| PublicationDate: 6/20/96 Summary: Recalculation of Some FY 1994 Cohort Default Rates Author: IPOS - Institutional Participation and Oversight Service June 20, 1996 On May 6, 1996, the Department of Education (Department) transmitted draft FY 1994 cohort default rates to 6,900 schools. Subsequently, the Department discovered that an error in off-the-shelf computer software used in calculating those rates caused some borrowers with defaulted loan records to be improperly excluded from the numerator of the calculated rates. As a result, FY 1994 pre-publication default rates were reported too low for approximately 2,700 schools. The effect was small for most of the schools; for more than fifty percent of them, fewer than six borrowers were erroneously omitted. This has NOT affected default rates published for any previous years. Fortunately, this defect was found early in the FY 1994 cohort default rate cycle and was easy to correct. The offending software product has been completely replaced by new software. In addition, the Department has recalculated rates for the affected schools and is mailing the revised rates along with the corresponding pre-published backup data to all those schools. The 2,700 schools whose rates are being revised will have 30 additional days from the date they receive their notice to submit challenges of the data to guarantee agencies. The following text is the letter of explanation that the Department will be sending to the affected schools. Please be assured the Department will put procedures in place to avert such errors in the future. ********************************************************************************************* July 1996 Dear President: In May, the U.S. Department of Education (Department) mailed Fiscal Year (FY) 1994 pre-publication cohort default rate notices to all schools to allow them the opportunity to review and correct data errors prior to the calculation of FY 1994 official cohort default rates. The Department has determined that some defaulted loan records were improperly excluded from the numerator of your schools FY 1994 pre-publication cohort default rate. These loans were excluded because of a problem encountered in off-the-shelf computer operating software. The problem has now been corrected, and the Department has recalculated your schools FY 1994 pre-publication cohort default rate. Enclosed are revised FY 1994 pre-publication cohort default rate data for your review. The Department is also offering your school a second opportunity to challenge the FY 1994 data prior to the calculation of your schools official FY 1994 cohort default rate. If your school chooses to challenge the enclosed cohort default rate data, it has 30 calendar days from the receipt of the enclosed data to notify the appropriate guaranty agency(ies) of any data that your school believes to be incorrect. Your school must submit its challenge to the guaranty agency that reported the information to the Department in accordance with the procedures described at 34 CFR §668.17(h) and the FY 1994 Cohort Default Rate Data Pre-Publication Review Booklet you received in May. The Department regrets any inconvenience this problem may have caused your school. If you have any questions about the cohort default rate pre-publication review process, please contact the Departments Default Management Hotline at (202) 708-9396. Sincerely, Suzanne M. Duval Acting Chief Default Management Section Enclosure |