Default Prevention

Default occurs when a student is 270 days delinquent on their Stafford Loan Payment. The consequences of default have a negative impact on a student’s present and future financial health.  For instance, the default will be reported to national credit bureaus which may impact his/her chances of obtaining credit, or financing an automobile or house.  It may also mean a person may have to pay higher interest rates, increased insurance premiums, and in some cases may impact an employer’s hiring decision. Fortunately, default can usually be avoided.

Nobody likes to see a student fail. When student borrowers go delinquent or default on the repayment of their loans, that’s exactly what happens. Many students simply don’t understand the long-term peril default places on their financial future.  Successful repayment is a key step for the student in establishing a healthy financial future.

Financial Aid Administrators (FAAs) are in an ideal position to help at-risk student borrowers understand the important benefits they’ll earn from debt repayment.  To support FAAs in this effort ISAC has developed many Default Prevention programs that are free of charge to your school.  

For your students, our loan repayment information, Default Prevention materials, and Personal Finance Seminars are all designed to educate student loan borrowers on loan repayment, default prevention and about good personal financial habits.

For FAAs, ISAC provides what many consider to be industry leading Default Prevention programs and materials designed to keep your Cohort Default Rate (CDR) in check.  In fact, taking full advantage of ISAC’s Default Prevention programs can actually help to DECREASE your institutional CDR.   

Cohort Default Rate (CDR)  

A cohort default rate is defined as the percentage of a school's student borrowers entering repayment on a Federal Family Educational Loan Program (FFELP) or Federal Direct Loan Program loans during a specific fiscal year who default on those loans during the same or following fiscal year.

Access the Cohort Default Rate page within this section to learn how the school's CDR is calculated, how to challenge or appeal a CDR  decision and link to guides published by the U.S. Department of Education.

Electronic Cohort Default Rate Notification (eCDR)

The Department of Education uses the eCDR process to electronically transmit draft and official cohort default rate notification packages to schools through the Student Aid Internet Gateway (SAIG).

Dear Colleague Letter (GEN-03-05) outlines the eCDR process for schools within the United States. A Federal Register Notice (Vol 72, Number 155) provides information regarding the implementation of eCDR for institutions located outside of the United States.

Cohort Default Rate (CDR) Reduction Programs for Schools

Using ISAC Default Prevention programs can benefit your institution.  ISAC Default Prevention programs and materials promote the values of financial responsibility, and help to ensure an acceptable cohort default rate at your institution. High default rates will threaten a school’s ability to participate in federal and state financial aid programs. 

ISAC is here to help.  ISAC is very active in assisting students during loan repayment. Feel free to browse the complete list of Cohort Rate Reduction programs that Default Prevention Outreach and Services has to offer.

Default Prevention Outreach (Default Reduction Activities)

• Online Entrance/Exit Counseling
• Default Prevention Outreach Materials
• Personal Finance Presentations
• Mapping Your Future  
• On-site Training
• Consumer Credit Counseling Partnership
• Mone Smart Week - Chicago

Default Prevention Services (Default Aversion)

• Default Prevention Services
• ExitExpress 
• National Student Loan Clearinghouse
• Default Prevention Events Calendar
• DAAR (Default Aversion Assistance Request Report