FY 2022 AGENCY FINANCIAL REPORT 1 U.S. DEPARTMENT OF EDUCATION

fy 2022

AGENCY

FINANCIAL

REPORT
U.S. Department of Education

Miguel A. Cardona, Ed.D.

Secretary

Office of Finance and Operations

Denise Carter

Delegated the authority to perform the functions and duties of the position of Chief Financial Officer 

January 23, 2023

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. While permission to reprint 

this publication is not necessary, the citation should be U.S. Department of Education, Fiscal Year 2022 Agency Financial 

Report, Washington, DC. 

This report is available at http://www.ed.gov/about/reports/annual/index.html

NOTICE OF AVAILABILITY OF ALTERNATE FORMATS

On request, the report also is available in alternative formats, such as Braille, large print, or compact disc. For more information, 

please contact our Alternate Format Center at 202-260-0852 or the 504 coordinator via email at om_eeos@ed.gov

To become connected to the Department through social media, please visit the Department’s website at www.ed.gov. Our 

Twitter page is at @usedgov, and our blog is at Homeroom.

NOTICE TO LIMITED ENGLISH PROFICIENT PERSONS

If you have difficulty understanding English, you may request language assistance services, free of charge, for this Department 

information by calling 1-800-USA-LEARN (1-800-872-5327) (TTY: 1-800-877-8339), 

or by emailing us at Ed.Language.Assistance@ed.gov

For fiscal year 2022, in addition to the Agency Financial Report (AFR), the Department will post to its website the Annual 

Performance Report and Annual Performance Plan (Report and Plan). This Report and Plan and the Congressional Budget 

Justification will be posted on the Department’s website at http://www.ed.gov/about/reports/annual/index.html with the 

FY 2024 budget.

Please submit your comments and questions regarding this report, and any suggestions to improve its usefulness to 

AFRComments@ed.gov or write to:

Office of Finance and Operations

U.S. Department of Education

Washington, DC 20202-0600
FY 2022 AGENCY FINANCIAL REPORT i U.S. DEPARTMENT OF EDUCATION

About This Report

The purpose of the U.S. Department of Education’s 

(Department’s) fiscal year (FY) 2022 Agency Financial 

Report (AFR) is to inform Congress, the President, other 

external stakeholders, and the American people on how the 

Department used the federal resources entrusted to it to 

advance the mission of the Department to promote student 

achievement and preparation for global competitiveness by 

fostering educational excellence and ensuring equal access. 

The Department accomplishes its mission and the related 

strategic goals and objectives by administering programs 

that range from preschool education through postdoctoral 

research; enforcing civil rights laws to provide equal access 

and treatment; and supporting research that examines ways 

that states, schools, districts, and postsecondary institutions 

can improve America’s education system. As evidenced by 

the information contained in this AFR, the Department has 

demonstrated that it is a good steward of financial resources 

and has put in place well-controlled and well-managed 

business and financial management systems, processes, 

and practices. 

The AFR also provides high-level financial and performance 

highlights, assessments of controls, a summary of challenges, 

and a demonstration of the Department’s stewardship. 

This report is required by legislation and complies with the 

requirements of the Office of Management and Budget’s 

Circulars A-11, Preparation, Submission, and Execution of 

the Budget; A-123, Management’s Responsibility for Enterprise 

Risk Management and Internal Control; and A-136, Financial 

Reporting Requirements. 

Federal Student Aid (FSA), a principal office of the 

Department and a designated Performance-Based 

Organization, produces a separate Annual Report that 

details its financial and program performance. Summary 

level information about FSA activities can be found in the 

applicable sections of this report. For more detail on FSA’s 

performance and financial information, refer to www.

StudentAid.gov.

Certificate of Excellence

The Department won its 18th prestigious 

Certificate of Excellence in Accountability 

Reporting award from the AGA for its 

FY 2021 AFR. 
FY 2022 AGENCY FINANCIAL REPORT ii U.S. DEPARTMENT OF EDUCATION

How This Report Is Organized

The AFR is designed to focus on the use of federal resources provided to or distributed by the Department to support its 

mission, with an emphasis on the challenges ahead.

M A NAGEMENT’S DISCUSSION

and ANALYSIS

This section provides information about the Department’s mission and organizational structure as 

well as its high-level performance results, financial highlights, management assurances regarding 

internal controls, and forward-looking information.

FINANCIAL SECTION

This section provides a message from the chief financial officer, the financial statements and notes, 

required supplementary information, and the report from the independent auditors.

OTHER INFORMATION

This section provides the Office of Inspector General’s Management and Performance Challenges 

for FY 2023, a summary of financial statement audit and management assurances, Payment 

Integrity Information Act reporting details, civil monetary penalty adjustment for inflation, Grants 

Oversight and New Efficiency Act of 2016 and grant closeout process reporting, and the FY 2021 

Climate Adaptation Plan.

APPENDICES

This section provides a listing of selected Department web links, education resources, and a 

glossary of acronyms and abbreviations.
FY 2022 AGENCY FINANCIAL REPORT iii U.S. DEPARTMENT OF EDUCATION

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FY 2022 AGENCY FINANCIAL REPORT iv U.S. DEPARTMENT OF EDUCATION

January 23, 2023

Message From the Secretary

The statesman and Nobel laureate Kofi Annan has said, 

“Education is the premise of progress, in every society, in 

every family.” Our nation’s historic federal investments 

in education during fiscal year (FY) 2022 are a powerful 

statement of America’s values. 

The U.S. Department of Education is committed to 

ensuring that all students receive an education that prepares 

them to fulfill their promise and follow their dreams. 

The academic achievement, mental health, and social 

and emotional well-being of our nation’s students remain 

our top priorities. And these priorities informed all of 

our actions to meet the challenges and opportunities of 

FY 2022. 

Because the pandemic has affected all students, parents, 

educators, and school leaders — but especially those in 

schools and communities furthest from opportunity — 

safely and successfully reopening all schools for in-person 

learning is a major accomplishment that the Department 

and the nation share with education leaders throughout 

the country this fiscal year. When the Biden-Harris 

administration took office, fewer than half of K-12 schools 

were open for in-person instruction. We knew that was 

unacceptable, so we did something about it. And within 

nine months of the inauguration, more than 98% of 

schools were fully open. 

Our priority is to keep our schools open and to accelerate 

an equitable recovery. 

We’re doing that by focusing on and helping schools to 

meet students’ academic, social, emotional, and mental 

health needs, through new initiatives and unprecedented 

resources to states and districts — including through 

the American Rescue Plan and the Bipartisan Safer 

Communities Act. 

Our Engage Every Student initiative, announced in 

July 2022, is an important part of advancing this work. 

The initiative is a public-private partnership that unites 

schools, districts, state and local governments, and 

community-based organizations to support access to quality 

out-of-school time learning. Through this program, more 

students — especially those who are most underserved — 

are gaining access to after-school and summer enrichment 

opportunities that can help them recover from lost 

instructional time caused by the pandemic. 

The National Partnership for Student Success is another 

vital effort we launched this fiscal year with leading 

education, youth, and service organizations. This brandnew coalition supports the expansion, launch, and 

improvement of high-impact tutoring, mentoring, and 

other programs that can accelerate learning and support 

students’ mental health and overall well-being. In FY 2022, 

the Department also held a virtual summit, where we 

highlighted steps that schools, colleges, and communities 

can take to support students with disabilities and students 

with mental health needs. 

Here at the Department, we believe all students deserve 

a high-quality education that provides opportunity and 

addresses achievement gaps. That is why I’m proud that 

President Biden’s fiscal year 2023 budget request includes a 

significant increase in funding for Title I of the Elementary 

and Secondary Education Act, to help schools provide 

students in low-income communities with the learning 

opportunities and support they need to succeed.

The Department also is working to promote supportive, 

safe learning environments for our students — and to 

protect students’ civil rights in education. 

We’re doing that through the Promise Neighborhoods 

program, which is designed to significantly improve 

academic and developmental outcomes for children living 

in communities of concentrated poverty. I’m especially 
FY 2022 AGENCY FINANCIAL REPORT v U.S. DEPARTMENT OF EDUCATION

MESSAGE FROM THE SECRETARY

encouraged that this year’s grant competition included 

targeted funds for underserved communities, including 

both rural and Tribal areas. 

We’re also advancing this work through our Full-Service 

Community Schools grant. This program funds initiatives 

that provide academic supports, integrated health and 

social services, and engagement opportunities for students, 

while creating stronger connections among families, 

communities, and their local public schools. 

In addition, in November 2021, we joined the U.S. 

Departments of Interior and Health and Human Services 

to launch an interagency initiative to preserve, protect, and 

promote the rights of Native Americans to use, practice, 

and develop Native languages. 

And in June 2022, we released proposed amendments 

to Title IX to ensure crucial protections against sex 

discrimination, including regarding sex-based harassment 

and sexual assault. We also released guidance to avoid the 

discriminatory use of school discipline policies and practices 

for students with disabilities.

In all of our work in education, it’s also vital that we strive 

to make postsecondary education more inclusive and 

affordable so that our students have pathways to good jobs, 

fulfilling careers, and bright futures. 

That’s why we are determined to build a more accessible, 

affordable, and accountable student loan system. 

So far, we’ve discharged $48 billion in debt for more than 

1.9 million borrowers, and we have turned the Public 

Service Loan Forgiveness program from a promise broken, 

into a promise kept. 

The Biden-Harris administration announced in August 2022 

that the Department is providing targeted student debt 

cancellation to borrowers with loans held by our agency. This 

is part of our overall effort to address the financial harms of 

the pandemic by smoothing the transition back to repayment 

and helping borrowers at highest risk of delinquencies or 

default once payments resume. 

Through this plan, up to $20,000 in federal student loan 

debt cancellation will be provided to Pell Grant recipients 

and up to $10,000 in debt cancellation will be provided 

to non-Pell Grant recipients. Borrowers earning less 

than $125,000 per year or households earning less than 

$250,000 are eligible. The Department also is proposing a 

rule to create a new income-driven repayment plan that will 

substantially reduce future monthly payments for lowerand middle-income borrowers. 

This past summer, the Department also released proposed 

regulations that would expand and improve the major 

student loan discharge programs authorized by the Higher 

Education Act. The regulations would alleviate student loan 

debt burdens for borrowers whose schools closed or who 

are totally and permanently disabled and for public service 

workers who have met their commitments under the Public 

Service Loan Forgiveness program. 

Also this summer, we announced the availability of $5 

million in funds to support a new College Completion 

Fund for Postsecondary Student Success. The fund 

will support grants to Historically Black Colleges and 

Universities (HBCUs), Tribal Colleges and Universities 

(TCUs), and Minority-Serving Institutions (MSIs), such 

as Hispanic-Serving Institutions — many of which are 

community colleges. This program will invest in datadriven and evidence-based practices that encourage 

postsecondary retention, transfer, and completion — as 

well as reengaging students who withdrew from school 

temporarily during the pandemic. 

Additionally, I’m encouraged that the President’s fiscal year 

2023 budget request increases the maximum Pell Grant 

and provides significant increases in funding for HBCUs, 

TCUs, and MSIs.

Another priority for the Department is encouraging 

programs that lead students to successful careers. I’m 

particularly excited about systems of career and college 

pathways that provide support to students during their 

secondary and postsecondary education, helping them 

chart a successful course to their professions of choice. This 

past summer, we held an event with the U.S. Departments 

of Labor and Commerce to highlight the importance of 

career pathways programs for students. In addition, the 

President’s fiscal year 2023 budget request includes the 

Career-Connected High Schools program. This grant 

program would fund partnerships among school districts, 

postsecondary institutions, and employers to support 

early enrollment in postsecondary and career-connected 

coursework, work-based learning opportunities, and 

academic and career-connected instruction across the 

last two years of high school and the first two years of 

postsecondary education.

The Department continues to make stewardship of 

taxpayer funds and financial integrity top priorities. The 

financial and performance data included and assessed in 

this Agency Financial Report are complete and reliable 

in accordance with federal requirements. The financial 

report includes information and assurances about the 

Department’s financial management systems and controls 
FY 2022 AGENCY FINANCIAL REPORT vi U.S. DEPARTMENT OF EDUCATION

as well as control opportunities noted by the Department. 

Similarly, the Department’s related Annual Performance 

Report and Annual Performance Plan (Report and Plan) 

provides information on the overall performance of the 

Department as a federal agency. Each year this Report 

and Plan accompany the Department’s annual budget 

submission and links performance goals with resources for 

achieving targeted levels of performance. 

This year, the Department received a disclaimer of opinion 

on its FY 2022 financial statements. The Department 

is confident in the sound financial management of 

our programs, and we will implement the appropriate 

actions to return to an unmodified opinion as soon as 

possible. For more information, please see Management’s 

Response in the Independent Auditors’ Report. A detailed 

assessment of internal controls and compliance with the 

Department’s financial management systems can be found 

in the Management’s Discussion and Analysis section of 

this report.

For too long in this country, students have faced gaps in 

equity and opportunity and low expectations based on 

background and circumstance. We must remove these 

barriers, raise the bar for what learners can achieve, and 

reimagine our education system to include and support 

young people of all backgrounds. 

Federal resources, including unprecedented funds through 

the American Rescue Plan, are being used by states, 

districts, and schools to advance these priorities, address 

the impacts of the pandemic on our nation’s students and 

educators, and make our education system more equitable, 

inclusive, and excellent than ever before. 

For example, through the American Rescue Plan, states, 

districts, and schools are addressing students’ unfinished 

instruction, accelerating their academic outcomes, 

and supporting their mental and emotional health. 

And, through the Bipartisan Safer Communities Act, 

communities across the country will benefit from more 

than $2 billion to create safe and inclusive learning 

environments, including by hiring vital mental health 

professionals in schools and by growing the pipeline of 

talented individuals into the profession. All of these are 

game-changing investments, made possible through the 

Biden-Harris administration and the hard work of the 

entire team at the Department of Education. 

As we did in FY 2022, we will keep working to promote the 

nation’s progress by ensuring that our best days in education 

— and our children’s brightest futures — are ahead.

Miguel A. Cardona, Ed.D.
FY 2022 AGENCY FINANCIAL REPORT vii U.S. DEPARTMENT OF EDUCATION

Contents

About This Report ....................................................i

How This Report Is Organized ...............................ii

Message From the Secretary ................................iv

M A N A G E M E N T ’S D I S C U S S I O N 

and A N A L Y S I S 

(UNAUDITED)

About the Management’s 

Discussion and Analysis ........................................ 2

About the Department ........................................... 3

The Department in Fiscal Year 2022 ..................... 4

The Department’s Approach to Performance ........ 5

Financial Highlights ............................................. 10

Analysis of Systems, 

Controls, and Legal Compliance ......................... 25

Secretary’s Statement of Assurance ................... 25

Forward-Looking Information............................... 36

F I N A N C I A L S E C T I O N 

(FISCAL YEAR 2022 UNAUDITED)

Message From the Chief Financial Officer .......... 48

About the Financial Section ................................. 50

Financial Statements ........................................... 52

Notes to the Financial Statements for the 

Years Ended September 30, 2022 

and September 30, 2021 ..................................... 56

Required Supplementary Information

(Unaudited) ........................................................ 100

Report of the Independent Auditors ................... 104

OTHER INFORMATION

(UNAUDITED)

About the Other Information Section ................. 123

Memorandum from the Office 

of Inspector General .......................................... 124

Office of Inspector General’s (OIG)

Management and Performance 

Challenges for Fiscal Year 2023 ....................... 125

Summary of Financial Statement 

Audit and Management Assurances .................. 153

Payment Integrity Information 

Act Reporting ..................................................... 154

Civil Monetary Penalty 

Adjustment for Inflation ...................................... 157

Climate Adaptation Plan .................................... 158 

The Grants Oversight and New Efficiency 

Act of 2016 (GONE Act) and Education’s 

Grant Closeout Process .................................... 159

APPENDICES

(UNAUDITED)

Appendix A: Selected Department 

Web Links and Education Resources ................ 162

Appendix B: Glossary of 

Acronyms and Abbreviations ............................. 165

Acknowledgments ............................................. 168
FY 2022 AGENCY FINANCIAL REPORT viii U.S. DEPARTMENT OF EDUCATION

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FY 2022 AGENCY FINANCIAL REPORT 1 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S

DISCUSSION

and ANALYSIS

(UNAUDITED)
FY 2022 AGENCY FINANCIAL REPORT 2 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

About the Management’s Discussion and Analysis

he U.S. Department of Education (Department) 

continued to enhance the content quality, report 

layout, and public accessibility of the fiscal year 

(FY) 2022 Agency Financial Report (AFR) by refining 

graphics and providing more useful, balanced, and easily 

understood information about the Broad-Based Debt 

Relief, COVID-19 funding relief bills and the 

Department’s loan programs, including additional cost and 

risk information. The Department also chose relevant web 

content to provide users with more information about the 

Department’s operations and performance. To take 

advantage of the hyperlinks embedded in the report, the 

Department recommends reading it on the Internet. To 

continue to improve the quality and usefulness of 

information provided in the AFR, the Department 

encourages the public and other stakeholders to provide 

feedback and suggestions at AFRComments@ed.gov.

This section highlights information on the Department’s 

performance, financial statements, systems and controls, 

compliance with laws and regulations, and actions taken or 

planned to address select challenges.

MISSION AND 

ORGANIZATIONAL STRUCTURE

This section provides information about the Department’s 

mission, an overview of its history, and its structure. The 

active links include the organization chart and principal 

offices and a link to the full list of Department offices with 

a description of selected offices by function.

THE DEPARTMENT’S APPROACH 

TO PERFORMANCE

This section provides a summary of the Department’s 

performance goals and results for FY 2022. Since the 

Department has chosen to produce separate financial 

and performance reports, a detailed discussion of 

performance information for FY 2022 will be provided in 

the Department’s FY 2022 Annual Performance Report and 

FY 2024 Annual Performance Plan to be released online 

at the same time as the President’s FY 2024 Budget of the 

United States Government (President’s Budget) in February 

2023. For more information, prior year performance 

reports can be found on the Department’s website. The 

Department also urges readers to seek programmatic data 

as it is reported in the Congressional Budget Justification, 

as well as on the web pages of individual programs. 

Any questions or comments about the Department’s 

performance reporting should be emailed to PIO@ed.gov. 

For more details on performance, please refer to the 

Department’s budget and performance web page at www.

Performance.gov.

FINANCIAL HIGHLIGHTS

This section provides summarized information and analyses 

about the Department’s assets, liabilities, net position, 

sources and uses of funds, program costs, and related trend 

data. It provides a high-level perspective of the detailed 

information contained in the financial statements and 

related notes and provides an analysis of key financial 

statement changes.

ANALYSIS OF SYSTEMS, CONTROLS, 

AND LEGAL COMPLIANCE

The Department’s internal control framework and its 

assessment of controls, in accordance with Office of 

Management and Budget (OMB) Circular A-123, 

Management’s Responsibility for Enterprise Risk 

Management and Internal Control, provide assurance 

to Department leadership and external stakeholders that 

financial data produced by the Department’s business and 

financial processes and systems are complete, accurate, 

and reliable.

FORWARD-LOOKING INFORMATION

The Forward-Looking Information section describes the 

challenges that the Department aims to address to achieve 

progress on Direct Loans, Next Generation Federal Student 

Aid (Next Gen FSA), Leveraging Data as a Strategic Asset, 

and the new G6 modernization.
FY 2022 AGENCY FINANCIAL REPORT 3 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

About the Department

Our Mission

The U.S. Department of Education’s 

mission is to promote student achievement 

and preparation for global competitiveness 

by fostering educational excellence and 

ensuring equal access.

Who We Are. In 1867, the federal government recognized 

that furthering education was a national priority and 

created a federal education agency to collect and report 

statistical data. The Department was established as a 

Cabinet-level agency in 1980. Today, the Department 

supports programs in every area and level of education from 

preschool through postdoctoral research.

The Department makes funds and information available to 

individuals pursuing an education, colleges and universities, 

state educational agencies, and school districts by engaging 

in four major categories of activities:

• Establishing policies related to federal education 

funding, including distributing funds, collecting on 

student loans, and using data to monitor the 

use of funds.

• Supporting data collection and research on 

America’s schools.

• Identifying major issues in education and focusing 

national attention on them.

• Enforcing federal laws promoting equal access and 

prohibiting discrimination in programs that receive 

federal funds.

Our Public Benefit. The Department executes the 

laws passed by Congress to promote student academic 

achievement and preparation for global competitiveness. 

The Department works with students, parents, educational 

institutions, school districts, and states to foster educational 

excellence and to ensure equal access to a high-quality 

education for all students. While recognizing the primary 

role of states and school districts in providing high-quality 

education, the Department is committed to helping ensure 

students throughout the nation develop skills to succeed 

in school, pursue postsecondary options, and transition 

to the workforce. The Department’s vision is to improve 

educational outcomes for all students.

Many of the Department’s programs involve awarding 

grants to state and local educational agencies and 

providing grants and loans to postsecondary students. The 

Department’s largest outlays are for its portfolio of student 

loans (see the Financial Highlights and Notes sections). 

Grant programs constitute the second-largest driver of 

outlays. The grant programs include student aid to help 

pay for college through Pell Grants, Work-Study, and other 

campus-based programs; grants awarded based on statutory 

formulas mostly for elementary and secondary education; 

and competitive grant programs to promote innovation. 

The Department also supports research, collects education 

statistics, and enforces civil rights laws. The Department 

manages and spends financial resources on programs 

designed to support parents, teachers, principals, school 

leadership, institutions, and states in the pursuit of instilling 

knowledge and transferring skills to students.
FY 2022 AGENCY FINANCIAL REPORT 4 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

The Department in Fiscal Year 2022

This chart reflects the coordinating structure of the U.S. Department of Education. A text version of the FY 2022 

coordinating structure of the Department is available.

Note: The colors on this chart are for aesthetics only.

* The White House Initiatives are Center for Faith and Opportunity Initiatives; White House Initiative on American Indian and Alaska Native Education; White House Initiative on 

Advancing Educational Equity, Excellence, and Economic Opportunity for Hispanics; and White House Initiative on Educational Excellence for African Americans.

** The Office of the Under Secretary is responsible for the administration of the White House Initiative on Advancing Educational Equity, Excellence, and Economic Opportunity 

through Historically Black Colleges and Universities.
FY 2022 AGENCY FINANCIAL REPORT 5 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

The Department’s Approach to Performance

PERFORMANCE MANAGEMENT

FRAMEWORK

In accordance with the GPRA Modernization Act of 

2010,

1

 the Department’s framework for performance 

management begins with the Strategic Plan, which serves 

as the foundation for establishing and implementing 

priorities, highlighting performance goals and objectives, 

and developing performance indicators to gauge progress 

and outcomes. Progress toward the Department’s strategic 

goals and its two-year Agency Priority Goals (APGs) are 

measured using data-driven review and analysis. Additional 

information on performance management is available in the 

Annual Performance Plans and Annual Performance Reports.

2

The FY 2022–26 Strategic Plan is comprised of five Strategic 

Goals and three FY 2022 and FY 2023 APGs. The Strategic 

Plan aims to address administration priorities, such as 

recovering from the coronavirus disease 2019 (COVID-19) 

pandemic; ensuring high-quality, equitable secondary and 

postsecondary education; and providing diverse learning 

environments for all students, especially those who have 

been underserved. Each supporting strategic objective 

has corresponding performance indicators to assess the 

Department’s progress on achieving the Strategic Goals and 

objectives. For additional information about Performance 

Management at the Department, visit ED Strategic Plans 

and Annual Reports or email PIO@ed.gov.

1 GPRA Modernization Act of 2010 amends the Government Performance and 

Results Act of 1993 (GPRA).

2 The FY 2022 Statement of Net Cost and related notes align with the FY 2022–26 

Strategic Plan.

FY 2022–26 Strategic Goals 

and Strategic Objectives

Strategic Goal 1: Promote equity in student access to educational 

resources, opportunities, and inclusive environments.

Strategic Objective 1.1 Prioritize the equitable and adequate 

distribution of resources to communities of 

concentrated poverty, in an effort to provide 

underserved students with high-quality 

educational opportunities.

Strategic Objective 1.2 Ensure all students have access to wellrounded, rigorous, engaging, and diverse 

learning opportunities and environments to 

support their success in school.

Strategic Objective 1.3 Support states, school districts, and 

institutions of higher education to promote 

and protect students’ nondiscriminatory and 

equal access to education, as provided by 

Federal civil rights laws.

Strategic Objective 1.4 Promote greater access and supports for 

youth and adults to engage in learning, 

succeed in postsecondary education, and 

increase their employability in high-demand 

occupations.

Strategic Goal 1 focuses on outcomes related to improving 

and promoting educational equities for all students 

through adequate resources, opportunities, and supports. 

In FY 2022, $46.2 billion was appropriated to the 

Department in support of Strategic Goal 1. 

Multiple reports, such as those from the National 

Assessment of Educational Progress and the Program 

for International Student Assessment, suggest that 

inequalities in resources, policies, programs, services, and 

practices serve as barriers to access to equal educational 

opportunities for underserved students that need to be 

redressed. In support of Strategic Goal 1, the Department 

provided accessible digital instructional materials to blind, 

visually impaired, and print-disabled students, supporting 

499,260 accessible digital instructional material downloads. 

Additionally in FY 2022, the Department issued guidance 

on the rights of public-school students with disabilities, 

including behavioral disabilities, at the elementary and 

secondary education level, to nondiscrimination on the 

basis of disability, under Section 504 of the Rehabilitation 

Act of 1973, in the context of discipline.

In FY 2022, the Department also released for public 

comment proposed changes to its regulations implementing 

Title IX of the Education Amendments of 1972 that 

would advance Title IX’s goal of ensuring that no person 
FY 2022 AGENCY FINANCIAL REPORT 6 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

experiences sex discrimination, sex-based harassment, or 

sexual violence in education and help elementary and 

secondary schools implement this vital legislation. 

The devastating and adverse impacts of the COVID-19 

pandemic exacerbated previously documented gaps in 

educational opportunity. The American Rescue Plan Act 

of 2021 (ARP) provides states and districts with critical 

resources to address these challenges. The $122 billion 

American Rescue Plan Elementary and Secondary School 

Emergency Relief (ARP ESSER) Fund provides state 

educational agencies and local educational agencies (LEAs) 

flexible resources that can support hiring, preparing, and 

retaining high-quality teachers and school personnel to 

address teacher shortages and build a stronger pipeline for 

the future; promote learning acceleration, for example, 

through summer learning and enrichment and high-quality 

tutoring; and improve indoor air quality through upgrades 

to heating, ventilation, and air conditioning systems. 

The ARP also requires that LEAs use 20 percent of their 

ARP ESSER allocation to address the academic impact 

of lost instructional time through the implementation 

of evidence-based interventions and that interventions 

respond to students’ social, emotional, and mental health 

and academic needs and address the disproportionate 

impact of COVID-19 on students. In FY 2022, the 

Department continued monitoring work around 

the COVID-19 pandemic relief funds. Systems were 

implemented to ensure the Department was providing the 

required oversight and the technical systems to support 

states in addition to timely responses to guidance requests. 

The ARP further facilitates Strategic Goal 1 by providing 

much needed relief to help districts and schools recover and 

increase capacity to improve student outcomes and address 

historical inequities.

Strategic Goal 2: Support a diverse and talented 

educator workforce and professional growth to strengthen 

student learning.

Strategic Objective 2.1 Strengthen and diversify the educator 

pipeline and workforce.

Strategic Objective 2.2 Identify and promote evidence-based 

practices or strategies that support diverse 

districts (including rural districts) with high 

rates of poverty in recruiting, selecting, 

preparing, and retaining well-qualified 

(including in-field fully certified) and effective 

teachers, principals, paraprofessionals, and 

specialized instructional support personnel.

Strategic Objective 2.3 Support the professional growth, retention, 

and advancement of talented, experienced 

educators and other school personnel and 

their capacity to meet the social, emotional, 

mental health, and academic needs of 

underserved students.

Strategic Goal 2 focuses on outcomes related to supporting 

and increasing diversity and talent in the educator workforce 

and professional growth. Teachers are essential to the learning 

and development of the students they serve. However, the 

educator workforce faces several challenges that limit students’ 

educational opportunities and place at risk the success of 

students, particularly those who have been underserved by 

education systems. In FY 2022, $16.3 billion was appropriated 

to the Department in support of Strategic Goal 2. 

It is essential to attract, prepare, support, develop, and 

retain a diverse, well-qualified, experienced, and effective 

pool of educators by ensuring candidates have access to 

high-quality comprehensive preparation programs, and that 

steps are taken to support and retain qualified, experienced, 

and effective educators. In FY 2022, the Department 

aligned 18 grant competitions focusing more than $414 

million in federal funding toward projects that are designed 

to advance diversity in the educator workforce and 

professional development. 

The Department is committed to and focused on making 

substantial progress in decreasing teacher shortages nationwide 

that have increased in the wake of the COVID-19 pandemic. 

Therefore, the Department encourages the use of ARP ESSER 

funds to prepare and retain a diverse educator workforce. 

In FY 2022, the Department continued to provide several 

resources to state educational agencies and local educational 

agencies that focused on the use of American Rescue Plan 

(ARP) funds and provided concrete examples of how states, 

districts, and schools are using federal COVID-19 dollars to 

strengthen the teacher pipeline, get more educators in the 

classroom, and accelerate student recovery. Districts and higher 

education institutions are partnering to create and expand 

residency programs, offer paraprofessional internships, and 

get college graduates credentialed and in the classroom more 

quickly. These partnerships provide students across the country 
FY 2022 AGENCY FINANCIAL REPORT 7 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

more classroom time working with qualified educators and 

addressing the academic impact of COVID-19.

Strategic Goal 3: Meet students’ social, emotional, and 

academic needs.

Strategic Objective 3.1 Support the development and 

implementation of multitiered systems of 

supports to increase students’ engagement; 

social, emotional, and mental health; wellbeing; and academic success.

Strategic Objective 3.2 Foster supportive, inclusive, and identitysafe learning environments and ensure the 

individual needs of underserved students 

are met through appropriately designed 

instruction, evidence-based practices, and 

related supports and services.

Strategic Objective 3.3 Strengthen learning environments, support 

professional development, and improve 

educator credentialing for emergent bilingual 

students and multilingual learners.

Strategic Goal 3 focuses on meeting students’ social, 

emotional, and academic needs. Learning and development 

across a student’s life span are influenced by several 

interrelated factors, including the individual’s social, 

emotional, academic, and career development. In FY 2022, 

$20.1 billion was appropriated to the Department in 

support of Strategic Goal 3. 

Research has shown that a safe, healthy, and equitable 

school climate that addresses students’ social and emotional 

development is associated with higher student attendance 

and engagement, improved student connectedness, and 

better social and emotional health. The Title IV, Part A 

Centers provide state educational agencies (SEAs) with 

dedicated support for implementing the Title IV, Part A 

(Title IV-A) Student Support and Academic Enrichment 

(SSAE) program. 

In support of Strategic Goal 3, the Office of Special 

Education and Rehabilitative Services issued Individuals 

with Disabilities Education Act discipline guidance that 

included a Dear Colleague Letter, a question and answer 

document, and a companion technical assistance document 

that provides examples of proven practices to address 

inequities and disparities in the use of discipline, including 

exclusionary discipline practices. The Department supports 

the education community in creating and maintaining 

healthy school environments that can contribute to 

lifelong benefits.

Strategic Goal 4: Increase postsecondary value by focusing on 

equity-conscious strategies to address access to high-quality 

institutions, affordability, completion, post-enrollment success, 

and support for inclusive institutions.

Strategic Objective 4.1 Support educational institutions and state 

systems in efforts to raise academic quality 

and college completion for all students, 

especially for underserved students, such 

as first-generation students, students from 

low-income backgrounds, students of color, 

and students with disabilities.

Strategic Objective 4.2 Improve the administration of student 

aid programs to help eligible students 

receive aid; support borrowers in 

successfully repaying their loans, 

claiming loan forgiveness benefits, and 

mitigating student loan default; and hold 

contractors accountable.

Strategic Objective 4.3 Increase equitable access to secondary 

and postsecondary programs that have 

clear on-ramps to both high-quality jobs 

and additional high-quality postsecondary 

educational opportunities.

Strategic Objective 4.4 Improve the alignment across secondary, 

postsecondary, and career and technical 

education programs, including through 

transparent and effective transition 

processes, inclusive pathways, and clear 

credentialing requirements.

Strategic Goal 4 focuses on increasing the value of 

postsecondary education by addressing access, affordability, 

and degree and credential completion. The goal puts a 

particular emphasis on supporting educational institutions 

and state systems in their efforts to improve academic 

outcomes for all students and especially underserved 

student populations (i.e. first-generation, low-income 

background, students of color, and students with 

disabilities). In FY 2022, $91.9 billion was appropriated to 

support Goal 4.

In support of Goal 4, the Department announced the 

availability of $5 million in funds to support a new College 

Completion Fund for Postsecondary Student Success. 

The funding will support grants to Historically Black 

Colleges and Universities, Tribal Colleges and Universities, 

and Minority-Serving Institutions such as HispanicServing Institutions—many of which are community 

colleges—to invest in data-driven and evidence-based 

reforms that encourage postsecondary retention, transfer, 

and completion.
FY 2022 AGENCY FINANCIAL REPORT 8 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Strategic Goal 5: Enhance the Department’s internal capacity to 

optimize the delivery of its mission.

Strategic Objective 5.1 Manage information technology as a 

strategic resource and driver to promote the 

advancement of the missions executed by 

the Department’s 21st-century workforce.

Strategic Objective 5.2 Strengthen agency-wide data governance 

and build capacity to improve data access, 

data management, and enterprise data 

analytics in support of agency goals. 

Strategic Objective 5.3 Recruit, retain, and develop the workforce 

needed to meet the Department’s mission 

now and into the future.

Strategic Objective 5.4 Deliver mission outcomes and value for 

taxpayers through efficient acquisition 

management and proactive industry 

partnerships while promoting small 

businesses.

Strategic Goal 5 is focused on continuously improving 

agency operations as the Department manages, engages, 

and empowers the workforce; purchases products and 

services; enhances and secures information technology 

resources; and leverages data to support evidencebased decision-making. In FY 2022, $59 million was 

appropriated to support Goal 5. 

In FY 2022, the Department was recognized for its 

leading-edge work in data governance and in the effective 

execution of the agency’s Data Maturity Assessment by 

the Partnership for Public Service. The Department was 

also recognized as a pioneer by the Data Foundation for 

its progress in the advancement of data literacy and data 

skill development across the agency. The Department has 

shared its effective practices in this space with numerous 

federal agencies including the Department of State, Office 

of National Defense Intelligence, and the Department 

of Health and Human Services. The Department also 

chairs a federal working group building a Federal Data 

Skills Catalog. 

The Department took immediate action in FY 2022 

regarding the Office of Management and Budget Memo 

M-22-09 Moving the U.S. Government Toward Zero Trust 

Cybersecurity Principles by onboarding a GS-15 zero-trust 

architecture program manager and releasing a Department 

Strategy and project schedule for full implementation by 

the end of FY 2024.

Strategic Goal 5 prioritizes reducing potential procurement 

barriers and increasing procurement opportunities for 

small, underserved, and disadvantaged businesses. In 

support of Goal 5, 15.43% of contracts have been awarded 

to small business, which exceeds the goal of 14%. The 

Department also received an A on the FY 2021 Small 

Business Scorecard.
FY 2022 AGENCY FINANCIAL REPORT 9 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

THE DEPARTMENT’S AGENCY PRIORITY GOALS

The Department has identified three Agency Priority Goals (APGs) for FY 2022 and FY 2023 which seek to address the 

impact of the COVID-19 pandemic, effectively manage federal student loans, and reduce disparities in attainment of highquality degrees and credentials. 

APG 1 Address the impact of the COVID-19 pandemic on students, educators, and faculty. The Department will be 

a leader and partner in addressing the impact of the COVID-19 pandemic in educational areas. By September 30, 

2023, the Department will respond to the impact of the COVID-19 pandemic and the need to continuously provide for 

high-quality educational environments and capabilities by supporting state educational agencies, local educational 

agencies, and institutions of higher education to:

• Continue to support schools in maintaining safe, fully in-person instructions for students.

• Utilize COVID-19 relief funds on appropriate, effective, and evidence-based activities to reengage students, 

address lost instructional time, and improve educational opportunities by offering 300+ Department-led technical 

assistance engagements.

Related Strategic 

Objectives

Strategic Objective 1.1: Prioritize the equitable and adequate distribution of resources to communities of 

concentrated poverty in an effort to provide underserved students with high-quality educational opportunities.

Strategic Objective 1.2: Ensure all students have access to well-rounded, rigorous, engaging, and diverse learning 

opportunities and environments to support their success in school.

Strategic Objective 3.1: Support the development and implementation of multitiered systems of supports to increase 

students’ engagement; social, emotional, and mental health; well-being; and academic success.

Strategic Objective 3.2: Foster supportive, inclusive, and identity-safe learning environments and ensure the 

individual needs of underserved students are met through appropriately designed instruction, evidence-based 

practices, and related supports and services.

APG 2 Effectively manage federal student loans. The Department will provide effective customer service for borrowers to 

simplify the student loan repayment process. By September 30, 2023, Federal Student Aid will improve loan servicer 

quality and accuracy to levels at or above 95 percent, as defined in student loan servicer agreements.

Related Strategic 

Objective

Strategic Objective 4.2: Improve the administration of student aid programs to help eligible students receive aid; 

support borrowers in successfully repaying their loans, claiming loan forgiveness benefits, and mitigating student loan 

default; and hold contractors accountable.

APG 3 Reduce disparities in attainment of high-quality degrees and credentials. The Department will support institutions 

and states to assist low-income students and students of color to enroll in and complete high-quality postsecondary 

education programs, including at community colleges and through career and technical training. By September 30, 

2023, the Department will increase the number and diversity of higher education grant applicants from community 

colleges, Historically Black Colleges and Universities, Tribally Controlled Colleges or Universities, Minority-Serving 

Institutions, and public four-year colleges by 5 percent to support and assist low-income students and students of color 

in attaining improved educational outcomes.

Related Strategic 

Objective

Strategic Objective 4.1: Support educational institutions and state systems in efforts to raise academic quality and 

college completion for all students, especially for underserved students, such as first-generation students, students 

from low-income backgrounds, students of color, and students with disabilities.

Strategic Objective 4.2: Improve the administration of student aid programs to help eligible students receive aid; 

support borrowers in successfully repaying their loans, claiming loan forgiveness benefits, and mitigating student loan 

default; and hold contractors accountable.
FY 2022 AGENCY FINANCIAL REPORT 10 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Financial Highlights

The financial statements, notes, and underlying business 

processes, systems, and controls are audited by an 

independent accounting firm with audit oversight provided 

by the Office of Inspector General (OIG). This year, 

the Department received a disclaimer of opinion on its 

FY 2022 financial statements. The financial statements 

and notes for FY 2022 are on pages 52–99, and the 

Independent Auditors’ Report begins on page 104.

The financial statements are prepared to report the financial 

position and results of operations of the reporting entity, 

consistent with the requirements of 31 U.S.C. § 3515(b). 

The statements are prepared from the Department’s 

books and records in accordance with generally accepted 

accounting principles for federal entities and the formats 

prescribed by OMB. Reports used to monitor and control 

INTRODUCTION

This section provides summarized information and analyses 

about the Department’s assets, liabilities, net position, 

sources and uses of funds, program costs, and related trend 

data. It also provides a high-level perspective of the detailed 

information contained in the financial statements and 

related notes.

The Department consistently produces complete, accurate, 

and timely financial information. The Department’s 

financial statements and notes are prepared in accordance 

with accounting principles generally accepted in the United 

States for federal agencies issued by the Federal Accounting 

Standards Advisory Board and the format and content 

specified by Office of Management and Budget (OMB) 

Circular No. A-136, Financial Reporting Requirements. 

Financial Statement Lines 

with Significant Changes

Amount Total Changes Changes Due to COVID-19

 FY 2022 FY 2021 Amount Percentage Amount Percentage

Balance Sheets

Fund Balance with Treasury $ 317.0 $ 351.9 $ (34.9) -9.9% $ (80.7) -22.9%

Loan Receivables, Net - Direct Loan Program 816.5 1,104.9 (288.4) -26.1% (409.2) -37.0%

Loan Receivables, Net - Federal Family Education 

Loan (FFEL) Program 39.8 58.2 (18.4) -31.6% (23.0) -39.5%

Cash and Other Monetary Assets 0.7 1.9 (1.2) -63.2% - 0.0%

Debt Associated with Loans - Direct Loan Program 837.4 1,142.2 (304.8) -26.7% (437.4) -38.3%

Debt Associated with Loans - FFEL Program 67.0 78.3 (11.3) -14.4% (26.1) -33.3%

Subsidy Due to Treasury 27.0 1.5 25.5 1,700.0% - 0.0%

Guaranty Agency Funds Due to Treasury 0.7 1.9 (1.2) -63.2% - 0.0%

Loan Guarantee Liabilities 10.7 7.5 3.2 42.7% - 0.0%

Accrued Grant Liabilities 5.1 7.6 (2.5) -32.9% (1.5) -19.7%

Statements of Net Cost

Total Program Gross Costs 628.6 279.7 348.9 124.7% 431.8 123.8%

Total Program Earned Revenue (65.2) (40.0) (25.2) 63.0% (27.3) 108.3%

Statements of Budgetary Resources

Unobligated Balance from Prior Year Budget 

Authority (Net) 65.3 41.4 23.9 57.7% 17.9 43.2%

Appropriations (Discretionary and Mandatory) 597.2 476.8 120.4 25.3% 154.9 32.5%

New Obligations and Upward Adjustments (Total) 813.7 627.5 186.2 29.7% 190.8 30.4%

Unobligated Balance, End of Year (Total) 88.3 62.1 26.2 42.2% (17.9) -28.8%

Outlays, Net 668.5 267.1 401.4 150.3% 437.9 163.9%

Distributed Offsetting Receipts (29.1) (6.6) (22.5) 340.9% - 0.0%

Table 1. Key Financial Statement Changes

(Dollars in Billions)
FY 2022 AGENCY FINANCIAL REPORT 11 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

The broad-based debt relief announced on 

August 24, 2022, is expected to impact up 

to 43 million borrowers. Nearly 8 million 

borrowers may be eligible to receive one-time 

broad-based debt relief automatically because 

relevant income data is already available to the 

Department. If all borrowers claim relief they are 

entitled to, this action will provide relief to up to

43 million borrowers.

In addition, because of the other debt relief 

actions taken by the Department:

•	1.1 million borrowers have already received 

discharges related to borrower defense or 

school closures.

•	More than 1 million borrowers have already 

received additional credit toward forgiveness 

through the temporary changes to the 

PSLF program. 

•	More than 425,000 borrowers received loan 

relief due to a total and permanent disability.

budgetary resources are prepared from the same books 

and records. The financial statements should be read with 

the understanding that they are for a component of the 

U.S. government.

FINANCIAL STATEMENT IMPACTS OF 

DEBT RELIEF ACTIONS 

During FY 2022, the Department announced significant 

actions to provide relief to federal student loan borrowers, 

including extensions to the student loan repayment pause, 

and several additional debt relief actions. Debt relief actions 

that occurred or were announced during FY 2022 include:

• Providing one-time broad-based student loan debt relief 

of up to $20,000 in debt cancellation for Pell Grant 

recipients with loans held by the Department and up 

to $10,000 in debt cancellation to non-Pell Grant 

recipients. Applications for this debt relief launched on 

October 17, 2022.

• Revamping the Public Service Loan Forgiveness (PSLF) 

program, including temporary changes that allow 

student borrowers to get credit for past periods of 

repayment on loans that would not otherwise qualify for 

PSLF, including payments made on loans from FFEL 

Program, Perkins Loan Program, and other federal 

student loans. Additionally, the temporary changes allow 

past periods of repayment to count for certain types of 

deferment or forbearance periods, or if the borrowers 

were not on a qualified repayment plan. The changes 

also eliminate barriers for military service members 

to receive PSLF. The temporary changes expired on 

October 31, 2022.

• Approving borrower defense and closed school 

discharges for borrowers whose institutions took 

advantage of them, including borrowers who attended 

Corinthian Colleges Inc., the ITT Technical Institute, 

Marinello Schools of Beauty, Westwood College, 

DeVry University, Minnesota School of Business and/or 

Globe University.

• Providing relief for borrowers who have a total and 

permanent disability.

Although forgiveness of loan principal and interest 

associated with some of these actions will not occur until 

future fiscal years, these actions have already resulted in 

significant increases in cancellations of loan principal and 

interest for loans held by the Department. 
FY 2022 AGENCY FINANCIAL REPORT 12 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

As shown in Figure 1, cancellations of loan principal and 

interest increased 181% during FY 2022, primarily for the 

Direct Loan Program. A large portion of cancellations of 

loan principal and interest during FY 2022 were associated 

with the PSLF program and discharges for total and 

permanent disability, as they made up 46.7% and 40.8% 

of total cancellations, respectively. Other notable types of 

cancellation activity include borrower defense discharges, 

cancellations of loan principal and interest for loans in 

default status, and discharges due to death of the borrower.

 

 

Figure 1. Loan Cancellations 

(Dollars in Billions) FY 2022

Direct Loan 

Program FFEL Program

Loan 

Cancellation Type Principal Interest Principal Interest Other Total

Discharges for 

closed schools $ 443 $ 56 $ 36 $ 7 $ 0 $ 542

Discharges due 

to death of the 

borrower

766 60 34 6 0 866 

Discharges for total 

and permanent 

disability

7,537 1,129 2,363 877 2 11,908 

Public service loan 

forgiveness 13,036 594 0 0 0 13,630 

Borrower defense 

discharges 877 0 146 3 0 1,026 

Cancellation of loans 

in default status 447 72 172 134 6 831 

Other 310 (25) 9 (2) 69 361 

Total Loan 

Cancellations $ 23,416 $ 1,886 $ 2,760 $ 1,025 $ 77 $ 29,164

FY 2022 Loan Cancellations

(Dollars in Millions)
FY 2022 AGENCY FINANCIAL REPORT 13 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

FINANCIAL STATEMENT IMPACTS OF 

COVID-19 ACTIVITIES 

Many of the significant changes to the Department’s 

financial statements resulted from the impacts due to 

coronavirus disease 2019 (COVID-19) activities. Congress 

passed multiple COVID-19 relief bills in FY 2020 and 

FY 2021, including the following that provided a total 

of $282.5 billion of direct appropriation funding for 

educational purposes:

• Coronavirus Aid, Relief, and Economic Security Act of 

2020 (CARES Act) $31.0 billion

• Coronavirus Response and Relief Supplemental 

Appropriations Act of 2021 (CRRSAA) $82.0 billion

• American Rescue Plan Act of 2021 (ARP) $169.5 billion 

These appropriations funded a variety of programs 

administered primarily through grant programs. The largest 

component of the education funding provided by the 

COVID-19 relief appropriations established the Education 

Stabilization Fund which included (1) the Elementary and 

Secondary School Emergency Relief Fund, (2) the Higher 

Education Emergency Relief Fund, (3) the Governor’s 

Emergency Education Relief Fund, and (4) funds for 

outlying areas. 

The COVID-19 relief legislation and administrative actions 

also provided support for student loan borrowers by:

• Providing broad-based debt relief to address the financial 

harms of the pandemic by smoothing the transition 

back to repayment and helping borrowers at the 

highest risk of delinquencies or default once payments 

resume. Applications for this debt relief launched on 

October 17, 2022.

• Temporarily suspending nearly all federal student loan 

payments, interest free. 

• Authorizing Guaranty Agencies to reimburse themselves 

from the Federal Student Loan Reserve Fund for lost 

revenue that resulted from student loan repayment 

deferrals. This reimbursement covers the share of what a 

guaranty agency might have reasonably collected during 

the pandemic, but for the suspension.

• Making temporary changes to the PSLF program 

through a Limited PSLF Waiver to allow student 

borrowers to get credit for payments made while 

working for a qualifying employer, regardless of loan 

type or repayment plan. 

• Addressing issues with income-driven repayment (IDR) 

payment counting by allowing any borrower who 

made IDR-qualifying payments to count toward IDR, 

regardless of repayment plan. 

Funding for each of these actions was provided through 

indefinite appropriations. Cost impacts of the COVID-19 

loan modifications were recorded as loan modifications 

and are a component of subsidy expense, which reduced 

the overall loan receivable balances for the student loan 

programs. Detailed explanations of the COVID-19 Direct 

Loan Program loan modifications are provided in the 

Analysis of Direct Loan Program Subsidy Expense section 

beginning on page 21 and in Note 5 of the financial 

statements beginning on page 66.

The direct and indirect funding stemming from the 

combined COVID-19 relief legislation and administrative 

actions is summarized in Figure 2. Obligated and 

unobligated COVID-19 funds remaining to be disbursed as 

of September 30, 2022, totaled $142.1 billion. Most of the 

undisbursed funds are for the Elementary and Secondary 

School Emergency Relief (ESSER) Fund. While states 

may have made subawards for all of their ESSER funding, 

subawardees may still be in the process of completing 

their obligations and requesting reimbursement from the 

states who will then in turn drawdown the remaining 

undisbursed funds.
FY 2022 AGENCY FINANCIAL REPORT 14 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Elementary and Secondary School Emergency Relief 

(ESSER) Fund—Funds provided for state educational 

agencies (SEAs) and local educational agencies (LEAs) 

to support continued learning for K-12 students whose 

educations have been disrupted by COVID-19, and grants 

for the specific needs of homeless children and youth to 

address the challenges of COVID-19.

Higher Education Emergency Relief Fund (HEERF) —

Funds provided for institutions of higher education (IHEs) 

to address needs directly related to COVID-19, including 

transitioning courses to distance education and granting 

aid to students for educational costs such as food, housing, 

course materials, health care, and child care. 

Governor’s Emergency Education Relief (GEER) 

Fund—Grants provided to state governors to ensure 

education continues for students of all ages impacted by the 

COVID-19 national emergency. 

Outlying Areas, Bureau of Indian Education (BIE), 

and Discretionary Grants—Funds provided for outlying 

areas and discretionary grants to states with the highest 

COVID-19 burdens. 

Figure 2. COVID-19 Funding Flow

(Dollars in Billions)
FY 2022 AGENCY FINANCIAL REPORT 15 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

Figure 3. Assets by Type

Figure 4. Liabilities by Type

BALANCE SHEETS

The consolidated balance sheets present, as of a specific 

point in time (the end of the fiscal year), the Department’s 

total assets, total liabilities, and net position.

The Department’s assets totaled $1,176.7 billion as of 

September 30, 2022. As shown in Figure 3, most assets 

relate to loans receivables, $858.6 billion, which comprised 

73.0 percent of all assets. Direct loans comprise the largest 

share of these receivables. Analysis of the net change 

in Direct Loan Program receivable balances begins on 

page 16. All other assets totaled $318.1 billion, most of 

which was Fund Balance with Treasury, $317.0 billion, 

which decreased by $34.9 billion during FY 2022, largely 

due to a decrease in undisbursed COVID-19 funds as of 

September 30, 2022.

The Department’s liabilities totaled $954.9 billion as 

of September 30, 2022. As shown in Figure 4, most of 

the Department’s liabilities are also associated with loan 

programs, primarily amounts borrowed from the U.S. 

Department of the Treasury (Treasury) to fund student 

loans. Debt associated with the Direct Loan Program 

totaled $837.4 billion as of September 30, 2022. Analysis 

of debt associated with the Direct Loan Program begins on 

page 18.
FY 2022 AGENCY FINANCIAL REPORT 16 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

ANALYSIS OF DIRECT LOAN PROGR AM 

RECEIVABLES, NET

Figure 5 shows the changes in the Direct Loan Program 

receivable components over the past five years. The principal 

amount has continued to grow as the Direct Loan Program 

has originated all new federal loans since July 2010, when 

originations of new FFEL loans ended. Prior to COVID-19, 

the rate of increase in principal slowed as enrollment 

stagnated and sometimes declined. Also, accrued interest 

amounts had been increasing as more Direct Loans were 

moving into active repayment statuses, and the rate of 

enrollment in income-driven repayment plans that allow for 

payments to be lower than interest accrual had increased. 

The rate of increase in principal has slowed in recent years 

as the Direct Loan program has disbursed fewer than $95 

billion in new loans each year since FY 2016 as a result of 

stagnant, and in some cases declining, enrollment. Even 

so, new loan disbursements continue to exceed overall loan 

principal repayments—student loan borrowers have many 

options to stretch out their repayment terms and reduce their 

monthly payments. The student loan repayment deferrals 

implemented in response to COVID-19 caused the rate of 

increase in principal to be lower in FYs 2020, 2021, and 

2022 compared to previous years.

In accordance with the Federal Credit Reform Act of 1990, the 

Department’s financial statements report the value of direct 

loans (credit program receivables) at the net present value of 

their future cash flows, discounted at a fixed rate established 

based on Treasury securities. The difference between the 

recorded principal and interest balance and the net present 

value of the loans is referred to as the “allowance for subsidy,” 

which can be positive or negative.

A negative allowance for subsidy balance means that the 

present value of funds expected to be recovered is less than 

the principal outstanding. The increase in the negative 

allowance from FY 2018 through FY 2022 is due primarily 

to higher subsidy costs, the main causes being high 

participation in IDR plans and the COVID-19 deferrals of 

student loan repayments. In addition to these factors, the 

increase in the negative allowance for subsidy during FY 

2022 was also due to higher subsidy costs due to broad-based 

debt relief (see discussion in the Analysis of Direct Loan 

Program Subsidy Expense section on page 21). 

 

Figure 5. Components of Direct Loan Receivables, Net

(Dollars in Billions)

Direct Loan 

Component 

(Dollars in 

Billions)

Fiscal Year

2018 2019 2020 2021 2022

Principal $ 1,083.7 $ 1,164.9 $ 1,224.8 $ 1,292.2 $ 1,341.8 

Rate of Increase 

in Principal 8.5% 7.5% 5.1% 5.5% 3.8%

Accrued Interest $ 72.0 $ 83.3 $ 92.1 $ 86.5 $ 86.7 

Allowance for 

Subsidy $ (40.7) $ (124.4) $ (216.4) $ (273.9) $ (611.9)

Total No. of 

Direct Loan 

Borrowers 

(in Millions)

34.2 35.1 35.9 37.0 37.1 
FY 2022 AGENCY FINANCIAL REPORT 17 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

Table 2 shows the payment status of the direct loan 

principal and interest balances outstanding over the past 

five years. The Current Repayment category consists of 

loans that are being paid back on time, including the 

current portion of loans being repaid pursuant to IDR 

plans. Loans in the Delinquent category are past due 

anywhere from 31 to 360 days. Default/Bankruptcy/Other 

includes loans that are more than 360 days delinquent 

(default status), loans in a nondefaulted bankruptcy status, 

and loans in disability status. 

While technical default is 271 days delinquent, default is 

defined as 361 days delinquent for reporting purposes.

The balances reported for Current Repayment and 

Delinquent in FY 2020, FY 2021, and FY 2022 are 

significantly lower than other years, primarily due to the 

COVID-19 student loan repayment deferrals that placed 

loans in forbearance and subsequently cured delinquencies. 

As a result of the COVID-19 student loan repayment 

deferrals, the delinquent balances are now zero.

While the COVID-19 student loan repayment deferrals 

suspended payments for federally owned student loans, 

some borrowers elected to continue to make student loan 

payments. In addition to improving borrowers’ overall 

financial health, factors that may have influenced borrowers 

to continue making payments on their student loans during 

forbearance include the following:

• Borrower flexibility to make payments or suspend

payments as their financial circumstances permitted

without notification to the loan servicer.

• Potential earlier loan payoff.

• Lower total cost of a loan over time to the borrower

due to the zero percent interest rate. (Before the pause,

an average of two-thirds of each dollar paid went to

principal. During the pause, this quickly increased to

above 90 percent, and now an average of 95 percent of

each dollar goes toward principal).

• Potentially improving the borrower’s credit rating

by reducing the student debt balance. The relative

strength of FSA borrower payment activity has been

driven, in part, by efforts of borrowers to improve

their credit stance to purchase homes during the

period of forbearance. During the pandemic, the U.S.

Department of Housing and Urban Development and

Federal Housing Authority implemented nontemporary

policy changes to improve the underwriting stance of

federal student loan borrowers.

• Potentially improved overall borrower financial health

and reduced financial stress by reducing student debt.

Loan Status

Fiscal Year

2018 2019 2020** 2021** 2022**

Total No. of 

Direct Loan 

Recipients 

(in Millions)

34.2 35.1 35.9 37.0 37.1

Total Dollar 

Amount of 

Direct Loans 

Outstanding

$1,155.70 $1,248.10 $1,316.90 $1,378.70 $1,428.50

Current 

Repayment1 $ 531.20 $ 594.70 $ 14.20 $ 16.20 $ 11.80 

% Current 

Repayment 46.0% 47.6% 1.1% 1.2% 0.8%

In School, 

Grace Period, 

and Education 

Deferments

$ 295.50 $ 294.80 $ 282.80 $ 271.90 $ 259.50 

% In School, 

Grace Period, 

and Education 

Deferments

25.6% 23.6% 21.5% 19.7% 18.2%

Forbearance 

and 

Noneducation 

Deferments

$ 121.50 $ 133.20 $ 887.50 $ 967.80 $ 1,039.70 

% Forbearance 

and 

Noneducation 

Deferments

10.5% 10.7% 67.4% 70.2% 72.8%

Delinquent 

(Past Due 

31–360 Days)

$ 92.50 $ 90.80 $ 0.50 $ 0.00 $ 0.00

% Delinquent 

(Past Due 

31–360 Days)

8.0% 7.3% 0.0% 0.0% 0.0%

Default/

Bankruptcy/

Other*

$ 115.00 $ 134.60 $ 131.90 $ 122.80 $ 117.50 

% Default/

Bankruptcy/

Other*

10.0% 10.8% 10.0% 8.9% 8.2%

1 Loans in Current Repayment status include loans that are being repaid on-time. 

However, these on-time loans can include loans for which the amount of interest 

accruing is higher than payments that are being made, which can occur in the case 

of loans on income-driven repayment plans.

*Adjusted to eliminate differences between NSLDS and FSA Total Reported DL 

Portfolio (principal and interest)

**Student loan payment pause in effect from March 2020 

Table 2. Payment Status of Direct Loan Principal and 

Interest Balance

(Dollars in Billions)
FY 2022 AGENCY FINANCIAL REPORT 18 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

ANALYSIS OF DEBT ASSOCIATED WITH 

LOANS, DIRECT LOAN PROGR AM 

The Department borrows funds to disburse new loans 

and pay credit program outlays and related costs. The 

Department repays Treasury after consideration of cash 

position and the liability for future cash outflows. 

The Department’s total debt associated with the 

Direct Loan Program was $837.4 billion as of 

September 30, 2022, which was a $304.8 billion decrease 

from FY 2021. Total debt decreased largely because the 

Department received subsidy appropriations for loan 

modifications during FY 2022 and used these resources to 

repay debt to Treasury.

Figure 6 shows the Direct Loan Program cumulative 

borrowing and repayment activity that resulted in the debt 

amount on the balance sheet. A diagram depicting the 

Direct Loan Program financing process is displayed with 

related trend data as Figure 7 on page 19 of this report.

 

Figure 6. Components of Direct Loan 

Receivables, Net 

(Dollars in Billions)
FY 2022 AGENCY FINANCIAL REPORT 19 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

Treasury Financing and Subsidy Cost of Direct Loans (Dollars in Billions)*

Fiscal Year 2018 2019 2020 2021 2022

Net Borrowing $ 89.1 $ 41.5 $ (32.0) $ (17.9) $ (304.8)

Borrowing from Treasury 155.3 137.6 116.9 120.0 162.8 

Debt Repayments to Treasury (66.2) (96.1) (148.9) (137.9) (467.6)

Interest Expense to Treasury (32.3) (33.8) (34.7) (33.0) (30.6)

Interest Earned from Treasury 3.9 4.1 4.8 4.2 7.6 

Cumulative Taxpayer Cost / (Savings) 40.7 124.4 216.4 273.9 611.9 

Current Subsidy Expense / (Revenue) 4.4 61.5 100.9 93.9 385.4 

Direct Loan Program Cash Transactions with Borrowers (Dollars in Billions)*

Fiscal Year 2018 2019 2020** 2021** 2022**

Loan Disbursements $ 134.1 $ 130.7 $ 117.4 $ 104.8 $ 120.4 

Stafford Subsidized 20.3 20.0 19.1 18.3 15.7 

Stafford Unsubsidized 49.0 48.1 46.1 44.1 45.5 

Parent Loan for Undergraduate Students (PLUS) 23.1 22.7 21.7 20.8 22.2 

Consolidation1 41.6 39.8 30.4 21.5 36.9 

Loan Collections2 84.9 91.3 69.9 37.2 45.5 

Principal 63.5 67.0 55.3 33.3 41.3 

Interest 19.5 22.4 12.9 2.3 2.6 

Fees 1.9 1.9 1.7 1.6 1.6 

* Numbers may not add due to rounding.

** Student loan payment pause in effect from March 2020 through December 2022.

1

 Consolidation amounts stem from a number of loan programs, including most notably the FFEL program, in addition to Direct Loans.

2

 Loan collections include prepayments, including prepayments in full due to consolidation of underlying Direct Loans. 

Figure 7. William D. Ford Federal Direct Loan Program: Following the Funding

 

 
FY 2022 AGENCY FINANCIAL REPORT 20 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

STATEMENTS OF NET COST

The consolidated statements of net cost report the 

Department’s components of the net cost of operations for 

a given fiscal year. Net cost of operations consists of the 

gross costs incurred less any exchange (i.e., earned) revenue 

from activities. Gross costs are composed of the cost of 

credit and grant programs, and operating costs. Exchange 

revenue is primarily interest earned on credit program 

loans. Figure 8 shows the Department’s gross costs and 

earned revenue over the past five years. As shown in Table 

1 and discussed in more detail below, significant changes in 

the Department’s net costs for FY 2022 were primarily due 

to loan modifications and reestimates (subsidy expense) and 

grant expenses related to COVID-19 activities. 

 

Figure 9. Primary Components of Gross Costs and Earned Revenue 

(Dollars in Billions)

 

 

Figure 8. Gross Costs & Earned Revenue 

(Dollars in Billions)

GROSS COSTS AND EARNED REVENUE BY TYPE

As shown in Figure 9, the Department’s gross costs and earned revenue include three primary components:

• Credit program interest expense offset by credit program interest revenue and administrative fees as the result of 

subsidy amortization. 

• Credit program subsidy expense (see Analysis of Direct Loan Program Subsidy Expense below).

• Grant expenses. (See Figure 11)
FY 2022 AGENCY FINANCIAL REPORT 21 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

ANALYSIS OF DIRECT LOAN PROGR AM 

SUBSIDY EXPENSE 

The Department’s gross costs can fluctuate significantly 

each year as a result of changes in estimated subsidy 

expenses—primarily subsidy expenses for direct loans. The 

primary components of subsidy expenses include year-end 

subsidy re-estimates and loan modifications. 

Subsidy expenses are estimates of the present value cost 

of providing direct loans but exclude the administrative 

costs of issuing and servicing the loans. The Department 

estimates subsidy expenses using a set of econometric and 

financial models as well as cash flow models. 

The Department estimates subsidy expenses annually for 

new loans disbursed in the current year and updates the 

previous cost estimates for outstanding loans disbursed in 

prior years based on various updated assumptions (subsidy 

re-estimates). The Department also updates subsidy 

expenses due to changes to terms of existing loans (subsidy 

modifications). Figure 10 shows these three components of 

the Direct Loan Program subsidy expense for the past five 

years. Factors such as interest rates charged to the borrower, 

interest rates on Treasury debt, default rates, fees and other 

costs, and assumptions concerning borrowers’ selection of 

repayment plans impact the estimated cost calculation and 

determine whether the individual components and overall 

subsidy expense are positive or negative. 

The Direct Loan Program subsidy expense for new loans 

disbursed in the current year was negative from FY 2018 

through FY 2019 primarily because lending interest rates 

charged were greater than the historically low rates at which 

the Department borrowed from Treasury. In practical 

terms, a negative subsidy occurs when the interest and/

or fees charged to the borrower are more than sufficient to 

cover the interest on Treasury borrowings and the costs of 

borrower default. Subsidy expense for new loans disbursed 

since FY 2020 has been positive due to rising enrollment 

in IDR plans and a reduction in projected future income 

of borrowers in IDR plans, both of which contribute to a 

higher expected cost to the government for issuing student 

loans by reducing the amount that many borrowers will 

repay over the life of their loans and/or creating a student 

loan forgiveness benefit for amounts remaining after 20 or 

25 years, particularly common among high-debt borrowers.

The Department updates its subsidy cost estimates each 

year for outstanding loans disbursed in prior years using 

a process referred to as a subsidy re-estimate. The total 

of Direct Loan subsidy re-estimates during FY 2022 was 

a net $21.9 billion downward subsidy re-estimate. The 

components of the Direct Loan Program subsidy reestimates are summarized in Figure 10.

Figure 10. Direct Loan Program Subsidy

(Dollars in Billions)

2018 2019 2020 2021 2022

Subsidy Expense for New 

Loans Disbursed in the 

Current Year $ (3.1) $ (3.0) $ 5.1 $ 1.6 $ 7.3 

Subsidy Re-estimates 7.4 64.5 56.1 24.0 (21.9)

Loan Modifications 0.1 - 39.7 68.3 400.0 

Total Subsidy Expense $ 4.4 $ 61.5 $ 100.9 $ 93.9 $ 385.4 

Subsidy Re-estimate Components 2022 2021

Income-Driven Repayment (IDR) 

Model Changes $ (24.0) $ 22.4 

Prior Year's Cohort Assumption Changes 7.7 15.5 

Interest on the Re-Estimate (0.4) 5.0 

Default 3.0 (6.4)

Repayment Plan Selection (3.0) 0.7 

Discount Rates (16.6) (11.5)

Non-IDR Discharges 2.9 3.2 

Deferment And Forbearance 2.6 (4.8)

Collections (1.7) 1.5 

Interactive Effects 7.4 (1.6)

Other Assumptions 0.2 - 

Total Direct Loan Program Subsidy 

Re-estimates $ (21.9) $ 24.0 

Modification Costs

Loan Modification Components 2022 2021

Student Loan Repayment Deferrals $ 48.6 $ 49.5 

Broad-Based Debt Relief 337.3 - 

Shift to Business Process Operations (9.1) - 

PSLF Waiver 9.1 - 

IDR Waiver 14.1 - 

Total and Permanent Disability - 18.7 

Faith-Based Final Rule - 0.1 

Total Direct Loan Program 

Loan Modifications $ 400.0 $ 68.3 
FY 2022 AGENCY FINANCIAL REPORT 22 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

 

Figure 11. Grant Expenses by Program Areas 

(Dollars in Billions)

COVID-19 Grant Expenses

(Dollars in Millions)

COVID-19 Grants FY 2022 FY 2021

Education Stabilization Fund:

Elementary and Secondary School 

Emergency Relief Fund

$ 48,502 $ 20,036 

Higher Education Emergency 

Relief Fund

 25,976 31,407 

Governor’s Emergency Education 

Relief Fund

 2,654 1,341 

Outlying Areas & Discretionary Grants 312 130 

Total Education Stabilization Fund 77,444 52,914 

Other COVID-19 Grants 865 66 

Total COVID-19 Grants $ 78,309 $ 52,980 

The Department also updates previous cost estimates 

based on any new legislation or other government actions 

that change the terms of existing loans and alter the 

estimated subsidy cost. This process is referred to as a 

modification. During FY 2022, the Department recorded 

a total of $400.0 billion in net upward modifications. The 

table below Figure 10 also identifies the components of 

modifications that were recorded during FY 2022. More 

detail about these modifications and components of reestimated subsidy cost can be found in the notes to the 

financial statements beginning on page 56.

The FY 2022 year-end subsidy re-estimates also resulted 

in a $25.5 billion increase in the Subsidy Due to Treasury 

shown in Table 1 on page 10 of this report. This represents 

the amount of accrued downward re-estimates of subsidy 

expense that will be transferred to Treasury in the 

succeeding fiscal year upon receipt of authority from OMB. 

More detail on Subsidy Due to Treasury can be found in 

the notes to the financial statements beginning on page 56.

GRANT EXPENSES

As shown in Figure 11, overall grant expenses changed 

primarily because of COVID-19 grants. More detail 

concerning COVID-19 grants can be found in Note 11 of 

the financial statements beginning on page 87. In addition 

to COVID-19 funded grants, the Department has more 

than 100 other grant and loan programs. The three largest 

of these grant program areas are:

• Pell Grants—Provides need-based grants to students 

to promote access to postsecondary education. Grant 

amounts are dependent on the student’s expected family 

contribution, the cost of attendance (as determined by 

the institution), the student’s enrollment status (fulltime or part-time), and whether the student attends for 

a full academic year or less. Pell Grants are the single 

largest source of grant aid for postsecondary education.

• Education for the Disadvantaged—Primarily consists 

of grants that provide financial assistance through 

SEAs to LEAs and public schools with high numbers 

or percentages of poor children to help ensure that all 

children meet challenging state academic content and 

student academic achievement standards. The program 

also provides funds to states to support educational 

services to children of migratory farmworkers and fishers 

and to neglected or delinquent children and youth 

in state-run institutions, attending community day 

programs, and in correctional facilities.

• Special Education—Primarily consists of Individuals 

with Disabilities Education Act grants that provide 

funds by formula to states to assist them in providing 

a free appropriate public education in the least 

restrictive environment for children with disabilities 

ages 3 through 21 and assists states in providing early 

intervention services for infants and toddlers from 

birth through age 2 and their families. Also provides 

discretionary grants to IHEs and other nonprofit 

organizations to support research, demonstrations, 

technical assistance and dissemination, technology, 

personnel development and parent training, and 

information centers. 

In addition to student loans and grants, the Department 

offers other discretionary grants under a variety of 

authorizing legislation, with approximately 90 percent of 

nonstudent aid funds awarded by formula and 10 percent 

through competitive processes.
FY 2022 AGENCY FINANCIAL REPORT 23 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

STATEMENTS OF CHANGES IN 

NET POSITION

The consolidated statements of changes in net position 

report the beginning net position, the summary effect of 

transactions that affect net position during the fiscal year, 

and the ending net position. Net position is the residual 

difference between assets and liabilities and consists of 

unexpended appropriations and cumulative results of 

operations. Unexpended appropriations include undelivered 

orders and unobligated balances for grant and administrative 

operations. Cumulative results of operations represent the 

net difference since inception between (1) expenses and (2) 

revenues and financing sources.

STATEMENTS OF BUDGETARY 

RESOURCES

The combined statements of budgetary resources present 

information on how budgetary resources were made 

available and their status at the end of the fiscal year. 

Information in the statements is based on budgetary 

transactions as prescribed by OMB and Treasury.

Figure 12 shows the components of the Department’s 

budgetary resources, which totaled $902.0 billion for FY 

2022, increasing from $689.6 billion, or 30.8 percent, 

from the prior year. This increase was primarily due to a net 

increase in appropriations received totaling $120.4 billion, 

of which $154.9 billion was for an increase in direct and 

indirect appropriations for COVID-19 activity.

 

Figure 12. Components of Budgetary Resources 

(Dollars in Billions)

Other significant changes to the Department’s combined 

statements of budgetary resources include the following:

• Unobligated Balances from Prior Year Budget Authority 

(Net) increased by $23.9 billion, or 57.7 percent. Of 

this increase, $17.9 billion was due to COVID-19 

funded balances.

• New Obligations and Upward Adjustments (Total) 

decreased by $186.2 billion, or 29.7 percent, due 

primarily to a decrease of $190.8 billion for grant 

obligations funded by the COVID-19 appropriations 

and loan modifications for COVID-19 student 

loan deferrals, broad-based debt relief, and IDR and 

PSLF Waivers.

• Unobligated Balance, End of Year increased $26.2 

billion, or 42.2 percent. This increase was largely due 

to a $42.5 billion increase in unapportioned balances 

for the credit program accounts, net of a $17.9 billion 

decrease due to COVID-19-funded balances.
FY 2022 AGENCY FINANCIAL REPORT 24 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Table 3. Outlays, Distributed Offsetting Receipts, and 

Disbursements, Net

(Dollars in Billions)

FY 2022 FY 2021

Outlays, Net

Credit Programs $510.0 $141.7 

Grants 155.3 122.4 

Contractual Services 2.5 2.3 

Personnel Compensation and Benefits 0.7 0.7 

Total Outlays, Net $668.5 $267.1 

Distributed Offsetting Receipts

Negative Subsidies and Downward 

Re-estimates Of Subsidies (28.2) (5.6)

Repayment of Perkins Loans and 

Capital Contributions (0.7) (0.9)

Other (0.2) (0.1)

Total Distributed Offsetting Receipts $(29.1) $(6.6)

Disbursements, Net

Direct Loan Program

Gross Disbursements $177.6 $143.8 

Offsetting Collections (526.6) (171.5)

Total Direct Loan Program 

Disbursements, Net (349.0) (27.7)

FFEL Program

Gross Disbursements 10.3 8.3 

Offsetting Collections (43.6) (19.2)

Total FFEL Program Disbursements, Net (33.3) (10.9)

Other Loan Programs

Gross Disbursements 0.5 0.7 

Offsetting Collections (0.5) (2.0)

Total Other Loan Program 

Disbursements, Net - (1.3)

Total Disbursements, Net $(382.3) $(39.9)

The combined statements of budgetary resources also 

present the Department’s summary disbursement and 

collection amounts shown in Table 3.

Outlays, Net is comprised of gross outlays and offsetting 

collections in the Department’s budgetary funds. Outlays, 

net increased $401.4 billion (150.3 percent) due primarily 

to an increase of $368.3 billion in credit programs 

outlays. Total credit program outlays during FY 2022, 

$510.0 billion, included $461.1 billion associated with 

upward loan modifications.

Distributed Offsetting Receipts primarily represents 

amounts paid from the Direct Loan Program and FFEL 

Program financing accounts to Treasury General Fund 

receipt accounts for downward current fiscal year executed 

subsidy re-estimates and modifications, and negative 

subsidies. The $22.5 billion net increase in FY 2022 versus 

FY 2021 was attributed to the Direct Loan Program. 

Disbursements, Net is comprised of gross outlays and 

offsetting collections in the Department’s credit program 

nonbudgetary financing funds. Of the $342.4 billion net 

decrease in FY 2022 versus FY 2021, $321.3 billion was 

attributed to the Direct Loan Program.
FY 2022 AGENCY FINANCIAL REPORT 25 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

Analysis of Systems, Controls, and Legal Compliance

MANAGEMENT ASSURANCES

The Secretary of the Department of Education’s Fiscal Year 2022 Statement of Assurance provided below is the final report 

produced by the Department’s annual assurance process.

STATEMENT OF ASSURANCE

 FISCAL YEAR 2022

January 23, 2023

The Department of Education’s (the Department’s) management is responsible for managing 

risks and maintaining effective internal control to meet the objectives of the Federal Managers’ 

Financial Integrity Act of 1982 (FMFIA).

In accordance with Section 2 of FMFIA and Office of Management and Budget (OMB) 

Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal 

Control, management assessed risk and evaluated the effectiveness of the Department’s internal 

controls to support effective and efficient operations, reliable reporting, and compliance with 

applicable laws and regulations.

Section 4 of FMFIA and the Federal Financial Management Improvement Act of 1996 (FFMIA) 

require management to ensure the Department’s financial management systems provide 

reliable, consistent disclosure of financial data. Management evaluated the Department’s 

financial management systems for substantial compliance with FFMIA requirements. The 

Department also conducted a separate assessment of the effectiveness of its internal control 

over reporting with consideration of its Data Quality Plan (DQP) in accordance with 

Appendix A of OMB Circular A-123.

The Department’s management is responsible for managing risks and maintaining effective 

internal control to meet the objectives of Sections 2 and 4 of the Federal Managers’ Financial 

Integrity Act. The Department conducted its assessment of risk and internal control in 

accordance with OMB Circular No. A-123, Management’s Responsibility for Enterprise Risk 

Management and Internal Control. Based on the results of the assessment, the Agency can 

provide reasonable assurance that internal control over operations, reporting, and compliance 

were operating effectively as of September 30, 2022.

Miguel A. Cardona, Ed.D.
FY 2022 AGENCY FINANCIAL REPORT 26 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

INTRODUCTION

Strong risk management practices and internal control 

help the Department run its operations efficiently and 

effectively, report reliable information about its operations 

and financial position, and comply with applicable laws 

and regulations. The FMFIA requires federal agencies to 

establish internal controls that provide reasonable assurance 

that agency objectives will be achieved. OMB Circular 

A-123, Management’s Responsibility for Enterprise Risk 

Management (ERM) and Internal Control implements 

FMFIA and defines management’s responsibilities for 

ERM and internal control. The circular provides guidance 

to federal managers to improve accountability and 

effectiveness of federal programs and mission-support 

operations. This is achieved through implementation of 

ERM practices and by establishing, maintaining, and 

assessing internal control effectiveness. Furthermore, 

the guidance requires federal agencies to provide 

reasonable assurance that it has met the three objectives of 

internal control:

• Operations—Effectiveness and efficiency of operations.

• Reporting—Reliability of reporting for internal and 

external use. 

• Compliance—Compliance with applicable laws 

and regulations. 

This section describes the Department’s internal control 

framework, and explains assurances provided by the 

Department’s leadership. 

Enterprise Risk Management Framework

The Department’s Enterprise Risk Management (ERM) 

program supports agency-wide efforts to maximize the 

Department’s value to students and taxpayers through 

achievement of strategic goals and objectives. The 

Department’s ERM program strategically focuses on the 

complete spectrum of the organization’s significant risks 

and the combined impact of those risks as an interrelated 

portfolio rather than simply addressing risks within silos. 

This coordinated approach leverages data and analytical 

solutions to identify, measure, and assess challenges related 

to mission delivery and resource management. Through 

ERM, the Department has established a systematic and 

deliberate view of risk into key management practices, 

ultimately yielding more effective performance and 

operational outcomes. 

The Division of Enterprise Data Analytics and Risk 

Management (EDARM), within the Office of Finance and 

Operations (OFO), leads the agency’s overall ERM strategy 

and formally aligns ERM and internal controls processes. 

EDARM leverages partnerships with agency leaders (e.g., 

the Senior Management Council, the Senior Executive 

Cadre, political leadership) to identify, measure, and assess 

challenges related to mission delivery, policy development, 

and operations to develop coordinated, actionable 

response plans.

EDARM collaborated with every Principal Office 

Component (POC) to identify and evaluate risk priority 

within each POC and at the Department wide level. The 

FY 2022 Department of Education ERM profile was 

published with the aggregated result and analysis from the 

annual assessment process. This profile highlights the top 

11 risks for the Department around the following 5 main 

functional processes:

• Financial Management: Student Loan Cost Estimation, 

Budget Formulation.

• Human Capital Management: Recruitment & Hiring, 

Workforce & Succession Planning, Employee Training 

& Development.

• Information Technology Management: IT Process 

Governance, Cybersecurity, and Infrastructure.

• Data Management: Data Quality.

• Oversight and Compliance: Grants and 

Contracts Management.

In FY 2022, EDARM also launched the ERM digital tool 

for collecting, analyzing, and reporting risk data to promote 

transparency and accountability across the Department.

EDARM continues to make progress in developing and 

implementing new trainings, tools, and helpful content to 

better educate and promote healthy risk culture, a culture 

of continuous improvement within the Department—

where data and awareness of enterprise risk are used to 

objectively inform strategic and operational decisions and 

optimize agency performance.
FY 2022 AGENCY FINANCIAL REPORT 27 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

Internal Control Framework

The Department’s internal control framework helps to ensure that the Department achieves its strategic goals and objectives 

related to delivering education services effectively and efficiently, complies with applicable laws and regulations, and prepares 

accurate reports. The Department maintains a comprehensive internal control framework and assurance process as depicted in the 

following diagram.

The Department continues to focus on streamlining and 

coordinating internal control activities to ensure efficiency 

of operations, recognize the connection points across 

areas, and enable transparency of information across the 

Department. This framework enables increased compliance, 

process efficiency, oversight, and more informed monitoring 

of internal controls and risk management by all offices 

and governance bodies, including the Department’s Senior 

Management Council. The framework also allows for 

the Department to obtain outcomes from an improved 

control system and reduced risk landscape. Furthermore, 

this streamlined approach helps the Department provide 

reasonable assurance to internal and external stakeholders that 

the data produced by the Department is complete, accurate, 

and reliable; internal controls are in place and working as 

intended; and operations are efficient and effective.

ANALYSIS OF CONTROLS

Overall, the Department relies on annual assurances 

provided by the heads of its principal offices, supported 

by risk-based internal control evaluations and testing – as 

well as annual internal control training provided for all 

employees – to demonstrate reasonable, but not absolute, 

assurance that its internal controls are well-designed, 

in place, and working as intended. The Department’s 

annual assurance process conforms to the requirements 

contained in the revised U.S. Government Accountability 

Office (GAO) publication, Standards for Internal Control 

in the Federal Government (commonly referred to as the 

“Green Book”) and OMB Circular A-123, Management’s 

Responsibility for Enterprise Risk Management and 

Internal Control. 

 

 

Figure 13. Department of Education Internal Control Framework
FY 2022 AGENCY FINANCIAL REPORT 28 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

In FY 2022, the Department and Federal Student Aid 

(FSA) did not self-identify any material weaknesses 

related to the effectiveness and efficiency of its operations. 

However, an area of noncompliance with laws and 

regulations is noted in the Analysis of Legal Compliance 

section below. The Department acknowledges that it has 

areas of control that need further strengthening, as well as 

major challenges identified by the Department’s Office of 

the Inspector General (OIG) in its FY 2023 Management 

Challenges report. As an example, data quality and 

reporting are a challenge identified by the OIG. The 

Department, its grantees, and its subrecipients must have 

effective controls to ensure that reported data are accurate 

and complete. The Department relies on program data to 

evaluate program performance and inform management 

decisions. The establishment of a Data Quality Plan (DQP) 

integrated into testing of controls is helping to address this 

challenge identified by the OIG.

The Department maintains processes and procedures 

to identify, document, and assess internal control over 

reporting and operations. Key activities include: 

• Maintaining process documentation for the 

Department’s significant business processes 

and subprocesses.

• Maintaining an extensive library of key financial, 

operational, and information technology (IT) controls.

• Providing technical assistance to principal offices to help 

them understand and monitor key controls.

• Refining the DQP to improve reporting controls and 

data quality.

• Implementing a risk-based control testing strategy.

• Developing corrective action plans when internal 

control deficiencies are found and tracking progress 

against those plans.

• Recommending and assisting with implementation 

of robust tools to design more efficient and effective 

operating procedures.

In accordance with OMB Circular A-123, the Department 

also conducted a separate assessment of the effectiveness 

of the Department’s internal control over reporting, 

operations, and compliance with key financial management 

laws and regulations, as described below. 

Internal Control Over Reporting 

In FY 2022, the Department tested a proportionate 

number of key financial controls in significant business 

processes in non-grant areas based on qualitative risk 

assessments and rotational test plans. The internal controls 

assessment did not find any control deficiencies or material 

weakness. However, recommendations have been provided 

to process owners to strengthen internal controls, such 

as verifying immaterial differences, obtaining electronic 

signatures, and updating policies and procedures.

Internal Control Over Operations 

In FY 2022, the Department reviewed a number of 

operational processes based on qualitative risk assessments 

(in alignment with the Department’s ERM profile) and 

detected some control deficiencies but none that would 

rise to the level of material weakness. As a result, tools 

have been developed in the areas of workforce planning, 

acquisition planning and the procurement process to better 

utilize resources, improve the flow, timeliness and quality of 

information and allow for more effective decision-making. 

A major accomplishment has been the development of a 

workforce dashboard that consolidates relevant and up-todate human resources data from multiple systems in a single 

location and visually depicts complex relationships in an 

easily digestible manner, enhancing decision-makers’ ability 

to identify critical human resource trends and challenges 

across the Department.
FY 2022 AGENCY FINANCIAL REPORT 29 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

ANALYSIS OF FINANCIAL 

MANAGEMENT SYSTEMS

The FFMIA requires management to ensure that the 

Department’s financial management systems consistently 

provide reliable data that comply with system requirements, 

applicable federal accounting standards, and the U.S. 

Standard General Ledger at the transaction level. Appendix 

D to OMB Circular A-123, Compliance with the 

FFMIA, and OMB Circular A-130, Managing Federal 

Information as a Strategic Resource, provide specific guidance 

to agency managers when assessing conformance to 

FFMIA requirements. 

The Department’s vision for its financial management 

systems is to provide objective financial information to 

stakeholders to support data-driven decision-making, 

promote sound financial management, and enhance 

financial reporting and compliance activities. The 

Department’s core financial applications are integrated 

under common management control as part of the 

Education Central Automated Processing System 

(EDCAPS). EDCAPS is a suite of financial applications 

(subsystems), including commercial off-the-shelf, custom 

code, and interfaces that encompass the Department’s core 

financial management processes. Specifically, EDCAPS 

provides the following functions:

• General ledger—Preparation of financial statements and 

reconciliation of general ledger balances with subsystems 

maintained in program areas and Treasury.

• Funds management—Budget formulation, budget 

execution, and funds control.

• Grants pre- and post-award processing, including grant 

payment processing.

• Contract pre-and post-award processing.

• Receivables management.

• Cost management.

• Recipient management.

• Administrative processes (e.g., purchasing, travel, and 

miscellaneous payments).

EDCAPS is composed of five main integrated components: 

• Financial Management Support System (FMSS)—

FMSS is the Department’s core financial system. It 

provides financial management functions such as the 

general ledger, financial statement preparation, funds 

control and budget execution, purchase receiving, 

accounts receivable, and accounts payable.

• The FMSS Oracle E-Business Suite application resides 

behind the Department firewall and not an externalfacing application.

• Contracts and Purchasing Support System (CPSS)—CPSS 

provides the Department with a central repository to 

enter, retrieve, manage, and view acquisition/contractrelated data. The centralized data provides enhanced 

information dissemination, with the ability to respond 

to both internal and external information requests.

• Grants Management System (G5)—G5 provides 

the Department with a platform to manage all grant 

activities, from initial recipient contact to grant 

processing to payments and grant closeout. This singlesystem approach provides improved grant information 

management, recipient response time, and accuracy of 

financial management information.

• E2 Travel System—E2 provides the Department, under 

a GSA contract with third party, with a platform to 

manage travel functions. EDCAPS interfaces with E2 

in accordance with an established Memorandum of 

Understanding and Information Security Agreement 

between the Department and the vendor.

The following diagram provides the data flow in and out 

of EDCAPS, including data flow with other Department 

applications/systems and external applications/systems.
FY 2022 AGENCY FINANCIAL REPORT 30 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Across all its components, EDCAPS is serving approximately 

2,800 Departmental internal users in Washington, D.C. 

and 10 regional offices throughout the United States and 

territories. EDCAPS is serving approximately 40,970 

external users, mostly users of Grants Management System 

(G5). In FY 2022, the Department conducted an annual risk 

assessment of EDCAPS and tested 103 IT security controls 

out of a baseline of 630 IT security controls, as follows:

• EDCAPS—183

• FMSS—28

• CPSS—12

• G5—33

• E2—12

The Department designated the FMSS as a mission-critical 

system that provides core financial management services 

3 Number of IT controls tested. No significant deficiencies or material weaknesses 

were identified.

and focused its system strategy on the following areas 

during FY 2022: 

• Managing and implementing cross-validation rules 

throughout the fiscal year to prevent invalid accounting 

transactions from being processed.

• Transmitting the Department’s spending data related to 

contracts, grants, loans, and other financial assistance 

awards for the USASpending.gov initiative as part of 

the Federal Funding Accountability and Transparency 

Act of 2006 (FFATA) and Digital Accountability and 

Transparency Act of 2014 (DATA Act).

• Transmitting the entire Department’s payments through 

the Department of Treasury Secure Payment System.

The FMSS Oracle E-Business Suite application is behind 

the Department firewall and not external-facing. FMSS 

includes the following interfaces to multiple applications 

which are either not part of the Oracle suite of applications 

in the Enterprise Resource Plan or are external systems:

 

 

 

 
FY 2022 AGENCY FINANCIAL REPORT 31 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

• Department Systems:

 Oracle Enterprise Performance Management Cloud 

Planning (formerly Hyperion).

 Fiserv Frontier.

 G5.

 CPSS.

• External Systems:

 Treasury systems (Invoice Processing Platform [IPP] 

invoices/receipts/obligation data, IPP invoice status; 

payment files, debt referrals, CRS invoices, warrants, 

Treasury confirmations, CIR collections and 

administrative return, collections/payments).

 Department of Interior systems (Payroll). 

 E2 Travel System.

The Department’s financial management systems are designed 

to support effective internal control and produce accurate, 

reliable, and timely financial data and information. Based on 

self-assessments, system-level general controls tests, and the 

results of internal and external audits, the Department has 

not identified any material weaknesses in controls over these 

systems. The Department has also determined that its financial 

management systems substantially comply with FFMIA 

requirements. However, as noted below in the Analysis of Legal 

Compliance section, the Department continues to address 

issues and improve its controls over systems.

ANALYSIS OF LEGAL COMPLIANCE

The Department is committed to maintaining compliance 

with applicable laws and regulations. Below are some examples:

Payment Integrity Information Act of 2019 (PIIA)

The Payment Integrity Information Act of 2019 (PIIA), 

Pub. L. 116-117, 134 Stat. 113, was enacted into law 

on March 2, 2020. The primary purpose of the PIIA is to 

reorganize and revise several existing improper payments 

statutes,4

 which establish requirements for federal agencies 

to cut down on improper payments made by the federal 

government. PIIA requires federal agencies to report 

improper payments annually for programs that are deemed 

susceptible to significant improper payments. PIIA also 

4 Improper Payments Information Act of 2002 (IPIA), Pub. L. 107-300, 116 Stat. 

2350, as amended by the Improper Payments Elimination and Recovery Act of 

2010 (IPERA), Pub. L. 111-204, 124 Stat. 2224, and the Improper Payments 

Elimination and Recovery Improvement Act of 2012 (IPERIA), Pub. L. 112-248, 

126 Stat. 2390.

requires each agency’s OIG to review the agency’s improper 

payment reporting in its Agency Financial Report (AFR) 

and accompanying materials, and to determine whether the 

agency has met six compliance requirements. 

In its annual improper payment compliance audit for 

FY 2021, the OIG concluded that the Department was 

not compliant with PIIA because it did not meet one of the 

six compliance requirements. Specifically, the Department 

reported an improper payment estimate for the Title I, Part A 

program of 14.77 percent. To comply with 31 U.S.C. section 

3351(2)(F), an agency must report an improper payment 

rate of less than 10 percent for each program and activity 

for which an estimate was published. The Department’s 

improper payment estimates were not reliable for three of its 

programs (Title I, Part A; Pell; and Direct Loan) that required 

an estimate for FY 2021. Specifically, the improper payment 

sampling and estimation plan the Department developed 

for the Title I, Part A program was not adequate for State 

Educational Agencies (SEAs) that use an advance payment 

process that does not allow the SEA to directly link payment 

transactions (expenditures) to specific G5 system drawdowns.

This determination of noncompliance with PIIA does 

not represent a material weakness in the Department’s 

internal controls. 

Debt Collection Improvement Act of 1996 (DCIA)

The Debt Collection Improvement Act of 1996 (DCIA), 

Pub. L. 104-134, 110 Stat. 1321-358, was enacted 

into law as part of the Omnibus Consolidated Rescissions 

and Appropriations Act of 1996, Pub. L. 104-134, 110 

Stat. 1321. The primary purpose of the DCIA is to 

increase the collection of nontax debts owed to the federal 

government. Additionally, the Digital Accountability and 

Transparency Act of 2014 (DATA Act), Pub. L. 113-101, 

128 Stat. 1146, amended Section 3716(c)(6) of the DCIA 

to require notification of a legally enforceable nontax debt 

that is over 120 days delinquent to the Department of 

the Treasury for purposes of administrative offset. While 

the Department continued to work toward an accelerated 

process to refer delinquent debt to Treasury, extension of 

the provisions of the Coronavirus Aid, Relief, and Economic 

Security Act (CARES Act) in FY 2022 continued to afford 

administrative forbearance for eligible loans. Beginning in 

March 2020, the provisions of the CARES Act suspended 

involuntary collection through the Treasury Offset Program. 

The suspension of involuntary collections will continue 

to apply through 2023. Pursuant to the CARES Act and 

related authorities, no loans were required to be transferred to 

Treasury during FY 2022. Accordingly, the Department was 

and is compliant with DCIA as amended by the DATA Act.
FY 2022 AGENCY FINANCIAL REPORT 32 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Federal Information Security Modernization Act of 2014 (FISMA)

The Federal Information Security Modernization Act of 2014 (FISMA 2014) requires federal agencies to develop, document, 

and implement an agencywide program to provide security for the information and relevant information technology systems. The 

Act supports the operations and assets of the agency and helps to ensure the confidentiality, integrity, and availability of all systemrelated information.

The Department’s and FSA’s information security programs completed numerous significant activities in FY 2022 to improve 

cybersecurity capabilities and functions, some of which include:

• The Department received an overall Federal Information Security Modernization Act of 2014 (FISMA) assessment of 

“Effective,” or a Level 4 Cybersecurity Maturity Level for FY 2022, which marks a significant improvement from FY 2021. 

This is the first time the Department has achieved this level with seven of nine FISMA domains increasing in score, as 

supported by information in the graphics below.

• In February 2022, the Department implemented a 

new cybersecurity policy framework aligned with 

Executive Order (EO) 14028 Improving the Nation’s 

Cybersecurity and National Institute of Standards 

and Technology (NIST) Special Publication 800-

53, Revision 5. The updated framework ensures a 

more comprehensive inventory of policies that directly 

align with the latest catalog of security control families 

and requirements levied through EO 14028. Five 

Instructions and 22 Standards have been converted 

into 20 new Standards (control families) aligned 

with the Cybersecurity Framework (CSF) and NIST 

800-53, Revision 5. The framework modernizes the 

Department’s cybersecurity policies, enables system 

Security 

Function Metric Domain

Maturity 

Level

Change 

from 

2021

Met 

Federal 

Goal

Identify Risk Management Consistently 

Implemented =

Identify Supply Chain Risk 

Management

Consistently 

Implemented ▲

Protect Configuration 

Management

Managed 

and 

Measurable ▲ 

Protect

Identity and 

Access 

Management

Consistently 

Implemented ▲

Protect Data Protection 

and Privacy

Consistently 

Implemented =

Protect Security Training

Managed 

and 

Measurable ▲ 

Detect

Information 

Security 

Continuous 

Monitoring

Managed 

and 

Measurable ▲ 

Respond Incident Response

Managed 

and 

Measurable ▲ 

Recover Contingency 

Planning

Managed 

and 

Measurable ▲ 

 

FISMA Recommendations 2018–2022

stakeholders to find the Department’s requirements 

quickly, and allows for updates to the Department’s 

system of record for FISMA reporting, Cyber Security 

Assessment and Management System (CSAM) with EDdefined control parameters to support System Security 

Plan (SSP) development and assessments. This includes 

control overlays for requirements not within 800-

53 control baselines, and enhances maintenance and 

strengthens the ability to update for new requirements 

while maintaining mapping to CSF rapidly and 

NIST controls.

• The Department released Standard PR.DS: Protection 

of Federal Tax Information. Released in January 2022, 

this standard establishes the Department standards 
FY 2022 AGENCY FINANCIAL REPORT 33 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

for safeguarding the confidentiality of Federal Tax 

Information (FTI) as required by Internal Revenue 

Service (IRS) Safeguards Program 1 and IRS Publication 

1075, Tax Information Security and Privacy Guidelines 

for Federal, State and Local Agencies. This is in 

accordance with Internal Revenue Code (IRC), Section 

6103(p)(4)3; and IRS Publication 1075, as a condition 

of receiving FTI directly from either the IRS or from 

secondary sources. 

• Office of the Chief Information Officer (OCIO) refined 

and used the Department’s cybersecurity risk tolerance 

and appetite, which integrates with the Department’s 

overall ERM program. In FY 2022, OCIO updated 

its target profile and key performance indicators (KPI) 

and key risk indicators (KRI) to support tracking and 

reporting progress made towards the Department’s 

OCIO ERM target profile. OCIO continues 

membership and participation in ERM Working Groups 

and mini working groups (ERMWG) to continue 

to mature integration of Cyber Risk Management 

with ERM:

 ERM maturity model metric refinement.

 ERM digital tools risk reporting and analysis.

 ERM training for leaders and staff.

 ERM knowledge management.

• The Department’s Security Assessment Team worked 

with OCIO to implement the Ongoing Security 

Assessment & Authorization (OSA) program, which 

started in December 2021. The OSA program and 

method of assessment replaced the older static-point-intime assessment model of Assessment & Authorization. 

The threshold for entry into the OSA program is a risk 

assessment that focuses on the following areas: system 

demonstration, control baseline and inheritance review, 

and the Department’s CSF Scorecard and discrepancy 

reports. The OSA program will reduce steps and modify 

artifacts to improve efficiency. The overall outcome 

is more frequent system stakeholder engagement and 

timely risk visibility. 

• OCIO publishes monthly Department’s CSF Risk 

Scorecards as part of the Department’s Information 

Security Continuous Monitoring efforts to identify 

cybersecurity risks, issues, and opportunities for 

improvements in its cybersecurity protections. The 

Department CSF Risk Scorecard provides a detailed 

analysis tool for authorizing officials, information 

system owners, and information system security officers 

to prioritize and mitigate risks to the Department’s 

information systems. In FY 2022, the Department 

continued to mature its risk management processes 

through enhancements made to the CSF Risk Scorecard. 

These enhancements have improved the accuracy and 

timeliness of the Department’s risk reporting and 

continuous monitoring. System stakeholders are now 

provided daily visibility of their system’s risk and data 

quality. Additional views were established to augment 

and consolidate risk reporting to allow the Department’s 

authorizing officials to quickly identify which systems 

require attention and prioritization of authorization 

and risk reduction activities. These enhancements are 

targeted to result in a reduced number of past due Plan 

of Actions and Milestones (POA&M) and data quality 

issues. With near-real time risk scoring and reporting 

in place, executive and system level stakeholders can 

effectively prioritize and manage the Department’s 

cybersecurity risk daily.

• Throughout the year, the Department continued 

outreach and risk communications by disseminating 

monthly “State of IT” reports to the Department’s 

senior leaders. These executive-level reports provide 

the Department’s senior leaders with a holistic view 

of their IT investments, services, and cybersecurity 

posture through comprehensive IT and cybersecurity 

trends, metrics, and key insights to prompt topdown engagement and actions. These reports prepare 

senior POC leaders for the Monthly Deputy Secretary 

cybersecurity briefings facilitated by the Department’s 

Chief Information Security Officer (CISO). The 

meeting communicates Department cyber risks, trends, 

metrics, key insights, upcoming announcements, 

and actions.

• The Department continued to mature its risk 

management processes through enhancements to the CSF 

Risk Scorecard. POC leadership can now monitor status 

of program-level business continuity planning and testing 

activities. These enhancements allowed the Department 

to close corrective action plan (CAP) 8.3 from the FY 

2020 FISMA audit and are targeted to result in consistent 

implementation of business continuity planning activities. 

In FY 2022 Quarter 1, the Department enhanced its 

Power BI reporting to track and report compliance 

with the Department’s 14028 mandates including, but 

not limited to, Multifactor Authentication (MFA), 

encryption, and resiliency. The FISMA Dashboard was 

also enhanced to visualize compliance statuses against 

recently released FY 2022 OCIO Metrics reporting 

guidelines (v1.1), issued by OMB/Cybersecurity and 

Infrastructure Security Agency (CISA) in support of EO 

14028 requirements. 
FY 2022 AGENCY FINANCIAL REPORT 34 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

• In FY 2022, the Department was approached to 

provide a demonstration of its cybersecurity risk 

scoring and visualization capabilities to several partner 

federal Departments. As a result of the Department’s 

demonstration of risk scoring and visualization 

capabilities, the partner Departments have expressed 

interest in establishing similar capabilities within their 

cybersecurity mission space.

• The Department established a Vulnerability Disclosure 

Policy (VDP) program in FY 2021, to provide an 

open channel and legal safe harbor for the discoverer 

of vulnerabilities to report it to the Department. The 

VDP allows the research community and others to alert 

the Department about vulnerabilities in its systems 

through a clearly established program. The Department 

expanded the VDP program in FY 2022 Quarter 1 

to cover all internet accessible Department systems. 

Information submitted to the Department under the 

VDP will be used to mitigate or remediate internetaccessible systems and services vulnerabilities, or 

vendors’ internet-accessible systems or services.

• The Department updated internal vulnerability 

management procedures in accordance with Binding 

Operational Directive (BOD) 22-01 Reducing the 

Significant Risk of Known Exploited Vulnerabilities. 

The Department continues to remediate each 

vulnerability according to the timelines set forth in the 

CISA-managed vulnerability catalog. The Department is 

working with CISA to mature Continuous Diagnostics 

and Mitigation (CDM) capabilities to augment 

and enhance remediation actions as required by 

this directive.

• The Department developed and implemented a new 

FISMA 2014 reporting dashboard through Microsoft 

Power BI to reflect the updated FY 2022 OCIO 

Metrics. The new dashboard allows leadership to 

visualize all data collected across the Department in 

support of its quarterly reporting requirements to 

DHS and OMB. The dashboard provides the ability to 

proactively identify discrepancies or potential risks as a 

result of data captured and presented to both leadership 

and FISMA 2014 metric owners for action. 

• The Department took immediate action in Quarter 

1 and Quarter 2 regarding M-22-09 Moving the 

U.S. Government Toward Zero Trust Cybersecurity 

Principles by creating, funding, and onboarding a GS15 zero-trust architecture (ZTA) program manager and 

releasing a Department strategy and project schedule 

for full implementation by the end of FY 2024. The 

Department received the initial transfer of $15 million 

in Technology Modernization Fund (TMF) funds, 

used to:

 establish a ZTA Project Management office (PMO).

 engage the recompete of Enterprise Identity, 

Credential, and Access Management (ICAM).

 obtain Secure Access Service Edge (SASE) & 

Security Orchestration Automation & Response 

(SOAR) capabilities. 

There is ongoing collaboration between ZTA, ICAM, 

Enterprise Detection and Response (EDR), and Cyber Data 

Lake (CDL) PMOs to fulfill progress towards all pillars of 

Zero Trust. A “zero trust” approach to security provides the 

Department with a necessary and defensible architecture 

against increasingly sophisticated cyber-attacks. The 

Department is on track to meet the requirements set forth 

by OMB and maintain a resilient cybersecurity posture. 

• During the first half of FY 2022, OCIO successfully 

continued to provide IT services to support nearly 

100% telework in response to the COVID-19 

pandemic. However, during the second half of FY 2022, 

the Department shifted from nearly 100% telework to 

a hybrid telework posture. Throughout this transition, 

there was no significant impact or compromise to 

the Department Information Security Program, and 

the Department continued execution of missions 

without interruption. Despite the challenging work 

environment necessitated by the COVD-19 pandemic 

and the evolving technology changes to meet working 

requirements, the Department did not have any major 

information security incidents occur. To continue 

strengthening its cloud portfolio, the Department 

has continued its close working relationship with the 

FedRAMP Project Management Office (PMO) which 

established increased reoccurring continuous monitoring 

meetings with participating agencies to help improve the 

security posture of those Cloud Service Providers.

• In response to the January 2022 Apache Log4j 

vulnerability, the Department Vulnerability 

Management (VM) team identified all impacted 

systems, assets, and remediation actions. All reports 

were forwarded to the EDSOC for further incident 

response activities. The EDSOC coordinated across 

the Department (FSA Security Operations Center 

[SOC], CSOC, etc.) to identify impacted assets, patch 

immediately, block indicators of compromise, and take 

necessary incident response actions if compromises were 

discovered. The EDSOC completed all network traffic 

and forensics analysis on the Department’s systems 

and concluded that no Department assets showed 
FY 2022 AGENCY FINANCIAL REPORT 35 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

indication of a successful compromise. The Department 

was selected to participate in the first Cybersecurity 

Safety Review Board analysis of Log4j and was cited 

as providing the most input and support of Federal 

Cabinet-level Departments.

• In response to Emergency Directive 22-03 Mitigate 

VMWare Vulnerabilities, the Department issued a CISO 

Memorandum on May 20, 2022. Information System 

Owners and Information System Security Officers 

were required to enumerate all instances of impacted 

VMWare products within their system authorization 

boundaries, report findings to the OCIO VM team, and 

deploy updates (or remove the VMWare product until 

an update is available). There were no findings of impact 

to the Department, which was reported to CISA. 

• The Department implemented measures in the wake 

of the COVID-19 pandemic to permit remote work, 

including issuance of Standard PR.AC: Emergency 

personal identity verification (PIV) Alternative Standard. 

As restrictions have been lifted and per the requirement 

of Homeland Security Presidential Directive 12, the 

Department released a CISO memorandum on April 

15, 2022, for the rescission of Standard PR.AC. As a 

result of the memo, more than 90% of Department 

users are now utilizing PIV. This ensures the security of 

user access to the Department’s networks and systems.

• In support of SOC consolidation and maturation, 

the Department continues to identify task separation, 

integrate security tooling, coordinate incident 

investigation and response, and remove duplication 

between the Department’s two SOCs, EDSOC 

and FSA SOC. Existing milestones include refining 

current processes that support incident response 

and management to be aligned to a singular source, 

establishing automation within our incident response 

tool, and evolving training on newly enhanced processes 

and technologies. In FY 2021, the SOC maturation 

plan was updated to address key requirements levied 

on the Department in support of the recently released 

EO 14028 on Improving the Nation’s Cybersecurity 

and NIST 800-53 Revision 5. Updates to the plan in 

FY 2022 will result in improved incident response (IR) 

maturation in keeping within Federal IR requirements, 

continued improvement to our data loss prevention 

systems, increased cost savings through virtualization, 

and increased use of specialized personnel dedicated 

to threat intelligence analysis, law enforcement 

cooperation, and hunt team activities, providing a 

more robust and complete threat analysis product to 

our customer.
FY 2022 AGENCY FINANCIAL REPORT 36 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Forward-Looking Information

This section summarizes information pertinent to the 

Department’s future progress and success.

DIRECT LOAN PROGRAM

The Department’s largest program, the William D. Ford 

Federal Direct Loan (Direct Loan) Program, provides 

students and their families with funds to help pay for their 

postsecondary education costs. The following describes 

(1) the steps the Department has taken to help make 

student debt more manageable and (2) the risks inherent in 

estimating the cost of the program.

Managing Student Loan Debt

Each year, federal student loans help millions of Americans 

obtain a college education—an investment that, on average, 

has high returns. While the average return to having a 

college degree remains high,5

 some students leave school 

poorly equipped to manage their debt.

Traditionally, federal student loans had fixed-payment 10-

year repayment schedules, making it difficult for borrowers 

to begin repaying at the start of their career when their 

salaries are low. The recent expansion of income-driven 

repayment (IDR) plans allows students the opportunity for 

greater financial flexibility as it pertains to their monthly 

repayment. For more details on these plans, visit FSA’s How

to Repay Your Loans Portal.

Recent trends in student loan repayment data show that:

• More than 73 percent of the direct loan portfolio is in 

administrative forbearance—the suspended payment 

status provided to students through the extension of the 

student loan repayment deferrals.

• As of June 2022, nearly 8.4 million direct loan 

recipients were enrolled in IDR plans, representing 

a 1 percent increase from June 2021 and a 3 percent 

increase from June 2020. Overall, more than 45 percent 

of direct loan dollars and 33 percent of borrowers in 

repayment are enrolled in an IDR plan.

5 https://cew.georgetown.edu/cew-reports/collegepayoff2021/

The Department continues to work relentlessly to make 

student loan debt more manageable. Looking to the future, 

the Department will:

• Continue conducting outreach efforts to inform student 

loan borrowers of their repayment options before the 

emergency loan relief measures expire. 

• Work to improve customer service and student aid 

systems and processes by implementing FSA’s Next Gen 

FSA, see page 39.

• Continue to support the development of additional 

tools, such as the College Scorecard and College 

Financing Plan, to increase transparency around 

higher education costs and outcomes that may help 

students and families make informed decisions before 

college enrollment.

Managing Risks and Uncertainty Facing the Direct 

Loan Program’s Cost Estimates

Direct Loan Program costs are estimated consistent with 

the requirements of the Federal Credit Reform Act of 1990. 

Under the act, the future disbursements and collections 

associated with a cohort of loans are estimated for the 

entire life of the loan, up to 40 years in this case. The 

actual performance of a loan cohort tends to deviate from 

the estimated performance during that time, which is not 

unexpected in developing estimates. Estimation of Federal 

credit programs involves inherent risk. The Department 

utilizes the best data available with modeling techniques 

that have been examined over time by several outside 

entities. Management has confidence over the estimates by 

using several different tools to analyze cost estimates. Reestimates on the loan portfolio are performed twice a year 

ensuring that the most up to date data and models are used. 

There are four types of inherent risk, described below, that 

make estimating lifetime program costs a difficult task.

Legislative, Regulatory, and Policy Risk

There are inherent risks to estimating future lifetime 

disbursements and collections for a cohort stemming 

from legislative, regulatory, or administrative actions. For 

instance, the cost structure of the Direct Loan Program may 
FY 2022 AGENCY FINANCIAL REPORT 37 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

be significantly altered if policies around loan forgiveness 

are expanded. In addition, the effects on financial modeling 

and estimation associated with recent legislative, regulatory, 

and policy action is difficult to interpret given the lack of 

actual trend data availability. Some examples of current 

risks include the following:

Extension of Student Loan Payment Relief During the 

COVID-19 Pandemic: The emergency relief measures 

in the Direct Loan Program, including suspending loan 

payments, halting collections on defaulted loans, and 

setting interest rates to 0 percent have been extended. 

These actions have insulated federal student loan 

performance from economic disruption caused by the 

COVID-19 pandemic, while at the same time reducing 

the amount of loan repayments being remitted to the 

Department. As the pandemic is ongoing, there is 

uncertainty regarding cost estimates as future actions to 

support borrowers during the return to repayment in 2023 

could affect those received payments. 

Income-Driven Repayment Plans: Without consideration 

of impacts from the pandemic, IDR plans tend to be more 

costly to the government than non-IDR plans. For the 2022 

loan cohort, it is estimated that the government will recover 

47 percent less for loans in IDR plans as compared to loans 

in standard plans. It is important to be careful in making 

such comparisons, however, as the underlying characteristics 

of borrowers (and the corresponding behavioral dynamics 

driving selection of plans) also impact the overall cost of 

loans under each plan. Also, having more repayment plan 

options complicates repayment plan selection, since the 

tradeoff decisions when selecting the plans vary by borrower 

and may not always be entirely clear. In general, however, 

the proliferation of IDR plans has made IDR terms more 

generous and made the plans available to a greater number 

of borrowers; these plans are traditionally more costly to 

the government. Selected comparisons between projected 

originations and borrower repayments under the different 

IDR plans are available on the Department’s website. Future 

commitment to promote these programs, and potential 

increased participation in these plans, are areas of uncertainty. 

Future legislative and/or regulatory activity could also affect 

the underlying cost of IDR plans.

Public Service Loan Forgiveness: Enacted in 2007, the 

Public Service Loan Forgiveness (PSLF) program allows 

a direct loan borrower to have the balance of their direct 

loans forgiven after having made 120 qualifying monthly 

payments under a qualifying repayment plan, while working 

full time for a qualifying public service employer (such as 

government or certain types of nonprofit organizations). In 

general, forgiveness provided via PSLF raises the cost of the 

Direct Loan Program; however, there is still uncertainty as 

to how many borrowers will take advantage of the program. 

Much of this uncertainty arises because borrowers are not 

required to apply for the program or provide any supporting 

documentation on their employment until after having made 

the 120 qualifying monthly payments.

On October 5, 2021, the Department announced a 

temporary change to the PSLF program to allow previously 

ineligible loans to be immediately eligible for forgiveness, 

or additional progress toward forgiveness, with no further 

action from the borrower. The changes included a limited 

PSLF waiver that allows all payments by student borrowers 

to count toward PSLF, regardless of loan program or 

payment plan and a review of denied PSLF applications 

for errors, giving borrowers the ability to have their PSLF 

determinations reconsidered. Borrowers who have not 

previously certified employment have been able to apply for 

the waiver. Two permanent changes to military borrowers 

working toward PSLF were also implemented. This 

opportunity ended on October 31, 2022. 

The Consolidated Appropriations Act, FY 2018, and the 

Department of Education Appropriations Act, FY 2019, each 

provided $350 million toward Temporary Expanded Public 

Service Loan Forgiveness (TEPSLF) for borrowers who 

met eligibility for public service employment but were not 

enrolled in a qualified repayment plan. The Consolidated 

Appropriations Act, FY 2020, and the Consolidated 

Appropriations Act, FY 2021, each provided $50 million 

for TEPSLF. 

Data on approved PSLF applications first became available 

in FY 2018 since borrowers first became eligible for PSLF 

discharges starting October 1, 2017, after having made 

120 qualifying payments. As of July 31, 2022, the total 

number of borrowers who received forgiveness from 

the PSLF waiver exceeded 172,000. The value of this 

forgiveness totaled $10.5 billion. Including TEPSLF and 

PSLF discharges not associated with the waiver, the value of 

forgiveness exceeded $12 billion. 

As of July 31, 2022, the number of borrowers with certified 

employment totaled nearly 1.33 million. The low number 

of approved PSLF applications in relation to employment 

certifications may be partially due to the complicated 

nature of the program, in particular the determination of 

what constitutes a qualifying payment. In addition, many 

borrowers who file employment certification forms early in 

their careers may also move into private sector employment 

before completing the 10 years of qualifying payments and 

thus may (a) never apply for forgiveness or (b) apply for 

forgiveness much later after returning to public service work. 

Any future congressional or regulatory action that may affect 

eligibility for PSLF continues to be an area of uncertainty.
FY 2022 AGENCY FINANCIAL REPORT 38 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Broad-Based Debt Relief: In August, the administration 

announced its plan to cancel up to $20,000 in student 

debt for eligible borrowers to give working and middleclass families more breathing room as they recover from 

the pandemic. As a result of Student Debt Relief, millions 

of borrowers will no longer have to make repayments on 

their loans and millions more will be able to substantially 

reduce their repayments. The Department estimates that 

the vast majority of eligible borrowers—81%—will take the 

necessary steps to get relief. This assumption is uncertain, as 

other relief programs vary in terms of take-up rates. 

The executive action carrying out the plan for Student 

Debt Relief is based on extensive legal analysis by multiple 

federal offices concluding that the action is within the 

Secretary’s authority and otherwise complies with the 

law. That conclusion is reflected in a memorandum by the 

Office of the General Counsel and an opinion from the 

Department of Justice’s Office of Legal Counsel, which 

were both made available with the action’s announcement 

on August 24. As is the case with many high-profile 

executive actions, the plan is the subject of recent litigation, 

which is pending. The Department cannot predict the 

outcome of litigation, but the conclusions in the legal 

memoranda made available in August have not changed in 

the intervening time. Accordingly, the Department plans to 

vigorously defend the executive action against all existing 

and future challenges. 

Borrower Defense to Repayment: On June 22, 2022, 

the Department and the plaintiffs reached a proposed 

settlement in the case titled Sweet v. Cardona (formerly 

Sweet v. DeVos). If approved by the court, that agreement 

will affect the processing of borrower defense applications 

in FY 2023. In the proposed settlements, if the borrower 

defense application is related to federal student loans 

taken out to pay for attendance at any school on the 

list of schools attached to the settlement agreement, 

the borrower will receive “Full Settlement Relief.” Full 

Settlement Relief means that the federal student loan(s) 

associated with the borrower’s attendance at the school will 

be discharged, the Department will refund any amounts 

paid to it on those loans, and the credit tradeline for those 

loans will be deleted from the borrower’s credit report.

Estimation Risk

Actual student loan outcomes may deviate from estimated 

student loan outcomes, which is not unexpected given 

the long projection window of up to 40 years. The Direct 

Loan Program is subject to a significantly large number 

of borrower-level events and future economic factors that 

heavily impact the ultimate cost of student loans. For 

example, assumptions that need to be estimated for loans 

originating in FY 2022 include how long students will 

remain in school; what repayment plan will be chosen; 

whether the loan will be consolidated; whether the 

borrower will die prior to completing repayment, become 

disabled, bankrupt, or have another claim for discharge or 

forgiveness (closed school loan discharge, borrower defense 

to repayment, etc.); whether the loan will go into deferment 

or forbearance; whether the loan will go into default and, if 

so, what collections will be received on the defaulted loan; 

and, if the loan is in an IDR plan, what the borrower’s 

employment (public sector or not) and income and family 

size will be over the next 25 years. These projections are 

generally made based on historical data about borrower 

characteristics and behavior, which are more difficult to 

estimate. Lastly, the direct loan portfolio has grown from 

approximately $356 billion in FY 2011 to more than $1.3 

trillion as of the end of FY 2022. This growth naturally 

results in larger re-estimates, since a re-estimate worth 1 

percent of the portfolio today would be more than three 

times as large as a similar re-estimate in FY 2011.

Macroeconomic Risk

The ultimate amount, timing, and total value of future 

borrower repayments under the Direct Loan Program are 

heavily affected by certain economic factors, especially since 

the introduction of IDR plans.

In 2022, the COVID-19 pandemic continued to cause 

widespread disruption to the American economy. The 

emergency relief measures provided by Congress and the 

President resulted in flexibilities for federal student loan 

borrowers, continuing to prevent spikes in delinquency 

and default rates. Involuntary loan collections from wage 

garnishment, tax refund reductions, and reductions of 

federal benefits such as Social Security are also suspended. 

However, the ultimate impact of the pandemic on longterm Direct Loan Program costs will depend on, among 

other things, short- and long-term unemployment, 

economic growth trends, and potential structural changes 

in the overall economy and job markets. Some types of 

macroeconomic risk are inherent to student loan cost 

estimation, and the Department analyzes them regularly—

though some of these risks have been exacerbated by the 

unprecedented worldwide pandemic. New risks have also 

developed due to the conditions surrounding the pandemic. 

Specific examples of macroeconomic risk include:

Interest Rates: Direct Loan Program cost estimates are very 

sensitive to changes in interest rates. Under the current 

program terms, the fixed borrower rates for direct loans 

are established in advance of the upcoming school year, 
FY 2022 AGENCY FINANCIAL REPORT 39 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

while the Treasury fixed interest rate on the Department’s 

borrowings to fund those loans is not set until after 

those awards are fully disbursed, which can be as much 

as 18 months later. Unexpected changes in interest rates 

during this time can significantly impact Direct Loan 

Program cost.

Unemployment: Unemployment rates have been shown 

to affect both student loan volume and student loan 

repayment decisions and behavior. During periods of 

economic downturn, displaced workers have tended to 

pursue higher education opportunities in high numbers 

to strengthen their credentials, change career paths, or 

improve future employment opportunities. The exact 

impact on the cost estimates from the current period 

remains an area of uncertainty. For instance, higher shortterm unemployment rates could have an impact on future 

collections of already defaulted loans by increasing the risk 

of fewer collections from wage garnishment and tax refund 

reductions. A sensitivity analysis examining the impact 

of a 5 percent reduction in default collections, limited to 

cohorts 2017–21, resulted in a projected increase in the reestimate of $3.4 billion.

Wage Growth: The estimated costs of IDR plans are 

largely dependent on trends in observed wage growth. To 

the extent that future wage growth deviates significantly 

from prior wage growth, actual costs of IDR plans may 

deviate from estimated costs. The Department will closely 

monitor impacts to wage growth because of the pandemic. 

The estimates are sensitive to slight changes in model 

assumptions. The Department continues to manage risks in 

this area by building its knowledge about its borrower base 

and remaining informed of labor market statistics.

Operational Risk

Unforeseen issues in administering and servicing student 

loans may impact the cost estimates. For example, in 

December 2019, the President signed the Fostering 

Undergraduate Talent by Unlocking Resources for Education 

Act (FUTURE Act), which amends Section 6103 of the 

Internal Revenue Code to allow the IRS to share taxpayer 

data directly with the Department. Once implemented, this 

will make it easier for borrowers to stay enrolled in an IDR 

plan by allowing automated data sharing between federal 

agencies and eliminating the need for borrowers to annually 

recertify their income. A timeline for implementation of 

the FUTURE Act is uncertain. Similarly, the Department is 

working to implement the FAFSA Simplification Act, which 

makes significant changes to the need analysis formula that 

will also introduce operational challenges. The Department 

invests significant resources to ensure continuous 

improvements in cybersecurity defenses based on current and 

emerging threats. Despite this investment, security threats to 

operations are ongoing and incidents may happen without 

warning, potentially disrupting student loan administration 

and ultimately borrower cash flows, which can be impacted 

by the timing of when collections or disbursements are 

processed. Hence, there is an inherent risk that future, 

unpredictable disruptions in the administrative status quo 

may impact student loan cost estimates.

Another potentially unforeseen issue that may impact cost 

estimates is when federal loan servicers or private collection 

agencies exit the student loan servicing program, as several 

have over the last year. The Department remains committed 

to ensuring that borrowers receive high-quality service that 

helps them access the benefits granted by law.

NEXT GEN FSA

About FSA

As the nation’s largest provider of financial aid for education 

beyond high school, Federal Student Aid (FSA) delivers 

approximately $112 billion in aid each year to students 

and their families. Through programs authorized under the 

Higher Education Act of 1965, as amended, FSA provides 

grants, loans, and work-study funds for college and career 

school. FSA’s loan portfolio has grown to more than $1.6 

trillion. FSA also provides oversight of approximately 5,600 

postsecondary institutions that participate in the federal 

student aid programs. In every interaction with students 

and their families, FSA strives to be the most trusted and 

reliable source of student financial aid information and 

services in the nation.

The Vision

Through the Next Generation Federal Student Aid 

(Next Gen FSA) initiative, the Department continues to 

modernize FSA’s programs, technology, processes, and 

operations to improve student, parent, and borrower 

experiences and outcomes, as well as those of student 

aid partners. Moreover, through Next Gen FSA, the 

Department continues to strengthen cybersecurity 

protections for students, parents, borrowers, institutions, 

and other financial partners.

Legacy Environment

In the current federal student aid process, students and 

families navigate a complex and fragmented landscape and 

interact with multiple systems, vendors, processes, and 

interfaces across a multitude of brands and user experiences. 

This poor customer experience creates confusion and results 
FY 2022 AGENCY FINANCIAL REPORT 40 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

in customers failing to understand how to apply for and 

maintain their aid eligibility. Because of a confusing current 

state, federal student loan borrowers do not know for 

which loan forgiveness and repayment options they qualify. 

Additionally, operational complexities result in higher 

administrative costs and hinder effective oversight of the 

Department’s vendors.

Next Gen FSA Environment

FSA combined multiple websites, contact centers, and 

other customer interfaces into a simplified, consistent, and 

engaging customer experience, which has been enhanced 

by standardized training and tools. FSA’s website—

StudentAid.gov—continues to be customers’ single front 

door on the web. FSA continues to enhance its modern selfservice and consumer information tools that help customers 

understand the aid they have received, their remaining 

eligibility, for what loan forgiveness programs they may be 

eligible, and how they can manage loan repayment in a way 

that meets their goals.

Some of FSA’s Digital and Customer Care (DCC) 

tools include the Federal Student Aid Estimator, Loan 

Simulator, Aidan Virtual Assistant, and a Public Service 

Loan Forgiveness (PSLF) help tool. In FY 2022, FSA 

launched Medallia, a new survey tool, that allows FSA to 

use customers’ feedback to better serve them, and FSA 

retired the myStudentAid mobile app due to low usage. In 

FY 2022, FSA also enhanced the PSLF Help Tool to reflect 

program changes as a result of the limited PSLF waiver 

the Department announced. FSA enhanced resources and 

tools to help borrowers prepare for student loan payments 

to restart after the COVID-19 payment pause ends. FSA 

also updated the income-driven repayment (IDR) plan 

application to allow borrowers to self-certify income 

and better streamline the application process, as well as 

updated its virtual assistant to answer more IDR planrelated questions.

Customers now are getting questions answered through 

contact centers staffed by Next Gen Business Process 

Operations (BPO) vendors, which the Department brought 

online in FY 2022 under enhanced cybersecurity standards. 

BPO is the personnel component of the Next Gen vision. 

These vendors manage millions of customer interactions, 

have been trained in a uniform way, and operate on a 

single contact center platform that will improve operational 

consistency, efficiency, and oversight. While managing 

customer and partner relations, BPO vendors:

• Deliver efficient and effective customer and 

partner experiences.

• Improve customer outcomes.

• Ensure compliance with consumer 

protections standards.

• Establish greater operational flexibility.

• Reduce operational complexity.

In FY 2022, FSA required customers who create a new 

account on StudentAid.gov to set up and use two-step 

verification, a commonly-used process where students, 

parents, and borrowers must provide two or more pieces 

of information to verify their identity to gain access to an 

application or digital resource. Two-step verification helps 

prevent cybercriminals from illegally obtaining student aid 

account information and credentials used to access online 

tools, such as the Free Application for Federal Student Aid

(FAFSA®), PSLF Help Tool, and Loan Simulator. The 

Department’s actions meet the requirements—in Executive 

Order 14028 - Improving the Nation’s Cybersecurity—to 

implement multi-factor authentication.

Next Gen remains deeply committed to improving the FSA 

experience for partners as well as customers. In FY 2022, 

FSA introduced an enhanced, modernized National Student 

Loan Data System (NSLDS®) Professional Access website 

for the institutions and other partners that administer the 

federal student aid programs. The updated site is more 

secure and easier to navigate. The site also improves the user 

experience, eliminates the need for users to toggle between 

systems to see students’ grant information, and simplifies 

the process to download most reports.

The FSA Partner Connect website, fsapartners.ed.gov, 

consolidates the tools that partners use regularly onto 

a single digital platform that streamlines operational 

information by award year, provides notifications related to 

a partner’s specific school activities, tracks scheduled system 

outages, and more. FSA Partner Connect also reduces the 

administrative burden on financial aid professionals at 

more than 5,600 postsecondary schools around the globe, 

allowing them more time to serve students. FSA’s future 

plans for the Partner Connect site include replacing the 

legacy Postsecondary Education Participants System (PEPS) 

and redesigning the Application for Approval to Participate 

in the Federal Student Financial Aid Programs (E-App).

In FY 2022, FSA posted the solicitation for its long-term 

loan servicing solution, the Unified Servicing and Data 

Solution (USDS). Currently, six federal loan servicers (i.e., 

legacy loan servicers) support borrowers first while they are 
FY 2022 AGENCY FINANCIAL REPORT 41 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

in school and in loan repayment. Each legacy loan servicer 

operates under its own brand and has its own website and 

self-service tools for customers. This disjointed servicing 

system is often confusing for borrowers, and they are 

understandably frustrated when they receive inconsistent 

information about something as important as their student 

loans. The overarching goals of the USDS are to:

• Provide all federally managed borrowers with complete 

account management capabilities on StudentAid.gov.

• Increase servicer accountability to reduce loan 

delinquencies and defaults and other customer service 

benchmarks through clear, measurable service-level 

agreements and performance incentives.

• Allow FSA to collect more and better data from legacy 

loan servicers to improve account transfers, borrowers’ 

access to information, and FSA’s ability to monitor 

servicer performance.

• Bring legacy loan servicers up to enhanced 

cybersecurity standards.

To maintain the stability of the loan servicing environment, 

FSA expects to award new loan servicing contracts through 

the USDS and ensure that USDS vendors are compliant 

with modern cybersecurity standards before the legacy loan 

servicing contracts expire in December 2023. Through the 

USDS solicitation, FSA will award contracts to multiple 

loan servicers who will help guide more than 35 million 

student loan borrowers with federally managed loans 

through successful repayment.

LEVER AGING DATA AS A 

STRATEGIC ASSET

The Department continues to focus on leveraging its data 

as a strategic asset by further implementing requirements 

in the Foundations for Evidence-Based Policymaking Act 

(Evidence Act; P.L. 115-435) and the Federal Data 

Strategy. The Department has implemented efforts 

to strengthen data governance while overseeing the 

unprecedented investment in students and schools through 

the Education Stabilization Fund, created and subsequently 

augmented through the triad of COVID relief laws. This 

section highlights five areas guiding the Department 

towards realizing the power of data in daily operations and 

national policy: (1) the ED Data Strategy; (2) Open Data; 

(3) the Education Stabilization Fund Transparency Portal; 

(4) Data Quality; and (5) the ED Learning Agenda.

The Department’s Data Strategy

The FY 2020 Action Plan for the Federal Data Strategy called 

for agencies to “put in place a data strategy or road map,” 

and in December 2020, the Department completed and 

published its inaugural Data Strategy. The Department’s 

Data Governance Board (DGB) guided the development 

of four goals—to strengthen agency-wide data governance, 

build human capacity to leverage data, advance the strategic 

use of data, and to improve data access, transparency, and 

privacy. The Office of the Chief Data Officer (OCDO) led 

agency-wide working groups composed of representatives 

of each principal office to develop 19 objectives and a 

multi-year action plan to guide implementation throughout 

FY 2021 and FY 2022. 

December 2021 marked the completion of the first year 

implementing the Department’s Data Strategy and 

executing its priority goals and objectives designed to realize 

the full potential of data to drive decision-making and 

support our nation’s students. Building on progress made in 

FY 2021, the DGB and OCDO coordinated across principal 

offices of the Department in FY 2022 to implement data 

governance policies, strengthen data management functions, 

launch an agency data literacy program, conduct research for 

a data privacy playbook, improve our data quality approach, 

and more. 

More specifically, in FY 2022, OCDO recommended 

improvements to the management of data-related 

investments through the Department’s capital planning 

process, to support Goal 1 of the Data Strategy, 

documenting the current state and target state, with an 

implementation plan for Quarter Four of FY 2022. The 

agency also continued exemplary progress in Goal 2 

with the implementation of a suite of new curricular 

opportunities for Department staff to enhance their data 

competencies and skills, continued internal outreach 

and advocacy through weekly and monthly data skill 

engagements and principal office-specific sessions, 

and a focus on cross-agency engagement to share the 

Department’s leading-edge work in this space. 

As evidence of the impact and effectiveness of these efforts to 

instill a data centric culture throughout the Department, in 

early FY 2022, the DGB completed a review of the FY 2021 

Agency Data Maturity Assessment (DMA), in which 93% 

of ED’s principal offices improved their data maturity from 

FY 2020. This analysis of the DMA further informed the 

DGB’s priorities for FY 2022, which include a focus on data 

management strategies and oversight as well as data quality. 

ED’s pioneering work in the Data Maturity arena was 

highlighted in a Partnership for Public Service issue brief as an 

example for other federal agencies to emulate. 
FY 2022 AGENCY FINANCIAL REPORT 42 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

Finally, OCDO and the DGB have commenced an analysis 

to gauge the progress and accomplishments rendered through 

ED’s inaugural Data Strategy with the goal of publishing by 

early FY 2023 the agency’s Data Strategy version 2.0 to guide 

and inform efforts throughout FYs 2023, 2024, and 2025. 

Open Data

Improving access to Department data, while maintaining its 

quality and confidentiality, is key to expanding the agency’s 

ability to generate evidence to inform policy and program 

decisions. Increasing access to data for Department staff, 

federal, state, and local lawmakers, and researchers can 

help the Department to make new connections and foster 

evidence-based decision making. 

The Department’s Open Data Platform (ODP) (https://data.

ed.gov/) was publicly launched in December 2020, with an 

initial population of public data profiles. A central repository 

for Department data assets, ODP is a fully featured, 

robust, and highly scalable data repository that maintains 

all data assets in a fully searchable catalog. As required 

by the Evidence Act and guided by Data Strategy Goal 4, 

throughout FY 2022, the Department continued to advance 

towards a comprehensive data inventory by further expanding 

on the ODP; increasing its catalogued data assets for both 

externally available open data and internal sources subject to 

open data priorities, reviewing all data assets for release, and 

growing the number of Department open data assets listed in 

the Federal Data Catalogue. 

The ODP significantly improves the Department’s ability to 

grow and operationalize its comprehensive data inventory 

while progressing on open data requirements. In FY 2022, 

OCDO and the National Center for Education Statistics 

(NCES) worked to catalogue and consolidate NCES 

data sets to the comprehensive data inventory. The data 

inventory will become significantly more comprehensive 

when that consolidation has been completed later in 

FY 2022. Additionally, the Open Data Platform has been 

enhanced to provide principal office data stewards with 

login.gov access as well as improved upload and meta data 

entry interface that will simplify growing and maintaining 

the comprehensive data inventory. 

Finally, while guidance related to the consistent 

implementation of Title II of the Evidence Act remains 

unpublished by OMB and the 2022 Federal Data Strategy 

Action Plan has yet to be released to agencies, the Department 

remains committed to publishing and executing the Act’s 

required open data plan by the end of FY 2022. Collectively, 

the Department remains at the forefront of federal agencies 

in realizing the requirements of the Open, Public, Electronic 

and Necessary Government Data Act (OPEN) (Title II of the 

Evidence Act), and the ODP is leading example of how the 

Department is making its data open by default. 

Education Stabilization Fund Public 

Transparency Portal

Launched publicly in the first quarter of FY 2021, 

the Education Stabilization Fund (ESF) Transparency 

Portal (Portal), located at covid-relief-data.ed.gov, is 

the Department’s website dedicated to collecting and 

disseminating data and information about the ESF programs 

managed by the Department and authorized through the 

Coronavirus Aid, Relief, and Economic Security (CARES) Act, 

Coronavirus Response and Relief Supplemental Appropriations 

(CRRSA) Act, and the American Rescue Plan (ARP) Act. 

The Portal provides decision-makers, parents, students, 

teachers, education leaders, and taxpayers with information 

about ESF programs and discloses how states, districts, 

and institutions of higher education (IHEs) spent COVID 

relief funds. The funding data is from public data sources 

and reflects data collected by the Department and data 

released or shared by other federal agencies, including the 

General Services Administration, and the Department of 

the Treasury. The Portal enables state and IHE grantees to 

submit annual performance reports on funding authorized 

through the ESSER, GEER, EANS, and HEER Funds, 

providing the public and decision makers fuller insight into 

the expenditures and usage of ESF program funds. 

Throughout FY 2022, the Department executed several 

enhancements to the Portal which improved transparency 

and increased accountability. For example, in FY 2022, the 

Office of Elementary and Secondary Education (OESE) 

collaborated with OCDO to include state level award and 

expenditure data for the Emergency Assistance to NonPublic Schools (EANS) program authorized through the 

ARP Act. This feature was in addition to a cyclical monthly 

refresh of award and expenditure data for all ESF programs 

as disclosed on USAspending.gov and subsequently 

published to the Portal. 

OCDO, in coordination with OESE and the Office of 

Postsecondary Education, also developed and published 

the Year 2 Annual Performance Report (APR) forms for 

the ESSER, GEER, and HEER Fund programs and Year 1 

APR form for the EANS program. This involved the review 

and adjudication of hundreds of public comments and the 

training on the APR form requirements via webinars for 

grantees of each of the four main ESF programs featured on 

the Portal. ESSER and GEER grantees were also afforded 

the opportunity to submit corrections to improve the 

quality of their now final Year 1 APR data submissions 

documenting usage of CARES Act funds. Collectively, the 

enhanced level of technical assistance provided to ESF grant 
FY 2022 AGENCY FINANCIAL REPORT 43 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

recipients in FY 2022 supports the Department’s efforts 

to improve the quality and accuracy of the data it receives 

from ESF grantees on the expenditure and use of funding 

under CARES, CRRSA, and ARP Acts. 

Beginning in quarter three of FY 2022, the Department 

commenced collection of Year 2 APR data for the ESSER, 

GEER, and HEER Fund grantees and Year 1 data for 

EANS prime grantees through the Portal. The Department 

anticipates publishing the near 5,000 APRs collectively 

received across the four main ESF programs represented on 

the Portal in the first quarter of FY 2023. An exemplar of 

open, transparent data, the Portal is fully responsive to the 

mandate in the OPEN Government Data Act (Title II of 

the Evidence Act) to make public data open and accessible. 

Data Quality

The Department, states, and schools must have effective 

controls to ensure that reported data are accurate, reliable, 

and accessible to improve the use of that data at the 

Department and in the education community. However, 

the Department’s program offices have historically 

had varying levels of data quality control among their 

data sets, and findings from the 2023 Office of Inspector 

General’s Management Challenges Report citing a lack 

of overall integrity and persistent weaknesses in the data 

quality and reporting it receives from grantees provide 

further evidence that a comprehensive strategy is warranted.

The ED Data Strategy Objective 1.5 calls for the 

Department to “Implement a cohesive data quality 

approach for the agency, leveraging best practices, technical 

assistance, and controls.” Building on efforts launched 

in previous fiscal years, the Department has continued 

to refine and execute components of a multi-pronged 

approach to address root causes and improve data quality. 

Executing initially with grantees participating in ESF 

programs, such actions throughout FY 2022 have included 

ensuring grantees are aware of their data responsibilities 

under the conditions of their grants and of the credible 

consequences for noncompliance, ranging from additional 

informal monitoring through termination of the grant. 

Resources and technical assistance have also been levied to 

improve the varying capacity of grantees in reporting data 

and varying capacity among Department staff in reviewing 

grantee-reported data. 

As monitoring program performance remains a key motive 

for improving data quality, improving the development, 

reporting, and use of the agency’s programs’ performance 

and accountability measures remains a focus for the 

Department as well (Data Strategy Objective 3.4). The 

focus throughout FY 2021 and into FY 2022 has been 

the review of the Government Performance and Results 

Act (GPRA) lifecycle with agency stakeholders. The 

Department’s work has included drafting a framework for 

review of performance measures that support evidencebased decisions, incorporating budget guidance for 

programs, the development of a data quality review 

checklist for performance measures, and identifying 

opportunities to review the work during the Information 

Collection Request process. 

The Department has continued to work on developing 

data quality controls for each stage of the data lifecycle, 

including mechanisms for evaluating, preventing, and 

remediating data irregularities to assure higher quality data 

for the agency to use in meeting its mission and strategic 

objectives. To help further this goal, in FY 2022, the 

Department completed and published in October 2023, 

a Data Quality Playbook, outlining authorities, tools, and 

resources for grant program managers. The playbook helps 

grant program managers assess and improve data quality 

before submission, proposes meaningful incentives for data 

submitters, strengthens communication strategies, and 

proposes ways to reduce the burden on both Department 

staff and grantees. The playbook provides guidance for 

strengthening the agency’s data quality standards to help 

reduce data quality issues and improve data interoperability. 

It also builds common language for discussing data quality 

with internal and external stakeholders and provides 

recommendations for handling common irregularities. 

Other critical initiatives planned for implementation 

in FY 2022 and start of FY 2023 include updating the 

Department’s Information Quality Act (IQA) Guidelines and 

the establishment of data quality plans as a component in 

early stages of the data collection (and investment lifecycle). 

To better align with updated expectations from the Office of 

Management and Budget (OMB M-19-15), the Evidence Act, 

as well as organizational need, the Department plans to revise 

its IQA Guidelines to provide clearer guidance to the public 

(and Department staff) about data quality requirements, 

processes, and appeals. The Department will also be placing a 

stronger emphasis on the establishment and transparency of 

data quality plans in advance of data collection or creation, to 

ensure appropriate levels of resourcing are provided to ensure 

data are fit for purpose. 

The Department’s Learning Agenda 

The Department’s FY 2022–FY 2026 Learning Agenda was 

published in July 2022, in conjunction with the release of 

the Department’s Strategic Plan. The Learning Agenda is 

aligned to the Department’s goals and strategic objectives, 

reflecting the Secretary’s priorities for the Department over 
FY 2022 AGENCY FINANCIAL REPORT 44 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

the next four years. The Learning Agenda is complemented 

by an Annual Evaluation Plan. The Annual Evaluation 

Plan includes a listing of the Department’s most significant 

evaluation activities in a given fiscal year. All Evidence Act 

deliverables are located at https://www.ed.gov/data. 

The Learning Agenda was developed in consultation with 

the Department’s Evidence Leadership Group (ELG). The 

ELG is co-chaired by the Department’s Evaluation Officer 

and the Director of the Department’s Grants Policy Office 

(GPO) and includes members from the Department’s 

primary grant-making offices as well as mission-support 

units, such as the Department’s Budget Service, and Office 

of General Counsel, and ex-officio representatives from the 

Office of the Chief Data Officer, the Statistical Official, 

and the Performance Improvement Officer. Feedback 

from OMB and consultation with stakeholders across 

government, education, and the general public, was also 

used to inform the Department’s Learning Agenda. 

In addition to advising the Evaluation Officer on the 

development of the Learning Agenda, the ELG advises 

Department leaders on how to support the capacity of 

Department staff to make better use of data and evidence. 

The GPO, led by the ELG co-chair, continues to spearhead 

a range of internal training opportunities for Department 

staff to bolster the use of the Secretary’s policy priorities, 

including the use of evidence in program design, and to 

consider how the Department’s grantmaking activities can 

build evidence for improvement in the future. 

CONTINUOUS IMPROVEMENT

Improving critical infrastructure, systems and overall 

capacity, and ensuring sound strategic decision-making 

regarding allocation of resources are essential to the 

Department’s future progress and success. Implementing 

the new G6 modernization is one of the Department’s 

key initiatives.

G5 Modernization/G6 

The G5 modernization project is an initiative that started 

in 2019 to develop a new grants management system that 

will support the Department’s grant programs and the 

broader grants community. G6 is the modernized system 

that will replace G5, allowing users to apply, track, and 

manage all grants through an improved user experience. It 

will modernize and consolidate existing business processes 

and manual workarounds into one platform and streamline 

the grants management lifecycle, improving oversight 

and monitoring. 

Project Objectives 

The Department’s Grants Management System, G5, is 

a custom-built, full life cycle grants management and 

payment system that has reached the end of life. Despite 

years of ongoing G5 maintenance, stakeholders continue to 

identify concerns regarding the system’s functionality and/

or ease of use. The Department’s current grant processes 

rely on multiple systems utilizing various technologies. 

Much of the data is duplicated, there is a lack of visibility, 

and there are ad-hoc workarounds. 

To effectively address the needs of all users, the Business 

Systems Support Division within the Office of Finance 

and Operations initiated the G5 Modernization Initiative 

to replace G5 and implement a state-of-the-art grants 

management system. The objective of this program is to 

implement an enterprise-wide grants management platform 

that achieves the following objectives: 

1. Improved effectiveness of grant programs by 

streamlining grant processes, tools, and 

technology agency-wide.

2. Enhanced and modularized grants platform

with superior customer experience using industry 

best practices. 

3. Reduced cost by minimizing disjointed grants 

systems, lowering maintenance, and reducing 

paper. 

4. More informed decision-making by Program 

Offices by utilizing advanced analytics and 

collaboration tools. 

5. An evergreen platform capable of easily 

incorporating future technology advancements 

and compliance requirements.

System Components 

The “system” consists of two main components. 

• Education Grants Platform (EGP). The EGP 

will serve as the foundation for the entire Grants 

Segment Portfolio of Systems. The EGP, implemented 

as a “Platform of Platforms,” will house Grants 

Management functionality and capabilities needed 

across the Department. The EGP, depicted below, is 

a grants platform that incorporates Infrastructure as a 

Service provided by Amazon Web Services, Platform 

as a Service provided by Red Hat OpenShift, and a 

host of Software as a Service and traditionally deployed 
FY 2022 AGENCY FINANCIAL REPORT 45 U.S. DEPARTMENT OF EDUCATION

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A LY S I S ( U N A U D I T E D ) 

 

 

tools that establish a framework for advanced analytics, technology development, and data integration for improved grant 

operations. Over time, the EGP will be used to both develop and host the Department’s grants ecosystem (technology and 

services). G6 is considered the nucleus of the EGP. 

• G6. The Department’s grants modernization initiative will implement an incremental modern, modular, and secure 

application that segments the grants process into granular modules using microservices that are interdependent, yet 

autonomous enough to be maintained separately. Managing the end-to-end grants process, G6 will combine state-ofthe-art Interactive Experience and Customer Experience frameworks to provide users with a cognitive grants experience 

powered by Artificial Intelligence, Natural Language Processing, and advanced analytics.

Agile Development 

The Grants Modernization Initiative is developing G6 

through a user-centered and incremental approach 

using the Agile methodology over multiple years. The 

subsequent years will be used to roll out G6 capabilities 

in an incremental manner to production and retire the 

corresponding capabilities from the legacy G5 system. 

As functionality is built, groups of grant users will test 

and validate what is built prior to it being released in the 

system. OFO has facilitated multiple working groups, user 

research interviews, and outreach sessions that all keep 

stakeholders informed and include them in the planning 

efforts around development. 

G6 Capabilities 

G6 is being developed to execute the G5 business processes 

and functionality across the grant lifecycle. The G6 

system will: 

• Include all the Department’s core requirements. 

• Maintain an advanced security posture for the data 

and infrastructure.

• Utilize Advanced Business Intelligence and 

Collaboration features to allow Program Officers 

to make more informed decisions with increased 

communication and visibility into data.

• Provide an intuitive user experience. 

The G6 system will have the following characteristics:

• Modular with the ability to turn off or restrict a module 

or sub-module as needed. 

• Based on an open architecture and OMB approved 

grant standards. 

• Built to ensure flexibility, adaptability, interoperability, 

and configurability. 

• Built using a modern technology stack that ensures the 

underlying technology components do not become 

outdated before reaching their end of life. 

• Mobile-enabled. 
FY 2022 AGENCY FINANCIAL REPORT 46 U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

• Highly automated.

• Compliant with legislative changes. 

• Roles-based and rules-driven. 

Timeline 

In Year 1 (FY 2022), the modernization program is 

implementing the EGP. 

Looking to Year 2 (FY 2023), the program will begin its 

first phase of the G5 modernization to G6. The team will 

implement the Pre-award phase of the grants’ lifecycle, 

including Planning and Scheduling, Applications, 

Application Packages (Grants.gov, Impact Aid, Fellowship), 

Discretionary Grants, Formula Grants, Loans, Application 

Technical Review Plan, and Review Process. These 

capabilities are identified based on what is available in the 

current G5; however, the Department expects that the 

implementation team shall design the G6 system with 

a much superior user experience using the industry best 

practices, human-centered design, and federal guidelines. 

The Department is planning for the development effort for 

the remaining years and capabilities. FY 2023 to FY 2025 

will be dedicated to Phases 2, 3 and 4 where we will migrate 

different modules to the new platform and decommission 

the corresponding modules from the legacy system, 

therefore stabilizing the G6. In FY 2026, we envision 

decommissioning the legacy G5 and moving into steady 

state G6. 
FY 2022 AGENCY FINANCIAL REPORT 47 U.S. DEPARTMENT OF EDUCATION

FINANCIAL

SECTION

(FISCAL YEAR 2022 UNAUDITED)
FY 2022 AGENCY FINANCIAL REPORT 48 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Message From the Chief Financial Officer

The Office of Finance and Operations is committed 

to supporting the Department of Education’s mission 

to “promote student achievement and preparation for 

global competitiveness by fostering educational excellence 

and ensuring equal access,’’ while also ensuring effective 

financial stewardship of taxpayer dollars. This FY 2022 

Agency Financial Report (AFR) is another valuable tool 

the public can use to better understand the Department of 

Education and its programs. 

This year was again challenging and rewarding as the 

agency completed its transition to new normal operations 

following two years of pandemic impacts, published a 

new strategic plan, completed another major upgrade 

of its financial management systems and supported the 

administration’s debt relief program initiative. 

This year, the Department received a disclaimer of opinion 

on our FY 2022 financial statements from our independent 

auditor. The Department will develop and implement a 

corrective action plan to begin addressing improvements 

identified in the audit report and remains committed to 

continually evaluating business processes for improvement 

opportunities in FY 2023 and beyond. More information 

regarding this disclaimer of opinion and our ongoing efforts 

may be found in Management’s Response in the Independent 

Auditors’ Report of this AFR.

On April 1, 2022, the agency successfully transitioned to 

its new hybrid work model after spending two years in a 

100% telework posture due to COVID-19. Managers and 

employees have continually shown that they can perform at 

the highest levels no matter where they are working. 

On July 8, 2022, the agency published its new FY 2022-

2026 Strategic Plan which now serves as our roadmap for 

implementing key program and operational goals which 

support students, educational staff, and parents while also 

optimizing agency operations. The Strategic Plan Goals are: 

 Strategic Goal 1: Promote equity in student access to 

educational resources, opportunities, and inclusive 

environments. 

 Strategic Goal 2: Support a diverse and talented 

educator workforce and professional growth to 

strengthen student learning. 

 Strategic Goal 3: Meet students’ social, emotional, 

and academic needs. 

 Strategic Goal 4: Increase postsecondary value by 

focusing on equity-conscious strategies to address 

access to high-quality institutions, affordability, 

completion, post-enrollment success, and support for 

inclusive institutions. 

 Strategic Goal 5: Enhance the Department’s internal 

capacity to optimize the delivery of its mission.

On August 24, 2022, the administration announced a onetime loan cancellation for more than 40 million Americans 

with federal student loans. This program provides eligible 

borrowers who make less than $125,000 a year with a 

one-time loan cancellation of up to $20,000. It is estimated 

that this program will result in total loan forgiveness for 

approximately 20 million Americans, and for many of those 

borrowers who still have a balance remaining, their monthly 

loan payments will be reduced.

In addition, the Department recently released details on its 

proposal regarding a new income-driven repayment plan to 

further assist borrowers in managing their student debt. 

And finally, this year the Department again received 

external validation of our sustained efforts to produce 

user-friendly, transparent financial reporting by earning 

the Department’s 18th award of the AGA’s Certificate of 

Excellence in Accountability Reporting. Federal financial 

reports must pass a rigorous independent review against 

a comprehensive set of standards to earn this prestigious 

recognition, which is the highest award bestowed for federal 

financial reporting.

The Department’s achievements illustrate the remarkable 

effort and dedication of our employees and partners. We 

will continue to serve as accountable and committed 

stewards supporting the Department’s mission on 

behalf of the public while enhancing our financial 

management capabilities.

Denise L. Carter

Delegated the authority to perform the functions and duties of 

the position of Chief Financial Officer

January 23, 2023
FY 2022 AGENCY FINANCIAL REPORT 49 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

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FY 2022 AGENCY FINANCIAL REPORT 50 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

About the Financial Section

n FY 2022, the Department prepared its financial 

statements as a critical aspect of ensuring 

accountability and stewardship for the public 

resources entrusted to it. Preparation of these statements 

is an important part of the Department’s financial 

management goal of providing accurate and reliable 

information for decision-making.

FI N A N C I A L STAT E M E N T S 

AND NOTES

The Consolidated Balance Sheets summarize the assets, 

liabilities, and net position by major category as of the 

reporting date. Intragovernmental assets and liabilities 

resulting from transactions between federal agencies 

are presented separately from assets and liabilities from 

transactions with the public.

The Consolidated Statements of Net Cost show, by 

program, the net cost of operations for the reporting 

period. Net cost of operations consists of full program costs 

incurred by the Department less exchange revenues earned 

by those programs.

The Consolidated Statements of Changes in Net Position

present the Department’s beginning and ending net 

position by two components—Unexpended Appropriations 

and Cumulative Results of Operations. It summarizes the 

change in net position by major transaction category. The 

ending balances of both components of the net position are 

also reported on the Consolidated Balance Sheets.

The Combined Statements of Budgetary Resources

present the budgetary resources available to the 

Department, the status of these resources, and the outlays 

of budgetary resources.

The Notes to the Financial Statements provide 

information to explain the basis of the accounting and 

presentation used to prepare the statements and to 

explain specific items in the statements. They also provide 

information to support how particular accounts have been 

valued and computed.

Note 1. Summary of Significant Accounting 

Policies

Note 2. Non-Entity Assets

Note 3. Fund Balance with Treasury

Note 4. Other Assets

Note 5. Loan Receivables, Net and Loan 

Guarantee Liabilities

Note 6. Liabilities Not Covered by Budgetary 

Resources

Note 7. Debt Associated with Loans

Note 8. Subsidy Due to Treasury

Note 9. Other Liabilities

Note 10. Net Cost of Operations 

Note 11. COVID-19 Activity

Note 12. Statements of Budgetary Resources

Note 13. Reconciliation of Net Cost to Net 

Outlays

Note 14. Commitments and Contingencies

Note 15. Reclassification of Statement of Net 

Cost and Statement of Operations and 

Changes in Net Position for Financial 

Report Compilation Process

Note 16. Subsequent Events
FY 2022 AGENCY FINANCIAL REPORT 51 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

R EO R T O F T H E 

INDEPENDENT AUDITORS

The results of the audit of the Department’s financial 

statements for FY 2022 and FY 2021 to comply with 

the Chief Financial Officers Act of 1990, as amended, are 

presented to be read in conjunction with the Financial 

Section in its entirety. The Department’s Office of Inspector 

General contracted with the independent certified public 

accounting firm of KPMG LLP to audit the financial 

statements of the Department as of September 30, 2022, 

and 2021, and for the years then ended.

R EQ U I R E D S U P P L E M E N TA RY 

INFORMATION (UNAUDITED)

This section contains the Combining Statements of 

Budgetary Resources for the periods ended 

September 30, 2022, and September 30, 2021.
FY 2022 AGENCY FINANCIAL REPORT 52 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

U.S. Department of Education

Consolidated Balance Sheets

As of September 30, 2022 and September 30, 2021

(Dollars in Millions)

FY2022 (Unaudited) FY2021

ASSETS (Note 2)

Intragovernmental:

Fund Balance with Treasury (Note 3) $ 317,007 $ 351,868 

Other Assets (Note 4) 92 114 

Total Intragovernmental 317,099 351,982 

Other than Intragovermental:

Loans Receivable, Net (Note 5)

Direct Loan Program 816,514 1,104,851 

Federal Family Education Loan (FFEL) Program 39,802 58,246 

Other Credit Programs for Higher Education 2,332 1,967 

Cash and Other Monetary Assets 725 1,913 

Other Assets (Note 4) 208 324 

Total Other than Intragovermental 859,581 1,167,301 

Total Assets $ 1,176,680 $ 1,519,283 

LIABILITIES (Note 6)

Intragovernmental:

Debt Associated with Loans (Note 7)

Direct Loan Program $ 837,440 $ 1,142,195 

FFEL Program 66,995 78,254 

Other Credit Programs for Higher Education 912 1,096 

Accounts Payable 1 1 

Other Liabilities:

Subsidy Due to Treasury (Note 8) 26,965 1,513 

Guaranty Agency Funds Due to Treasury 725 1,913 

Other Liabilities (Note 9) 1,067 739 

Total Intragovernmental 934,105 1,225,711 

Other than Intragovermental:

Accounts Payable 4,509 5,010 

Loan Guarantee Liabilities (Note 5) 10,655 7,496 

Other Liabilities:

Accrued Grant Liabilities 5,130 7,589 

Other Liabilities (Note 9) 550 382 

Total Other than Intragovermental 20,844 20,477 

Total Liabilities $ 954,949 $ 1,246,188 

Commitments and Contingencies (Note 14)

NET POSITION

Unexpended Appropriations $ 231,218 $ 301,798 

Cumulative Results of Operations (9,487) (28,703)

Total Net Position $ 221,731 $ 273,095 

Total Liabilities and Net Position $ 1,176,680 $ 1,519,283 

The accompanying notes are an integral part of these statements.
FY 2022 AGENCY FINANCIAL REPORT 53 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

U.S. Department of Education

Consolidated Statements of Net Cost

For the Years Ended September 30, 2022 and September 30, 2021

(Dollars in Millions)

The accompanying notes are an integral part of these statements.

FY2022 (Unaudited)

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 

12 STUDENTS WITH ACCESS TO EDUCATIONAL RESOURCES, 

OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS 

Gross Costs $ 90,852 

Earned Revenue (68)

Net Program Costs $ 90,784 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY 

STRATEGIES TO ADDRESS ACCESS TO AFFORDABILITY, 

COMPLETION, AND POST-ENROLLMENT SUCCESS

Direct Loan Program

Gross Costs $ 445,958 

Earned Revenue (58,831)

Net Cost of Direct Loan 

Program $ 387,127 

FFEL Program

Gross Costs $ 28,553 

Earned Revenue (5,163)

Net Cost of FFEL Program $ 23,390 

Other Credit Programs for Higher 

Education

Gross Costs $ 234 

Earned Revenue (1,133)

Net Cost of Other Credit 

Programs for Higher Education $ (899)

Non-Credit Programs

Gross Costs $ 63,014 

Earned Revenue (3)

Net Cost of Non-Credit 

Programs $ 63,011 

Net Program Costs $ 472,629 

Total Program Gross Costs $ 628,611 

Total Program Earned Revenue $ (65,198)

Net Cost of Operations (Notes 10 

& 13) $ 563,413 

FY2021

IMPROVE LEARNING OUTCOMES FOR ALL P-12 STUDENTS

Gross Costs $ 61,013 

Earned Revenue (118)

Net Program Costs $ 60,895 

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE 

OUTCOMES TO FOSTER ECONOMIC OPPORTUNITY, AND 

PROMOTE PRODUCTIVE CITIZENRY

Direct Loan Program

Gross Costs $ 131,088 

Earned Revenue (35,673)

Net Cost of Direct Loan 

Program $ 95,415 

FFEL Program

Gross Costs $ 16,898 

Earned Revenue (3,095)

Net Cost of FFEL Program $ 13,803 

Other Credit Programs for Higher 

Education

Gross Costs $ 1,673 

Earned Revenue (1,060)

Net Cost of Other Credit 

Programs for Higher Education $ 613 

Non-Credit Programs

Gross Costs $ 68,994 

Earned Revenue (15)

Net Cost of Non-Credit 

Programs $ 68,979 

Net Program Costs $ 178,810 

Total Program Gross Costs $ 279,666 

Total Program Earned Revenue $ (39,961)

Net Cost of Operations (Notes 10 

& 13) $ 239,705 
FY 2022 AGENCY FINANCIAL REPORT 54 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

U.S. Department of Education

Consolidated Statements of Changes in Net Position

For the Years Ended September 30, 2022 and September 30, 2021 

(Dollars in Millions)

FY2022 (Unaudited) FY2021

Unexpended 

Appropriations

 Cumulative 

Results of 

Operations

Unexpended 

Appropriations

 Cumulative 

Results of 

Operations

Beginning Balances $ 301,798 $ (28,703) $ 99,314 $ (54,383)

Appropriations Received 599,069 - 477,507 - 

Appropriations Transferred - In/Out 15 - (409) - 

Other Adjustments (Rescissions, etc.) (2,412) - (1,107) 1 

Appropriations Used (667,252) 667,252 (273,507) 273,507 

Nonexchange Revenue - 21 - 8 

Donations and Forfeitures of Cash and Cash Equivalents - 1 - 1 

Imputed Financing from Costs Absorbed by Others - 38 - 36 

Negative Subsidy Transfers, Downward Subsidy Re-estimates, 

and Other (84,683) - (8,168)

Net Cost of Operations - (563,413) - (239,705)

Net Change $ (70,580) $ 19,216 $ 202,484 $ 25,680 

Net Position $ 231,218 $ (9,487) $ 301,798 $ (28,703)

The accompanying notes are an integral part of these statements.
FY 2022 AGENCY FINANCIAL REPORT 55 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

U.S. Department of Education

Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2022 and September 30, 2021 

(Dollars in Millions) 

FY2022 (Unaudited) FY2021

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

BUDGETARY RESOURCES

Unobligated Balance from Prior Year Budget Authority (Net) (Note 12) $ 43,131 $ 22,216 $ 20,772 $ 20,650 

Appropriations (Discretionary and Mandatory) 594,475 2,759 476,520 239 

Borrowing Authority (Discretionary and Mandatory) (Note 12) - 178,717 - 129,407 

Spending Authority from Offsetting Collections (Discretionary and Mandatory) 105 60,593 (206) 42,224 

Total Budgetary Resources $ 637,711 $ 264,285 $ 497,086 $ 192,520 

 STATUS OF BUDGETARY RESOURCES 

New Obligations and Upward Adjustments (Total) $ 615,000 $ 198,706 $ 457,228 $ 170,268 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 17,832 - 35,815 - 

Unapportioned, Unexpired Accounts 748 65,579 1,931 22,252 

Unexpired Unobligated Balance, End of Year $ 18,580 $ 65,579 $ 37,746 $ 22,252 

Expired Unobligated Balance, End of Year 4,131 - 2,112 - 

Unobligated Balance, End of Year (Total) $ 22,711 $ 65,579 $ 39,858 $ 22,252 

Total Budgetary Resources $ 637,711 $ 264,285 $ 497,086 $ 192,520 

 OUTLAYS, NET

Outlays, Net (Discretionary and Mandatory) $ 668,455 $ 267,076 

Distributed Offsetting Receipts (-) (Note 12) (29,086) (6,625)

Agency Outlays, Net (Discretionary and Mandatory) (Notes 12 and 13) $ 639,369 $ 260,451 

Disbursements, Net (Total) (Mandatory) $ (382,288) $ (39,881)

The accompanying notes are an integral part of these statements.
FY 2022 AGENCY FINANCIAL REPORT 56 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 1. Summary of Significant 

Accounting Policies

R E P O R T I N G E N T I T Y A N D 

PROGRAMS

The U.S. Department of Education (the Department), 

a Cabinet-level agency of the executive branch of the 

U.S. government, was established by Congress under the 

Department of Education Organization Act (Public Law 96-

88), which became effective on May 4, 1980. The mission 

of the Department is to promote student achievement 

and preparation for global competitiveness by fostering 

educational excellence and ensuring equal access. 

The Department is a component of the U.S. government. 

For this reason, some of the assets and liabilities reported 

by the Department may be eliminated for governmentwide 

reporting because they are offset by assets and liabilities of 

another U.S. government entity. These financial statements 

should be read with the realization that they are for a 

component of the U.S. government. 

The Department is primarily responsible for administering 

federal student loan and grant programs and provides 

technical assistance to loan and grant recipients and 

other state and local partners. The largest portions of the 

Department’s financial activities relate to the execution of 

loan and grant programs discussed below.

Federal Student Loan Programs. The Department 

administers direct loan, loan guarantee, and other student 

aid programs to help students and their families finance the 

cost of postsecondary education. These include the William 

D. Ford Federal Direct Loan (Direct Loan) Program and the 

Federal Family Education Loan (FFEL) Program.

The Direct Loan Program, added to the Higher Education 

Act of 1965 (HEA) in 1993 by the Student Loan Reform Act 

of 1993, authorizes the Department to make loans through 

participating schools to eligible undergraduate and graduate 

students and their parents. The Direct Loan Program 

offers four types of loans: Stafford, Unsubsidized Stafford, 

Parent Loan for Undergraduate Students (PLUS), and 

Consolidation Loans. Evidence of financial need is required 

for an undergraduate student to receive a subsidized 

Stafford loan. The other three loan programs are available 

to borrowers at all income levels. Loans can be used only to 

meet qualified educational expenses.

The FFEL Program, authorized by the HEA, operates through 

state and private, nonprofit guaranty agencies that provided 

loan guarantees on loans made by private lenders to eligible 

students with reinsurance and interest subsidies provided by 

the Department. The SAFRA Act, which was included in the 

Health Care and Education Reconciliation Act of 2010, stated 

that no new FFEL loans would be made effective July 1, 2010. 

FFEL Program receivables include defaulted FFEL loans and 

acquired FFEL loans. Acquired FFEL loans include student 

loan assets acquired using temporary authority provided in 

the Ensuring Continued Access to Student Loans Act of 2008

(ECASLA). ECASLA gave the Department temporary 

authority to purchase FFEL loans and participation interests 

in those loans. The Department implemented three activities 

under this authority: loan purchase commitments; purchases 

of loan participation interests; and a put, or forward purchase 

commitment, with an asset-backed commercial paper (ABCP) 

Conduit. This authority expired after September 30, 2010; as 

a result, loan purchase commitments and purchases of loan 

participation interests concluded. However, under the terms of 

the Put Agreement with the conduit, ABCP Conduit activity 

ceased operations in January 2014.

The Department also administers other credit programs for 

higher education. These include the Federal Perkins Loan 

program, the Teacher Education Assistance for College and 

Higher Education (TEACH) Grant program, the Health 

Education Assistance Loan (HEAL) program, and facilities 

loan programs that include the Historically Black Colleges 

and Universities (HBCU) Capital Financing program, 

along with low-interest loans to institutions of higher 

education (IHE) for the building and renovating of their 

facilities. (See Notes 5 and 10)

Grant Programs. The Department has more than 100 

grant programs. The three largest grant programs are Title 

I of the Elementary and Secondary Education Act, federal 

Pell Grant, and the Individuals with Disabilities Education 

Act (IDEA) grants. In addition, the Department offers 

other discretionary grants under a variety of authorizing 

legislation awarded using a competitive process, and 

formula grants using formulas determined by Congress 

with no application process. (See Note 10)

Notes to the Financial Statements for the Years Ended 

September 30, 2022 and September 30, 2021
FY 2022 AGENCY FINANCIAL REPORT 57 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19. Congress passed multiple COVID-19 relief 

bills in fiscal year (FY) 2020 and FY 2021 including the 

following that provided funding for educational purposes: 

the Coronavirus Aid, Relief, and Economic Security Act, of 

2020 (CARES Act), the Coronavirus Response and Relief 

Supplemental Appropriations Act of 2021 (CRRSAA), and 

the American Rescue Plan Act of 2021 (ARP). The largest 

component of the education funding provided by the 

COVID-19 relief appropriations established the Education 

Stabilization Fund, which includes the (1) Elementary 

and Secondary School Emergency Relief Fund, (2) 

Higher Education Emergency Relief Fund, (3) Governor’s 

Emergency Education Relief Fund, and (4) funds for 

outlying areas. The Education Stabilization Fund is being 

distributed to recipients through various grant programs. 

The Department transferred $563 million of the funds to 

the Department of the Interior to be administered by the 

Bureau of Indian Education. (See Notes 3, 10, and 11)

The COVID-19 relief legislation and administrative actions 

also provided support for student loan borrowers by: 

• Providing broad-based debt relief to address the financial 

harms of the pandemic.

• Temporarily suspending nearly all federal student loan 

payments, interest free.

• Authorizing Guaranty Agencies to reimburse 

themselves from the Federal Student Loan Reserve 

Fund for lost revenue that resulted from student loan 

repayment deferrals.

• Making temporary changes to the PSLF program to 

allow student borrowers to get credit for payments made 

while working for a qualifying employer.

• Addressing issues with IDR payment counting. 

Funding for these actions was provided through indefinite 

appropriations. (See Notes 5, 10, and 11) 

Other regulatory flexibilities and incentives provided in the 

COVID-19 legislation include:

• Stopping all federal wage garnishments and collection 

actions for borrowers with federally held loans in default.

• Federal Supplemental Educational Opportunity Grants 

to provide emergency aid to students.

• Continuation of work-study payments, even if students 

can no longer work on-site.

• Pell Grants, financial aid, and loans originated for the 

spring 2020 term, which students who have had to leave 

college campuses will not have to pay back. Moreover, 

none of this aid will count against students’ financial aid 

lifetime limits.

• Waiving satisfactory academic progress requirements to 

help ensure that students do not lose academic standing 

and the ability to receive federal financial student aid.

• Tax credits that incentivize employers to help pay for 

student loans.

PROGRAM OFFICES

The Department has three major program offices that 

administer most of its loan and grant programs: 

• Federal Student Aid (FSA) administers financial 

assistance programs for students pursuing postsecondary 

education and makes available federal grants, direct 

loans, and work-study funding to eligible undergraduate 

and graduate students.

• The Office of Elementary and Secondary Education 

(OESE) assists state educational agencies (SEA) and local 

educational agencies (LEA) to improve the achievement 

of preschool, elementary, and secondary school students; 

helps ensure equal access to services leading to such 

improvement—particularly children with high needs; and 

provides financial assistance to LEAs whose local revenues 

are affected by federal activities.

• The Office of Special Education and Rehabilitative 

Services (OSERS) supports programs that help provide 

early intervention and special education services to 

children and youth with disabilities. OSERS also supports 

programs for the vocational rehabilitation of youth 

and adults with disabilities, including preemployment 

transition services and other transition services designed 

to assist students with disabilities to enter postsecondary 

education and achieve employment.

Other offices that administer programs and provide 

leadership, technical assistance, and financial support to 

states, LEAs, and IHEs for reform, strategic investment, 

and innovation in education include: the Office of Career, 

Technical, and Adult Education (OCTAE); Office of 

Postsecondary Education (OPE); Institute of Education 

Sciences (IES); and Office of English Language Acquisition 

(OELA). In addition, the Office for Civil Rights (OCR) 

works to ensure equal access to education through the 

vigorous enforcement of civil rights and the collection of 

data from public schools, promotes educational excellence 

throughout the nation, and serves student populations facing 

discrimination and the advocates and institutions promoting 

systemic solutions to civil rights issues. (See Note 10)
FY 2022 AGENCY FINANCIAL REPORT 58 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B A S I S O F AC C O U N T I N G 

AND PRESENTATION

These financial statements were prepared to report the 

financial position, net cost of operations, changes in net 

position, and budgetary resources of the Department, as 

required by the Chief Financial Officers Act of 1990 and 

the Government Management Reform Act of 1994. The 

financial statements were prepared from the books and 

records of the Department, in accordance with Generally 

Accepted Accounting Principles (GAAP) accepted in the 

United States for federal entities, issued by the Federal 

Accounting Standards Advisory Board (FASAB), and the 

Office of Management and Budget (OMB) Circular A-136, 

Financial Reporting Requirements, as revised. These financial 

statements are different from the financial reports prepared 

by the Department pursuant to OMB directives that are 

used to monitor and control the use of budgetary resources. 

FSA also issues audited stand-alone financial statements 

that are included in their annual report.

The accounting structure of federal agencies is designed to 

reflect both accrual and budgetary accounting transactions. 

Under the accrual method of accounting, revenues are 

recognized when earned and expenses are recognized when 

a liability is incurred, without regard to receipt or payment 

of cash. Budgetary accounting facilitates compliance with 

legal constraints and controls over the use of federal funds.

Intradepartmental transactions and balances have been 

eliminated from the consolidated financial statements. 

Accounting standards require all reporting entities 

to disclose that accounting standards allow certain 

presentations and disclosures to be modified, if needed, to 

prevent the disclosure of classified information.

AC C O U N T I N G FO R FE D E R A L 

C R E D I T P RO G R A M S 

The Department’s accounting for its loan and loan guarantee 

programs is based on the requirements of the Federal Credit 

Reform Act of 1990 (FCRA). The purpose of the FCRA is 

to record the lifetime subsidy cost (expense) of direct loans 

and loan guarantees, in present value terms, at the time the 

loan is disbursed (subsidy). Components of subsidy costs 

for loans and guarantees include defaults (net of recoveries); 

contractual payments to third-party, private loan collectors 

who receive a set percentage of amounts collected; and, as 

an offset, origination and other fees collected. For direct 

loans, the difference between interest rates incurred by the 

Department on its borrowings from the U.S. Department of 

Treasury (Treasury) and interest rates charged to particular 

borrowers is also subsidized (or may provide an offset to 

subsidy if the Department’s rate is less). 

Under the FCRA, subsidy cost is estimated using the 

net present value of future cash flows to and from the 

Department. In accordance with the FCRA, credit 

programs either estimate a subsidy cost to the government 

(a “positive” subsidy), breakeven (zero subsidy cost), 

or estimate a negative subsidy cost. Negative subsidy 

occurs when the estimated cost of providing loans to 

borrowers from Treasury borrowing, collection costs, and 

loan forgiveness is less than the value of collections from 

borrowers for interest and fees, in present value terms.

Subsidy cost is an estimate of the present value cost of 

providing direct loans but excludes the administrative 

costs of issuing and servicing the loans. The Department 

estimates subsidy costs using a set of econometric and 

financial models, as well as cash flow models. 

The Department estimates subsidy costs annually for new 

loans disbursed in the current year; updates to the previous 

cost estimates for outstanding loans disbursed in prior 

years (subsidy re-estimates); and updates to previous cost 

estimates based on new legislation or other government 

actions that change the terms of existing loans (loan 

modifications) that alter the estimated subsidy cost and the 

present value of outstanding loans. Loan modifications can 

also include modification adjustment gains and losses to 

account for the difference between the discount rate used to 

calculate the cost of the modification and the interest rate at 

which the cohort pays or earns interest.

The subsidy costs of direct loan and loan guarantee 

programs are budgeted and tracked by the fiscal year in 

which the loan award is made, or the funds committed. 

Such a grouping of loans or guarantees is referred to as a 

“cohort.” A cohort is a grouping of direct loans obligated or 

loan guarantees committed by a program in the same year 

even if disbursements occur in subsequent years.

To account for the change in the net present value of the 

loan portfolio over time, the subsidy cost is amortized 

each year. Amortization accounts for the differences in 

interest rates, accruals, and cash flows over the life of a 

cohort, ensuring that cost is reflected in subsidy estimates 

and re-estimates. Amortization of subsidy is calculated as 

the difference between interest received from borrowers 

and Treasury (on uninvested funds) and interest paid to 

Treasury on borrowings. 

The FCRA establishes the use of financing, program, 

and Treasury General Fund receipt accounts for loan 

guarantees committed and direct loans obligated after 

September 30, 1991. 

• Financing accounts borrow funds from Treasury, 

make direct loan disbursements, collect fees from 
FY 2022 AGENCY FINANCIAL REPORT 59 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

lenders and borrowers, pay claims on guaranteed 

loans, collect principal and interest from borrowers, 

earn interest from Treasury on any uninvested funds, 

and transfer excess subsidy to Treasury General Fund 

receipt accounts. Financing accounts are presented 

separately in the combined statements of budgetary 

resources (SBR) as nonbudgetary credit reform 

accounts to allow for a clear distinction from all other 

budgetary accounts. This facilitates reconciliation of 

the SBR to the Budget of the United States Government

(President’s Budget).

• Program accounts receive and obligate appropriations 

to cover the positive subsidy cost of a direct loan or loan 

guarantee when the loan is approved and disburses the 

subsidy cost to the financing account when the loan is 

issued. Program accounts also receive appropriations for 

administrative expenses.

• Treasury General Fund receipt accounts receive amounts 

paid from financing accounts when there are negative 

subsidies for new loan disbursements or downward 

re-estimates of the subsidy cost of existing loans. (See 

Notes 12 and 13) 

The Department records an obligation each year for direct 

loan awards to be made in a fiscal year based on estimates 

of schools’ receipt of aid applications. The Department 

advances funds to schools based on these estimates. 

Half of all loan awards are issued in the fourth quarter of the 

fiscal year. Loans awarded are typically disbursed in multiple 

installments over an academic period. As a result, loans may 

be disbursed over multiple fiscal years. Loan awards may not 

be fully disbursed due to students leaving or transferring to 

other schools. The Department’s obligation estimate may 

also not reflect the actual amount of awards made. Based on 

historical averages, the Department expects approximately 

7.7 percent of the amount obligated for new loan awards 

will not be disbursed.

When a loan is placed in deferment or forbearance, loan 

repayment is temporarily suspended with the length of 

postponement different for each borrower. Interest accrues 

while a loan is in deferment or forbearance. Loans are 

canceled if a person dies, meets disability requirements, 

or occasionally through the bankruptcy courts. Loans are 

also canceled through the Public Service Loan Forgiveness 

(PSLF) program, which forgives the remaining balance 

on a direct loan after 120 qualifying monthly payments 

are made. These payments must be made under a 

qualifying repayment plan while working full-time for a 

qualifying employer. In addition, the Department offers 

income-driven repayment plans under which borrowers 

may receive forgiveness of the remaining balance of their 

loans after 20 or 25 years under certain rules.

BUDGETARY TERMS

The purpose of Federal budgetary accounting is to 

control, monitor, and report on funds made available to 

the Department by law and help ensure compliance with 

the law. 

Budgetary resources are amounts that are available to incur 

and liquidate obligations in a given year. The Department’s 

budgetary resources include unobligated balances of 

resources from prior years and new resources, which include 

appropriations, authority to borrow from Treasury, and 

spending authority from collections. Obligations are legally 

binding agreements that will result in outlays, immediately 

or in the future. Budgetary resources must be available 

before obligations can be incurred legally. 

Borrowing authority is an indefinite budgetary resource 

authorized under the FCRA. This resource, when realized, 

finances the unsubsidized portion of the Direct Loan, 

FFEL, and other loan programs. In addition, borrowing 

authority is requested to cover the cost of the initial loan 

disbursement as well as any related negative subsidy to be 

transferred to Treasury General Fund receipt accounts. 

Treasury prescribes the terms and conditions of borrowing 

authority and lends to the financing account amounts as 

appropriate. Amounts borrowed, but not yet disbursed, are 

included in uninvested funds and earn interest. Treasury 

uses the same weighted average interest rates for both the 

interest charged on borrowed funds and the interest earned 

on uninvested funds. Treasury sets a different fixed interest 

rate to be used for each loan cohort once the loans are 

substantially disbursed. The Department may carry forward 

borrowing authority to future fiscal years if cohorts are 

disbursing loans. All borrowings from Treasury are effective 

on October 1 of the current fiscal year, regardless of when 

the Department borrowed the funds, except for amounts 

borrowed to make annual interest payments.

Authority to borrow from Treasury provides most of the 

funding for disbursements made under the Direct Loan, 

FFEL, and other loan programs. Subsidy and administrative 

costs of the programs are funded by appropriations. 

Borrowings are repaid using collections from borrowers, 

fees, and interest on uninvested funds.

Unobligated balances represent the cumulative amount 

of budgetary resources that are not obligated and that 

remain available for obligation under law, unless otherwise 

restricted. Resources expiring at the end of the fiscal 

year remain available for five years, but only for upward 

adjustments of prior-year obligations, after which they are 
FY 2022 AGENCY FINANCIAL REPORT 60 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

canceled and may not be used. Resources that have not 

expired at year-end are available for new obligations, as well 

as upward adjustments of prior-year obligations. Funds 

are appropriated on an annual, multiyear, or no-year basis. 

Appropriated funds expire on the last day of availability 

and are no longer available for new obligations. Amounts in 

expired funds are unavailable for new obligations but may 

be used to adjust previously established obligations.

Permanent Indefinite Budget Authority. The Direct Loan, 

FFEL, and other loan programs have permanent indefinite 

budget authority through legislation to fund subsequent 

increases to the estimated future costs of the loan programs. 

Parts B, Federal Family Education Loan Program, and D, 

Federal Direct Student Loan, of the HEA pertain to the 

existence, purpose, and availability of permanent indefinite 

budget authority for these programs.

Reauthorization of Legislation. Funds for most 

Department programs are authorized, by statute, to be 

appropriated for a specified number of years, with an 

automatic one-year extension available under Section 422 

of the General Education Provisions Act. Congress may 

continue to appropriate funds after the expiration of the 

statutory authorization period, effectively reauthorizing the 

program through the appropriations process. The current 

President’s Budget presumes all programs continue in 

accordance with congressional budgeting rules.

Outlays are the liquidation of obligations that often 

takes the form of an electronic funds transfer. Outlays 

are reported on the SBR net of offsetting collections and 

distributed offsetting receipts.

Offsetting collections and offsetting receipts are generally 

amounts collected from (1) business-like transactions with 

the public or (2) intragovernmental transfers. Offsetting 

collections usually may be used by the Department once 

received without further legislation whereas offsetting 

receipts must be appropriated to be used. 

Offsetting receipts and offsetting collections both “offset” 

or reduce outlays. Offsetting collections reduce outlays at 

the expenditure account level, whereas offsetting receipts 

generally reduce outlays at the agency or Governmentwide level. Offsetting receipts can be either “distributed” or 

“undistributed,” with distributed offsetting receipts shown 

on the SBR reducing agency outlays and undistributed 

offsetting receipts reducing Government-wide outlays (and 

not shown on the SBR). 

Budgetary transactions are included as outlays or receipts 

in the Budget and ultimately affect the budget deficit or 

surplus whereas non-budgetary amounts are a means of 

financing and do not affect the deficit or surplus. Nonbudgetary amounts include the non-budgetary financing 

account amounts for loan and loan guarantee programs 

shown on the SBR. Financing accounts reflect program 

cash flows as distinct from credit “program” accounts, 

which are budgetary and reflect the subsidy cost of the 

programs. (See Note 12)

ENTITY AND NON-ENTITY ASSETS

Assets are classified as either entity or non-entity assets. 

Entity assets are those that the Department has authority 

to use for its operations. Non-entity assets are those held by 

the Department but not available for use in its operations. 

Non-entity assets are offset by liabilities to third parties and 

have no impact on net position. The Department combines 

its entity and non-entity assets on the balance sheets and 

discloses its non-entity assets in the notes. (See Note 2)

FUND BALANCE WITH TREASURY

Fund Balance with Treasury includes amounts available to 

pay current liabilities and finance authorized purchases, 

as well as funds restricted until future appropriations 

are received. Treasury processes cash receipts and cash 

disbursements for the Department. The Department’s 

records are reconciled with Treasury’s records. (See Note 3)

ACCOUNTS RECEIVABLE

Accounts receivable are amounts due to the Department 

from other federal agencies (intragovernmental) and 

the public (other than intragovernmental). Other than 

intragovernmental receivables result from overpayments 

to recipients of grants and other financial assistance 

programs, as well as disputed costs resulting from audits of 

educational assistance programs. Amounts due from federal 

agencies result from reimbursable agreements entered into 

by the Department with other agencies to provide various 

goods and services. Accounts receivable are reduced to net 

realizable value by an allowance for uncollectible amounts. 

The estimate of an allowance for loss on uncollectible 

accounts is based on the Department’s experience in the 

collection of receivables and an analysis of the outstanding 

balances. (See Note 4)

C A S H A N D OT H E R 

MONETARY ASSETS

Cash and other monetary assets are the federal government’s 

interest in the program assets held by state and nonprofit 

FFEL Program guaranty agencies (guaranty agencies’ federal 

funds). Section 422A of the HEA required FFEL guaranty 

agencies to establish federal student loan reserve funds. 

Guaranty agencies’ federal funds include initial federal 

start-up funds, receipts of federal reinsurance payments, 
FY 2022 AGENCY FINANCIAL REPORT 61 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

insurance premiums, guaranty agency share of collections 

on defaulted loans, investment income, administrative cost 

allowances, and other assets.

The balance of guaranty agencies’ federal funds represents 

consolidated reserve balances of the 18 guaranty agencies 

based on the guaranty agency financial reports that each 

agency submits annually to the Department. Although the 

Department and the guaranty agencies operate on different 

fiscal years, all guaranty agencies are subject to an annual 

audit. A year-end valuation adjustment is made to adjust the 

Department’s balances to comply with federal accounting 

principles and disclose funds held outside of Treasury.

Guaranty agencies’ federal funds are classified as other than 

intragovernmental non-entity assets and are offset by a 

corresponding liability due to Treasury on the Department’s 

balance sheets. The funds are held by the guaranty agencies 

but can only be used for certain specific purposes listed 

in the Department’s regulations. The guaranty agencies’ 

federal funds are the property of the United States and are 

reflected in the President’s Budget. Payments made to the 

Department from guaranty agencies’ federal funds through 

a statutory recall or agency closures represent capital 

transfers and are returned to Treasury’s General Fund. 

(See Note 2)

LOA N R EC EI VA B L ES , N E T 

A N D LOA N G UA R A N T E E LI A B I LI T I ES 

The financial statements reflect the Department’s estimate 

of the long-term subsidy cost of direct and guaranteed loans 

in accordance with the FCRA. Loans and interest receivable 

are valued at their gross amounts less an allowance for the 

present value of amounts not expected to be recovered, 

and thus having to be subsidized—called an “allowance 

for subsidy.” The difference between the gross amount and 

the allowance for subsidy is the present value of the cash 

flows to, and from, the Department that are expected from 

receivables over their projected lives. Similarly, liabilities for 

loan guarantees are valued at the present value of the cash 

outflows from the Department less the present value of 

related inflows. The estimated present value of net longterm cash outflows of the Department for subsidized costs 

is net of recoveries, interest supplements, and offsetting fees.

The loan guarantee liabilities represent the net present value 

of all future cash flows from currently insured FFEL loans, 

including claim payments, interest assistance, allowance 

payments, and recoveries from assigned loans. Guaranteed 

loans that default are initially turned over to guaranty 

agencies for collection. Defaulted FFEL loans are accounted 

for as assets and reported at their net present value, similar 

to direct loans, although they are legally not direct student 

loans. Credit program receivables, net includes defaulted 

FFEL loans owned by the Department and held by the 

Department or guaranty agencies. In most cases, after 

approximately four years, defaulted guaranteed loans not in 

repayment are turned over by the guaranty agencies to the 

Department for collection.

FFEL Program receivables include purchased loans and 

other interests acquired under an expired program. The 

cash flows related to these receivables include collections on 

purchased loans and other activities, including transfers of 

re-estimated subsidy. The cash flows of these authorities also 

include inflows and outflows associated with the underlying 

or purchased loans and other related activities, including 

any positive or negative subsidy transfers. 

Capitalization of interest occurs as a result of various 

initiatives, such as loan consolidations. As a result, interest 

receivable is reduced, and loan principal is increased. 

(See Note 5)

P R O P E R T Y A N D EQ U I P M E N T, N E T 

AND LEASES

The Department has very limited acquisition costs 

associated with buildings, furniture, and equipment as 

all Department and contractor staff are housed in leased 

buildings. The Department does not own real property 

for the use of its staff. The Department leases office space 

from the General Services Administration (GSA). The 

lease contracts with GSA for privately and publicly owned 

buildings are operating leases.

The Department also leases information technology and 

telecommunications equipment, as part of a contractorowned, contractor-operated services contract. Lease 

payments associated with this equipment have been 

determined to be operating leases and, as such, are expensed 

as incurred. The noncancellable lease term is one year, with 

the Department holding the right to extend the lease term 

by exercising additional one-year options. (See Notes 4 

and 14)

LIABILITIES

• Liabilities represent actual and estimated amounts to 

be paid as a result of transactions or events that have 

already occurred.

• Liabilities are classified as covered by budgetary 

resources if budgetary resources are available to pay 

them. Credit program liabilities funded by permanent 

indefinite appropriations are also considered covered by 

budgetary resources. 
FY 2022 AGENCY FINANCIAL REPORT 62 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

• Liabilities are classified as not covered by budgetary 

resources when congressional action is needed before 

they can be paid. Although future appropriations to 

fund these liabilities are likely, it is not certain that 

appropriations will be enacted to fund these liabilities. 

• Liabilities not requiring appropriated budgetary resources 

include those related to deposit funds, Subsidy Due to 

Treasury General Fund for Future Liquidating Account 

Collections (pre-1992 loan guarantee programs), and 

Federal Perkins Loan program balances due to be repaid 

to the Treasury General Fund. (See Note 6) 

DEBT ASSOCIATED WITH LOANS

The Department borrows from Treasury to provide funding 

for the Direct Loan, FFEL, and other credit programs for 

higher education. The liability to Treasury from borrowings 

represents unpaid principal at year-end. The Department 

repays the principal based on available fund balances. 

Interest rates are based on the corresponding rate for 10-

year Treasury securities and are set for those borrowings 

supporting each cohort of loans once the loans for that 

cohort are substantially disbursed. Interest is paid to Treasury 

on September 30. In addition, the Federal Financing Bank 

(FFB) holds bonds issued by a designated bonding authority, 

on behalf of the Department, for the HBCU Capital 

Financing program. The debt for other credit programs for 

higher education includes the liability for full payment of 

principal and accrued interest for the FFB-financed HBCU 

Capital Financing program. (See Note 7) 

SUBSIDY DUE TO TREASURY

The Department must transfer to the Treasury General 

Fund all excess funding resulting from downward reestimates of credit program loans that are subject to FCRA 

requirements. This excess funding is included in the 

liability for subsidy due to Treasury and will be transferred 

to Treasury in the succeeding fiscal year upon receipt of 

authority from OMB. Subsidy due to Treasury also includes 

future liquidating account collections (estimated collections 

in excess of estimated outlays) for the Department’s pre1992 FFEL and HEAL loans that, when collected, will also 

be transferred to the Treasury General Fund. (See Note 8)

ACCOUNTS PAYABLE

Accounts payable include amounts owed by the 

Department for goods and services received from other 

entities, as well as payments not yet processed. Other than 

intragovernmental accounts payable primarily consists 

of in-process grant and loan disbursements, including an 

accrued liability for schools that have disbursed loans before 

requesting funds. (See Note 9)

ACCRUED GRANT LIABILITIES

The Department records grant expenses as grantees 

drawdown funding on their available grant balances. 

Some grant recipients incur allowable expenditures as 

of the end of an accounting period but have not yet 

drawn on their available balances to be reimbursed by 

the Department. The Department accrues liabilities for 

these allowable expenditures. The liability amounts are 

estimated using a combination of historical data and a 

statistical sample survey of current unliquidated balances. 

Some grantees drawdown funding in advance of incurring 

grant expenditures. A statistical estimate is made for 

these advance drawdowns and is recorded as other than 

intragovernmental advances (see Note 4).

P E R S O N N E L C O M P E N S AT I O N A N D 

OTHER EMPLOYEE BENEFITS

Annual, Sick, and Other Leave. The liability for annual 

leave, compensatory time off, and other vested leave is 

accrued when earned and reduced when taken. Each year, 

the accrued annual leave account balance is adjusted to 

reflect current pay rates. Sick leave and other types of 

nonvested leave are expensed as taken. Annual leave earned 

but not taken, within established limits, is funded from 

future financing sources. (See Notes 6 and 9)

Retirement Plans and Other Retirement Benefits.

Employees participate in either the Civil Service 

Retirement System (CSRS), a defined benefit plan, or the 

Federal Employees Retirement System (FERS), a defined 

benefit and contribution plan. For CSRS employees, the 

Department contributes a fixed percentage of pay.

FERS consists of Social Security, a basic annuity plan, 

and the Thrift Savings Plan. The Department and the 

employee contribute to Social Security and the basic 

annuity plan at rates prescribed by law. In addition, the 

Department is required to contribute to the Thrift Savings 

Plan a minimum of 1 percent per year of the basic pay 

of employees covered by this system, match voluntary 

employee contributions up to 3 percent of the employee’s 

basic pay, and match one-half of contributions between 

3 percent and 5 percent of the employee’s basic pay. For 

FERS employees, the Department also contributes the 

employer’s share of Medicare.

Federal Employees’ Compensation Act. The Federal 

Employees’ Compensation Act (FECA) (Pub. L. 103-3) 

provides income and medical cost protection to covered 

federal civilian employees injured on the job, to employees 

who have incurred work-related occupational diseases, and 

to beneficiaries of employees whose deaths are attributable 

to job-related injuries or occupational diseases. The FECA 
FY 2022 AGENCY FINANCIAL REPORT 63 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

program is administered by the U.S. Department of Labor 

(DOL), which pays valid claims and subsequently seeks 

reimbursement from the Department for these paid claims.

The FECA liability consists of two elements. The first 

element, accrued FECA liability, is based on claims paid 

by DOL but not yet reimbursed by the Department. 

The Department reimburses DOL for claims as funds 

are appropriated for this purpose. In general, there is a 

two- to three-year period between payment by DOL and 

reimbursement to DOL by the Department. As a result, 

the Department recognizes an intragovernmental liability, 

not covered by budgetary resources, for the claims paid by 

DOL that will be reimbursed by the Department.

The second element, actuarial FECA liability, is the 

estimated liability for future benefit payments and is 

recorded as an other than intragovernmental liability, 

not covered by budgetary resources. The actuarial 

FECA liability includes the expected liability for death, 

disability, medical, and miscellaneous costs for approved 

compensation cases. DOL determines the actuarial FECA 

liability annually, as of September 30, using an actuarial 

method that considers historical benefit payment patterns, 

wage inflation factors, medical inflation factors, and other 

variables. The projected annual benefit payments are 

discounted to present value. (See Notes 6 and 9)

IMPUTED COSTS

Services are received from other federal entities at no cost 

or at a cost less than the full cost to the Department. 

Consistent with accounting standards, certain costs of 

the providing entity that are not fully reimbursed by 

the Department are recognized as imputed cost in the 

Statements of Net Cost and are offset by imputed revenue 

in the Statements of Changes in Net Position. Such 

imputed costs and revenues relate to employee benefits. 

However, unreimbursed costs of services other than 

those related to employee benefits are not included in the 

Department’s financial statements.

NET COST

As required by the GPRA Modernization Act of 2010, the 

Department’s programs have been aligned with the goals 

presented in the Department’s Strategic Plan. 

Net cost consists of gross costs less earned revenue. Major 

components of the Department’s net costs include credit 

program subsidy expense, credit program interest revenue 

and expense, and grant expenses. (See Note 10)

Credit Program Subsidy Expense. Subsidy expense is 

an estimate of the present value cost of providing loans, 

excluding the administrative costs of issuing and servicing 

the loans. To estimate subsidy expense, the Department 

must project lifetime cash flows associated with loans 

disbursed in a specific fiscal year (i.e., the loan cohort). 

The Department projects these lifetime cash flows using 

a set of econometric and financial models, as well as 

cash flow models. The Department estimates subsidy 

expenses annually for new loans disbursed in the current 

year; updates the previous cost estimates for outstanding 

loans disbursed in prior years (subsidy re-estimates); and 

updates previous cost estimates based on changes to terms 

of existing loans (loan modifications). Loan modifications 

include actions resulting from new legislation or from the 

exercise of administrative discretion under existing law, 

which directly or indirectly alters the estimated subsidy 

cost of outstanding direct loans (or direct loan obligations). 

The change in book value of direct loans resulting from a 

modification and the cost of modification will normally 

differ due to the use of different discount rates or the use 

of different measurement methods. Any difference between 

the change in book value and the cost of modification is 

recognized as a modification adjustment transfer gain or a 

modification adjustment transfer loss. (See Notes 5 and 10) 

Credit Program Interest Revenue and Expense. The 

Department recognizes other than intragovernmental 

interest revenue when interest is accrued on Direct Loan 

Program loans, defaulted and acquired FFEL loans, and 

outstanding principal for other loan programs. Interest due 

from borrowers is accrued at least monthly and is satisfied 

upon collection or capitalization into the loan principal. 

Federal interest revenue is recognized on the unused fund 

balances with Treasury in the financing accounts.

Federal interest expense is recognized monthly on the 

outstanding borrowing from Treasury (debt) used to finance 

direct loan and loan guarantee programs. Accrued interest 

to Treasury is paid on September 30. The interest rate for 

federal interest expense is the same as the rate used for 

federal interest revenue.

Interest expense equals interest revenue plus administrative 

fees accrued for all credit programs due to subsidy 

amortization. Subsidy amortization is required by the 

FCRA and accounts for the difference between interest 

expense and revenue cash flows. For direct loans, the 

allowance for subsidy is adjusted with the offset to interest 

revenue. For guaranteed loans, the liability for loan 

guarantees is adjusted with the offset to interest expense. 

(See Note 10)
FY 2022 AGENCY FINANCIAL REPORT 64 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NET POSITION

Net position consists of unexpended appropriations 

and cumulative results of operations. Unexpended 

appropriations include undelivered orders and unobligated 

balances, except for amounts in financing accounts, 

liquidating accounts, and trust funds. Cumulative 

results of operations represent the net difference since 

inception between (1) expenses and (2) revenues and 

financing sources.

ALLOCATION TRANSFERS

The Department is a party to allocation transfers with 

other federal agencies as both a transferring (parent) entity 

and a receiving (child) entity. Allocation transfers are legal 

delegations by one entity of its authority to obligate budget 

authority and outlay funds to another entity. A separate 

fund account (allocation account) is created in the Treasury 

as a subset of the parent fund account for tracking and 

reporting purposes. All allocation transfers of balances are 

credited to this account, and subsequent obligations and 

outlays incurred by the child entity are charged to this 

allocation account as they execute the delegated activity on 

behalf of the parent entity. All financial activity related to 

this allocation transfer (e.g., budget authority, obligations, 

outlays) is reported in the financial statements of the parent 

entity from which the underlying legislative authority, 

appropriations, and budget apportionments are derived.

The Department is a party to allocation transfers as a 

parent entity to the Department of the Interior and receives 

allocation transfers as a child entity from the Department 

of Health and Human Services. 

TAXES

The Department is a federal entity and is not subject to 

federal, state, or local taxes. Therefore, no provision for 

income taxes is recorded.

USE OF ESTIMATES

Department management is required to make certain 

estimates while preparing consolidated financial statements 

in conformity with GAAP. These estimates are reflected 

in the assets, liabilities, net cost, and net position of the 

financial statements and may differ from actual results. The 

Department’s estimates are based on management’s best 

knowledge of current events, best available data, economic 

assumptions, historical experiences, and other assumptions 

that are believed to be reasonable under the circumstances. 

Significant estimates reported on the financial statements 

include: allocation of Department administrative overhead 

costs; allowance for subsidy and subsidy expense for direct, 

defaulted guaranteed, and acquired loans; the liability for 

loan guarantees; and grant liability and advance accruals. 

(See Notes 4, 5, 9, and 10)

The Department’s estimates for credit programs are 

calculated using a series of assumption models that are 

updated using a statistically valid sample of National 

Student Loan Data System (NSLDS®) data, data from the 

Debt Management and Collection System, and economic 

assumptions provided by OMB. Actual results may differ 

from those assumptions and estimates. Differences between 

actual results and these estimates may occur in the valuation 

of credit program receivables and liabilities for loan 

guarantees under guidelines in the FCRA. The Department 

recognizes the sensitivity of credit reform modeling. 

Slight changes in modeling methodology or data used to 

derive assumptions can produce largely varied results. The 

Department therefore continually reviews its model factors 

and statistical modeling techniques to reflect the most 

accurate credit program costs possible in its annual financial 

statements. The Department updates its assumption models 

in accordance with its model update plan, which takes 

into consideration statutory or new program requirements, 

major changes to the model structure or methodology, 

and data updates. This level of granularity in the modeling 

methodology is essential to the financial reporting and 

budgeting processes so that the Department can forecast 

the costs of various program options when making policy 

decisions. (See Note 5)
FY 2022 AGENCY FINANCIAL REPORT 65 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 2. Non-Entity Assets

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Non-Entity Assets

Fund Balance with Treasury $ 448 $ - $ 285 $ - 

Loans Receivable, Net - 1,066 - 693 

Cash and Other Monetary Assets - 725 - 1,913 

Accounts Receivable, Net - 32 - 66 

Total Non-Entity Assets 448 1,823 285 2,672 

Entity Assets 316,651 857,758 351,697 1,164,629 

Total Assets $ 317,099 $ 859,581 $ 351,982 $ 1,167,301 

The Department’s FY 2022 assets are predominantly entity assets (99.8 percent), leaving a small portion of assets remaining 

as non-entity assets. Non-entity intragovernmental assets primarily consist of balances in deposit and clearing accounts. 

Non-entity other than intragovernmental assets primarily consist of guaranty agency reserves (39.8 percent), reported as cash 

and other monetary assets, and Federal Perkins Loan program loan receivables (58.5 percent), reported as loan receivables, 

net. Federal Perkins Loan program receivables are a non-entity asset because the assets are held by the Department but are 

not available for use by the Department. The corresponding liabilities for non-entity assets are reflected in various accounts, 

including intragovernmental accounts payable, Guaranty Agencies’ Federal Funds Due to Treasury, and other liabilities. 

(See Note 9)

NOTE 3. Fund Balance with Treasury 

(Dollars in Millions)

2022 (Unaudited) 2021

COVID-19 

Funds

All Other 

Funds Total COVID-19 

Funds

All Other 

Funds Total

Unobligated Balance

Available $ 541 $ 17,291 $ 17,832 $ 18,515 $ 17,300 $ 35,815 

Unavailable 23 69,710 69,733 - 24,382 24,382 

Obligated Balance, Not Disbursed 140,753 131,421 272,174 203,460 130,330 333,790 

Authority Temporarily Precluded from Obligation - (1,003) (1,003) - (396) (396)

Borrowing Authority Not Yet Converted to Fund 

Balance with Treasury (Note 12) - (42,130) (42,130) - (41,978) (41,978)

Other - 401 401 - 255 255 

Total Fund Balance with Treasury $ 141,317 $ 175,690 $ 317,007 $ 221,975 $ 129,893 $ 351,868 

Available unobligated balances represent amounts that are apportioned for obligation in the current fiscal year. Unavailable 

unobligated balances represent amounts that are not apportioned for obligation during the current fiscal year and expired 

appropriations no longer available to incur new obligations. Total unavailable unobligated balance ($69.7 billion) differs from 

unapportioned and expired amounts on the SBR ($70.4 billion) due to the Guaranty Agencies’ Federal Funds ($0.7 billion).

In FY 2022 and FY 2021, $587 million and $354 million, respectively, of unused funds from canceled appropriations were 

returned to Treasury. Such balances are excluded from the amount reported as Fund Balance with Treasury in accordance with 

Treasury guidelines. (See Note 12)
FY 2022 AGENCY FINANCIAL REPORT 66 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 4. Other Assets 

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Accounts Receivable, Net $ 7 $ 198 $ 9 $ 284 

Advances to Others and Prepayments 85 2 104 34 

Property and Equipment, Net - 6 - 6 

Other - 2 1 - 

Total Other Assets $ 92 $ 208 $ 114 $ 324 

Included in the other than intragovernmental accounts receivable are amounts owed because of criminal restitution orders 

that are to be collected by the Department of Justice on behalf of the Department of Education. Amounts collected for these 

criminal restitutions are generally returned to the Treasury General Fund. Gross receivables and the allowance for uncollectible 

amounts as of September 30, 2022, related to criminal restitutions totaled $127 million and $117 million, respectively.

Changes in property and equipment balances were as follows:

Property and Equipment 

(Dollars in Millions)

 Acquisition Value Accumulated 

Depreciation Net

2022 (Unaudited)

Balance Beginning of the Year $ 168 $ (162) $ 6 

Balance At End of Year $ 168 $ (162) $ 6 

2021

Balance Beginning of the Year $ 167 $ (161) $ 6 

Capitalized Acquisitions 1 - 1 

Depreciation Expense - (1) (1)

Balance At End of Year $ 168 $ (162) $ 6 

NOTE 5. Loan Receivables, Net and Loan Guarantee Liabilities 

Loans Receivables

(Dollars in Millions)

Principal Accrued Interest Allowance for Subsidy Net

2022 (Unaudited)

Direct Loan Program $ 1,341,770 $ 86,663 $ (611,919) $ 816,514 

FFEL Program 80,262 21,599 (62,059) 39,802 

Other Credit Programs for Higher Education 2,452 466 (586) 2,332 

Total Loans Receivable $ 1,424,484 $ 108,728 $ (674,564) $ 858,648 

2021

Direct Loan Program $ 1,292,214 $ 86,501 $ (273,864) $ 1,104,851 

FFEL Program 82,009 23,902 (47,665) 58,246 

Other Credit Programs for Higher Education 2,060 294 (387) 1,967 

Total Loans Receivable $ 1,376,283 $ 110,697 $ (321,916) $ 1,165,064 
FY 2022 AGENCY FINANCIAL REPORT 67 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The federal student loan programs provide students and their families with the funds to help meet postsecondary education 

costs. Funding for these programs is provided through permanent indefinite budget authority. The emergency relief measures 

provided by Congress and the administration in response to the COVID-19 pandemic were recorded as loan modifications 

and are described in each of the programs below. Per OMB guidance, loan modifications were calculated using the President’s 

Budget formulation discount rates. 

As the net loans receivable represents the net present value of future cash flows, it is not necessarily representative of the 

proceeds that might be expected if these loans were sold on the open market. The net loans receivable decreased by $306.4 

billion during FY 2022 as a result of activity identified in the following table.

Reconciliation of Loans Receivable, Net

(Dollars in Millions)

Direct Loan 

Program

Defaulted FFEL 

Guaranteed 

Loans

Acquired 

FFEL Loans

Other Credit 

Programs for 

Higher Education Total

2022 (Unaudited)

Beginning Balance of Loans Receivable, Net $ 1,104,851 $ 16,138 $ 42,108 $ 1,967 $ 1,165,064 

Add Loan Disbursements:

New Loan Disbursements 83,451 - - 173 83,624 

Consolidations 36,939 - - - 36,939 

Add Defaulted Loan Claim Payments - 3,680 - - 3,680 

Less Principal, Interest, and Fee Payments Received:

Principal (41,283) (1,172) (2,163) (47) (44,665)

Interest (2,561) (14) (309) (6) (2,890)

Fees (1,613) - - - (1,613)

Add Interest Accruals (564) (1,153) (117) (1) (1,835)

Less Loans Written Off:

Principal (23,416) (1,974) (786) (67) (26,243)

Interest (1,886) (865) (160) (8) (2,919)

Fees (1) (1) - - (2)

Allowance for Subsidy 25,303 2,840 946 75 29,164 

Add Amortization of Net Interest:

Interest Revenue on Uninvested Funds (7,631) - (290) (22) (7,943)

Interest Revenue from the Public 564 - 117 1 682 

Administrative Fees (5) - - - (5)

Interest Expense on Borrowing 30,589 - 1,334 41 31,964 

Positive Subsidy Transfers (10,827) - - (41) (10,868)

Negative Subsidy Transfers 3,535 - - - 3,535 

Upward Subsidy Re-Estimate (14,563) - (26) (367) (14,956)

Downward Subsidy Re-Estimate 36,500 - 2,031 295 38,826 

Loan Modifications (400,055) - (12,817) (67) (412,939)

Other:

Other Adjustments to Allowance for Subsidy 147 (6,593) 27 (115) (6,534)

Other Non-Cash Reconciling Items (960) (955) (24) 521 (1,418)

Ending Balance of Loans Receivable, Net $ 816,514 $ 9,931 $ 29,871 $ 2,332 $ 858,648 

When Department-held loans are written off, the unpaid principal and interest are removed from the gross amount of loans 

receivable, along with an offsetting amount charged to the allowance for subsidy. Prior to the write off transaction, the 

estimated uncollectible amounts are provided for in the subsidy cost allowance through the subsidy cost estimate, re-estimates, 

or loan modifications. Therefore, the write off transactions do not affect the net loan receivable or expenses.
FY 2022 AGENCY FINANCIAL REPORT 68 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Other adjustments to allowance for subsidy for defaulted FFEL guaranteed loans shown in the table above includes the 

Department’s allocation of current year subsidy re-estimates and modifications to the allowance for subsidy for Departmentheld defaulted FFEL guaranteed loans. 

What follows is additional analysis of the activity, costs, and adjustments for each of the loan programs. 

D I R EC T LOA N P R O G R A M 

The federal government makes loans directly to students and parents through participating IHEs under the Direct Loan Program. 

Direct loans are originated and serviced through contracts with private vendors.

Direct Loan Program loan receivables include defaulted and nondefaulted loans owned by the Department. Of the 

$1,428.4 billion in gross loan receivables, as of September 30, 2022, $85.8 billion (6.0 percent) in loan principal was in 

default and had been transferred to the Department’s defaulted loan servicer, compared to $91.5 billion (6.6 percent) as of 

September 30, 2021.

Direct Loan Program Loan Disbursements by Loan Type

(Dollars in Millions)

2022 (Unaudited) 2021

Stafford $ 15,728 $ 18,325 

Unsubsidized Stafford 45,486 44,146 

PLUS 22,237 20,824 

Consolidation 36,939 21,508 

Total Disbursements $ 120,390 $ 104,803 

The allocation of disbursements for the first three loan types is estimated based on historical trend information.

Student and parent borrowers may prepay existing loans without penalty through a new consolidation loan. Under the FCRA 

and requirements provided by OMB regulations, the retirement of direct loans being consolidated is considered a collection of 

principal and interest. This receipt is offset by the disbursement related to the newly created consolidation loan. Underlying direct 

or guaranteed loans, performing or nonperforming, are paid off in their original cohort; new consolidation loans are originated in 

the cohort in which the new consolidation loan was obligated. Consolidation activity is taken into consideration in establishing 

subsidy rates for defaults and other cash flows. The cost of new consolidations is included in subsidy expense for the currentyear cohort; the effect of prepayments on existing loans could contribute to re-estimates of prior cohort subsidy costs. The net 

receivables include estimates of future prepayments of existing loans through consolidations; they do not reflect subsidy costs 

associated with anticipated future consolidation loans.

Direct loan consolidations were $36.9 billion during FY 2022 and $21.5 billion during FY 2021. The effect of the early payoff of 

the existing loans—those being consolidated—is recognized in the future projected cash flows associated with that cohort.

Direct Loan Program Interest Expense and Revenues (See Note 10)

(Dollars in Millions)

2022 (Unaudited) 2021

Interest Expense on Treasury Borrowing $ 30,589 $ 32,957 

Total Interest Expense $ 30,589 $ 32,957 

Interest Revenue From the Public (564) (459)

Interest Revenue on Uninvested Funds 7,631 4,230 

Administrative Fees 5 32 

Amortization of Subsidy 23,517 29,154 

Total Revenues $ 30,589 $ 32,957 
FY 2022 AGENCY FINANCIAL REPORT 69 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Direct Loan Program Subsidy Expense 

(Dollars in Millions)

2022 (Unaudited) 2021

Subsidy Expense for Direct Loans Disbursed in the Current Year

Interest Rate Differential $ 24,653 $ 19,844 

Defaults, Net of Recoveries 353 606 

Fees (1,644) (1,603)

Other (16,070) (17,259)

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 7,292 1,588 

Modifications and Re-Estimates

Loan Modifications

Modification Adjustment Transfer Gain (28,242) (2,716)

Modification Adjustment Transfer Loss 2,483 182 

Loan Modifications 425,814 70,812 

Total Loan Modifications 400,055 68,278 

Net Upward/(Downward) Subsidy Re-Estimates

Interest Rate Re-estimates (1,652) (6,221)

Technical and Default Re-estimates (20,285) 30,246 

Total Net Upward/(Downward) Subsidy Re-estimates (21,937) 24,025 

Total Modifications and Re-estimates 378,118 92,303 

Direct Loan Subsidy Expense $ 385,410 $ 93,891 

Subsidy Expense for Direct Loans Disbursed in the Current 

Year. The two major components of the total subsidy expense 

for direct loans disbursed in the current year (subsidy transfers) 

are Interest Rate Differential and Other components. Interest 

Rate Differential is attributable to the difference between the 

borrowers’ interest payments due to the Department and the 

Department’s estimated cost to finance the direct loan on a 

present value basis. The Other components of subsidy transfers 

primarily consists of contract collection costs, program review 

collections, fees, and loan forgiveness.

Loan Modifications. Loan modifications for the Direct 

Loan Program for FY 2022 included the following:

• Broad-Based Debt Relief. To address the financial harms 

of the pandemic by smoothing the transition back to 

repayment and helping borrowers at highest risk of 

delinquencies or default once payments resume, the 

Department provided broad-based debt relief. Borrowers 

with loans held by the Department who received a Pell 

Grant in college and meet the specified income limits are 

eligible for up to $20,000 in debt relief, while non-Pell 

Grant recipients who meet the specified income limits are 

eligible for up to $10,000 in relief. Applications for this 

debt relief launched on October 17, 2022. This action 

resulted in an upward modification cost of $361.0 billion 

in the Direct Loan Program. There was a net negative 

$23.7 billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost for the Direct Loan Broad-Based Debt 

Relief to $337.3 billion.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals through 

December 31, 2022.6

 The extended relief for borrowers 

resulted in an upward modification cost of $48.4 billion. 

There was a net positive $0.2 billion modification 

adjustment transfer associated with this modification, 

bringing the total FY 2022 modification cost for the 

student loan repayment deferrals to $48.6 billion.

• PSLF Waiver. The PSLF Program removes the burden 

of student debt on public servants by cancelling loans 

after 10 years of payments while the borrower is in 

public service. Temporary changes were made to the 

program through a Limited PSLF Waiver to allow student 

borrowers to get credit for payments made while working 

for a qualifying employer, regardless of loan type or 

repayment plan. The Waiver, which ran through October 

31, 2022, applies to borrowers with Direct Loans, those 

who have already consolidated into the Direct Loan 

Program, and those with other types of federal student 

loans who submit a consolidation application into the 

Direct Loan Program while the waiver is in effect. These 

temporary changes resulted in an upward modification 

cost of $10.1 billion in the Direct Loan Program. There 

6 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16) 
FY 2022 AGENCY FINANCIAL REPORT 70 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

was a net negative $1.0 billion modification adjustment 

transfer associated with this modification, bringing the 

total FY 2022 modification cost for the Direct Loan 

Program PSLF Waiver to $9.1 billion. 

• Income-Driven Repayment (IDR) Waiver one time 

account adjustment. Borrowers on most IDR plans are 

entitled to forgiveness after 20 years of payments and 

depend on FSA and its servicers to accurately track their 

progress toward relief. However, the Department’s review 

of IDR payment-tracking procedures revealed significant 

flaws that suggested borrowers had been missing out on 

progress toward IDR forgiveness. To address past issues 

with IDR payment counting, the IDR Waiver allowed 

any borrower who made IDR-qualifying payments to 

count toward IDR, regardless of repayment plan. Any 

borrower who made the required number of payments 

for IDR forgiveness based on this payment-count 

revision would receive loan forgiveness automatically, 

and months spent in deferment prior to 2013 would 

count toward forgiveness as well. These changes resulted 

in an upward modification cost of $16.4 billion during 

FY 2022 in the Direct Loan Program. There was a net 

negative $2.3 billion modification adjustment transfer 

associated with this modification, bringing the total FY 

2022 modification cost for the Direct Loan Program IDR 

Waiver to $14.1 billion.

• Shift to Business Process Operations (BPO). The holder 

of defaulted federal student debt has historically entered 

into contracts with Private Collection Agencies (PCAs) 

to collect on defaulted student loans. FSA transitioned 

PCA services to new BPO contracts in FY 2022, which 

is estimated to result in lower costs for future defaulted 

student loan collection activities. This action resulted in 

a downward modification cost (savings) of $10.1 billion 

in the Direct Loan Program. There was a net positive 

$1.0 billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost (savings) for the Direct Loan Program 

shift to business process operations to $9.1 billion.

Net Upward/Downward Subsidy Re-Estimates for All 

Prior-Year Loan Cohorts. The Direct Loan Program 

subsidy re-estimate decreased subsidy expense in FY 2022 

by $21.9 billion. Re-estimated costs only include cohorts 

that are 90 percent disbursed (i.e., cohort years 1994–

2021). The re-estimate reflects the assumption updates and 

other changes described below. 

In addition to the major assumption updates described 

below, the re-estimate reflects several other assumption 

updates, including loan volume, enter repayment rates, and 

Teacher Loan Forgiveness.

• Non-IDR Discharges. The Department updated the 

assumption to reflect changes made in recent cycles, 

including adjustments made for COVID-related Return 

of Title IV Fund claims, the VA-match and SSAmatch TPD adjustments, and the change to a 30-year 

distribution. One addition in this update cycle was for 

an expected increase in closed school discharges. The 

combined effect of these updates led to a new upward 

re-estimate of $2.9 billion.

• IDR Model Changes. The Department completed a 

standard IDR data update. The income calibration 

used in the IDR model was updated to use more of the 

available data from NSLDS. The calibration was done 

by the risk groups used in the model. Doing so resulted 

in a smaller calibration for some groups (especially 

graduate students), which contributed significantly to 

savings for this component. Data on inflation, interest 

rates, and the poverty line were adjusted to reflect 

the latest current data, as well as OMB’s most recent 

forecasts. Several smaller technical updates were made 

to improve the accuracy and functioning of the IDR 

model, including the handling of payments during 

the COVID-19 payment pause and calculating the 

percentage of debt allocated to the borrower when 

jointly repaying with the borrower’s spouse. The 

combined effect of these updates led to a net downward 

re-estimate of $24.0 billion.

• Deferment and Forbearance. The Department updated 

actual deferment and forbearance rates for FY 2021 and 

calibrated FY 2022 and FY 2023 rates using data from 

FSA on borrower payments made during the period 

of repayment deferral. The combined effect of these 

changes led to a net upward re-estimate of $2.6 billion. 

• Collections. The Department updated the data and 

calibrated FY 2022 collection rates to reflect the extension 

of the repayment deferral. The combined effect of these 

changes led to a net downward re-estimate of $1.7 billion.

• Default. In addition to the adjustments for the 

extension of the student loan repayment deferrals, the 

Department updated the data and incorporated actual 

unemployment rates from the Bureau of Labor Statistics 

and projected unemployment rates from OMB. The 

combined effect of these changes led to a net upward 

re-estimate of $3.0 billion.

• Repayment Plan Selection. The Department 

incorporated new repayment plan data through 

FY 2021. This update led to a downward re-estimate 

of $3.0 billion.
FY 2022 AGENCY FINANCIAL REPORT 71 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

• 2021 Cohort Assumption Changes. The technical re-estimate cannot reflect the impacts of certain assumption changes 

applicable to the current year loan cohort until the following fiscal year per OMB guidance. The current year’s reestimate includes a net upward adjustment of $7.7 billion for these current-year assumption changes attributable to the 

FY 2021 cohort.

• Interest on the Re-Estimate. Interest on re-estimates is the amount of interest that would have been earned or paid by each 

cohort on the subsidy re-estimate if the re-estimated subsidy had been included as part of the original subsidy estimate. 

The interest on the re-estimate calculated on the overall subsidy re-estimate resulted in a net downward re-estimate of 

$0.4 billion.

• Interactive Effects. The re-estimate includes a net upward re-estimate of $7.4 billion attributed to the interactive effects of 

the assumption changes described above. Each assumption described above is run independently. The interactive effect is a 

result of combining all assumptions together to calculate the final re-estimate.

• Discount Rates. The rates are used to calculate the NPV of the cash flows to create subsidy rates. Adjustments to the 2020 

and 2021 cohorts were calculated. All other cohorts are actual. The combined effect of these changes led to a net downward 

re-estimate of $16.6 billion.

Direct Loan Subsidy Rates—Cohort 2022 (Unaudited)

Interest 

 Differential Defaults Fees Other Total

Stafford 22.42% 0.83% -1.06% -14.21% 7.98%

Unsubsidized Stafford 23.21% 0.60% -1.06% -20.50% 2.25%

PLUS 10.39% 0.39% -4.23% -20.70% -14.15%

Consolidation 18.83% -0.70% 0.00% 6.40% 24.53%

Weighted Average Total 20.04% 0.19% -1.31% -12.86% 6.06%

*The Other component reflects costs associated with loan cancelations and the interactive effects of payment plans on the components of subsidy.

The subsidy rates disclosed pertain only to the current year’s cohorts. These rates cannot be applied to the direct loans 

disbursed during the current reporting year to yield the subsidy expense. The subsidy expense for new loans reported in the 

current year could result from disbursements of loans from both current year cohorts and prior-year cohorts. The subsidy 

expense reported in the current year also includes modifications and re-estimates. 

The subsidy costs of the Department’s student loan programs, especially the Direct Loan Program, are highly sensitive 

to changes in actual and forecasted interest rates. The formulas for determining program interest rates are established by 

statute; the existing loan portfolio has a mixture of borrower and lender rate formulas. Interest rate projections are based on 

probabilistic interest rate scenario inputs developed and provided by OMB.

Direct Loan Program Reconciliation of Allowance for Subsidy 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance of Allowance for Subsidy $ 273,864 $ 216,404 

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 7,292 1,588 

Adjustments

Loan Modifications 400,055 68,278 

Fees Received 1,611 1,562 

Loans Written Off (25,303) (8,354)

Subsidy Allowance Amortization (23,517) (29,154)

Other Activities (146) (485)

Ending Balance of Allowance for Subsidy Before Re-Estimates 633,856 249,839 

Net Upward/(Downward) Subsidy Re-estimates (21,937) 24,025 

Ending Balance of Allowance for Subsidy $ 611,919 $ 273,864 
FY 2022 AGENCY FINANCIAL REPORT 72 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The estimation process used to determine the amount of 

positive or negative subsidy expense each fiscal year, and 

subsequently the cumulative taxpayer cost of the program 

(allowance for subsidy), is subject to various external risk 

factors that often show strong interdependence with one 

another. These risks include uncertainty about changes 

in the general economy, changes in the legislative and 

regulatory environment, and changing trends in borrower 

performance related to contractual cash flows within the 

loan programs.

Due to the complexity of the Direct Loan Program, there is 

inherent projection risk in the process used for estimating 

long-term program costs. As stated, some uncertainty 

stems from potential changes in student loan legislation 

and regulations because these changes may fundamentally 

alter the cost structure of the program. Operational and 

policy shifts may also affect program costs by causing 

significant changes in borrower repayment timing. Actual 

performance may deviate from estimated performance, 

which is not unexpected given the long-term nature of 

these loans (cash flows may be estimated up to 40 years), 

and the multitude of projection paths and possible 

outcomes. The high percentage of borrowers in IDR plans 

has made projection of borrower incomes a key input for 

the estimation process. This uncertainty is directly tied 

to the macroeconomic climate and is another inherent 

program element that displays the interrelated risks facing 

the Direct Loan Program. The Department utilizes the best 

data available with modeling techniques that have been 

examined over time by several outside entities. Management 

has confidence over the estimates by using several different 

tools to analyze cost estimates. Re-estimates on the loan 

portfolio are performed twice a year ensuring that the most 

up to date data and models are used.

Loans written off result from borrowers having died, 

becoming disabled, or having a loan approved for discharge 

in bankruptcy or other type of discharge, including 

borrower defense discharges. The interest rate re-estimate 

reflects the cost of finalizing the Treasury borrowing rate 

to be used for borrowings received to fund the disbursed 

portion of the loan awards obligated. 

FEDER AL FAMILY EDUCATION LOAN PROGR AM

FFEL was established in FY 1965 and is a guaranteed loan program. As a result of the SAFRA Act, no new FFEL loans have 

been made since July 1, 2010. Federal guarantees on FFEL Program loans and commitments remain in effect for loans 

made before July 1, 2010, unless they were sold to the Department through an ECASLA authority (acquired FFEL loans), 

consolidated into a direct loan, or otherwise satisfied, discharged, or canceled.

FFEL Guaranteed Loans Outstanding

(Dollars in Billions)

2022 (Unaudited)

Outstanding Principal of Guaranteed Loans, Face Value $ 98.6 

Amount of Outstanding Principal Guaranteed $ 98.6 

As of September 30, 2022, the total principal value of guaranteed loans outstanding and the amount of that principal which 

is guaranteed is approximately $98.6 billion. Additionally, the FFEL Program guarantees outstanding interest balances. 

As of September 30, 2022, the interest balances outstanding for guaranteed loans held by lenders was approximately 

$4.2 billion. The Department’s total FFEL Program guarantees (principal and interest) are approximately $102.8 billion as of 

September 30, 2022. Of the total guaranteed amount, the Department would expect to pay a smaller amount to the guaranty 

agencies. The guarantee rates range from 75 to 100 percent of the principal and interest balance depending on the type of 

claim, when the loan was made, and the guaranty agency’s claim experience. For purposes of disclosing the Department’s total 

risk exposure for FFEL guarantees, the highest reimbursement rate of 100 percent is assumed.
FY 2022 AGENCY FINANCIAL REPORT 73 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Defaulted and acquired FFEL loans are accounted for as assets as shown in the following table.

FFEL Program Loan Receivables 

(Dollars in Millions)

Principal Accrued Interest

Allowance 

for Subsidy 

(Present Value)

Net

2022 (Unaudited)

DEFAULTED FFEL GUARANTEED LOANS

FFEL GSL Program (Pre-1992) $ 3,310 $ 4,966 $ (7,940) $ 336 

FFEL GSL Program (Post-1991) 34,298 8,226 (32,929) 9,595 

Total Defaulted FFEL Guaranteed Loans 37,608 13,192 (40,869) 9,931 

ACQUIRED FFEL LOANS

Loan Purchase Commitment 14,189 2,593 (7,945) 8,837 

Loan Participation Purchase 27,181 5,461 (12,952) 19,690 

ABCP Conduit 1,284 353 (293) 1,344 

Total Acquired FFEL Loans 42,654 8,407 (21,190) 29,871 

FFEL Program Loan Receivables $ 80,262 $ 21,599 $ (62,059) $ 39,802 

2021

DEFAULTED FFEL GUARANTEED LOANS

FFEL GSL Program (Pre-1992) $ 3,638 $ 5,739 $ (8,418) $ 959 

FFEL GSL Program (Post-1991) 32,612 9,302 (26,735) 15,179 

Total Defaulted FFEL Guaranteed Loans 36,250 15,041 (35,153) 16,138 

ACQUIRED FFEL LOANS

Loan Purchase Commitment 15,238 2,716 (4,822) 13,132 

Loan Participation Purchase 29,178 5,776 (7,316) 27,638 

ABCP Conduit 1,343 369 (374) 1,338 

Total Acquired FFEL Loans 45,759 8,861 (12,512) 42,108 

FFEL Program Loan Receivables $ 82,009 $ 23,902 $ (47,665) $ 58,246 
FY 2022 AGENCY FINANCIAL REPORT 74 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

FFEL Program Subsidy Expense 

(Dollars in Millions)

2022 (Unaudited) 2021

Loan Modification Costs

FFEL Guaranteed Loan Program

Net Modification Adjustment Transfer (Gain)/Loss $ (979) $ (302)

Loan Modifications 10,813 3,164 

Total FFEL Guaranteed Loan Program Loan Modifications 9,834 2,862 

Loan Purchase Commitment

Net Modification Adjustment Transfer (Gain)/Loss (319) - 

Loan Modifications 4,454 1,069 

Total Loan Purchase Commitment Loan Modifications 4,135 1,069 

Loan Participation Purchase

Net Modification Adjustment Transfer (Gain)/Loss (604) - 

Loan Modifications 9,286 1,879 

Total Loan Participation Purchase Loan Modifications 8,682 1,879 

Total Loan Modification Costs 22,651 5,810 

Upward/(Downward) Subsidy Re-Estimates

FFEL Loan Guarantee Program 1,391 7,226 

Loan Purchase Commitment (428) 208 

Loan Participation Purchase (1,577) 397 

Total FFEL Program Subsidy Re-Estimates (614) 7,831 

FFEL Program Subsidy Expense $ 22,037 $ 13,641 

Loan Modifications. Loan modifications for the FFEL 

Loan Program for FY 2022 included the following:

• Broad-Based Debt Relief. To address the financial harms 

of the pandemic by smoothing the transition back to 

repayment and helping borrowers at highest risk of 

delinquencies or default once payments resume, the 

Department provided broad-based debt relief. Borrowers 

with loans held by the Department who received a Pell 

Grant in college and meet the specified income limits are 

eligible for up to $20,000 in debt relief, while non-Pell 

Grant recipients who meet the specified income limits are 

eligible for up to $10,000 in relief. Applications for this 

debt relief launched on October 17, 2022. This action 

resulted in an upward modification cost of $18.1 billion 

in the FFEL Program. There was a net negative $2.0 

billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost for the FFEL Broad-Based Debt Relief 

to $16.1 billion.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals for 

Department-held loans through December 31, 2022.7

The extended relief for borrowers resulted in an 

7 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16)

upward modification cost of $5.8 billion. There was 

a net positive $0.1 billion modification adjustment 

transfer associated with this modification, bringing the 

total FY 2022 modification cost for the student loan 

repayment deferrals to $5.9 billion.

• Support for the Federal Student Loan Reserve Fund. 

The Department authorized the Guaranty Agencies to 

reimburse themselves from the Federal Fund for lost 

revenue that resulted from the student loan repayment 

deferrals. The reimbursements cover the share of what 

the Guaranty Agencies would have collected during 

the pandemic but for the suspension. This relief for the 

Guaranty Agencies resulted in an upward modification 

cost of $1.1 billion.

• Shift to Business Process Operations. The holder of 

defaulted federal student debt has historically entered 

into contracts with PCAs to collect on defaulted 

student loans. FSA transitioned PCA services to new 

BPO contracts in FY 2022, which is estimated to 

result in lower costs for future defaulted student loan 

collection activities. This action resulted in a downward 

modification cost (savings) of $0.6 billion in the FFEL 

Loan Program. 
FY 2022 AGENCY FINANCIAL REPORT 75 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

• Shift of FFEL Special Allowance to SOFR. For the purposes of Special Allowance Payment calculations on certain 

FFEL Program loans, lenders or beneficial owners were given the option to substitute the 1-month London Interbank 

Offered Rate (LIBOR) for the 3-month commercial paper rate. However, as LIBOR is expected to be discontinued by 

June 2023, lenders and servicers in the FFEL Program have begun switching to the Secured Overnight Financing Rate 

(SOFR), permitted by the Consolidated Appropriations Act of 2022. This shift resulted in an upward modification cost 

of $0.2 billion.

Net Upward/Downward Subsidy Re-Estimates. The total FFEL subsidy re-estimate decreased subsidy expense in FY 2022 

by $0.6 billion. The net upward re-estimates in the FFEL Program were due primarily to updated IDR model changes in the 

Loan Purchase Commitment and Loan Participation Purchase programs.

Reconciliation of Liabilities for Loan Guarantees 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance of Post-1991 FFEL Loan Guarantee Liability $ 7,252 $ 884 

Adjustments

Loan Modifications 9,834 2,862 

Interest Supplements Paid (351) (348)

Claim Payments to Lenders (3,657) (2,613)

Fees Received 780 1,014 

Interest on Accumulation on the Liability Balance (223) (863)

Other Activities (4,617) (910)

Net Upward Subsidy Re-estimates 1,391 7,226 

Ending Balance of Post-1991 FFEL Loan Guarantee Liability 10,409 7,252 

Pre-1992 FFEL Liquidating Account Liability for Loan Guarantees - - 

FFEL Liabilities for Loan Guarantees 10,409 7,252 

HEAL Liabilities for Loan Guarantees 246 244 

Total Liabilities for Loan Guarantees $ 10,655 $ 7,496 

Other activity includes negative special allowance collections, collections on defaulted FFEL loans, guaranty agency expenses, 

and loan cancellations due to death, disability, or bankruptcy.
FY 2022 AGENCY FINANCIAL REPORT 76 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Allowance for Subsidy Reconciliation for Acquired FFEL Loans 

(Dollars in Millions)

Loan Purchase 

Commitment

Loan Participation 

Purchase ABCP Conduit Total

2022 (Unaudited)

Beginning Balance of Allowance for Subsidy $ 4,822 $ 7,316 $ 374 $ 12,512 

Adjustments

Loan Modifications 4,135 8,682 - 12,817 

Subsidy Allowance Amortization (331) (787) (43) (1,161)

Loans Written Off (251) (658) (37) (946)

Other Activities (2) (24) (1) (27)

Ending Balance of Allowance for Subsidy 

Before Re-estimates 8,373 14,529 293 23,195 

Net Downward Subsidy Re-Estimates (428) (1,577) - (2,005)

Ending Balance of Allowance for Subsidy $ 7,945 $ 12,952 $ 293 $ 21,190 

2021

Beginning Balance of Allowance for Subsidy $ 4,102 $ 6,424 $ 434 $ 10,960 

Adjustments

Loan Modifications 1,069 1,879 - 2,948 

Subsidy Allowance Amortization (424) (952) (42) (1,418)

Loans Written Off (136) (424) (16) (576)

Other Activities 3 (8) (2) (7)

Ending Balance of Allowance for Subsidy 

Before Re-estimates 4,614 6,919 374 11,907 

Net Upward Subsidy Re-Estimates 208 397 - 605 

Ending Balance of Allowance for Subsidy $ 4,822 $ 7,316 $ 374 $ 12,512 

OTHER CREDIT PROGRAMS FOR HIGHER EDUCATION

Loans Receivables, Other Credit Programs for Higher Education 

(Dollars in Millions)

Principal Accrued Interest Allowance for Subsidy 

(Present Value) Net

2022 (Unaudited)

Federal Perkins Loans $ 997 $ 368 $ (299) $ 1,066 

TEACH Program Loans 790 71 (365) 496 

HEAL Program Loans 380 26 (7) 399 

Facilities Loan Programs 285 1 85 371 

Total $ 2,452 $ 466 $ (586) $ 2,332 

2021

Federal Perkins Loans $ 708 $ 197 $ (212) $ 693 

TEACH Program Loans 783 70 (256) 597 

HEAL Program Loans 388 26 (1) 413 

Facilities Loan Programs 181 1 82 264 

Total $ 2,060 $ 294 $ (387) $ 1,967 
FY 2022 AGENCY FINANCIAL REPORT 77 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Federal Perkins Loan Program. Loans made through the 

Federal Perkins Loan program were low-interest federal 

student loans for undergraduate and graduate students with 

exceptional financial needs. Schools made these Perkins loans 

to their students and are responsible for servicing the loans 

throughout the repayment term. Borrowers who undertake 

certain public, military, or teaching service employment are 

eligible to have all or part of their loans canceled. 

The Perkins Loan program was a revolving loan program 

where the loan repayments collected from former students 

were used to make new loans to current students. The 

Department provided most of the capital used by schools 

to make these loans to eligible students. Participating 

schools provided the remaining program funding. In 

some statutorily defined cases, funds were provided by the 

Department to reimburse schools for loan cancellations. 

The above schedule includes only Perkins loans that were 

assigned to the Department when schools discontinued 

their participation in the program. For these assigned 

Perkins loans, collections of principal, interest, and fees, 

net of amounts paid to cover contract collection costs 

totaled $393 million and $79 million for FY 2022 and 

FY 2021, respectively.

The Federal Perkins Loan Program Extension Act of 

2015 (Extension Act) eliminated the authorization 

for schools to make new Perkins loan disbursements 

as of September 30, 2017, and ended all Perkins loan 

disbursements by June 30, 2018. Before the authority for 

new Perkins loans ended, collections made by the schools 

would go back into each school’s Perkins fund to be used 

to make more loans. Schools are required to return to the 

Department the federal share of any excess beyond what is 

needed (excess liquid capital). 

Schools are not required to liquidate and close out their 

programs now that no new Perkins loans are being made. 

Schools continue to take in collections and are required 

to return the federal share of the capital that is collected 

to the Department on an annual basis. Schools returned 

$689 million and $850 million to the Department in 

FY 2022 and FY 2021, respectively, for the federal share 

of collected cash. 

Schools will continue to service outstanding Perkins 

loans to recover the money they contributed to their 

Perkins funds for as long as it is feasible to do so or until 

the eventual wind-down of their portfolios. Schools that 

liquidate and close out their programs must transfer any 

outstanding portfolio to the Department and liquidate any 

final cash. Most recent data from the 2022–23 reporting 

year shows a $2.6 billion outstanding principal balance on 

Perkins loans held by schools, and the Department’s equity 

interest on this portfolio is $2.2 billion.

The amounts collected by the Department annually for 

defaulted Perkins loans and for the return of the federal 

share of schools’ Perkins capital contributions are returned 

to the Treasury General Fund. (See Note 12)

TEACH Grant Program. The Department awards 

annual grants of up to $4,000 to eligible undergraduate 

and graduate students who agree to serve as full-time 

mathematics, science, foreign language, bilingual education, 

special education, or reading teachers at high-need 

schools for four years within eight years of graduation. 

The maximum lifetime grant for students is $16,000 for 

undergraduate programs and $8,000 for graduate programs. 

For students failing to fulfill the service requirement, the 

grants are converted to direct unsubsidized Stafford loans. 

The program is operated as a loan program under the 

FCRA for budget and accounting purposes since grants can 

be converted to direct loans.

Loan modifications for the TEACH Program for FY 2022 

included the following:

• Broad-Based Debt Relief. This action resulted in an upward 

modification cost of $55 million in the TEACH Program 

for Department-held TEACH Program loans. There was 

a net negative $4 million modification adjustment transfer 

associated with this modification, bringing the total FY 

2022 modification cost for the TEACH Broad-Based Debt 

Relief to $51 million.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals through 

December 31, 20228

 for Department-held TEACH 

Program loans. The extended relief for borrowers 

resulted in an upward modification cost of $16 million. 

There was a net positive $1 million modification, 

bringing the total FY 2022 modification for student 

loan repayment deferrals to $17 million.

• Shift to Business Process Operations. This action 

resulted in a downward modification cost (savings) of 

$2 million in the TEACH Program. 

8 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16)
FY 2022 AGENCY FINANCIAL REPORT 78 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

TEACH Subsidy Rates—Cohort 2022 (Unaudited)

Interest Differential Defaults Fees Other Total

Subsidy Rates 79.33% -0.14% 0.00% -36.62% 42.57%

*The Other component reflects costs associated with loan cancelations and the interactive effects of payment plans on the components of subsidy.

HEAL Program. The Department assumed responsibility in FY 2014 for the HEAL program and the authority to administer, 

service, collect, and enforce the program. The HEAL program is structured as required by the FCRA. A liquidating account is 

used to record all cash flows to and from the government resulting from guaranteed HEAL loans committed before 1992. All 

loan activity for 1992 and beyond is recorded in corresponding financing accounts. In FY 2022, the administration extended 

the student loan repayment deferrals through December 31, 2022.9

 The extended relief for borrowers resulted in an upward 

modification cost of $1.5 million. There was a net negative $0.1 million modification adjustment transfer associated with 

this modification, bringing the total modification cost to $1.4 million.

Facilities Loan Programs. The Department also administers the HBCU Capital Financing program. Since 1992, this 

program has given HBCUs access to financing for the repair, renovation, and in exceptional circumstances, the construction 

or acquisition of facilities, equipment, and infrastructure through federally insured bonds. The Department has authorized 

a designated bonding authority to make loans to eligible institutions, charge interest, and collect principal and interest 

payments. In compliance with HEA, as amended, the bonding authority maintains an escrow account to pay the principal and 

interest on bonds for loans in default. 

The FAFSA Simplification Act provided debt relief for most outstanding HBCU Capital Financing program loans as of 

December 27, 2020. This resulted in an upward loan modification cost of $1.6 billion during FY 2021.

The total amount of support for HBCU programs, along with any accrued interest and unpaid servicing fees, will be 

capitalized to principal and be reamortized through the original maturity date of June 1, 2037. The Department has 

approximately $271 million in outstanding borrowing from the FFB to support loans made to HBCU institutions and $617 

million obligated to support near term lending as of September 30, 2022. 

The Department administers the College Housing and Academic Facilities Loan program, the College Housing Loan program, 

and the Higher Education Facilities Loan program. From 1952 to 1993, these programs provided low-interest financing to 

IHEs for the construction, reconstruction, and renovation of housing, academic, and other educational facilities.

NOTE 6. Liabilities Not Covered by Budgetary Resources 

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Liabilities Not Covered By Budgetary Resources

Unfunded Leave $ - $ 52 $ - $ 52 

FECA Liabilities 3 15 2 14 

Total Liabilities Not Covered By Budgetary Resources 3 67 2 66 

Liabilities Not Requiring Budgetary Resources

Subsidy Due to Treasury General Fund 513 - 1,209 - 

Federal Perkins Loan Program 1,057 - 682 - 

Miscellaneous Receipt, Deposit Funds and 

Clearing Accounts (9) 453 38 289 

Custodial Liabilities 1 - 4 - 

Total Liabilities Not Requiring Budgetary Resources 1,562 453 1,933 289 

Total Liabilities Covered By Budgetary Resources 932,540 20,324 1,223,776 20,122 

Total Liabilities $ 934,105 $ 20,844 $ 1,225,711 $ 20,477 

9 Subsequent to the end of FY 2022, the administration announced an additional extension of the student loan repayment deferrals. (See Note 16) 
FY 2022 AGENCY FINANCIAL REPORT 79 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 7. Debt Associated with Loans

(Dollars in Millions)

Beginning 

Balance Borrowing Repayments Accrued Interest Ending Balance

2022 (Unaudited)

Debt to the Bureau of Public Debt

Direct Loan Program $ 1,142,195 $ 162,823 $ (467,578) $ - $ 837,440 

FFEL Program 78,254 3,283 (14,542) - 66,995 

Other Credit Programs for Higher Education 936 58 (353) - 641 

Total Debt to the Bureau of Public Debt 1,221,385 166,164 (482,473) - 905,076 

Debt to the Federal Financing Bank

Other Credit Programs for Higher Education 160 404 (293) - 271 

Total Debt Associated with Loans $ 1,221,545 $ 166,568 $ (482,766) $ - $ 905,347 

2021

Debt to the Bureau of Public Debt

Direct Loan Program $ 1,160,099 $ 119,950 $ (137,854) $ - $ 1,142,195 

FFEL Program 88,986 1,630 (12,362) - 78,254 

Other Credit Programs for Higher Education 784 308 (156) - 936 

Total Debt to the Bureau of Public Debt 1,249,869 121,888 (150,372) - 1,221,385 

Debt to the Federal Financing Bank

Other Credit Programs for Higher Education 1,518 192 (1,551) 1 160 

Total Debt Associated with Loans $ 1,251,387 $ 122,080 $ (151,923) $ 1 $ 1,221,545 

The Department borrows from Treasury’s Bureau of the Public Debt and the FFB to fund the disbursement of new loans and 

the payment of credit program outlays and related costs. During FY 2022, debt decreased 25.9 percent from $1,221.5 billion 

in the prior year to $905.3 billion. The Department makes periodic principal payments after considering the cash position and 

liability for future outflows in each cohort of loans, as mandated by the FCRA.

Approximately 92.5 percent of the Department’s debt, as of September 30, 2022, is attributable to the Direct Loan Program. 

Most of the new borrowing activity for the year was designated for funding new direct loan disbursements.

During FY 2022, TEACH net borrowing of $(96) million was used for the advance of new grants and repayments of principal 

made to Treasury. In FY 2022, debt in HBCU decreased by $81 million, or 19.5 percent. This total represents the aggregate of 

new bonds administered and repayments made on previously issued bonds.
FY 2022 AGENCY FINANCIAL REPORT 80 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 8. Subsidy Due to Treasury 

(Dollars in Millions)

2022 (Unaudited) 2021

Credit Program Downward Subsidy Re-estimates

Direct Loan Program $ 23,101 $ 303 

FFEL Program 3,351 1 

Total Credit Program Downward Subsidy Re-estimates 26,452 304 

Future Liquidating Account Collections

FFEL Program 513 1,209 

Total Future Liquidating Account Collections 513 1,209 

Total Subsidy Due to Treasury General Fund $ 26,965 $ 1,513 

NOTE 9. Other Liabilities

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Federal Perkins Loan Program $ 1,057 $ - $ 682 $ - 

Miscellaneous Receipt, Deposit Funds and 

Clearing Accounts (9) 453 38 289 

Liability for Advances and Prepayments 3 - 3 - 

Accrued Funded Payroll and Leave - 29 - 26 

Accrued Unfunded Annual Leave - 52 - 52 

Employer Contributions and Payroll Taxes Payable 12 1 10 1 

FECA Liabilities 3 15 2 14 

Custodial Liabilities 1 - 4 - 

Total Other Liabilities $ 1,067 $ 550 $ 739 $ 382 
FY 2022 AGENCY FINANCIAL REPORT 81 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 10. Net Cost of Operations

As required by the GPRA Modernization Act of 2010, the Department’s programs have been aligned with the goals presented 

in the Department’s Strategic Plan as shown below. Goal 5 in the Strategic Plan is considered a crosscutting goal, and therefore 

costs and revenues associated with these activities are included in the net cost programs associated with Goals 1 through 4. 

Programs associated with COVID-19 activities are administered by multiple program offices but are summarized separately. 

(See Note 11)

Program Offices Strategic Goal Net Cost Program

Net Cost Statement Program Alignment with Strategic Plan

OESE

OSERS

Other:

OCTAE

IES

OELA

OCR

Goal 1: Promote equity in student access to educational resources, opportunities, and 

inclusive environments.

Goal 2: Support a diverse and talented educator workforce and professional growth to strengthen 

student learning.

Goal 3: Meet students’ social, emotional, and academic needs.

Promote equity for 

prekindergarten 

through grade 12 

students with access 

to educational 

resources, 

opportunities, 

and inclusive 

environments

FSA

OSERS

Other:

OCTAE

IES

OPE

OCR

Goal 4: Increase postsecondary value by focusing on equity-conscious strategies to address 

access to high-quality institutions, affordability, completion, post-enrollment success, and support for 

inclusive institutions.

Increase 

postsecondary value 

by focusing on equity 

strategies to address 

access to affordability, 

completion, and postenrollment success

All Offices Goal 5: Enhance the Department’s internal capacity to optimize the delivery of its mission. Crosscutting Goal
FY 2022 AGENCY FINANCIAL REPORT 82 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Gross Costs and Earned Revenue by Program 

(Dollars in Millions)

2022 (Unaudited)

FSA OESE OSERS COVID-19 Other Total

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 12 STUDENTS WITH ACCESS TO EDUCATIONAL RESOURCES, 

OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS

Gross Cost

Grants $ - $ 22,592 $ 13,570 $ 51,529 $ 2,217 $ 89,908 

Other - 80 - 30 834 944 

Earned Revenue - - - - (68) (68)

Net Program Costs - 22,672 13,570 51,559 2,983 90,784 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY STRATEGIES TO ADDRESS ACCESS TO AFFORDABILITY, 

COMPLETION, AND POST-ENROLLMENT SUCCESS 

Direct Loan Program

Gross Cost

Credit Program Interest Expense 30,589 - - - - 30,589 

Subsidy Expense (23,758) - - 437,410 - 413,652 

Administrative Expenses 1,658 - - 59 - 1,717 

Earned Revenue

Subsidy Expense - - - (28,242) - (28,242)

Interest & Administrative Fees (7,072) - - - - (7,072)

Subsidy Amortization (23,517) - - - - (23,517)

Net Cost of Direct Loan Program (22,100) - - 409,227 - 387,127 

FFEL Program

Gross Cost

Credit Program Interest Expense 3,202 - - - - 3,202 

Subsidy Expense (924) - - 25,140 - 24,216 

Subsidy Amortization (Guaranteed Loans) (223) - - - - (223)

Guaranty Agencies 1,193 - - - - 1,193 

Administrative Expenses 158 - - 7 - 165 

Earned Revenue

Subsidy Expense (6) - - (2,173) - (2,179)

Interest & Administrative Fees (1,818) - - - - (1,818)

Subsidy Amortization (Acquired FFEL Loans) (1,161) - - - - (1,161)

Guaranty Agencies (5) - - - - (5)

Net Cost of FFEL Program 416 - - 22,974 - 23,390 

Other Credit Programs for Higher Education

Gross Cost

Credit Program Interest Expense 18 - - - 27 45 

Subsidy Expense 109 - - 74 2 185 

Administrative Expenses 3 - - - 1 4 

Earned Revenue

Subsidy Expense - - - - - -

Interest & Administrative Fees (5) - - - (23) (28)

Subsidy Amortization (13) - - - (4) (17)

Other (1,088) - - - - (1,088)

Net Cost of Other Credit Programs for Higher 

Education (976) - - 74 3 (899)

Non-Credit Programs

Gross Cost

Grants 28,102 11 3,434 26,780 4,242 62,569 

Other 155 - 2 6 282 445 

Earned Revenue - - - - (3) (3)

Net Cost of Non-Credit Programs 28,257 11 3,436 26,786 4,521 63,011 

Net Program Costs 5,597 11 3,436 459,061 4,524 472,629 

Total Program Gross Costs 40,282 22,683 17,006 541,035 7,605 628,611 

Total Program Earned Revenue (34,685) - - (30,415) (98) (65,198)

Net Cost $ 5,597 $ 22,683 $ 17,006 $ 510,620 $ 7,507 $ 563,413 
FY 2022 AGENCY FINANCIAL REPORT 83 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Gross Costs and Earned Revenue by Program 

(Dollars in Millions)

2021

FSA OESE OSERS COVID-19 Other Total

IMPROVE LEARNING OUTCOMES FOR ALL P-12 STUDENTS

Gross Cost

Grants $ - $ 24,328 $ 12,685 $ 20,965 $ 2,173 $ 60,151 

Other - 68 - 30 764 862 

Earned Revenue - - - - (118) (118)

Net Program Costs - 24,396 12,685 20,995 2,819 60,895 

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE OUTCOMES TO FOSTER ECONOMIC OPPORTUNITY, 

AND PROMOTE PRODUCTIVE CITIZENRY

Direct Loan Program

Gross Cost

Credit Program Interest Expense 32,957 - - - - 32,957 

Subsidy Expense 44,426 - - 52,181 - 96,607 

Administrative Expenses 1,516 - - 8 - 1,524 

Earned Revenue

Subsidy Expense (9) - - (2,707) - (2,716)

Interest & Administrative Fees (3,803) - - - - (3,803)

Subsidy Amortization (29,154) - - - - (29,154)

Net Cost of Direct Loan Program 45,933 - - 49,482 - 95,415 

FFEL Program

Gross Cost

Credit Program Interest Expense 3,538 - - - - 3,538 

Subsidy Expense 9,994 - - 4,006 - 14,000 

Subsidy Amortization (Guaranteed Loans) (863) - - - - (863)

Guaranty Agencies 79 - - - - 79 

Administrative Expenses 144 - - - - 144 

Earned Revenue

Subsidy Expense - - - (359) - (359)

Interest & Administrative Fees (1,257) - - - - (1,257)

Subsidy Amortization (Acquired FFEL Loans) (1,418) - - - - (1,418)

Guaranty Agencies (61) - - - - (61)

Net Cost of FFEL Program 10,156 - - 3,647 - 13,803 

Other Credit Programs for Higher Education

Gross Cost

Credit Program Interest Expense 22 - - - 105 127 

Subsidy Expense 104 - - 22 1,393 1,519 

Administrative Expenses 1 - - - 26 27 

Earned Revenue

Subsidy Expense (1) - - - - (1)

Interest & Administrative Fees (4) - - - (49) (53)

Subsidy Amortization (18) - - - (56) (74)

Other (932) - - - - (932)

Net Cost of Other Credit Programs for Higher 

Education (828) - - 22 1,419 613 

Non-Credit Programs

Gross Cost

Grants 29,117 24 3,721 32,015 3,707 68,584 

Other 130 - 3 3 274 410 

Earned Revenue (1) - - - (14) (15)

Net Cost of Non-Credit Programs 29,246 24 3,724 32,018 3,967 68,979 

Net Program Costs 84,507 24 3,724 85,169 5,386 178,810 

Total Program Gross Costs 121,165 24,420 16,409 109,230 8,442 279,666 

Total Program Earned Revenue (36,658) - - (3,066) (237) (39,961)

Net Cost $ 84,507 $ 24,420 $ 16,409 $ 106,164 $ 8,205 $ 239,705 
FY 2022 AGENCY FINANCIAL REPORT 84 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Credit Program Interest Expense and Revenues 

(Dollars in Millions)

Gross Interest 

Expense

Subsidy 

Amortization

Net Interest 

Expense

Gross Interest and Administrative 

Fee Revenue

Subsidy 

Amortization

Net Revenue

Intragovernmental

Other than 

IntragovernmentalIntragovernmental

Other than 

Intragovernmental

Other than 

Intragovernmental

2022 (Unaudited)

Direct Loan Program $ 30,589 $ - $ 30,589 $ 7,631 $ (559) $ 23,517 $ 30,589 

FFEL Program 3,202 (223) 2,979 1,935 (117) 1,161 2,979 

Other Credit Programs 

for Higher Education 45 - 45 22 6 17 45 

Total $ 33,836 $ (223) $ 33,613 $ 9,588 $ (670) $ 24,695 $ 33,613 

2021

Direct Loan Program $ 32,957 $ - $ 32,957 $ 4,230 $ (427) $ 29,154 $ 32,957 

FFEL Program 3,538 (863) 2,675 1,326 (69) 1,418 2,675 

Other Credit Programs 

for Higher Education 127 - 127 28 25 74 127 

Total $ 36,622 $ (863) $ 35,759 $ 5,584 $ (471) $ 30,646 $ 35,759 

Interest expense equals interest revenue plus administrative fees accrued for all credit programs due to subsidy amortization. 

Subsidy amortization is required by the FCRA and accounts for the difference between interest expense and revenue cash 

flows. For direct loans, the allowance for subsidy is adjusted with the offset to interest revenue. For guaranteed loans, the 

liability for loan guarantees is adjusted with the offset to interest expense.

Due to the COVID-19 relief actions to temporarily suspend nearly all required federal student loan payments and set 

borrower interest rates to zero percent, no new interest revenues were recognized in FY 2021 and FY 2022. However, interest 

adjustments and reapplication activities are included in the current year’s other than intragovernmental interest in the schedule 

above. Adjustments and reapplications cause loan activity during the period between the original effective date and the new 

processing date to be reversed and reposted. As a result, interest accrued in a prior year is reversed and typically reposted. 

The amount of interest reposted can be different than the original amount depending on the purpose of the adjustment and 

whether the adjustment or reapplication caused an increase or decrease to the principal balance as of the original effective date. 

These adjustments and reapplications resulted in net negative FY 2021 and FY 2022 interest revenues for the Direct Loan 

Program and the FFEL Program.
FY 2022 AGENCY FINANCIAL REPORT 85 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Grant Expenses by Appropriation

(Dollars in Millions)

2022 (Unaudited)

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 

12 STUDENTS WITH ACCESS TO EDUCATIONAL RESOURCES, 

OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS

COVID-19 $ 51,529 

Education for the Disadvantaged 16,635 

Special Education - IDEA Grants 13,570 

School Improvement Programs 4,156 

Impact Aid 1,369 

Innovation and Improvement 849 

English Language Acquisition 750 

Career, Technical, and Adult Education 433 

Hurricane Education Recovery 83 

Institute of Education Sciences 186 

Other 348 

Subtotal 89,908 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY 

STRATEGIES TO ADDRESS ACCESS TO AFFORDABILITY, 

COMPLETION, AND POST-ENROLLMENT SUCCESS 

COVID-19 $ 26,780 

Student Financial Assistance

Pell Grants 26,983 

Federal Work-Study Program 668 

Federal Supplemental Educational 

Opportunity Grants 

 451 

Rehabilitation Services 3,030 

Higher Education 2,551 

Career, Technical, and Adult Education 1,403 

Special Education - IDEA Grants 124 

Hurricane Education Recovery 11 

Institute of Education Sciences 44 

Other 524 

Subtotal 62,569 

Total Grant Costs $ 152,477 

2021

IMPROVE LEARNING OUTCOMES FOR ALL P-12 STUDENTS

COVID-19 $ 20,965 

Education for the Disadvantaged 16,171 

Special Education - IDEA Grants 12,685 

School Improvement Programs 6,069 

Impact Aid 1,484 

Innovation and Improvement 928 

English Language Acquisition 667 

Career, Technical, and Adult Education 425 

Hurricane Education Recovery 271 

Institute of Education Sciences 152 

Other 334 

Subtotal 60,151 

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE 

OUTCOMES TO FOSTER ECONOMIC OPPORTUNITY, 

AND PROMOTE PRODUCTIVE CITIZENRY

COVID-19 $ 32,015 

Student Financial Assistance

Pell Grants 26,852 

Federal Work-Study Program 1,145 

Federal Supplemental Educational 

Opportunity Grants 

 1,120 

Rehabilitation Services 3,347 

Higher Education 1,977 

Career, Technical, and Adult Education 1,440 

Special Education - IDEA Grants 122 

Hurricane Education Recovery 24 

Institute of Education Sciences 35 

Other 507 

Subtotal 68,584 

Total Grant Costs $ 128,735 

The Department has more than 100 grant programs. Descriptions of COVID-19 grant programs are provided in Note 11. 

Descriptions of non-COVID-19 major grant program areas are as follows: 

Student Financial Assistance

• Pell Grant—Provides need-based grants to students to promote access to postsecondary education. Grant amounts are 

dependent on the student’s expected family contribution; the cost of attendance (as determined by the institution); the 

student’s enrollment status (full-time or part-time); and whether the student attends for a full academic year or less. Pell 

Grants are the single largest source of grant aid for postsecondary education.

• Federal Work-Study Program—Provides funds by formula to enable eligible institutions to offer employment to students 

based on financial needs. The program is available to full-time or part-time students and encourages community service work. 

The work is often related to the student’s course of study. This program is administered by the schools that participate in 

the Federal Work-Study program. Hourly earnings under this program must be at least the federal minimum wage. Federal 

funding, in most cases, pays 75 percent of a student’s hourly wage, with the remaining 25 percent paid by the employer.

• Federal Supplemental Educational Opportunity Grant—Provides funds by formula to enable eligible institutions to offer 

grants to students based on need. Federal grants distributed under this program are administered directly by the financial 

aid office at each participating school.
FY 2022 AGENCY FINANCIAL REPORT 86 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Education for the Disadvantaged—Primarily consists of 

grants that provide financial assistance through SEAs to LEAs 

and public schools with high numbers or percentages of poor 

children to help ensure that all children meet challenging 

state academic content and student academic achievement 

standards. Also provides funds to states to support 

educational services to children of migratory farmworkers 

and fishers, and to neglected or delinquent children and 

youth in state-run institutions, attending community day 

programs, and correctional facilities.

Special Education—Consists primarily of IDEA Grants 

that provide funds by formula to states to assist them in 

providing a free appropriate public education in the least 

restrictive environment for children with disabilities ages 3 

through 21 and assists states in providing early intervention 

services for infants and toddlers birth through age 2 and their 

families. Also provides discretionary grants to IHEs and other 

nonprofit organizations to support research, demonstrations, 

technical assistance and dissemination, technology, personnel 

development and parent-training, and information centers. 

School Improvement Programs—Provides funds to SEAs 

to make competitive subgrants to LEAs that demonstrate the 

greatest need for the funds and the strongest commitment to 

use the funds to provide adequate resources to substantially 

raise the achievement of students in their lowestperforming schools.

Rehabilitation Services—Provides funds to states and 

other agencies to support vocational rehabilitation and 

other services to individuals with disabilities to maximize 

their employment, independence, and integration into the 

community and the competitive labor market.

Higher Education—Includes Institutional Service 

grants designed to improve academic quality, institutional 

management and fiscal stability, and strengthen physical 

plants and endowments of IHEs, with an emphasis on 

institutions that enroll large proportions of minority and 

financially disadvantaged students. Also includes Student 

Service grant programs supporting low-income, firstgeneration students and individuals with disabilities as they 

progress through the academic pipeline from middle school to 

graduate school, in addition to programs focused on college 

readiness, campus-based childcare, and graduate fellowships. 

Also includes International and Foreign Language Education 

grant and fellowship programs that strengthen foreign 

language instruction, area/international studies teaching 

and research, professional development for educators, 

and curriculum development at the K–12, graduate, and 

postsecondary levels.

Career, Technical, and Adult Education—Includes 

programs that are related to adult education and literacy, 

career and technical education, community colleges and 

correctional education.

Impact Aid—Provides funds to LEAs to replace the lost 

local revenue that would otherwise be to educate children of 

federal workers that live on government property, which is 

exempt from local property taxes that finance education.

Innovation and Improvement—Includes support for 

nontraditional programs that improve student achievement 

and attainment; supports the development of educational 

television and digital media programs targeted at preschool 

and early elementary school children and their families to 

promote early learning and school readiness, with a particular 

interest in reaching low-income children; and supports LEAs 

and their partners in implementing, evaluating, and refining 

tools and approaches for developing the noncognitive skills 

of middle school students to increase student success. 

English Language Acquisition—Provides funds primarily 

by formula to states to improve services for English learners. 

Also provides discretionary funds to support national 

activities, including professional development to increase 

the supply of high-quality teachers of English learners and a 

national clearinghouse on English language acquisition. 

Hurricane Education Recovery—Provides onetime emergency-relief grants, funded by supplemental 

appropriations acts enacted in response to specific events, 

to support schools and students directly affected by natural 

disasters. Assists students displaced or disrupted by such 

disasters as well as eligible agencies and institutions that 

require funding to cover unexpected expenses and return to 

normal operations. 

Institute of Education Sciences—Provides funding to: 

support research, development, and dissemination activities 

that provide parents, teachers, and schools with evidencebased information on effective educational practices; 

support statistical data collection activities conducted by 

the National Center for Education Statistics; support the 

ongoing National Assessment of Educational Progress 

and the National Assessment Governing Board; support 

research to build the evidence base on improving special 

education and early intervention services and outcomes for 

infants, toddlers, and children with disabilities; and support 

studies, evaluations, and assessments related to IDEA.
FY 2022 AGENCY FINANCIAL REPORT 87 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 11. COVID-19 Activity

Congress passed multiple COVID-19 relief bills in 

FY 2020 and FY 2021 including the following that 

provided the Department with a total of 282.5 billion of 

direct appropriation funding for educational purposes:

• Coronavirus Aid, Relief, and Economic Security Act of 

2020 (CARES Act) $31.0 billion.

• Coronavirus Response and Relief Supplemental 

Appropriations Act of 2021 (CRRSAA) $82.0 billion.

• American Rescue Plan Act of 2021 (ARP) $169.5 billion. 

These appropriations funded a variety of programs 

administered primarily through grant programs as 

described starting on page 90. The largest component of 

the education funding provided by the COVID-19 relief 

appropriations established the Education Stabilization 

Fund which included the (1) Elementary and Secondary 

School Emergency Relief Fund, (2) Higher Education 

Emergency Relief Fund, (3) Governor’s Emergency 

Education Relief Fund, and (4) funds for outlying areas. 

The Education Stabilization Fund is being distributed to 

recipients through various grant programs.

The COVID-19 relief legislation and administrative actions 

also provided support for student loan borrowers by:

• Proposing broad-based debt relief to address the 

financial harms of the pandemic by smoothing the 

transition back to repayment and helping borrowers 

at the highest risk of delinquencies or default once 

payments resume. Applications for this debt relief 

launched on October 17, 2022.

• Suspending nearly all federal student loan payments 

through December 31, 2022,10 interest free. 

• Authorizing Guaranty Agencies to reimburse themselves 

from the Federal Student Loan Reserve Fund for lost 

revenue that resulted from student loan repayment 

deferrals. This reimbursement covers the share of what a 

guaranty agency might have reasonably collected during 

the pandemic, but for the suspension.

• Making temporary changes to the PSLF program 

through a Limited PSLF Waiver to allow student 

borrowers to get credit for payments made while 

working for a qualifying employer, regardless of loan 

type or repayment plan. 

10 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16) 

• Addressing issues with IDR payment counting by 

allowing any borrower who made IDR-qualifying 

payments to count toward IDR, regardless of 

repayment plan.

Funding for each of these actions was provided through 

indefinite appropriations, and the cost impacts were 

recorded as loan modifications. These COVID-19 loan 

modifications are a component of a subsidy expense that 

reduced the overall credit program loan receivable balances. 

(See Notes 5 and 10)

In addition, other COVID-19 relief provided to student 

loan borrowers included the following:

• The Department stopped all federal wage garnishments 

and collection actions for borrowers with federally held 

loans in default.

• The Department provided relief for certain borrowers 

who received student loan discharges due to total and 

permanent disability. Unless it is through a process 

with the VA, borrowers receiving this discharge are, by 

regulation, subject to a three-year monitoring period 

during which they must provide the Department with 

information about their earnings from employment. 

Per regulation, borrowers whose earnings exceed certain 

thresholds and borrowers who do not meet certain other 

criteria will have their loans reinstated. The Department 

provided relief to ensure no borrowers are at risk of 

having their loans reinstated, meaning they would have 

to repay their debt—for failure to provide earnings 

information during the COVID-19 emergency. This 

change was made retroactive to March 13, 2020, the 

start of the COVID-19 national emergency.

• The Department requested a waiver from the Small 

Business Administration to immediately help nearly 

30,000 small business owners in the Paycheck 

Protection program who faced difficulties because they 

were delinquent or in default on a federal student loan.

The following tables provide more detail on the 

Department’s funded COVID-19 activity for FY 2022 and 

FY 2021. Unobligated CARES Act balances as of the end 

of FY 2021 totaling $18,515 million were carried forward 

to FY 2022 and are reported in the FY 2022 COVID-19 

schedule as Unobligated Balance from Prior Year Budget 

Authority (Net) together with $104 million of downward 

adjustments recorded in FY 2022 to prior years’ CARES 

Act obligations. Obligated and unobligated COVID-19 

funds remaining to be disbursed as of the end of FY 

2021 totaled $222.0 billion. Obligated and unobligated 

COVID-19 funds remaining to be disbursed as of the end 

of FY 2022 totaled $141.3 billion. (See Note 3)
FY 2022 AGENCY FINANCIAL REPORT 88 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19 Activity

(Dollars in Millions)

2022 (Unaudited)

Unobligated 

Balance from 

Prior Year 

Budget Authority 

(Net)

Appropriations Appropriations

Transferred Obligated Unobligated Outlays

Transfers 

to General 

Fund

Net Costs 

(See Note 

10)

COVID-19 Direct Appropriations

Education Stabilization Fund

Elementary and Secondary School 

Emergency Relief Fund

Allocations to States $ 14,937 $ - $ - $ 14,936 $ 1 $ 46,889 $ - $ 48,415 

Assistance for Homeless 

Children and Youth 1 - - - 1 87 - 87 

Higher Education Emergency 

Relief Fund

Higher Education Funds to 

Students 252 (132) - 38 82 12,900 - 9,629 

Higher Education Funds to 

Institutions 362 (311) - 44 7 14,015 - 13,994 

Proprietary Institutions Grant 

Funds for Students 237 - - - 237 281 - 279 

Schools Serving Low-Income 

Students, HBCUs, and Minority 

Serving Institutions (MSIs) 

MSIs 44 - - 16 28 515 - 509 

HBCUs 1 - - - 1 1,028 - 1,034 

Tribally Controlled Colleges 

and Universities (TCCUs) 3 - - 3 - 105 - 105 

Strengthening Institutions 

Program 66 - - 11 55 289 - 291 

Fund for the Improvement of 

Postsecondary Education 112 - - - 112 21 - 21 

Supplemental Assistance 

and Support 85 - - 198 (113) 120 - 114 

Governor’s Emergency Education 

Relief Fund

Emergency Education 

Relief Grants - - - - - 1,493 - 1,488 

Emergency Assistance to NonPublic Schools Program 2,173 - - 2,173 - 1,168 - 1,166 

Outlying Areas - - - - - 257 - 257 

Bureau of Indian Education - - - - - - - -

Discretionary Grants - - - - - 55 - 55 

Total Education 

Stabilization Fund 18,273 (443) - 17,419 411 79,223 - 77,444 

Individuals with Disabilities 

Education Act Grants 39 - - 39 - 809 - 810 

School Improvement Programs 57 - - 30 27 29 - 29 

American Indian Resilience in 

Education 20 - - 7 13 2 - 2 

Safe Schools & 

Citizenship Education - - - - - - - -

Gallaudet University - - - - - 15 - 15 

Howard University - - - - - - - -

National Technical Institute for the 

Deaf - - - - - 9 - 9 

HBCU Loan Deferment 30 - - - 30 - - -

Student Aid Administration 64 - - 61 3 66 - 68 

Program Administration 22 - - 13 9 16 - 18 

Inspector General 13 - - 6 7 6 - 6 

Institute of Education Sciences 101 - - 37 64 14 - 13 

Total COVID-19 Direct 

Appropriations 18,619 (443) - 17,612 564 80,189 - 78,414 

COVID-19 Indirect Appropriations 

(See Note 5)

Loan Deferral Extension - 55,343 - 55,343 - 55,343 916 54,427 

Support for the Federal Student 

Loan Reserve Fund - 1,091 - 1,091 - 1,091 24 1,067 

PSLF Waiver - 10,152 - 10,152 - 10,152 997 9,155 

IDR Waiver - 16,443 - 16,443 - 16,443 2,365 14,078 

Broad-Based Debt Relief - 379,596 - 379,596 - 379,596 26,117 353,479 

Total COVID-19 Indirect 

Appropriations - 462,625 - 462,625 - 462,625 30,419 432,206 

Total COVID-19 Activity $ 18,619 $ 462,182 $ - $ 480,237 $ 564 $ 542,814 $ 30,419 $ 510,620 
FY 2022 AGENCY FINANCIAL REPORT 89 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19 Activity

(Dollars in Millions)

2021

Unobligated 

Balance from 

Prior Year 

Budget Authority 

(Net)

Appropriations Appropriations

Transferred Obligated Unobligated Outlays

Transfers 

to General 

Fund

Net Costs 

(See Note 

10)

COVID-19 Direct Appropriations

Education Stabilization Fund

Elementary and Secondary School 

Emergency Relief Fund

Allocations to States $ - $ 176,286 $ - $ 161,349 $ 14,937 $ 19,021 $ - $ 20,035 

Assistance for Homeless 

Children and Youth - 800 - 799 1 1 - 1 

Higher Education Emergency 

Relief Fund

Higher Education Funds to 

Students 113 24,066 - 23,982 197 10,838 - 14,097 

Higher Education Funds to 

Institutions 155 32,157 100 32,084 328 15,225 - 15,226 

Proprietary Institutions Grant 

Funds for Students - 1,077 - 843 234 473 - 475 

HBCUs, and Minority Serving 

Institutions (MSIs) 

MSIs 5 1,207 - 1,169 43 391 - 397 

HBCUs - 2,576 - 2,575 1 791 - 793 

Tribally Controlled Colleges 

and Universities (TCCUs) - 225 - 223 2 36 - 36 

Strengthening Institutions 

Program 9 663 - 606 66 231 - 231 

Fund for the Improvement of 

Postsecondary Education 203 - - 91 112 140 - 140 

Supplemental Assistance 

and Support - 311 - 226 85 5 - 12 

Governor’s Emergency Education 

Relief Fund

Emergency Education 

Relief Grants 48 1,303 - 1,351 - 1,055 - 1,061 

Emergency Assistance to NonPublic Schools Program - 5,500 - 3,327 2,173 277 - 280 

Outlying Areas - 1,259 - 1,259 - 114 - 114 

Bureau of Indian Education - 409 (409) - - - - - 

Discretionary Grants - - - - - 16 - 16 

Total Education 

Stabilization Fund 533 247,839 (309) 229,884 18,179 48,614 - 52,914 

Individuals with Disabilities 

Education Act Grants - 3,030 - 2,991 39 - - - 

School Improvement Programs - 170 - 113 57 - - - 

American Indian Resilience in 

Education - 20 - - 20 - - - 

Safe Schools & 

Citizenship Education 100 - (100) - - - - - 

Gallaudet University - 30 - 30 - 16 - 16 

Howard University - 55 - 55 - 44 - 44 

National Technical Institute for 

the Deaf - 30 - 30 - 6 - 6 

HBCU Loan Deferment 30 - - - 30 - - - 

Student Aid Administration 24 121 - 91 54 8 - 8 

Program Administration 4 30 - 12 22 11 - 11 

Inspector General 7 10 - 4 13 2 - 2 

Institute of Education Sciences - 128 - 27 101 20 - 20 

Total COVID-19 Direct 

Appropriations 698 251,463 (409) 233,237 18,515 48,721 - 53,021 

COVID-19 Indirect Appropriations 

(See Note 5)

Student Loan Deferrals - 56,209 - 56,209 - 56,209 3,066 53,143 

Total COVID-19 Indirect 

Appropriations - 56,209 - 56,209 - 56,209 3,066 53,143 

Total COVID-19 Activity $ 698 $ 307,672 $ (409) $ 289,446 $ 18,515 $ 104,930 $ 3,066 $ 106,164 
FY 2022 AGENCY FINANCIAL REPORT 90 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Elementary and Secondary School Emergency Relief 

(ESSER) Fund—Supports continued learning for 

K–12 students whose education has been disrupted 

by COVID-19.

• Allocations to States—Provides grants to states based 

on the same proportion that each state receives under 

the Elementary and Secondary Education Act (ESEA) 

Title 1-A. States must distribute at least 90 percent 

of funds to local educational agencies based on their 

proportional share of ESEA Title I-A funds. States have 

the option to reserve 10 percent of the allocation for 

emergency needs as determined by the state to address 

issues responding to the COVID-19 pandemic. 

• Assistance for Homeless Children and Youth—

Provides grants to support the specific needs of 

homeless children and youth with wraparound services 

to address the challenges of COVID-19, and to enable 

homeless children and youth to attend school and fully 

participate in school activities.

Higher Education Emergency Relief Fund (HEERF)—

Provides grants for IHEs to address needs directly related 

to COVID-19, including transitioning courses to distance 

education and granting aid to students for educational 

costs such as food, housing, course materials, health 

care, and childcare. The fund is distributed through the 

following grant programs. 

• Higher Education Funds to Students—Provides 

grants to IHEs to give emergency financial aid grants 

to students whose lives have been disrupted, many of 

whom are facing financial challenges and struggling to 

make ends meet. Institutions have the responsibility of 

determining how grants will be distributed to students, 

how the amount of each student grant is calculated, and 

the development of any instructions or directions that 

are provided to students about the grant. 

• Higher Education Funds to Institutions—Provides 

grants to IHEs which can use up to one-half of 

the total funds to cover any costs associated with 

significant changes to the delivery of instruction due 

to COVID-19. Institutions are encouraged to use the 

funds to expand remote learning programs, build IT 

capacity to support such programs, and train faculty 

and staff to operate effectively in a remote learning 

environment. They are also encouraged to use the funds 

to expand support for students with the most significant 

financial needs arising from the COVID-19 pandemic, 

including eligible expenses under a student’s cost of 

attendance, such as course materials, technology, health 

care, childcare, food, and housing.

• Proprietary Institutions Grant Funds for Students—

Provides grants to proprietary IHEs to give emergency 

financial aid grants to students, which may be used for 

any component of the student’s cost of attendance or 

for emergency costs that arise due to COVID-19, such 

as tuition, food, housing, health care (including mental 

health care) or childcare.

• Minority Serving Institutions (MSIs)—Provides grants 

to MSIs to defray institutional expenses, which may 

include lost revenue, reimbursement for expenses already 

incurred, technology costs associated with the transition 

to distance education, faculty and staff training, and 

payroll. MSIs include institutions that are eligible to 

participate in the following programs: Predominantly 

Black Institutions, Alaska Native and Native HawaiianServing Institutions, Asian American and Native 

American Pacific Islander-Serving Institutions, Native 

American-Serving Nontribal Institutions, Developing 

Hispanic-Serving Institutions program, and Promoting 

Postbaccalaureate Opportunities for Hispanic 

Americans. MSIs are encouraged to use as much of 

these funds as possible to provide students eligible for 

financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Historically Black Colleges and Universities 

(HBCUs)—Provides grants to HBCUs to defray 

institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. HBCUs are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Tribally Controlled Colleges and Universities 

(TCCUs)—Provides grants to TCCUs to defray 

institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. TCCUs are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology. 

• Strengthening Institutions Program—Provides grants 

to institutions that are not participating in the MSI 

programs but have at least 50 percent of their degree 
FY 2022 AGENCY FINANCIAL REPORT 91 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

students receiving need-based assistance under Title 

IV of the Higher Education Act or have a substantial 

number of enrolled students receiving Pell Grants and 

have low educational and general expenditures. These 

funds can be used to defray institutional expenses, 

which may include lost revenue, reimbursement for 

expenses already incurred, technology costs associated 

with the transition to distance education, faculty 

and staff training, and payroll. These institutions are 

encouraged to use as much of these funds as possible 

to provide students eligible for financial aid with grants 

for any component of the student’s cost of attendance, 

including tuition, course materials, and technology. 

• Fund for the Improvement of Postsecondary 

Education (FIPSE)—Provides grants that support 

projects to encourage innovative reform and expand 

education opportunities to underrepresented groups. 

Institutions can use these additional FIPSE funds to 

defray institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. Institutions are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Supplemental Assistance and Support—Provides 

discretionary grants to institutions of higher education 

with unmet needs related to recovery from disruptions 

in the finances, day-to-day operations, instruction, and 

student support due to COVID-19.

Governor’s Emergency Education Relief (GEER) 

Fund—Provides grants to state governors to ensure 

education continues for students of all ages impacted by 

the COVID-19 national emergency. The GEER Fund 

is a flexible emergency block grant designed to enable 

governors to decide how best to meet the needs of 

students, schools (including charter schools and non-public 

schools), postsecondary institutions, and other educationrelated organizations.

• Emergency Education Relief Grants—Provide 

grants to state governors for the purpose of providing 

local educational agencies (LEA), IHEs, and other 

education-related entities with emergency assistance as a 

result of COVID-19.

• Emergency Assistance to Non-Public Schools 

Program—Provides grants to state governors to provide 

services or assistance to eligible non-public schools to 

address COVID-19 impacts.

Outlying Areas, Bureau of Indian Education, and 

Discretionary Grants—Provides funding for outlying areas 

and states with the highest COVID-19 burdens. These 

funds are distributed through the following grant programs.

• Outlying Areas—Provides grants for the outlying 

areas of the United States, specifically: the U.S. Virgin 

Islands, Guam, the Commonwealth of the Northern 

Mariana Islands, and American Samoa. Money made 

available from these grants will be used in response 

to COVID-19 and was calculated via formula. Each 

outlying area received two block grants from the 

Education Stabilization Fund—one to the governor’s 

offices and one to the SEA.

• Bureau of Indian Education—Provides funding for 

programs operated by the Bureau of Indian Education 

(BIE), in consultation with the Secretary of Interior. The 

Department transferred these funds to BIE.

• Discretionary Grants—Provides grants to states to use 

to create adaptable, innovative learning opportunities 

for K–12 and postsecondary learners in response to the 

COVID-19 national emergency. 

In addition to the Education Stabilization Fund, 

COVID-19 appropriations also included funding for 

the following.

Individuals with Disabilities Education Act Grants—

Provides grants to states to help them recover from the 

impact of the COVID-19 and to safely reopen schools and 

sustain safe operations. These grants assist states in providing 

a free, appropriate public education in the least restrictive 

environment for children with disabilities ages 3 through 21 

and assists states in providing early intervention services for 

infants and toddlers birth through age 2 and their families.

School Improvement Programs—Provides additional 

funds to SEAs to make competitive subgrants to LEAs that 

demonstrate the greatest need for the funds and the strongest 

commitment to use the funds to provide adequate resources 

to substantially raise the achievement of students in their 

lowest-performing schools.
FY 2022 AGENCY FINANCIAL REPORT 92 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

American Indian Resilience in Education—Provides 

grants to tribal education agencies for activities authorized 

under Section 6121(c) of the Elementary and Secondary 

Education Act of 1965. Those activities include a broad range 

of direct services to Indian children and youth, their teachers, 

and families.

Safe Schools & Citizenship Education—The CARES 

Act provided additional funding for this program to 

prevent, prepare for, and respond to COVID-19, including 

disinfecting affected schools, and assisting in counseling and 

distance learning. The CRRSAA subsequently authorized 

these additional funds to be reallocated to the HEERF. 

Gallaudet University—Provides funding to help address 

challenges associated with COVID-19.

Howard University—Provides funding to help address 

challenges associated with COVID-19.

HBCU Loan Deferment—Provides funding for 

the deferment of loan repayments for HBCUs that 

were provided low-cost capital financing for campus 

maintenance and construction projects. During the period 

of the deferment, the Department was required to pay 

the required principal and interest due. At the end of the 

deferment, the HBCU is required to repay the Department 

for payments made on its behalf.

Student Aid Administration—Provides funding for the 

additional costs of administering the COVID-19 provisions 

affecting student financial aid programs.

Program Administration—Provides funding to 

the Department to fund costs of administrating the 

COVID-19 appropriations.

Inspector General—Provides funding for salaries and 

expenses necessary for Office of Inspector General oversight 

and audit of COVID-19 programs, grants, and projects.

Institute of Education Sciences—Provides funding for 

research to address learning loss caused by the coronavirus 

and to disseminate findings to SEAs, LEAs, and others, 

and for carrying out the National Assessment of Educational 

Progress Authorization Act.

NOTE 12. Statements of Budgetary Resources

The SBR compares budgetary resources with the status of those resources. As of September 30, 2022, budgetary resources 

were $902.0 billion, and net agency outlays were $639.4 billion. As of September 30, 2021, budgetary resources were $689.6 

billion, and net agency outlays were $260.5 billion.

Net Adjustments to Unobligated Balances Brought Forward, October 1

(Dollars in Millions)

2022 (Unaudited) 2021

Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Prior Year Unobligated Balance, End of Year (Total) $ 39,858 $ 22,252 $ 19,904 $ 22,726 

Recoveries of Prior Year Unpaid Obligations 3,648 14,486 1,317 16,676 

Borrowing Authority Withdrawn - (11,997) - (13,566)

Actual Repayments of Debt, Prior-Year Balances - (2,767) - (5,444)

Actual Capital Transfers to the Treasury General Fund (81) - (97) -

Canceled Authority (587) - (354) -

Downward Adjustments of Prior-Year Paid Delivered Orders 280 241 3 257 

Other Differences 13 1 (1) 1 

Unobligated Balance from Prior Year Budget Authority (Net) $ 43,131 $ 22,216 $ 20,772 $ 20,650 

During the periods ended September 30, 2022, and September 30, 2021, certain adjustments were made to the balance of 

unobligated budgetary resources available as of October 1, 2021, and October 1, 2020. These adjustments included, among 

other things, recoveries of prior year unpaid obligations that result from downward adjustments of undelivered orders that 

were obligated in a prior fiscal year.
FY 2022 AGENCY FINANCIAL REPORT 93 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Unused Borrowing Authority 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance - Unused Borrowing Authority $ 41,978 $ 48,230 

Current Year Borrowing Authority 178,717 129,407 

Funds Drawn from Treasury (166,568) (122,093)

Borrowing Authority Withdrawn (11,997) (13,566)

Decreases to Borrowing Authority (21) - 

Ending Balance - Unused Borrowing Authority $ 42,109 $ 41,978 

The Department is given authority to draw funds from Treasury to finance the Direct Loan, FFEL, and other loan programs. 

Unused borrowing authority is a budgetary resource and is available to support obligations for these programs. The 

Department periodically reviews its borrowing authority balances in relation to its obligations, resulting in the withdrawal of 

unused amounts.

Undelivered Orders at the End of the Period

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental

Unpaid $ 301 $ 262,438 $ 252 $ 321,379 

Paid 85 480 104 1,287 

Undelivered Orders $ 386 $ 262,918 $ 356 $ 322,666 

Undelivered orders represent the amount of goods and/or services ordered that have not been actually or constructively 

received. Paid amounts include any orders that may have been prepaid or advanced but for which delivery or performance has 

not yet occurred.

Distributed Offsetting Receipts

(Dollars in Millions)

2022 (Unaudited) 2021

Negative Subsidies and Downward Re-estimates of Subsidies:

Direct Loan Program $ 27,334 $ 4,809 

FFEL Program 546 589 

HEAL Program - 25 

TEACH Program 5 3 

Facilities Loan Programs 291 207 

Total Negative Subsidies and Downward Re-estimates of Subsidies 28,176 5,633 

Repayment of Perkins Loans and Capital Contributions 707 866 

Other 203 126 

Distributed Offsetting Receipts $ 29,086 $ 6,625 

Distributed offsetting receipts are amounts that the Department collects that are used to offset or reduce the Department’s 

budget outlays. The Department’s outlays are measured on both a gross and net basis, with net outlays being reduced by 

offsetting receipts.

Most of the distributed offsetting receipts line item on the SBR represents amounts paid from the Direct Loan Program and 

FFEL Program financing accounts to Treasury General Fund receipt accounts for downward current fiscal year executed 

subsidy re-estimates and negative subsidies.
FY 2022 AGENCY FINANCIAL REPORT 94 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Explanation of Differences between the SBR and the Budget of the U.S. Government 

(Dollars in Millions) (Unaudited)

Budgetary 

Resources

New Obligations 

and Upward 

Adjustments 

(Total)

Distributed 

Offsetting 

Receipts

Net Outlays

Combined Statements of Budgetary Resources $ 689,606 $ 627,496 $ 6,625 $ 260,451 

Expired Funds (2,494) (383) - - 

FFEL Guaranty Agency Amounts Included in the President's Budget 3,837 3,837 - - 

Distributed Offsetting Receipts - - - 6,625 

Other (5) (1) (1) (2)

Budget of the United States Government1 $ 690,944 $ 630,949 $ 6,624 $ 267,074 

1

 Amounts obtained from the Appendix, Budget of the United States Government, FY 2023

The FY 2024 President’s Budget, which presents the actual amounts for the year ending September 30, 2022, has not been 

published as of the issue date of these financial statements. The FY 2024 President’s Budget is scheduled for release in 

February 2023 and will be made available on OMB’s website. The table above reconciles the FY 2021 SBR to the FY 2023 

President’s Budget (FY 2021 actual amounts) for budgetary resources, new obligations and upward adjustments, distributed 

offsetting receipts, and net outlays.

Reconciling differences exist because the President’s Budget excludes expired funds. Additionally, the President’s Budget 

includes a public enterprise fund that reflects the gross obligations by the FFEL Program for the estimated activity of the 

consolidated federal fund of the guaranty agencies. Ownership by the federal government is independent of the actual control 

of the assets. Since the actual operation of the federal fund is independent from the Department’s direct control, budgetary 

resources and new obligations and upward adjustments are estimated and disclosed in the President’s Budget to approximate 

the gross activities of the combined federal fund. Amounts reported on the SBR for the federal fund are compiled by 

combining all guaranty agencies’ annual reports to determine a net valuation amount for the federal fund.
FY 2022 AGENCY FINANCIAL REPORT 95 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 13. Reconciliation of Net Cost to Net Outlays

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

Other than 

IntragovernmentalTotal Intragovernmental

Other than 

IntragovernmentalTotal

Net Cost $ 24,894 $ 538,519 $ 563,413 $ 31,606 $ 208,099 $ 239,705 

Components of Net Cost Not Part of 

Budgetary Outlays:

Year-End Credit Reform Subsidy 

Accrual Re-Estimates - 16,954 16,954 - (28,399) (28,399)

Loan Modification Adjustment Transfers - 27,665 27,665 - 2,837 2,837 

Property and Equipment Depreciation 

Expense - - - - (1) (1)

Increase/(Decrease) in Assets:

Loans Receivables, Net (Non-FCRA) - (255) (255) - (62) (62)

Other Assets (19) (65) (84) (13) 22 9

(Increase)/Decrease in Liabilities:

Accounts Payable - 397 397 (1) (597) (598)

Loan Guarantee Liabilities (Non-FCRA) - - - - (2) (2)

Other Liabilities 366 2,312 2,678 171 (5,728) (5,557)

Financing Sources:

Imputed Costs (38) - (38) (36) - (36)

Total Components of Net Cost Not Part of 

Budgetary Outlays 309 47,008 47,317 121 (31,930) (31,809)

Components of Budget Outlays Not Part of 

Net Cost:

Effect of Prior-Year Credit Reform 

Subsidy Re-estimates - 28,399 28,399 - 52,571 52,571 

Acquisition of Capital Assets - - - - 1 1 

Financing Sources:

 Donated Revenue - (1) (1) - (1) (1)

Total Components of Budget Outlays Not 

Part of Net Cost - 28,398 28,398 - 52,571 52,571 

Miscellaneous Items:

Other Loan Activities (Non-FCRA) (76) - (76) (89) - (89)

Non-Entity Activity 338 - 338 82 - 82

Non-Exchange Revenues (21) - (21) (9) - (9)

Total Miscellaneous Items 241 - 241 (16) - (16)

Budgetary Agency Outlays, Net $ 639,369 $ 260,451 

This reconciliation explains the relationship between the Department’s net cost and its net outlays. Reconciling items result 

from transactions that did not result in a current period outlay but did result in a current period cost, and current period 

outlays that did not result in a current period cost. 

Disbursements for new FCRA loans and collections of principal and interest on existing FCRA loans are recorded in 

nonbudgetary credit reform financing accounts. These disbursements and collections are reported on the Statement of 

Budgetary Resources as disbursements, net, and not as agency outlays, net. Since these disbursements and collections affect 

neither net cost of operations nor agency outlays, net, they are excluded from this reconciliation as are any increases or 

decreases in the FCRA loan receivable balances. 
FY 2022 AGENCY FINANCIAL REPORT 96 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The two major reconciling differences, both associated 

with the Department’s FCRA loan programs, are for 

Year-End Credit Reform Subsidy Accrual Re-Estimates 

(current-year subsidy accrual costs) and Effect of Prior-Year 

Credit Reform Subsidy Re-Estimates (current-year budget 

subsidy costs).

• Current-year subsidy accrual costs are the portion of the 

current-year loan subsidy re-estimates not impacting the 

current year outlays.

• Current-year budget subsidy costs are current year 

indirect appropriations provided to fund subsidy 

costs accrued in the prior year. This includes the 

portion of the current year’s executed President’s 

Budget re-estimates not included in this year’s net cost 

subsidy expense. 

NOTE 14. Commitments and Contingencies

The Department discloses contingencies where any of the 

conditions for liability recognition are not met and there is 

at least a reasonable possibility that a loss or an additional 

loss may have been incurred in accordance with FASAB 

Standard No. 5, Accounting for Liabilities of the Federal 

Government. The following commitments are amounts 

for contractual arrangements that may require future 

financial obligations.

Future Minimum Lease Payments

(Dollars in Millions)

2022 (Unaudited) 2021

2023 $ 65 2022 $ 69 

2024 58 2023 71 

2025 48 2024 71 

2026 45 2025 72 

2027 45 2026 73 

After 2027 46 After 2026 75 

 Total $ 307 Total $ 431 

The Department leases from the GSA all or a portion of 

15 privately owned and 11 publicly owned buildings in 

21 cities. The table above presents the estimated future 

minimum lease payments for these privately and publicly 

owned buildings. The decrease in the estimated future 

minimum lease payments is due to anticipated releases of 

building and floor rentals.

GUARANTY AGENCIES

The Department may assist guaranty agencies experiencing 

financial difficulties. The Department has not done so in 

FY 2022 or FY 2021 and does not expect to in future years. 

No provision has been made in the financial statements for 

potential liabilities.

LITIGATION AND OTHER CLAIMS

The Department is involved in various lawsuits incidental 

to its operations. In the opinion of management, the 

ultimate resolution of pending litigation will not have a 

material impact on the Department’s financial position. 

As appropriate, the Department would seek recovery from 

Treasury’s Judgment Fund for any loss in litigation that 

may occur. The Judgment Fund is a permanent, indefinite 

appropriation available to pay judgments against the 

government if appropriated funds cannot be used. 

The cost of loan forgiveness related to borrower defense 

claims reflected in the accompanying financial statements 

is limited to loans originated through September 30, 

2022. The final disposition of claims filed and those yet 

to be filed from loans originated before September 30, 

2022, is not expected to have a material impact on these 

financial statements.
FY 2022 AGENCY FINANCIAL REPORT 97 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

OT H E R M AT T E R S 

Some portion of the current-year financial assistance 

expenses (grants) may include funded recipient 

expenditures that are subsequently disallowed through 

program review or audit processes. In the opinion of 

management, the ultimate disposition of these matters 

will not have a material effect on the Department’s 

financial position.

NOTE 15. Reclassification of Statement of 

Net Cost and Statement of Operations and 

Changes in Net Position for Financial Report 

Compilation Process

To prepare the Financial Report (FR) of the U.S. 

government, Treasury requires agencies to submit an 

adjusted trial balance, which is a listing of accounts that 

appear in the financial statements. Treasury uses the trial 

balance information reported in the Governmentwide 

Treasury Account Symbol Adjusted Trial Balance System 

to develop a Reclassified Statement of Net Cost and a 

Reclassified Statement of Operations and Changes in Net 

Position for each agency, all of which show how agency 

amounts are related to particular FR statement line items. 

Treasury eliminates all intragovernmental balances from the 

reclassified statements and aggregates lines with the same 

title to develop the FR statements. 

The two schedules in this note show the Department’s 

financial statements and the Department’s reclassified 

statements before elimination of intragovernmental 

balances and before aggregation of repeated FR line items. 

The term “Non-Federal” is used in this note to refer to 

federal government amounts that result from transactions 

with non-federal entities. These include transactions with 

individuals, businesses, nonprofit entities, and state, local, 

and foreign governments.

A copy of the September 30, 2021, FR can be found on 

Treasury’s website, and a copy of the September 30, 2022, 

FR will be posted to this site as soon as it is released.
FY 2022 AGENCY FINANCIAL REPORT 98 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Reclassification of Statement of Net Cost to Line Items Used for the Governmentwide Statement

of Net Cost for the Period Ending September 30, 2022

(Dollars in Millions)

FY 2022 Department Statement of Net Cost (Unaudited) Line Items Used to Prepare FY 2022 Governmentwide 

Statement of Net Cost 

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Total Gross Cost $ 628,611 $ 594,126 Non-Federal Gross Cost

 155 Benefit Program Costs

 38 Imputed Costs

 437 Buy/Sell Cost

 33,836 Borrowing and Other Interest Expense

 19 Other Expenses (Without Reciprocals)

Total Gross Cost $ 628,611 $ 628,611 Department Total Gross Cost

Total Earned Revenue $ (65,198) $ (55,607) Non-Federal Earned Revenue

(3) Buy/Sell Revenue (Exchange)

 (9,588) Borrowing and Other Interest Revenue (Exchange)

Total Earned Revenue (65,198) (65,198) Department Total Earned Revenue

Net Cost $ 563,413 $ 563,413 Net Cost
FY 2022 AGENCY FINANCIAL REPORT 99 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Reclassification of Statement of Changes in Net Position to Line Items Used for the

Governmentwide Statement of Operations and Changes in Net Position for the Period

Ending September 30, 2022

(Dollars in Millions)

FY 2022 Department Statement of Changes in Net Position (Unaudited) Line Items Used to Prepare FY 2022 Governmentwide 

Statement of Operations and Changes in Net Position

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Unexpended Appropriations

Beginning Balance 301,798 301,798 Net Position, Beginning of Period

Appropriations Received 599,069 596,657 Appropriations Received as Adjusted (Rescissions and 

Other Adjustments)

Other Adjustments (Rescissions, etc.) (2,412)

Appropriations Transferred 15 15 Non-Expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources

Appropriations Used (667,252) (667,252) Appropriations Used

Unexpended Appropriations, Ending Balance 231,218 231,218 

Cumulative Results of Operations

Beginning Balance (28,703) (28,703) Net Position, Beginning of Period

Appropriations Used 667,252 667,252 Appropriations Expended

Nonexchange Revenue 21 21 Collections transferred into a TAS Other Than the 

General Fund of the U.S. Government - Nonexchange

Donations and Forfeitures of Cash and Cash 

Equivalents 1 1 Other Taxes and Receipts

Imputed Financing from Costs Absorbed by Others 38 38 Imputed Financing Sources

Negative Subsidy Transfers, Downward Subsidy 

Re-estimates, and Other (84,683) (59,461) Non-Entity Collections Transferred to the General Fund 

of the U.S. Government

 (24,603)

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the 

U.S. Government

 (619) Other Budgetary Financing Sources

Net Cost (563,413) (563,413) Net Cost 

Cumulative Results of Operations, Ending Balance $ (9,487) $ (9,487)

Net Position $ 221,731 $ 221,731 Net Position, End of Period

NOTE 16. Subsequent Events

On November 10, 2022, a U.S. District Court in Texas 

issued an order to vacate the program for Broad-Based Debt 

Relief that was previously adopted by the U.S. Secretary 

of Education and announced on August 24, 2022. On 

November 14, 2022, the U.S. Court of Appeals for the 

Eighth Circuit stayed the Department’s implementation of 

the same program pending an appeal by six states of their 

case challenging the relief, on which the Department had 

prevailed in a U.S. District Court. The U.S. Department of 

Education subsequently requested a stay of both decisions, 

and ultimately sought stays as well as a hearing on the 

merits from the Supreme Court of the United States. Those 

stay requests were denied, but the Supreme Court of the 

United States granted certiorari and has agreed to hear 

both cases and to address both questions of standing and 

the Department’s authority to provide the debt relief. The 

Department is confident in its position in these matters 

before the Court.

On November 22, 2022, the Department announced 

that it would be extending the existing pause on student 

loan repayments through a period which would be largely 

determined by the court cases mentioned previously. The 

pause has been extended until 60 days after the Department 

is permitted to implement the program or the litigation is 

resolved. If the program has not been implemented and the 

litigation has not been resolved by June 30, 2023, payments 

will resume 60 days after that.
FY 2022 AGENCY FINANCIAL REPORT 100 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Required Supplementary Information (Unaudited)

U.S Department of Education 

Combining Statement of Budgetary Resources 

For the Year Ended September 30, 2022

(Dollars in Millions)

(Unaudited)

Federal Student Aid Office of Elementary and 

Secondary Education

Budgetary

Non-Budgetary Credit 

Reform Financing 

Accounts

Budgetary 

BUDGETARY RESOURCES

Unobligated Balance from Prior Year Budget Authority (Net) (Note 12) $ 20,921 $ 21,923 $ 2,096 

Appropriations (Discretionary and Mandatory) 539,874 2,759 27,183 

Borrowing Authority (Discretionary and Mandatory) (Note 12) - 178,546 - 

Spending Authority from Offsetting Collections (Discretionary and Mandatory) 28 60,322 - 

Total Budgetary Resources $ 560,823 $ 263,550 $ 29,279 

STATUS OF BUDGETARY RESOURCES 

New Obligations and Upward Adjustments (Total) $ 542,540 $ 198,205 $ 27,046 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 14,212 - 2,150 

Unapportioned, Unexpired Accounts 733 65,345 13 

Unexpired Unobligated Balance, End of Year $ 14,945 $ 65,345 $ 2,163 

Expired Unobligated Balance, End of Year 3,338 - 70 

Unobligated Balance, End of Year (Total) $ 18,283 $ 65,345 $ 2,233 

Total Budgetary Resources $ 560,823 $ 263,550 $ 29,279 

OUTLAYS, NET

Outlays, Net (Discretionary and Mandatory) $ 539,829 $ 23,682 

Distributed Offsetting Receipts (-) (Note 12) (28,595) (1) 

Agency Outlays, Net (Discretionary and Mandatory) (Notes 12 and 13) $ 511,234 $ 23,681 

Disbursements, Net (Total) (Mandatory) $ (382,399) 
FY 2022 AGENCY FINANCIAL REPORT 101 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Office of Special Education 

and Rehabilitative Services

Education 

Stabilization Fund Other Combined

Total

Budgetary Budgetary Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

$ 393 $ 18,271 $ 1,450 $ 293 $ 43,131 $ 22,216 $ 65,347 

18,445 (443) 9,416 - 594,475 2,759 597,234 

- - - 171 - 178,717 178,717 

- - 77 271 105 60,593 60,698 

$ 18,838 $ 17,828 $ 10,943 $ 735 $ 637,711 $ 264,285 $ 901,996 

$ 18,401 $ 17,420 $ 9,593 $ 501 $ 615,000 $ 198,706 $ 813,706 

262 385 823 - 17,832 - 17,832 

- - 2 234 748 65,579 66,327 

$ 262 $ 385 $ 825 $ 234 $ 18,580 $ 65,579 $ 84,159 

175 23 525 - 4,131 - 4,131 

$ 437 $ 408 $ 1,350 $ 234 $ 22,711 $ 65,579 $ 88,290 

$ 18,838 $ 17,828 $ 10,943 $ 735 $ 637,711 $ 264,285 $ 901,996

$ 17,974 $ 79,223 $ 7,747 $ 668,455 $ 668,455 

- - (490) (29,086) (29,086)

$ 17,974 $ 79,223 $ 7,257 $ 639,369 $ 639,369 

$ 111 $ (382,288) $ (382,288)
FY 2022 AGENCY FINANCIAL REPORT 102 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

U.S. Department of Education 

Combining Statement of Budgetary Resources 

For the Year Ended September 30, 2021

(Dollars in Millions)

(Unaudited)

Federal Student Aid Office of Elementary and 

Secondary Education

Budgetary

Non-Budgetary Credit 

Reform Financing 

Accounts

Budgetary 

BUDGETARY RESOURCES

Unobligated Balance from Prior Year Budget Authority (Net) (Note 12) $ 16,988 $ 20,473 $ 1,999 

Appropriations (Discretionary and Mandatory) 172,332 239 24,760 

Borrowing Authority (Discretionary and Mandatory) (Note 12) - 128,739 - 

Spending Authority from Offsetting Collections (Discretionary and Mandatory) 142 42,050 - 

Total Budgetary Resources $ 189,462 $ 191,501 $ 26,759 

STATUS OF BUDGETARY RESOURCES 

New Obligations and Upward Adjustments (Total) $ 171,476 $ 169,693 $ 24,910 

Unobligated Balance, End of Year:

Apportioned, Unexpired Accounts 14,397 - 1,778 

Unapportioned, Unexpired Accounts 1,930 21,808 - 

Unexpired Unobligated Balance, End of Year $ 16,327 $ 21,808 $ 1,778 

Expired Unobligated Balance, End of Year 1,659 - 71 

Unobligated Balance, End of Year (Total) $ 17,986 $ 21,808 $ 1,849 

Total Budgetary Resources $ 189,462 $ 191,501 $ 26,759 

OUTLAYS, NET

Outlays, Net (Discretionary and Mandatory) $ 170,470 $ 23,027 

Distributed Offsetting Receipts (-) (Note 12) (6,296) (1) 

Agency Outlays, Net (Discretionary and Mandatory) (Notes 12 and 13) $ 164,174 $ 23,026 

Disbursements, Net (Total) (Mandatory) $ (38,680) 
FY 2022 AGENCY FINANCIAL REPORT 103 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Office of Special Education 

and Rehabilitative Services

Education 

Stabilization Fund Other Combined

Total

Budgetary Budgetary Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

$ 346 $ 633 $ 806 $ 177 $ 20,772 $ 20,650 $ 41,422 

21,022 247,839 10,567 - 476,520 239 476,759 

- - - 668 - 129,407 129,407 

- (409) 61 174 (206) 42,224 42,018 

$ 21,368 $ 248,063 $ 11,434 $ 1,019 $ 497,086 $ 192,520 $ 689,606 

$ 20,941 $ 229,884 $ 10,017 $ 575 $ 457,228 $ 170,268 $ 627,496 

220 18,179 1,241 - 35,815 - 35,815 

- - 1 444 1,931 22,252 24,183 

$ 220 $ 18,179 $ 1,242 $ 444 $ 37,746 $ 22,252 $ 59,998 

207 - 175 - 2,112 - 2,112 

$ 427 $ 18,179 $ 1,417 $ 444 $ 39,858 $ 22,252 $ 62,110 

$ 21,368 $ 248,063 $ 11,434 $ 1,019 $ 497,086 $ 192,520 $ 689,606 

$ 15,939 $ 48,614 $ 9,026 $ 267,076 $ 267,076 

- - (328) (6,625) (6,625)

$ 15,939 $ 48,614 $ 8,698 $ 260,451 $ 260,451 

$ (1,201) $ (39,881) $ (39,881)
FY 2022 AGENCY FINANCIAL REPORT 104 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Report of the Independent Auditors

UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF INSPECTOR GENERAL

THE INSPECTOR GENERA

400 MARYLAND AVENUE, S.W., WASHINGTON, DC 20202-1510

Promoting the efficiency, effectiveness, and integrity of the Department’s programs and operations.

January 23, 2023

The Honorable Miguel Cardona

Secretary of Education

Washington, D.C. 20202

Dear Secretary Cardona: 

The enclosed Independent Auditors’ Report (report) covers the U.S. Department of Education’s 

(Department) consolidated financial statements for fiscal years 2022 and 2021 to comply with 

the Chief Financial Officers Act of 1990, as amended. The report should be read in conjunction 

with the Department’s financial statements and notes to fully understand the context of the 

information contained therein.

We engaged the independent certified public accounting firm KPMG LLP (KPMG) to audit the 

consolidated financial statements of the Department as of September 30, 2022, and 2021, and 

for the years then ended. The contract requires that the audit be performed in accordance with 

U.S. generally accepted government auditing standards and Office of Management and Budget 

bulletin, Audit Requirements for Federal Financial Statements.

Results Presented in the Independent Auditors’ Report

KPMG reports: 

• A disclaimer of opinion on the fiscal year 2022 consolidated financial statements

because KPMG has not been able to obtain sufficient appropriate audit evidence to 

provide a basis for an audit opinion. 

• The fiscal year 2021 consolidated financial statements are presented fairly, in all 

material respects, in accordance with U.S. generally accepted accounting principles. 

• One material weakness in internal control over financial reporting:

o Controls over the Relevance and Reliability of Underlying Data Used in Credit 

Reform Estimates Need Improvement. 

• Two significant deficiencies in internal control over financial reporting:

o Information Technology Controls Need Improvement, and

o Entity Level Controls Need Improvement. 
FY 2022 AGENCY FINANCIAL REPORT 105 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Page 2 – The Honorable Miguel Cardona

KPMG is responsible for the auditors’ report dated January 23, 2023, and the conclusions 

expressed therein. We do not express opinions on the Department’s consolidated financial 

statements or internal control over financial reporting, or on whether the Department’s 

financial management systems complied substantially with the three requirements of FFMIA, or 

conclusions on compliance and other matters. 

We appreciate the cooperation given KPMG and my office during the engagement. If you have 

any questions or would like to discuss the report, please contact me at (202) 245-6900. 

Sincerely, 

Sandra D. Bruce

Inspector General

Enclosure
FY 2022 AGENCY FINANCIAL REPORT 106 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Independent Auditors’ Report

Inspector General 

United States Department of Education

Secretary

United States Department of Education:

Report on the Audit of the Consolidated Financial Statements

Disclaimer of Opinion on Fiscal Year 2022 Consolidated Financial Statements

We were engaged to audit the consolidated financial statements of the United States Department of Education 

(Department), which comprise the consolidated balance sheet as of September 30, 2022, and the related 

consolidated statements of net cost and changes in net position, and combined statement of budgetary 

resources for the year then ended, and the related notes to the consolidated financial statements.

We do not express an opinion on the accompanying consolidated financial statements of the Department as of

and for the year ended September 30, 2022. Because of the significance of the matter described in the Basis 

for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit 

evidence to provide a basis for an audit opinion on the fiscal year 2022 consolidated financial statements.

Opinion on Fiscal Year 2021 Consolidated Financial Statements

We have audited the consolidated financial statements of the Department, which comprise the consolidated 

balance sheet as of September 30, 2021, and the related consolidated statements of net cost and changes in 

net position, and combined statement of budgetary resources for the year then ended, and the related notes to 

the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the 

financial position of the Department as of September 30, 2021, and its net cost, changes in net position, and 

budgetary resources for the year then ended in accordance with U.S. generally accepted accounting principles.

Basis for Disclaimer of Opinion on Fiscal Year 2022 Consolidated Financial Statements

During fiscal year 2022, the Department announced broad-based debt relief for certain of its student loan 

borrowers under the Direct Loan and Federal Family Education Loan (FFEL) programs. Management estimated

the subsidy costs stemming from the broad-based debt relief as of September 30, 2022. However, 

management was unable to provide adequate evidential matter to support certain key assumptions used to 

estimate the subsidy costs. As a result of this matter, we were unable to determine whether any adjustments to 

the balance sheet might have been necessary with respect to the fiscal year 2022 Loans Receivable, Net – 

Direct Loan Program; Loans Receivable, Net – FFEL Program; Subsidy Due to Treasury; Loan Guarantee 

Liabilities; the related balances in the consolidated statements of net cost and changes in net position; and 

related notes to the consolidated financial statements.

Basis for Opinion on Fiscal Year 2021 Consolidated Financial Statements

We conducted our audit of the fiscal year 2021 consolidated financial statements in accordance with auditing 

standards generally accepted in the United States of America (GAAS), the standards applicable to financial 

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

KPMG LLP, a Delaware limited liability partnership and a member firm of 

the KPMG global organization of independent member firms affiliated with 

KPMG International Limited, a private English company limited by guarantee. 
FY 2022 AGENCY FINANCIAL REPORT 107 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

2 

audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, 

and Office of Management and Budget (OMB) Bulletin No. 22-01, Audit Requirements for Federal Financial 

Statements. Our responsibilities under those standards and OMB Bulletin No. 22-01 are further described in the 

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are 

required to be independent of the Department and to meet our other ethical responsibilities, in accordance with 

the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is 

sufficient and appropriate to provide a basis for our audit opinion on the fiscal year 2021 consolidated financial 

statements. 

Other Matter - Interactive Data

Management has elected to reference to information on websites or other forms of interactive data outside the 

fiscal year 2022 Agency Financial Report to provide additional information for the users of its consolidated 

financial statements. Such information is not a required part of the consolidated financial statements or 

supplementary information required by the Federal Accounting Standards Advisory Board. The information on 

these websites or the other interactive data has not been subjected to any of our auditing procedures, and 

accordingly we do not express an opinion or provide any assurance on it. 

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in 

accordance with U.S. generally accepted accounting principles, and for the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of consolidated financial 

statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a 

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that 

includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and 

therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing 

Standards, and OMB Bulletin No. 22-01 will always detect a material misstatement when it exists. The risk of 

not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud 

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the consolidated financial statements.

Except as explained in the Basis for Disclaimer of Opinion paragraph, in performing an audit in accordance with

GAAS, Government Auditing Standards, and OMB Bulletin No. 22-01, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether 

due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures 

include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated 

financial statements.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are 

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of 

the Department’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting 

estimates made by management, as well as evaluate the overall presentation of the consolidated financial 

statements.
FY 2022 AGENCY FINANCIAL REPORT 108 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

3 

We are required to communicate with those charged with governance regarding, among other matters, the 

planned scope and timing of the audit, significant audit findings, and certain internal control related matters that 

we identified during the audit.

Required Supplementary Information

U.S. generally accepted accounting principles require that the information in the Management’s Discussion and 

Analysis and Required Supplementary Information sections be presented to supplement the basic consolidated 

financial statements. Such information is the responsibility of management and, although not a part of the basic 

consolidated financial statements, is required by the Federal Accounting Standards Advisory Board who 

considers it to be an essential part of financial reporting for placing the basic consolidated financial statements 

in an appropriate operational, economic, or historical context. We were unable to apply certain limited 

procedures to the required supplementary information as of and for the year ended September 30, 2022 in 

accordance with GAAS because of the significance of the matter described in the Basis for Disclaimer of 

Opinion paragraph. We do not express an opinion or provide any assurance on the information.

We have applied certain limited procedures to the required supplementary information as of and for the year 

ended September 30, 2021 in accordance with GAAS, which consisted of inquiries of management about the 

methods of preparing the information and comparing the information for consistency with management’s 

responses to our inquiries, the basic consolidated financial statements, and other knowledge we obtained 

during our audit of the fiscal year 2021 basic consolidated financial statements. We do not express an opinion 

or provide any assurance on the information because the limited procedures do not provide us with sufficient 

evidence to express an opinion or provide any assurance.

Report on Internal Control Over Financial Reporting

In connection with our engagement to audit the Department’s consolidated financial statements as of and for 

the year ended September 30, 2022, we considered the Department’s internal control over financial reporting 

(internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the 

purpose of expressing an opinion on the consolidated financial statements, but not for the purpose of 

expressing an opinion on the effectiveness of the Department’s internal control. Accordingly, we do not express 

an opinion on the effectiveness of the Department’s internal control. We did not test all internal controls relevant 

to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982. 

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was 

not designed to identify all deficiencies in internal control that might be material weaknesses or significant

deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. 

However, as described in the accompanying Exhibits, we identified certain deficiencies in internal control that 

we consider to be a material weakness and significant deficiencies. 

A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial 

statements will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies 

described in the accompanying Exhibit A, Controls over the Relevance and Reliability of Underlying Data Used 

in Credit Reform Estimates Need Improvement, to be a material weakness. 

The Department management did not report the material weakness in its Statement of Assurance, included in 

the Management’s Discussion and Analysis section of the accompanying Agency Financial Report.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe 

than a material weakness, yet important enough to merit attention by those charged with governance. We 

consider the deficiencies described in the accompanying Exhibit B, Information Technology Controls Need 

Improvement and Entity Level Controls Need Improvement, to be significant deficiencies.
FY 2022 AGENCY FINANCIAL REPORT 109 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

4 

Report on Compliance and Other Matters

In connection with our engagement to audit the Department’s consolidated financial statements as of and for 

the year ended September 30, 2022, we performed tests of its compliance with certain provisions of laws, 

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect 

on the consolidated financial statements. However, providing an opinion on compliance with those provisions 

was not an objective of our engagement, and accordingly, we do not express such an opinion. The results of 

our tests disclosed no instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards or OMB Bulletin No. 22-01. 

We also performed tests of the Department’s compliance with certain provisions referred to in Section 803(a) of 

the Federal Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion on compliance with 

FFMIA was not an objective of our engagement, and accordingly, we do not express such an opinion. The 

results of our tests disclosed no instances in which the Department’s financial management systems did not 

substantially comply with the (1) Federal financial management systems requirements, (2) applicable Federal 

accounting standards, and (3) the United States Government Standard General Ledger at the transaction level.

Additionally, if the scope of our work had been sufficient to enable us to express an opinion on the consolidated 

financial statements, instances of noncompliance or other matters may have been identified and reported 

herein.

Department’s Response to Findings

Government Auditing Standards requires the auditor to perform limited procedures on the Department's 

response to the findings identified in our engagement and described in Exhibit C. The Department’s response 

was not subjected to the other auditing procedures applied in the engagement to audit the consolidated 

financial statements and, accordingly, we express no opinion on the response.

Our response to the Department’s response is included in Exhibit D.

Purpose of the Reporting Required by Government Auditing Standards

The purpose of the communication described in the Report on Internal Control Over Financial Reporting and 

the Report on Compliance and Other Matters sections is solely to describe the scope of our testing of internal 

control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the 

Department’s internal control or compliance. Accordingly, this communication is not suitable for any other 

purpose.

Washington, D.C.

January 23, 2023
FY 2022 AGENCY FINANCIAL REPORT 110 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

A-1 

Exhibit A

Material Weakness

Controls over the Relevance and Reliability of Underlying Data Used in Credit Reform Estimates Need 

Improvement 

Background:

The material weakness under this section is related to the Department’s Direct and FFEL student loan 

portfolios. 

The Department is required to perform interest rate and technical re-estimates (commonly referred to as 

estimates) of the subsidy costs of its direct loan and guaranty programs as of September 30 every year. 

During fiscal year 2022, the Department announced changes to its student loan programs, including broadbased debt relief for borrowers meeting certain criteria (eligible borrowers). Management estimated the subsidy 

costs stemming from the broad-based debt relief as of September 30, 2022. Management’s estimate used data 

and assumptions related to a take-up rate, among other assumptions. The take-up rate assumption represents

how many eligible borrowers are expected to apply for debt-relief, hence considered a key assumption for 

estimating the impact of broad-based debt relief on the financial statements. This assumption is used as an 

input in the Income Driven Repayment (IDR), Collections, and Death, Disability & Bankruptcy (DD&B) 

assumptions. 

These assumptions are included in the estimates calculated using the Department’s internally developed cash 

flow model, the Student Loan Model (SLM). The SLM utilizes assumptions based on internally sourced data 

elements from Information Technology systems to generate future cash flows. These future cash flows are then 

input into the format required by the Office of Management and Budget (OMB) Credit Subsidy Calculator 

(CSC), a required present value discount tool for agencies with credit reform programs, to produce the subsidy 

cost estimate. 

Condition:

Management's internal controls were not properly designed at an appropriate level of precision to address the 

relevance and reliability of the underlying data used to develop the take-up rate assumption used in the various 

loan program estimates. In addition, management did not design sufficiently precise controls over the relevance 

and reliability of certain data used in other key assumptions for the SLM cash flow model to develop the 

subsidy cost estimates. 

Cause/Effect:

Management’s risk assessment process was not sufficient to identify the relevance and reliability of the 

underlying data used in significant assumptions for the estimates, including the take-up rate assumption, as a 

risk that required additional controls. As a result, the documentation over the subsidy cost estimates in the 

financial statements was not supportive to evidence the estimate calculations. Inadequate controls over the

relevance and reliability of the underlying data used to develop the estimate calculations increases the risk that 

the financial statements could be materially misstated.
FY 2022 AGENCY FINANCIAL REPORT 111 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

A-2 

Criteria:

The following criteria were considered in the evaluation of the material weakness presented in this exhibit:

• The Standards for Internal Control in the Federal Government issued by the Comptroller General of the 

United States (the Green Book), Principle No. 6, Management should define objectives clearly to enable 

the identification of risks and define risk tolerances; Principle No. 10, Design Control Activities; Principle No. 

13, Use Quality Information. 

• FASAB Technical Release No. 6, Preparing Estimates for Direct Loan and Loan Guarantee Subsidies

under the Federal Credit Reform Act – Amendments to Technical Release No. 3 Preparing and Auditing

Direct Loan and Loan Guarantee Subsidies under the Federal Credit Reforms Act, Paragraph 20.

Recommendation:

We recommend that management: 

1. Design and implement controls that require the validation of the relevance and reliability of underlying data 

used in developing the assumptions related to the subsidy cost estimates. Such review should be 

documented and maintained.
FY 2022 AGENCY FINANCIAL REPORT 112 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B-1 

Exhibit B

Significant Deficiencies

A. Information Technology Controls Need Improvement

The following control deficiencies in the areas of Information Technology (IT) logical access, security 

management, segregation of IT duties, application change management, and computer operations are related 

to both the Department and Federal Student Aid (FSA) systems.

Conditions:

In prior years, we reported a significant deficiency related to the Department and FSA’s IT controls due to 

persistent unmitigated IT control deficiencies. During FY 2022, the FSA management demonstrated progress 

implementing corrective actions to remediate some prior-year deficiencies, such as oversight of service 

organization controls. However, the Department management and FSA management have not fully remediated 

prior-year deficiencies related to logical access administration, separated and transferred user access removal, 

user access reviews and recertification, and configuration management. New and existing IT control 

deficiencies related to security management, access controls, segregation of IT duties, application change 

management, and computer operations for the Department’s core financial management system, three of 

FSA’s financial and mixed systems, and two access management support systems are as follows: 

Department:

1. Weakness in IT logical access controls: New and separated contractors were not consistently and 

accurately tracked including inconsistent reporting of start and termination dates. Further, the account 

controls were not consistently followed for the Department’s core financial management system.

Specifically: 

a. documentation supporting the completed security awareness training for new and modified users could 

not be provided; 

b. evidence supporting complete and accurate access reviews and recertifications was not provided or 

retained; 

c. password controls were not designed to meet the Department’s requirements; and 

d. the Department’s requirement for the use and monitoring of generic and shared accounts was not met 

for all accounts. 

2. Weakness in IT application change management and patch management controls: The application change 

management and patch management policies and processes were not consistently followed for the 

Department’s core financial management system in accordance with Department policy. The Department 

was unable to provide sufficient evidence supporting tracking, security assessment, and approval for 

certain application changes and patches. 

3. Weakness in IT computer operations controls: Changes to the job processing tool and schedules were not 

centrally tracked and were made directly in production. Finally, the use and monitoring of generic and 

shared accounts for the job scheduling tool did not follow the Department’s requirements. 

FSA:

1. Weakness in IT security management controls: Plan of Action and Milestone (POA&M) closure 

documentation for FSA systems did not always address the root cause of the deficiencies, thereby

increasing the potential of IT control deficiencies reoccurring in the future. 
FY 2022 AGENCY FINANCIAL REPORT 113 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B-2 

2. Weakness in IT logical access controls: The access control processes were not consistently followed for 

three FSA systems and two access control support systems. Evidence supporting complete and accurate 

access listings and evidence supporting new, modified, or separated users could not be provided or was 

provided with missing required information and/or approvals; evidence supporting complete and accurate 

access reviews and recertifications was not provided or retained; and the Department’s requirement for 

two-factor authentication was not met for all internal system users.

3. Weaknesses in IT controls related to the segregation of IT duties: For one FSA system, users with 

developer access had access greater than read-only to the system’s production environment or update 

access to the production and development environments.

4. Weakness in IT application change management controls: The application change management process 

was not consistently followed for one FSA system. FSA was unable to provide a complete and accurate 

population of application changes. Also, documentation for a selection of changes contained inaccuracies 

in recorded testing and migration dates. 

Cause/Effect:

There was a lack of effective monitoring controls by the Department and FSA to ensure:

1. Corrective actions to remediate prior-year conditions and associated causes are fully implemented, as well 

as verifying and validating that these corrective actions were effectively addressing the weakness with 

adequately documented supporting evidence.

2. Systems and support processes consistently adhered to documented agency-wide policies and procedures 

for the financial and mixed systems hosted and managed by FSA and the Department.

3. The established logical access control process is followed and requests and related evidence for new, 

modified, or separated users were retained, documented completely and accurately, and approved.

4. Complete and accurate access reviews are performed to detect and mitigate the risk of unauthorized 

accounts, access that is not commensurate with job responsibilities or least privilege, and access 

permissions not being revoked timely.

5. Password controls are designed to meet the Department’s requirements.

6. The requirements for the use and monitoring of generic and shared accounts controls are followed and 

enforced. 

7. Segregation of duties and least privilege principles are followed and enforced.

8. The established change process and patch management process are followed. 

9. The established process for job processing changes is followed and the requirements for the use and 

monitoring of generic/shared accounts controls for the job scheduling tool are followed and enforced. 

10. The established computer operations process detects and/or prevents unauthorized changes to the job 

processing tool and schedules within the core financial system environment. 

Ineffective IT controls increases the risk of unauthorized use, disclosure, disruption, modification, or destruction 

of information, and information systems that could impact the integrity and reliability of information processed in 

the associated applications which may lead to misstatements of the financial statements.
FY 2022 AGENCY FINANCIAL REPORT 114 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B-3 

Criteria:

The following criteria were considered in the evaluation of the significant deficiency presented in this exhibit:

• The Departmental Directive OCIO 3-112, Cybersecurity Policy. 

• Department Information Technology (IT) System Access Control Standard. 

• EDCAPS System Security Plan (SSP) control requirements. 

• EDCAPS Configuration Management Plan (CMP). 

• Department Information Technology System and Information Integrity (SI) standard policy section 2.2 

control SI-2, Flaw Remediation. 

• EDCAPS Patch Management Plan, section 4.7 Patch Maintenance.

• Department Baseline Cybersecurity Standard, OCIO-STND-01, dated September 23, 2021, Section 3.15, 

Acceptable Use. 

• The Standards for Internal Control in the Federal Government issued by the Comptroller General of the 

United States (the Green Book), Principle No. 3.08 Assignment of Responsibility and Delegation of 

Authority, Principle No. 4, Demonstrate Commitment to Competence, Principle No. 7, Identify, Analyze, and 

Respond to Risks, Principle No. 8.07 Response to Fraud Risks, Principle No.10.03, Design of Appropriate 

Types of Control Activities, Principle No.10.12 Segregation of Duties, Principle No. 10.3 Design of 

Appropriate Types of Control Activities, Principle No. 11, Design Activities for the Information System, 

Principle No. 13, Use Quality Information, Principle No.16, Perform Monitoring Activities. 

• Federal Information Processing Standards (FIPS) 200, Minimum Security Requirements for Federal 

Information and Information Systems.

• National Institute of Standards and Technology Special Publication 800-53, Security and Privacy Controls 

for Federal Information Systems and Organizations, Revision 5, specifically security control requirements 

PM-4 Plan of Action and Milestone, AC-2 Account Management, AC-5 Separation of Duties, AC-6 Least 

Privilege, AT-3 Role-based Training, AT-4 Training records, CM-3 Configuration Change Control, and SI-2 

Flaw Remediation. 

Recommendations:

We recommend that the Department:

1. Evaluate, develop, and implement a formal process to track and report all new and separated contractors.

2. Ensure separated contractors are off-boarded and system personnel are notified in a timely manner to 

disable or remove access to IT resources.

3. Provide training and oversight to the Department’s personnel with on/off-boarding responsibilities to help

ensure new/separated contractors are properly tracked.

4. Update access review procedures to require the reviewers to verify the access lists received to be used in 

the performance of the access reviews is complete and accurate and not modified prior to commencing the 

access reviews.

5. Identify and implement a process for the reviewer to validate the population generated for review is 

complete and accurate. 

6. Enforce established access authorization controls and ensure all requirements are met prior to granting 

system access. 
FY 2022 AGENCY FINANCIAL REPORT 115 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B-4 

7. Formally perform and document the periodic reviews of all database user accounts in accordance with 

Department policy to confirm access is current, authorized, and commensurate with job responsibilities.

8. Ensure the application and database server access reviews include the verification of access privileges 

assigned to the user accounts are commensurate with job responsibilities and follow the concept of least 

privilege.

9. Ensure the database and server layers comply with the disabling of inactive accounts and account lockout 

duration password setting requirements, as required by Department policy. 

10. Adhere to the SSP control requirements and avoid the use of generic and shared accounts. If generic and 

shared accounts are required, obtain a formal risk acceptance and develop a policy and procedure to:

• Authorize the use of these accounts by approved personnel, 

• Control who can access the generic/shared accounts and those sensitive actions performed by the 

accounts are logged and reviewed every time the accounts are used, and

• Require that generic/shared accounts’ passwords are changed each time approved personnel separate 

or transfer from the Department. 

We recommend that FSA:

11. Implement a process to evaluate the magnitude of impact, likelihood of occurrence, and nature of the 

deficiency in order to tailor the corrective actions to remediate the risk and address the root cause. Further, 

update guidance to ensure that quality reviews over the POA&M closure documentation are conducted to 

confirm the noted deficiencies are fully addressed to help prevent future reoccurrences.

12. Formally develop and implement a quality control review process to ensure that logical access control 

processes are followed completely and accurately to validate logical access requests, reviews, and 

recertifications.

13. Ensure segregation of duties and least privilege principles are adhered to when granting user access to 

prevent users from having the ability to develop and/or change application code and having update access 

to the environment where the final tested and approved changes are staged prior to migration to the 

production environment; and prevent users with access to develop code from having update access to the 

production environment.

14. Evaluate and update the access review control process based on risk and enforce segregation of duties. 

15. Reconcile the list of users’ roles and responsibilities per the identity and access software tools to the lists 

that reside in each system accessed by such users. 

16. Update access review procedures to require the reviewer to verify the access list, received to be used in 

the performance of the access reviews, is complete and accurate and not modified prior to commencing the 

access reviews.

17. Enforce established access authorization controls and ensure all requirements are met prior to granting 

access to systems. 

18. Ensure a complete and accurate population of application changes is provided. Formally develop and 

implement a quality control review process to ensure that the application change control process is 

followed and consistently and accurately documented.
FY 2022 AGENCY FINANCIAL REPORT 116 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

B-5 

B. Entity Level Controls Need Improvement

The Department and FSA are continually seeking ways to improve accountability in achieving the entity’s 

mission. A key factor in improving accountability in achieving an entity’s mission is to implement an effective 

internal control system. The control environment sets the tone of an organization by influencing the control 

consciousness of its personnel. It is also the foundation for all components of internal control, providing 

discipline and structure. The Department and FSA need to address weaknesses in its entity-wide control 

environment as we have observed, through our procedures, two entity-wide control environment conditions in 

the areas of risk assessment and monitoring activities that have a pervasive influence on the effectiveness of 

controls. 

Conditions:

1. Risk Assessment- The Department and FSA’s entity level controls were not designed and implemented 

appropriately in order to define objectives related to the financial reporting process to enable the 

identification of risks, define risk tolerances and identified processes and controls responsive to those risks.

2. Monitoring Activities- The Department and FSA’s entity level controls were not designed and implemented 

appropriately in order to remediate identified internal control deficiencies in a timely manner.

Cause/Effect: 

1) Risk assessment considerations address the risks facing the entity as it seeks to achieve its objectives. 

This assessment provides the basis for developing appropriate risk responses. Specifically, inadequate risk 

assessment throughout the Department and FSA, prevented the proper identification and analysis of 

certain risks related to the financial reporting process at the Department and FSA, and from designing 

appropriate risk responses. 

2) Monitoring activities considerations address management’s processes to establish and implement 

operations that assess the quality of performance over time and promptly resolve the findings of auditsand 

other reviews. Specifically, insufficient monitoring has prevented the Department and FSA from ensuring 

that corrective action plans are implemented, and control deficiencies are remediated timely.

The conditions noted above contributed to the control deficiencies described earlier in the report and could lead 

to other weaknesses in internal control over financial reporting. 

Criteria: 

The following criteria were considered in the evaluation of the significant deficiency presented in this Exhibit:

• GAO Standards for Internal Control in the Federal Government (Green Book) Principle 6, Management 

should define objectives clearly to enable the identification of risks and define risk tolerances. 

• GAO Standards for Internal Control in the Federal Government (Green Book) Principle 17, Management 

should remediate identified internal control deficiencies on a timely basis.

Recommendations: 

We recommend that management implement the following to improve the effectiveness of entity-level controls:

1. Improve the risk assessment process at the financial statement assertion level and at the process levelto 

ensure the department is appropriately defining objectives to enable the identification of risks and define 

risk tolerances.

2. Implement key monitoring controls to ensure that corrective action plans are implemented to timely 

remediate control deficiencies identified. In addition, increase oversight, review, and accountability over the 

process among various offices and directorates within the Department and FSA.
FY 2022 AGENCY FINANCIAL REPORT 117 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

C-1 

Exhibit C

Management’s Response
FY 2022 AGENCY FINANCIAL REPORT 118 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)
FY 2022 AGENCY FINANCIAL REPORT 119 U.S. DEPARTMENT OF EDUCATION

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FY 2022 AGENCY FINANCIAL REPORT 120 U.S. DEPARTMENT OF EDUCATION

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FY 2022 AGENCY FINANCIAL REPORT 121 U.S. DEPARTMENT OF EDUCATION

OTHER

INFORMATION

(UNAUDITED)
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OTHER INFORMATION (UNAUDITED)

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FY 2022 AGENCY FINANCIAL REPORT 123 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

About the Other Information Section

The Other Information section includes:

OFFICE OF INSPECTOR GENER AL’S 

(OIG) MANAGEMENT AND 

PERFORMANCE CHALLENGES FOR 

FISCAL YEAR 2023

The Management and Performance Challenges Report 

provides a summary of what the Office of Inspector General 

(OIG) believes are the Department’s biggest challenges for 

FY 2023. The OIG identified the following five challenges: 

(1) Implementing Pandemic Relief Laws, (2) Oversight and 

Monitoring, (3) Data Quality and Reporting, (4) Improper 

Payments, and (5) Information Technology Security. The 

full report is available at the OIG website.

SUMMARY OF FINANCIAL STATEMENT 

AUDIT AND MANAGEMENT 

ASSURANCES

The Summary of Financial Statement Audit and 

Management Assurances provides information about 

the material weaknesses reported by the Department or 

through the audit process.

PAYMENT INTEGRITY INFORMATION 

ACT REPORTING

This section summarizes the U.S. Department of 

Education’s (the Department) efforts to maintain payment 

integrity and to develop effective controls designed to 

prevent, detect, and recover improper payments. It also 

includes information regarding the Department’s high-risk 

programs.

CIVIL MONETARY PENALT Y 

ADJUSTMENT FOR INFLATION

This section reports on the Department’s annual inflation 

adjustments to civil monetary penalties as required 

under the Federal Civil Penalties Inflation Adjustment Act 

Improvements Act of 2015.

CLIMATE ADAPTATION PLAN

This section summarizes the Department’s FY 2021 

Climate Adaptation Plan.

THE GR ANTS OVERSIGHT AND NEW 

EFFICIENCY ACT OF 2016 (GONE 

ACT) AND EDUCATION’S GR ANT 

CLOSEOUT PROCESS

This section provides a high-level summary of the 

Department’s expired, but not closed, federal grants and 

cooperative agreements.
FY 2022 AGENCY FINANCIAL REPORT 124 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF INSPECTOR GENERAL

THE INSPECTOR GENERA

400 MARYLAND AVENUE, S.W., WASHINGTON, DC 20202-1510

Promoting the efficiency, effectiveness, and integrity of the Department’s programs and operations.

December 13, 2022

TO: The Honorable Miguel Cardona

Secretary of Education

FROM: Sandra D. Bruce

Inspector General

SUBJECT: Management Challenges for Fiscal Year 2023 

In compliance with the Reports Consolidation Act of 2000, the U.S. Department of Education 

(Department) Office of Inspector General (OIG) reports annually on the most serious 

management and performance challenges faced by the Department. In addition to the

challenges themselves, these reports include a brief assessment of the Department’s progress 

in addressing the challenges and identity further actions that, if properly implemented, could 

enhance the effectiveness of the Department’s programs and operations. 

The Government Performance and Results Modernization Act of 2010 identifies major 

management challenges as programs or management functions that are vulnerable to waste, 

fraud, abuse and mismanagement and where a failure to perform could seriously affect the 

ability of the Department to achieve its mission or goals. To identify management challenges, 

the OIG routinely examines past audit, inspection, and investigative work; reviews corrective 

actions that have not been completed; assesses ongoing audit, inspection, and investigative 

work to identify significant vulnerabilities; and analyzes new programs and activities that could 

pose significant challenges because of their breadth and complexity. Our assessment also 

considers the accomplishments reported by the Department. 

Our FY 2023 report identifies five management challenges facing the Department as it 

continues its efforts to promote student achievement and preparation for global 

competitiveness by fostering educational excellence and ensuring equal access. We specifically 

retained all five management challenges from our FY 2022 report. Although the Department 

made progress in addressing these challenges, our work continues to identify vulnerabilities 

within each of these areas. Additional challenges may exist in areas that we have not recently 

reviewed. 

We provided our draft report to Department officials and considered their comments in 

developing the final report. This report will be posted to our website at 

http://www2.ed.gov/about/offices/list/oig/managementchallenges.html. We look forward to 

working with the Department to address the FY 2023 management challenges in the coming

year. If you have any questions or would like to discuss these issues, please contact me at (202) 

245-6900. 
FY 2022 AGENCY FINANCIAL REPORT 125 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

MANAGEMENT CHALLENGE 1—

IMPLEMENTING PANDEMIC 

RELIEF LAWS

The U.S. Department of Education (Department) was 

provided with more than $280 billion under three major 

pandemic relief laws to assist States, schools, school 

districts, and institutions of higher education (IHE) in 

meeting their needs and the needs of students impacted by 

the pandemic. This included the Coronavirus Aid, Relief, 

and Economic Security (CARES) Act, enacted in March 

2020; the Coronavirus Response and Relief Supplemental 

Appropriations Act, 2021, enacted in December 2020; and 

the American Rescue Plan Act (ARP), enacted in March 

2021. Collectively, these laws established and funded 

new emergency relief programs, allowed the Department 

to provide State educational agencies (SEA) and local 

educational agencies (LEA) with waivers of certain statutory 

or regulatory requirements, and included provisions 

intended to provide borrowers with emergency relief. 

Why This Is a Challenge 

Implementation of the pandemic relief laws poses 

challenges for the Department as it must effectively oversee 

and monitor new grant programs and additional Federal 

education funds, implement additional student financial 

assistance program requirements, and ensure that quality 

data are reported. In addition to the programs funded by 

the pandemic relief laws, the Department must oversee 

more than 100 other grant and loan programs, including 

a Federal student loan portfolio that now surpasses 

$1.6 trillion.

New Grant Programs and Additional Federal Education Funds 

As shown in Table 4, the pandemic relief laws included 

funding for State and local agencies, higher education, 

nonpublic schools, and other education-related entities.

Table 4 

Education Stabilization Fund (ESF) Summary

Program Funding Overview

Elementary and Secondary School 

Emergency Relief Fund (ESSER)

$190 billion ESSER funds are awarded to SEAs to provide formula-based subgrants to LEAs. ESSER 

funds can be used to support a wide range of activities, including purchasing and using 

technology for online learning, coordinating efforts with public health departments, 

addressing the needs of underrepresented student subgroups, planning for both school 

closures and reopenings, purchasing cleaning supplies, providing mental health services, 

and implementing summer learning and supplemental after-school programs.

Higher Education Emergency Relief Fund 

(HEER)

$76.2 

billion

HEER funds are awarded to IHEs. HEER funds can be used to assist students with 

expenses related to the disruption of campus operations due to the pandemic, such as 

tuition, food, housing, healthcare, childcare, technology, and course materials; and to 

help IHEs, including Historically Black Colleges and Universities and Minority Serving 

Institutions, cover costs associated with significant changes to the delivery of instruction due 

to the pandemic, reimburse themselves for lost revenue resulting from the pandemic, and 

defray other expenses, such as those for faculty and staff trainings, payroll, campus safety 

measures and protocols, and student support activities.

Emergency Assistance to Nonpublic 

Schools (EANS)

$5.5 billion EANS funds are awarded to Governors, who are responsible for complying with grantee 

oversight requirements, but SEAs are responsible for administering the program. EANS 

funds can be used to provide services or assistance to nonpublic schools.

Governor’s Emergency Education Relief 

Fund (GEER)

$4.3 billion GEER funds are awarded to Governors’ offices to provide to LEAs, IHEs, or other 

education-related entities that each Governor determines to be most impacted by the 

pandemic or essential for carrying out emergency educational services, providing childcare 

and early childhood education, social and emotional support, and protecting educationrelated jobs. GEER funds can be used to support these entities’ ongoing operations and 

efforts to provide educational services to students.

Office of Inspector General’s (OIG) Management and Performance 

Challenges for Fiscal Year 2023
FY 2022 AGENCY FINANCIAL REPORT 126 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

The pandemic relief laws also provided about $2.8 billion 

in funds for the Outlying Areas, Tribal education agencies 

and programs operated or funded by the Bureau of 

Indian Education, and homeless children and youth. 

The ARP provided an additional $3 billion to States 

to support infants, toddlers, children, and youth with 

disabilities served under the Individuals with Disabilities 

Education Act. 

While the pandemic relief laws provided more 

than $161 million to the Department for student 

aid administration and $38 million for program 

administration, each of these programs must be effectively 

implemented and monitored by the Department to ensure 

that the legislation is followed, and that States, elementary 

and secondary schools, and postsecondary institutions 

and students receive support in response to the pandemic. 

Because these programs have different purposes, allowable 

uses of funds, and grant recipients, it is vital that the 

Department provides effective guidance, training, technical 

assistance, and outreach. These additional responsibilities 

remain significant challenges to the Department given the 

large amount of funding involved, the number of entities 

receiving funds, and the need to administer its existing 

programs. Additionally, the Department must continue 

to ensure that the primary recipients, such as Governors’ 

offices and SEAs, effectively fulfill their critical role in 

overseeing and monitoring subrecipients, such as LEAs.

Student Financial Assistance Program Requirements

The CARES Act included student financial assistance 

provisions intended to provide emergency relief to 

borrowers and to allow institutions to meet student needs 

more easily. These provisions included borrower and teacher 

assistance provisions, waivers of student financial assistance 

refunds and loan cancellations, and adjustments to lifetime 

Federal Pell Grant (Pell) usage. The Department had to 

provide guidance to and rely on postsecondary institutions, 

contracted servicers, collection agencies, guaranty agencies, 

and accrediting agencies to effectively implement these 

and other provisions. The Department may be challenged 

to provide adequate oversight of existing student aid 

program participants while it continues to implement 

and oversee the student aid provisions in the CARES Act, 

resumes collections on Federal student loans in 2023, and 

implements plans to provide up to $20,000 in debt relief 

to eligible borrowers. Additionally, the Department faces 

the challenge of ensuring that postsecondary institutions 

continue to meet financial responsibility requirements, as 

the pandemic may negatively impact the enrollment and 

financial health of many institutions.

Data Quality 

The pandemic relief laws included several reporting 

provisions that were intended to provide transparency 

regarding the use of funds to alleviate the impact of the 

Coronavirus Disease 2019 (COVID-19). The Department 

also established additional reporting requirements for 

programs authorized under these laws. Grantees must 

report monthly on subcontracts and subgrants exceeding a 

certain threshold and submit annual performance reports. 

Administering the programs and operations funded by 

the pandemic relief laws requires the Department to 

collect, analyze, and report on data for many purposes, 

such as evaluating programmatic performance, assessing 

fiscal compliance, and informing management decisions. 

For this reason, the Department, its grant recipients and 

subrecipients, and other program participants must have 

effective systems, processes, and procedures in place to 

ensure that the reported data are accurate and complete.

The Office of Inspector General’s (OIG) recent audit work 

within this area is shown in Table 5.
FY 2022 AGENCY FINANCIAL REPORT 127 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Table 5

OIG’s Recent Reports Relating to Pandemic Relief Laws

Activities Reviewed Review Results

GEER We issued three audits from a series of work on States’ administration of GEER fund grants. 

We found that one State designed awarding processes that would ensure GEER funds supported entities that were most 

significantly impacted by the coronavirus. However, we also found that the State did not always implement the awarding 

process as it was designed and could strengthen its monitoring process over entities’ use of the GEER grant.

We found that another State did not award all GEER grant funds to entities in accordance with the CARES Act, Federal 

regulations, and grant conditions. We also found that the State should strengthen its monitoring process and did not 

comply with the GEER grant award Federal cash management terms and conditions. Additionally, our work identified more 

than $650,000 in purchases that did not appear to be education-related.

We found that an additional State did not maintain sufficient documentation to support its processes for awarding GEER 

funds to eligible entities. We also found that the State did not have a written plan to monitor its GEER grant subgrantees. 

HEER We have issued five reports relating to HEER funds.

We issued a flash report that identified $73 million in duplicate HEER grant awards made by the Department. We found 

that the Department’s processes did not always prevent or timely identify and correct duplicate HEER grant awards, and 

that the Department did not consistently document activities taken to correct duplicate awards.

In our work related to the Department’s oversight of HEER fund grants, we found that the Office of Postsecondary 

Education (OPE) did not perform or document several key activities that are essential to effective program oversight. 

This included developing a framework to guide its monitoring practices, procedures, and controls and designing and 

implementing a risk-based monitoring plan to provide assurance that HEER grant funds are used appropriately and 

performance goals are being met. We also found that OPE did not establish performance goals for the HEER fund program 

or specific metrics that would provide a basis to monitor individual schools’ performance or report on outcomes at the 

program level.

In the first two audits from a series of work on postsecondary schools’ use of HEER funds, we found that two schools 

generally used the Student Aid portion of their HEER funds for allowable and intended purposes but did not always use 

the Institutional portion of their funds in accordance with Federal requirements. We also found that both schools did not 

minimize the time between drawing down and disbursing HEER funds nor deposit excess funds in an interest-bearing 

account, contrary to Federal regulations.

We issued a flash report on HEER-related risks that shared observations on closed schools that received or had access 

to HEER funds. We found that 17 schools that had closed on or before December 31, 2020, applied for and were awarded 

more than $4.9 million in HEER funds. We also noted that eight of those schools had drawn about $1.26 million from these 

grants after closure dates listed in a Department system.

Flexibilities We found improvements were needed in Federal Student Aid’s (FSA) implementation of Teacher Education Assistance 

for College and Higher Education (TEACH) Grant CARES Act flexibilities. We found weaknesses in FSA’s processes that 

may have resulted in inappropriate denials of CARES Act flexibilities to some eligible recipients and may have provided 

benefits to recipients who were not entitled to them. We also found weaknesses in processes associated with a contract 

modification that may have impacted FSA’s assurance that the contractor properly approved or rejected certifications of 

recipients impacted by COVID-19. 

Student Financial 

Assistance Program 

Requirements

We found that FSA took quick action to implement processes that generally achieved positive results in suspending 

and refunding most involuntary collections on defaulted Department-held loans. We specifically determined that FSA 

suspended administrative wage garnishments and Treasury offsets for over 96 percent of the borrowers that FSA 

collected payments for within 90 days of the start of the suspension period. We also found that FSA refunded 99 percent 

of administrative wage garnishments and Treasury offsets that were collected from March 13, 2020, through September 

30, 2020. Although FSA refunded most administrative wage garnishments and Treasury offsets collected for the period 

of our review, it did not reprocess all refunds that were subsequently returned to Treasury and did not refund all wage 

garnishments and Treasury offsets collected. In addition, FSA did not develop procedures to obtain and track the U.S. 

Department of Justice’s progress on suspending and refunding involuntarily collections on defaulted Departmentheld loans.

Data Quality and 

Reporting

We issued a flash report on ESF reporting in the Federal Audit Clearinghouse regarding the inconsistent reporting of 

subprogram expenditures by grantees and subgrantees. This included instances where grantees and subgrantees did not 

identify subprograms or used variations of subprogram identifying information. 

In our work relating to HEER reporting requirements, we found that 81 of the 100 recipients included in our nonstatistical 

sample complied with HEER Institutional portion reporting requirements. However, we were unable to locate Institutional 

portion reports on the websites of the 19 other recipients. As of September 30, 2020, those 19 recipients had drawn down 

over $5.5 million of the almost $29 million awarded to them. 

Our work on postsecondary schools’ use of HEER funds also reviewed the timeliness and quality of the data that two 

schools reported on their use of HEER funds. We found that the information in both schools’ required HEER reports were 

generally accurate, complete, and timely.
FY 2022 AGENCY FINANCIAL REPORT 128 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Activities Reviewed Review Results

Department Operations Our assessment of the Department’s reconstitution plans following COVID-19 found that the Department generally 

incorporated available guidance, which was intended to provide for a safe and gradual return to Federal offices, in its 

Workplace Reconstitution Transition Plan. However, we noted that the Department did not address anti-retaliation, 

including practices for ensuring that no adverse or retaliatory action is taken against an employee who adheres to 

guidelines or raises workplace safety and health concerns, and did not periodically reassess and update self-screening 

questions as suggested by available guidance.

We issued a Management Information Report that identified challenges that the Department may face as it implements 

and oversees the CARES Act. These included grantee oversight and monitoring, student financial assistance oversight 

and monitoring, and data quality and reporting. We noted that the Department should consider these persistent challenges 

and the lessons learned from its administration of the Recovery Act as it implements and administers the programs and 

provisions authorized under the CARES Act to reduce vulnerabilities to fraud, waste, abuse, noncompliance, and other 

issues that could impact a grantee’s or subgrantee’s ability to achieve intended programmatic results.

The OIG recent investigative activity within this area is shown in Table 6. 

Investigations of Pandemic Relief Funding 

Table 6

OIG’s Recent Investigative Activity Relating to Pandemic Relief Funding

Area Example of Related Investigative Activity

Institutions OIG investigations have identified institutions that drew down funds when not entitled to them, drew down 

funds when knowingly closing, or drew down funds with no intent to provide them to students. 

Program Participants OIG investigations have identified students stealing the identity of others to fraudulently obtain 

HEER funds. 

OIG investigations have identified schemes associated with the HEER program where individuals target 

institutional accounts containing HEER funds or other individuals submitted applications in mass to 

multiple institutions to obtain funds.

Employees OIG investigations have identified employees applying for non-ED pandemic related funds such as 

Paycheck Protection Program (PPP) for which they were not entitled to.

Ongoing and Planned Work

Our ongoing work in this area includes reviews of two 

States’ oversight and use of ESSER funds; LEAs’ use 

of ESSER funds for technology; a third school’s use of 

HEER funds; FSA’s use of pandemic assistance program 

administration funds; and FSA’s processes for the return of 

Title IV of the Higher Education Act of 1965, as amended 

(Title IV) requirements, cancellation of borrower loans, and 

exclusion Pell lifetime usage.

Our planned projects relating to State and local programs 

within this area for fiscal year (FY) 2023 include reviews 

of additional States’ oversight and use of ESSER funds, the 

Department’s oversight of ESSER funds, the Department’s 

oversight of HEER funds to replace lost revenue, and States’ 

administration and oversight of EANS grant funds. 

Our planned project relating to student financial assistance 

and higher education programs within this area for 

FY 2023 include a review of FSA’s transition of Federal 

student loan borrowers back into repayment after the relief 

measures implemented in response to the pandemic expire.

Progress in Meeting the Challenge 

The Department stated that it took steps to ensure 

appropriate interpretation of the legislative requirements in 

multiple pandemic relief laws. This included collaboration 

with Congressional Appropriations Committee staff and 

the Office of Management and Budget to help ensure 

that statutory requirements and program implementation 

priorities were met. The Department added that multiple 

offices coordinated to expedite the award of pandemic relief 

grants while administering its portfolio of existing programs 

and responding to accountability engagements of the 

Government Accountability Office and the OIG.

The Department stated that it leveraged pandemic hiring 

authorities to help address its increased administrative and 

oversight responsibilities. This included specific activities to 

support monitoring efforts related to the HEER, ESSER, 

GEER, and EANS programs. The Department added that 

it implemented multiple strategies to provide support and 

help ensure the quality of data collected. According to the 

Department, this included providing technical assistance, 

using risk-based monitoring approaches, ensuring 
FY 2022 AGENCY FINANCIAL REPORT 129 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

relevant programs were included in guidance for nonFederal auditors, coordinating with the OIG, establishing 

processes for regular communication with grantees, and 

implementing structured data collection processes, with 

changes this year having been significantly informed 

by lessons learned from the initial ESF grantee data 

collection experience. 

The Department added that it took steps to implement 

pandemic relief requirements related to the student 

financial assistance programs. This included suspending 

payments and interest accrual on Federal student loans, 

stopping wage garnishments for borrowers in default, and 

ensuring that flexibilities were applied to eligible TEACH 

Grant recipients. The Department also stated that it is 

making preparations to return all borrowers to a repayment 

status when the payment pause ends. According to the 

Department, its plan includes borrower outreach, servicer 

hiring, training and preparation, policy enhancements, and 

vendor and process oversight.

What the Department Needs to Do 

The Department identified several actions it had taken to 

address the challenges posed by the pandemic relief laws. Its 

activities to provide guidance and assistance to recipients, 

implement certain requirements, and expand its oversight 

capabilities are generally responsive to this challenge. 

However, our work continues to identify weaknesses in 

areas that include recipients’ program administration, 

the Department’s programmatic oversight, and related 

data quality and reporting. Overall, the Department 

should continue its efforts, improve its implementation of 

controls to better ensure effective monitoring and oversight 

processes, and use the information it receives to identify 

and address risks as they emerge. It is also important that 

the Department implement activities in ways that allow 

it to assess their impact and whether they contribute to 

improved outcomes that demonstrate progress toward 

addressing this challenge. 

Specifically, the Department should continue to employ 

strategies that effectively support its program staff and 

grantees. It should also assess the results of its monitoring 

efforts and other information collected from recipients 

to identify areas that could benefit from additional 

guidance or technical assistance. The Department should 

also continuously evaluate its oversight activities and 

refine them as necessary to enhance their effectiveness. 

Given the importance of spending these funds quickly 

and appropriately, it is important for the Department to 

obtain timely and accurate information and to respond 

quickly to emerging challenges identified by it or others, 

including Federal and non-Federal auditors. Continuing 

to use a lessons-learned approach, like the one cited above 

on changes to its data collection strategy, is a good way 

for the Department to continue to learn from and act on 

emerging issues. 

To implement the student financial assistance related 

statutory provisions, waivers, and flexibilities, the 

Department needs to continue to provide guidance to 

and work with postsecondary institutions, contracted 

servicers, guaranty agencies, and accrediting agencies. 

The Department also needs to monitor and oversee these 

entities to ensure that the provisions are implemented 

effectively. Importantly, when these provisions expire, the 

Department will need to carefully reinstate the student loan 

provisions for which the relief was temporarily provided. 
FY 2022 AGENCY FINANCIAL REPORT 130 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

MANAGEMENT CHALLENGE 2—

OVERSIGHT AND MONITORING

Effective oversight and monitoring of the Department’s 

programs and operations are critical to ensure that 

funds are used for the purposes intended and programs 

are achieving goals and objectives. This is a significant 

responsibility for the Department given the numbers of 

different entities and programs requiring monitoring and 

oversight, the amount of funding that flows through the 

Department, and the impact that ineffective monitoring 

could have on stakeholders. Two subareas are included in 

this management challenge: student financial assistance 

programs and grantees. 

Oversight and Monitoring—Student Financial 

Assistance Programs 

FSA, a principal office of the Department, seeks to ensure 

that all eligible individuals can access Federal financial aid 

so they can gain the benefits of education and training 

beyond high school. FSA is the nation’s largest provider of 

student financial aid and is responsible for implementing 

and managing the Federal student financial assistance 

programs authorized under Title IV. These programs 

provide grants, loans, and work-study funds to students 

attending colleges or career schools. FSA directly manages 

or oversees a loan portfolio of more than $1.6 trillion, 

representing about 216.9 million student loans to more 

than 43 million borrowers. FSA oversees the disbursement 

of more than $27 billion in grants to more than 6 million 

recipients.11 FSA also oversees approximately 5,600 

postsecondary institutions that participate in the Federal 

student aid programs. 

In FY 2021, FSA performed these functions with 

an administrative budget of $1.9 billion and about 

1,400 employees, along with contractors that provide 

outsourced business operations. From FY 2017 to FY 2021, 

FSA delivered an average of $118.9 billion in Federal 

student aid to an average of 11.4 million students.

11 Information relating to the amount of the loan portfolio, number of loans and 

borrowers, amount of grants, and number of recipients are from the Federal 

Student Aid Annual Report FY 2021.

Figure 14

Student Aid Delivered and Postsecondary Students Receiving Aid FYs 2017–2021

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

 

Total Federal Student

Aid Delivered (in

billions of $)

$122.5 $122.4 $121.8 $115.6 $112.0

 

Total Postsecondary

Students Receiving

Aid (in millions)

12.9 12.7 10.4 10.8 10.1

Source: Federal Student Aid Annual Report FY 2021 
FY 2022 AGENCY FINANCIAL REPORT 131 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Within the Department, FSA administers the Federal 

student assistance programs, and the Office of 

Postsecondary Education develops Federal postsecondary 

education policy and regulations for the Federal student 

assistance programs. The Office of Postsecondary Education 

also administers the review process for accrediting agencies 

to ensure that the Department recognizes only agencies 

that are reliable authorities for evaluating the quality of 

education and training postsecondary institutions offer.

Why This Is a Challenge

The Department must provide effective oversight and 

monitoring of the student financial assistance programs 

to ensure that the programs are not subject to fraud, 

waste, and abuse. The Department’s responsibilities 

include coordinating and monitoring the activity of 

many Federal, State, nonprofit, and private entities 

involved in Federal student aid delivery, within a statutory 

framework established by Congress and a regulatory 

framework established by the Department. These entities 

include postsecondary institutions, contracted servicers, 

collection agencies, accrediting agencies, guaranty agencies, 

and lenders. 

Audits Relating to Student Financial Assistance Programs 

Our audits involving the oversight and monitoring of 

student financial assistance programs continue to identify 

instances of noncompliance as well as opportunities for the 

Department to further improve its processes. The OIG’s 

recent work within this area has covered a wide range of 

activities, as shown in Table 7.

Table 7

OIG’s Recent Reports Relating to the Oversight and Monitoring of Student Financial Assistance Programs

Activities Reviewed Review Results

Accreditation In an audit of the Department’s processes for accessing the Accrediting Council for Independent Colleges and School’s 

compliance with Federal regulatory criteria for recognition from 2016 through 2018, we determined that the Department did 

not comply with all regulatory requirements during its 2016 review of the Accrediting Council for Independent Colleges and 

School’s petition for recognition renewal because its process did not consider all available relevant information during its 

review as required. We also determined that the Department implemented a process for assessing the Accrediting Council for 

Independent Colleges and School’s compliance with recognition criteria following a court remand in 2018 that was permitted 

under applicable policies and regulations as well as the court’s remand order.

Heightened Cash 

Management

We found that FSA consistently administered its heightened cash monitoring payment methods when utilizing this process for 

the top five reasons FSA placed a school on heightened cash monitoring. We also concluded that FSA’s use of heightened 

cash monitoring was an effective oversight tool. However, we noted opportunities for FSA to improve its controls to better 

ensure that it (1) consistently places schools on a heightened cash monitoring payment status when they submitted late 

annual financial statements or had composite scores that fell below the minimum financial responsibility score, (2) tracks 

a school’s method of payment status from the time of recommendation for heightened cash monitoring placement until the 

placement was made, and (3) retains all required documentation.

Professional Judgment In the first of a series of audit work in this area, we found that a school did not adequately document special circumstances for 

more than 90 percent of the students in our nonstatistical random sample for whom it applied professional judgment. Because 

the school did not adequately document special circumstances, its application of professional judgment was not in accordance 

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

In our second audit in this area, we found that a school improperly applied professional judgment across three classes of 

students and based on wedding expenses or standard living expenses rather than applying professional judgment on a 

case-by-case basis for special circumstances, as required by the HEA. The school also did not adequately document special 

circumstances for 57 percent of the students for whom it applied professional judgment for one or both award years covered 

by our audit.

Sales of 

Postsecondary 

Schools

We found that the Department did not take actions sufficient to mitigate significant financial responsibility and administrative 

capability risks posed by a non-profit company and the 13 for-profit postsecondary schools that it purchased in transactions 

occurring in November 2017 and February 2018. We also found that the Department did not follow several of its procedures 

relating to subsequent activities involving those schools. For example, the Department retroactively approved temporary 

interim nonprofit statuses for 2 of the 13 schools, to avoid a lapse in their eligibility to participate in the Title IV programs, 

without following its own procedures for ensuring that schools meet the regulatory definition of a nonprofit school. Additionally, 

the Department did not follow FSA’s financial analysis procedures when it limited a letter of credit requirement despite lacking 

certain documentation for a transaction involving the resale of 4 of the 13 schools in 2019. We also found that the Department 

did not follow FSA policy when it extended the temporary provisional program participation agreements for the four schools 

without receiving evidence that the accrediting agencies and all State authorizing agencies had approved the changes in 

ownership. We also determined that the Department allowed the use of surety funds to pay the operating expenses of schools 

that were planned to close in December 2018. Allowing surety funds to be used for such purposes was unprecedented, and 

neither the Department nor FSA had policies or procedures for such a situation. Finally, we found that the Department’s 

standard procedures were not rigorous enough to ensure the purchaser’s compliance with requirements for drawing down and 

disbursing Title IV funds, including the payment of credit balances. 
FY 2022 AGENCY FINANCIAL REPORT 132 U.S. DEPARTMENT OF EDUCATION

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Activities Reviewed Review Results

Total and Permanent 

Disability (TPD) 

Discharges

We found that FSA appropriately approved and rejected TPD applications and that its contractor generally serviced TPD 

accounts in accordance with Federal program requirements. However, we identified design weaknesses in FSA’s control 

activities for the TPD discharge application review process that may negatively affect the operating efficiency and effectiveness 

of the process and increase the risk that FSA approves applications that are inaccurate or incomplete. We also found 

weaknesses in FSA’s documented procedures and its quality control review for its TPD discharge application review process, 

as well as weaknesses in FSA’s monitoring of the TPD discharge process.

Verification of Free 

Application for Federal 

Student Aid (FAFSA) 

Data

We completed a series of eight audits within this area. 

In our review of FSA’s controls over the school verification process, we found that FSA implemented five significant control 

activities over schools’ processes for completing verification procedures and reporting verification results. However, we 

determined that FSA did not monitor four of those control activities on a regular basis and did not address all of the control 

issues identified in a separate internal evaluation of its processes to ensure schools performed verification. In a separate 

audit, we found that FSA did not evaluate its process for selecting Free Application for Federal Student Aid data elements 

that schools were required to verify and generally did not effectively evaluate and monitor its processes for selecting students 

for verification. 

We also performed a series of external audits of selected schools to assess their compliance with Federal verification and 

reporting requirements. Of six schools covered by these audits, three did not always complete verification of applicant data in 

accordance with Federal requirements, and two did not always accurately report verification results to FSA.

Investigations of Student Financial Assistance Program Participants

The OIG’s investigative recent work continues to identify fraud, waste, and abuse of student financial assistance program 

funds. This includes each of the areas in Table 8.

Table 8

OIG’s Recent Investigative Activity Relating to the Student Financial Assistance Programs

Area Example of Related Investigative Activity

Institutions An OIG investigation identified instances where a school concealed making payments on students’ loans to prevent defaulting on 

their loans and being counted against the school’s cohort default rate.

School Officials OIG investigations identified improper activities of school officials that included falsifying student eligibility information, deceiving 

school applicants, students, and donors into believing it was a top-ranked program.

Program 

Participants

OIG investigations identified schemes where a student underreported income and assets to obtain student financial assistance they 

were not eligible to receive; a man targeted veterans and student loan borrowers and offered to help them obtain discharges for 

Federal student loans in exchange for a fee; and a woman deceived borrowers into believing they qualified for student loan relief 

and charged fees to facilitate their loan discharge process.

Distance 

Education Fraud 

Rings

Distance education fraud rings are large, loosely affiliated groups of criminals who seek to exploit vulnerabilities in distance 

education programs. The OIG has investigated numerous instances where these groups use the identities of others (with or without 

their consent) to fraudulently obtain Federal student aid.

Ongoing and Planned Work

Our ongoing work in this area includes reviews of 

an additional school’s use of professional judgment, 

FSA’s transition to the Next Generation Loan 

Servicing Environment, the Department’s process for 

terminating private collection agency contracts, three 

schools’ compliance with career pathways and ability 

to benefit provisions, and reviews of FSA’s processes for 

overseeing proprietary school compliance with 90/10 

revenue requirements. 

Additional planned projects for FY 2023 include FSA 

oversight of career pathway programs, FSA oversight of 

its contractor’s acceptability review process for proprietary 

school annual audits, FSA’s borrower defense to repayment 

loan discharge process, FSA’s Student Aid and Borrower 

Eligibility Reform Initiative, and FSA’s transition plans and 

oversight of Business Process Operations. 

Progress in Meeting the Challenge

The Department stated that FSA established an 

Enforcement Office in October 2021 to strengthen its 

oversight of postsecondary schools participating in the 

Title IV programs. According to the Department, the 

Enforcement Office will proactively identify and address 

substantial misrepresentations and other misconduct by 

schools. The Department further stated that in FY 2023 

the Enforcement Office plans to use a risk model to focus 
FY 2022 AGENCY FINANCIAL REPORT 133 U.S. DEPARTMENT OF EDUCATION

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resources on schools that pose the highest risk to students, 

their families, and taxpayers. 

The Department identified several other efforts undertaken 

by FSA that were intended to improve oversight and 

monitoring activities relating to the student financial 

assistance programs, including 

• working to improve the usefulness of single audits as an 

oversight and monitoring tool;

• employing an analytical model to identify at-risk schools 

and prioritize its oversight resources to provide support 

to schools; 

• proposing regulations relating to change of school 

ownership approvals that could limit potentially harmful 

agreements; 

• implementing the Fostering Undergraduate Talent by 

Unlocking Resources for Education Act, which will allow 

FSA to receive income tax data more easily from the 

Internal Revenue Service. The Department stated that 

this data will help strengthen the oversight of participants 

in the student financial assistance programs by ensuring 

the accuracy of income information used to determine 

student aid eligibility and monthly payment amounts;

• continuing use of a model for verification selection that 

reduces the number of filers selected without sacrificing 

the overall degree of confidence; 

• using a data match with the Social Security 

Administration to automatically discharge student 

loans for certain individuals that qualify for total and 

permanent disability relief;

• planning a long-term servicing strategy (Unified 

Servicing and Data Solution) that is intended to 

improve borrower experiences and increase servicer 

accountability; and

• working to raise public awareness of consumer scams 

through communications via social media, direct emails, 

and its website.

What the Department Needs to Do

The Department continued to report progress in improving 

its oversight and monitoring of student financial assistance 

programs. It specifically identified actions that were 

responsive to the subject areas of several recent OIG 

reports. This included activities intended to improve 

its processes relating to verification of FAFSA data, 

TPD discharges, and changes in postsecondary school 

ownership. While there has been progress, it is critical that 

the Department continue its improvement efforts. This 

includes effectively designing and implementing systems 

of internal controls and developing processes that allow an 

assessment of their effectiveness and their contributions 

towards the achievement of established goals. Further, it 

is important that the Department develop measures to 

evaluate its progress and demonstrate the impact of its 

initiatives relating to this challenge. 

We continue to recognize that the Next Gen initiative 

has significant potential to improve FSA’s ability to 

oversee contractors that service Federal student aid. It 

remains important for FSA to ensure that this initiative is 

effectively implemented, and once in place that it follows 

through to hold its contractors accountable for effectively 

administering their responsibilities. 

Our audits and investigations of student financial assistance 

program participants and audits of the Department’s related 

oversight and monitoring processes will continue to assess 

a variety of effectiveness and compliance elements. This 

area remains a management challenge given our continued 

findings in this area.

Oversight and Monitoring—Grantees

The Department is responsible for administering education 

programs that Congress authorized and the President 

signed into law. This responsibility includes awarding 

program funds to a wide range of eligible recipients, 

including LEAs, SEAs, IHEs, individuals, nonprofits, 

and other organizations, and monitoring their progress in 

meeting program objectives. The Department also ensures 

that programs are administered fairly and that grants are 

executed in conformance with both authorizing statutes 

and laws prohibiting discrimination in Federally funded 

activities, collects data and conducts research on education, 

and helps to focus attention on education issues of national 

importance. The funding for many grant programs flows 

through primary recipients, such as SEAs, to subrecipients, 

such as LEAs or other entities. The primary recipients must 

oversee and monitor the subrecipients’ activities to ensure 

compliance with Federal requirements.

The Department administers more than 100 grant 

programs that annually serve about 56 million elementary 

and secondary students attending 98,000 public schools 

and 32,000 private schools, as well as about 9 million 

postsecondary students attending 5,600 colleges and 

universities. Many of these programs also serve other types 

of students, extending from early learning through adult 

education. The Department awards discretionary grants 

using competitive processes and priorities, and formula 

grants using formulas established by Congress. In all cases, 
FY 2022 AGENCY FINANCIAL REPORT 134 U.S. DEPARTMENT OF EDUCATION

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the Department’s activities are governed by the program 

authorizing legislation and implementing regulations. 

One of the key programs that the Department administers 

is Title I, Part A, which provided about $17.5 billion in 

FY 2022 for local programs that provide extra academic 

support to help an estimated 25 million students in highpoverty schools meet State academic standards. Another key 

program is Individuals with Disabilities Education Act, Part 

B Grants to States, which provided more than $13.3 billion 

in FY 2022 to help States and school districts meet the 

special educational needs of an estimated 7.4 million 

students with disabilities.

Why This Is a Challenge

Effective monitoring and oversight are essential to ensure 

that grantees meet grant requirements and achieve program 

goals and objectives. Our recent audits related to several 

grant programs identified weaknesses in grantee oversight 

and monitoring that included concerns with SEA and LEA 

controls and Department oversight processes.

Audits Relating to Federal Education Grant Programs 

Our recent audits at the grantee level identified weaknesses that 

could have been limited through more effective oversight and 

monitoring. The internal control issues identified within these 

areas could impact the effectiveness of the entities reviewed and 

their ability to achieve intended programmatic results. This 

included work related to the programs and activities identified 

in Table 9.

Table 9

OIG’s Recent Reports Relating to Grantee Implementation of Federal Education Grant Programs

Activities Reviewed Review Results

Charter Schools We have issued two audit reports relating to Charter School Program Grants for the Replication and Expansion of High-Quality 

Charter Schools. We found that two nonprofit charter management organizations did not fully comply with Federal grant 

reporting requirements and did not charge only adequately documented and allowable expenditures to their grants.

Disaster Recovery We have issued eleven reports relating to disaster recovery funding authorized under the Bipartisan Budget Act of 2018. 

Our work at two SEAs relating to internal controls over the Immediate Aid to Restart School Operations (Restart) program 

identified weaknesses in programmatic monitoring processes, internal audit division staffing, processes to assess fraud risks, 

internal controls over procurement, and segregation of duties. 

Our work at three SEAs relating to Restart allocations and uses of funds found that one SEA established and implemented 

effective controls over Restart allocations and uses of funds. However, we identified instances of noncompliance that included 

one district inappropriately charging unallowable personnel expenditures to the program and another entity failing to obtain 

control and ownership of materials, funded by the Restart program, at nonpublic schools. We found that another SEA also 

established and implemented effective controls over Restart allocations and uses of funds but could better maintain and 

manage its records for the Restart program. We found that the third SEA appropriately allocated program funds but could 

improve its processes for ensuring that LEAs use program funds for allowable and intended purposes by better adhering to its 

established procedures for reimbursement of expenditures.

Our work at four SEAs relating to the Temporary Emergency Impact Aid for Displaced Students (EIA) program found that all 

four SEAs did not ensure that the displaced student count data provided to the Department were accurate and complete or 

that LEAs accounted for EIA program funds received for students reported as children with disabilities in accordance with 

Federal requirements. We also found that three SEAs did not ensure that LEAs used EIA program funds to pay salaries only 

for employees who supported schools with displaced students. Our most recent report in this area found that an SEA received 

an estimated $6.5 million more in EIA program funds than it should have received because it incorrectly interpreted the Federal 

definition of a displaced student and lacked effective written procedures and system controls to ensure that accurate student 

enrollment and withdrawal data were entered in its student information system. We found that another SEA expensed more 

than $300,000 in EIA program funds for employees who worked at schools that did not support displaced students because it 

did not monitor LEAs’ EIA program expenditures.

We issued a Flash Report on the risk of an SEA’s unallowable use of EIA program funds. We found that the SEA may have 

charged up to $1.3 million in payrolls costs to the EIA program for employees who were not employed by the SEA during the 

accrual periods applicable to the payments.

In our most recent work in this area, we found that a postsecondary school used approximately $1.8 million in Emergency 

Assistance to Institutions of Higher Education program funds for lost tuition revenue and to purchase certain equipment that 

was not allowable in accordance with Federal requirements. 
FY 2022 AGENCY FINANCIAL REPORT 135 U.S. DEPARTMENT OF EDUCATION

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Activities Reviewed Review Results

Individuals with 

Disabilities 

Education Act

We have issued two audit reports relating to SEAs’ and selected LEAs’ development and implementation of individualized 

education programs (IEP) for children with disabilities who attend virtual charter schools. We found that both SEAs generally 

had sufficient internal controls to ensure that LEAs developed IEPs in accordance with Federal and State requirements for 

children with disabilities who attend virtual charter schools and that these students were provided with the services described 

in their IEPs. However, we identified weaknesses at selected LEAs that included insufficient written procedures for IEP 

development and documenting the delivery of services, not ensuring that they maintained IEPs that included all of the required 

information describing the services that students needed, and not maintaining sufficient documentation to support that all 

special education services that were outlined in IEPs were provided.

Our recent audits of the Department’s oversight and monitoring processes over several grant programs identified internal 

control weaknesses and opportunities for improvement. These weaknesses could limit the Department’s ability to ensure 

that grantees demonstrated progress towards meeting programmatic objectives and properly safeguarded and used Federal 

education funds. As noted in Table 10, our work included audits within several areas.

Table 10

OIG’s Recent Reports Relating to the Department’s Oversight and Monitoring of Federal Education Grant Programs

Area Reviewed Review Results

Charter Schools We found that the Department did not track and report on whether charter schools that grant recipients opened and expanded 

with Federal funds remained open after the grant performance period ended. We also found that grant recipients did not 

always open or expand the number of charter schools committed to in their approved grant applications.

Disaster Recovery We found that the Department designed policies and procedures that should have provided reasonable assurance that it 

awarded and monitored Defraying Costs of Enrolling Displaced Students in Higher Education and Emergency Assistance 

to Institutions of Higher Education program funds in accordance with applicable guidance. However, we found that the 

Department did not implement all processes and risk mitigation strategies as designed. As a result, the Department 

inappropriately awarded funds to some of the grantees whose applications we reviewed.

Every Student 

Succeeds Act

We found that the Department has provided inadequate oversight of grantee performance and funds awarded under the 

Student Support and Academic Enrichment program. Specifically, we found that the Department has conducted only limited 

formal monitoring activities; has not ensured that SEAs are meeting all reporting requirements; and did not always develop, 

finalize, and implement monitoring plans to monitor grantees’ performance and use of funds. As a result, the Department has 

little assurance that grantees are making progress toward program goals and objectives and limited insight regarding how 

grantees and subgrantees are using, or potentially misusing, grant funds.

Our work on State plans required under the Every Student Succeeds Act found that the Department designed processes 

that would provide reasonable assurance of identifying and resolving potential instances of State plans’ noncompliance with 

applicable requirements and complying with Department policy. However, the Department did not always implement these 

processes as designed. As a result, we could not determine why the Department selected certain peer reviewers, could not 

ensure that the Department considered conflict of interest information it collected from peer reviewers before assigning them 

to panels, and could not always determine whether the Department considered the results of the peer review process when 

providing States feedback to strengthen the technical and overall quality of their plans.
FY 2022 AGENCY FINANCIAL REPORT 136 U.S. DEPARTMENT OF EDUCATION

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Investigations of Federal Education Grant Program Participants

The OIG’s recent investigative work continues to identify fraud relating to Federal education grant programs. This includes 

the areas identified in Table 11.

Table 11

OIG’s Recent Investigative Activity Relating to Federal Education Grant Programs

Subject Area Example of Related Investigative Activity

Contractors OIG investigations identified instances where contractors invoiced for services that they did not perform, fraudulently obtained 

contracts, committed bribery, and made kickback payments.

SEA Officials An OIG investigation identified an SEA official receiving financial benefits in exchange for leasing school space to a 

private company.

LEA Officials OIG investigations identified instances where officials fraudulently enrolled private school students in virtual public schools and 

then falsely reported those students to the SEA.

Another OIG investigation identified instances where LEA employees submitted false timecards for work not performed on 

Federally funded programs.

Charter School 

Officials

OIG investigations identified instances involving charter school founders and senior officials who participated in conspiracy, 

fraud, theft, money laundering, false bankruptcy declarations, and other scams, abusing their positions of trust for 

personal gain.

Ongoing and Planned Work

Ongoing work in this area includes reviews of an SEA’s 

use of Restart program funds, the Department’s oversight 

of Charter School Program Grants for Replication 

and Expansion of High-Quality Charter Schools, 

reviews of selected SEAs’ implementation of their 

Statewide accountability systems, and the Department’s 

implementation of its rule concerning equity in the 

Individuals with Disabilities Education Act. 

Planned projects for FY 2023 include the Department’s 

oversight of the State Vocational Rehabilitation Services 

program, the Department’s approval of alternative 

assessment waivers, and selected SEAs’ oversight of 

spending and educational outcomes of Prevention and 

Intervention Programs for Children and Youth Who Are 

Neglected, Delinquent, or At Risk. 

Progress in Meeting the Challenge

The Department stated that it continues to employ a 

progressive improvement approach to addressing the 

longstanding management challenge on oversight and 

monitoring of grant recipients. The Department added 

that in FY 2022 this included focusing on the consistent 

application of risk-based and data-driven monitoring 

approaches to improve recipient and grant program 

outcomes. According to the Department, it implemented 

several initiatives to further these goals, to include

• implementing a grant monitoring solution (Virtual 

Monitoring Principles), intended to increase the 

efficiency, collaboration, and consistency of risk-based 

monitoring and technical assistance protocols across 

Department offices;

• providing technical assistance to Department offices 

that focused on grantee and subrecipient responsibilities, 

adhering to internal controls, subrecipient monitoring, 

data quality, and reporting;

• facilitating information sharing through monthly 

and quarterly grant policy forums on oversight and 

monitoring practices, solutions, and resources;

• continually assessing the grant-making process to 

identify improvement opportunities using data 

and collaboration;

• utilizing Grantee Satisfaction Survey results to inform 

improvements in the areas of technical assistance and 

grant performance reporting across program offices; and

• coordinating the oversight and monitoring of pandemic 

relief programs to ensure that funds were used for 

the purposes intended and that goals and objectives 

are achieved.

What the Department Needs to Do

The Department continues to report progress in enhancing 

its grantee oversight processes. The Department identified 

several actions it had taken to address this challenge, 

including a focus on risk-based monitoring approaches to 

improve outcomes. While this, and several other actions 
FY 2022 AGENCY FINANCIAL REPORT 137 U.S. DEPARTMENT OF EDUCATION

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it identified, are responsive to this challenge, it remains 

critical that the Department develop and implement 

processes that allow it to assess the outcomes of these 

actions. This includes establishing measures against which 

it can assess the impact of its various initiatives and identify 

additional opportunities for improvement.

Given our ongoing findings under this challenge area, 

the Department should continue its efforts to implement 

innovative approaches to grantee oversight, offer common 

training to program staff, encourage collaboration and 

communication within and across program offices, and take 

steps to ensure that its technical assistance and monitoring 

activities are both risk-based and data-driven. The Department 

should especially focus on the actions taken by pass-through 

entities to provide oversight of their subrecipients. Importantly, 

concerning its actions in this area. Lastly, it is important for the 

Department to continue to explore ways to more effectively 

leverage the resources of other entities that have roles in grantee 

oversight, including those conducting single audits under the 

Office of Management and Budget (OMB) 2 Code of Federal 

Regulations 200, Subpart F, given its generally limited staffing 

in relation to the amount of Federal funding that it oversees.

MANAGEMENT CHALLENGE 3 — DATA 

QUALITY AND REPORTING 

The Department collects, analyzes, and reports on data 

for many purposes that include enhancing the public’s 

ability to access high-value education-related information, 

reporting on programmatic performance, informing 

management decisions, and improving education in 

the United States. The Department collects data from 

numerous sources, including States, which compile 

information relating to about 17,000 public school districts 

and 98,000 public schools; about 5,600 postsecondary 

institutions, including universities and colleges, as well as 

institutions offering technical and vocational education 

beyond the high school level; and surveys of private 

schools, public elementary and secondary schools, students, 

teachers, and principals. 

Why This Is a Challenge

The Department, its grantees, and its subrecipients 

must have effective controls to ensure that reported data 

are accurate and complete. The Department relies on 

program data to evaluate program performance and inform 

management decisions. 

Audits and Inspections Involving Data Quality and Reporting 

Our recent audit work identified a variety of weaknesses 

in the quality of reported data and recommended 

improvements at the Department and at SEAs and LEAs. 

This included the following areas, as shown in Table 12.

Table 12

OIG’s Recent Data Quality Related Reports

Area Reviewed Review Results

Charter Schools We issued a report on the effectiveness of Charter School Programs in increasing the number of charter schools. We found 

that the Charter School Program office’s processes did not result in grant recipients reporting clear, reliable, and timely 

information. Their processes also did not result in the Charter School Program office receiving all the information needed to 

assess grant recipients’ performance or evaluate the overall effectiveness of the Charter School Program.

We have issued two audit reports relating to Charter School Program Grants for the Replication and Expansion of High-Quality 

Charter Schools. We found that both grant recipients did not include complete and accurate information for all performance 

measures on which they were required to report in their annual performance reports. We also found that both grant recipients 

did not always retain records that supported the performance measures that they reported to the Department. 

Clery Act We found that two postsecondary institutions did not have effective controls to ensure they reported complete and accurate 

Clery Act crime statistics. We concluded that both schools’ Clery Act crime statistics were not complete and accurate and as a 

result neither school provided reliable information to current and prospective students, their families, and other members of the 

campus community for making decisions about personal safety and security.

Digital Accountability 

and Transparency 

(DATA) Act

An independent public accountant, with OIG oversight, determined that the Department submitted data of excellent quality 

based on guidance provided by the Council of Inspectors General on Integrity and Efficiency. It also determined that the 

Department implemented and used the Government-wide financial data standards established under the DATA Act. However, 

it found that Department did not submit certain data completely, accurately, or timely, and identified internal control deficiencies 

over the Department’s DATA Act submissions.
FY 2022 AGENCY FINANCIAL REPORT 138 U.S. DEPARTMENT OF EDUCATION

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Area Reviewed Review Results

Disaster Recovery We found that four SEAs did not ensure that the displaced student count data provided to the Department under the EIA 

program were accurate and complete. This included instances where students who did not change schools or not did not 

transfer from a disaster area were included in displaced student counts, students withdrew from the school prior to the disaster 

or enrolled after the reporting date, and displaced student counts were not supported by adequate documentation.

Pandemic Relief We found inconsistent reporting of subprogram expenditures by grantees and subgrantees in the Federal Audit Clearinghouse. 

This included instances where subprograms were not identified and variations in the information that was used to identify 

subprograms. As a result, Federal award expenditure data at the subprogram level cannot be reliably used by the Department 

and associated data on areas such as audit results, audit findings, and corrective action plans are not consistently reported at 

the subprogram level. 

In our work relating to HEER reporting requirements, we were unable to locate Institutional portion reports on the websites 

of the 19 percent of the recipients included in our nonstatistical sample. We also found that 22 percent of the recipients in 

our sample that reported expenditures in the ‘Other Uses’ category did not follow Department instructions or did not provide 

sufficient detail.

Ongoing and Planned Work

Ongoing work in this area includes FSA’s processes for 

schools to report the return of Title IV waivers, the 

Department’s reporting on experimental sites initiatives, 

and a school’s use of professional judgment. 

Progress in Meeting the Challenge

The Department stated that it identified the root causes 

for persistent data quality challenges in FY 2020 and 

concentrated its data quality efforts to collections associated 

with the ESF in the wake of the pandemic. According 

to the Department, it expanded a support contract to 

supplement existing staff resources and expertise. The 

Department added that this allowed for the development 

system architecture to identify potential data quality issues, 

many of which required resolution prior to acceptance 

of reports.

The Department stated that it provided several resources 

to support ESF grantees in response to these challenges. 

According to the Department, this included technical 

assistance (such as live and recorded webinars), business 

rule guides, and an ESF Reporting Help Desk. The 

Department stated that it also provided ESF grantees with 

clear expectations for reporting quality data in its ESF 

Year 2 Annual Performance Reports by communicating 

minimum data quality expectations for performance 

reporting and potential consequences for failure to report. 

The Department stated that its actions contributed to 

improved reporting compliance, and that it continued to 

review and address data quality issues across all collections. 

The Department provided examples of actions taken in 

FY 2022, including one Department office that applied 

special payment conditions to 40 noncompliant recipients. 

The Department also stated that another of its offices had 

just three grantees that had not submitted Year 2 reports. 

The Department further stated that multiple Departmentwide initiatives were completed, continued, initiated, or 

planned during FY 2022, including

• creating a performance metric focused on tracking 

instances where data collections lack data quality 

plans and working to update Information Quality 

Act Guidelines;

• completing a Data Quality Playbook that provides easily 

deployable strategies for program offices, especially their 

grant staff; 

• initiating development of data quality training tailored 

to different audiences;

• continuing to modernize the EDFacts system and 

implement data quality checks; and

• developing tools such as a data quality dashboard, data 

catalog, and query management resources.

What the Department Needs to Do

The Department continued to report progress in addressing 

this challenge through its actions to improve the quality 

of education data. This included activities relating to 

pandemic relief programs and other Department-wide 

initiatives. While the Department completed multiple 

actions to advance data quality, several of our recent reports 

included findings within this area. As with the preceding 

challenges, it is important that the Department continue to 

build upon its improvement efforts. It is also critical that it 

develop processes to assess the effectiveness of these efforts. 

This includes implementing methods to assess the impact 

of its data quality initiatives against established goals and 

considering any lessons learned to refine existing processes 

or establish new ones.
FY 2022 AGENCY FINANCIAL REPORT 139 U.S. DEPARTMENT OF EDUCATION

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MANAGEMENT CHALLENGE 4—

IMPROPER PAYMENTS

“Improper payments” are payments the government 

makes to the wrong person, in the wrong amount, or for 

the wrong reason. Although not all improper payments 

are fraudulent or represent a loss to the government, all 

improper payments degrade the integrity of government 

programs and compromise citizens’ trust in government. 

To reduce instances of improper payments, agencies must 

properly identify the cause of the improper payment, 

implement effective mitigation strategies to address 

the cause, and regularly assess the effectiveness of those 

strategies, refining them, as necessary.

The Payment Integrity Information Act of 2019 (PIIA) 

repealed and replaced several improper payments statutes, 

including the Improper Payments Elimination and 

Recovery Act of 2010 (IPERA) and consolidated those 

laws’ requirements. PIIA requires Federal agencies to reduce 

improper payments and to report annually on their efforts. 

It specifically requires that each agency, in accordance 

with guidance prescribed by OMB, periodically review 

all programs and activities that the agency administers 

and identify those that may be susceptible to significant 

improper payments. For each program and activity 

identified as susceptible to significant improper payments, 

the agency is required to produce a statistically valid 

estimate (or an estimate that is otherwise appropriate using 

a methodology that OMB approved) of the improper 

payments made by each program and activity. The agency is 

required to post those estimates to PaymentAccuracy.gov. 

PIIA also requires each agency’s Inspector General to 

determine the agency’s compliance with the statute for 

each fiscal year. To be considered compliant with PIIA, 

an agency must (1) publish an Agency Financial Report; 

(2) conduct a program-specific risk assessment; (3) publish 

improper payment estimates; (4) publish corrective action 

plans to reduce improper payments; (5) publish improper 

payment reduction targets, demonstrate improvements, and 

develop a plan to meet reduction targets; and (6) report 

improper payment rates of less than 10 percent. 

Why This Is a Challenge

The Department must ensure that the billions of 

dollars entrusted to it reach the intended recipients. 

In FY 2021, the Pell and the William D. Ford Federal 

Direct Loan (Direct Loan) programs continued to be 

susceptible to significant improper payments. In FY 2020, 

the Department also identified the EIA, Restart, and 

Emergency Assistance to Institutions of Higher Education 

programs as susceptible to improper payments because 

each of the programs met OMB criteria as disaster-related 

programs with $10 million or more in outlays in a given 

fiscal year. For FY 2021, we found that the Department 

published unreliable improper payment estimates for 

the Title I, Part A; Pell; and Direct Loan programs. It is 

important for the Department to develop reliable estimates 

so that it can identify the root causes and take actions to 

prevent and reduce improper payments.

Audits and Inspections Involving Improper Payments

The OIG’s review of the Department’s compliance with 

improper payment reporting requirements for FY 2021 

found that the Department did not comply with PIIA 

because it did not meet one of the six compliance 

requirements. Specifically, the Department reported an 

improper payment estimate for the Title I, Part A program 

that exceeded 10 percent. As shown in Table 13, our recent 

improper payment audits identified opportunities for 

improvement in multiple areas.
FY 2022 AGENCY FINANCIAL REPORT 140 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Table 13

Results of Recent OIG Statutorily Required Improper Payment Audits

FY of Department’s 

Reporting

Complied with 

Reporting 

Requirements Identified Concerns

2021 No The Department published unreliable improper payment estimates for the Title I, Part A; Pell; 

and Direct Loan programs. We found that the Department’s improper payment sampling and 

estimation plan for the Title I, Part A program was not adequate for SEAs that use certain 

advance payment processes. We also found that the Department’s sampling and estimation 

plans for the Pell and Direct Loan programs were unreliable. 

2020 No The Department published improper payment estimates for all five required programs. However, 

its estimates were unreliable because they were not statistically valid. We found that the 

development of these estimates included the use of nonrandom samples, unsuitable sample 

weighting, or inaccurate and incomplete population sampling frames. 

We also found that the Department’s improper payment risk assessment process needs 

strengthening. Specifically, the risk assessment performed for one program did not adequately 

support the Department’s conclusion regarding its level of improper payment risk and the risk 

assessment the Department conducted on its contracts management activity was incomplete. 

2019 Yes The Department published improper payment estimates for the Pell, Direct Loan, EIA, Restart, 

and Emergency Assistance to Institutions of Higher Education programs as required by IPERA. 

However, we found that the published estimates for three of these programs were unreliable 

because the methodologies used to develop them were not statistically valid. 

Ongoing and Planned Work

Planned projects include our annual review of the 

Department’s compliance with the improper payment 

reporting requirements and its efforts to prevent and reduce 

improper payments. 

Progress in Meeting the Challenge

The Department stated that it continued to prioritize 

efforts to ensure payment integrity and minimize improper 

and unknown payments across all programs in FY 2022, 

including programs considered “susceptible to significant 

improper payments” per OMB guidance. The Department 

specifically identified several activities that were intended 

to facilitate successful implementation of Payment Integrity 

Information Act of 2019 compliance activities including

• revising the sampling and estimation methodology 

and plan for the Title I, Part A program to address 

the root cause of reported improper payments and 

to ensure SEAs would be able to obtain supporting 

documentation from LEAs for sampled transactions;

• continuing to promote improper payment awareness and 

deliver payment integrity training for Department staff;

• continuing to employ the Payment Integrity Monitoring 

Application as a means of detecting anomalies in grants 

payment data; and

• continuing efforts to obtain OMB’s approval of the 

sampling and estimation plans for the Pell Grant and 

Direct Loan programs.

What the Department Needs to Do 

As the Department continues to work to improve 

its payment integrity initiatives, it is important that 

it ensures that its estimation methodologies for the 

programs deemed susceptible to significant improper 

payments produce reliable improper payment estimates. 

In addition, the Department needs to properly implement 

its enhanced quality control procedures over its improper 

payment estimation process. The OIG has not assessed 

the Department’s FY 2022 estimation methodologies or 

the accuracy and validity of the Department’s estimates. 

The OIG will review the accuracy and validity of these 

measurements as part of the FY 2022 PIIA audit. This is an 

annual focus of the OIG’s work, and we will continue to 

monitor and report on the Department’s progress on this 

Management Challenge Area.
FY 2022 AGENCY FINANCIAL REPORT 141 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

MANAGEMENT CHALLENGE 5—

INFORMATION TECHNOLOGY 

SECURITY

The Department’s systems house millions of sensitive 

records on students, their parents, and others, and are 

used to process billions of dollars in education funding. 

These systems are primarily operated and maintained by 

contractors and are accessed by thousands of authorized 

people (including Department employees, contractor 

employees, and other third parties such as school 

financial aid administrators). According to information 

on ITDashboard.gov, the Department expects to spend 

more than $1 billion in information technology (IT) for 

FY 2023. 

Through the Office of the Chief Information Officer 

(OCIO), the Department monitors and evaluates the 

contractor-provided IT services through a service-level 

agreement framework and develops and maintains common 

business solutions required by multiple program offices. 

OCIO is responsible for implementing the operating 

principles established by legislation and regulation, 

establishing a management framework to improve the 

planning and control of IT investments, and leading 

change to improve the efficiency and effectiveness of the 

Department’s operations. In addition to OCIO, FSA has its 

own chief information officer, whose primary responsibility 

is to promote the effective use of technology to achieve 

FSA’s strategic objectives through sound technology 

planning and investments, integrated technology 

architectures and standards, effective systems development, 

and production support.

The Federal Information Security Modernization Act of 

2014 (FISMA) requires the OIG to assess the effectiveness 

of the agency’s information security program. FISMA 

mandates that this evaluation includes (1) testing 

of the effectiveness of information security policies, 

procedures, and practices of a representative subset of 

the agency’s information systems; and (2) an assessment 

of the effectiveness of the information security policies, 

procedures, and practices of the agency. 

For FY 2022 FISMA reporting, we evaluated the 

Department’s security program using the 20 core Inspector 

General Reporting Metrics that were published for FY 2022 

and issued by OMB. The OIG’s assessment for FY 2022 

showed improvements but was significantly different from 

the FY 2021’s audit. The 20 core metrics evaluated for 

FY 2022 represented less than one third of the 66 metrics 

used to assess the Department’s effectiveness for FY 2021. 

Why This Is a Challenge

Considering increased occurrences of high-profile data 

breaches (public and private sector), the importance 

of safeguarding the Department’s information and 

information systems cannot be understated. Protecting 

this complex IT infrastructure from constantly evolving 

cyber threats is an enormous responsibility and challenge. 

Without adequate management and operational and 

technical security controls, the Department’s systems and 

information are vulnerable to attacks. Unauthorized access 

could result in lost data confidentiality and integrity, 

limited system availability, and reduced system reliability. 

For the last several years, IT security audits and financial 

statement audits have identified security controls that 

need improvement to adequately protect the Department’s 

systems and data. 

Audits and Inspections Involving IT Security

Our recent reports on the Department’s compliance 

with FISMA, performed by the OIG with contractor 

assistance, noted that the Department and FSA made 

progress in strengthening their information security 

programs. However, as shown in Table 14, our recent 

FISMA audits and inspection included findings across all 

five cybersecurity framework security functions developed 

by the Council of the Inspectors General on Integrity 

and Efficiency, OMB, and the Department of Homeland 

Security and within each security function’s related metric 

domains. Our FY 2019 through FY 2021 FISMA audits 

concluded that the Department and FSA were not effective 

in any of the five security functions (Identify, Protect, 

Detect, Respond, and Recover) and we had findings in 

all eight metric domains for FYs 2019 through 2020, and 

all nine (supply chain risk management was added during 

FY 2021) for FY 2021. However, in FY 2022, based on the 

new metric scoring, the Department and FSA were found 

to be effective in four of the five security functions (Protect, 

Detect, Respond, and Recover), having findings in four of 

the nine metric domains.
FY 2022 AGENCY FINANCIAL REPORT 142 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Table 14

Results of OIG FISMA Audits and Inspections—Cybersecurity Framework Security Functions and Metric Domains 

with New Findings

Domain FY 2019 FY 2020 FY 2021 FY 2022

Identify: Risk Management Audit Finding Audit Finding Audit Finding -

Identify: Supply Chain Risk Management NA NA Audit Finding -

Protect: Configuration Management Audit Finding Audit Finding Audit Finding Inspection Finding

Protect: Identity and Access Management Audit Finding Audit Finding Audit Finding Inspection Finding

Protect: Data Protection and Privacy Audit Finding Audit Finding Audit Finding Inspection Finding

Protect: Security Training Audit Finding Audit Finding Audit Finding -

Detect: Information Security 

Continuous Monitoring

Audit Finding Audit Finding Audit Finding -

Respond: Incident Response Audit Finding Audit Finding Audit Finding Inspection Finding

Recover: Contingency Planning Audit Finding Audit Finding Audit Finding -

In previous FISMA reports from FY 2019 through 

FY 2021, the OIG recommended ways the Department 

and FSA could increase the effectiveness of their 

information security program so that they could fully 

comply with all applicable requirements. In FY 2022, the 

Department and FSA improved its maturity rating for 

eight of nine metric domains. Although the Department’s 

overall information security program was assessed to be 

effective in FY 2022 based on the 20 core FISMA metrics, 

the OIG made recommendations in several areas where 

the Department and FSA could strengthen their controls. 

We noted that until the Department improves in these 

areas, it cannot ensure that its overall information security 

program adequately protects its systems and resources from 

compromise and loss. 

Although the Department’s security program was assessed 

as effective based on the 20 core Inspector General 

Reporting Metrics for FY 2022, IT security will continue to 

remain a management challenge given that this was the first 

year under the new metrics and that there are significant 

areas with remaining recommendations. In addition, we 

note that the Department’s technology environment is 

constantly evolving, bringing new threats and cybersecurity 

requirements. As technology environments evolve, it is 

important that the Department continues to ensure that it 

implements the respective security controls to protect its 

information and resources. 

Recent audits of the Department’s financial statements, 

performed by an independent public accountant with 

OIG oversight, have repeatedly identified IT controls 

as a significant deficiency. In its FY 2021 report, 

the independent public accountant noted that FSA 

management demonstrated progress in implementing 

corrective actions to remediate some prior-year deficiencies. 

However, they reported that management had not fully 

remediated prior-year deficiencies in areas such as logical 

access administration, separated or transferred user 

access removal, user access reviews and recertification, 

and configuration management. In addition, new and 

existing control deficiencies were reported for FY 2021 

covering security management, access controls, segregation 

of IT duties, application change management, and 

logical access. The independent public accountant also 

reported that entity level controls were not designed 

and implemented appropriately to remediate identified 

internal control deficiencies in a timely manner. The 

independent public accountant concluded that ineffective 

IT controls increases the risk of unauthorized use, 

disclosure, disruption, modification, or destruction of 

information and information systems that could impact 

the integrity and reliability of information processed in the 

associated applications. 

Planned projects in this area will continue to determine 

whether the Department’s and FSA’s overall IT security 

programs and practices were generally effective as they 

relate to Federal information security requirements. For 
FY 2022 AGENCY FINANCIAL REPORT 143 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

FY 2023, we have planned an inspection to determine 

whether the Department is effectively monitoring the 

oversight and approval of its IT contracts in accordance 

with applicable Federal requirements and guidelines.

Progress in Meeting the Challenge

The Department stated that its advancements in the 

IT security program encompassed both technological 

capabilities as well as improvements in knowledge 

management and internal controls. The Department 

identified several specific actions taken to help address this 

management challenge, including 

• implementing a new cybersecurity policy framework;

• implementing an ongoing security assessment and 

authorization program that is intended to result in more 

frequent system stakeholder engagement and timely 

risk visibility;

• maturing its risk management processes;

• enhancing its automated cybersecurity reporting;

• expanding the Vulnerability Disclosure Policy program 

to cover all internet accessible Department systems;

• onboarding a zero-trust architecture program manager 

and releasing a Department strategy and project 

schedule for full implementation by the end of FY 2024;

• developing analytics capability to assist FSA in 

identifying applicants that met criteria of potential fraud 

and grouping them for identity verification activities;

• completing the global password change for StudentAid.

gov;

• completing Multifactor Authentication Phase 1, making 

multifactor authentication mandatory for all new users 

on StudentAid.gov; and

• planning for completion of Multifactor Authentication 

Phase 2 in FY 2023. This is expected to provide FSA 

with the capability to enforce multifactor authentication 

enablement for existing users on a rolling basis. 

What the Department Needs to Do

The Department continued to identify actions that were 

responsive to this challenge, addressed vulnerabilities, and 

improved its IT security program. However, we continue 

to identify significant weaknesses in our annual FISMA 

reviews. Overall, the Department needs to continue its 

efforts to develop and implement an effective system of IT 

security controls, particularly in the areas of configuration 

management, identity and access management, data 

protection and privacy, and incident response. It is critical 

that the Department continue to focus on the timely and 

successful implementation of corrective actions in response 

to our audit work. In addition, the Department needs to 

remain on the forefront of emerging information security 

strategies and solutions, such as Zero Trust12 Architecture, 

to ensure that controls are continually integrated into its 

security program.

Our FISMA and discretionary information security 

audit and inspection work will continue to assess the 

Department’s efforts within this area, and IT security 

will remain a management challenge until our work 

corroborates that the Department’s system of controls 

achieves expected outcomes. To that end, the Department 

needs to effectively address deficiencies, continue to provide 

mitigating controls for vulnerabilities, and implement 

planned actions to correct weaknesses.

12 Zero trust focuses on resource protection and the premise that trust is never 

granted implicitly but must be continually evaluated. Zero trust architecture is an 

end-to-end approach to enterprise resource and data security that encompasses 

identity (person and nonperson entities), credentials, access management, 

operations, endpoints, hosting environments, and the interconnecting 

infrastructure. The initial focus should be on restricting resources to those with a 

need to access and grant only the minimum privileges (e.g., read, write, delete) 

needed to perform the mission.
FY 2022 AGENCY FINANCIAL REPORT 144 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

400 MARYLAND AVE., S.W., WASHINGTON, DC 20202 

www.ed.gov

The Department of Education's mission is to promote student achievement and preparation for global competitiveness by 

fostering educational excellence and ensuring equal access. 

DEPARTMENT COMMENTS
FY 2022 AGENCY FINANCIAL REPORT 145 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

CHALLENGE 1: IMPLEMENTING 

PANDEMIC RELIEF LAWS 

New Grant Programs and Additional Federal

Education Funds; Data Quality

Congress passed multiple COVID-19 relief bills in 

FY 2020 and FY 2021 (i.e., the Coronavirus Aid, Relief, 

and Economic Security Act, the Coronavirus Response 

and Relief Supplemental Appropriations Act, 2021, and 

the American Rescue Plan Act of 2021) (collectively, 

Education Stabilization Fund (ESF)) that provided a total 

of $282.3 billion in education-related assistance to prevent, 

prepare for, and respond to the COVID-19 emergency. 

The Department took comprehensive steps to ensure 

appropriate interpretation of the legislations’ requirements 

and subsequent policy and operational implications. 

The Office of Finance and Operations (OFO) and the 

Office of Planning, Evaluation, and Policy Development 

coordinated Department efforts – and worked with the 

Office of Postsecondary Education (OPE) and the Office 

of Elementary and Secondary Education (OESE) – to 

successfully award an extraordinary number and size of 

ESF grants on expedited timelines, on top of the ongoing 

administration of the agency’s $70+ billion annual 

portfolio of existing programs. Additional collaborations 

with Congressional Appropriations Committee staff 

and the Office of Management and Budget (OMB) 

helped ensure statutory requirements and program 

implementation priorities were met. The Department also 

responded to several accountability engagements with the 

Office of Inspector General (OIG) and the Government 

Accountability Office (GAO) regarding the implementation 

of these pandemic relief laws while simultaneously 

implementing the ESF programs themselves. 

To address the additional administrative, monitoring, 

and oversight workload associated with administering the 

pandemic relief funding, the Department strategically 

leveraged the COVID-19 excepted service hiring authority, 

per the Office of Personnel Management, to augment 

staffing resources for OPE and OESE. The additional 

staff allowed OPE to create the Emergency Response Unit, 

which enabled OPE to have dedicated staff to monitor 

and support the Higher Education Emergency Relief 

Fund (HEERF) program, and OESE’s Office of State and 

Grantee Relations to administer, monitor and support all 

the elementary and secondary ESF programs, including the 

Elementary and Secondary School Emergency Relief Fund 

(ESSER), the Governor’s Emergency Education Relief Fund 

(GEER), and the Emergency Assistance to Non-Public 

Schools (EANS). 

To ensure effective and timely support to eligible applicants, 

grantees, and stakeholders while also balancing the need 

for high quality data collection and reporting processes, the 

Department implemented several strategies, including:

• Establishing structured processes for data collection 

and reporting, including both annual and quarterly 

reporting requirements.

• Implementing preventative funds control measures for 

accurate tracking and reporting of funds in real time.

• Adopting risk-based approaches to administering 

program funding, and targeted and comprehensive 

monitoring.

• Providing regulatory flexibilities, training, written 

guidance, webinars, and direct technical assistance to 

new grantees.

• Conducting thorough progress reviews and providing 

clear and transparent reporting (via the ESF 

Transparency Portal launched in November 2020). 

The Public Transparency Portal allows the Department 

to track performance, hold grantees accountable, and 

provide transparency to taxpayers and oversight bodies.

• Issuing early and comprehensive communications 

to grantees outlining clear data quality and 

timing expectations. 

• Working with OMB to ensure relevant programs were 

included in the 2020, 2021, and 2022 Compliance 

Supplements, which issues guidance relied upon 

by independent third-party auditors who review or 

audit federal programs. Beginning with the FY 2021 

supplement, the Department sought and received 

approval from OMB for a “higher risk” designation for 

ESF grant funds. 

• Creating a HEERF proprietary institution auditing 

requirement and working with OIG to develop the 

HEERF Audit Guide for proprietary schools.

• Creating a Required Proprietary Institution Certification 

form to ensure appropriate accountability regarding 
FY 2022 AGENCY FINANCIAL REPORT 146 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

proprietary institutions receiving ARP HEERF (a)(4) 

grant funding.

• Establishing procedures in OPE for quality control of 

grant obligations to institutions of higher education 

(IHEs), including application and award verification 

procedures, quality assurance reviews of obligated 

HEERF awards, and the correction and documentation 

of erroneous awards in a timely manner for potential use 

in future emergency programs.

• Taking various coordinated accountability actions 

(OPE) using enhanced processes, corrected any errors 

on expedited basis and identified compliance concerns 

when needed among 5,000+ HEERF grantees. Such 

actions include the de-obligation of funds, restricting 

access to funds, and/or requiring an IHE to return funds 

to the Department.

• Coordinating (OESE) with OIG on a monthly basis to 

address audits and investigations and ensure alignment 

to reduce burden on grantees and share information. 

• Establishing processes (weekly workgroups) (OPE and 

OESE) to respond to grantee questions with consistency 

and in accordance with regulatory and statutory 

requirements.

• Establishing (OESE) routine touch points with grantees 

via monthly check-ins and quarterly reviews.

• Continuing to provide (OPE and OESE) comprehensive 

training to ensure employees possess the knowledge, 

tools, and resources to successfully perform the tasks and 

responsibilities of the grant-making processes, which 

includes quality controls for pre- and post-obligations, 

as well as for monitoring the ESF grants.

• Conducting (OPE) a complete post-award analysis 

of all HEERF grants awarded in concert with our G5 

grant system and Budget Service and memorializing this 

process to ensure that OPE comprehensively identifies 

and corrects any errors in funding in the future. 

Lessons learned from the initial ESF grantee data collection 

experience significantly informed the processes for the 

year two annual collection. Through these collections, the 

Department will be better able to assess the use of funds, 

providing visibility into the equitable recovery of schools 

and students as well as the capacity to promote learning. 

Student Financial Assistance 

Program Requirements

The COVID-19 relief legislation and administrative actions 

provided crucial support to student loan borrowers. Nearly 

all federal loan payments on Department-held loans were 

suspended and made interest free beginning in March 

2020, and after many extensions, through December 

31, 2022. FSA also acted quickly and effectively to stop 

all federal wage garnishments and collection, as well as 

interest accrual, for borrowers with federally held loans in 

default; FSA went even further by refunding over 99% of 

involuntary payments made during that period. FSA also 

continued to monitor the receipt of funds for an extended 

period to identify employers that did not comply with the 

Department’s instructions to stop wage garnishments and 

to issue further refunds to borrowers.

Similarly, FSA was also highly effective in ensuring 

CARES Act flexibilities were applied to eligible TEACH 

Grant recipients, and when appropriate OESE and OPE 

also applied authorized flexibilities. To further improve 

its implementation of these flexibilities, FSA increased 

communications to eligible recipients and improved 

guidance to servicers about how to implement these 

flexibilities. FSA also will continue for more than two years 

to provide direct oversight and review of TEACH Grant 

recipients who are denied these flexibilities.

On August 24, 2022, the Biden-Harris administration 

announced that the Department will implement 

historic student debt relief, which includes targeted debt 

cancellation of up to $20,000 for borrowers with certain 

federal loans earning income below specified thresholds. 

The details of this effort are complex and evolving, but the 

Department is working intensively to deliver on President 

Biden’s promise.

As the payment pause nears its end on December 31, 

2022, the Department is diligently preparing to meet the 

unprecedented challenge of returning all borrowers to a 

repayment status and helping them maintain their current 

repayment status. The goal is to achieve a smooth transition 

that minimizes the risk of borrower harm due to confusion, 

lack of awareness, or insufficient servicing capacity. 

The Department’s comprehensive plan for returning 

borrowers to repayment combines elements of borrower 

outreach; servicer hiring, training and preparation; policy 

enhancements; and vendor and process oversight.
FY 2022 AGENCY FINANCIAL REPORT 147 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

In discussing ongoing challenges, it is important to 

acknowledge that resource limitations from working 

under a long-term Continuing Resolution rather than an 

approved FY 2023 budget may impact the Department 

and FSA as they seek to implement planned initiatives and 

achieve their stated objectives.

CHALLENGE 2: OVERSIGHT 

AND MONITORING

Student Financial Assistance Programs

FSA improved its oversight and monitoring of institutions 

of higher education (IHEs) participating in Title IV 

programs. On October 8, 2021, FSA established 

the Enforcement Office to strengthen oversight of 

postsecondary schools that participate in the federal 

student loan, grant, and work-study programs. This 

includes initiating enforcement actions against schools 

as appropriate. The Enforcement Office will proactively 

identify and address substantial misrepresentations and 

other misconduct by schools that are shown to impose 

outsized costs on borrowers and taxpayers. During 

FY 2023, the Enforcement Office plans to continue 

refining and implementing the use of a risk model aimed 

at identifying schools and service providers that may 

be engaged in those costly misrepresentations or other 

misconduct. It will seek to use the model to focus its 

investigatory resources on a limited number of those 

schools deemed to pose the highest risk to students, their 

families, and taxpayers. Where warranted, the Enforcement 

Office will initiate enforcement actions, which could 

include fines, limitation actions, or termination from 

the Title IV program. Finally, the office will continue to 

administer the Borrower Defense program, through which 

borrowers who were defrauded by their schools can receive 

a discharge of their federal student loans. 

FSA has worked on addressing weaknesses in the single audit 

process to improve the single audit’s use as an oversight and 

monitoring tool for IHEs’ disbursements of Pell Grants 

and Direct Loans. On September 30, 2022, FSA submitted 

a report to OMB supporting changes in reporting under 

the single audit to improve its usefulness as an oversight 

and monitoring tool. FSA continues to use and improve 

its analytical model to continually monitor partner data 

and performance, thus improving the ability to identify 

IHEs most at-risk and allow more effective use of oversight 

resources by informing and prioritizing support for IHEs. 

On July 28, 2022, the Department issued proposed 

regulations that will require IHEs to provide information 

about a change of ownership 90 days prior to that change; 

will significantly modify the definition of a nonprofit 

institution; and strengthen FSA’s ability to place conditions 

on any approvals to limit potentially harmful agreements 

between entities or when an institution wishes to convert 

from for profit to nonprofit. FSA has also informed schools 

that it may require additional signatures on a school’s 

Program Participation Agreement when a school seeks 

initial certification or recertification or when it undergoes 

a change of ownership. This requirement will provide more 

accountability and better protect taxpayers in the event of a 

school closure, approved borrower defense claims, or when 

other liabilities are owed to the Department.

Implementation of the Fostering Undergraduate Talent by 

Unlocking Resources for Education (FUTURE) Act began 

in FY 2020 and will continue through FY 2024. This Act 

will allow FSA to receive income tax data more easily from 

the Internal Revenue Service (IRS) to administer the Free 

Application for Federal Student Aid (FAFSA®) and income 

driven repayment plans. Using the IRS tax data will help 

strengthen the oversight of participants in the Title IV 

programs by ensuring the accuracy of income information 

used to determine student aid eligibility and monthly 

payment amounts. 

To provide better borrower outcomes, improve 

cybersecurity, and address pending contract expirations, 

the Department has established a long-term servicing 

strategy named the Unified Servicing and Data Solution 

(USDS). The USDS contract award is anticipated by 

early in calendar year 2023. By leveraging multiple 

system and process improvements made since the Next 

Gen initiative launched in 2017, among other benefits, 

the implementation of USDS will improve borrower 

experiences in both interactions with servicers and 

accessing their loan information as well as increasing 

servicer accountability. 

For borrowers participating in income driven repayment 

(IDR) plans, FSA has taken steps to improve the 

accuracy of IDR payment counts, borrower information, 

and communications to improve the overall customer 

experience and accurately provide forgiveness. Additional 

phased improvements will include changes to ensure 

accurate payment counts, borrower self-service options 
FY 2022 AGENCY FINANCIAL REPORT 148 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

to view payment counts, and standardized guidance to 

servicers on administering IDR plans.

In 2019, FSA implemented an improved model for 

verification selection and evaluation of data elements from 

the FAFSA. The model provides the Department with a 

better way to choose filers for verification and to reduce 

improper payments by targeting fewer filers without 

sacrificing the overall degree of confidence. In recent years, 

the verification rate of FAFSA filers has dropped from a 

high of 30% during the 2016-17 FAFSA cycle to 10% 

today. For the 2023-24 FAFSA cycle, the Department 

anticipates that just 7.5% of FAFSA filers will be selected 

for verification.

FSA appropriately administered the total and permanent 

disability (TPD) discharge application process and its 

contractor generally serviced TPD accounts in accordance 

with Federal program requirements. Nonetheless, FSA 

further enhanced its oversight and monitoring of the 

contractor by updating its sampling methodology and 

documenting improved processes. To continue those 

improvements, in 2021, the Department established a data 

match with the Social Security Administration to grant 

discharges more easily to over 350,000 borrowers with total 

and permanent disabilities. This data match enables the 

Department to automatically discharge student loans more 

efficiently and effectively as individuals meet the standards 

to qualify for relief.

For some time, FSA has been actively combating a growing 

number of consumer scams that target borrower interest 

in student loan forgiveness programs. Congress passed the 

Stop Student Debt Relief Scams Act in 2019, and FSA has 

been implementing its requirements. Most recently, FSA’s 

efforts to raise public awareness of scams have included 

communications via social media, direct emails, and the 

website. FSA has also produced a brief video to alert 

and inform borrowers about how to identify and avoid 

these scams.

Oversight of an accrediting agency or state approval agency 

happens through the Department’s recognition process and/

or through follow up on issues brought to the Accreditation 

Group’s attention. These are complex processes that take 

time to gather information and require detailed staff 

reviews. An entity seeking recognition from the Secretary 

of Education (Secretary) must meet the Department’s 

regulatory criteria for the recognition of accrediting 

agencies and state approval agencies and must have a 

Federal Link (Higher Education Act (HEA) or non-HEA). 

Only agencies recognized by the Secretary can provide the 

gate-keeping function to allow institutions they accredit to 

participate in the federal student aid programs under the 

HEA. Accrediting agencies that accredit only educational 

programs located in institutions of higher education apply 

for recognition for non-HEA purposes. The recognition 

process involves reviews by the Department’s Accreditation 

Group (AG) staff and the National Advisory Committee 

on Institutional Quality and Integrity (NACIQI). Both the 

(AG staff and NACIQI) recommendations are submitted to 

the Senior Department Official designated by the Secretary 

who makes the decision regarding recognition. State 

agencies for the approval of public postsecondary vocational 

education and for the approval of nursing education 

must meet separate sets of recognition criteria and their 

applications for recognition also undergo review by the AG 

staff and the NACIQI.

The recognition process is outlined in Section 496 of 

the HEA and in regulation at 34 CFR 602. There are 

limitations on the Secretary’s authority on review of 

accrediting agencies. The Secretary may only establish 

criteria for accrediting agencies or associations that are 

required by the statute. The HEA specifically notes that 

the Secretary may not establish any criteria that specifies, 

defines, or prescribes the standards that accrediting agencies 

or associations use to assess any institution’s success 

with respect to student achievement. The Department 

of Education Organization Act also prohibits us from 

“exercis[ing] any direction, supervision, or control over 

the curriculum, program of instruction, administration, or 

personnel of any educational institution, school, or school 

system, over any accrediting agency or association, or over 

the selection or content of library resources, textbooks, or 

other instructional materials by any educational institution 

or school system, except to the extent authorized by law.”

Grantees

The Department continues to employ a progressive 

improvement approach to addressing the longstanding 

management challenge on oversight and monitoring of 

grant recipients. In FY 2021, the Department prioritized 

the enhancement of its grantmaking processes through 

capacity building and collaboration across the Department’s 

grantmaking Principal Office Components (POCs) to 

ensure effective programmatic and financial stewardship of 

taxpayer funded investments. In FY 2022, the Department 
FY 2022 AGENCY FINANCIAL REPORT 149 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

expanded its focus to include the consistent application of 

risk-based, and data-driven approaches to monitoring to 

improve recipient and grant program outcomes through the 

following initiatives: 

• Improved effectiveness and efficiency of grants trainings 

by categorizing oversight and monitoring courses 

according to the level of experience and expertise of 

both internal and external stakeholders and expanded 

the number of asynchronous trainings for grantees and 

subrecipients, i.e., Subrecipient Monitoring for the 

Grantee Community.

• Implemented Virtual Monitoring Principles, a grant 

monitoring solution intended to enhance the user’s 

experience, while increasing efficiency, collaboration, 

and consistency of risk-based monitoring and technical 

assistance protocols across POCs, and grantee cohorts. 

• Provided technical assistance to POCs focused on 

grantee and subrecipient responsibilities, adhering to 

internal controls, subrecipient monitoring, data quality, 

and reporting. 

• Used innovative monitoring approaches to learn with 

and from grantees, promoting effective implementation 

and timely policy feedback.

• Facilitated program staff information sharing and 

collaborative resolution through sharing challenges in 

monthly and quarterly grant policy forums on oversight 

and monitoring practices, solutions, and resources. 

• Continually assessed the grant-making process to 

identify opportunities for improvements through the use 

of data and collaboration. 

• Targeted the utilization of Grantee Satisfaction Survey 

data results to better define challenges, successes, and 

inform improvements in the areas of technical assistance 

and grant performance reporting across program offices.

• Leveraged inter-agency coordination to POCs in their 

effective oversight and monitoring of 2020 CARES 

Act and 2021 American Rescue Plan Act programs 

and operations to ensure that funds were used for 

the purposes intended and that goals and objectives 

are achieved. 

• Utilized the annual Grantee Satisfaction Survey to 

obtain from the Department’s grant community their 

experiences with the FSRS.gov (Federal Funding 

Accountability and Transparency Act Subaward 

Reporting System) system and reporting process. 

Documented and identified grantees’ successes and 

challenges with FSRS.gov and provided to GSA.gov a 

list that included resolutions to challenges identified 

along with overall recommendations for improvements.

CHALLENGE 3: DATA QUALITY AND 

REPORTING

While the Department’s grantees—states, institutions 

of higher education, and others—serve as important 

intermediaries and partners, our programmatic funds 

ultimately serve our nation’s students and teachers. The 

Department requires quality data from its grantees to 

ensure students and teachers are benefiting from these 

funds in expected ways. These data are also used to build 

evidence, determining whether these funds could have been 

used in more efficient or effective ways. Failure to address 

the root cause of poor-quality data, therefore, may harm 

our ultimate beneficiaries.

Thematically aligned with the findings identified by the 

OIG, the Department identified in FY 2020 the root causes 

for its persistent data quality challenges. In the wake of the 

COVID-19 pandemic, the Department reported to the 

OIG that it would concentrate these data quality efforts 

and apply its strategy to key data collections associated 

with the Education Stabilization Fund (ESF). The 

Department renegotiated and expanded a support contract 

to supplement existing staff resources and expertise. This 

allowed for the development system architecture to identify 

potential data quality issues, many of which required 

resolution prior to acceptance of reports. 

The Department recognizes the challenge that limited 

grantee resources presents to quality reporting. This 

manifests itself not only in the grantee’s reporting to the 

agency, but also in evaluating the quality of data it received 

from any applicable subgrantees. To address capacity 

challenges for grantees, the Department launched an array 

of resources to support ESF grantees, many of which are 

conveniently located on the ESF Grantee Help Portal

for asynchronous access. Covering each of the major ESF 

programs—specifically, HEER, EANS, GEER, ESSER, 

and outlying area equivalent Funds—resources included 

a variety of technical assistance mediums from live and 
FY 2022 AGENCY FINANCIAL REPORT 150 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

recorded webinars to business rule guides to the provision 

of an ESF Reporting Help Desk. 

The Department has acknowledged that it historically 

has not conveyed to its grantees a credible expectation for 

reporting quality data. To address challenges associated with 

credible communication, the agency reaffirmed with the 

Department’s Office of General Counsel (OGC), Office 

of the Secretary (OS), and program office leadership its 

strategy in 2021, recognizing that poor-quality data can 

harm the ultimate beneficiaries of Department grants—that 

is, may harm our nation’s teachers and students. To support 

collection of ESF Year 2 Annual Performance Reports 

(APRs), the Department made clear to grantees minimum 

data quality expectations for performance reporting, as well 

as the potential consequences for failure to report. 

Due in part to these efforts, the Department experienced 

improved reporting compliance, especially considering the 

scope and recency of the programs and collections, as well 

as the prolonged challenges associated with the pandemic. 

The Department, of course, continues to review and 

address isolated data quality issues across all collections, 

especially in areas where known gaps in controls exist. 

However, more serious deficiencies—that is, those where 

data is not of sufficient quality to publish—are rarer. 

The Office of Postsecondary Education (OPE) placed 

noncompliant institutions of higher education (IHEs) that 

had a remaining balance on route payment. In FY 2022, 

this was a total of 40 IHEs that were placed on route 

payment or that were already on route or stop payment 

for other compliance concerns. The Office of Elementary 

and Secondary Education (OESE) works to ensure timely, 

accurate reporting and accountability through the provision 

of robust technical assistance, direct communication 

with senior leadership in state educational agencies, and 

gradual escalation of compliance measures. By the close of 

FY 2022, three grantees have outstanding Year 2 reports: 

two for the outlying area equivalent of the GEER fund and 

one for the outlying area equivalent of the ESSER Fund. 

In an effort to improve the quality of the data in the ESF 

Transparency Portal, OESE continues to: 1. track reporting 

issues and FSRS (GSA’s system) Helpdesk tickets to ensure 

States submit accurate Federal Funding Accountability 

and Transparency Act (FFATA) and subaward data; 2. 

collaborate with OFO to provide direct assistance to 

grantees; and 3. escalate grantees’ system challenges to GSA 

and OMB to resolve systematic problems with the FSRS 

that are outside of the Department’s control.

In addition, a number of other agency-wide initiatives 

were completed, continued, initiated, or planned during 

FY 2022. As a part of the agency’s FY 2022–26 Strategic 

Plan, the agency created a performance metric focused 

on tracking instances where data collections lack data 

quality plans and worked to update the Department’s 

Information Quality Act (IQA) Guidelines, expected to be 

finalized in the first quarter of FY 2023. The Department 

also completed development of a Data Quality Playbook 

to provide easily deployable strategies for program 

offices, especially their grant staff. The Department 

also began developing data quality training tailored to 

different audiences.

In FY 2022, work also continued to modernize the EDFacts 

system and related processes, including data quality checks 

that states can use to supplement their own downstream 

data quality work and disseminating a more standardized 

and complete set of data validation rules applied to the data 

collected via EDFacts. The National Center for Education 

Statistics completed a successful pilot of the new process 

with the Common Core of Data survey, which led to more 

complete and accurate data, better data quality notes where 

data needed to be explained, and earlier publication of 

the data. Federal Student Aid (FSA) developed an internal 

dashboard to track the quality of the data it receives from 

its servicers and ingested into the National Student Loan 

Data System (NSLDS) and Enterprise Data Warehouse & 

Analytics (EDWA), allowing stakeholders to monitor data 

processing and identify specific or systemic problem areas 

by servicer and record type. FSA also deployed the Alation 

data catalog and query management tool to consolidate 

metadata, business rules, and edit processing into one 

enterprise tool that, in addition to becoming the complete 

data catalog, will also provide an effective knowledge 

management tool for FSA.

CHALLENGE 4: IMPROPER PAYMENTS

The Department continued to prioritize efforts to ensure 

payment integrity and minimize improper and unknown 

payments across all programs in FY 2022, including 

programs considered “susceptible to significant improper 

payments” per OMB guidance (OMB Circular A-123, 

Appendix C, implemented by OMB Memorandum M-21-

19). Collaboration between financial management and 

grants administration staff aimed to facilitate successful 

implementation of Payment Integrity Information Act of 

2019 (PIIA) compliance activities (e.g., improper payment 
FY 2022 AGENCY FINANCIAL REPORT 151 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

risk assessment or estimation of programs and activities in 

scope). Improvement action items included:

• Revising the Sampling & Estimation Methodology 

and Plan (S&EMP) for the Title I, Part A program in 

FY 2022 to address the root cause of reported improper 

payments. Additionally, the Department further 

coordinated with its State Educational Agencies (SEAs) 

to ensure they would be able to obtain requested financial 

documentation from their Local Educational Agencies 

(LEAs) to support sampled payment transactions;

• Reviewing the completed payment test plans for the 

Title I, Part A program to ensure they accurately 

represent the data used by statistician to develop the 

estimated improper payment rate, as quality control 

improvement responding to OIG’s review of the 

Department’s FY 2021 compliance with improper 

payment reporting requirements; 

• Continuing to promote improper payment awareness 

and deliver payment integrity training for Department 

staff through, for example, webinars and dialogue 

regarding improper payment sampling and testing 

with dozens of grantees and the Department’s grant 

monitoring and grants policy communities; and

• Continuing to employ the Payment Integrity 

Monitoring Application (PIMA) as a means of 

detecting anomalies in grants payment data (i.e., case 

management files for payment anomalies are established 

within the application for follow-up investigation by 

the Department’s grants program officials to validate 

improper payments and determine root causes).

As reflected in its report for 2021, the OIG determined 

that the payment integrity reporting for the Pell Grant and 

Direct Loan programs complied with all PIIA reporting 

requirements. However, the OIG asserted its opinion 

that FSA’s use of non-random student-level sampling in 

some compliance audits conducted under the Single Audit 

Act to calculate the estimates affected the appropriateness 

and accuracy of the confidence intervals. As noted in the 

report, FSA believes that compliance audits, which do 

not always require random sampling, provide quality data 

necessary to calculate statistically valid improper payment 

estimates and confidence intervals. The OIG determined 

that FSA’s proposed actions of requesting and obtaining 

OMB’s approval of FSA’s sampling and estimation plan or 

requiring random student-level samples to be used in Single 

Audit compliance audits, if successfully implemented, were 

responsive to the OIG’s recommendations.

FSA completed the following corrective actions this year:

• FSA continued efforts to obtain OMB’s approval 

that its sampling and estimation plan is acceptable 

considering program resources and characteristics. 

FSA continued to engage OMB Office of Federal 

Financial Management staff in discussions regarding 

OMB approval of FSA’s improper payment sampling 

and estimation methodology plan (S&EMP) pursuant 

to the provisions in PIIA section 3352(c)(1)(A). 

During FY 2022 and as of FY 2022 year end, these 

discussions were ongoing to address FSA’s formal request 

for approval.

• FSA continued to collaborate with OMB, the OIG, 

Departmental components, and the independent 

audit community to include requirements for random 

sampling in compliance audits conducted under 

the Single Audit Act. However, the OIG and the 

independent audit community strongly opposed 

inclusion of the random sampling requirement, stating 

that it would compromise auditor independence. 

Consequently, FSA agreed to retract its recommendation 

of random sampling. However, FSA successfully 

advocated to retain language in the FY 2022 OMB 

Compliance Supplement of prior updates to clarify the 

procedures auditors must perform and information 

auditors should provide to the Department. These 

updates better align the requirements for compliance 

auditors in the Compliance Supplement with the 

payment integrity requirements for Federal agencies in 

OMB Circular A-123, Appendix C. 

CHALLENGE 5: INFORMATION 

TECHNOLOGY SECURITY

FY 2022 advancements in the information technology 

security program encompass both technological 

capabilities as well as improvements in knowledge 

management and internal controls. The Department took 

a comprehensive approach to addressing this management 

challenge, including:

• Implemented a new cybersecurity policy framework 

aligned with Executive Order (EO) 14028 Improving 

the Nation’s Cybersecurity and National Institute of 
FY 2022 AGENCY FINANCIAL REPORT 152 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

DEPARTMENT COMMENTS

Standards and Technology (NIST) Special Publication 

800-53, Revision 5. 

• Implemented the Ongoing Security Assessment & 

Authorization (OSA) program, which will reduce 

steps and modify artifacts to improve efficiency. The 

overall outcome is more frequent system stakeholder 

engagement and timely risk visibility. 

• Continued to mature its risk management processes 

through enhancements to the Cybersecurity Framework 

(CSF) Risk Scorecard to monitor status of program-level 

business continuity planning and testing activities. 

• Enhanced its automated cybersecurity reporting 

to track and report compliance to ED 14028 

mandates including, but not limited to, Multifactor 

Authentication (MFA), encryption, and resiliency. 

• Expanded the Vulnerability Disclosure Policy (VDP) 

program to cover all internet accessible Department 

systems. 

• Updated our internal vulnerability management 

procedures in accordance with Binding Operational 

Directive (BOD) 22-01 Reducing the Significant Risk 

of Known Exploited Vulnerabilities. 

• Took action to address M-22-09 Moving the U.S. 

Government Toward Zero Trust Cybersecurity 

Principles by creating, funding, and onboarding a GS15 zero-trust architecture (ZTA) program manager and 

released a Department Strategy and project schedule for 

full implementation by the end of FY 2024. 

• Received the initial transfer of Technology 

Modernization Fund (TMF) funds to establish a ZTA 

Program Management Office (PMO) and completed the 

recompete of Enterprise Identity, Credential, and Access 

Management (ICAM) program, and obtained Secure 

Access Service Edge (SASE) & Security Orchestration 

Automation & Response (SOAR) capabilities. 

• FSA Enterprise Cybersecurity Group and FSA 

Enterprise Data Directorate worked together to develop 

a fraud detection analytics capability in partnership 

to identify occurrences of potential fraud. This initial 

model permits FSA to identify applicants that met 

criteria of potential fraud and put them into the Suspect 

Identify File (SIF) so that they would be selected for 

identity verification. This model is being fine-tuned for 

accuracy with the goal to become part of the FSA data 

science toolkit on fraud detection. 

• FSA Enterprise Cybersecurity Group implemented 

a formal quality assurance process to ensure account 

recertifications are conducted in accordance with 

Department requirements.

• FSA Identity and Access Management (IAM) team 

in the Technology Directorate recently completed the 

Global Password Change for StudentAid.gov, FSA ID 

user accounts in the Person Authentication Service 

(PAS) system. Over 22.7 million of our 83 million users 

have already logged in and changed their passwords.

• In July 2022, MFA Phase 1 was successfully deployed, 

making MFA mandatory to all new users as part of 

the Create Account process on StudentAid.gov. MFA 

Phase 2 will be deployed, allowing FSA the capability to 

enforce MFA enablement for existing users on a rolling 

basis. Due to the timing of the MFA rollout coinciding 

with other high priority FSA initiatives, it is being 

recommended the MFA Phase 2 rollout start February 

2023, to be completed July 2023.

These enhancements contributed to the OIG’s FY 2022 

Federal Information Security Modernization Act of 2014 

(FISMA) assessment of the Department’s cybersecurity 

capabilities as “Effective,” or a Level 4 Cybersecurity 

Maturity Level for FY 2022, which marks a significant 

improvement from FY 2021 and the first time the 

Department has achieved this level with seven of nine 

FISMA domains increasing in score.
FY 2022 AGENCY FINANCIAL REPORT 153 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Summary of Financial Statement Audit 

and Management Assurances

The following tables provide a summarized report on the Department’s financial statement audit and its management 

assurances. For more details, the auditors’ report can be found beginning on page 104 and the Department’s management 

assurances on page 25.

SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion: Disclaimer of Opinion 

Restatement: No

Material Weaknesses Beginning 

Balance New Resolved Consolidated Ending Balance

Total Material Weaknesses 1 1 0 1 1

SUMMARY OF MANAGEMENT ASSURANCES

Effectiveness of Internal Control Over Financial Reporting—Federal Managers’ Financial Integrity Act 

(FMFIA) 2

Statement of Assurance: Unmodified

Material 

Weaknesses

Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

Total Material 

Weaknesses 0 0 0 0 0 0

The Department had no material weaknesses in the design or operation of the internal control over financial reporting.

Effectiveness of Internal Control Over Operations—FMFIA 2 

Statement of Assurance: Unmodified

Material 

Weaknesses

Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

Total Material 

Weaknesses 0 0 0 0 0 0

Conformance With Financial Management System Requirements—FMFIA 4

Statement of Assurance: The Department systems conform to financial management system requirements.

Nonconformances Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

Total Nonconformances 0 0 0 0 0 0

Compliance with Federal Financial Management Improvement Act of 1996 (FFMIA)

Agency Auditor

1. System Requirements No lack of compliance noted No lack of compliance noted

2. Federal Accounting Standards No lack of compliance noted No lack of compliance noted

3. U.S. Standard General Ledger at Transaction Level No lack of compliance noted No lack of compliance noted
FY 2022 AGENCY FINANCIAL REPORT 154 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

Payment Integrity Information Act Reporting

ll program outlays can be categorized into one of 

three payment type categories: proper payments, 

improper payments, and unknown payments. 

OMB Circular A-123, Appendix C, Requirements for 

Payment Integrity Improvement, defines an improper 

payment as a payment that should not have been made 

or that was made in an incorrect amount under statutory, 

contractual, administrative, or other legally applicable 

requirements. The term improper payment includes any 

payment to an ineligible recipient; any payment for an 

ineligible good or service; any duplicate payment; any 

payment for a good or service not received, except for those 

payments where authorized by law; any payment that is 

not authorized by law; and any payment that does not 

account for credit for applicable discounts. OMB Circular 

A-123, Appendix C, also defines an unknown payment as 

a payment that could either be proper or improper, but it 

cannot be determined whether the payment was proper or 

improper because of insufficient or lack of documentation.

The Department places a high value on maintaining 

the integrity of all types of payments made to ensure 

that the billions of dollars in federal funds it disburses 

annually reach intended recipients in the right amount 

and for the right purpose. The Department ensures 

payment integrity by establishing effective policies, 

business processes, systems, and controls over key payment 

activities, including those pertaining to payment data 

quality, cash management, banking information, thirdparty oversight, assessments of audit reports, and financial 

reporting. The number and dollar value of improper 

and unknown payments are key indicators of payment 

integrity. Accordingly, the Department maintains a robust 

internal control framework that includes internal controls 

designed to help prevent, detect, and recover improper and 

unknown payments. In designing controls, the Department 

attempts to strike the right balance between making timely 

and accurate payments and ensuring that controls put in 

place are not too costly or overly burdensome and thereby 

deter intended beneficiaries from obtaining funds they are 

entitled to receive. Additionally, the Department must rely 

heavily on controls established by external entities that 

receive Department payments, including federal, state, 

and private organizations and institutions, because they 

further distribute funds received from the Department to 

subordinate organizations and individuals. Due to these 

third-party controls being outside of the Department’s 

operational management, they present a higher risk to 

the Department, as evidenced by its root cause analysis. 

When control deficiencies are detected, either within the 

Department or at external entities, the Department seeks to 

identify their root causes, develop corrective action plans, 

and track corrective actions through to completion.

To further promote payment integrity, the Department 

continues to develop its Payment Integrity Monitoring 

Application (PIMA), which detects anomalies in grants 

payment data. Case management files for payment 

anomalies are established within the application for 

follow-up investigation by the Department’s grants 

program officials to validate improper payments and 

determine root causes. Additionally, the Department 

continues to develop its internal control framework to 

address gaps, strengthen internal control processes, and 

align assessments with enterprise risk management. Both 

efforts reflect the Department’s recognition of the critical 

importance that payment integrity plays in demonstrating 

financial stewardship to the American taxpayer.

DESCRIPTION OF RISK-SUSCEPTIBLE 

AND HIGH-PRIORIT Y PROGR AMS 

In FY 2022, the Federal Pell Grant, William D. Ford 

Federal Direct Loan, and Title I, Part A programs 

continued to be designated as programs that are 

“susceptible to significant improper payments” (referred 

to as Phase 2 per OMB Circular A-123, Appendix C 

guidance). The Federal Pell Grant program remained an 

OMB-designated high-priority program. Additionally, 

at the conclusion of the FY 2021 improper payment risk 

assessment, the Department identified the Education 

Stabilization Fund (ESF) and the Special Education 

Grants to States, Individuals with Disabilities Education 

Act (IDEA) programs as being susceptible to significant 

improper payments. 

The Department continues to place additional emphasis 

to ensure payment integrity and minimize improper 

and unknown payments in these important programs as 
FY 2022 AGENCY FINANCIAL REPORT 155 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

required by OMB guidance. Readers can obtain a detailed 

breakdown of information on improper and unknown 

payment estimates, root causes, and corrective actions for 

the programs at https://paymentaccuracy.gov.

FEDER AL PELL GR ANT 

The Pell Grant Program, authorized under Title IV 

of the Higher Education Act of 1965 (HEA), provides 

need-based grants to low-income undergraduate and 

certain post-baccalaureate students to promote access to 

postsecondary education. 

WILLIAM D. FORD FEDER AL 

DIRECT LOAN 

The Direct Loan Program, added to HEA in 1993 by 

the Student Loan Reform Act of 1993, authorizes the 

Department to make loans through participating schools 

to eligible undergraduate and graduate students and 

their parents.

SPECIAL EDUCATION GR ANTS 

TO STATES

The Special Education Grants to States, Individuals with 

Disabilities Education Act (IDEA) program provides 

formula grants to assist the 50 states, the District of 

Columbia, Puerto Rico, the Department of the Interior, 

Outlying Areas, and the Freely Associated States in meeting 

the excess costs of providing special education and related 

services to children with disabilities. To be eligible for 

funding, states must serve all children with disabilities 

between the ages of 3 through 21, except that they are 

not required to serve children aged 3 through 5 or 18 

through 21 years if services are inconsistent with State 

law or practice or the order of any court. A state that does 

not provide a free appropriate public education (FAPE) 

to children with disabilities aged 3 through 5 cannot 

receive base payment funds attributable to this age group 

or any funds under the Preschool Grants program. Funds 

are allocated among states in accordance with a variety of 

factors, as outlined in the funding formula under section 

611(d) of the Individuals with Disabilities Education 

Act (IDEA).

EDUCATION STABILIZATION FUND

On Friday, March 27, 2020, the Coronavirus Aid, Relief, 

and Economic Security Act (CARES Act) was signed into 

law. It was a $2 trillion package of assistance measures, 

including $30.75 billion for an Education Stabilization 

Fund. The Coronavirus Response and Relief Supplemental 

Appropriations Act, 2021 (CRRSA Act), was signed into 

law on December 27, 2020, and provided an additional 

$81.9 billion to the Education Stabilization Fund. 

Additionally, on March 11, 2021, the American Rescue 

Plan (ARP) was signed into law and provided an additional 

$169.5 billion. To date, eight grant programs were created: 

Education Stabilization Fund Discretionary Grants, 

Governor’s Emergency Education Relief Fund, Elementary 

and Secondary School Emergency Relief Fund, Homeless 

Children and Youth, Emergency Assistance to Non-Public 

School, Outlying Areas, Bureau of Indian Education, and 

Higher Education Emergency Relief Fund.

TITLE I, PART A

Title I, Part A (Title I) of the Elementary and Secondary 

Education Act, as amended by Every Student Succeeds Act

(ESEA) provides financial assistance to LEAs and schools 

with high numbers or high percentages of children from 

low-income families to help ensure that all children meet 

challenging state academic standards. Federal funds are 

currently allocated through four statutory formulas that are 

based primarily on census poverty estimates and the cost of 

education in each state

In FY 2022, the Department used statistically valid 

sampling and estimation methodologies to estimate the 

improper payment rates for the Pell Grant, Direct Loan, 

IDEA, ESF and Title I programs. The methodologies used 

for each of these programs are described in detail on the 

Department’s improper payments website.

For detailed information on Pell Grant, Direct Loan, IDEA, 

ESF and Title I improper payment estimates in FY 2022 and 

prior years, please visit https://paymentaccuracy.gov.

IDENTIFIED AND RECAPTURED 

IMPROPER PAYMENTS

Agencies are required to conduct recovery audits for all 

programs and activities that expend more than $1 million 

in a fiscal year, if conducting such audits would be costeffective. The Department has determined that payment 

recapture audits would not be cost effective for any of its 

loan and grant programs or for contracts. A comprehensive 

report on the cost effectiveness of the various recapture 

audit programs can be found in the Department’s FY 2012 

Report on the Department of Education’s Payment 

Recapture Audits.

The Department identifies and recovers improper payments 

through sources other than payment recapture audits 

and works with grantees and Title IV (FSA) program 

participants to resolve and recover amounts identified 
FY 2022 AGENCY FINANCIAL REPORT 156 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

in compliance audits, OIG audits, and Departmentconducted program reviews. The Department also 

analyzes the return of grant funds from recipients to 

determine if they are due to improper payments. When an 

improper payment is detected and deemed collectable, the 

Department establishes an account receivable and pursues 

collection. Recoveries are also made through grant program, 

payroll, and other offsets. Recipients of Department funds 

can appeal management’s decisions regarding funds to 

be returned to the Department or they may go bankrupt 

before the Department can collect, thereby delaying or 

decreasing the amounts the Department is able to collect. 

Additionally, the Department has wide discretion to 

decide not to collect improper payments from grantees in 

cases where it determines that pursuing collections would 

cause more harm to the federal interest. For these and 

other reasons, not all identified improper payments will 

ultimately be collected and collections will not necessarily 

be made in the same year the improper payments 

were identified. 

The Department continues to work to improve its methods 

to identify, collect, and report on improper payment 

collections. For detailed information on identified and 

recovered improper payments in FY 2022, readers can visit 

https://paymentaccuracy.gov.
FY 2022 AGENCY FINANCIAL REPORT 157 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

he Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, as amended, requires agencies to make 

regular and consistent inflationary adjustments of civil monetary penalties to maintain their deterrent effect. To 

improve compliance with the act, and in response to multiple audits and recommendations, agencies should report 

annually in the Other Information section the most recent inflationary adjustments to civil monetary penalties to ensure 

penalty adjustments are both timely and accurate.

Location for Penalty Update Details:

https://www.federalregister.gov/documents/2022/04/20/2022-08222/adjustment-of-civil-monetary-penalties-for-inflation

Table 15

Penalty Authority Date of Previous 

Adjustment

Date of Current 

Adjustment

Current Penalty 

Level

Failure to provide information for cost of higher education 20 USC 

1015(c)(5) 02-03-21 04-20-22 $ 42,163

Failure to provide information regarding teacherpreparation programs20 USC 

1022d(a)(3) 02-03-21 04-20-22 35,119

Violation of Title IV of the HEA 20 USC 1082(g) 02-03-21 04-20-22 62,689

Violation of Title IV of the HEA 20 USC 

1094(c)(3)(B) 02-03-21 04-20-22 62,689

Failure to disclose information to minor children and parents 20 USC 

1228c(c)(2)(E) 02-03-21 04-20-22 1,850

Improper lobbying for government grants and contracts

31 USC 

1352(c)(1) and 

c(2)(A)

02-03-21 04-20-22 22,021 to 220,213

False claims and statements 31 USC 3802(a)(1) 

and (a)(2) 02-03-21 04-20-22 12,537

Civil Monetary Penalty Adjustment for Inflation
FY 2022 AGENCY FINANCIAL REPORT 158 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

limate change impacts on students, families, 

schools, and communities across the country 

are present, severe, and worsening. Pathways 

through which climate change affects student achievement 

include school closures due to extreme weather or unsafe 

conditions, poor environmental conditions within schools 

that impede learning, students’ own personal health and 

safety, increased social and emotional anxiety related to 

climate change and extreme weather events, and increased 

migration and economic disruption for households and 

communities. 

In September 2021, the Department released a new 

FY 2021 Climate Adaptation Plan. With this new 

plan, the Department acknowledges that climate change 

is affecting the Department’s mission and the need for 

comprehensive and urgent action to promote adaptation 

and resilience through the Department’s programs and 

operations. This plan builds on the lessons learned from 

the Department’s past sustainability action plans, climate 

change adaptation plans, and environmental justice plans 

to offer new actions that the Department can undertake 

to better adapt to climate change and develop agency 

resilience and resilience across the nation’s schools.

Climate Adaptation Plan
FY 2022 AGENCY FINANCIAL REPORT 159 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

he goal of the Grants Oversight and New Efficiency Act of 2016 (GONE) (Pub. L. No. 114-117) was to close out 

grants and cooperative agreements that are in manual closeout with zero dollars and undisbursed balances and whose 

period of performance has exceeded two years. Although the Grants Oversight and New Efficiency Act reporting 

requirements have expired, the Office of Management and Budget Circular A-136, Section II.4.9, Grants Programs (August 

10, 2021) requires similar information to be reported in the Other Information section. See Table 16 below.

Starting with an October 3, 2016, baseline of 8,948 grants and cooperative agreements totaling approximately $2 billion 

in various statuses of the closeout process, the Department succeeded in closing out 100 percent of the required grants 

and cooperative agreements during FY 2018. As of September 30, 2022, the Department had 239 grants and cooperative 

agreements totaling approximately $131.1 million in various statuses of the closeout process. 

In FY 2020, the Department’s Office of Inspector General (OIG) performed a risk assessment of the Department’s grant 

closeout process and issued their results via memorandum. They identified risks with the reliability of grant data and related 

GONE Act reporting, as well as the Department’s grant closeout policies and procedures, including a policy allowing older 

grants to be closed in compliance without required reports being provided by the grantee. In addition, the OIG found that 

both the volume of expired grants and amount of undisbursed grant funds significantly increased between the date of initial 

GONE Act reporting (September 30, 2017) and January 30, 2020, indicating that grant closeout is less of a focus now that 

GONE Act reporting is over. The memorandum is available at https://www2.ed.gov/about/offices/list/oig/auditreports/

fy2020/s19u0002.pdf.

Overall, the Office of Finance and Operations (OFO) agreed with the OIG assessment and noted its intention to move 

forward with grant policy deliberation consistent with the results of the assessment. Approved in July 2020, the Handbook 

for the Discretionary Grants Process (Handbook) includes policy requirements that align with the OIG recommendations. 

(6.16.1) (A) (3)

Each year the Office of Acquisition, Grants, and Risk Management (OAGRM) offers a financial monitoring curriculum for 

formula and discretionary grants aligned with the Standards for Financial Management in 2 CFR 200 Uniform Administrative 

Requirements, Cost Principles, and Audit Requirements for Federal Awards, addressing cash management and drawdown activity 

of grantees’ utilization of funds consistent with an approved scope of work aimed at reducing issues associated with grant 

closeouts. 

Table 16

Category 2–3 Years 3–5 Years > 5 Years

Number of Grants/Cooperative 

Agreements with Zero Dollar 

Balances

108 5 -

Number of Grants/Cooperative 

Agreements with Undisbursed Dollar 

Balances

119 7 -

Total Amount of Undisbursed 

Balances $49,336,249 $14,523,161 -

Source: G5, grants management system linked to the Department’s general ledger system. Data is based on the performance end date of September 30, 2021.

The Grants Oversight and New Efficiency Act of 2016 (GONE Act) and 

Education’s Grant Closeout Process
FY 2022 AGENCY FINANCIAL REPORT 160 U.S. DEPARTMENT OF EDUCATION

OTHER INFORMATION (UNAUDITED)

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FY 2022 AGENCY FINANCIAL REPORT 161 U.S. DEPARTMENT OF EDUCATION

APPENDICES

(UNAUDITED)
FY 2022 AGENCY FINANCIAL REPORT 162 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

Appendix A: Selected Department Web Links and Education Resources

COLLEGE COMPLETION TOOLKIT

The College Completion Toolkit provides information that 

governors and other state leaders can use to help colleges in 

their state increase student completion rates. It highlights 

key strategies and offers models to learn from, as well 

as other useful resources. https://www.ed.gov/collegecompletion/completion-toolkit

COLLEGE COST LISTS

The Department provides college affordability and 

transparency lists under the Higher Education Opportunity 

Act of 2008. Each list is broken out into nine different 

sectors to allow students to compare costs at similar types 

of institutions, including career and technical programs. 

http://collegecost.ed.gov/

COLLEGE FINANCING PLAN

The College Financing Plan is a consumer tool that 

participating institutions use to notify students about 

their financial aid packages. It is a standardized form that 

is designed to simplify the information that prospective 

students receive about costs and financial aid so that 

they can easily compare institutions and make informed 

decisions about where to attend school. https://www2.

ed.gov/policy/highered/guid/aid-offer/index.html

COLLEGE NAVIGATOR

College Navigator consists of the latest data from the 

Integrated Postsecondary Education Data System, and 

the core postsecondary education data collection program 

for the National Center for Education Statistics, as well 

as data from Federal Student Aid on cohort default rates, 

the Office of Postsecondary Education on campus safety 

and accreditation, and information on veterans from the 

Veterans Benefits Administration. https://nces.ed.gov/

collegenavigator/

COLLEGE PREPARATION CHECKLIST

This Department tool gives prospective college students 

step-by-step instructions on how to prepare academically and 

financially for education beyond high school. Each section 

is split into subsections for students and parents, explaining 

what needs to be done and which publications or websites 

might be useful to them. http://studentaid.gov

These additional resources within the checklist assist 

students in finding scholarships and grants:

https://studentaid.gov/resources/prepare-for-college/

checklists

https://studentaid.gov/sa/types/grants-scholarships/

finding-scholarships

COLLEGE SCORECARD

The Department’s College Scorecard makes it easier to 

find out more about a college’s affordability and value. The 

College Scorecard continues to be a tool that provides clear, 

accessible, and reliable data on college cost, graduation, 

debt, and post-college earnings. The College Scorecard 

continues to move the field forward in informing college 

choices with the help of technology and open data, making 

it possible for anyone—a student, a school, a policymaker, 

or a researcher—to decide which factors to evaluate. 

https://collegescorecard.ed.gov/

C O N D I T I O N O F E D U C AT I O N A N D 

DIGEST OF EDUCATION STATISTICS

The Condition of Education is a congressionally mandated 

annual report that summarizes developments and trends 

in education using the latest available statistics. The report 

presents statistical indicators containing text, figures, 

and data from early learning through graduate-level 

education, as well as labor force outcomes and international 

comparisons. https://nces.ed.gov/programs/coe/

The primary purpose of the Digest of Education Statistics is 

to provide a compilation of statistical information covering 

the broad field of American education from prekindergarten 

through graduate school. The digest includes a selection of 

data from many sources, both government and private, and 

draws especially on the results of surveys and activities carried 

out by the National Center for Education Statistics. https://

nces.ed.gov/programs/digest/

E D U C AT I O N R E S O U R C E S 

INFORMATION CENTER

The Department offers Education Resources Information 

Center (ERIC)—the world’s largest free, digital 

library of education research. It is composed of 1.8 

million bibliographic records and 400,000 full-text 
FY 2022 AGENCY FINANCIAL REPORT 163 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

materials indexed from 1966 to the present. Each ERIC 

bibliographic record contains an abstract of a journal article 

or grey literature document (for example, a technical report 

or conference paper), along with such indexed information 

as author, title, and publication date. https://eric.ed.gov

FEDERAL PROGRAM INVENTORY

The GPRA Modernization Act of 2010, P.L. 111-352, 

requires that the Office of Management and Budget 

(OMB) establish a single website with a central inventory 

of all federal programs, including the purpose of each 

program and its contribution to the mission and goals of 

the Department. The initial Federal Program Inventory was 

published in May 2013. The Department described each 

program within 27 budgetary accounts, as well as how the 

programs support the Department’s broader strategic goals 

and objectives.

Since that time, Congress passed the Digital Accountability 

and Transparency Act (DATA Act) requiring new public 

reporting requirements, which impact the definition of 

programs used in this guidance. OMB is currently working 

with agencies to merge the implementation of the DATA 

Act and the Federal Program Inventory requirements to 

the extent possible to avoid duplicate efforts. In December 

2020 OMB launched an exploratory pilot as the next 

step towards creating a coherent and comprehensive 

inventory. This site provides the history of the Federal 

government’s efforts to create an inventory as well as key 

insights, data from the pilot, and planned next steps. 

https://fpi.omb.gov/

G O V E R N M E N T A C C O U N TA B I L I T Y 

O F F I C E 

The Government Accountability Office (GAO) supports 

Congress in meeting its constitutional responsibilities and 

helps improve the performance and accountability of the 

federal government for the benefit of the American people. 

https://www.gao.gov/agencies/department-education

G R A N T S I N F O R M AT I O N A N D 

RESOURCES

In addition to student loans and grants, the Department 

offers other discretionary grants. These are awarded using 

a competitive process, and formula grants use formulas 

determined by Congress with no application process. This 

site lists Department discretionary grant competitions 

previously announced, as well as those grant competitions 

planned for later announcement, for new awards organized 

according to the Department’s principal program offices. 

http://www2.ed.gov/fund/grant/find/edlite-forecast.html

For more information on the Department’s programs, see 

http://www2.ed.gov/programs

N AT I O N A L A S S E S S M E N T O F 

E D U C AT I O N A L P R O G R E S S 

The National Assessment of Educational Progress (NAEP) 

assesses samples of students in grades 4, 8, and 12 and at 

ages 9, 13 and 17 in various academic subjects. Results 

of the assessments are reported for the nation and states 

in terms of comparable scale scores and achievement 

levels—NAEP Basic, NAEP Proficient, and NAEP Advanced. 

https://nces.ed.gov/nationsreportcard/

O F F I C E O F I N S P E C TO R G E N E R A L 

The Office of Inspector General (OIG) conducts 

independent and objective audits, investigations, 

inspections, and other activities to promote the efficiency, 

effectiveness, and integrity of the Department’s programs 

and operations. http://www.ed.gov/about/offices/list/oig/

index.html

For a list of recent reports, go to http://www2.ed.gov/

about/offices/list/oig/reports.html

O N E - S TO P S H O P P I N G F O R 

STUDENT LOANS

The Department provides a site where students can manage 

their loans. http://studentaid.gov/

PERFORMANCE DATA

EDFacts is a Department initiative to put performance data 

at the center of policy, management, and budget decisions 

for all K–12 educational programs. EDFacts centralizes 

performance data supplied by K–12 state educational 

agencies with other data assets within the Department, such 

as financial grant information, to enable better analysis and 

use in policy development, planning, and management. 

http://www.ed.gov/about/inits/ed/edfacts/index.html

P R O J E C T I O N S O F E D U C AT I O N 

S TAT I S T I C S TO 2 0 2 8 

For the 50 states, jurisdictions, and the District of 

Columbia, the tables, figures, and text in this report contain 

data on projections of public elementary and secondary 

enrollment and public high school graduates to the year 

2028. The report includes a methodology section that 

describes the models and assumptions used to develop 

national and state-level projections. https://nces.ed.gov/

pubs2020/2020024.pdf
FY 2022 AGENCY FINANCIAL REPORT 164 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

R E G I O N A L E D U C AT I O N A L 

LABORATORY PROGRAM

The Department administers the Regional Education 

Laboratory (REL) program to support the use of research 

and evidence to help states and school districts improve 

their education programs and, ultimately, student 

performance. To do this, each regional REL contractor 

works with teachers, administrators, and policy makers 

to identify “high-leverage” problems of practice and to 

build the research capacity of local stakeholders. Each REL 

develops partnerships with state- and local-level education 

agencies to gather and analyze data, conduct evaluations, 

and provide technical assistance that addresses these “highleverage” problems. https://ies.ed.gov/rels

R E S O U R C E S F O R A D U LT, C A R E E R , 

A N D T E C H N I C A L E D U C AT I O N 

The Department continues to support state and local 

efforts to implement high-quality secondary and 

postsecondary career and technical education programs 

under the nation’s $1.3 billion investment in funding under 

the Carl D. Perkins Career and Technical Education Act

(Perkins V). Among the Department’s efforts is hosting the 

Perkins Collaborative Resource Network (PCRN) website 

that provides a one-stop shop for information, resources, 

and data pertaining to Perkins V CTE programs. The 

PCRN Website provides individual state profiles containing 

Perkins V State Plans, fiscal information, and accountability 

data; tools and resources from Department-sponsored 

national activities investments; and a Perkins V data 

explorer where users can run reports on trends in student 

participation and outcomes in CTE programs. http://cte.

ed.gov

To support the Workforce Innovation and Opportunity 

Act (WIOA), the Department offers professional 

development resources through the Literacy Information 

and Communication System (LINCS). This initiative 

seeks to expand evidence-based practice in the field of 

adult education and literacy. LINCS serves as Office of 

Career, Technical, and Adult Education’s (OCTAE) primary 

outreach and dissemination mechanism to adult educators 

and provides high-quality, on-demand educational 

opportunities to practitioners of adult education and 

literacy, so those practitioners can help adult learners 

successfully transition to postsecondary education and 21stcentury jobs. LINCS is comprised of: the LINCS Resource 

Collection, which provides online access to high-quality, 

evidence-based materials and instructional resources; 

the LINCS Community, a virtual professional learning 

space where adult educators can engage in discussions 

focused on critical topics to the field of adult education; a 

Learning Portal that offers anytime, anywhere professional 

development courses; a Professional Development Center 

that provides technical assistance to states in meeting the 

state leadership requirements set forth in WIOA; and 

the Learner Center, which provides access to federally 

developed or federally reviewed resources to assist adult 

learners in reaching their learning goals. http://lincs.

ed.gov/

W H AT W O R K S C L E A R I N G H O U S E 

P R A C T I C E G U I D E S F O R 

EDUCATORS

The Department offers practice guides and other resources 

that help educators address everyday challenges faced in 

classrooms and schools. Developed by a panel of nationally 

recognized experts, practice guides consist of actionable 

recommendations and strategies for overcoming potential 

roadblocks. The practice guides also provide indication of 

the strength of evidence supporting each recommendation. 

The guides themselves are subjected to rigorous external 

peer review. Users can sort by subject area, academic level, 

and intended audience to find the most recent, relevant, 

and useful guides. https://whatworks.ed.gov
FY 2022 AGENCY FINANCIAL REPORT 165 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

Appendix B: Glossary of Acronyms and Abbreviations

ABCP Asset-Backed Commercial Paper

AFR Agency Financial Report

AGA Association of Government 

Accountants 

AP Acquisition Plan

APGs Agency Priority Goals

APR Annual Performance Reports

ARP American Rescue Plan Act of 2021

ARP ESSER American Rescue Plan 

Elementary and Secondary School 

Emergency Relief 

BIE Bureau of Indian Education

BOD Binding Operational Directive

BPO Business Process Operations

CARES Coronavirus Aid, Relief, and Economic 

Security Act of 2020

CEAR Certificate of Excellence in 

Accountability Reporting 

CISA Cybersecurity and Infrastructure 

Security Agency

COVID-19 Coronavirus Disease 2019

CPSS Contracts and Purchasing 

Support System

CRRSAA Coronavirus Response and Relief 

Supplemental Appropriations Act 

of 2021

CSF Cyber Security Framework

CSRS Civil Service Retirement System

CTE Career and Technical Education

DATA Act Digital Accountability and 

Transparency Act of 2014

DCC Digital and Customer Care

DCIA Debt Collection Improvement Act 

of 1996

DDB Death, Disability, and Bankruptcy

Department U.S. Department of Education

DGB Data Governance Board

DHS U.S. Department of 

Homeland Security

Direct Loan William D. Ford Federal Direct Loan

DL Direct Loan 

DLP Data Loss Prevention

DMA Data Maturity Assessment 

DOL U.S. Department of Labor

DQP Data Quality Plan

EAI Emergency Assistance to Institutions 

of Higher Education

EANS Emergency Assistance to 

Non-Public Schools 

ECASLA Ensuring Continued Access to Student 

Loans Act of 2008

EDARM Division of Enterprise Data Analytics 

and Risk Management 

EDCAPS Education Central Automated 

Processing System

EGP Education Grants Platform 

EIA Emergency Impact Aid

ELG Evidence Leadership Group 

Emergency Temporary Emergency Impact Aid for

Impact Aid Displaced Students

EO Executive Order

ERIC Education Resources 

Information Center

ERM Enterprise Risk Management 

ERMWG Enterprise Risk Management 

Working Group

ESEA Elementary and Secondary 

Education Act

ESF Education Stabilization Fund

ESSA Every Student Succeeds Act

ESSER Elementary and Secondary School 

Emergency Relief

FAFSA® Free Application for Federal 

Student Aid

FASAB Federal Accounting Standards 
FY 2022 AGENCY FINANCIAL REPORT 166 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

Advisory Board

FCRA Federal Credit Reform Act of 1990

FECA Federal Employees’ 

Compensation Act

FERS Federal Employees 

Retirement System

FFB Federal Financing Bank

FFEL Federal Family Education Loan

FFMIA Federal Financial Management 

Improvement Act of 1996

FIPSE Fund for the Improvement of 

Postsecondary Education 

FISMA 2014 Federal Information Security 

Modernization Act of 2014

FMFIA Federal Managers’ Financial Integrity 

Act of 1982

FMSS Financial Management 

Support System

FR Financial Report of the 

U.S. Government 

FSA Federal Student Aid

FUTURE Act Fostering Undergraduate Talent 

by Unlocking Resources for 

Education Act

FY Fiscal Year

G5 Grants Management System 

GAAP Generally Accepted 

Accounting Principles

GAO Government Accountability Office

GEER Governor’s Emergency 

Education Relief

GONE Act Grants Oversight and New Efficiency 

Act of 2016

GPO Grants Policy Office

GPRA Government Performance and Results 

Act of 1993

GSA General Services Administration

HBCUs Historically Black Colleges 

and Universities

HEA Higher Education Act of 1965

HEAL Health Education Assistance Loan

HEERF Higher Education Emergency 

Relief Fund

HHS U.S. Department of Health and 

Human Services

HTTPS Hypertext Transfer Protocol Secure

IDEA Individuals with Disabilities 

Education Act 

IDR Income-Driven Repayment

IEP Individualized Education Program 

IES Institute of Education Sciences

IHE Institutions of Higher Education

IPP Invoice Processing Platform

IPERA Improper Payments Elimination and 

Recovery Act of 2010

IPERIA Improper Payments Elimination and 

Recovery Improvement Act of 2012

IQA Information Quality Act 

IRS Internal Revenue Service

IT Information Technology

LEAs Local Educational Agencies

LINCS Literacy Information and 

Communication System

MSIs Minority Serving Institutions

NAEP National Assessment of 

Educational Progress

NCES National Center for 

Education Statistics 

Next Gen FSA Next Generation Federal Student Aid

NIST National Institute of Standards 

and Technology

NSLDS® National Student Loan Data System

OAGRM Office of Acquisition, Grants, and 

Risk Management

OCDO Office of the Chief Data Officer 

OCIO Office of the Chief Information Officer

OCR Office for Civil Rights

OCTAE Office of Career, Technical, and 

Adult Education

ODP Open Data Platform

OELA Office of English Language Acquisition

OESE Office of Elementary and 

Secondary Education

OFM Office of Financial Management 

OFO Office of Finance and Operations

OGC Office of the General Counsel
FY 2022 AGENCY FINANCIAL REPORT 167 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

OHR Office of Human Resources

OIG Office of Inspector General

OMB Office of Management and Budget

OPE Office of Postsecondary Education

OPEN Open, Public, Electronic 

and Necessary

OPEPD Office of Planning, Evaluation, and 

Policy Development

OPM Office of Personnel Management

OS Office of the Secretary

OSERS Office of Special Education and 

Rehabilitative Services

P–12 Prekindergarten Through 12th Grade 

Pell Federal Pell Grant

PEPS Postsecondary Education 

Participants System 

PIIA Payment Integrity Information Act 

of 2019

PIMA Payment Integrity Monitoring 

Application

PIV Personal Identity Verification

PLUS Parent Loan for 

Undergraduate Students 

POC Principal Office Component

POA&M Plan of Actions & Milestones 

President’s Budget of the United States

Budget Government

PSLF Public Service Loan Forgiveness

REL Regional Educational Laboratory

Report Annual Performance Report and

and Plan Annual Performance Plan

RESTART Immediate Aid to Restart 

School Operations 

SBR Statement of Budgetary Resources

SEAs State Educational Agencies

SSA Social Security Administration

STEM Science, Technology, Engineering, 

and Mathematics

TCUs Tribal Colleges and Universities 

TCCUs Tribally Controlled Colleges 

and Universities 

TEACH Teacher Education Assistance for 

College and Higher Education Grant

TEPSLF Temporary Expanded Public Service 

Loan Forgiveness

Title I Title I, Part A

Title IV-A Title IV, Part A 

TOP Treasury Offset Program

TPD Total and Permanent Disability 

Treasury U.S. Department of Treasury

USDS Unified Servicing and Data Solution 

VDP Vulnerability Disclosure Policy

VM Vulnerability Management

WIOA Workforce Innovation and 

Opportunity Act
FY 2022 AGENCY FINANCIAL REPORT 168 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

Acknowledgments

This Agency Financial Report was produced with the 

energies and talents of our employees and contract partners.

Within the Office of Finance and Operations (OFO), 

the Office of Financial Management is responsible 

for certifying, processing, reconciling, evaluating, and 

reporting all agency financial transactions; preparing annual 

financial statements and related notes and schedules; and 

coordinating the external audit of the agency’s financial 

statements.

The Office of Budget Service has lead responsibility for 

multiple functions, including developing and implementing 

the Department’s Budget. The Office of Acquisition, 

Grants, and Risk Management (OAGRM) is responsible for 

developing, managing, and providing policy guidance and 

oversight of the Department’s acquisition, grant, and risk 

management activities and operations.

The Contracts and Acquisitions Management Division, 

within OAGRM, is responsible for the solicitation, award, 

administration, and closeout of all contracts and other 

acquisition instruments for the Department.

We offer our sincerest thanks and acknowledgment to staff of 

all participating principal offices. In particular, we recognize 

the following organizations for their contribution:

OTHER CONTRIBUTORS

Federal Student Aid

Office of Communications and Outreach

Office of Planning, Evaluation, and Policy Development

Office of the Chief Information Officer

Office of the Inspector General

Office of the Secretary

PARTNERS

Association of Government Accountants

Department of Treasury

Government Accountability Office

Office of Management and Budget

The following companies were contracted to assist in the 

preparation of the U.S. Department of Education 

FY 2022 Agency Financial Report:

F O R G E N E R A L L AY O U T 

AND WEB DESIGN

OmniStudio Inc.

FOR ACCOUNTING SERVICES

Cotton & Company Assurance and Advisory LLC

FMR Consulting Inc.

OptumServe Technology Services Inc.

The FY 2022 Agency Financial Report 

U.S. Department of Education 

Office of Finance and Operations

An electronic version is available 

on the World Wide Web at 

http://www2.ed.gov/about/reports/annual/index.html

U.S. Department of Education, January 2023
FY 2022 AGENCY FINANCIAL REPORT 169 U.S. DEPARTMENT OF EDUCATION

APPENDICES (UNAUDITED)

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Our Mission is to promote student achievement and 

preparation for global competitiveness by fostering 

 educational excellence and ensuring equal access.

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