To be exempt from the 30-day delay of first disbursement for first-time loan borrowers, the institution's Cohort Default Rate (CDR) must be below what threshold for the three most recent fiscal years?

To be exempt from the 30-day delay of first disbursement for first-time loan borrowers, the institution's Cohort Default Rate (CDR) must be below what threshold for the three most recent fiscal years?

• A. Less than 15 percent for each of the three most recent fiscal years
• B. Less than 25 percent for each of the three most recent fiscal years
• C. Less than 30 percent for each of the three most recent fiscal years
• D. Less than 10 percent for each of the three most recent fiscal years

Answer: (A)

Being exempt from the 30-day delay hinges on showing a very low default rate over a span of three consecutive fiscal years. The Cohort Default Rate measures the share of a school’s borrowers who default on their loans within a three-year cohort after the loans originate. To qualify for the exemption, the rate must be below 15 percent for each of the three most recently completed fiscal years. This demonstrates a consistently low default risk across three years, which is why the 15% threshold is used. If any of those years reached 15 percent or more, the exemption wouldn’t apply. The other thresholds don’t meet this three-year, consistently low requirement.

Being exempt from the 30-day delay hinges on showing a very low default rate over a span of three consecutive fiscal years. The Cohort Default Rate measures the share of a school’s borrowers who default on their loans within a three-year cohort after the loans originate. To qualify for the exemption, the rate must be below 15 percent for each of the three most recently completed fiscal years. This demonstrates a consistently low default risk across three years, which is why the 15% threshold is used. If any of those years reached 15 percent or more, the exemption wouldn’t apply. The other thresholds don’t meet this three-year, consistently low requirement.