Department of Education

STUDENT AID ADMINISTRATION

Fiscal Year 2014 Budget Request

CONTENTS

Page

Appropriations Language ......................................................................................................AA-1

Analysis of Language Provisions and Changes.....................................................................AA-2

Amounts Available for Obligation ..........................................................................................AA-3

Obligations by Object Classification ......................................................................................AA-4

Summary of Changes ...........................................................................................................AA-5

Authorizing Legislation..........................................................................................................AA-7

Appropriations History...........................................................................................................AA-8

Significant Items in FY 2013 Appropriations Reports.............................................................AA-9

Summary of Request ..........................................................................................................AA-10

Activity:

Student Aid Administration...........................................................................................AA-11

Organizational Chart ...........................................................................................................AA-38
STUDENT AID ADMINISTRATION

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Appropriations Language

For Federal administrative expenses to carry out part D of title I, and subparts 1, 3, 9,

and 101 of part A, and parts B, C, D, and E of title IV of the HEA, $1,050,091,000, to remain 

available until September 30, 2015.

2

NOTES

A full-year 2013 appropriation for this account was not enacted at the time the budget was prepared; therefore, 

this account is operating under a continuing resolution (P.L. 112-175). The amounts included for 2013 reflect the 

annualized level provided by the continuing resolution.

Each language provision that is followed by a footnote reference is explained in the Analysis of Language 

Provisions and Changes document, which follows the appropriation language.
STUDENT AID ADMINISTRATION

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Analysis of Language Provisions and Changes

Language Provision Explanation

1 For Federal administrative expenses to 

carry out part D of title I, and subparts 1, 3, 9,

and 10...

Subpart 10 is added to the language to 

include the specific subpart authorization for 

the Iraq and Afghanistan Service Grant 

program. 

2 ...to remain available until September 30, 

2015.

This language provides for appropriated funds 

to remain available for 2 years.
STUDENT AID ADMINISTRATION

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Amounts Available for Obligation

 (dollars in thousands)

Appropriation and Adjustments 2012 2013 2014

Discretionary appropriation:

Appropriation............................................................ $1,045,363 $1,043,387 $1,050,091

Discretionar y appAcross-the-board reduction (P.L. 112-74) ................ -1,976 0 0

Discretionar y appropriati onAcross-the-board increase (P.L. 112-175)................ ____0 _6,386 0 Discretionar y appropriati on

 Subtotal, appropriation ................................... 1,043,387 1,049,773 1,050,091

Discretionar y appropriati on Transfer from Department of Health and Human 

Mandatory Discretionar y appr opri ation Services for Health Education Assistance Loan 

Discretionar y appropriati on Discretionar y appropoProgram ............................................................ 0 0 3,000

Discretionar y appropriati on Subtotal, adjusted discretionary appropriation 1,043,387 1,049,773 1,053,091

Mandatory appropriation: Mandator y appropriate

on Not-For-Profit Servicing ............................................ 276,731 385,897 434,447

Subtotal, discretionary and mandatory 

appropriation ................................................. 1,320,118 1,435,670 1,487,538

Unobligated balance, start of year................................ 2,513 72,032 0

Recovery of prior-year obligations................................ 22,379 0 0

Unobligated balance expiring....................................... -20,000 0 0

Unobligated balance, end of year................................. -72,032 0 0

Total, direct obligations............................ 1,252,978 1,507,702 1,487,538
STUDENT AID ADMINISTRATION

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Obligations by Object Classification

(dollars in thousands)

Object Class 2012 2013 2014

Personal Compensation and Benefits: PC&B

PC&B Full-time permanent............................................... $134,716 $137,468 $138,268

PC&B Full-time temporary ............................................... 248 0 0

PC&B Part-time................................................................ 823 0 0

PC&B Overtime................................................................ 38 76 76

PC&B Awards .................................................................. 1,847 1,600 1,600

PC&B Benefits ................................................................. 38,720 38,612 39,733

PC&B Benefits for former personnel ................................ 121 0 0

Subtotal........................................................ 176,513 177,756 179,677

Travel...................................................................... 2,472 2,807 2,855

Transportation of Things ......................................... 4 0 0

Rental payments to GSA and others ...................... 13,717 18,836 19,440

Communications, utilities, and miscellaneous 

charges................................................................. 588 464 464

Printing and reproduction ........................................ 2,573 2,014 1,441

Contractual services and supplies: CS&S

CS&S Advisory and assistance services.......................... 8,588 2,484 4,843

CS&S Other services ....................................................... 638,954 817,310 789,924

CS&S Training and tuition................................................ 997 2,503 2,800

CS&S Purchases of goods and services.......................... 23,366 18,165 20,042

CS&S Operations and maintenance of facilities ............... 196 100 440

CS&S Research and Development .................................. 460 0 0

CS&S Operations and maintenance of equipment ........... 3 30 30

CS&S Information technology services and contracts ...... 381,437 464,290 463,775

Subtotal........................................................ 1,054,001 1,304,882 1,281,854

Supplies and materials ............................................ 239 197 269

Equipment............................................................... 2,704 316 538

Building Alterations.................................................. 167 430 1,000

Total, direct obligations ................................ 1,252,978 1,507,702 1,487,538
STUDENT AID ADMINISTRATION

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Summary of Changes

(dollars in thousands)

2013.............................................................................................. $1,043,3871

2014.............................................................................................. 1,050,091

Net change ............................................................ +6,704

1

 Excludes a 0.612 percent across-the-board increase of $6,386 thousand in FY 2013 

provided by P.L. 112-175.

Increases: 2013 base

Change 

from base

Built-in: Built

Built Increase in personnel compensation primarily for a proposed 

Governmentwide one percent pay raise. $137,468 +$800

Built Increase in benefits for the Department’s share of health, 

retirement, and other benefits. 38,612 +1,121

Built Increase in GSA rental payments due to anticipated rate 

increases and tax escalation. 18,836 +604

Program: Prog

 Increase in information technology contracts due to an increase 

in operations and maintenance of Common Origination and 

Disbursement and procurement of core contracts. 415,714 +39,061

 Increase in National Student Loan Data System for system

enhancements. 0 +9,000

Prog Increase funding in advisory & assistance services due to 

additional contract specialist support. 2,484 +2,359

Prog Increase in goods and services from the Government due to 

increase in background investigations. 18,165 +1,877

Prog Increase in building alterations. 430 +570

Prog Increase in operations and maintenance of facilities. 100 +340

Prog Increase in training. 2,503 +297

Prog Increase in equipment. 316 +222
STUDENT AID ADMINISTRATION

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Summary of Changes—Continued

(dollars in thousands)

____________________________________________________________________________

Increases: 2013 base

Change 

from base

Program: Prog

Prog Increase in supplies. $197 +$72

Prog Increase in travel necessary for compliance reviews. 2,807 +48

Subtotal, increases +56,371

Decreases: 2013 base

Change 

from base

Program: Prog

Prog Decrease in other services due to expiration of Common 

Servicers for Borrowers contract and the anticipation of the 

Front End Business Integration and Loan Consolidation 

recompete efforts being completed. $401,571 -$49,094

Prog Decrease in printing. 2,014 -573

Subtotal, decreases -49,667

Net change +6,704

 
STUDENT AID ADMINISTRATION

Authorizing Legislation

(dollars in thousands)

Activity

2013

Authorized

2013

Estimate

2014

Authorized

2014

Request

Student aid administration (Higher 

Education Act of 1965, I-D and IV-D, 

section 458) Indefinite $1,043,387 Indefinite $1,050,091

Total definite authorization 0 1,043,387 0 1,050,091

Total discretionary appropriation 1,043,387 1,050,091

Total mandatory appropriation 385,897 434,447

Total appropriation 1,429,284 1,484,538

Total appropriation including 0.612 

percent ATB discretionary increase 1,049,773

AA-7
STUDENT AID ADMINISTRATION

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Appropriations History

(dollars in thousands)

Year

Budget 

Estimate 

to Congress 

House 

Allowance Footnote

Senate 

Allowance Footnote Appropriation Footnote

2005 $934,639 $120,247 $121,000 $119,084

2006 939,285 124,084 120,000 118,800

2007 733,720 N/A1 N/A1 719,9141

Rescission (P.L. 110-28) 0 0 0 -500

Transfer (P.L. 110-05) 0 0 0 -1,464

2008 708,216 708,216 708,216 695,843

2009 764,000 714,0002 704,8432 753,402

Recovery Act Supplemental

 (P.L. 111-5) (non-add) (0) (50,000) (0) (60,000)

2010 870,402 870,402 870,4023 870,402

Rescission (P.L. 111-226) 0 0 0 -82,000

2011 1,170,231 994,6004 1,048,0783 992,0125

2012 1,095,418 992,0126 1,045,3636 1,043,387

2013 1,126,363 1,043,3877 1,126,3637 1,049,7738

2014 1,050,0919

 1

 This account operated under a full-year continuing resolution (P.L. 110-5). House and Senate Allowance 

amounts are shown as N/A (Not Available) because neither body passed a separate appropriations bill.

2 The levels for the House and Senate allowances reflect action on the regular annual 2009 appropriations bill, 

which proceeded in the 110th Congress only through the House Subcommittee and the Senate Committee.

3

 The levels for the Senate allowance reflect Committee action only. 

4

 The levels for the House allowance reflect the House-passed full-year continuing resolution. 

5

 The level for appropriation reflects the Department of Defense and Full-Year Continuing Appropriations Act, 2011 

(P.L. 112-10). 

6

 The level for the House allowance reflects an introduced bill; the level for the Senate allowance reflects Senate 

Committee action only.

7

 The levels for the House and Senate allowance reflect action on the regular annual 2013 appropriation bill, which 

proceeded in the 112th Congress only through the House Subcommittee and the Senate Committee.

8 The amount shown includes the 0.612 percent across-the-board increase provided by P.L. 112-175, in effect 

through March 27, 2013. 9 Excludes $3,000 thousand transferred from Department of Health and Human Services to Department of 

Education for the Health Education Assistance Loan program.

_____________________________________________________________________________________________
STUDENT AID ADMINISTRATION

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Significant Items in FY 2013 Appropriations Reports

SAA Obligation Plan for Mandatory and Discretionary Funds

Senate: Report 112-176. The Senate directs the Department to continue to provide

quarterly reports detailing its obligation plan by quarter for spending mandatory 

and discretionary funding for student aid administrative activities broken out by 

servicer, activity and funding source.

Response: The Department will continue to provide the requested quarterly reports as 

directed to the Committees on Appropriations of the House of Representatives 

and the Senate.
Summary of Request

Click here for accessible version 

(in thousands of dollars) 2014

Category 2012 2013 President's

Account, Program and Activity Code Appropriation Appropriation Budget Amount Percent

Student Aid Administration (HEA I-D and IV-D, section 458)

1. Salaries and expenses D 682,221 699,770 733,224 51,003 7.476%

2. Servicing activities D 361,166 343,617 316,867 (44,299) -12.266%

3. Health education assistance loan program (non-add) 1 D 0 0 3,000 3,000 ---

Subtotal 1,043,387 1,043,387 1,050,091 6,704 0.643%

4. Not-for-profit servicers M 276,731 385,897 434,447 157,716 56.993%

Total 1,320,118 1,429,284 1,484,538 164,420 12.455%

Discretionary 1 D 1,043,387 1,043,387 1,050,091 6,704 0.643%

Mandatory M 276,731 385,897 434,447 157,716 56.993%

Across-the-board 0.612% increase applied to discretionary appropriation, provided in P.L. 112-175. 6,386

Total, Discretionary 1,043,387 1,049,773 1,050,091 6,704 0.643%

NOTES: D = discretionary program, M = mandatory program; FY = fiscal year 

FY 2013 discretionary appropriation amounts are based on P.L. 112-175, the Continuing Appropriations Resolution, 2013, that provided appropriations through March 27, 2013. FY 2013 mandatory amounts are 

either specifically authorized levels, or are based on FY 2013 President's Budget Policy, updated for more recent estimates of mandatory costs, or FY 2014 President's Budget Policy, as applicable.

Detail may not add to totals due to rounding.

1 Excludes budget authority transfer in FY 2014 of $3,000 thousand for the Health Education Assistance Loan (HEAL) program, the program administrative authority for which is proposed to be transferred

from HHS to Education, per Sec. 519 of P.L. 112-74, the Department of Labor, Health and Human Services, and Education, and Related Agencies Appropriation Act of 2012, as amended. 

Compared to 2012 Appropriation

2014 President's Budget 

AA-10
STUDENT AID ADMINISTRATION

AA-11

Activit y

Student Aid Administration

(Higher Education Act of 1965, I-D and IV-D, section 458)

(dollars in thousands)

FY 2014 Authorization: Indefinite

Budget Authority

Activity

2012 2013 F

o

ot

n

ot

e

2014Footnote

20Change

from 2013

Salaries and Expenses: 0 0 0

Sal aries and Expenses Personnel costs $176,426 $177,756 $179,676 +$1,920

Sal aries and Expenses Non-personnel costs,

excluding loan servicing costs 505,795 522,014 553,548 +31,534

Subtotal, salaries and expenses1 682,221 699,770 733,224 +33,454

Loan servicing activity discretionary costs 361,166 343,617 2 316,867 3 -26,750

Total, discretionary costs4 1,043,387 1,043,3875 1,050,091 +6,704

Not-For-Profit servicing mandatory costs 276,731 385,897 6 434,447 7 +48,550

Total, mandatory costs 276,731 385,897 434,447 +48,550

Total, student aid administration8 1,320,118 1,429,284 1,484,538 +55,254

FTE employees 1,325 1,326 1,321 -5

_________________

1

 The changes from 2012 to 2014 in Student Aid Administration (SAA) Salaries and Expenses discretionary 

costs are: for Personnel costs, +$3,250 thousand; for Non-personnel costs – excluding loan servicing costs, 

+$47,753 thousand; and for the Salaries and Expenses subtotal, +$51,003 thousand.

2

 Includes $205,876 thousand in servicing costs for Title IV Additional Servicer (TIVAS) servicing contracts,

$121,476 thousand in servicing costs for the Common Services for Borrowers servicing contract, $6,478 thousand in 

servicing costs for Department-held Perkins Loans, $5,000 thousand for Debt Management Collection System 

(DMCS) development costs, $3,000 thousand for TIVAS development costs, $1,511 thousand for Teacher Education 

Assistance for College and Higher Education (TEACH) grants servicing costs, and $276 thousand for a customer 

satisfaction survey required for TIVAS servicer volume allocation. 3

 Includes servicing costs of $248,680 thousand for TIVAS servicing contracts, $57,872 thousand for DMCS 

servicing costs, $4,083 thousand for Department-held Perkins Loans servicing, $3,500 thousand for TIVAS 

development costs, $2,420 thousand for Teacher Education Assistance for College and Higher Education (TEACH) 

grants servicing, and $312 thousand for a customer satisfaction survey required for TIVAS servicer volume allocation. 4

 The changes from 2012 to 2014 in SAA for Loan servicing activity discretionary costs are -$44,299 thousand, 

and for Total discretionary costs, +$6,704 thousand. 5

 Excludes 0.612 percent across-the-board discretionary increase provided in P.L. 112-175. All 2013 

discretionary numbers in this congressional justification exclude this increase, which totals $6,386 thousands for the 

SAA account. 6

 Includes $355,059 thousand in servicing costs for Not-For-Profit (NFP) servicing contracts, $14,105 thousand 

for one-time set up fees for new NFP servicers, $9,698 thousand in systems development costs to implement new 

NFP servicers, $6,000 thousand for Not-For-Profit TIVAS development costs, and $1,035 thousand for a customer 

satisfaction survey required for NFP servicer volume allocation.
STUDENT AID ADMINISTRATION

AA-12

7

 Includes $421,947 thousand in servicing costs for NFP servicing contracts, $5,882 thousand for one-time set 

up fees for new NFP servicers, $5,500 thousand in system development costs for NFP TIVAS, and $1,118 thousand 

for a customer satisfaction survey required for NFP servicer volume allocation. 8

 The change from 2012 to 2014 in total funding for the SAA account, including discretionary and mandatory 

costs, is +$164,420 thousand. 

PROGRAM DESCRIPTION

Student Aid Administration provides funds to administer the Federal student financial assistance 

programs authorized under Title IV of the Higher Education Act (HEA) of 1965, as amended. 

The Title IV programs, which provide funds to help students and families pay for the cost of 

postsecondary education, are the Nation’s largest source of financial aid for postsecondary 

students. The account provides funding to administer 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 aid dollars; administering billions of 

dollars in existing guaranteed loans; servicing tens of millions of accounts; and partnering with 

schools, financial institutions, and guaranty agencies to prevent fraud, waste, and abuse.

The Offices of Postsecondary Education (OPE) and Federal Student Aid (FSA) are primarily 

responsible for administering the Federal student financial assistance programs. OPE 

formulates policy for the student financial assistance programs and administers other Federal 

postsecondary education programs. In addition, a number of other Department offices—Office 

of Management, Office of Planning, Evaluation and Policy Development, Office of the General 

Counsel, Office of the Chief Information Officer, Office of the Inspector General, and Office of 

the Chief Financial Officer—contribute to the administration of the student aid programs.

The Higher Education Amendments of 1998 established Federal Student Aid as the Federal 

Government’s first performance-based organization (PBO) to improve service to students, 

parents, schools, and other program participants; to reduce student aid administration costs; to 

increase the accountability of the officials responsible for administering program operations; and 

to integrate the student aid processing and delivery systems. 

The Federal Pell Grant Program is the foundation for Federal financial assistance. It helps 

ensure financial access to postsecondary education—disbursing $32.8 billion to 9.0 million lowand middle-income undergraduate students during the 2012-2013 award year, with an average 

award of $3,658. The maximum Pell Grant award has grown from $4,731 for the 2008–2009 

award year to $5,350 for the 2009–2010 award year; $5,550 for the 2010–2011, 2011-2012, 

and 2012-2013 award years. The maximum award $5,645 for the 2013-2014 award year and is 

projected to be $5,785 for the 2014-2015 award year. 

The William D. Ford Federal Direct Loan (DL) Program and Federal Family Education Loan 

(FFEL) Program are the main drivers of Federal Student Aid’s workload. The DL program lends 

funds directly to students and their families through participating schools by providing 

subsidized and unsubsidized loans. The DL program is funded by borrowing from the U.S. 

Treasury, as well as by an appropriation for subsidy costs. See the Student Loans Overview

and Student Aid Overview for details on Student Loan programs in the 2014 Budget.
STUDENT AID ADMINISTRATION

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The FFEL Program provided the same eligibility requirements and loan limits as the Federal 

Direct Loan Program; however, instead of funds being directly disbursed by the Government to 

borrowers, lenders provided funds to borrowers, which were insured by loan guaranty agencies 

and then reinsured by the Government. 

As a result of uncertainty in the financial markets, the Ensuring Continued Access to Student 

Loans Act of 2008 (ECASLA), P.L. 110-227, provided a mechanism that provided access to 

capital to private lenders for making Federal student loans. Under the ECASLA authority, the 

Department implemented four programs to ensure students and families had access to FFEL 

loans through the 2009-2010 award year. Federal Student Aid continues to administer these 

programs, which continue to affect Federal Student Aid’s workload. The ECASLA efforts 

increased the loan servicing workload, in effect doubling the volume of loans serviced by the 

Department’s private sector contractors at the time. More information about these programs is

available online at: http://Federalstudentaid.ed.gov/ffelp. 

SAFRA (Student Aid and Fiscal Responsibility Act), Title II, Part A of the Health Care Education 

Reconciliation Act, 2010, required all new Federal student loans to be originated through the 

Direct Loan program and serviced by the Department of Education effective July 1, 2010. 

Although all new loans are made through the DL program, Federal Student Aid continues to 

administer the FFEL program, while lenders and guaranty agencies continue to service and 

collect outstanding loans from the FFEL portfolio. In FY 2014, the Department will provide $112

billion in new Direct Loans, excluding Consolidations.

Federal Student Aid uses a variety of means to meet the servicing capacity required to service 

ECASLA and DL loan volume, more detail on which is provided on pages AA-15 through AA-17. 

Servicing activities are funded both by discretionary funds and mandatory funds (as provided by 

SAFRA for eligible Not-For-Profit (NFP) servicers). 

Funding levels for the past 5 fiscal years were as follows:

Fiscal year (dollars in thousands)

2009 ....................................................... $753,402

Recovery Act ...................................... 60,000

2010 .................................................... . 788,402

2011 ................................................... 992,012

2012 ................................................... 1,043,387

2013 ................................................... 1,043,3871

_________________

1

 Excludes 0.612 percent across-the-board increase provided in P.L. 112-175.

FY 2014 BUDGET REQUEST

The Administration requests $1.050 billion in discretionary resources to administer the Federal 

student financial assistance programs in FY 2014, a net increase of $6.704 million—or 0.64 

percent— over the FY 2013 level. This request includes $733 million for student aid 

administration activities and $317 million for loan servicing activities. In addition, the Budget 
STUDENT AID ADMINISTRATION

AA-14

includes $3 million in transferred budget authority for administering the Health Education Loan 

Program (HEAL), for a total of $1.053 billion in discretionary budget authority. The 2014 Budget 

includes appropriations language to transfer the HEAL Program from the Secretary of Health 

and Human Services (HHS) to the Secretary of Education (ED). 

The discretionary funds requested in the 2014 Budget are necessary to: manage and service 

the student loan portfolio, to address anticipated increases in loan volume; maintain operations 

for student aid application processing, origination and disbursement functions, as well as the

student aid IT system hosting; and manage the acquisition strategy for Federal Student Aid’s 

core contracts for origination and disbursement and system hosting.

The 2014 Budget also includes $434.4 million in mandatory funding for Not-For-Profit (NFP) 

loan servicing activities. 

FY 2014 Budget Costs by Category

The following chart, shown on page AA-15, provides for each FY 2014 cost category the funding 

level and percentage share of the FY 2014 Budget. Eighty-three percent of the proposed SAA

budget supports 2014 Federal Student Aid priorities and pay. FY 2014 SAA’s major priorities 

are: effectively servicing the growing student loan portfolio; maintaining continual and 

uninterrupted operations for student aid application processing, origination and disbursement 

functions, and IT system hosting; and procuring and developing systems to replace expiring 

core student aid systems. 

 

Other core student aid systems (e.g., National Student Loan Data System, FSA’s accounting 

system), matching agreements (e.g., Social Security Administration), and IT security initiatives

account for 6 percent of the request. The remaining 11 percent includes overhead and the 

“Other” category, which contains central support (e.g. rent, background investigations), central 

information technology (e.g., the Department’s EDCAPS financial systems), Web site interfaces, 

contract specialist support, and other activities that support FSA’s mission.
STUDENT AID ADMINISTRATION

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FY 2014 Costs by Category and as Percent of Discretionary Request

(dollars in millions)

Pay

17%, $179.70

Other Core Student Aid 

Systems

5%, $47.56

IT Security Initiatives

1%, $10.92

Overhead

2%, $23.62

Other

9%, $91.71

2014 Priorities

66%, $696.58

The sections below show, by cost category, the major projects and their associated FY 2014 

budget funding levels. Only the major drivers of the SAA budget request within each cost 

category are discussed in detail.

Costs within the Overhead cost category and some of the costs in the Other category are 

presented on page AA-31. The Pay request of $179.7 million would cover the personnel

compensation and benefits costs of 1,321 FTE, 1,230 FTE in Federal Student Aid, and 91 FTE 

in the non-Federal Student Aid offices as delineated on page AA-31.

FY 2014 Priorities – $696.6 million

Effectively servicing the student loan portfolio: $316.9 million in discretionary funding; 

$434.4 million in mandatory funding

The FY 2014 budget request includes a total of $316.9 million for discretionary loan servicing 

costs ($248.7 million for operations and maintenance for loan servicers, $57.9 million for Debt 

Management Collection System (DMCS) operations, $4.0 million for Department-held Perkins 

Loans servicing costs, $3.5 million for system development costs, $2.4 million for Teacher 

Education Assistance for College and Higher Education (TEACH) grant operations, and 

$312,000 for customer service satisfaction surveys required for loan volume allocation between 

the Title IV Additional Servicers (TIVAS). The servicing cost estimate takes into account overall 

loan volume, repayment status of the borrower, and the timing of loan delivery. Loan servicing 

costs are presented separately from other student aid administration operating costs to provide 

greater transparency on the main driver of FSA’s cost.

The FY 2014 Budget also includes $434.4 million for mandatory loan servicing. This amount 

includes $427.8 million for Not-For-Profit (NFP) servicing costs, $5.5 million for continual system 
STUDENT AID ADMINISTRATION

AA-16

development costs required for servicing student loans, and $1.1 million for customer 

satisfaction surveys to allocate loans between the four TIVAS servicers.

Currently, the Department contracts with 16 servicers, through the Common Services for 

Borrowers (CSB) contract, the Title IV Additional Servicers (TIVAS) contract, and the Not-ForProfit (NFP) Servicers contract. The sole CSB servicer, Xerox, and two of the TIVAS servicers, 

Sallie Mae and Nelnet, which are For-Profit, are funded with discretionary budget authority. The 

CSB contract will expire in December 2013 and all loans serviced by CSB are expected to be 

transferred to other servicers.

SAFRA provides mandatory budget authority to fund administrative costs of eligible NFP loan 

servicers. Two TIVAS servicers, American Education Services/Pennsylvania Higher Education 

Assistance Agency (AES/PHEAA) and Great Lakes Education Loan Services, are classified as 

NFP servicers, but receive compensation based on the terms of the TIVAS contract. The 

Department also has obtained additional servicing support through its new NFP Servicers 

contracts. The new NFP servicers are allocated a minimum of 100,000 borrower accounts 

each, although future allocations may vary based on performance. As of February 2013, 11

servicers (Missouri Higher Education Loan Authority, ESA/EDFinancial, Cornerstone, Aspire, 

Granite State, Oklahoma Student Loan Authority, EdManage, Vermont Student Assistance 

Corporation, KSA Servicing, EDGEucation Loans, and Council for South Texas Economic

Progress (COSTEP)) service loans under the new NFP Servicers contracts.

The tables on page AA-17 detail the discretionary budget authority for the TIVAS For-Profit 

servicers, mandatory budget authority for the NFP servicers, and the major assumptions driving 

servicing costs for Department-held Federal student loans. Servicing costs are largely 

determined by volume (average borrower accounts per month) and the average negotiated

contractual unit costs. Average borrower accounts per month are calculated by the distribution 

of new unique borrower accounts to one of the multiple service contractors. The average unit 

cost to service each borrower is derived by contractual pricing schedules based on different 

borrower statuses (e.g., in-school, in-grace/current repayment, deferment/forbearance, and 

delinquency). Differences in distribution among loan statuses affect overall unit costs due to 

different pricing for different statuses (e.g., in-repayment borrowers cost more to service than inschool borrowers). 

The increases in average unit cost from 2012 to 2013, and 2013 to 2014, under the NFP 

servicers, are partly due to the maturity of the 100 percent Direct Loan portfolio as more loans 

shift from in-school to in-repayment, and the assumption that borrowers will be shifted from the 

CSB servicer to new NFP servicers, in accordance with Section 2212 of the Health Care and 

Education Reconciliation Act of 2010 (P.L. 111-152, 124 Stat. 1029). By comparison, the unit 

costs for the For-Profit servicers will likely decrease between 2013 and 2014, because the 

current CSB servicer unit costs are higher for this portfolio than the TIVAS For-Profit Servicers’ 

unit costs. 
STUDENT AID ADMINISTRATION

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1 Amounts are actual obligations and may differ from total budget authority.

1 Amounts are actual obligations and may differ from total budget authority.

For-Profit Servicers’ Discretionary Budget Authority:

Major Assumptions Driving Servicing Costs

2012 2013 2014

For-Profit Volume (Borrowers) 18,613,305 16,613,609 17,736,571

For-Profit Average Unit Cost per 

Month (whole dollars)

$1.56 $1.65 $1.45

Number of Servicing Months 12 12 12

For-Profit Loan Servicing Cost 

(dollars in millions)

$349 $329 $309

For-Profit Other Servicing Costs 

(Development and Customer 

Surveys) (dollars in millions)

$8 $4

For-Profit Department-held Perkins 

Loan Servicing Cost 

(dollars in millions)

$7 $4

Total For-Profit Loan Servicing 

Cost (dollars in millions)

$3491 $344 $317

Not-For-Profit Servicers’ Mandatory Budget Authority:

Major Assumptions Driving Servicing Costs

2012 2013 2014

Not-For-Profit Volume (Borrowers) 11,086,907 16,549,824 19,042,873

Not-For-Profit Average Unit Cost per 

Month (whole dollars)

$1.67 $1.78 $1.84

Number of Servicing Months 12 12 12

Not For-Profit Loan Servicing Cost 

(dollars in millions)

$222 $355 $422

Not For-Profit Loan One-Time SetUp Fees (dollars in millions)$32 $14 $6

Not-For-Profit Other Servicing Costs 

(Development and Customer 

Surveys) (dollars in millions)

$3 $17 $6

Total Not For-Profit Loan Servicing 

Cost (dollars in millions)

$2571 $386 $434
STUDENT AID ADMINISTRATION

AA-18

Since the Department implemented the ECASLA program in FY 2009 and became the sole 

originator of Federal student loans in FY 2010, the number of borrowers has increased 

significantly from 9.7 million in FY 2008 to an estimated 36.8 million in FY 2014, a 279 percent 

increase.

Maintaining continual operations for student aid application processing, origination and 

disbursement functions, and IT system hosting: $350.7 million in discretionary funds

The budget request includes $350.7 million for student aid application processing, origination

and disbursement functions, and IT system hosting, an increase of $10.5 million over FY 2013. 

Like servicing, these costs are driven by loan volume. As more students apply for and receive 

aid, the costs increase for processing Free Applications for Federal Student Aid (FAFSA), 

originating and disbursing student loans, and maintaining the necessary IT infrastructure to 

prevent interrupted service to borrowers and student loan information from being lost. 

Included in this request are key FSA operational costs:

• Front End Business Integration (FEBI) ($87.2 million), including operations and 

maintenance ($81.6 million), and school products and services ($5.6 million);

• Common Origination and Disbursement (COD) ($159.4 million); and

• IT system costs ($104.1 million), including the operation and maintenance of the 

data center, software licenses, and the technical architecture and system support 

for FSA applications.
STUDENT AID ADMINISTRATION

AA-19

Federal Student Aid renegotiated the FEBI contract in FY 2012. The renegotiation resulted in 

contract components that are severable and a price per FAFSA application that is based on a 

firm-fixed-price tiered schedule. A predetermined tier is established before the next contract 

year. Applications are counted during the contract year regardless of the application year. 

FEBI’s operations and maintenance per applicant includes: FAFSA applications and all related 

communications; Central Processing System (CPS) for application processing, eligibility 

determination, and support functions; Federal Student Aid Information Center (FSAIC) call 

center support; and necessary changes to the FAFSA application for each new award year. In

addition to operations and maintenance, FEBI school products and services provide the school 

administrator with necessary tools such as EDEXpress, Financial Aid Administrators Access, 

Participation Management, and COD Ancillary Services. 

Strategically planning the acquisition process and including procurement of systems: 

$29.0 million in discretionary funds

Federal Student Aid’s core operations and IT systems hosting are supported through several 

large contracts: FEBI, Common Origination and Disbursement, CSB, and Virtual Data Center. 

All of these contracts are scheduled to expire between fiscal years 2014 and 2016. FSA is 

implementing a multi-year acquisition strategy for all these contracts to ensure operational 

continuity while leveraging the competitive procurement process to increase efficiency, simplify 

operations, and reduce costs. 

Procuring these systems in FY 2014 will ensure that the Department is able to originate and 

disburse loans and host core systems without interruption to service when the current contracts

expire. The request for these activities includes procurement related costs including acquisition 

strategy assistance and development costs.

The FY 2014 request for these procurement activities is $29 million, an increase of $3 million

over FY 2013. The table below shows the projected funding levels for the major student aid 

procurement contracts for fiscal years 2013 and 2014, and the contract expiration dates.

FY 2014 Requested funding and the supported procurement activities follow:

Funding for Major Student Aid Procurement Activity

(dollars in millions)

Acquisition FY 2013 FY 2014 Contract Expiration Date

Common Services for Borrowers:

Direct Loan Consolidation System $5.0 0.0 December 2013

Common Origination and 

Disbursement 0.0 $26.0 September 2015

Front End Business Integration 20.0 0.0 January 2015

Virtual Data Center 1.0 3.0 August 2016

Total $26.0 $29.0

Common Origination and Disbursement (COD): $26.0 million. 

The COD system processes origination and disbursement records for Pell Grants, TEACH 

Grants, Iraq/Afghanistan Service Grants, and Direct Loans (Stafford, Unsubsidized Stafford, 

PLUS and Graduate PLUS). Together these loan programs will provide an estimated $161

billion in financial aid, excluding Direct Consolidation Loans, to students and parents in FY 
STUDENT AID ADMINISTRATION

AA-20

2014. The COD contract includes system operations and maintenance activities, a call center, 

the StudentLoans.gov Web site, and customer service to assist institutions with processing data 

and managing their loan administration activities. 

The current COD contract expires in September 2015. During FY 2014, FSA will solicit a new 

procurement for the COD system; the request provides the funding necessary for new system 

set-up and development costs. 

Virtual Data Center: $3.0 million

The Virtual Data Center (VDC) is a single computing environment for data and transaction 

processing, network communication services, infrastructure, and tools required to deliver 

financial aid. The VDC is a large central site that hosts 56 applications necessary to deliver 

student financial aid. The current VDC contract expires in August FY 2016. FSA will begin 

procuring a new data center in FY 2013. The request of $3 million in FY 2014 will provide 

specialized contractor support to develop the acquisition strategy and prepare acquisition 

documents, including the Performance Work Statement, Service Level Agreements, the 

Solicitation, and an Independent Government Cost Estimate. Contractor support will produce

technical exhibits and evaluation factors for the solicitation that will enable the Source Selection 

Panel to evaluate offers received.

Other Core Student Aid Administration Systems – $47.6 million

National Student Loan Data System (NSLDS): $21.0 million in discretionary funding, which 

includes $9.0 million for system upgrades

NSLDS includes detailed information regarding Title IV aid, such as the number of loans and 

grants made, and provides for the electronic exchange of data between program participants 

and the system. NSLDS stores and collects borrower data from borrowers, schools, lenders, 

and guaranty agencies and integrates data on student aid applicants and recipients. This 

comprehensive information is essential for calculating student loan indebtedness of borrowers, 

budget formulation, portfolio management, and policy analysis. NSLDS is also used to calculate 

cohort default rates, prevent fraud and abuse through pre-screening and post-screening for Title 

IV aid eligibility, and calculate statutory guaranty agency payments. 

In addition to ongoing NSLDS operations and maintenance, FSA is undertaking a major effort to 

further improve enrollment reporting and monitor persistence and completion among Federal 

student aid recipients. The Department requests $9 million for this work, which will include 

upgrades in three areas: data enhancement, system integration, and data quality.

Federal Student Aid Administration Interagency Agreements: $7.4 million in discretionary 

funding

The Department enters into agreements with other Government agencies for the purpose of 

ensuring Federal student aid eligibility, locating borrowers who have defaulted on their Federal 

student loans, and providing services to simplify the aid process. Below is the listing of these 

agencies and the agreements:
STUDENT AID ADMINISTRATION

AA-21

Department of Housing and Urban Development: This allows the Department to provide 

information on student loan defaulters to the Credit Alert Interactive Voice Response 

System which is used to determine eligibility for Federal housing loans. Borrowers who 

are ineligible for housing loans due to student loan defaults will frequently pay off their 

defaulted student loan to obtain the housing loan.

Department of Treasury, Financial Management Service: Through the Federal 

Employee Salary Offset Program, the Financial Management Service shares information 

with the Department regarding employees whose Federal pay is or could potentially be 

offset through the Treasury Offset Program and other services due to student loan 

defaults.

Internal Revenue Service (IRS): The Department has three interagency agreements

with IRS.

1. FAFSA Data Share Project: This agreement simplifies the FAFSA completion 

process by allowing the applicant to directly transfer tax return information, needed to 

determine an applicant’s expected family contribution, to the appropriate FAFSA data 

fields. Applicants will be able to retrieve this data after passing an authentication 

process.

2. Taxpayer Address Request Program: This agreement allows the Department to 

obtain the address of borrowers who have defaulted on their Federal student loans or 

owe the Department for grant overpayment. 

3. Income-Based Repayment (IBR) Plan Data Share: This agreement allows borrowers 

to directly connect with IRS to retrieve their Adjusted Gross Income (AGI) in order to 

complete the IBR application, allowing an accurate income-based calculation of monthly 

payment amounts. Like the use of the FAFSA Data Share Project, this direct transfer of 

information simplifies the application process for the borrower by reducing the amount of 

time the borrower spends retrieving the information. The IBR Plan Data Share also 

presents only applicable questions and data fields to the borrower, potentially reducing 

the amount of questions shown to the borrower.

Social Security Administration (SSA): This agreement assists in ensuring student aid 

eligibility by matching Title IV applicants against SSA’s master file for Social Security 

and citizenship verification.

Department of Homeland Security, United States Citizenship and Immigration Services:

This agreement assists in ensuring student aid eligibility by verifying the immigration 

status of non-citizen applicants.

Department of Health and Human Services: Through the National Directory of New 

Hires program, the Department is able to obtain new hire, quarterly wage, and 

unemployment insurance information on borrowers who have defaulted on their Federal 

student loans or who owe the Department for grant overpayment. This agreement 

assists the Department in locating borrowers who have defaulted on their student loans 
STUDENT AID ADMINISTRATION

AA-22

or students who owe grant overpayments with the goal of placing them into repayment 

status.

Financial Management System (FMS): $7.1 million, in discretionary funding

FMS consolidates and manages all financial transactions from FSA’s feeder systems. FMS 

facilitates reconciliation and internal program management and reporting. The system tracks 

and manages payment processing for Federal Direct Loan originations and Pell Grant awards,

and processes refunds to borrowers for overpaid loans and payments to lenders and guaranty 

agencies. It also performs validations and reasonability checks to minimize erroneous 

payments. The 2014 request supports the operations and maintenance of the system. 

Integrated Partner Management (IPM): $7.0 million, in discretionary funding

During FY 2014, IPM will be operational, consolidating processes scattered among six disparate 

systems: Lender Application Process, Financial Statements and Compliance Audits, 

Participation Management, Electronic Application, Postsecondary Education Participation, and 

Electronic Records Management. IPM will simplify and reduce duplicate and conflicting data 

storage, complex system architectures, and excessive file exchange activities. IPM will provide 

a centralized view of Federal Student Aid, ensuring that all customers and employees have 

access to the same current institutional eligibility and oversight data. In addition, IPM will 

provide better data accuracy, information security through a single point of access, and effective 

oversight to target enforcement efforts. 

eCampus-Based: $1.8 million, in discretionary funding

The eCampus-Based system automates the administration of the Federal Perkins Loan, Federal 

Work-Study, and Federal Supplemental Educational Opportunity Grant programs. The system 

determines institutional funding needs and allocation levels based on data from the Fiscal 

Operations Report and Application to Participate; collects funding data to inform subsequent 

reallocations; maintains cumulative Perkins Loan funding histories; calculates institutional cohort 

default rates; catalogs low-income elementary and secondary schools for use in determining 

eligibility for teacher cancellation benefits; and identifies delinquent or defaulted Perkins loan 

borrowers. Funds in 2014 will primarily support the operation and maintenance of the system. 

IT Security Initiatives – $10.9 million

IT Security: $10.9 million, in discretionary funding

FSA takes seriously the ongoing security threats to operations and the real risks of 

compromising student private personal information. In addition to specific security requirements 

in FSA’s system and application contracts, FSA has specific initiatives to mitigate security risks:

Enterprise Identity Management System (EIMS): $3.4 million

The Enterprise Identity Management System addresses the issue of fragmented user 

account management and inconsistent methods of identity authentication. There is an 

increased security risk that borrowers face when they log in to FSA systems by using 

their social security number and PIN. EIMS will mitigate this security risk by requiring a 
STUDENT AID ADMINISTRATION

AA-23

username/password combination. EIMS will also improve interoperability between 

agencies using PIV credentials and improve partner communities’ interaction with FSA 

systems by consolidating multiple access logins, which will provide a consistent personal 

authentication while eliminating the use of a user’s social security number. 

System Security Authorizations: $3.0 million

This initiative provides basic security that is critical for ensuring that all FSA applications 

and general support systems are secured from malicious exploits and threats. Security 

authorizations and annual testing are mandated by the Federal Information Security 

Management Act and are required to be performed before system upgrades are 

implemented. Continuous testing must be completed to maintain system security 

authorization. In addition, an official re-authorization is required every 3 years for 50 

systems supporting Federal Student Aid. 

Internet Protocol version 6 (IPv6): $1.6 million

In order to comply with the Federal CIO memorandum on IPv6, FSA needs to 

operationally upgrade internal client applications that communicate with public Internet 

servers and support enterprise networks to be compatible with IPv6 by the end of FY 

2014. FSA will also ensure that procurements of IT networks comply with Federal 

Acquisition Regulation requirements for use of IPv6 capabilities. The goal in 

transitioning to an IPv6 capable environment is to provide enhanced technology services 

to improve business and efficiency. By enhancing the network from IPv4, this will enable 

the support and ensure uninterrupted service for continual growth among student and 

parent users who have an updated IPv6 Web address. 

Two-Factor Authentication: $1.5 million

Two-Factor Authentication increases the security of FSA systems by requiring two forms 

of authentication to allow user access. The first authentication mechanism is the user ID 

and password and the second mechanism is a token which generates a one-time 

password. Stronger authentication decreases the risk of fraud and unauthorized access 

to privileged data and is particularly important for remote users of FSA systems. Since 

FY 2011, remote Federal Student Aid and Department employees have utilized twofactor authentication for system access. Currently, FSA is enabling two-factor 

authentication for partner facing applications and distributing tokens to Foreign and 

Domestic Postsecondary Schools. 

These funds will be used to distribute tokens to partner financial institutions (Guaranty 

Agencies, NFPs, TIVAS, and Payment Collection Agencies) and provide continued 

operation and maintenance of this service, token replacement, and helpdesk support.

Trusted Internet Connection: $1.0 million

Federal Student Aid works with the Department’s Chief Information Officer to consolidate 

ED’s Internet connections and comply with the OMB mandate to implement a Trusted 

Internet Connection initiative. The Internet connection consolidation will reduce external 

access points and allow for the standardization of monitoring devices and easier 

identification of potentially malicious traffic. Compliance with this mandate is monitored 

by Department of Homeland Security and a component of our Nation’s defense against 

cyber terrorism. 
STUDENT AID ADMINISTRATION

AA-24

Security Operations Center: $0.4 million

The security operations center provides independent monitoring and analysis needed to 

protect the VDC infrastructure, systems and data from vulnerabilities. The Security 

Operation Center will automate the security sensors on approximately 1,500 servers 

housed at the VDC and communicate real-time information regarding suspicious events. 

The real-time information will enable Federal Student Aid to react timely to suspicious 

activity. The center is operated by a contracted Managed Security Service. 

Other – $91.7 million

The “Other” category includes projects aimed at supporting FSA’s mission. A portion of the 

projects are administered by Federal Student Aid. The remaining projects are administered by 

the non-Federal Student Aid offices and are described on page AA-31. In addition to 

Conference Management below, costs in the Other category include Web site interfaces and

contract specialist support.

Conference Management: $2.6 million, in discretionary funding

Conference management supports the annual Federal Student Aid Fall Conference and Federal 

Student Aid’s participation in national financial aid related conferences (e.g., National 

Association of Student Financial Aid Administrators). Federal Student Aid uses these 

conferences to train over 6,500 financial aid professionals and disseminate information about 

Title IV programs. This training is part of FSA’s school oversight and responsibility and 

increases the integrity of the Federal student aid programs while ensuring appropriate 

stewardship of taxpayer resources. Some of the sessions during the conference specifically 

address waste, fraud, abuse, and mismanagement of Title IV funds. Over the last 5 years, FSA 

has reduced overall conference costs by 50 percent through consolidating 4 individual 

conferences into 1 large conference. This reduction was achieved without impacting customer 

experience and jeopardizing the quality of the training. 

The FY 2014 request will support the warehousing and inventory management of conference 

equipment, materials, and supplies at the contractor site in Lawrence, Kansas. The request will 

also provide on-site contractor support, IT technical support, video recording, Web posting, and 

hosting of conference sessions. Approximately $1.5 million of the request supports the hotel fee 

and includes the contingent liability fee that covers any potential cancellation costs. After the 

fall conference, FSA expects to deobligate at least $700,000 for the liability fee. 

System Application Matrix

The two system matrixes, shown on page AA-25, illustrate the interdependencies between the 

major student aid system applications for the core business functions and the end user. The 

first chart shows each system application, its projected costs for 2013 and 2014, and core 

business functions supported by each system application. The second chart shows the 

interdependencies between all system applications and the four end users—school, students, 

financial partners, and the Department.
STUDENT AID ADMINISTRATION

AA-25

System Applications and Core Business Functions Interdependencies

System Application

2013 Cost

(dollars in 

millions)

2014 Cost

(dollars in 

millions)

Student Aid 

Application 

Processing

Origination 

and 

Disbursement

Student 

Loan 

Servicing

CSB, TIVAS, DMCS, and 

Perkins Loan Servicing; 

Development; and Customer

Surveys $343.61 $316.91 No X X

Common Origination and 

Disbursement 149.7 159.4 X X X

Front End Business 

Integration and FAFSA 

Operations 92.8 87.2 X X No

Virtual Data Center 57.1 61.0 X X X

Enterprise Software 

Licenses 21.8 25.6 X X X

National Student Loan Data 

System 12.2 21.02 X X X

Integrated Partner 

Management 1.4 7.0 No X

Financial Management 

System 6.8 7.1 No X X

Total Discretionary Costs 685.4 685.2 No No No

1 Amount reflects only discretionary request. 2 Amount includes $9 million for NSLDS system upgrades.

Systems Applications and End Users

System Application School Student

Financial 

Partners 

Department 

of Education

CSB, TIVAS, new NFP Servicers, and 

DMCS X X X X

Common Origination and 

Disbursement X X No X

Front End Business Integration and 

FAFSA Operations X X No X

Virtual Data Center No No No X

Enterprise Software Licenses No No xo X

National Student Loan Data System X X X X

Enterprise Information Technology 

Integration X

Integrated Partner Management X No X X

Financial Management System X No X X

Note: Financial Partners include lenders and guaranty agencies.
STUDENT AID ADMINISTRATION

AA-26

Major SAA Contracts

The following table provides a list of Student Aid Administration contracts estimated to exceed

$5 million in FY 2014.

Student Aid Contracts Projected to Exceed $5 Million in FY 2014

(dollars in millions)

*denotes vendor headquarters for loan servicers

Contract Description Vendor Vendor Location

FY 2013

Funding

FY 2014

Funding

CSB Servicing and 

consolidation of 

direct student 

loans, servicing 

FFEL loans, and 

collection of 

defaulted loans.

Xerox Germantown, MD*

Bakersfield, CA

Coralville, IA

Greenville, TX

Lawrence, KS

Louisville, KY

Utica, NY

$343.61 $316.91

TIVAS PHEAA Harrisburg, PA*

Chester, PA

Mechanicsburg, 

PA

State College, PA

Great Lakes 

Education 

Loan 

Services Inc.

Madison, WI*

Aberdeen, SD

Boscobel, WI

Eau Claire, WI

Rocky Hill, CT

St. Paul, MN

Nelnet 

Servicing 

LLC

Lincoln, NE*

Aurora, CO

Boise, ID

Highlands Ranch, 

CO

Albany, NY

Austin, TX

Bellevue, NE

Houston, TX

Woodbury, MN

Sallie Mae 

Corporation

Newark, DE*

Fishers, IN

Indianapolis, IN

Reston, VA 

Wilkes-Barre, PA

1 Amount reflects only discretionary request.
STUDENT AID ADMINISTRATION

AA-27

Student Aid Contracts Projected to Exceed $5 Million in FY 2014

(dollars in millions)

(Continued)

*denotes vendor headquarters

Contract Description Vendor Vendor Location

FY 2013

Funding

FY 2014

Funding

New NFP 

Servicers

Missouri 

Higher 

Education 

Loan 

Authority

Chesterfield, MO*

Columbia, MO

ESA/

Edfinancial

Knoxville, TN

Aspire 

Resources 

Inc.

West Des Moines, 

IA

Cornerstone Salt Lake City, UT

New 

Hampshire 

Higher 

Education 

Corporation

Concord, NH*

Manchester, NH

Pembroke, NH

Penacook, NH

Oklahoma 

Student 

Loan 

Authority

Oklahoma City, OK

EdManage Columbia, SC

Kentucky 

Higher 

Education 

Loan 

Corporation

Louisville, KY*

Frankfort, KY

Vermont 

Student 

Assistance 

Corporation

Winooski, VT

COSTEP McAllen, TX

EDGEucation 

Loans

Raleigh, NC
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-28

Student Aid Contracts Projected to Exceed $5 Million in FY 2014

(dollars in millions)

(Continued)

*denotes vendor headquarters

Contract Description Vendor Vendor Location

FY 2013

Funding

FY 2014 

Funding

Debt 

Management 

Collection 

System

TBD TBD

Common 

Origination and 

Disbursement

Disbursement of 

Pell Grants and 

Direct Loans.

Accenture 

LLP

Phoenix, AZ

Alexandria, VA

Arlington, VA

Bloomfield, CT

Bozeman, MT

Buffalo, NY

Cincinnati, OH

Columbus, GA

Herndon, VA

Lawrence, KS

Monticello, KY

Montgomery, AL

North 

Tonawanda, NY

Phenix City, AL

Philadelphia, PA

San Antonio, TX

Utica, NY

Washington, DC

$149.7 $159.4

Front-End 

Business 

Integration

Integration of 

application 

processing, aid 

awareness, and 

eligibility 

determination.

Vangent Inc. Fairfax, VA

Alexandria, VA

Arlington, VA

Coralville, IA

Herndon, VA

Las Cruces, NM

Lawrence, KS

Phoenix, AZ

Rockville, MD

Washington, DC

$92.8 $87.2
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-29

Student Aid Contracts Projected to Exceed $5 Million in FY 2014

(dollars in millions)

(Continued)

*denotes vendor headquarters

Contract Description Vendor Vendor Location

FY 2013

Funding

FY 2014 

Funding

Virtual Data 

Center

Data center for 

student financial 

aid systems.

Perot 

Systems

Plano, TX

Asburn, VA

Fairfax, VA

Herndon, VA

$57.1 $61.0 

Enterprise 

Software 

Licensing

Maintenance for 

software licenses 

for Financial 

Management 

System and 

database 

operations.

Various Various $21.8 $28.6

National 

Student Loan 

Data System

Loan-level 

database to verify 

student eligibility, 

calculate 

institutional default 

rates, pay 

guaranty agency 

fees, track 

enrollment for loan 

servicing, and 

support credit 

reform accounting.

Briefcase 

Systems 

Development

Inc.

Great Falls, VA 

Alexandria, VA

Arlington, VA

Coralville, IA

Herndon, VA

Venice, FL

$12.2 $21.02

Enterprise 

Information 

Technology 

Integration

Integration of 

operational data 

from multiple 

student aid 

systems to 

facilitate data 

exchange.

Phoenix 

Programming 

Services

Rockville, MD

Alexandria, VA

Herndon, VA

Kensington, MD

Lawrence, KS

$7.0 $7.0

Integrated 

Partner 

Management

Integration of 

institutional 

eligibility 

determination and 

oversight of 

schools, lenders, 

guaranty agencies 

and other FSA 

partners.

BSC Systems/

Creative/ 

Ideas Simple 

Solutions, Inc./

2020 Co., 

LLC/

Quality 

Software 

Services, Inc. 

Washington, DC $1.4 $7.0

2 Amount includes $9 million for NSLDS system upgrades.
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-30

Student Aid Contracts Projected to Exceed $5 Million in FY 2014

(dollars in millions)

(Continued)

*denotes vendor headquarters

Contract Description Vendor Vendor Location

FY 2013

Funding

FY 2014 

Funding

Financial 

Management 

System

Accounting system 

for FSA 

transactions.

Avineon, Inc. Washington, DC

Lawrence, KS

Alexandria, VA

Herndon, VA

$6.8 $7.1

FAFSA 

Enhancements

Provides for the 

annual release, 

enhancements 

resulting from 

survey results and 

comments and 

simplification of 

the FAFSA.

Vangent 

Inc./GDIT

Coralville, IA $5.6 $5.6
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-31

Non-Federal Student Aid Support Activities

Other and Overhead – $91.7 million and $23.7 million, respectively

(discretionary funds)

In addition to funds directly allocated to Federal Student Aid to manage student aid programs, 

$91.5 million of the FY 2014 request is allocated to departmental offices for central support 

activities, such as rent and central computer services; and for student-aid related activities 

managed by other department offices, such as financial management systems operations, and 

Office of the General Counsel. 

Funding for Departmentwide financial management systems related to student aid will total 

$15.1 million in FY 2014. There is no increase from FY 2013.

Rent payments to the General Services Administration for Federal Student Aid occupied space 

will total $19.4 million for FY 2014, a slight increase from $18.8 million in FY 2013.

Combined funding for central computer services and telecommunications will total $22.2 million 

in FY 2014. This will support normal activities and enhancements to the Department’s network 

operations. There is no increase for these activities from FY 2013.

Other non-pay central support services related to student aid will total $20.8 million in FY 2014, 

an increase from $18.2 million, the expected support level in FY 2013. These include contract 

costs such as the preparation of the loan portion of the Department’s audited financial statement

and overhead costs such as background investigations. The increase is due to additional 

security background investigations for new Not-For-Profit servicers.

In addition to 1,321 FSA full-time staff, the FY 2014 request also funds the salaries and benefits 

of 91 FTE outside Federal Student Aid who perform student-aid related activities. These

personnel are located in the Office of Postsecondary Education; Office of Management; Office 

of the General Counsel; Office of the Chief Financial Officer/Chief Information Officer; and 

Office of Planning, Evaluation, and Policy Development. 
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-32

PROGRAM PERFORMANCE INFORMATION

Performance Measures

This section presents selected program performance information, including, for example, GPRA

goals, objectives, measures, and performance targets and data; and an assessment of the 

progress made toward achieving program results. Achievement of program results is based on 

the cumulative effect of the resources provided in previous years and those requested in FY 

2014 and future years, as well as the resources and efforts invested by those served by this 

program.

In December 2011, Federal Student Aid (FSA) released a revised strategic plan, Federal 

Student Aid: Strategic Plan, Fiscal Years 2012-16. In the plan, FSA established the following 

five goals and performance indicators to measure the delivery of Federal student aid. Some of 

these indicators were in the prior year strategic plan (Fiscal Years 2011-2015) and had 

baselines and targets created in FY 2010. FSA modified and replaced other prior year 

indicators in the Fiscal Years 2012-16 strategic plan to improve measurement and success in 

achieving the five strategic goals. 

Goal: Provide superior service and information to students and borrowers. 

Measure: Proportion of first-time FAFSA filers among high school seniors.

Year Target Actual

2010 Baseline 49.5%

2011 >= 49.5% 52.0%

2012 >=52% 54.0%o

2013 No Lower than Prior Year No

2014 No Lower than Prior Year

Additional Information: By June 2012, FSA had already exceeded its 2012 target of 52 

percent, the second year that the target has been exceeded. FSA has aggressively tried to 

increase the number of students completing the FAFSA. During FY 2012, FSA expanded the 

FAFSA Completion Tool to accelerate the delivery of data to all high schools using improved 

data analytics capacity within FSAs Customer Experience Office. The new tool allows FSA for 

the first time to publish FAFSA completion data aggregated by high school, and to update the 

data every 2 weeks. As a result any high school in the country with more than five FAFSAs 

completed can see their completion totals. This includes over 24,000 high schools in all 50 

States, DC and all U.S. Territories. Since 2011, the site has logged over 25,000 unique 

visitors.
STUDENT AID ADMINISTRATION

____________________________________________________________________________

AA-33

Measure: Proportion of first-time FAFSA filers among workforce aged 25+ with no college.

Year Target Actual

2010 Baseline 3.9%

2011 >=3.9% 3.8%

2012 >=3.6% 3.7%%

2013 No Lower than Prior Year No

2014 No Lower than Prior Year

Additional Information: FSA attained its performance goal in FY 2012, with about 3.7 percent 

of the workforce over 25 years of age, who have never attended college before, submitting a 

FAFSA during the 2011-2012 application cycle. 

Measure: Proportion of first-time FAFSA filers among low-income students.

Year Target Actual

2011 Baseline 57%

2012 >=57% 63%

2013 No Lower than Prior Year No

2014 No Lower than Prior year

Additional information: The Department will measure the percentage of original FAFSA filers 

who come from low-income households. This measure looks at the effectiveness of FSA’s 

outreach in getting low-income students to file a FAFSA application for the first time. The 

baseline was set in FY 2011 and FSA’s target is to maintain or increase these percentages 

each year. In FY 2012, FSA exceeded its goal.

Measure: Proportion of first-time FAFSA filers aged 19-24 among those in the population who 

are high school graduates with no college.

Year Target Actual

2011 Baseline 27.0%

2012 >=27% 28.4%No

2013 No Lower than Prior Year No

2014 No Lower than Prior Year
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Additional information: To include the universe of first-time FAFSA filers, FSA will also 

measure the percentage of original FAFSA filers aged 19-24 who are high school graduates 

with no college. The baseline was set in FY 2011 and FSA exceeded its target in FY 2012.

Measure: Customer service level of American Customer Satisfaction Index for entire aid 

lifecycle.

Year Target Actual

2010 Baseline 74.0

2011 74 78.0

2012 78 78.5

2013 78 No

2014 78

Note: Customer Satisfaction Scores for the Entire Life Cycle are based upon ACSI scores from the application, inschool, and servicing experiences of students and borrowers. Data is weighted based upon the intensity of the 

experience to the overall life cycle and the number of students within each category of the life cycle.

Additional Information: To measure overall customer satisfaction level throughout the 

student aid lifecycle, FSA calculates a weighted score based on the American Customer 

Satisfaction Index (ACSI) surveys of applicants, students in school, and borrowers in 

repayment. This metric measures how FSA is simplifying its information and making it easier 

for its customers to obtain and use that information. FSA’s goal is to continue to improve the 

aggregate ACSI score yearly. 

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

funding serve the interest of students from policy to delivery. 

Measure: Ease of Doing Business School Survey (1-100 Scale).

Year Target Actual

2011 Baseline 72

2012 >=72 74No

2013 No Lower than Prior Year No

2014 No Lower than Prior Year

Additional Information: FSA works closely with postsecondary institutions to provide millions 

of students with Federal student aid. Successfully delivering aid through a complex system 

depends on FSA’s ability to work well with its institutional, financial, and State partners, and to 

provide adequate oversight to ensure that participants are complying with program 

requirements. To ensure that all participants in the postsecondary education funding system 

can easily access the information they need, FSA conducts a quarterly survey with 

postsecondary institutions and partners to gauge the “ease of doing business with FSA.” The 
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baseline was set in FY 2011 and FSA’s goal is to maintain or improve survey results each 

year. In FY 2012, it surpassed its goal.

Measure: Percent of borrowers >90 days delinquent.

Year Target Actual

2011 Baseline 9.9%

2012 <=10% 9.9.7%No

2013 No Higher than Prior Year No

2014 No Higher than Prior Year

Note: The borrower delinquency rate is defined as the average number of borrowers each year who are 91-270 days 

delinquent in the year ending June 30, divided by the average number of borrowers in repayment for the year (does 

not include in-school or in-grace loan statuses).

Additional information: During FY 2011, FSA evaluated other possible ways to measure the 

extent to which postsecondary institutions and partners are actively supporting the interest of 

students and borrowers. As a result, FSA developed a new delinquency metric: the percent of 

borrowers serviced by the Not-For-Profit (NFP) and For-Profit TIVAS servicers and new NFPs 

who are greater than 90 days delinquent. Currently, TIVAS servicers handle over 15 million 

borrower accounts, including Direct Loans and Department-held FFEL loans. TIVAS should 

help borrowers to stay current on their loans because borrowers who do not become delinquent 

avoid default. TIVAS can also help borrowers with severely delinquent loans take steps to avoid 

defaulting on their loans. 

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

the public and private sector.

Measure: Aid Delivery Cost per Application.

Year Target Actual

2011 Baseline $9.89

2012 $10.90 $10.52No

2013 Expect increase No

2014 Expect increase

Note: Data for this measure is derived from FSA’s Activity Based Costing model, which is updated on a quarterly 

basis, and reconciled to FSA’s Statement of Net Cost, ensuring all costs assigned to FSA are included in the cost 

model. Specifically, the measure is defined as the total direct cost to process FAFSAs and originate aid in the year 

ending June 30, divided by the number of original FAFSAs processed in the year.

Additional information: In FY 2011, FSA developed two measures to gauge the efficiency 

and effectiveness of the student aid lifecycle. The first one is the Aid Delivery Cost per 

Application. Throughout FY 2011, FSA improved aid delivery by automating and simplifying 
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processes, such as simplifying the FAFSA application to make it easier to navigate and 

complete. 

Measure: Loan Servicing Cost per Borrower.

Year Target Actual

2011 Baseline $18.15

2012 $19.64 $18.49o

2013 Expect increase No

2014 Expect increase

Note: Data for this measure is derived from FSA’s Activity Based Costing model, which is updated on a quarterly 

basis, and reconciled to FSA’s Statement of Net Cost, ensuring all costs assigned to FSA are included in the cost 

model. Specifically, the measure is defined as the total direct costs for servicing in the year ending June 30, divided 

by the average number of borrowers in servicing for the year. 

Additional information: The second measure to gauge the efficiency and effectiveness of the 

student aid lifecycle is the Loan Servicing Cost per Borrower. Servicing costs will increase for 

two reasons. First, more of the Direct Loan borrowers will move from the low-cost in-school 

status to the more expensive repayment status as the Direct Loan portfolio matures. In 

addition, as more higher-cost non-TIVAS NFP servicers come on board the unit cost of 

borrowers at all statuses will result in higher overall costs to the government. 

Goal: Ensure program integrity and safeguard taxpayers’ interest

Measure: Direct Loan Default Rate.

Year Target Actual

2010 Baseline 12.2%

2011 <=12.2% 11.3%

2012 <=11.3% 9.7%No

2013 No Higher than Prior Year No

2014 No Higher than Prior year

Note: The default rate is defined as the average balance of loans serviced by FSA that are 270 days or more past 

due and loans serviced in debt collection during the year, divided by the average balance of loans serviced by FSA 

(does not include in-school or in-grace loan statuses).

Additional Information: FSA exceeded this performance goal in FY 2012, for the second year 

in a row, by keeping the 2012 loan default rate at about 9.7 percent of the total dollar amount, 

including principal and interest, of the Direct Loan portfolio (excludes in-school and in-grace 

loans). The Direct Loan portfolio includes all unpaid accounts in the default collection system 

since the program began, as well as recent defaults that are delinquent more than 270 days. 

Loans are never charged off and are rarely discharged in a bankruptcy. FSA will continue to 
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pursue and increase collections through its loan servicers and collection agencies by using tools 

such as wage garnishment and IRS offset. 

In addition to the Loan Default Rate, FSA will measure its performance on managing two other 

metrics, Improper Payment Rate and Collection Rate. Improper payments occur when funds go 

to the wrong recipient, the recipient receives the incorrect amount of funds, documentation is 

not available to support a payment, or the recipient uses funds improperly. FSA is developing a

methodology, baseline, and targets for the strategic plan in consultation with the Office of 

Management and Budget. 

The Collection Rate will measure FSA’s success in collecting on its outstanding portfolio of 

roughly $443 billion in Direct Loans, Government-held FFEL and Perkins loans, and unassigned 

FFEL defaulted loans. In establishing a baseline and targets for future years, FSA will need to 

assess the impact of economic fluctuations; changes in the nature of the Government-held 

portfolio under 100 percent Direct Loans; and trends in the use by borrowers of options such as 

income-based or other flexible repayment plans, deferments, and forbearances, all of which can 

reduce or delay repayment amounts. Over the next year, FSA will develop appropriate targets 

for this metric.

Goal: Strengthen Federal Student Aid’s performance culture and become one of the best 

places to work in the Federal Government.

Measure: FSA Morale Index (Subset of Questions from Governmentwide Employee Viewpoint 

Survey) - Percentage of positive responses to survey.

Year Target Actual

2011 Baseline 58%

2012 >=58%

2013 No Lower than Prior Year No

2014 No Lower than Prior Year

Additional Information: The FSA Morale Index was developed from a subset of seven 

Employee Viewpoint Survey (EVS) questions that FSA considered most likely to be impacted by 

internal Department actions. FSA will focus its First Class employee engagement program 

objectives to match areas of concerns identified in the EVS. 
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Organizational Chart

FEDERAL

STUDENT AID

Policy Liaison and

Implementation

Staff

BUSINESS

OPERATIONS

PROGRAM

COMPLIANCE

CUSTOMER

EXPERIENCE

FINANCE

PERFORMANCE

MANAGEMENT

TECHNOLOGY ADMINISTRATIVE

SERVICES

RISK

MANAGEMENT

FSA

ACQUISITIONS