The FY 2023 default rates are out, and the Department says to look elsewhere

The official FY 2023 cohort default rates were published on September 30, 2026, for a cohort that entered repayment while federal loan payments were paused. The national rate is 0.4 percent. The Department of Education’s own announcement says to interpret it with caution and points institutions at a different number. These are the five questions we expect your cabinet to ask, each with the source you would need to answer it.

1. What did we receive, and what does it say?

Federal Student Aid sent every eligible institution its official rate package on September 28 and released the rates publicly on September 30 (LOANS-26-07). Institutions enrolled in electronic delivery found it in email and their SAIG mailbox; the rest download it from NSLDS. Nationally, according to the national briefing (LOANS-26-08): 5,417 schools; 3,372,244 borrowers who entered repayment between October 1, 2022, and September 30, 2023; 14,296 of them in default by September 30, 2025; a rate of 0.4 percent, up from 0.0 for FY 2022. Public institutions 0.3 percent, private 0.3, proprietary 0.8. No institution loses eligibility on this cycle: both loss-of-eligibility lists on the official rates page read “No report for FY 2023”. For scale, FY 2017, the last cohort measured entirely before the pause, defaulted at 9.7 percent, and FY 2012 to FY 2016 ran between 10.1 and 11.8.

2. Why does the Department say not to read much into it?

Because the cohort entered repayment during the pause. From March 13, 2020, borrowers with Department-held loans were not required to make payments, and none of them entered default, so the FY 2023 rates “should be interpreted with caution, as the results may provide an overly favorable picture of borrower repayment outcomes” (LOANS-26-07). The draft FY 2024 rates, due early next year, will be the first release after every pandemic-era flexibility has fully expired, and the same announcement asks institutions to understand “the consequences that may occur following the release of the official FY 2024 CDRs next fall”. The loan portfolio points the same way: as of June 2026, more than 9.3 million recipients were in default, up about 400,000 in a quarter, and about 1.5 million more were in late-stage delinquency, at risk of default within six months.

3. What is the number it wants us to look at?

Your nonpayment rate: the share of your Direct Loan borrowers who entered repayment between January 2020 and May 2025 and were more than 90 days delinquent, default included, when the data was run in mid-August 2026. Federal Student Aid publishes it by institution and refreshed it on September 22 (GENERAL-26-57). It is not a cohort default rate and no sanction turns on it, but the Department says it “may be a more reliable indicator” of how current borrowers are repaying (GENERAL-26-12, February 18, 2026).

Sources: the FY 2023 national briefing, and the FSA Data Center nonpayment file (August 2026). Medians are our count of the institution-level file.

The September release counts about 2,100 institutions at or above 25 percent, up about 100 since May; the default-rate announcements still repeat February’s figure of about 1,800. Those institutions are “strongly encouraged” to update and maintain their default management and prevention plans now, ahead of the FY 2024 draft rates (LOANS-26-07).

4. Where are the sanction lines?

One official rate above 40 percent ends Direct Loan participation 30 days after notice; three consecutive rates each at or above 30 percent end Direct Loan and Pell participation for the rest of that fiscal year and the next two (34 CFR 668.206). A single rate at or above 30 percent requires a default prevention task force and a plan submitted to the Department, and a second consecutive year requires a revised plan (34 CFR 668.217; Higher Education Act section 435(a)(7)). A complete, timely appeal holds off a loss of eligibility while it is pending. Below those lines, the Department’s February announcement encourages a borrower portal on the institution’s website and routine analysis of the NSLDS Delinquent Borrower Report, and names “an institution’s chief executive officer, its governing board” among those it expects to coordinate.

5. Where does the appeal window stand?

Open. The appeal period began on October 6 (LOANS-26-07), the sixth business day after the September 28 transmission, which is when the regulation starts the clocks (34 CFR 668.205). At 0.4 percent nationally, most institutions have nothing to appeal. Those that do have 15 calendar days from October 6 to request a new data adjustment, or the loan servicing records a servicing appeal needs (668.210, 668.212), and 30 days for an uncorrected data adjustment (668.209); the data manager then has 20 days to respond. Adjustments and servicing appeals go through Federal Student Aid’s eCDR Appeals system; participation rate index challenges, erroneous data appeals and economically disadvantaged appeals go by password-secured email to [email protected], with the subject line “FY 2023 Official [insert appeal type], [insert OPEID]”. On October 13, from 1:15 to 2:15 p.m. Eastern, Federal Student Aid holds a webinar for campus leaders, “Default Prevention: Institutional Strategies for Success”, and a self-paced learning track on cohort default rates and default prevention has been open since August 21.