Federal Student Aid

Strategic Plan FY 2011–15

U.S. Department of Education | Federal Student Aid

www.FederalStudentAid.ed.gov

FEDERAL STUDENT AID

Strategic Plan

Fiscal Years 2011–15

U.S. Department of Education

Federal Student Aid | 2011
Counselors and Mentors Handbook

ii | Federal Student Aid

U.S. Department of Education

Arne Duncan

Secretary

Federal Student Aid

William J. Taggart

Chief Operating Officer

First published September 2010

Revised December 2010

This publication is in the public domain. Authorization to reproduce it in whole or in part is granted. 

While permission to reprint is not necessary, the citation should be: U.S. Department of Education, 

Federal Student Aid, Federal Student Aid: Strategic Plan, Fiscal Years 2011–15, Washington, D.C., 2010.

This publication is available at the Department’s website at http://federalstudentaid.ed.gov/about/performance.html

On request, this publication is available in alternate formats, such as Braille, large print, or computer diskette. 

For more information, contact the Department’s Alternate Format Center at 202-260-0852 or 202-260-0818.
iii

Strategic Plan FY 2011–15 | iii

Message From the Chief Operating Officer

President Obama has set an ambitious goal for the United States to lead the world in college completion by 2020. 

This will require America to produce over 8 million more college graduates over the next 10 years by improving 

completion rates and creating access for millions of Americans. Many of these new graduates are likely to have 

completed high school long ago and have very different profiles and needs than the “traditional” college student.

However, the average cost of postsecondary education has been rising far faster than inflation, increasing the 

financial pressures on students and their families. Meanwhile, private and state-based funding have recently 

decreased, due to a challenging economy and the fact that many Federal Family Education Loan Program (FFELP) 

lenders are leaving the student lending market.

The passage of the Health Care and Education Reconciliation Act (HCERA) of 2010 also presents new opportunities and 

challenges to Federal Student Aid (FSA): As FSA’s role in providing direct loans to students expands, we will have to 

take on additional responsibilities to ensure that the system for postsecondary education financing functions efficiently 

and effectively, focusing primarily on supporting students and their families. Various stakeholders within and outside 

government will be looking to FSA to ensure the health of the system of postsecondary education funding. Meanwhile 

there is pressure for the federal government to reduce its costs across the board, and FSA must do its part to increase the 

efficiency and effectiveness of government spending.

In light of this changing environment, we at FSA have spent the last several months fundamentally rethinking our 

strategy for serving the American people. We took a hard look at the changing world around us and at ourselves. 

This document pulls together that thinking and lays out an ambitious long-term strategy for FSA to deliver on its 

mission of helping Americans to pay for higher education.

Our plan is composed of five strategic goals. We will (A) provide superior service and information to students and 

borrowers, (B) work to ensure that all participants in the system of postsecondary education funding serve the 

interests of students, from policy to delivery, (C) develop efficient processes and effective capabilities that are among 

the best in the public and private sectors, (D) ensure program integrity and safeguard taxpayers’ interests, and 

(E) strengthen FSA’s performance culture and become one of the best places to work in the federal government.

These goals represent a substantial change for FSA. We will place more of an emphasis on proactively serving 

students and their families, take a broader role in cultivating the system of institutions that are involved in funding 

postsecondary education, and push harder to do more with less. We will strive for operational excellence that stands 

up to the justifiable scrutiny that FSA will receive, given its increased importance in the system of postsecondary 

education funding. Across the board, we have set a higher bar for ourselves because we believe that we can and must 

perform at a higher level.

We at FSA are committed to this strategy and all that it will entail. By charting this new course, we believe that we 

will set the stage for future generations of Americans to pursue their dreams and prepare themselves for long-term 

prosperity, for the betterment of our great nation.

William J. Taggart

Chief Operating Officer
Counselors and Mentors Handbook

iv | Federal Student Aid
v

Strategic Plan FY 2011–15 | v

Contents

Message From the Chief Operating Officer............................................................................................................... iii

Exhibits........................................................................................................................................................................ vi

1. Overview of Federal Student Aid.............................................................................................................................1

2. Key Trends Shaping Federal Student Aid’s Strategy ...............................................................................................5

3. New Mission, Vision and Core Values................................................................................................................... 11

4. FSA's Strategic Goals and Objectives.................................................................................................................... 12

 Strategic Goal A: Provide superior service and information to students and borrowers............................. 14

 Strategic Goal B: Work to ensure that all participants in the system of postsecondary education

funding serve the interests of students, from policy to delivery ...................................................................... 16

Strategic Goal C: Develop efficient processes and effective capabilities that are among the best 

in the public and private sectors......................................................................................................................... 17

 Strategic Goal D: Ensure program integrity and safeguard taxpayers’ interests........................................... 20

 Strategic Goal E: Develop FSA’s performance culture and become one of the best places 

to work in the federal government..................................................................................................................... 21

5. Performance Goals................................................................................................................................................. 23

6. External Risk Factors............................................................................................................................................. 27

7. Program Evaluations.............................................................................................................................................. 28

8. Moving Forward..................................................................................................................................................... 29

9. Notes....................................................................................................................................................................... 30
Counselors and Mentors Handbook

vi | Federal Student Aid

Exhibits

Exhibit 1: Federal student aid disbursed to students: FY 2005–09..........................................................................1

Exhibit 2: Summary of federal aid disbursed to students by program: FY 2009 ....................................................2

Exhibit 3: Estimated total spending for postsecondary education expenses, 

by type of funding source: FY 2005–09 ....................................................................................................3

Exhibit 4: Role of FSA and other participants in federal student aid system..........................................................4

Exhibit 5: Historical and estimated average costs of attendance, by institution type: Various years.....................6

Exhibit 6: Changes in nonfederal sources of funding: 2007–09...............................................................................7

Exhibit 7: Student enrollment, by age: 2001 and 2007; and total civilian labor force age 25 and older, 

by level of educational attainment: 2008 ..................................................................................................8

Exhibit 8: Enrollment and cohort default rate, by type of institution: Various years..............................................9

Exhibit 9: Number of FSA borrowers: FY 2005–09, and estimated for 2010–11 ................................................. 10

Exhibit 10: Changes in FSA workloads and resources: FY 2005–09, and estimated for 2010–11 ...................... 10

Exhibit 11: FSA’s new mission, vision, and core values: FY 2010........................................................................... 11

Exhibit 12: FSA’s strategic goals and objectives: FY 2011–15................................................................................ 13

Exhibit 13: FSA’s performance goals: FY 2011–15 ................................................................................................. 24

Exhibit 14: Year-by-year performance goals: FY 2011–15..................................................................................... 25
1

Strategic Plan FY 2011–15 | 1

F

ederal Student Aid (FSA), a principal office of 

the United States Department of Education (the 

Department), seeks to ensure that all eligible 

individuals can benefit from federal financial assistance 

for education beyond high school. FSA is responsible for 

implementing and overseeing federal student financial 

assistance programs, authorized under Title IV of the 

Higher Education Act (HEA) of 1965, as amended. 

The grant, work-study, and loan program money made 

available to students through FSA has grown on average 

at 16 percent per year over the last five years (Exhibit 1). 

In fiscal year (FY) 2009, close to 13 million students and 

their families were supported through approximately 30 

million aid awards, with the total amount of over $129 

billion in Title IV programs (Exhibit 2).1 FSA maintained 

a $622 billion loan portfolio at the end of FY 2009.2

1. Overview of 

Federal Student Aid

0

30

60

90

120

150

FY2005 FY2006 FY2007 FY2008 FY2009

$72 $77 $82

$98

$130

$15 $16 $17

$21

$33

$57 $61 $65

$77 $98

$ Billions (current $)

1 6 % a v e r a g e a n n u a l g r o w t h r a t e

9.7 10.4 10.0 11.6 12.8

Federal Grants*

Federal Loans

Students aided

(millions)

EXHIBIT 1: Federal student aid disbursed to students: FY 2005–09

* Includes federal work-study program of approximately $1 billion annually

SOURCE: Department of Education, Budget Summaries 
Counselors and Mentors Handbook

2 | Federal Student Aid

Historically, federal aid has comprised almost half of all 

annual sources of funding for students’ postsecondary 

education expenses. For example, in FY 2009, an estimated 

50 percent of the total aid and personal funds used to 

finance postsecondary education expenses came from 

federal grants, the work-study program, and loans 

(Exhibit 3). Every year, a considerable number of students, 

as well as institutions, rely on federal funding as the largest 

component of their budgets.

In order to execute Title IV programs, FSA is responsible 

for a range of functions across the student aid lifecycle, 

including educating students and families about the process 

for obtaining aid, processing millions of student financial aid 

applications, disbursing billions of dollars in aid, insuring 

billions of dollars in existing loans, servicing tens of millions 

of loans, and partnering with schools, financial institutions, 

and guaranty agencies to prevent program fraud, waste, 

and abuse. The community of stakeholders in the student 

aid delivery system includes postsecondary institutions, 

Federal Family Education Loan ProgramSM (FFELPSM) lenders, 

guaranty agencies, and contracted servicers and collection 

agencies, as well as other types of contractors, federal 

entities (e.g., Congress, the president and White House, 

Office of Management and Budget, among others), and the 

Department of Education itself 3 (Exhibit 4).

FSA’s role is primarily to manage, coordinate, and monitor 

the activity of the large number of federal, state, nonprofit, 

and private entities involved in federal student aid 

delivery—within a statutory framework set by Congress and 

a regulatory framework set by the Department. For the Direct 

Loan ProgramSM and Pell Grants, the core functions related to 

application processing and disbursement of program funds 

are fulfilled by postsecondary institutions and contracted 

vendors retained by FSA. As customers enter repayment, 

contracted companies engage in servicing the loan portfolio 

and collecting funds from borrowers in default. 

EXHIBIT 2: Summary of federal aid disbursed to students, by program: FY 2009

Program

Aid available to students 

$ Millions (current $)

Federal Pell Grant Program (Pell Grant) $28,213

Supplemental Educational Opportunity Grants $959

Academic Competitiveness Grants $503

National Science and Mathematics Access to Retain Talent (SMART) Grants $361

Leveraging Educational Assistance Partnerships (LEAP) Program $162

Federal Work-Study Program $1,417

Subtotal grants $31,615

Federal Family Education Loan (FFELSM) Program $66,778

Federal Direct Loan Program $29,738

Federal Perkins Loan Program $1,106

The Teacher Education Assistance for College and Higher Education (TEACH) Grants $72

Subtotal loans $97,695

Total $129,310

GRANTS LOANS

NOTE: Details may not sum to total because of rounding

SOURCE: Department of Education, Budget Summary FY 2011
3

Strategic Plan FY 2011–15 | 3

In the case of Federal Family Education Loans, FFELP 

lenders originated the loans, which were insured by guaranty 

agencies. FFELP lenders and guaranty agencies were also 

responsible for servicing and collections. The passage of the 

Health Care and Education Reconciliation Act (HCERA) in 

March 2010 ended the origination of new FFELP loans and 

FFELP lenders will no longer issue federal loans. However, 

FFELP lenders will continue to issue private student loans, 

and FFELP lenders and guaranty agencies will continue to 

service and collect outstanding FFELP loans.

Designated by Congress in 1998 as a performancebased organization (PBO), FSA focuses on executing the 

responsibilities effectively and efficiently, on achieving 

tangible results, and on continuously improving its 

performance. Today, FSA has an annual administrative 

budget of approximately $1 billion (FY 2010) and has about 

1,000 full-time employees based out of Washington, D.C. 

and 10 regional offices located throughout the country.4

Its staff is augmented by about 10,000 contractors, who 

provide outsourced business operations such as customer 

service, loan servicing, and collections.5 In fact, 85 percent 

of FSA's administrative budget is dedicated to external 

services. This model of public-private partnership provides 

stability to FSA’s service to the public and allows it to 

procure the best-in-class services at the best cost.

EXHIBIT 3: Estimated total spending for postsecondary education expenses, by type of funding source: FY 2005–09

0 FY2005 FY2006 FY2007 FY2008 FY2009

$190 $205 $221 $241 $260

27% 28% 29% 29% 24%

38% 38% 38% 41% 50%

$ Billions (current $)

Estimated 

personal funding*

Nonfederal aid 

and loans

Education 

tax benets

Federal grants, 

work-study program, 

and loans**

32% 32% 30% 27% 23%

3% 3% 3% 3%

3%

~50%

of funding comes 

from federal 

grants and loans

* Calculated by estimated total spending minus nonfederal aid and loans, education tax benefits, and federal grants and loans.

** Including other federal loans and grants that are administered by other federal agencies, such as the Department of Defense.

NOTE: Estimated totals based on number of enrolled students and average tuition, fees, room, and board for public 4-year, 

public 2-year, and private institutions for each year. The sum of percentages may not total 100 percent because of rounding.

SOURCE: Department of Education, National Center for Education Statistics, ‘Digest of Educational Statistics,’ http://nces.ed.gov/programs/projections/

projections2018/tables.asp; College Board, 'Trends in College Pricing 2008' (superseded by 2010 edition available at http://trends.collegeboard.org/

college_pricing); College Board, 'Trends in Student Aid 2008' (superseded by 2010 edition available at http://trends.collegeboard.org/student_aid); 

Department of Education, Budget Summaries FY 2007–2011 available through http://www2.ed.gov/about/overview/budget; and FSA program files
Counselors and Mentors Handbook

4 | Federal Student Aid

EXHIBIT 4: Role of FSA and other participants in federal student aid system

CONGRESS

T H E P R E S I D E N T, D E P T 

O F E D, A N D OT H E R S I N 

EXECUTIVE BRANCH PRIVATE LENDERS

Sets statutory standards on student aid 

funding and appropriate budgets.

Set regulatory standards and 

policy on student aid funding.

Service outstanding FFELP 

loans to students.

FSA supports it by

• Providing data and information 

for decision making, and 

• Updating on operational performance.

FSA supports them by

• Providing data and information 

for decision making, and

• Providing recommendations 

for implementation.

FSA supports them by

• Monitoring compliance, 

• Assisting them in meeting 

requirements,

• Providing loan puts and 

buybacks, and 

• Educating them regarding policy.

P O S T S E C O N D A R Y 

INSTITUTIONS STUDENTS GUARANTY AGENCIES

Determine students’ aid packages 

and disburse funds.

Receive and repay student aid to 

finance postsecondary education.

Insure FFELP loans and service part 

of defaulted loan portfolio.

FSA supports them by

• Monitoring compliance, 

• Educating them regarding 

policy, and

• Assisting them in 

meeting requirements.

FSA supports them by

• Increasing awareness of 

federal student aid, and 

• Addressing their complaints.

FSA supports them by

• Monitoring compliance, 

• Assisting them in meeting 

requirements, and 

• Educating them regarding policy.

O T H E R F S A 

CONTRACTORS

F S A - C O N T R A C T E D 

SERVICERS

F S A - C O N T R A C T E D 

P R I V A T E C O L L E C T I O N 

AGENCIES

Provide systems and services 

to support FSA’s core operations 

(e.g., applications, disbursement).

Service Direct Loan portfolio 

and portions of FFELP portfolio.

Recover funds from 

defaulted loans.

FSA supports them by

• Acquiring the service,

• Setting performance 

standards, and 

• Overseeing operations.

FSA supports them by

• Acquiring the service,

• Setting performance 

standards, and 

• Overseeing operations.

FSA supports them by

• Acquiring the service,

• Setting performance 

standards, and 

• Overseeing operations.
5

Strategic Plan FY 2011–15 | 5

As the largest single source of funding for 

postsecondary education in the United States, 

FSA has historically played a pivotal role in 

supporting higher education. This role will likely become 

even more important in light of current trends and 

President Obama’s higher education agenda. In his Joint 

Address to Congress on Feb. 24, 2009, President Obama 

set the goal that, by 2020, America will have the highest 

proportion of college graduates in the world. For the 

U.S. to achieve this goal, FSA must expand its contribution. 

Five trends will likely shape FSA’s role over the next five 

years: (1) the rising cost of attendance for postsecondary 

education; (2) the decline in availability of nonfederal 

sources of postsecondary education funding; (3) the 

expected increase in enrollment, particularly of 

nontraditional students; (4) the growth in enrollment 

in proprietary schools, distance-learning programs, 

and 2-year institutions; and (5) the expanded role of 

the federal government in providing federal student aid, 

as a shift towards Direct LendingSM takes place.

Trend 1: 

The rising cost of attendance 

for postsecondary education

From 2000 to 2009, the average costs of attending public 

2-year, public 4-year, and private 4-year schools have grown 

at the annual rate of 5.3, 6.5, and 5.6 percent, respectively. 

Proprietary institutions’ tuition has risen at 7.6 percent a 

year since 2006 (Exhibit 5). This is much faster than the 

rate of inflation during the same period at, on average, 

2.5 percent annually.6 While the government is working 

hard with institutions to contain the increase in cost of 

attendance, if this increase continues, the cost of attendance 

in 2015 will be as much as two times more than what it was 

in 2000. This is a likely scenario for the next five years, as 

many institutions are faced with declining endowments, 

fewer and smaller charitable donations, and reduced 

state funding. While the law mandates maximum grant 

and loan amounts per student, the increased cost of higher 

education puts additional pressure on FSA to ensure 

that eligible students are aware of federal student aid 

and available funds, and are able to finance their education 

at the institutions they desire to attend.

2. Key Trends 

Shaping Federal 

Student Aid’s Strategy
Counselors and Mentors Handbook

6 | Federal Student Aid

Trend 2: 

The decline in availability 

of nonfederal sources of 

postsecondary education funding

Over the next five years, the need for federal student aid 

is likely to increase, driven not only by rising costs of 

attendance but also by a decrease in other sources of funding, 

such as expected contributions by students and their families. 

Since 2007, the availability of nonfederal sources of funding, 

such as family contribution, state and institutional funding, 

and private student loan originations, has declined driven by 

the economic recession (Exhibit 6). Reductions in household 

income, assets, and access to credit have decreased the ability of 

students and their families to pay for college without aid. This 

is not likely to reverse anytime soon. For example, the Federal 

Reserve Board estimated that household income is expected 

to grow much slower for the next several years (1–3 percent 

range per year) than it had previously, before the recession 

(above 4 percent).7 The availability of nonfederal aid and loans 

has also decreased and will likely remain reduced, as states and 

institutions face significant budget constraints and the private 

lending market shrinks in an attempt to reduce risk exposures.

All of these factors will likely lead to a growth in the total 

demand for federal student aid, as more students are going 

to schools with increasing costs of attendance and fewer 

available sources for funding. The extent to which FSA can 

effectively meet this growing need and serve an increasing 

share of the market will be a key measure for FSA’s success in 

the next five years.

Trend 3: 

The expected increase in 

enrollment, particularly of 

nontraditional students

The National Center for Education Statistics (NCES) predicts that 

enrollment in degree-granting higher education institutions will 

increase from just over 15 million students in 2000 to 20 million 

by 2015.8 The increase will come from two sources: increased 

enrollment rate of “traditional” students, who go to college 

directly after high school; and the growth in “nontraditional” 

students, those who are 25 years old and above, who are 

increasingly becoming a part of the student population.

$ Thousands (current $)

0

10

20

30

40

50

2000 2009 2015

$19.2 $31.4 $43.6

0

10

20

30

40

50

2000 2009 2015

$8.0 $14.2 $20.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2009 2015

$1.7 $2.7 $3.7

0.0

0.5

1.0

1.5

2.0

2.5

2006** 2009 2015

$1.1 $1.4 $2.2

Average 5.6% per year Assuming same rate of growth

Average 6.5% per year Assuming same rate of growth

Average 5.3% per year Assuming same rate of growth

Average 7.6% per year Assuming same rate of growth

(estimate)

(estimate)

(estimate)

(estimate)

EXHIBIT 5: Historical and estimated average costs of 

attendance, by institution type: Various years

* Room and board not included in calculating averages for public 

2-year institutions and proprietary institutions

** Data prior to 2006 not available

NOTE: Average published tuition, fees, room and board

SOURCE: For 2000 data: http://www.eric.ed.gov/PDFS/ED446618.pdf

Last accessed May 10, 2010; For 2006 data: http://www.collegeboard.

com prod_downloads/about/news_info/trends/trends_pricing_07.

pdf Last accessed May 12, 2010; For 2009 data: College Board, 

“Trends in College Pricing 2009” (superseded by 2010 edition 

available at http://trends.collegeboard.org/college_pricing/); Last 

accessed Feb. 10, 2010; FSA program files for 2015 estimates

PRIVATE FOUR-YEAR INSTITUTIONS

PUBLIC FOUR-YEAR INSTITUTIONS

PUBLIC TWO-YEAR INSTITUTIONS*

PROPRIETARY INSTITUTIONS*
7

Strategic Plan FY 2011–15 | 7

Historically, about 60 percent of students enrolled in 

postsecondary, degree-granting institutions have been those 

of traditional age, between 18 and 24. The proportion of high 

school graduates going directly to college has increased from 

63 percent in 2000 to 69 percent in 2008, and this increase is 

expected to continue at a modest rate.9 However, there are still 

31 percent of high school seniors who did not enroll in college 

after graduation, with particularly high proportion among 

African American and Hispanic students.10 Many of these 

students are not aware of the availability of funding through 

FSA, and increasing the awareness and access to postsecondary 

schools for this population will drive overall enrollment.

In addition, the enrollment of nontraditional students is likely 

to see even more of an increase in the coming years 

for a number of reasons. First, adult enrollment is historically 

correlated with unemployment rates.11 The recent downturn 

has and will likely continue to cause laid-off workers to go 

back to school. Second, the U.S. economy is changing rapidly 

and requiring new skills. Many in the workforce will have to go 

back to school for re-training as a result, primarily to a growing 

number of community colleges and other schools that offer 

specific job training programs (e.g., systems analyst, medical 

technician). As of 2008, there were approximately 73 million 

members of the workforce age 25 years and older who did not 

have postsecondary degrees, including 23 million—or 18% 

of the workforce—who had completed at least some college 

courses (Exhibit 7).

Last but not least, the president’s goal of becoming number one 

in the world in the proportion of college graduates by 2020 will 

accelerate the enrollment of nontraditional students. Estimates 

suggest that in order to achieve the president’s goal, the United 

States must produce over 8 million more college graduates 

over the next 10 years.12 Given the current trends in population 

growth of traditional students, enrollment and completion 

must increase for nontraditional students in order to meet 

this goal. The HCERA appropriated $500 million annually, for 

a total of $2 billion from FY 2011 to 2014, for the Community 

College and Career Training Grant Program (CCCTGP) a 

discretionary grant program within the Trade Adjustment 

Assistance program to be administered by the secretary of 

labor. 13 CCCTGP is aimed at improving education and training 

programs at community colleges. These funds have the 

potential to benefit nontraditional students in a significant way.

Finally, even with the increased number of nontraditional 

students, increasing access to postsecondary programs will 

not be enough to meet the president’s 2020 college goal on its 

own. For example, according to NCES, of full-time students 

who were seeking a bachelor’s degree or equivalent for the 

first time in 2002, only 57 percent completed their degree at 

that school within 6 years.14 Another recent survey of college 

dropouts cited financial issues as one of the major reasons 

why they left school.15 This underscores the importance 

of FSA’s aid to students not only for increasing access to 

postsecondary education but also for enabling them to 

complete their programs. 

Market Value (in thousands)

0

100

200

300

400

500

2008 2009

$405

$312

-23%

$ Billions (current $)

0

5

10

15

20

25

2007 2008

$21

$11

- 48%

$ Trillions (current $)

0

10

20

30

40

50

60

70

80

2007 2008

$72

$59

-18%

EXHIBIT 6: Changes in nonfederal sources of funding: 2007–09

SOURCE: The Chronicle of Higher 

Education, ‘College and University 

Endowments, 2008–09,’ 

http://chronicle.com/premium/stats/

endowments/results.php?offset=0, 

last accessed Feb. 13, 2010, 

available only to subscribers

SOURCE: College Board, ‘Trends in College 

Pricing, 2009’ (superseded by 2010 

edition available at http://trends.

collegeboard.org/college_pricing), 

last accessed Feb. 10, 2010

SOURCE: The Federal Reserve Board. 

‘Flow of Funds,’ Moody’s 

Economy.com, last accessed 

Feb. 10, 2010, available 

only to subscribers

COLLEGE AND 

UNIVERSITY ENDOWMENTS

864 institutions

PRIVATE STUDENT 

LOAN ORIGINATIONS

ASSETS HELD BY 

U.S. HOUSEHOLDS AND 

NON-PROFIT ORGANIZATIONS
Counselors and Mentors Handbook

8 | Federal Student Aid

Trend 4: 

The growing number of 

enrollments at proprietary and 

2-year postsecondary institutions 

The mix of the types of institutions that FSA will have to serve 

is also changing. In community colleges, proprietary schools, 

and distance-learning programs, student enrollment has grown 

rapidly over the past few years, often outpacing growth in 

enrollment in traditional public and private 4-year institutions. 

For example, the number of students enrolled in for-profit 

schools has grown at 14 percent annually since 1998, compared 

to approximately 2 percent for public and private not-for-profit 

schools.16 For-profit institutions often offer more flexibility 

for specific job training and scheduling needs of students and 

can accommodate growing numbers of students. By working 

together to ensure that students have the financial resources 

necessary to graduate with meaningful degrees and certificates, 

these institutions can help us in reaching the president’s goal.

Many proprietary schools, distance-learning programs, and 

community colleges may have different ways they interact with 

students, or have different support infrastructure for students 

(e.g., less availability of financial aid offices and counselors at 

some community colleges). In FY 2007, the cohort defaults rate 

for proprietary schools and community colleges were much 

higher at 11.0 percent and 9.9 percent, respectively, than more 

traditional institutions (Exhibit 8). To adapt to the changing mix 

of institutions, FSA will need to adjust how it provides oversight 

and conducts compliance reviews as well as how it provides 

information to students entering these types of institutions to 

supplement the information they receive from the schools.

Trend 5: 

The greater role of the federal 

government in providing funding

for postsecondary education 

The role of the federal government in providing funding for 

postsecondary education has increased in the past few years with 

the passage of two main pieces of legislation. Using authority 

provided in the Ensuring Continued Access to Student Loans Act 

of 2008 (ECASLA), the Department committed to purchase loans 

Less than a high 

school diploma

High school graduates, 

no college

Some college, 

no degree

Associate degree

Bachelor’s and higher

Millions of students

Age unknown

Age 25+

Under 25

2001 2007

0.5 (3%)

5.9

(37%)

9.5

(60%)

2008

0.1 (1%)

6.9

(38%)

11.1

(61%)

9%

29%

10%

18%

34%

15.9 18.2

62

million

Millions of adults

100% = 132 million adults

EXHIBIT 7: Student enrollment, by age: 2001 and 2007; and total civilian labor force 

age 25 and older, by level of educational attainment: 2008

Less than a high 

school diploma

High school graduates, 

no college

Some college, 

no degree

Associate degree

Bachelor’s and higher

Millions of students

Age unknown

Age 25+

Under 25

2001 2007

0.5 (3%)

5.9

(37%)

9.5

(60%)

2008

0.1 (1%)

6.9

(38%)

11.1

(61%)

9%

29%

10%

18%

34%

15.9 18.2

62

million

Millions of adults

100% = 132 million adults

STUDENT ENROLLMENT IN DEGREEGRANTING INSTITUTIONS, BY AGETOTAL CIVILIAN LABOR FORCE 

AGE 25 AND OLDER

NOTE: Details may not sum to total because of rounding

SOURCE: http://nces.ed.gov/programs/digest/d08

/tables/dt08_192.asp, last accessed Feb. 10, 2010

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Labor 

Force Statistics, Table 7 ‘Employment status of the civilian 

noninstitutional population 25 years and over by educational 

attainment, sex, race, and Hispanic or Latino ethnicity,’ 

http://www.bls.gov/cps/cpsaat7.pdf, last accessed Feb. 11, 2010
9

Strategic Plan FY 2011–15 | 9

in order to ensure that despite credit market disruptions, lenders 

would continue to make loans to students and their parents. 

The Department first used this authority to purchase loans and 

participation interests in loans made for the 2008–09 academic 

year, and then replicated these actions for loans made for 

the 2009–10 academic year. To generate additional funds for 

lenders to make new loans, the Department then purchased 

loans made for the 2007–08 academic year, and, finally, 

supported the establishment of an Asset-Backed Commercial 

Paper (ABCP) conduit to which lenders could sell older 

loans. As of June 2010, FSA had purchased, or purchased 

an ownership interest in, a total of 11.5 million loans with a 

balance of $90 billion, and, by its loan purchase commitment 

to the ABCP conduit, had committed to purchase an additional 

amount of more than $35 billion over the next four years from 

the conduit, if and when needed.17

The HCERA makes postsecondary education more accessible 

and affordable for millions of Americans by increasing funds for 

Pell Grants; investing in support for college access, community 

colleges, and minority-serving institutions; and capping required 

payments under the Income-Based Repayment Program at 10 

percent of the borrower’s discretionary income. At the same 

time, it has a major operational implication to FSA: the bill ended 

the origination of new loans under the FFELP, and converts 

new federal lending to the Direct Loan Program, effective 

July 1, 2010, expanding FSA’s role in providing the loans to 

eligible students.

To successfully execute the transition, FSA will need to (1) ensure 

all schools are ready to administer the Direct Loan Program, and 

(2) build the operational capabilities to effectively manage direct 

loans on an ongoing basis. In effect, this could mean providing 

support services to institutions in transition, overseeing Direct 

Loan volume that will be seven times greater in FY 2015 than 

it was in FY 2008 (from 4 million loans to 29 million),18 and 

ensuring the same quality of service previously provided by 

FFELP guarantors and FFELP lenders. As a result of all the 

changes in legislation and the shift to the Direct Loan Program, 

the number of FSA borrowers is expected to almost double from 

FY 2009 to FY 2011 (Exhibit 9). 

The legislative changes will therefore shape FSA’s future role, 

as it requires FSA to take on additional responsibilities, and 

provides an opportunity to demonstrate the organization’s 

ability to adapt to external changes. According to current 

Overall

Proprietary

Public 2–3 year

Public 4 year (+)

Private

Millions of enrolled students

Public

Private 

not-for-prot

Proprietary

1998 2001 2007

77%

6.7%

34%

15

Percent, FY 2007

16

18

77% 74%

21% 20% 20%

Average

annual

growth

2.5%

2.1%

1.9%

14.0%

11.0%

4.3%

3.7%

9.9%

3% 3% 7%

EXHIBIT 8: Enrollment and cohort default rate, by type of institution: Various years

ENROLLMENT, BY INSTITUTION TYPE

Overall

Proprietary

Public 2–3 year

Public 4 year (+)

Private

Millions of enrolled students

Public

Private 

not-for-prot

Proprietary

1998 2001 2007

77%

6.7%

34%

15

Percent, FY 2007

16

18

77% 74%

21% 20% 20%

Average

annual

growth

2.5%

2.1%

1.9%

14.0%

11.0%

4.3%

3.7%

9.9%

3% 3% 7%

BORROWER DEFAULT RATE, 

BY TYPE OF INSTITUTION

NOTE: The sum of percentages may not total 100 percent because 

of rounding

SOURCE: NCES, Department of Education, 2007 Integrated 

Postsecondary Education Data System (IPEDS), Spring 2008.

SOURCE: U.S. Department of Education, FSA Office, Direct Loan and 

Federal Family Education Loan Programs, ‘Institutional Default 

Rate Comparison of FY 2006, 2007, and 2008 Cohort Default 

Rates,’ http://www2.ed.gov/offices/OSFAP/defaultmanagement/

instrates.html, last accessed Feb. 11, 2010
Counselors and Mentors Handbook

10 | Federal Student Aid

estimates, these legislative changes and 

other external trends are likely to 

substantially increase FSA’s workloads 

(Exhibit 10): for example, by the end 

of FY 2011, the number of borrowers 

is projected to increase threefold from 

the FY 2005 baseline due to the shift to 

Direct Lending. The number of FAFSASM

applications is expected to grow by almost 

80 percent due to increased enrollment. 

At the same time, FSA’s budget and 

staffing levels are projected to undergo 

more modest increases, of 75 percent and 

35 percent, respectively. These numbers 

illustrate the magnitude of the challenges 

faced by FSA in the coming years.

These trends provide important context 

for defining FSA’s future strategy and role 

in postsecondary education funding. FSA 

faces new challenges and opportunities 

from the rising cost of attendance, growing 

need for federal student aid, an increase 

in nontraditional students and new types 

of institutions, and expanded roles and 

responsibilities of the federal government 

as mandated by recent legislative changes. 

0

5

10

15

20

25

30

FY2011 

(Estimate)

FY2010 

(Estimate)

FY2005 FY2006 FY2007 FY2008 FY2009

9.1

Millions of borrowers

ECASLA

Loan purchase 

programs

Compound annual growth rate: 42%

Compound annual growth rate: 2%

9.2 9.4

24.5

15.5

9.6

27.3

HCERA

Elimination 

of FFELP

EXHIBIT 9: Number of FSA borrowers: FY 2005–09, and estimated for 2010–11

Millions

10

15

20

25

30

9.1

+200%

Millions

$ Millions (current $)

9.2 9.4 9.6 15.5 24.5 27.3

+77%

+76%

+40%

13.8 14.0 14.5 15.7 19.1 21.9 24.4

$665 $658 $644 $630 $671 $911 $11, 70

1,041 1,010 993 1,018 978 1,226 1,457

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

(estimate) (estimate)

EXHIBIT 10: Changes in FSA workloads and resources: FY 2005–09 and 

estimated for 2010–11

SOURCE: Federal Student Aid , program files

NUMBER OF BORROWERS

NUMBER OF FAFSAS

NUMBER OF FSA EMPLOYEES

FSA BUDGET

SOURCE: Federal Student Aid, program files
11

Strategic Plan FY 2011–15 | 11

T

his year, FSA revised its mission, vision, and core 

values to capture the opportunities and meet the 

challenges arising from the changing environment 

(Exhibit 11). These revisions were developed and refined 

based on numerous discussions and feedback from 

employees from all parts of FSA.

The emphasis of the new mission and vision is the focus 

on students, and the position that FSA is a provider of not 

only student financial aid and services but also information 

that can help students make better decisions related 

to postsecondary education funding. The core values 

reflect FSA employees’ desire to build a high-performing 

organization and a work environment among the best in 

the federal government, while improving our operations 

and services. 

3. New Mission, Vision, 

and Core Values

EXHIBIT 11: FSA’s new mission, vision, and core values: FY 2010

MISSION

Funding America’s Future, One Student at a Time

VISION

To be the most trusted and reliable source of student financial aid, information, and services in the nation

CORE VALUES

Integrity Do the right thing above other interests and hold everyone accountable

Customer Service Know what our customers want and ensure we meet their expectations

Excellence Strive to be the very best in all we do by embracing a culture of continuous improvement

Respect Value individuals by acknowledging the diversity of their contributions, ideas, and beliefs

Stewardship Uphold the sacred trust of taxpayers as we work to support the goals of Congress and the administration

Teamwork Work in collaboration with our colleagues and partners to produce the best possible results
Counselors and Mentors Handbook

12 | Federal Student Aid

S

ince FSA’s creation, its core mission has been to deliver 

financial aid efficiently and effectively. In the past five 

years, FSA primarily focused on achieving operational 

efficiency and system integration, both of which are key to 

FSA’s designation as a PBO. In that time, several external 

changes required FSA to take on additional responsibilities, 

and FSA employees consistently came together to meet the 

challenge of the moment. 

Over the next five years, FSA seeks to do more. In addition to 

its core mission, FSA now seeks to improve the overall system 

of funding for postsecondary education by (1) providing 

better information to students and their families so they 

can make better decisions about postsecondary education; 

and (2) actively shaping the behavior of participants in 

education funding, by using FSA’s knowledge, data, oversight 

authority, and relationships to improve the coordination of 

all participants in the system.

FSA also considered two important factors in devising these 

strategic goals. First, with the increasing budget deficits of 

the federal government, it is important for FSA to increase 

efficiency and free up resources, both to enable FSA to 

invest for the future and to be less of a draw on taxpayers. 

Second, FSA must be far more responsive to its stakeholders 

than it has been in the past, as the organization will be 

under increased scrutiny as a result of the shift to direct 

lending and the expanded role of FSA. While FSA does 

not set policies and regulations, FSA has valuable and 

wide-ranging data about students and schools, data that 

FSA can provide to policymakers, students, and 

borrowers to empower them to make even better decisions.

To achieve these aspirations, FSA developed a set of 

strategic goals for the next five years (Exhibit 12). 

The Higher Education Act of 1965, as amended (HEA)

states that as a performance-based organization, FSA 

has a responsibility to improve service, reduce costs, 

improve and integrate support systems, and develop 

delivery and information systems. FSA’s five strategic 

goals are squarely aligned to these PBO responsibilities. 

FSA will improve service through strategic goals A and 

B; reduce costs through strategic goals C and D; improve 

and integrate support systems and develop delivery and 

information systems through strategic goal C, and enhance 

staff development and talent to better deliver on the HEA’s 

mandate through Goal E, the human capital initiative. 

Each strategic goal encompasses several objectives and 

performance goals, and each objective in turn includes 

detailed initiatives. Taken together, these provide the 

blueprint for how FSA will achieve its vision. 

4. FSA’s Strategic 

Goals and Objectives
13

Strategic Plan FY 2011–15 | 13

EXHIBIT 12: FSA’s strategic goals and objectives: FY 2011–15

STRATEGIC GOALS OBJECTIVES

A. Provide superior service 

and information to students 

and borrowers

1. Take a data-driven approach to better understand students 

and borrowers and develop insights from these customers

2. Reach out to potential students more effectively to expand access 

to higher education, especially for nontraditional students

3. Aggregate and distribute information on the costs and benefits 

of higher education programs and on funding options to improve financial 

literacy and support the customers’ decision-making

4. Identify students for whom financial assistance can make a difference 

in completing a degree or credential and develop a plan to support the 

president’s 2020 college completion goal

5. Enhance customer-facing processes to improve the customer experience

B. Work to ensure that all 

participants in the system 

of postsecondary education 

funding serve the interests of 

students, from policy to delivery

1. Improve FSA’s support, communications, and processes for 

postsecondary institutions and financial partners 

2. Provide ideas, data, and analyses to inform policymakers about 

opportunities and challenges in higher education funding

3. Support system participants in completing the transition laid out by the 

Health Care and Education Reconciliation Act and other future legislation

C. Develop efficient processes 

and effective capabilities that 

are among the best in the 

public and private sectors

1. Deliver funds to students accurately, promptly, and professionally, 

to create high levels of customer satisfaction

2. Strengthen FSA's Information Technology (IT) function to complete 

systems integration and modernization, and to maintain IT security

3. Refine FSA’s acquisition strategy, acquisition processes, 

and performance management

4. Improve the organizational capacity to anticipate and handle external change

5. Enhance the risk management organization, systems, and processes

6. Evaluate administrative cost structures and streamline internal operations 

to increase efficiency and productivity

7. Build stronger business management capabilities and increase operational 

transparency to improve cross-functional coordination

D. Ensure program integrity 

and safeguard taxpayers’ interests

1. Improve quality control and reduce errors, waste, fraud, abuse, and 

mismanagement on the part of postsecondary institutions and financial 

partners to minimize program losses

2. Manage unpaid obligations and provide transparency about portfolio 

risk exposure

E. Strengthen FSA’s performance 

culture and become one of 

the best places to work in 

the federal government

1. Improve human capital processes to attract, develop, and retain talent, 

and help FSA employees achieve their full performance potential

2. Further develop a student-centric culture among all managers and 

employees that will fully deliver on FSA’s mission, vision, and strategy
Counselors and Mentors Handbook

14 | Federal Student Aid

Strategic Goal A: 

Provide superior service 

and information to students 

and borrowers

A major component of FSA’s mission is to ensure that all 

eligible individuals benefit from federal student aid. In 

order to achieve this goal, FSA must actively inform all 

eligible individuals of their funding options and help the 

customers make well-informed decisions. As a customerfacing institution, FSA also has an obligation to uphold 

the highest standards of service when interacting with its 

customers: prospective students, current students, their 

families, and borrowers. 

While high-quality customer service and a customer focus 

have always been FSA’s organizational priorities, there are a 

number of ways in which FSA could dramatically improve. 

FSA is in the process of establishing a position of Chief 

Customer Experience Officer (CCEO), to be the internal 

champion for customers at FSA. As part of the CCEO mandate, 

FSA will take steps to improve the organization’s understanding 

of the full range of current and potential customers. The insight 

will be used to increase higher education access for potential 

students, develop a plan to support the president’s 2020 goal of 

college completion, and to identify the best channels to interact 

with the customers. FSA also will undertake a thorough effort 

to improve the customer experience by simplifying points of 

customer interaction.

FSA will link these efforts to broader efforts in the 

Department. Several other offices in the Department 

have and use data on students, borrowers, and schools. 

FSA will partner with these other offices to ensure that 

the Department brings all its data and resources to 

improve all its programs, within and beyond FSA.

Objective A1: 

Take a data-driven approach to better understand 

students and borrowers and develop insights from 

these customers

As part of its operational mandate, FSA collects large 

amounts of customer data. This data comes from a variety 

of sources, including the Free Application for Federal Student 

Aid (FAFSASM), the National Student Loan Data SystemSM, 

other Department of Education offices, and postsecondary 

institutions, to name a few. Despite the abundance of data, 

FSA has not collected these data centrally and has not 

systematically analyzed them to yield customer insights.

In the next five years, FSA aims to build the capabilities to collect 

and analyze customer data in order to develop the analytical 

base required to conduct effective outreach and provide bettertailored customer service. This will also increase transparency 

and support the administration’s Open Government priority. 

FSA will have dedicated staff focusing on customer insights and 

innovation. These personnel will be responsible for compiling 

disparate data sources into a central customer-data architecture. 

Then, FSA will develop and disseminate insights on customer 

needs and characteristics throughout the organization. FSA will 

segment customers based on their needs. Possible customer 

segmentations could include such factors as demographics, 

student aid lifecycle stage, socio-economic indicators, geography, 

and types of institutions students attend, among others. FSA will 

conduct research and develop further detail to determine the 

needs of different customer types and work closely with FSA’s 

business units to increase customer awareness. 

Objective A2: 

Reach out to potential students more effectively 

to expand access to higher education, especially 

for nontraditional students

From websites and TV campaigns, to partnerships with 

high schools, FSA has utilized different messages and 

media to reach potential customers. Although FSA receives 

millions of FAFSA applications per year from eligible 

students, there are ways in which FSA could better identify 

and attract new customers. This is particularly true when 

it comes to potential nontraditional students, 25 years and 

older, whose enrollment in postsecondary programs is an 

especially important driver for reaching the president’s 

higher education goal for 2020.

Over the next five years, in collaboration with other 

Department efforts, FSA will use the staff’s innovation 

capability and customer insights to more effectively 

identify and target eligible customers, in order to fulfill the 

organization’s mission and expand access to higher education. 

These efforts will be managed in conjunction with other 

programs administered by the Department, such as Talent 

Search, Educational Opportunity Centers, Upward Bound, 

GEAR UP, and College Access Challenge Grants. First, FSA 

must identify which potential students have historically 
15

Strategic Plan FY 2011–15 | 15

been underserved, relative to their presence in the student 

population and the population at large. FSA will determine 

the specific needs and preferences of those underserved 

students, as well as barriers to enrollment and completion that 

they face; and it will identify effective media to reach them. 

FSA will use these findings to inform outreach strategies and 

provide information about programs to improve potential 

for completion. Furthermore, FSA will establish performance 

metrics for measuring access to postsecondary education and 

monitor them continuously so as to identify and invest in 

successful outreach strategies, while ceasing those efforts that 

prove ineffective. Thus, all potentially eligible students will have 

better access to the information they need.

Objective A3: 

Aggregate and distribute information on the costs 

and benefits of higher education programs and on 

funding options to improve financial literacy and 

support the customers’ decision-making

In the past, Federal Student Aid has provided potential 

students with information on the benefits of higher education 

in order to inform their decision on whether or not to enroll. 

However, FSA has not traditionally supported customers’ 

decision-making with regard to which specific programs to 

enroll in. As the primary source for postsecondary education 

aid, FSA is in the ideal position to aggregate and distribute 

information on postsecondary education, in close collaboration 

with other offices in the Department. This is consistent with 

the Department’s overall trend towards greater transparency. 

The information could include the lifetime costs and benefits 

of different higher education programs and funding options, so 

that prospective students can make the best decision on which 

program to enroll in. 

To fulfill this objective, the Department will need to work closely 

together to collect data on tuition costs, the earnings of program 

graduates, and the expected lifetime costs of different funding 

options. The Department will then disseminate this information 

to students and their families and thereby ensure that they have 

the most relevant information available to support their decisionmaking. By increasing students’ understanding of the relative 

financial value of different degree programs and funding options, 

the Department can help to make sure that students receive 

the maximum benefits from their education and become well 

positioned to repay their loans. 

Objective A4: 

Identify students for whom financial assistance 

can make a difference in completing a degree 

or credential and develop a plan to support the 

president’s 2020 college completion goal

Data from NCES suggest that there are opportunities 

to improve financial assistance to students in the United 

States. For example, of full-time students who were 

seeking a bachelor’s degree or equivalent for the first time 

in 2002, only 57 percent completed their degree at that 

school within six years. Similarly, of students attending 

2-year institutions full-time and for the first time in 2004, 

only 37 percent graduated within 4 years.19 In a survey of 

dropout students, more than half cited financial barriers 

to be a major reason for leaving school. Moreover, one 

survey found that more than 60 percent of students who 

take out private loans do not actually exhaust federal aid, 

with nearly half of such students not even taking out any 

federal loans.20 These facts suggest that there are students 

who would benefit from federal student aid.

Increasing completion rates and the number of graduates 

is a top priority for the administration and the Department, 

in light of the president’s 2020 goal for America to have 

the highest proportion of college graduates in the world. 

In support of this agenda, in collaboration with other 

offices within the Department, such as the Office of the 

Under Secretary (OUS) and the Office of Postsecondary 

Education (OPE), FSA will use its customer-insights function 

to identify students who could benefit from additional 

financial assistance to complete their degree or credential. 

It will develop a plan to educate and support those students, 

and work with school financial aid administrators, nonprofit 

organizations, and associations to create opportunities for 

students to learn more about financial aid opportunities 

and complete their programs.

Objective A5: 

Enhance customer-facing processes 

to improve the customer experience

FSA has successfully maintained high customer satisfaction 

ratings from its students and borrowers. FSA has also recently 

introduced significant simplifications and improvements 

to the FAFSA, such as the reduction of almost 30 percent 

of questions and the tax data retrieval option from the 

Internal Revenue Service. FSA will continue to simplify and 
Counselors and Mentors Handbook

16 | Federal Student Aid

improve the application process and other interactions with 

FSA’s customers in order to create a better user experience 

and potentially lead to an increase in applications, timely 

repayment, and recovery rates.

Focusing on the customer experience is a high priority 

for FSA. As part of the Chief Customer Experience Officer 

(CCEO) position being founded, FSA will create a unit 

devoted to improving interactions with FSA customers: 

prospective students, current students, their families, and 

borrowers. FSA will systematically investigate how to provide 

a simpler, more straightforward experience for borrowers 

in repayment or default. The CCEO’s unit will also expand 

FSA’s outreach by substantially scaling up the use of digital 

channels, such as social networks and online communities. 

FSA will leverage technology more effectively to better 

meet the demands of its customers and to find efficiency 

improvements. Lastly, FSA will continue to simplify customer 

points of contact, for example, by making the FAFSA even 

easier to fill out.

Strategic Goal B: 

Work to ensure that all participants 

in the system of postsecondary 

education funding serve the 

interests of students, from policy 

to delivery

FSA plays a vital role within the system of postsecondary 

education funding in the United States. While the Office of 

Postsecondary Education (OPE) within the Department 

is responsible for any matters related to policy and 

regulation setting regarding postsecondary education, 

FSA collaborates with the Department and Congress 

to inform policy and regulations relating to student 

financial assistance. FSA also works closely with partners: 

it coordinates the activities of different contractors, 

including servicers and private collection agencies; it 

works with guaranty agencies and FFELP lenders to 

administer programs; it provides oversight and support to 

postsecondary institutions; and it directly interacts with 

students and their families.

In the past, FSA has rigorously met its responsibilities 

within the postsecondary education funding system. 

However, over the next five years, since new FFELP 

loans will no longer be originated, FSA will have to 

increase its role even further so as to better fulfill the 

organization’s mission to consistently champion the 

promise of postsecondary education for all Americans. 

This will involve improving interactions with system 

participants and proactively providing information to 

shape participants’ decisions and behavior. FSA will not 

set policy, but it will provide more timely and relevant 

information to the Department and policymakers, to help 

them make appropriate decisions about issues related to 

funding postsecondary education. In addition, FSA intends 

to take a more active leadership role in the universe of 

postsecondary education funding and will help to ensure 

that all system participants effectively serve the interests of 

students. FSA will continue to play an active role in working 

with financial partners (FFELP lenders and guaranty 

agencies) to ensure transition is sustained.

Objective B1: 

Improve FSA’s support, communications, 

and processes for postsecondary institutions 

and financial partners

FSA works closely with postsecondary institutions to 

provide millions of students with federal student aid. 

While OPE is responsible for setting policy governing 

postsecondary education, FSA determines how it 

supports and communicates with its partners. Ultimately, 

successfully delivering aid through a complex system 

depends on FSA’s ability to work well with its partners, to 

support them through technical assistance that will help 

them improve their performance, and to provide adequate 

oversight to ensure that participants are complying with 

program requirements. 

In collaboration with other principal offices in the Department, 

FSA will be more active in assisting the full range of higher 

education funding partners. This will be accomplished by 

improving FSA’s support for and communications with these 

partners and by formally soliciting and acting on partner 

feedback. FSA will also provide necessary technical and expert 

support to schools and financial partners, especially in light 

of the shift to Direct Lending and the subsequent phasingout of services previously provided by private FFELP lenders. 

In addition to the support, FSA will provide streamlined 

processes for those institutions with better performance so 

as to encourage the desired behaviors among other schools 
17

Strategic Plan FY 2011–15 | 17

and thereby increase access, quality and completion. FSA 

will enhance communications with its partners, particularly 

through the explicit use of data and information to help 

institutional decision-making. FSA also will work to ensure 

that all participants in the higher education funding 

system can easily access the information they need from 

the organization. It will work with nonprofit organizations, 

associations, and other partners in postsecondary education 

to provide data and share knowledge that may lead to 

improvements in the quality of higher education. Lastly, FSA 

will compile and share best practices among its partners where 

it is appropriate and use feedback to recommend changes to 

regulations and laws where necessary. These activities will 

strengthen the organization’s relationships and ensure that 

institutional systems are functioning at their best in the service 

of FSA’s customers.

Objective B2: 

Provide ideas, data, and analyses to inform 

policymakers about opportunities and 

challenges in higher education funding

FSA was created to administer the Title IV Programs, but 

it is also responsible for providing input to the Department 

and Congress on policy-related matters. While FSA has been 

involved in many discussions to provide operational input 

on critical policies and regulations related to postsecondary 

education funding, there are opportunities to better share the 

organization’s ideas, data, and analyses with policymakers 

and to be more proactive in highlighting the opportunities 

and challenges in higher education funding.

Moving forward, FSA will enhance the processes for 

communicating with policymakers, assessing the impact 

of proposed policies and understanding the policy changes 

desired by FSA service areas and customers so that 

students’ interests are better reflected in consideration 

of policymaking. FSA will increase the organization’s 

capacity to quickly assess potential policy changes in 

order to understand and communicate their benefits and 

disadvantages to various stakeholders. In parallel, FSA will 

expand the formal mechanisms for soliciting and analyzing 

feedback from customers, partners, and service areas in order 

to identify potentially advantageous policy changes that 

would lead to achievement of the president’s 2020 college 

goal and share this information with policymakers. In this 

way, FSA can better utilize its institutional knowledge, data, 

and relationships to improve the higher education funding 

system, while maintaining the integrity of its role as an 

operations-focused, performance-based organization. 

Objective B3: 

Support system participants in completing 

the transition laid out by the Health Care 

and Education Reconciliation Act and other 

future legislation

As a result of HCERA and the discontinuation of new loan 

origination under the FFELP, there will be a number of 

changes to the roles of participants in the system of student 

aid. Private financial institutions, while continuing to service 

FFELP portfolios, will no longer originate federal student 

loans. Similarly, public and private guaranty agencies will no 

longer insure newly originated, privately held federal student 

loans. At the same time, the growth in the governmentheld Direct Lending portfolio will require FSA to procure 

broader support from private and nonprofit entities to 

service outstanding Direct Loans. In addition to Direct Loan 

origination and servicing, FSA will need help reaching out 

to customers and promoting financial literacy. Historically, 

financial institutions and guaranty agencies have provided 

these financial literacy trainings to FFELP participants, but 

they are no longer likely to provide such services. 

FSA will create and enhance programs that facilitate this 

transition so that students will face minimal disruption in 

receiving their federal student aid. FSA intends to work with 

FFELP lenders and guaranty agencies in winding down their 

FFELP portfolios as needed. FSA will ensure that all willing 

institutions of postsecondary education will successfully 

transition to the Direct Loan Program. FSA will also prepare 

to be responsive to any further changes in legislation.

Strategic Goal C: 

Develop efficient processes 

and effective capabilities that 

are among the best in the public 

and private sectors

FSA is responsible for managing the operational functions 

associated with delivering Title IV grants, work-study, and 

loan programs, while continually improving operating 

efficiency. To maintain credibility and confidence in the 

overall student aid delivery system, it is important for FSA 
Counselors and Mentors Handbook

18 | Federal Student Aid

to be able to smoothly handle the expected increase in the 

volume of aid, driven by increased student enrollment and 

the passage of HCERA. Historically, FSA’s budget has not 

grown proportionally to the increase in the volume of aid, 

and that is likely to remain true going forward. As a result, 

FSA will need to pursue further efficiencies to free up 

additional resources in its operating budget for allocation to 

the initiatives outlined in this strategic plan. 

FSA also will continue to improve its internal efficiency and 

capabilities across key functions, particularly in technology, 

acquisition, risk management, and business management, 

by comparing the current state with best practices and 

benchmarks across private and public sectors. The objectives 

under this goal will build the foundation and capability to 

support the first two strategic goals, providing better service 

and information to FSA customers and playing an integral 

role in the overall student aid delivery system. 

Objective C1: 

Deliver funds to students accurately, promptly, 

and professionally, to create high levels of 

customer satisfaction 

FSA’s primary responsibility is to deliver aid reliably: to deliver 

the right funds to the right students at the right time. There are 

always opportunities to deliver aid faster and more accurately. 

Two ways to accomplish this are by automating and simplifying 

processes. While most of the delivery-critical processes around 

application and disbursements are already automated, there 

are still parts of the process that are subject to occasional error 

and that need reconciliation. FSA will continue to improve the 

accuracy and speed with which it delivers aid to students and 

their families. 

Objective C2: 

Strengthen FSA's Information Technology (IT) 

function to complete systems integration and 

modernization, and to maintain IT security 

FSA’s operations rely on a number of large-scale IT systems 

for application processing, disbursement, loan servicing, 

compliance monitoring, collections, and many other 

functions. FSA has decentralized application development 

and has extensively used third-party contractors to build its 

IT systems. The PBO legislation mandated the integration 

of FSA’s IT systems, but many large-scale projects made 

substantially slower progress than expected. Going forward, 

FSA will need to continue responding to changes in 

legislative and operational demands. To do so, FSA should 

invest to build an agile and effective IT function that 

consistently delivers IT projects on time and within budget. 

This is a critical capability necessary to achieve the overall 

strategic goals and objectives. 

Over the next few years, FSA will invest to transform its IT 

capabilities and strengthen the central IT function. FSA will 

develop a long term vision of its future IT systems, and a 

near-term road map to begin the journey towards the target 

state. FSA will identify the functionality required to deliver 

on FSA’s long term vision, then prioritize and sequence the 

development efforts required to achieve the long term vision. 

In parallel, FSA will develop a stronger central IT organization 

with great responsibility and control residing with FSA’s Chief 

Information Officer (CIO). The CIO organization will become 

a center of excellence around the core application development 

processes, software development lifecycle, architecture and 

standards, IT project management and oversight, and IT 

vendor management. As part of this transition, FSA will 

need to determine what skills, roles, and knowledge should 

be developed and maintained within FSA. The central IT 

team also will conduct a talent review and gap analysis based 

on required roles and skills in the new organization and an 

assessment of current staff skills and performance. Based 

on both the target vision and the new organization, FSA will 

develop a roadmap for execution with sequence and timing 

of key initiatives. FSA will transition to this new model and 

the future state over several years in a way that allows the 

organization to track regular progress against major milestones 

and to manage the operational risks involved.

Objective C3: Refine FSA’s acquisition 

strategy, acquisition processes, and 

performance management

FSA uses contracted vendors for customer service, 

application processing, loan and grant origination and 

disbursement, loan servicing and collections, system 

applications and infrastructure development, as well as 

administrative functions. Although FSA has developed 

an acquisition strategy in the past, it has not been fully 

deployed. Consequently, major contracts evolved over 

time out of necessity to respond to legislative and external 

changes. With 85 percent of FSA’s administrative budget 

allocated to vendors today, there is still ample opportunity 

to strengthen FSA’s acquisition capabilities and more 

actively lead vendor relationships. 
19

Strategic Plan FY 2011–15 | 19

Over the next five years, FSA will optimize public-private 

partnership with vendors and undertake a two-pronged 

approach. In the near-term, FSA will review existing major 

contracts to identify any improvement opportunities for 

better pricing and contractor performance. At the same 

time, with a view to the long term, FSA will develop and 

execute a refined acquisition strategy to migrate to a more 

rationalized model for external vendor usage, keeping 

in-house those activities that are more effectively and 

efficiently performed by the government and outsourcing 

the rest. FSA will also align its acquisition process to the 

strategy, balancing the timely completion of acquisition 

with effective contracting. The acquisition strategy will 

allow FSA to improve its subject-matter expertise, 

so FSA can better manage its vendors.

Objective C4:

Improve the organizational capacity 

to anticipate and handle external change

The environment in which FSA delivers financial aid and 

related services to students changes quickly, due to external 

events including economic cycles, technological changes, and 

new legislation. As such, FSA’s success relies in large part on 

its ability to anticipate and adapt to external change. To date, 

FSA has been effective at adapting to change, as evidenced 

by its ability to respond to ECASLA in 2009.

In the near term, FSA must focus on ensuring that it 

successfully manages the shift to Direct Lending, as mandated 

by the recently passed HCERA legislation. This will require 

rapidly deploying resources and the concerted efforts of every 

FSA employee. Over the longer term, there are opportunities 

for FSA to improve its rapid-response capabilities. First, FSA 

will further develop its ability to anticipate changes by having 

an ear to the ground in the marketplace, at schools, and in 

policy discussions. Second, FSA will improve its resourcing 

model to ensure that it has highly capable personnel and 

vendors who are available to respond to unforeseen events. 

Third, FSA will clarify roles, responsibilities, and authorities 

for managing new development, to allow everyone to act more 

quickly and develop contingency plans. This would include 

ensuring that contractual terms with external vendors are 

set up flexibly enough to adapt to changes. Fourth, FSA will 

establish processes to respond more effectively to various 

stakeholders’ requests, such as congressional inquiries and 

those related to audit findings. These actions will ensure that 

FSA remains nimble, able to respond effectively to change.

Objective C5: 

Enhance the risk management organization, 

systems, and processes

Fulfilling FSA’s broad responsibilities to students, their 

families, borrowers, and higher education partners comes 

with a wide range of risks. Robust risk management, 

from operational risk to credit risk, is crucial for FSA 

to ensure that the organization maintains the highest 

standards of professionalism and operational excellence. 

Although FSA recently took some steps to centralize key 

risk responsibilities and made progress in identifying and 

assessing different types of risks across the organization, 

there are opportunities for continued improvement. 

The need is particularly acute for managing the risks 

throughout the distributed network of partners through 

which FSA delivers federal student aid.

Over the next five years, FSA will work to strengthen 

the central risk management function, while developing 

enterprise-wide systems and processes for identifying, 

quantifying, monitoring, and mitigating risks. FSA will 

increase central oversight of all risk functions within the 

organization and develop clear lines of communication 

between service-area risk functions and the risk 

organization in order to eliminate risk-management 

redundancies and ensure comprehensive risk-management 

coverage. FSA also will continue to build on the risk 

identification and assessment processes completed to date, 

to quantify and prioritize all risks, and to develop systems 

and process for regularly monitoring and mitigating 

identified risks. 

Objective C6: 

Evaluate administrative cost structures and 

streamline internal operations to increase 

efficiency and productivity

FSA’s internal processes have evolved based on the 

necessities of rapidly changing operational requirements. 

Since becoming a PBO, FSA has managed to reliably 

deliver aid and quickly adapt its processes to the demands 

of changing laws and regulations. At the same time, FSA 

has not had the opportunity to systematically re-evaluate 

and optimize the internal processes in order to reduce 

administrative cost, workload, and bureaucracy. 

To simplify the process and identify potential cost savings, 

FSA will conduct a systematic review of its internal 
Counselors and Mentors Handbook

20 | Federal Student Aid

processes to identify the biggest inefficiencies and 

introduce changes that would improve these processes. 

In parallel, FSA will develop a better understanding of 

its cost structure, and evaluate its administrative cost 

levels. FSA also will introduce cost targets throughout the 

organization in order to reduce costs wherever it is possible 

to do so without adversely affecting the quality of services 

to customers or compromising our risk management 

capabilities. These changes will not only save taxpayer funds 

but also increase the agility of the organization. 

Objective C7: 

Build stronger business management capabilities 

and increase operational transparency to improve 

cross-functional coordination

FSA will need to pursue organization-wide efforts to 

maintain FSA’s reliability and adaptability while managing 

the expected increases in application and servicing 

volume. Historically organizational units have been largely 

contained in the individual service areas, and there is room 

to increase coordination across the organizational units. 

There are four types of coordination and business management 

areas that present opportunities for improvement: a project 

management capability to ensure timely delivery of largescale projects; a strategic management capability to develop, 

execute, and monitor progress of strategy, including initiatives 

to support this strategic plan; a data management capability 

to take full advantage of the wealth of data that exists within 

FSA; and a budget management capability to prioritize the 

projects to ensure they receive adequate resources. FSA will 

strengthen all of these capabilities, with a particular emphasis 

on increasing operational transparency of process, financials, 

and coordination across the organization. 

Strategic Goal D: 

Ensure program integrity and 

safeguard taxpayers' interests

The Congressional Budget Office projects that the latest 

federal budget will result in close to $10 trillion in cumulative 

budget deficits over the next 10 years.21 This places additional 

importance on the responsibility of all federal agencies to 

safeguard taxpayer resources through all of their activities. FSA’s 

role requires the organization to provide more oversight of 

taxpayer dollars than most agencies, as FSA annually disburses 

almost $130 billion in aid and administers a loan portfolio 

valued at $700 billion. Even small variances in the financial 

performance of this portfolio can have a large impact on the U.S. 

federal budget. In addition to the budget constraints, to preserve 

the integrity of the system, there are challenges associated with 

managing the behavior of educational institutions, some of 

which recruit, represent information, and deal with enrolled 

students in ways that are considered improper. 

FSA will strive to better manage taxpayer resources and 

minimize program costs across all its activities. As part 

of this goal, FSA will intensify efforts aimed at preventing 

the misuse of funds by noncompliant institutions, and 

continue to reduce fraud and abuse of federal student aid 

programs. FSA also intends to take a larger responsibility 

for understanding and managing the credit risks of the 

student loan portfolio it manages. 

Objective D1: 

Improve quality control and reduce errors, waste, 

fraud, abuse, and mismanagement on the part of 

postsecondary institutions and financial partners 

to minimize program losses

An important component of administering the federal 

student aid programs for taxpayers is ensuring that funds 

are not misdirected inadvertently or intentionally: that 

aid is given only to students attending institutions that are 

licensed and accredited, and that these institutions continue 

to comply with all legal requirements. FSA must carefully 

balance two conflicting interests—supporting the schools 

and financial partners in administering and servicing the aid 

while providing sufficient oversight to those institutions—by 

sustaining the independent structure within the organization. 

With respect to financial partners, FSA will maintain the 

appropriate level of oversight to financial institutions, 
21

Strategic Plan FY 2011–15 | 21

even though their role has changed to no longer involve 

origination of new FFELP loans. 

Given the growth of enrollment in for-profit and distanceeducation programs, FSA has been focusing on addressing 

the unique oversight challenges these institutions pose. 

The current state of oversight regulations and practices 

present challenges for FSA due to changes in the ownership 

structures of institutions, and the use of alternative ways 

to provide instruction. The current regulations do not 

necessarily address the different needs of different types of 

schools. FSA has made inroads to improve the effectiveness 

of compliance reviews by introducing risk-based early 

warning signals and methodology to select schools for 

review, but there are opportunities for improvement. FSA 

has an opportunity to continuously improve the ways it 

can collaborate with institutions to ensure compliance; for 

example, FSA needs to develop compliance metrics that 

would differentiate the level of monitoring and oversight 

based on the institutions’ performance. There is also an 

opportunity to increase the aggregate effectiveness of 

compliance reviews for the entire population of higher 

education institutions. 

FSA will continue working to identify and eliminate 

elements of federal aid delivery processes that may lead 

to incidence of fraud and abuse. This includes identifying 

and more carefully reviewing federal aid process points 

that have shown incidents of abuse in the past and actively 

examining areas where mismanagement presents a large 

risk to the organization. FSA will amend the organization’s 

review standards to better reflect the characteristics 

of nontraditional schools and ensure that compliance 

processes use the latest technology to be most effective. 

FSA also plans to focus on quickly identifying and 

monitoring institutions that have a higher risk of 

noncompliance to ensure that resources are best directed 

at areas of greatest risk and importance. 

Abuse and mismanagement may not be strictly out of 

compliance with loans or regulations. In such instances, 

FSA will seek to eradicate the undesired behavior by 

invoking the help of other participants in the system, 

publicizing undesired behavior, and informing Congress. 

The new Chief Customer Experience Officer will have a 

consumer protection function that will focus on this issue.

Objective D2:

Manage unpaid obligations and provide 

transparency about portfolio risk exposure

FSA is the largest custodian of the federal government’s 

funds provided for federal student aid. FSA fulfills this role 

primarily by managing the processes to ensure that loans are 

repaid on time and recovered in full, even when borrowers 

default. Although FSA has unique legal tools to recover the 

students’ federal obligations, there is room to further decrease 

the cost of the federal student aid programs to the American 

taxpayer without affecting their effectiveness. 

FSA will play a stronger role in maximizing the timely 

repayment and recovery of federal student aid program 

funds and in informing the stakeholders of the long-term 

financial implications of the changing macroeconomic 

environment on the cost of providing aid. FSA will 

actively manage the performance of the vendors who 

provide servicing and collection services and help them 

share best practices and standards, leading to superior 

performance. FSA also plans to collect the data and create 

an analytical apparatus to examine the risk exposures 

in the loan portfolio and identify the variables affecting 

default rates (such as unemployment rate, borrower’s 

school type, or geography). The insights gained will allow 

FSA to forecast the effects of changing external trends on 

future economic performance, adapt compliance processes, 

and improve portfolio performance by focusing defaultaversion activities on at-risk loans. By taking these steps to 

further minimize program losses, FSA will ensure that the 

organization is best safeguarding taxpayer dollars.

Strategic Goal E: 

Develop FSA’s performance culture 

and become one of the best places 

to work in the federal government

FSA achieved substantial improvement in operational 

performance after its transformation into a PBO in 1998, 

successfully and reliably delivering aid under changing 

legislative conditions. According to the most recent internal 

employee survey, FSA employees feel strongly about the 

organization’s mission, but they do not feel empowered or 

encouraged to take on new responsibilities.22 In addition, FSA 

has a rapidly aging workforce, with a significant part of the 
Counselors and Mentors Handbook

22 | Federal Student Aid

staff eligible for retirement over the next several years. In 

order to meet the performance challenges facing FSA in the 

next five years and to fulfill its rapidly expanding role, FSA 

will have to rebuild its human capital foundations.

The objectives supporting this goal will strengthen and support 

FSA’s workforce: the core asset of the organization. FSA will 

revisit its fundamental human capital processes, such as hiring, 

training, and performance evaluation, to ensure that formal 

mechanisms are in place to support a performance culture. 

FSA employees will develop a student-focused culture to 

support the goals of the president and the Department. FSA 

also will work to actively transform the cultural aspects of what 

it means to work at FSA and increase the organization’s focus 

on students by reshaping employees’ mindsets and behaviors 

and modeling the desired culture at the leadership level.

Objective E1:

Improve human capital processes to 

attract, develop, and retain talent, and 

help FSA employees achieve their full 

performance potential

FSA faces substantial human capital challenges. Of the 1,000 

employees on board today, approximately 20 percent are 

eligible for retirement. To adequately support the increase in 

workloads and fill current vacancies, FSA plans to increase 

staffing levels to 1,226 positions in FY 2010.23 This implies 

that effective and efficient human capital processes will be 

a critical priority for the organization if it is to maintain 

current levels of reliability and performance as well as deliver 

on the ambitious goals laid out in this strategy. 

In the next five years, FSA will strive to improve core human 

capital processes across all major dimensions. FSA will review 

the hiring process to substantially reduce cycle times, reduce 

number of potential applicants who leave halfway through 

the process, and identify the highest-performing candidates. 

The organization will then redesign the processes and systems 

to measure individual performance, and complement them 

with a broad palette of non-financial means of employee 

recognition. FSA intends to focus on the management level, 

recognizing the important role managers play in executing 

FSA’s responsibilities. Specifically, FSA will create a training 

program for managers and introduce a process to plan 

each manager’s career track. This will result in meaningful 

opportunities for professional growth within FSA and in the 

federal government. 

Objective E2:

Further develop a student-centric culture among 

all managers and employees that will fully deliver 

on FSA’s mission, vision, and strategy 

FSA’s most important priority will continue to be to deliver 

the right aid to the right person at the right time. Going 

forward, FSA also will need to acquire resources to cultivate 

the organization’s workplace environment, to foster a culture 

of performance, and to think more about how to meet the 

changing needs of students. According to an employee 

survey, FSA’s staff remains intensely dedicated to serving 

students and upholds the sharp focus on monitoring and 

adapting to external changes. However, FSA has identified 

several specific areas that have room for improvements, 

beyond increasing the focus on students, which has the 

highest priority: employee engagement, trust in senior 

leadership, and accountability, among others. FSA employees 

wish to move away from bureaucracy and silos, and promote 

openness, empowerment, and trust. FSA needs to execute on 

this desired change to unlock the full potential of its staff and 

to deliver truly superior service to students.

FSA has started to create the momentum for change by 

substantially increasing the amount of communication at 

FSA and actively involving employees in the development 

of FSA’s new mission, vision, and core values. FSA will 

build on this by creating a dedicated team that will be 

tasked with effecting cultural change at FSA. FSA also will 

systematically strengthen the leadership capacity and the 

skills of middle managers. Finally, FSA will redesign the 

internal communication systems to create effective avenues 

of propagating messages from its leadership and employees. 

FSA also needs to undertake actions to better disseminate 

and represent the voice of the students across the 

organization, to make the customer more directly relevant 

to its employees. FSA must meaningfully collect the views 

of frontline employees, through focus groups and surveys, 

and create formal processes for including employee input in 

discussions and decisions that affect the organization.
23

Strategic Plan FY 2011–15 | 23

F

SA’s strategic goals, objectives and initiatives will 

significantly improve the organization’s future 

performance. FSA will measure the success of its strategic 

goals against the following performance goals (Exhibit 13). 

For strategic goal A, provide superior service and 

information to students and borrowers, the success 

outcome would be an increased number of students 

applying for federal student aid and their satisfaction with 

FSA’s services. For the application, FSA will look at groups 

by segments: (1) traditional high school senior students 

(number of original filers who are age 18 or younger, 

divided by the total number of high school graduates); 

(2) nontraditional students (number of original filers who 

are age 25 or older and with no college degree, divided by 

the number of people in the workforce age 25 and older 

with no college degree). In addition, given the increased 

focus on most-needy and least-served students, FSA will 

measure penetration of FAFSA applications for low-income 

students (number of original filers who are from lowincome households, divided by the number of low-income 

households that have college eligible students). For all 

metrics, we aim to continue to improve every year. 

FSA also will measure the percentage of students who 

dropped out of postsecondary school due to financial 

reasons, and customer satisfaction throughout the student 

aid lifecycle. FSA will develop a new survey or work with 

outside organizations to measure what proportion of 

dropouts are driven by lack of financial resources, and 

FSA will aim to reduce this proportion every year. FSA 

also will aggregate the American Customer Satisfaction 

Index (ACSI) survey for applicants, students in school, 

and borrowers in repayment to measure overall customer 

satisfaction level throughout the student aid lifecycle. 

FSA’s goal is to improve the aggregate ACSI score from 

74 today to 79 by FY 2015. This metric will measure how 

FSA is improving in terms of streamlined process for 

customer interaction and the accessibility of information 

FSA provides to its customers on its websites and in 

other materials.

For strategic goal B, work to ensure that all participants 

in the system of postsecondary education funding serve 

the interests of students, from policy to delivery, FSA will 

conduct a survey with postsecondary institutions and 

partners to gauge the “ease of doing business with FSA.” 

FSA aims to improve the score year after year. FSA also 

will continue to study other possible ways to measure the 

extent to which postsecondary institutions and partners are 

actively supporting the interests of students and borrowers. 

Specifically, FSA will develop an additional metric to 

measure the impact of improvement under development. 

For strategic goal C, develop efficient processes and effective 

capabilities that are among the best in the public and 

private sectors, FSA will measure two unit costs: (1) the cost 

for delivering aid (total cost to process FAFSA and originate 

aid, divided by the number FAFSA processed); and (2) cost 

for servicing all borrowers (total costs for servicing and 

5. Performance Goals
Counselors and Mentors Handbook

24 | Federal Student Aid

EXHIBIT 13: FSA’s performance goals: FY 2011–15

* Delinquency rate is defined as the balance of loans that are 1–270 days past due serviced by FSA, divided by total 

balance of loans serviced by FSA (not in school or in grace loan status) 

** Default rate is defined as the balance of loans that are 270-days-or-more past due serviced by FSA and loans 

serviced in debt collection, divided by total balance of loans serviced by FSA (not in school or in grace loan status)

STRATEGIC GOAL PERFORMANCE GOAL

BASELINE IN 

FY 2010

TARGET FOR 

FY 2015

A. Provide superior 

service and 

information 

to students 

and borrowers

1. % of original FAFSA filers 

among high school seniors

49.5% Continue to increase 

every year

2. % of original FAFSA filers 

among workforce aged 25+ 

without college degree

3.9% Continue to increase 

every year

3. % of original filers among 

low-income students

Calculation in progress Continue to increase 

every year

4. % of students who dropped 

out due to financial reasons

Develop baseline 

in FY 2011

Set target in FY 2011

5. Customer satisfaction score (ACSI) 

for the entire aid lifecycle

74 79

B. Work to ensure that all 

participants in the system 

of postsecondary education 

funding serve the interests 

of students, from policy 

to delivery

1. “Ease of doing business with 

FSA” survey result from schools

Develop baseline 

in FY 2011

Set target in FY 2011

2. Additional metric to measure 

impact of improvements 

under development

Develop metric 

and develop 

baseline in FY 2011

Set target in FY 2011

C. Develop efficient 

processes and 

effective capabilities 

that are among the 

best in the public 

and private sectors

1. Aid Delivery-related cost 

per application

Develop baseline 

in FY 2011

Set target in FY 2011

2. Loan servicing-related cost 

per borrower serviced

Develop baseline 

in FY 2011

Set target in FY 2011

3. Additional metric to measure 

improvement in cost structures 

under development

Define metric and 

develop baseline 

in FY 2011

Set target in FY 2011

D. Ensure program 

integrity and safeguard 

taxpayers’ interests

1. Delinquency rate* 8.8% Maintain <= 8.8% 

2. Default rate** 12.2% Maintain <= 12.2% 

E. Strengthen FSA’s 

performance culture 

and become one of 

the best places to work 

in the federal government

1. Best Places to Work in the 

Federal Government ranking 

217th out of 224 100th
25

Strategic Plan FY 2011–15 | 25

administrative costs of collections, divided by the number 

borrowers serviced). Since the shift to Direct Loans will 

impact these unit costs dramatically from FY 2010 and 

FY 2011, FSA will set baseline and targets in FY 2011 that 

incorporate a fuller understanding of the impacts of shift 

to Direct Lending. Finally, FSA will develop a measure 

to better evaluate its cost structure and set a target in 

FY 2011 to improve its cost structure.

For strategic goal D, ensure program integrity and safeguard 

taxpayers’ interest, FSA will look at its performance on 

managing outstanding loans to reduce delinquency and default 

rates. The delinquency rate is defined as the balance of loans 

1–270 days past due serviced by FSA, divided by total balance 

of loans serviced by FSA (not in school or in grace loan status); 

default rate is defined as the balance of loans that are 270-daysor-more past due serviced by FSA and loans serviced in debt 

EXHIBIT 14: Year-by-year performance goals: FY 2011–15

PERFORMANCE GOAL FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

A. 1. % of original FAFSA filers among 

high school seniors

>=49.5% ------- Each year no lower than in previous year ------->

2. % of original FAFSA filers among 

workforce aged 25+ without 

college degree

>=3.9% ------- Each year no lower than in previous year ------->

3. % of original filers among 

low-income students

TBD ------- Each year no lower than in previous year ------->

4. % of students who dropped 

out due to financial reasons

TBD ------- Each year no higher than in previous year ------>

5. Customer satisfaction score (ACSI) 

for the entire aid lifecycle

74 74 76.5 76.5 79

B. 1. “Ease of doing business with 

FSA” survey result from schools

Launch 

Survey

---- Each year the same or better than in previous year --->

2. Additional metric to measure 

impact of improvements 

under development

TBD ------------------------------ TBD -----------------------------> 

C. 1. Aid Delivery-related cost 

per application

TBD ------- Each year no higher than in previous year ------>

2. Loan servicing-related cost 

per borrower serviced

TBD ------- Each year no higher than in previous year ------>

3. Additional metric to measure 

improvement in cost structures 

under development

TBD -- Each year the same or better than in previous year -->

D. 1. Delinquency rate <=8.8% --------- Maintain the rate lower than baseline- ------->

2. Default rate <=12.2% --------- Maintain the rate lower than baseline- ------->

E. 1. Best Places to Work in the 

Federal Government ranking 

180th 160th 140th 120th 100th
Counselors and Mentors Handbook

26 | Federal Student Aid

collection, divided by total balance of loans serviced by FSA 

(not in school or in grace loan status). Historical analyses of 

these metrics showed that there is no significant correlation 

with industry benchmarks and they are not as susceptible 

to economic cycles. Therefore, FSA will aim to maintain or 

improve the rates for the next five years. 

For strategic goal E, strengthen FSA’s performance culture and 

become one of the best places to work in the federal government, 

FSA will aim to improve our ranking in the Best Places to Work in 

the Federal Government from current bottom quartile to top half 

by FY 2015. Because the ranking is based on the composite score 

of the Employee Viewpoint Survey conducted by OPM, it is a 

good indicator to measure the change in performance culture.

The year-by-year performance goals are described below 

(Exhibit 14). Except for the Best Places to Work in the 

Federal Government ranking, FSA currently does not track 

the metrics it aims to measure; over the course of FY 2011, 

FSA will develop the current baseline for all performance 

goals and then set targets for the next five years.

In addition to these 13 major performance goals, 

FSA has developed detailed performance metrics to 

monitor progress against each objective and strategic goal, 

so that stakeholders can keep track of progress and FSA 

can report on the same in its annual performance report. 
27

Strategic Plan FY 2011–15 | 27

6. External Risk Factors

•	 Changing political landscape. Changes in the 

administration may alter the direction, postsecondary 

education strategy, and overall goals that FSA is supporting. 

New legislation and regulations could impact what FSA is 

required and expected to do and require modifications to 

aspects of FSA’s strategy.

•	 Federal resource constraints. FSA has prepared this 

strategic plan based on an assumption of budget 

availability. Any reductions in the assumed budget levels 

or any constraints on FSA’s authority to allocate those 

resources would have an impact on the organization’s 

ability to reach its performance goals.

•	 Economic uncertainty. The effects of the recession could 

dramatically alter FSA’s operating and program costs by 

significantly increasing the number of students enrolled 

in higher education who require support services.

•	 Stakeholder and partner behavior. Many of FSA’s 

stakeholders will have their businesses radically altered by 

the recent legislation to shift to Direct Lending, particularly 

FFELP lenders and guaranty agencies. As a result, some 

partners may decrease provisions of services and information 

on student lending. This would increase the responsibility of 

FSA to ensure students have access to available information 

and funding. In addition, evolving trends, such as high growth 

of proprietary schools, may pose additional challenges to FSA’s 

operations. For example, proprietary schools conduct more 

proactive marketing to enroll students and are more likely 

to use new modes of instructional delivery (e.g., distance 

learning, technology-based learning) to optimize shareholder 

value, compared to traditional public 2- and 4-year, and notfor-profit private institutions.

•	 Natural disasters and catastrophic events. A catastrophic 

event, such as Hurricane Katrina, could change FSA’s 

responsibilities; that is, FSA may have to address specific 

need for additional aid to those students facing crisis. 

Similar unforeseen events could have unanticipated 

impact on FSA’s contractors and operations.

•	 Personally identifiable information. FSA and its partners 

handle personally identifiable information, such as Social 

Security numbers and tax and income information of 

family members. While FSA is working hard to upgrade 

its IT security, there is a continuous threat of exposure of 

personally identifiable information to unintended audiences.

F

SA faces a number of external risk factors that could 

undermine the organization’s mission and progress in 

implementing its strategy. While these factors are, by 

definition, outside of FSA’s control, FSA can anticipate 

and prepare for them to minimize their potential impact. 

The major risks are:
Counselors and Mentors Handbook

28 | Federal Student Aid

•	 Ongoing monitoring of initiative implementation. 

As part of objective C7, FSA will set up the organization 

and processes to closely track the progress of each of 

the initiatives specified in this document, with ongoing 

reporting to FSA senior leadership and quarterly reviews 

to assess progress and resolve any obstacles to successful 

implementation that should emerge.

•	 Ongoing monitoring of performance metrics.

FSA will develop the baseline and track the performance 

metrics outlined in section five above, regularly 

communicate them throughout the organization, 

and investigate ways of furthering progress towards 

the established performance goals.

•	 Annual performance reporting. FSA will include the 

progress against the performance goals set in this plan in 

the annual performance report. FSA also will report on 

the achievement of milestones and the impact of individual 

initiatives as they are meaningful components of the annual 

performance plans for FSA managers and executives. 

FSA also will monitor and evaluate them as part of FSA’s 

organizational performance assessment process.

•	 Annual strategic plan revision. Based on the progress 

made and effectiveness of the initiatives outlined in this 

plan, FSA will annually revise the strategy to make sure it 

is on the right trajectory towards supporting FSA’s mission 

and vision and the administration and the Department’s 

goals and objectives. As part of the revision, FSA also will 

modify initiatives and priorities to meet the changing 

environment and demands of FSA customers.

7. Program Evaluations

F

SA will continually monitor the progress of the 

implementation of this strategic plan and the effectiveness 

of its components, by undertaking the following:
29

Strategic Plan FY 2011–15 | 29

8. Moving Forward

F

SA stands at a critical juncture today, facing a number of 

external changes and new opportunities. The president’s 

2020 college completion goal increases the importance 

of providing access to higher education, particularly for 

nontraditional students. The recent legislation that shifts to 

Direct Lending presents opportunities as well as challenges, 

as FSA’s role within the overall financial aid system becomes 

greater, and as we become more responsible for ensuring 

students have access to postsecondary education and the 

needed funding.

This five-year strategic plan is designed to help us achieve 

our mission to help put America through school and realize 

our vision to become the most trusted and reliable provider of 

postsecondary financial aid information and services in the 

nation—all while supporting progress towards the president’s 

2020 college completion goal. We believe that the direction 

we outlined in this plan is ambitious, but at the same time it 

is a reasonable stretch for FSA to take on more responsibility 

in serving students, ensuring that they have access to funding, 

information to guide their choices in selecting postsecondary 

educational programs, and opportunity to reap the benefits of 

further educational attainment. 

We will use this plan as the foundation for discussion and 

decision-making at every level of our organization. While 

we will review and update the plan annually, it will serve 

as a tool to align our employees and stakeholders to the 

goals and priorities for our journey over the next five years. 
Counselors and Mentors Handbook

30 | Federal Student Aid

1 U.S. Department of Education, Fiscal Year 

(FY) 2010 Budget Summary.

2 U.S. Department of Education, FSA, Annual 

Report 2009. The data is as of end of FY 2009.

3 FSA interacts with a number of other offices 

within the Department. In such mentions, 

this report will refer to these offices simply 

as “the Department.” 

4 Presentation by Bill Taggart to the 

Department, Aug. 28, 2009.

5

 Ibid.

6 U.S. Department of Labor, Bureau of Labor 

Statistics, Inflation calculator, 2000–09. 

http://data.bls.gov/cgi-bin/cpicalc.pl, last 

accessed Feb. 11, 2010.

7 The Federal Reserve Board: Flow of Funds, 

Moody’s Economy.com, last accessed 

Feb. 10, 2010, available only to subscribers. 

8 U.S. Department of Education, 

National Center for Education (NCES). 

Enrollment in Postsecondary Institutions, 

Fall 2008; Graduation Rates, 2002 and 2005 

Cohorts; and Financial Statistics, Fiscal 

Year 2008 (NCES 2010-152), 2010. 

http://nces.ed.gov/pubs2010/2010152.rev.pdf, 

last accessed Feb. 10, 2010. 

9 U.S. Department of Education, NCES. Digest 

of Education Statistics, Table 384: College 

enrollment and labor force status of 1999 and 

2000 high school graduates, by sex & race/

ethnicity: October 1999 & October 2000, 

http://nces.ed.gov/programs/digest/d01/

dt385.asp , last accessed Feb. 10, 2010. 

10 U.S. Department of Labor, Bureau of 

Labor Statistics (BLS) Current Population 

Survey, http://www.bls.gov/news.release/

archives/hsgec_04282009.pdf, last accessed 

Feb. 11, 2010.

11 U.S. Department of Labor, Bureau of Labor 

Statistics Current Population Survey, “College 

Enrollment and Work Activity of 2008 High 

School Graduates,” 2009. http://www.bls.gov/

news.release/archives/hsgec_04282009.pdf

12 Under Secretary Martha Kanter's Remarks 

at the 2010 Association of International 

Education Administrators (AIEA) 

Conference, Feb. 15, 2010.

13 Center for Law and Social Policy, “Summary 

of Key Postsecondary Education and 

Training Provisions in the Health Care and 

Education Reconciliation,” March 23, 2010.

14 U.S. Department of Education, NCES 

“Enrollment in Postsecondary Institutions, 

Fall 2008; Graduation Rates, 2002 and 2005 

Cohorts; and Financial Statistics, Fiscal 

Year 2008.”

15 Bill and Melinda Gates Foundation, 

“With Their Whole Lives Ahead of Them,” 

December 2009. 

16 U.S. Department of Education, NCES, 

Integrated Postsecondary Education Data 

System (IPEDS), Federal Student Aid 

program files.

17 Federal Student Aid, Chief Finance Office, 

program files.

18 President’s Budget 2011 Budget Loan 

volumes—Net Commitments by Fiscal 

Year; The Department of Education Budget 

Service. 2009.

19 Organization for Economic Cooperation 

and Development, “State of Education 2009. 

OECD Indicators” 

http://www.oecd.org/document/24/0,3343,

en_2649_39263238_43586328_1_1_1_1,00.

html#4 Indicator A-3.

20 Bill and Melinda Gates Foundation, 

“With Their Whole Lives Ahead of Them,” 

December 2009.

21 Congressional Budget Office, “An Analysis 

of the President’s Budgetary Proposals for 

Fiscal Year 2011,” March 2010.

22 Federal Student Aid Organizational Health 

Index Survey, FSA program files.

23 Federal Student Aid, FSA program files. 

9. Notes