Student Loan Metrics 101: Looking Behind the Numbers
For 45 years, Walden University has played an important role in higher education and as an advocate for and innovator of outcomes-driven measures for success. We take our financial aid responsibilities very seriously and have worked hard over many years to be good stewards of federal financial aid.
Cohort default rates – The most established, recognized, and understood government-created student loan metric is the cohort default rate (CDR).
- Walden’s recently released three-year cohort default rate of 6.8% is well below the national average, including all nonprofit and for-profit institutions.
- Walden’s default rate is on par with such major state universities as University of Alabama, Arizona State University, and Oklahoma State University.
- Having a low CDR demonstrates that a significant majority of our student-borrowers are able to manage and repay their loans.
New loan repayment measurements – The new measures used recently by the U.S. Department of Education (DOE) and The Brookings Institution are untested and not yet understood. These points present a few of Walden’s concerns about the methodology:
Inconsistent treatment of interest payments:
- The DOE’s College Scorecard considers borrowers to be in repayment during the first three years only if they are able to pay down on the principal of their loan during that time period.
- However, under the DOE’s own current policy, when borrowers begin paying off their loans, the DOE treats those initial installments solely as payments of interest on the loan and doesn’t recognize payments of principal until after all interest is already paid.
- This means even when a borrower is considered to be “in good standing” because a minimum monthly payment of interest is made, that borrower is treated negatively in an institution’s repayment rate.
Unfair treatment of borrowers who opt for an income-driven repayment option:
For the purposes of analyzing loan repayment, both Brookings and the DOE are only treating favorably borrowers who opt to repay through the DOE’s 10-year standard plan.
- This seems inconsistent with the DOE’s policies and initiatives to enhance and encourage income-driven repayment plans as an alternative option for borrowers who are employed in public service fields like education, nursing, and counseling. These borrowers are either excluded from the rate or negatively treated in the rate.
- Walden is proud to have many students and graduates dedicating their lives and careers to professions that effect positive social change. As such, Walden has a significant number of graduates who are opting into income-driven repayment plans that allow them to pay as they earn.
New data only includes undergraduates:
- The DOE’s College Scorecard only covers undergraduate borrowing history. This background is important when assessing Walden’s performance.
- While Walden offers undergraduate degrees, 85% of our current students are pursuing a graduate degree and yet the DOE’s loan repayment rate and other metrics associated with the Scorecard only reflect the much smaller portion of borrowers who are enrolled in our undergraduate programs.
Walden fully supports new efforts to assess student debt and institutional accountability; however, these new measurements require further exploration and explanation. We welcome the opportunity to work with policymakers to ensure new metrics take into account the complex issues and nuances to measure the financial responsibility of an institution and to accurately reflect the ability of students to manage their federal student debt.