NAICU Washington Update

Education Department Reduces Some Student Loan Repayment Scores

January 25, 2017

Many of the loan repayment rates posted on the most recent update to the College Scorecard were over-stated, the Education Department announced January 19. 

The misinformation resulted from a data coding error used in calculating the repayment rate and was discovered during an Education Department review of the data. Corrected data was posted by January 19. 

According to Education Department officials, the problem may have affected up to 80 percent of schools, predominantly in the middle range of the loan repayment scale. Many institutions saw a major drop in their rates.  

The difference between the initial rates and the corrected rates was “modest” and doesn’t affect “any other Education Department-calculated repayment rates” other than those posted on the scorecards, according to officials. While rates changed, over 90 percent of institutions remained in the same “category.” The categories are above average, about average and below average. 

The current, average 3-year repayment rate is 46 percent. Forty-four percent of schools fall in the below average category with repayment rates of 34 percent and below; 32 percent of schools are about average with scores of 35 percent to 56 percent; and 24 percent are above average with loan repayment scores of 57 percent and above. (There are no rates for about 1500 schools, primarily for privacy reasons because the schools are small.) In general, students’ loan repayment rates improve over time and are higher at the 5- and 7-year marks after students leave college.

While the category of an institution might not have changed, the difference in rate could be significant for some schools.  NAICU found examples of member institutions whose three year repayment rates decreased 10 to 20 points, but remained in the “above average” category.

The student loan repayment rates measure the percentage of undergraduate borrowers who have not defaulted and who have repaid at least one dollar of their loan principal. The College Scorecard provide rates at 1-, 3-, 5-, and 7-years after a borrower enters repayment. The repayment rate is seen by many as a more accurate assessment of how borrowers are handling loan repayment than the cohort default rate.

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