Students are not the only ones who enjoyed a reprieve during the nearly five-year pause on federal student loan payments. Colleges also got a break from a rule that bars them from the federal student aid system if their former students’ loan default rates are too high. Now that student loan payments have resumed, however, too many borrowers aren’t paying their loans. If this nonpayment translates to higher loan defaults, over 1,000 colleges are at risk of losing federal funding.

The Cohort Default Rate (CDR) measures the percentage of borrowers who take out loans to attend a given institution and default on those debts within approximately three years of entering repayment. (Default means going 360 days without making a payment.) If a college’s CDR exceeds 30 percent for three consecutive years, or 40 percent for one year, it could lose access to federal student aid including Pell Grants and student loans.

During the pandemic-era payment pause, the official CDR was zero—students can’t default if they don’t owe payments. Even before the pause, only a handful of schools failed the CDR every year, making the rule somewhat of an afterthought. But now, loan payments are due again, and nonpayment rates have skyrocketed thanks to the Biden administration’s mismanagement of the transition back into repayment.

Though the Education Department has not yet published official post-pause CDR statistics, interim data show plummeting repayment rates among borrowers at hundreds of colleges. If these trends continue, over 1,000 colleges are at risk of losing access to federal aid.

The Department provided me with data on the proportion of student borrowers, broken down by institution, who entered repayment after January 2020 and were in default or at least 90 days delinquent (i.e., well on their way to default) as of May 2025. This data was also communicated to institutions of higher education. While these “nonpayment rates” are not exactly the same thing as the Cohort Default Rate, they are a reasonable proxy.

The data show that 1,113 colleges had nonpayment rates above 30 percent—meaning that they could soon exceed the threshold for losing access to student aid. Another 656 colleges had nonpayment rates close to the threshold (between 25 percent and 29 percent), meaning that they’re not out of the danger zone.

An institution could lose access to aid if its CDR is north of 40 percent for a single year. Nearly 400 institutions in the Department’s data have a nonpayment rate above 40 percent as of May 2025. For instance, Colorado Technical University saw 69,000 former students enter repayment after January 2020, and 42 percent of those students were in default or at least 90 days delinquent as of May 2025. If that rate holds, the school could lose access to federal aid sometime after the first post-pause CDRs are published (most likely next year).

Over 700 institutions had a nonpayment rate between 30 percent and 39 percent. If those nonpayment rates translate into comparable CDRs, and institutions maintain those high CDRs for three consecutive years, they could also lose access to federal funding. Institutions with nonpayment rates north of 30 percent include prominent for-profit college chains like Strayer University and major community college systems like Houston Community College. It would take longer for these institutions to lose access to aid, but it could eventually happen if these schools don’t bring their nonpayment rates under control.

To be sure, not every institution with a failing CDR will lose access to federal funding entirely. Colleges may appeal their CDR determination and plead exceptional circumstances; such appeals succeed more often than not. But a failing CDR is still an embarrassment for the institution, and schools may not wish to bet their continued access to federal funding on an uncertain appeals process.

In May, the Education Department sent a “Dear Colleague” letter asking colleges to remind recent alumni of their student loan obligations and ensure they are aware of resources to help them return to successful repayment. Schools have more than a moral responsibility here; the CDR means they have a direct financial stake in helping their students avoid defaulting on their debts. The new data on nonpayment rates should therefore be a wake-up call.