.6 23.5
VIRGINIA SCHOOL OF MASSAGE 29.4 14.8 22
WASHINGTON COUNTY COMMUNITY COLLEGE 29.5 20.5 12.7
MT. SAN JACINTO COLLEGE 29.5 29.9 26.5
WEST TENNESSEE BUSINESS COLLEGE 29.5 32.6 21.8
BRITTANY BEAUTY SCHOOL 29.5 31.9 26.4
JOHN PAOLO’S XTREME BEAUTY INSTITUTE, GOLDWELL PRODUCTS ARTISTRY 29.5 25 0
HARRIS – STOWE STATE UNIVERSITY 29.6 27.9 26.5
CARIBBEAN UNIVERSITY 29.6 29.9 29.9
GUILFORD TECHNICAL COMMUNITY COLLEGE 29.7 26 19
WARREN COUNTY CAREER CENTER 29.7 22.9 25
STARK STATE COLLEGE 29.7 24.5 17.2
STRAND COLLEGE OF HAIR DESIGN 29.7 17.9 11.1
INDEPENDENCE COLLEGE OF COSMETOLOGY 29.8 21.6 18.4
FRANK PHILLIPS COLLEGE 29.8 25.2 29.1
MEDICAL ARTS SCHOOL (THE) 29.8 21.6 13.1
NEW MEXICO JUNIOR COLLEGE 29.8 24.1 23.1
PARIS JUNIOR COLLEGE 29.9 40.7 41.5
UNIVERSITY OF ARKANSAS AT PINE BLUFF 29.9 29.2 29.8
MURRAY STATE COLLEGE 30 28.9 31.1
JARVIS CHRISTIAN COLLEGE 30 36.5 29.3
BUSINESS INDUSTRIAL RESOURCES 30.1 19.1 20.9
LONG BEACH CITY COLLEGE 30.1 24.2 19
EASTERN GATEWAY COMMUNITY COLLEGE 30.1 0 0
MARTIN UNIVERSITY 30.2 19.8 18.7
LANE COMMUNITY COLLEGE 30.2 30.6 19.5
CAREER QUEST LEARNING CENTER 30.2 24.1 16.1
NIGHTINGALE COLLEGE 30.3 25 16.6
EMPIRE BEAUTY SCHOOL 30.4 31.6 25.2
NATIONAL ACADEMY OF BEAUTY ARTS 30.4 20.6 5.6
BAR PALMA BEAUTY CAREERS ACADEMY 30.5 35.8 26.8
WEST VIRGINIA UNIVERSITY – PARKERSBURG 30.5 25.8 24.1
ENSACOLA SCHOOL OF MASSAGE THERAPY & HEALTH CAREERS 30.5 17.3 10
PROFESSIONAL MASSAGE TRAINING CENTER 30.6 14.8 13
UNIVERSAL THERAPEUTIC MASSAGE INSTITUTE 30.6 23.5 17.2
STYLEMASTERS COLLEGE OF HAIR DESIGN 30.6 46.6 37
CCI TRAINING CENTER 30.8 26.5 26.7
INSTITUTE OF AUDIO RESEARCH 30.8 29.7 17
LASSEN COLLEGE 30.8 37.1 37.7
KAPLAN CAREER INSTITUTE 30.8 34.6 29.7
TRANSFORMED BARBER AND COSMETOLOGY ACADEMY 30.9 66.6 0
MAYSVILLE COMMUNITY AND TECHNICAL COLLEGE 30.9 26.4 24.5
TRI-COUNTY TECHNICAL COLLEGE 30.9 27.2 16.1

Some of the larger for-profits fared better, potentially due to split servicers. The University of Phoenix’s CDR was 19.0% in FY 2011, down from 26.0% in FY 2010 and 26.4%. DeVry University was at 18.5% in FY 2011, down from 23.4% in FY 2010 and 24.1% in FY 2009. ITT Technical Institute also improved, going from 33.3% in FY 2009 to 28.6% and then 22.4% this year. (Everest College disaggregates its data by campus, but the results are similar.)

The CDR data are not without controversy, but they are an important accountability tool going forward. It will be interesting to see whether and how these data will be used in the draft Postsecondary Institution Ratings System later this fall.

Author: Robert

I am an a professor at the University of Tennessee, Knoxville who studies higher education finance, accountability policies and practices, and student financial aid. All opinions expressed here are my own.

7 thoughts on “Analyzing the New Cohort Default Rate Data”

  1. Can you please update your hyperlink for the data by institution. It leads to a page that has FY2010 and FY2009 3-yr CDRS, but has not been updated with the FY2011. Thank you.

  2. Robert:

    The core question I have is this: Is there any advantage to a (public) college’s financial aid standing for students who do not complete their degrees and then default versus if they graduate and then default? I may be wrong but it seems that is what my local college is trying to do (force students out before they complete their degree). The one “advantage” that is obvious of course is that the sooner a student quits school the less they borrow overall.

    I am a student at a California public college which is involved in an “experimental financial aid program” that is supposed to be available only to colleges with good (<25%) CDR's (oddly the reports you linked to show my college is above the 25% line all 3 of the years reported … I wonder how they managed to get approved). In this case the experimental program goes something like this: If you are a student struggling with completing your degree (not meeting "Satisfactory Academic Performance" or SAP guidelines) you are automatically ineligible to borrow ANY un-subsidized loans. Presumably this either makes poor students "get serious" or else it pushes them out of school which lowers the amount borrowed over time. Unfortunately the "local" SAP guidelines are much stricter than the Federal ones and also includes a much lower lifetime unit cap. The effect of this cap is that some academically good students are lumped in with the bad ones not because (with apologies to the Bard) they have not studied too poorly but rather too much. Notably once you cross that lifetime maximum you can NEVER borrow unsubsidized loans again (at least at that college) because ALL units count against the maximum, even those from 20 years ago and even those that did not involve ANY financial aid. I am a returning adult student and I am getting my degree late in life because I am unemployed and have been told countless times that in my field my many years of real world experience is not enough, a paper degree is now required just to get an interview. I am old enough and wise enough to understand the risks of over borrowing and believe me when I say that I only borrow what I need. However my need does require some unsubsidized loans without which I cannot afford college. Unless something amazing happens, next semester I will cross that line and become ineligible for the money I need to complete my degree. I will then be forced to drop out and since I am attempting to get my degree to be able to gain employment I will be very likely to default on my student debt until I can get a job. What possible advantage can their be to a college creating these circumstances? .

    1. I’m fascinated by your comment (and thanks for sharing your story). Some colleges in California opt out of even offering their students loans, and I’m concerned that more community colleges will move in that direction if they feel they are too close to the loan threshold. I wouldn’t be surprised if there is pressure from the Department of Education to make sure more students have access to loans.

      1. Robert: Just an update for your blog. It has indeed come to pass that I am now disallowed unsubsidized loans. In the local area “cheap” rooms rent for $400-500/month. That (less-than) $6000/year loan difference means that as I sit writing this I am having to consider such ugly options as becoming homeless in order to be able to afford finish my degree. None of my friends has a spare room so I will be living on the street as a college student.

        I have included a little more about my budget at the bottom of this post but let’s get on to the stuff you and your readers are more interested in, educational bureaucracy:

        Students who wish to get any Direct Loans are required to attend a workshop every year and this year’s workshop was an eye-opener! Officially the reason the college participates in the experimental program is to reduce “over-borrowing”, but in the workshop were told the reason that our college president “signed-off” on the program is because it reduces default rates. In fact, we were told that if the college had not been able to control their default rate they might have had to stop offering student loans all-together.

        That alone is interesting when one considers my earlier question of how a college with a high CDR gets into this experimental program. What is even more interesting follows:

        For months I have been talking with financial aid folks trying to find some way for my extreme financial need to allow me an exemption from the experimental program. At every turn I was told there was no way for the college to exclude me. At the workshop however it seems that there suddenly is an exception this year… If you are either a non-resident of California (paying the out-of-state tuition fee rates) or enrolled in a higher-cost degree program (like nursing) you are allowed to continue to be eligible for Unsubsidized Loans because (… wait for it …) you are considered to have exceptional financial need.

        After the workshop I asked a counselor and was told *my* exceptional financial need did not meet the criteria for exemption. Looking at the criteria it suddenly dawned on me that those two special categories have something else in common besides higher costs of attendance. Both of those categories put more money in the college’s purse. Guess just having need is not enough, you have to have need that benefits the people lending you money.

        Can you say “conflict-of-interest”?

        Right now I am working part-time as a tutor (so far I have earned less than $100/month) and trying to find grants (most grants I have found are, logically, targeted at recent high-school graduates) or maybe trying to do a GoFundMe campaign (but I do not have a large circle of people able to help financially). Historically the majority of my student money after paying rent went to books and other class-related materials, transportation, internet and basic living necessities like doing laundry. I do not have an entertainment or clothing or emergency budget at all. My last year’s food budget was about $10 per DAY ($3 per meal) and this year I am cutting that back to $6/day ($2/meal). But that is irrelevant because we all know that good or poor nutrition has no bearing on academic performance, right?

        It makes me so angry to get so close to my goal and then have to put up with this BS. I am NOT “over-borrowing” and I took on those loans in good faith only to have the rules changed on me in the middle of the journey. Now it looks like I may have almost $30,000 in debt and nothing to show for it.

  3. Pingback: Why is it So Difficult to Sanction Colleges for Poor Performance? | Kelchen on Education

  4. Robert: Just an update for your blog. It has indeed come to pass that I am now disallowed unsubsidized loans. In the local area “cheap” rooms rent for $400-500/month. That (less-than) $6000/year loan difference means that as I sit writing this I am having to consider such ugly options as becoming homeless in order to be able to afford finish my degree. None of my friends has a spare room so I will be living on the street as a college student.

    I have included a little more about my budget at the bottom of this post but let’s get on to the stuff you and your readers are more interested in, educational bureaucracy:

    Students who wish to get any Direct Loans are required to attend a workshop every year and this year’s workshop was an eye-opener! Officially the reason the college participates in the experimental program is to reduce “over-borrowing”, but in the workshop were told the reason that our college president “signed-off” on the program is because it reduces default rates. In fact, we were told that if the college had not been able to control their default rate they might have had to stop offering student loans all-together.

    That alone is interesting when one considers my earlier question of how a college with a high CDR gets into this experimental program. What is even more interesting follows:

    For months I have been talking with financial aid folks trying to find some way for my extreme financial need to allow me an exemption from the experimental program. At every turn I was told there was no way for the college to exclude me. At the workshop however it seems that there suddenly is an exception this year… If you are either a non-resident of California (paying the out-of-state tuition fee rates) or enrolled in a higher-cost degree program (like nursing) you are allowed to continue to be eligible for Unsubsidized Loans because (… wait for it …) you are considered to have exceptional financial need.

    After the workshop I asked a counselor and was told *my* exceptional financial need did not meet the criteria for exemption. Looking at the criteria it suddenly dawned on me that those two special categories have something else in common besides higher costs of attendance. Both of those categories put more money in the college’s purse. Guess just having need is not enough, you have to have need that benefits the people lending you money.

    Can you say “conflict-of-interest”?

    Right now I am working part-time as a tutor (so far I have earned less than $100/month) and trying to find grants (most grants I have found are, logically, targeted at recent high-school graduates) or maybe trying to do a GoFundMe campaign (but I do not have a large circle of people able to help financially). Historically the majority of my student money after paying rent went to books and other class-related materials, transportation, internet and basic living necessities like doing laundry. I do not have an entertainment or clothing or emergency budget at all. My last year’s food budget was about $10 per DAY ($3 per meal) and this year I am cutting that back to $6/day ($2/meal). But that is irrelevant because we all know that good or poor nutrition has no bearing on academic performance, right?

    It makes me so angry to get so close to my goal and then have to put up with this BS. I am NOT “over-borrowing” and I took on those loans in good faith only to have the rules changed on me in the middle of the journey. Now it looks like I may have almost $30,000 in debt and nothing to show for it.

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