USA Funds Career Development Loan Program (CDLP)

This program is for institutions only. This program is not for individual students.

INDEX

Purpose of the Career Development Loan Program (CDLP):
The School Evaluation Process for Existing CDLP Schools:

Rating System
    Default Performance Rate
    Cumulative Rate
    Cohort Default Rate
    Composite Score/Category Ranking
    Cumulative Default Rate/Adjustment Factor

Category 1 Schools
Category 2 Schools
Category 3 Schools
    Composite score/Annual Guarantee
Category 4 Schools

Requirements for approval and review
Appeal Process for category 3 or category 4 schools
The CDLP Process for New Schools

for more information regarding the Career Development Loan Program click here

Purpose of the Career Development Loan Program (CDLP):

USA Funds maintains the CDLP to ensure that proprietary institutions participating in its guaranty program satisfy the standards of administrative capability as defined in federal regulation (34 CFR Part 668).  The CDLP monitors important attributes that allow the CDLP Committee to work closely with proprietary institutions in evaluating their participation, when appropriate.  Each school is evaluated by USA Funds annually to ensure that the institutions administrative capability profile meets acceptable levels to protect the integrity of the Federal Family Education Loan Program for students and schools.

A cross-functional committee oversees the administration of the program.  The committee is comprised of members of USA funds and USA Education’s management who provide diverse business perspectives in evaluating a schools overall administrative capabilities

Support for the CDLP is found in 34 CFR 682.401(b) and in private letters from the U.S. Department of Education.
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The School Evaluation Process for Existing CDLP Schools:

The CDLP evaluation process provides a measure of reliance on the schools administrative capability as defined in 34 CFR 668.16.  Each school is first evaluated on a number of different default rate measures.  This evaluation is performed with data available to USA Funds and does not require the school to initially provide any information.  The default rate measures used to perform the preliminary analysis of each school include:

C                  The Cohort Default Rate for the latest fiscal year - This rate measures the cohort of borrowers that enter into repayment in a given year and default either in the year repayment began or in the subsequent year.

C                  USA Funds’ Default Performance Rate - This rate is calculated by dividing the total dollars of bad debt purchases in a given year by the total dollar amount of loans outstanding at the end of the prior year. 

C                  USA funds Cumulative Gross Default Rate – This rate divides the total dollar of default purchases by the total dollars of matured paper from the point in time when the school became a USA Funds’ client through the current date. Back to index

Using the above default rates, a composite score for each school is determined.  The composite score is determined by assigning a point factor to each of the three default rate measures and adding the factors together.  The point system for each of the rates and the composite score are determined using the following methodology:

The composite score is then determined by aggregating the point factors in each category:

Once a school’s initial composite score has been determined, an adjustment to this score will be made to reward those schools that have successfully reduced their cumulative default rates.  The adjustment amount is based upon the school’s overall cumulative default rate as follows:

Schools for which the cumulative default rate has risen will have no adjustments made to the composite score.  After the adjustments have been made, each school’s categorization is final.

Category 1 Schools

These schools are not subject to any restrictions and are given an unlimited funding amount for new loan guarantees during the next year. The school will be sent a letter annually notifying them of their designation as a Category 1 school.  The school will not have to sign an annual participation agreement as long as it remains in Category 1.
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Category 2 Schools

These schools are given unlimited funding for guarantees, however, the school will be required to submit a default management plan for review and approval by USA Funds. Upon the school’s request and the availability of resources within USA Funds or its designee, assistance will be provided in the development and implementation of the default management plan.  Each school is required to sign a participation agreement with USA Funds annually.  The school will be sent a letter notifying them of their designation as a Category 2 school along with the agreement that must be signed and returned to USA Funds.
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Category 3 Schools

The school will receive a limited funding allocation for the next year.  This amount will be determined using the school’s average annual loan volume for the last three years of operation and will be scaled based upon the total composite score as follows:

The school will be required to submit a default management plan to USA Funds for review and approval. Upon the school’s request and the availability of resources within USA Funds or its designee, assistance will be provided in the development and implementation of the default management plan at no cost to the school. Each school is required to sign a participation agreement with USA Funds annually.  The school will be sent a letter notifying them of their designation as a Category 3 school along with the agreement that must be signed and returned to USA Funds.

In addition, the school will be instructed to fill out a questionnaire and provide additional documentation for review.  Category 3 schools may be subject to the following additional requirements:

• USA Funds may instruct the Debt Management unit within USA Education to work individually with school officials to develop specific default reduction objectives that the school is expected to accomplish within a 3-year period. The school will be required to submit an annual report to USA Funds outlining the progress made on the established objectives.
• The school may undergo a compliance review to be conducted by USA Funds to verify the school’s overall administrative capability.
• If the school fails to meet the 3-year objectives outlined in its default management plan, or if findings from any program review conducted by USA Funds determines the school lacks the necessary administrative capability, the school may be denied further participation in the CDLP.
• The school may be required to send new and/or existing employees through USA Funds Boot Camp and/or specially designed default prevention workshops.

Category 4 Schools

Schools that reach this threshold are denied further participation in USA Funds’ CDLP.  In the event of a school’s denial, the school will be given a grace period of 30 days in which to secure a new guarantor relationship.  After the 30-day period, USA Funds will cease to guarantee applications for new borrowers attending the school.  Existing borrowers, however, will continue to be funded through the remainder of their enrollment at the school.
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Appeal Process for Category 3 or Category 4 Schools

Category 3 schools that have had funding reduced, or Category 4 schools that have been denied further participation, may submit an appeal to USA Funds for special consideration. The appeal process is designed for those schools that have exceptional mitigating circumstances that have contributed to its high default rates, and are unrelated to any shortcomings in the school’s administration of its programs.  Documentation that must be submitted by the school for consideration may include, but is not limited to, the following:

• The school’s admissions policies regarding student enrollment;
• The population of students the school serves (i.e., service to an economically disadvantaged population);
• The school’s graduation and placement rates and other statistical information (e.g., a listing of placed students along with the place of employment and telephone number of employer);
• The school’s accreditation status relating to quality of education issues;
• The school’s financial responsibility profile as outlined in 34 CFR Part 668.

After reviewing the appeal documentation, USA Funds may increase a Category 3 school’s approved funding amount.  USA Funds may also allow continued participation for Category 4 schools at a limited or full funding basis.  Schools will be notified in writing of the outcome of any filed appeal.
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The CDLP Process for New Schools:

Schools that have been in existence for a period of time long enough to have available cohort default rate information will be automatically admitted into the CDLP, provided that the cohort default rate for the latest fiscal year is less than or equal to 10%.

Any school that has a cohort default rate greater than 10%, or any school that is new to the Title IV loan programs will be required to fill out a questionnaire and provide additional documentation for review and consideration.  The school information will be evaluated by the CDLP committee on a case-by-case basis to determine the school’s acceptance into the CDLP.

A school that is denied access to the CDLP will be notified in writing of the denial.  Approved schools will be notified in writing and will be provided a copy of this document to provide the institution with an understanding of USA Funds CDLP evaluation process.

A new school will be required to sign a participation agreement, but will be given unlimited funding in the first year.  After the first year of participation, the school will be subject to the annual evaluation process for existing schools.

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