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  **HEA: Student Aid         
  Administration**           

  **FY 2006 Program          
  Performance Report**       

  Strategic Goal 5           

  Other                      

  HEA, Title IV, Part D,     
  Section 458 and FCRA       
  Section 508(e)             

  Document                   
  Year 2006 Appropriation:   
  \$718,800                  

  CFDA                       84.007: Federal Supplemental Educational Opportunity Grants

                             84.032: Federal Family Education Loans

                             84.033: Federal Work-Study Program

                             84.037: Perkins Loan Cancellations

                             84.038: Federal Perkins Loan Program_Federal Capital Contributions

                             84.063: Federal Pell Grant Program

                             84.069: Leveraging Educational Assistance Partnership

                             84.268: Federal Direct Student Loans
  -------------------------- ------------------------------------------------------------------

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  **Program      **To administer the student aid programs, including
  Goal:**        efforts to modernize student aid delivery and management
                 systems, improve service to students and other student
                 aid program participants, reduce the cost of student aid
                 administration, and improve accountability and program
                 integrity.**

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  ***Objective 1 of 1:***   *Student Aid Administration*

  ------------------------- --------------------------------------------------------

  ----------------------- ----------------- ------------------ --------------------------
  **Measure 1.1 of 5:**                                        
  The percent reduction                                        
  of electronic Federal                                        
  Application for Federal                                      
  Student Aid (FAFSA)                                          
  unit costs, compared to                                      
  FY 2005.   (Desired                                          
  direction: increase)                                         

  **Year**                **Target**        **Actual\          **Status**
                                            (or date           
                                            expected)**        

  2006                    Set a Baseline    (January 2007)     Pending

  2008                    20                                   Pending

  2010                    25                                   Pending
  ----------------------- ----------------- ------------------ --------------------------

**Source**. U. S. Department of Education, Federal Student Aid
Activity-Based Cost Model.

**Frequency of Data Collection**. Annual

**Data Quality**. Internal controls.

**Explanation**. In FY 2004, FSA defined and validated its
Activity-Based Costing (ABC) model to measure the success of its
cost-reduction strategies. In FY 2005, FSA continued to enhance the ABC
model to yield improved cost data and in FY 2006 will develop baseline
reduction percentages. The decrease in unit costs from 2005 to 2006 will
establish the baseline for the percent reduction of unit costs. In
succeeding years, the difference between the unit cost and the original
unit cost in 2005 will be calculated. The goal for 2008 is to achieve a
unit cost reduction (compared to 2005) that is 20 percent greater than
the unit cost reduction achieved between 2005 and 2006. In other words,
the target for 2008 is to achieve a unit cost reduction that is 1.2
times as great as that achieved for 2006.

  ----------------------- ---------------- ------------------ ---------------------------
  **Measure 1.2 of 5:**                                       
  The percent reduction                                       
  of origination and                                          
  disbursement unit                                           
  costs, compared to FY                                       
  2005.   (Desired                                            
  direction: increase)                                        

  **Year**                **Target**       **Actual\          **Status**
                                           (or date           
                                           expected)**        

  2006                    Set a Baseline   (January 2007)     Pending

  2008                    10                                  Pending

  2010                    15                                  Pending
  ----------------------- ---------------- ------------------ ---------------------------

**Source**. U. S. Department of Education, Federal Student Aid
Activity-Based Cost Model.

**Frequency of Data Collection**. Annual

**Data Quality**. Internal controls.

**Explanation**. In FY 2004, FSA defined and validated its
Activity-Based Costing (ABC) model to measure the success of its
cost-reduction strategies. In FY 2005, FSA continued to enhance the ABC
model to yield improved cost data and in FY 2006 will develop baseline
reduction percentages. The FSA Activity-Based Costing Model was used to
produce unit cost data for FY2003 and FY2004. FY2005 unit cost data will
be finalized by the second quarter of FY2006. The decrease in unit costs
from 2005 to 2006 will establish the baseline for the percent reduction
of unit costs. In succeeding years, the difference between the unit cost
and the original unit cost in 2005 will be calculated. The goal for 2008
is to achieve a unit cost reduction (compared to 2005) that is 10
percent greater than the unit cost reduction achieved between 2005 and
2006. In other words, the target for 2008 is to achieve a unit cost
reduction that is 1.1 times as great as that achieved for 2006.

  ----------------------- ---------------- ------------------ ----------------------------
  **Measure 1.3 of 5:**                                       
  The percent reduction                                       
  of Direct Loan                                              
  Servicing unit costs,                                       
  compared to FY 2005.                                        
    (Desired direction:                                       
  increase)                                                   

  **Year**                **Target**       **Actual\          **Status**
                                           (or date           
                                           expected)**        

  2006                    Set a Baseline   (January 2007)     Pending

  2008                    12                                  Pending

  2010                    12                                  Pending
  ----------------------- ---------------- ------------------ ----------------------------

**Source**. U. S. Department of Education, Federal Student Aid
Activity-Based Cost Model.

**Frequency of Data Collection**. Annual

**Data Quality**. Internal controls.

**Explanation**. In FY 2004, FSA defined and validated its
Activity-Based Costing (ABC) model to measure the success of its
cost-reduction strategies. In FY 2005, FSA continued to enhance the ABC
model to yield improved cost data and in FY 2006 will develop baseline
reduction percentages. The FSA Activity-Based Costing Model was used to
produce unit cost data for FY2003 and FY2004. FY2005 unit cost data will
be finalized by the second quarter of FY2006. The decrease in unit costs
from 2005 to 2006 will establish the baseline for the percent reduction
of unit costs. In succeeding years, the difference between the unit cost
and the original unit cost in 2005 will be calculated. The goal for 2008
is to achieve a unit cost reduction (compared to 2005) that is 12
percent greater than the unit cost reduction achieved between 2005 and
2006. In other words, the target for 2008 is to achieve a unit cost
reduction that is 1.12 times as great as that achieved for 2006.

  ----------------------- ---------------- ------------------ ----------------------------
  **Measure 1.4 of 5:**                                       
  The percent reduction                                       
  of Collections unit                                         
  costs, compared to FY                                       
  2005.   (Desired                                            
  direction: increase)                                        

  **Year**                **Target**       **Actual\          **Status**
                                           (or date           
                                           expected)**        

  2006                    Set a Baseline   (January 2007)     Pending

  2008                    14                                  Pending

  2010                    14                                  Pending
  ----------------------- ---------------- ------------------ ----------------------------

**Source**. U. S. Department of Education, Federal Student Aid
Activity-Based Cost Model.

**Frequency of Data Collection**. Annual

**Data Quality**. Internal controls.

**Explanation**. In FY 2004, FSA defined and validated its
Activity-Based Costing (ABC) model to measure the success of its
cost-reduction strategies. In FY 2005, FSA continued to enhance the ABC
model to yield improved cost data and in FY 2006 will develop baseline
reduction percentages. The FSA Activity-Based Costing Model was used to
produce unit cost data for FY2003 and FY2004. FY2005 unit cost data will
be finalized by the second quarter of FY2006. The decrease in unit costs
from 2005 to 2006 will establish the baseline for the percent reduction
of unit costs. In succeeding years, the difference between the unit cost
and the original unit cost in 2005 will be calculated. The goal for 2008
is to achieve a unit cost reduction (compared to 2005) that is 14
percent greater than the unit cost reduction achieved between 2005 and
2006. In other words, the target for 2008 is to achieve a unit cost
reduction that is 1.14 times as great as that achieved for 2006.

  ----------------------- ---------------- ------------------ ---------------------------
  **Measure 1.5 of 5:**                                       
  The President\'s                                            
  Management Agenda                                           
  Scorecard rating for                                        
  the Improper Payments                                       
  Initiative.   (Desired                                      
  direction: increase)                                        

  **Year**                **Target**       **Actual\          **Status**
                                           (or date           
                                           expected)**        

  2005                                     1                  Measure not in place

  2006                    2                                   Pending

  2010                    3                                   Pending
  ----------------------- ---------------- ------------------ ---------------------------

**Source**. Executive Office of the President, Office of Management and
Budget, President\'s Management Agenda Scorecard.

**Frequency of Data Collection**. Annual

**Explanation**. In the first quarter of FY 2005, OMB introduced a new
President\'s Management Agenda (PMA) initiative, Eliminating Improper
Payments, to support agency efforts to meet the Improper Payments
Information Act of 2002 (IPIA) reporting requirements. This initiative
makes it easier for agencies to track the progress of activities aimed
at identifying, reporting on and reducing improper payments. At the same
time, it provides for more comprehensive agency accountability to OMB
through quarterly PMA scorecards. Federal Student Aid is working closely
with OMB to develop an action plan designed to (a) reduce the amount of
improper payments in our programs, (b) lower the risk of improper
payments in our programs and (c) improve the accuracy of our improper
payment estimates. In FY 2005, FSA received red and the FY 2006 target
is yellow and the FY 2010 target is green.\
\
In the table: 1 = red; 2 = yellow; 3 = green