How does loan consolidation affect a school’s cohort default rate (CDR)?
If Stafford loans are repaid as a result of a consolidation, the loans would still be counted in the relevant CDR based on the date they entered repayment (as if they weren’t consolidated). Thus, if a student defaults on a consolidation loan during the cohort period in which the underlying loans entered repayment, the loans are included in the CDR for the school where the loan was received. For example: A student entered repayment on their Stafford loans in Fiscal Year (FY) 2005, and they were repaid by a consolidation loan approved in FY 2006. If the student defaults on the consolidation loan by the end of FY 2007, the underlying Stafford loans would be included in the 2005 CDR.
