Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

(95-L-184) This letter contains information about the publication of the Fiscal Year (FY) 1993 cohort default rates for originating lenders, holders, and guaranty agencies participating in the Federal Family Education Loan (FFEL) Program, as mandated by

DCLPublicationDate: 11/1/95
DCLID: 95-L-184
AwardYear:
Summary: This letter contains information about the publication of the Fiscal Year (FY) 1993 cohort default rates for originating lenders, holders, and guaranty agencies participating in the Federal Family Education Loan (FFEL) Program, as mandated by the Higher
Education Act of 1992.


November 1995

95-L-184

SUMMARY: This letter contains information about the publication
of the Fiscal Year (FY) 1993 cohort default rates for originating
lenders, holders, and guaranty agencies participating in the Federal
Family Education Loan (FFEL) Program, as mandated by the Higher
Education Act of 1992.
Dear Colleague:

Under Section 430(e) of the Higher Education Act (HEA), the
Department of Education (Department) is required to publish a list of
the cohort default rates of lenders, holders, and guaranty agencies
participating in the FFEL Program. The purpose of this letter is to
provide the student loan industry with information on the calculation
of the cohort default rates. Please retain this letter to answer any
questions that may arise when you receive notice of your default
rate.

The term COHORT DEFAULT RATE is defined in Section 435(m)
of the HEA. The formula for calculating the cohort default rate is
described below. Cohort default rates will be calculated for
originating lenders, holders, and guaranty agencies on the basis of
their respective Office of Postsecondary Education Lender
Identification Numbers (LID) or Guaranty Agency Identification
Numbers. Each assigned number identifies a separate lender or
guaranty agency on record at the Department of Education. The LID
provides the guaranty agencies with a means of reporting loan
activity.

The FY 1993 cohort default rates will be calculated based on data
electronically reported to the National Student Loan Data System
(NSLDS) by the guaranty agencies. Subsidized Federal Stafford,
Unsubsidized Federal Stafford, Federal Supplemental Loan for
Students (Federal SLS), and Federal Consolidation Loans that repaid
Federal Stafford or Federal SLS loans will be included in the
calculation of cohort default rates. The NSLDS data submitted by
the guaranty agencies were prepared according to procedures
developed by the Department and reflect activity on the loans
through September 30, 1994. Since the FY 1993 cohort default rates
were calculated based on data supplied to the Department by the
guaranty agencies, a lender or holder should address any initial
questions on data to these agencies.

Loans made under a Lender-of-Last-Resort program are not used in
the calculation. Federal PLUS Loans and Federal Insured Student
Loans are NOT used in the calculation. Loans that were transferred
from one guaranty agency to another prior to submission of the NSLDS data
to the Department are included in the NSLDS data submitted by the receiving
agency, but are not included in the NSLDS data submitted by the transferring
agency. For example, if a loan was originally guaranteed by the Higher
Education Assistance Foundation (HEAF) and was transferred to the Great
Lakes Higher Education Corporation (Great Lakes), that loan was reported
by Great Lakes.

The formula for calculating a cohort default rate is:

# of students who entered repayment in FY 1993
and defaulted on or before the end of FY 1994
(Numerator)
100 X -----------------------------------------
# of students who entered repayment in FY 1993
(Denominator)

Example:

A lender has made loans to 100 students entering repayment in FY
1993 (October 1, 1992 through September 30, 1993). Of those 100
students, 25 defaulted on their student loans prior to October 1, 1994
and had a default claim paid by the guaranty agency. This lender's
FY 1993 cohort default rate is calculated by dividing 25 by 100 and
multiplying the result by 100 to produce a cohort default rate of 25.0
percent.

The number of students who entered repayment is determined by
counting the number of DIFFERENT SOCIAL SECURITY
NUMBERS in that category. If a student had more than one loan
included in the data (for example, two Federal Stafford Loans or one
Federal Stafford and one Federal SLS loan), the student will be
counted only once. However, if a student borrowed from more than
one lender, he or she is counted in the calculation for EACH lender.

If a student has a loan that entered repayment in FY 1993 and a
default claim was paid by the guaranty agency on that loan before
October 1, 1994, the student is counted as being in default.

If a student entered repayment in FY 1993, defaulted on his or her
loan and a default claim was paid before October 1, 1994, the loan
continues to be counted as in default in the FY 1993 cohort default
rate calculation, even if the student later enters into a repayment
arrangement with the guaranty agency, or the student subsequently
repaid his or her loan in full to the guaranty agency.

Loans that are discharged due to death, total and permanent
disability, or bankruptcy are not counted in calculating the FY 1993
cohort default rate IF the guaranty agency was officially notified of
the death, disability, or bankruptcy BEFORE a default claim was
paid.

Once data for a specific fiscal year is electronically submitted to
NSLDS by a guaranty agency and is accepted for calculation
purposes, the Department continues to update that data on a monthly
basis during the period in which the rates calculated for that year are
in effect. Technical data processing questions relating to the
calculation of default rates, which cannot be answered by the
guaranty agency, should be directed to the Department's NSLDS
Division at (202) 708-8125 or NSLDS Customer Service Hotline at
1-800-999-8219.

Section 430(e) of the HEA also mandates that originating lenders,
holders, and guaranty agencies have the opportunity to correct cohort
default rate information. If a lender or holder believes that the data
are incorrect and should be changed, it should promptly contact the
guaranty agency to request back-up data. Any request to the
guaranty agency should be signed by an official of the lender or
holder who is authorized to act on the lender's behalf. See
Attachment 2 for instructions on how to correct cohort default rate
information. For information about back-up data printouts see
Attachment 3.

LENDERS (OR HOLDERS) THAT HAVE QUESTIONS ABOUT
THE DATA SHOULD CONTACT THE GUARANTY AGENCY.
ATTACHMENT 4 LISTS THE ADDRESSES AND TELEPHONE
NUMBERS OF THE GUARANTY AGENCIES.

Other questions on lender, holder, or guaranty agency default rates
may be referred to the Default Coordination Team of the Guarantor
and Lender Oversight Staff at the address listed in Attachment 1.

Sincerely,

Leo Kornfeld
Senior Advisor

Attachments


Attachment 1

For technical data processing questions regarding the calculation of
the default rates, contact:

U.S. Department of Education
NSLDS Division, Program Systems Service
ATTN: COTR
Room 4640, ROB-3
600 Independence Avenue, S.W.
Washington, D.C. 20202-5456
202-708-8125

For copies of regulations, Dear Colleague Letters, and other student
aid publications, contact:

U.S. Department of Education
Student Aid Information Center
P.O. Box 84
Washington, D.C. 20044-0084
1-800-433-3243

For other questions on lender, holder, or guaranty agency default
rates, contact:

U.S. Department of Education
Default Coordination Team
Guarantor and Lender Oversight Staff
Room 4624, ROB-3
600 Independence Avenue, S.W.
Washington, D.C. 20202-5138
(202) 401-7482

To resolve errors in your lender (or holder) back-up data, contact the
guaranty agency that reported the data to the Department. A list of
the guaranty agencies and their addresses is included in Attachment
4, "Guaranty Agency List".

For information on school cohort default rates, contact:

U.S. Department of Education
Default Management Section
Institutional Monitoring Division
Room 3919, ROB-3
600 Independence Avenue, S.W.
Washington, D.C. 20202-5353
(202) 708-9396


Attachment 2

Correcting Cohort Default Rates

Under Section 430(e) of the HEA, lenders, holders, and guaranty
agencies are allowed the opportunity to correct cohort default rate
information. The Department calculates cohort default rates based
on data electronically submitted to NSLDS by guaranty agencies.
The NSLDS data reflects loan activity as of September 30 of each
year. The Department selects certain relevant fields from NSLDS,
compiles the data by borrower identification (the student's social
security number) and lender code, and then performs the calculations
necessary to determine the cohort default rate.

Although a student's loan records may be included in both the
Federal Stafford and Federal SLS data because he or she had both
Federal Stafford and Federal SLS loans from the same lender or
holder entering repayment in the same fiscal year, THE STUDENT
IS ONLY COUNTED ONCE IN THE COHORT DEFAULT RATE
CALCULATION. Likewise, if there are multiple loan records for
the student for one of the loan programs, the student is still counted
only once. If a student borrowed from more than one lender, he or
she is counted in the calculation for EACH lender. You should note
that the data reflects the status of loans through September 30 of the
year following the cohort year. Thus, data for the FY 1993 cohort
year reflects the status of loans only through September 30, 1994.
Changes after that date, including a student's present loan status,
have no bearing on the cohort default rate calculation.

If you are an originating lender or holder and believe that the cohort
default rate was calculated based on erroneous data, contact the
guaranty agency. If you discover discrepancies between the
information in your records and the data provided to the Department
by the guaranty agencies, you should try to resolve the problem with
the guaranty agency that submitted the data to the Department. You
should submit to the guaranty agency all the relevant documentation
supporting your contention that the data relating to a particular loan
are incorrect and should be changed. The guaranty agency will
review the documentation you submit and determine whether it
agrees that the data are incorrect. The guaranty agency will notify
you and the Department, in writing, of its conclusions. The
Department will make the final decision as to whether the data
should be corrected based on its review of the information provided
by you and the guaranty agency. If the correction is approved by the
Department, the guaranty agency will be notified and will make the
appropriate changes in the default rate information provided to
NSLDS.

The process for data correction is as follows:

1. Lenders or holders are urged to promptly request back-up data
from the guaranty agency if they believe their cohort default rates
were calculated on the basis of incorrect data. A delay in requesting
the back-up data may delay the agency's response. (Back-up data is
an extract of the loan records that formed the basis for calculating
your lender or holder cohort default rate.) To ensure that back-up
data is released only to responsible parties, any request to the
guaranty agency should be signed by an official of the lender or
holder who is authorized to act on its behalf in this regard.

2. The guaranty agency should promptly respond to a lender's or
holder's request by requesting the appropriate back-up data from
NSLDS on behalf of the lender. The data will be sent to the official
lender address.

3. After reviewing the back-up data, the lender or holder should
submit the appropriate documentation to the guaranty agency in
support of its contention that the data are incorrect. Such
documentation should include the borrower's name, social security
number, and the nature of the error in each case. Supporting
documentation could include copies of the guarantor's notice of a
change on the Student Status Confirmation Report, cancelled checks,
or copies of other pertinent information. To ensure timely
processing of the request, borrowers should be listed in social
security number order. A lender or holder should identify the cohort
year to which the corrections apply. All requests to the guaranty
agency for a correction should be signed by an official of the lender
or holder who is authorized to act on its behalf in this regard.

4. The guaranty agency should analyze a lender's or holder's request
for data correction and determine whether it will agree with or deny
the request for a correction.

5. WHEN THE GUARANTY AGENCY HAS COMPLETED ITS
ANALYSIS OF THE REQUEST FOR DATA CORRECTION, THE
LENDER OR HOLDER MUST BE NOTIFIED OF THE
AGENCY'S CONCLUSIONS. A copy of the letter from the
guaranty agency agreeing with or denying the data correction must
be sent to the Department of Education, Guarantor and Lender
Oversight Staff, Default Coordination Team at the address listed
below. After receiving the agency's response, the lender should
inform the Department, in writing, whether it agrees with the agency
or believes that the agency is wrong. Based on these submissions,
the Department will make the final decision on the requested data
correction and will notify the appropriate lender or holder and
guaranty agency of its determination.

U.S. Department of Education
Attn: Default Coordination Team
600 Independence Avenue, S.W.
ROB-3, Room 4624
Washington, D.C. 20202-5138


Attachment 3

Information About Back-Up Data Printouts


How to Read Back-Up Data Printout

A back-up data printout, called a "Loan Record Detail Report," is an
extract of the loan records that forms the basis for calculating your
lender or guaranty agency cohort default rate.

At the top of the first page of the printout you will find general
information, including the name of the lender or guaranty agency,
the corresponding ID code, the cohort year covered, and the process
date. The process date is the date that the Department printed the
report; it is not the date the Department receives or uses the data to
determine your lender or guaranty agency cohort default rate.

The back-up data is sorted by borrower social security number. The
data field descriptions for the back-up data can be found on the first
two lines at the top of each page of back-up data--one right below the
other. To locate specific loan information for a particular borrower,
make sure you read the line of the loan record that corresponds with
the data field description line.


Privacy Act Notice

Back-up data contains the social security numbers and names of
students. It contains material of private nature. The use of this
material is covered by the U.S. Privacy Act and may also be
governed by State and local laws and regulations, as well as by your
own policies. You should take appropriate steps to safeguard this
material and ensure that it is used and disposed of appropriately.


Attachment 4

Guaranty Agency List

This section lists the names, addresses, and other identifying
information of the guaranty agencies. The address may be used to
contact guaranty agencies to resolve discrepancies in backup data.
However, DO NOT USE THIS ADDRESS if a guaranty agency has
provided you with a different address or addressee.

Each agency is listed in alphabetical order by the name of the state in
which it is the primary guarantor. After some state agency names,
Roman numerals are listed in parenthesis to distinguish between
agencies in states which have more than one guaranty agency
involved in the FFEL program. The numerals are assigned from low
to high in the order in which the guaranty agencies signed
reinsurance agreements with the Secretary of Education.

The three-digit guaranty agency code listed in parenthesis for each
agency is the coding system used by the Department to identify each
guaranty agency.

The Higher Education Assistance Foundation (HEAF) ceased
operations on December 31, 1993. In preparation for the closing,
HEAF transferred its remaining guarantees on loans not in default to
other guaranty agencies. Affected lenders were notified of the
guaranty agency now holding their student loan guarantees which
were originally issued by HEAF. The new guaranty agency will be
reported on the back-up data. The Department possesses the records
on defaulted loans on which HEAF paid default claims to lenders.
The Transitional Guaranty Agency (TGA) possesses records relating
to a small number of loans guaranteed by HEAF that were not
transferred to other agencies and for loans guaranteed by HEAF that
were paid as or subsequently became Chapter 13 bankruptcy claims.

The Puerto Rico Higher Education Assistance Corporation
(PRHEAC) ceased operations on April 15, 1994 and all guarantees
were transferred to the Great Lakes Higher Education Corporation.
Great Lakes will hold all defaulted loans and related records
previously held by PRHEAC. NOTE: IF YOUR
ORGANIZATION IS CHALLENGING ITS DEFAULT RATE
BASED ON ERRONEOUS DATA, YOU MUST NOTIFY GREAT
LAKES OF THE POSSIBLE ERRORS.

The Mississippi Guaranty Student Loan Agency (MGSLA) ceased
operations on September 30, 1994 and all guarantees were
transferred to United Student Aid Funds, Inc. (USAF). USAF will
hold all defaulted loans and related records previously held by
MGSLA. NOTE: IF YOUR ORGANIZATION IS
CHALLENGING ITS DEFAULT RATE BASED ON
ERRONEOUS DATA, YOU MUST NOTIFY USAF OF THE
POSSIBLE ERRORS.

The Student Loan Fund of Idaho, Inc. (SLFI) was replaced (July 1,
1994) by the Northwest Education Loan Association (NELA) as the
designated guarantor. However, SLFI has not yet transferred
defaulted loans and related records to NELA. NOTE: IF YOUR
ORGANIZATION IS CHALLENGING ITS DEFAULT RATE
BASED ON ERRONEOUS DATA, YOU MUST NOTIFY SLFI OF
THE POSSIBLE ERRORS.


Alabama, AL (701)

Alabama Commission on Higher Education
3465 Norman Bridge Road
P.O. Box 2470
Montgomery, AL 36102-3584
(205) 281-1921

Alaska, AK (702)

SEE United Student Aid Funds, Inc.

Arizona, AZ (804)

SEE United Student Aid Funds, Inc.

Arkansas, AR (705)

Student Loan Guarantee Foundation of Arkansas
219 South Victory
Little Rock, AR 72201-1884
(501) 372-1491

California, CA (706)

California Student Aid Commission
P.O. Box 510845
Sacramento, CA 94245-0845
(916) 445-0880

Colorado, CO (708)

Colorado Student Loan Program
One Denver Place
999 18th Street, Suite 425
Denver, CO 80202-2440
(303) 294-5050

Connecticut, CT (709)

Connecticut Student Loan Foundation
525 Brook Street, P. O. Box 1009
Rocky Hill, CT 06067
(203) 257-4001

Delaware, DE (710)

Delaware Higher Education Loan Program
820 N. French Street, 4th Floor
Wilmington, DE 19801
(302) 577-6055

District of Columbia (II), DC (611)

See MASSACHUSETTS

Florida, FL (712)

Florida Department of Education
1344 Florida Education Center
325 West Gain Street
Tallahassee, FL 32399
(904) 488-4095

Georgia, GA (713)

Georgia Higher Education Assistance Corporation
2082 East Exchange Place, Suite 200
Tucker, GA 30084
(404) 414-3000

Hawaii, HI (815)

SEE United Student Aid Funds, Inc.

Idaho, ID (716)

Student Loan Fund of Idaho, Inc.
P. O. Box 730
Fruitland, ID 83619
(208) 452-4058

Illinois, IL (717)

Illinois Student Assistance Commission
1755 Lake Cook Road
Deerfield, IL 60015
(312) 948-8500

Indiana, IN (718)

SEE United Student Aid Funds, Inc.

Iowa, IA (719)

Iowa College Student Aid Commission
201 Jewett Building, Room 201
914 Grand Avenue
Des Moines, IA 50309
(515) 281-3501

Kansas, KS (620)

SEE United Student Aid Funds, Inc.

Kentucky, KY (721)

Kentucky Higher Education Assistance Authority
1050 U.S. 127 South
Suite 102
Frankfort, KY 40601-4323
(502) 564-7990

Louisiana, LA (722)

Louisiana Office of Student Financial Assistance Commission
P. O. Box 91202
Baton Rouge, LA 70821-9202
(504) 922-1011

Maine, ME (723)

Maine Education Assistance Division
Finance Authority of Maine
State House Station 119
One Weston Court
Augusta, ME 04333
(207) 287-2183

Maryland, MD (724)

SEE United Student Aid Funds, Inc.

Massachusetts, MA (725)

American Student Assistance Corporation
330 Stuart Street, Berkeley Place
Boston, MA 02116-5292
(617) 426-9434

Michigan, MI (726)

Michigan Higher Education Assistance Authority
P. O. Box 30047
608 W. Allegan Road
Lansing, MI 48909
(800) 642-5626

Minnesota (II), MN (727)

NORTHSTAR Guarantee Incorporated
444 Cedar Street
Piper Jaffary Plaza
Suite 1910
St. Paul, MN 55164-0102
(612) 290-8780

Mississippi, MS (728)

SEE United Student Aid Funds, Inc.

Missouri, MO (729)

Coordinating Board for Higher Education
3515 Amazons Drive
Jefferson City, MO 65109-5717
(314) 751-2361

Montana, MT (730)

Guaranteed Student Loan Program
2500 Broadway
Helena, MT 59620-3101
(406) 444-6594

Nebraska, NE (731)

Nebraska Student Loan Program
1300 O Street
P.O. Box 82507
Lincoln, NE 68501-2507
(402) 475-8686

Nevada, NV (732)

See United Student Aid Funds, Inc.

New Hampshire, NH (733)

New Hampshire Higher Education Assistance Foundation
44 Warren Street
P. O. Box 877
Concord, NH 03302-0877
(603) 225-6612

New Jersey, NJ (734)

New Jersey Higher Education Assistance Authority
Guaranteed Student Loan Program
4 Quakerbridge Plaza
Trenton, NJ 08625
(800) 356-5562

New Mexico, NM (735)

New Mexico Student Loan Guarantee Corporation
3900 Osuna, N.E.
P.O. Box 27020
Albuquerque, NM 87125-7020
(505) 345-3371

New York, NY (736)

New York State Higher Education Services
99 Washington Avenue, Twin Towers
Albany, NY 12255
(518) 474-5592

North Carolina, NC (737)

North Carolina State Education Assistance Authority
P.O. Box 2688
Chapel Hill, NC 27515-2688
(919) 549-8614

North Dakota, ND (738)

Student Loans of North Dakota
P. O. Box 5524
Bismarck, ND 58502-5524
(701) 224-5600

Ohio, OH (739)

Ohio Student Aid Commission
309 South 4th Street
Columbus, OH 43216-6610
(614) 644-3091

Oklahoma, OK (740)

Oklahoma State Regents for Higher Education
Guaranteed Student Loan Program
P. O. Box 3000
Oklahoma City, OK 73101
(405) 552-4300

Oregon, OR (741)

Oregon State Scholarship Commission
1500 Valley River Drive
Suite 100
Eugene, OR 97401
(503) 687-7400

Pennsylvania, PA (742)

Pennsylvania Higher Education Assistance Agency
1200 N. 7th Street
Towne House
Harrisburg, PA 17102-1398
(717) 257-2850

Puerto Rico, PR (772)

SEE Wisconsin

Rhode Island, RI (744)

Rhode Island Higher Education Assistance Authority
560 Jefferson Boulevard
Warwick, RI 02886-1320
(401) 736-1100

South Carolina, SC (745)

South Carolina State Education Assistance Authority
Interstate Center
Suite 210
P. O. Box 210219
Columbia, SC 29221
(803) 798-0916

South Dakota, SD (746)

Education Assistance Corporation
115 First Avenue, S.W.
Aberdeen, SD 57401
(605) 225-6423

Tennessee, TN (747)

Tennessee Student Assistance Corporation
Parkway Towers, Suite 1950
404 James Robertson Parkway
Nashville, TN 37243-0820
(615) 741-1346

Texas (II), TX (748)

Texas Guaranteed Student Loan Corporation
Tower of the Hill
13809 N. Highway 189
Suite 400
Austin, TX 78750-1240
(512) 219-5700

Transitional Guaranty Agency (TGA) (927)

American National Bank Building
101 East 5th Street, 24th Floor
St. Paul, MN 55101
(602) 221-0566

United Student Aid Funds, Inc. (USAF), UF (800)

United Student Aid Funds, Inc.
P.O. Box 6180
Indianapolis, IN 46206-6180
(317) 849-6510

Utah, UT (749)

Utah Higher Education Assistance
335 West North Temple
#3 Triad Center, Suite 550
Salt Lake City, UT 84180-1025
(801) 321-7200

Vermont, VT (750)

Vermont Student Assistance Corporation
P. O. Box 2000, Champlain Mill
Winooski, VT 05404-2601
(802) 655-9602

Virgin Islands, VI (778)

SEE Wisconsin

Virginia, VA (751)

Virginia Student Assistance Authorities
State Education Assistance Authority
411 East Franklin Street, Suite 300
Richmond, VA 23219-2492
(800) 775-4000

Washington, WA (753)

Northwest Education Loan Association
500 Colman Building
811 First Avenue
Seattle, WA 98104
(206) 461-5300

West Virginia, WV (654)

SEE Pennsylvania

Wisconsin, WI (755)

Great Lakes Higher Education Corporation
P.O. Box 7858
Madison, WI 53707
(608) 246-1800

Wyoming, WY (656)

SEE United Student Aid Funds, Inc.

Last Modified: 10/31/1995