ED releases final FY 23 Cohort Default Rates
The Education Department on Wednesday released the final fiscal year 2023 (FY 2023) Cohort Default Rates (CDR). As a reminder, the CDR refers to the share of federal student loan borrowers who enter repayment and default within three years.
As covered in the Community College Daily, CDRs are the primary accountability mechanism for institutions participating in the federal student loan program. If an institution’s CDR is greater than 40% in a single year, the institution may lose eligibility to participate in the Direct Loan Program. If an institution’s CDR is 30% or higher for three consecutive years, it may lose eligibility to participate in both the Direct Loan and Federal Pell Grant programs. Institutions with CDRs of 30% or higher must establish a default prevention task force, and institutions with CDRs of 30% or higher for a second consecutive year must submit a revised default prevention plan and may be placed on provisional certification.
The FY 2023 CDRs are the first CDRs that could have binding consequences since FY 2017, when the national average CDR was 9.7%. Since then, one, two, or all three years of a CDR have been affected by the Covid student loan repayment pause, with CDRs for FY 2020, FY 2021 and FY 2022 at 0%.
For the FY 2023 cohort, the national CDR for FY 2023 is only 0.4% and only 0.6% for community colleges. While this number seems low, it is important to remember that this three-year cohort includes two years during the repayment pause. ED cautions that the FY 2023 CDRs should be interpreted with caution because they may provide an overly favorable picture of borrower repayment outcomes. The first CDR without any repayment pause years will be FY 2025, which will be released in 2028.
It is also important to remember that community colleges have historically had higher CDRs compared with other nonprofit sectors of higher education, with the majority of two-year public institutions having a FY 2017 CDR between 9% and 20%. The repayment landscape, especially for community college borrowers, has grown even more complicated and confusing for borrowers to navigate since then. Borrowers have faced significant challenges in successfully navigating repayment, including limited experience with repayment, difficulty maintaining contact with or locating their loan servicer, and frequent changes in federal student loan policies. These challenges can make it more difficult for borrowers to successfully manage their loans and avoid default.
Colleges are strongly encouraged to review their newly released FY 2023 CDRs, which, while not telling the full story, will give an indication of repayment trends for their student borrowers. Colleges are also encouraged to compare FY 2023 CDRs with past and future nonpayment rate data to assess whether default management interventions are moving the needle and where additional support may be needed.
ED, Treasury launch new support tool for borrowers in default
The departments of Education and the Treasury on Wednesday launched a new online portal, the Defaulted Loans Support Center, to help borrowers with defaulted federal student loans understand their options, rehabilitate or consolidate their loans, and return to repayment. According to ED, the new portal is intended to streamline the process by replacing outdated websites and paper- and fax-based processes with a centralized online system. Borrowers can upload documents, review estimated payments, electronically sign their agreements, track application progress, make payments, and review repayment and discharge options through StudentAid.gov.
According to ED and Treasury, beta testing of the new portal garnered positive feedback from borrowers, with 89% reporting that the application was easy to complete and 86% reporting that they understood what to do next.
ED releases new FVT/GE submission data
ED updated an Electronic Announcement first released in August with newer information on Financial Value Transparency/Gainful Employment (FVT/GE) data reported by institutions for the 2024 and 2025 reporting cycles. As of the most recent update, approximately 1,550 institutions have not yet reported all required FVT/GE data.
Colleges are responsible for submitting complete FVT/GE data for the 2024 and 2025 reporting cycles by Friday, January 15, 2027. The EAs also remind institutions that the deadline to submit FVT/GE data for the 2026 cycle is Thursday, October 1, 2026. The guidance details the process for submitting data and how colleges may elect to early implement the new Student Tuition and Transparency System (STATS) and Earnings Accountability reporting requirements instead.
AACC remains very interested in how community colleges are navigating the transition from FVT/GE to STATS reporting. Please respond to this email or reach out to the Office of Public Purpose and National Advocacy (formerly the government relations office) to share your experience.
AACC joins higher education groups in urging Congress to reverse rescissions package
The American Association of Community Colleges (AACC) and five other higher education associations this week sent a letter urging congressional leaders to reverse the administration’s $810 million fiscal year (FY) 2026 rescissions package and take steps to prevent similar actions in the future.
The letter specifically highlights the proposed rescission of $70 million for the International Education and Foreign Language Studies (IEFLS) Domestic Programs, which provide grants to colleges and universities for international studies, foreign language education, and related programs. The groups noted that the Department of Education had already renamed the programs, established an interagency agreement with the Department of State, and conducted a grant competition in June before the rescission request was submitted.
The letter expresses broader concern about the administration’s efforts to terminate, restructure, transfer, or withhold funding that Congress has already authorized and appropriated. It also raises concerns that submitting the rescission request just days before the end of the fiscal year effectively limited Congress’s ability to consider the request through the normal process.
The letter calls on Congress to reverse the proposed rescissions and reaffirm Congress’s role in determining federal spending through the appropriations process.
Sonderling confirmed as labor secretary
The Senate on Wednesday voted to confirm Keith Sonderling as the 31st Secretary of Labor. The 47-41 vote went along party lines. Sonderling had served as acting secretary since April and previously served as the Department of Labor’s deputy secretary beginning in March 2025.
As covered in the Community College Daily, Sonderling has visited many community colleges in his official capacities, touting the new Workforce Pell program and the administration’s commitment to expanding apprenticeships.