SCHOOL CLIENT LOGIN

STUDENT VERIFICATION LOGIN

DID WE CONTACT YOU?

Navigation

Based on the CARES Act and subsequent Executive Orders, student loan repayment is scheduled to resume on February 1, 2022. Many questions loom regarding Cohort Default Rates (CDR) and the future impact of all currently deferred borrowers resuming repayment at approximately the same time.

CARES Act Impact on CDRs and Open Cohort Years

2019

• Denominator: October 1, 2018 – September 30, 2019
• Impact to School’s CDR: October 1, 2018 – September 30, 2021
• 2019 CDR was established in March 2020 when the CARES Act went into effect

2020

• Denominator: October 1, 2019 – September 30, 2020
• Impact to school’s CDR: October 1, 2019 – September 30, 2022
• 2020 CDR was established in March 2020 when the CARES Act went into effect as loans which enter repayment on February 1, 2022 cannot default prior to September 30, 2022; therefore the 2020 CDR will be zero.

2021

• Denominator: October 1, 2020 – September 30, 2021
• Impact to school’s CDR: October 1, 2020 – September 30, 2023
• As of February 1, 2022, 55% of the cohort year remains
• Inceptia will accept delinquent borrowers through December 1, 2022

2022

• Denominator: October 1, 2021 – September 30, 2022
• Impact to school’s CDR: October 1, 2021 – September 30, 2024
• As of February 1, 2022, over 88% of the cohort year remains
• Inceptia will accept delinquent borrowers through December 1, 2023

A large number of borrowers will all reenter repayment in February 2022. This will likely result in higher delinquency placements and higher delinquency cure rates during April, May and June. After that time, placements and cures are likely to return to normal or slightly lower levels. It is expected to be a 12-month period of abnormal placement and cure rates.

Here’s why:

• Due to all borrowers being brought current effective March 13, 2020, all borrowers will reenter repayment in February 2022. This also means that a larger number of borrowers will also become delinquent at the same time.
• For Repayment Counseling Outreach, Inceptia loads borrowers at 60 days delinquent. The first batch of delinquent borrowers will occur in April, 2022.
  • There is no trend data on what to expect when repayment resumes. However, based on previous experience, when large natural disasters (hurricanes most recently) occur, borrowers have a difficult time getting back to making payments. As a result, there is typically a higher than normal delinquency rates after natural disasters.
  • Following this premise, Inceptia anticipates a larger than average number of borrowers will be loaded during April, May and June.
• Based on larger numbers of delinquent borrowers, the volume of cures is likely to also be higher than normal for April, May and June.
  • There are borrowers that were in a suspension status (deferment or forbearance) before March 30, 2020, but have since come out of that status. These borrowers may need reminding to complete paperwork to resume their previous status.
  • There are borrowers who made payments before the COVID-19 crisis and were in good standing but are now unable to make payments due to job loss, etc. These borrowers may need to be informed of payment plan options.
• After the initial surge of delinquent borrowers, delinquency placements and cures will likely return to normal thresholds; however, a portion of the initial batches will remain difficult to cure.
  • Newly delinquent borrowers will mainly be those borrowers currently in their grace period. These borrowers will roll into repayment in smaller cohorts and at different times.
  • Cure rates will also decline as delinquent borrowers from the earlier months become more challenging to cure. Previously delinquent borrowers prior to the CARES Act, may have been disengaged and have already gone nearly two years without making payments.

Visit Inceptia’s Cohort Year Impact Tool to see how the timeline impacts the cohort year. Contact Tami Gilbeaux and visit her dedicated solutions and resources page.