A cohort default rate (CDR) is an accountability metric for US colleges that are eligible for federal Pell Grants and student loans.
[3] The cohort default rate was initiated in the late 1980s as a way of drawing attention to institutions that were thought to be preying on low-income students who might have trouble re-paying their loans.
[4] There had been a burst of trade schools in cities with large minority populations and low-income residents who tried to build enrollment by encouraging academically under-qualified students to apply for loans that they would be unlikely to be able to repay, especially if they received a substandard education.
Some schools hired third-party companies to encourage borrowers to put their loans into forbearance (which pause required payments) during the first three years of repayment.
That means it takes roughly a full year for a loan to be considered in default, and that's not including the 6-month grace period before repayment begins.
[12][13] Then, starting in 2005, Congress began advising colleges to compare the ED's cohort default rates for their schools with their own records in order to ensure consistency.