ANNUAL REPORT FY 2019
United States Department of Education

Betsy DeVos

Secretary

Federal Student Aid

Mark A. Brown

Chief Operating Officer

Finance Office

Alison L. Doone

Chief Financial Officer

November 15, 2019

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, Federal Student Aid, FY 2019 Annual Report, Washington, D.C., 

20002. 

This report is also available on the Federal Student Aid website at StudentAid.gov/FY 2019 

Annual Report.

To connect to Federal Student Aid through social media, please visit the Federal Student Aid 

website at StudentAid.gov or on Twitter at @FAFSA.

Federal Student Aid strives to improve and enhance the content quality, report layout, and 

public accessibility of the Annual Report. Suggestions on how this report can be made more 

informative and useful are welcome. The public and other stakeholders are encouraged to 

submit all questions and comments to AFRComments@ed.gov.
Fiscal Year 2019 Annual Report | Federal Student Aid 

Contents 

Contents

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

Letter from the Chief Operating Officer of Federal Student Aid ... iii

Letter from the Chief Operating Officer of Federal Student Aid ..................................................... v

Overview of the Federal Student Aid Annual Report ...................................................................... ix

Management’s Discussion and Analysis (Unaudited) .................... 1

Overview of the Management’s Discussion and Analysis............................................................... 2

Fiscal Year 2019 Organizational Highlights ...................................................................................... 3

Looking Forward at Federal Student Aid............................................................................................................ 3

Federal Student Aid Fiscal Year 2019 by the Numbers ..................................................................................... 5

Mission and Organizational Structure ............................................................................................... 7

Federal Student Financial Aid Programs ..........................................................................................................11

Performance Management ................................................................................................................ 17

Fiscal Year 2019 Strategic Goals, Objectives, and Performance Metrics.........................................................19

Agency Priority Goals .......................................................................................................................................31

Quality of Performance Data.............................................................................................................................33

Analysis of Financial Statements..................................................................................................... 34

Balance Sheet ..................................................................................................................................................36

Statement of Net Cost.......................................................................................................................................47

Statement of Changes in Net Position ..............................................................................................................48

Statement of Budgetary Resources ..................................................................................................................48

Financial Management Highlights.....................................................................................................................50

Analysis of Systems, Controls, and Legal Compliance................................................................. 53

Limitations of Financial Statements ................................................................................................ 55

Annual Performance Report (Unaudited).................................... 57

Overview of the Annual Performance Report ................................................................................. 58

Fiscal Year 2019 Organizational Performance................................................................................ 59

Federal Student Aid Strategic Goals and Strategic Objectives .........................................................................59

Federal Student Aid Strategic Goals, Performance Metrics, and Results.........................................................60

Federal Student Aid Performance Results by Strategic Goal ...........................................................................61

Introduction to the Annual Performance Report ............................................................................ 62

Performance Results by Strategic Goal .......................................................................................... 63

Strategic Goal A: Improve quality of service for customers across the entire student aid life cycle.................64

Strategic Goal B: Proactively manage the student aid portfolio to mitigate risk. ..............................................70

Strategic Goal C: Improve operational efficiency and flexibility........................................................................74

Strategic Goal D: Foster trust and collaboration among stakeholders.............................................................76

Strategic Goal E: Invest in expanded workforce capability. .............................................................................79

Fiscal Year 2019 Accomplishments of Federal Student Aid ......................................................... 80

Legislative and Regulatory Recommendations.............................................................................. 84
Fiscal Year 2019 Annual Report| Federal Student Aid

Contents

Annual Bonus Awards....................................................................................................................... 85

Report of the Federal Student Aid Ombudsman ............................................................................ 86

Financial Section ...................................................................... 109

Overview of the Financial Section.................................................................................................. 110

Financial Statements ....................................................................................................................... 111

Notes to the Financial Statements ................................................................................................. 116

Required Supplementary Stewardship Information (Unaudited)................................................ 145

Required Supplementary Information (Unaudited) ...................................................................... 147

Independent Auditors’ Report ........................................................................................................ 154

Other Information (Unaudited) ................................................ 167

Other Information............................................................................................................................. 169

Summary of Financial Statement Audit and Management Assurances ..........................................................169

FSA Management Challenges ........................................................................................................................169

Payment Integrity............................................................................................................................................170

Appendices ............................................................................... 175

Appendix A: Glossary of Acronyms and Terms .......................................................................... 177

Appendix B: Availability of the Federal Student Aid Annual Report......................................... 181

Acknowledgements .................................................................. 183
 

Fiscal Year 2019 Annual Report | Federal Student Aid i 

About This Report

About This Report

Federal Student Aid (FSA), a principal office of the United States (U.S.) Department of 

Education (the Department), is required by legislation to produce an Annual Report, which 

details the organization’s fiscal year financial and program performance. The Federal Student 

Aid FY 2019 Annual Report (Annual Report) is a comprehensive document that provides an 

analysis of FSA’s financial and program performance results for Fiscal Year (FY) 2019 and 

exhibits the organization’s effectiveness in accomplishing its mission. The Annual Report

enables the President of the United States, the U.S. Congress, and the public to assess the 

organization’s performance relative to its mission and determine whether FSA has 

demonstrated accountability for the resources entrusted to it.

This report presents information about FSA’s performance as a Performance-Based 

Organization, its initiatives, accomplishments, and challenges, as required by Office of 

Management and Budget Circular A-11, Preparation, Submission and Execution of the Budget, 

Part 6, Section 260, and Circular A-136, Financial Reporting Requirements. The report also 

satisfies the requirements included in the following federal statutes: 

• Higher Education Act of 1965, as amended

• Federal Managers’ Financial Integrity Act of 1982

• Chief Financial Officers Act of 1990

• Government Performance and Results Act of 1993

• Government Management Reform Act of 1994

• Federal Financial Management Improvement Act of 1996

• Reports Consolidation Act of 2000

• Improper Payments Information Act of 2002, amended

• Government Performance and Results Modernization Act of 2010

• Improper Payments Elimination and Recovery Act of 2010

• Improper Payments Elimination and Recovery Improvement Act of 2012

The Department produces the U.S. Department of Education FY 2019 Agency Financial 

Report (AFR). That report provides a comprehensive view of the Department’s stewardship 

over its resources and includes a summary of the information contained in the Annual Report. 

The Annual Report is available at StudentAid.gov/strategic-planning-and-reporting. 
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About This Report

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Fiscal Year 2019 Annual Report | Federal Student Aid iii

Letter from the Chief Operating Officer of Federal Student Aid

Letter from the Chief Operating Officer of 

Federal Student Aid 
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Letter from the Chief Operating Officer of Federal Student Aid

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Fiscal Year 2019 Annual Report | Federal Student Aid v 

Letter from the Chief Operating Officer of Federal Student Aid

Letter from the Chief Operating Officer of Federal 

Student Aid

Dear Federal Student Aid Colleagues, Partners, and Customers:

I am excited to have joined Federal Student Aid 

(FSA) as Chief Operating Officer in March 2019. I 

am honored to have the opportunity to present this 

Fiscal Year (FY) 2019 Annual Report representing 

much of the incredible work and numerous 

accomplishments of the entire FSA team.

As we work each day to help Americans reach 

their higher education goals, we are reminded that 

our mission began in a packed Texas gymnasium 

in November 1965. That day, President Lyndon B. 

Johnson signed the Higher Education Act of 1965

(HEA) into law and made a promise to swing open 

a new door for the young people of America, the 

door to education.

At the time, just 1 in 10 Americans graduated 

college, 19 percent of American families lived in 

poverty, and the median income stood just above 

$6,000. In 2019—more than 50 years after the HEA became law—the average household 

income is $58,000; poverty has been cut almost in half; and 35 percent of Americans have 4 or 

more years of college.

Our nation has made significant progress, but we have more work to do. We so believe in the 

importance of keeping the promise made in 1965 that we’ve adjusted our mission statement to 

read: “Keeping the Promise: Funding America’s Future, One Student at a Time”.

One student—and one parent—at a time, FSA and America’s postsecondary institutions partner 

to deliver more than $120 billion in federal grants, loans, and work-study funds to approximately 

10 million students at nearly 6,000 schools.

This report presents FSA’s achievements in FY 2019 and demonstrates our many efforts to 

improve the quality of service to our customers, mitigate risks, foster trust and collaboration 

among stakeholders, improve operational efficiency and flexibility, and invest in expanded 

workforce capability.

In FY 2019, we launched the next generation of federal student aid—an initiative called Next 

Generation FSA (Next Gen FSA)—that is bringing every aspect of what we do into the 21st

century. The initiative, well underway, is streamlining our student aid systems and processes 

through innovations to our online tools from the StudentAid.gov website to the myStudentAid 

mobile app.

More than 1.2 million people downloaded the mobile app since its launch on October 1, 2018.

The app’s useful and time-saving features allow students and parents to easily and securely 

complete and submit a Free Application for Federal Student Aid (FAFSA®). Throughout the 

Mark A. Brown

Chief Operating Officer
vi Fiscal Year 2019 Annual Report | Federal Student Aid

Letter from the Chief Operating Officer of Federal Student Aid

year, FSA enhanced the mobile app, by simplifying the signature process, providing a checklist 

to guide students and parents through the next steps in the student aid process, enabling push 

notifications, and adding role-based messaging. In FY 2019, more than 2.1 million people used 

a mobile device to submit a FAFSA form.

In addition to launching innovative technology during FY 2019, we improved customers’ 

experience with the Teacher Education Assistance for College and Higher Education (TEACH) 

Grant and Public Service Loan Forgiveness (PSLF) Programs. We established a standard 

annual certification date—October 31—for all TEACH Grant recipients to simplify the program’s 

requirements and ensure more TEACH Grant recipients have an opportunity to fulfill their 

service requirement. FSA also introduced a PSLF Help Tool that aids borrowers in assessing 

whether their employer and loans qualify for PSLF. The tool also helps borrowers know 

whether they are enrolled in an eligible repayment plan and decide which PSLF-related form to 

submit. Additionally, the tool allows FSA to use the information we have about the borrowers’ 

federal student loans to explain other actions customers should or must take to benefit from 

PSLF.

While FSA took major steps to improve student and borrower experiences, we also refocused 

our oversight efforts on the institutions and other partners, such as federal loan servicers, that 

are critical to our work. To improve the delivery of world-class service to borrowers, we worked 

with the Department of Veterans Affairs to identify a new process to automatically relieve total 

and permanently disabled (TPD) veterans of their student loan debt. As a result of servicer 

performance issues, we initiated senior-level meetings at all FSA servicers to reinforce FSA’s

expectations of their performance and future compliance efforts. 

We also have laid a solid foundation for the partner-centric element of Next Generation, Partner 

Participation and Oversight (Next Gen PPO). Next Gen PPO will transform the way FSA 

interacts with the thousands of schools, financial institutions, and other partners that participate 

in the federal student aid programs. Our vision is to create a single portal for access to all FSA 

systems and processes to reduce the administrative burden on schools and other vital partners.

FSA has made major strides to responsibly manage the student aid portfolio by mitigating risk. 

Our staff continues to expand enterprise risk management capabilities in areas such as 

governance, setting strategy and objectives, increased oversight, and reporting. In FY 2019,

FSA built upon our portfolio view of risk, with a greater emphasis on cybersecurity and fraud 

risk. FSA also developed our first formal risk appetite statement, which aids our ability to 

determine appropriate risk responses and increase consistency and transparency in decision 

making.

FSA continues to foster trust and collaboration among stakeholders, in part, by promoting 

accountability and transparency. FSA reduced outstanding Freedom of Information Act

requests by 67 percent in FY 2019 and has continued to engage stakeholders about the Next 

Gen FSA vision and its benefits to the customers we serve.

Institutional oversight remained an important focus in FY 2019. We conducted oversight for 

nearly 6,000 institutions; resolved more than 2,400 deficient audits and flagged financial 

statements; and processed more than 6,400 eligibility-related actions, including recertification 

applications. We also issued more than 375 Program Review Reports and Final Program 

Review Determinations (FPRDs) to institutions and third-party servicers subjected to a program

review. Our focused oversight resulted in more than $227 million in assessed liabilities against 
Fiscal Year 2019 Annual Report | Federal Student Aid vii

Letter from the Chief Operating Officer of Federal Student Aid

institutions and third-party servicers via the 188 FPRDs issued to those entities throughout the 

fiscal year.

In addition to ensuring robust oversight of institutions, FSA also collaborated with guaranty 

agencies to improve retention, graduation, and cohort default rates at minority-serving 

institutions. Through this pilot program, Project Success, guaranty agencies provide 

customized resources and support costs to approximately 140 currently participating schools. 

The program also provides students financial literacy and other resources to help them achieve 

their higher education goals. Following the results of the first three years, we have extended the 

program through 2020 and increased its resources to double the number of participating 

schools and reach even more students.

None of this tremendous work is possible without the dedication and hard work of our 1,251

member workforce in 11 offices throughout the United States. We are investing in employees to 

enhance their skills and competencies for the 21st-century work that lies before us. I am 

amazed every day at employees’ resolve and commitment to our mission. I commend them on 

their dedicated public service and thank them for all they do to keep the promise to students.

Students are at the heart of everything we do. In FY 2020, when we unveil the next phase of 

Next Gen FSA that includes a new “digital front door,” a redesigned online and mobile platform, 

we will do so with students as our focus. When we introduce enhanced financial literacy tools 

and resources—including a repayment simulator and personalized loan counseling—we will do 

so with students’ needs in mind.

I invite you to join us on this journey—not only to transform our organization, but also to 

collectively keep the promise and improve opportunities for students and families across 

America.

Sincerely,

November 15, 2019
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Fiscal Year 2019 Annual Report | Federal Student Aid ix

Overview of the Federal Student Aid Annual Report 

Overview of the Federal Student Aid Annual Report

The Annual Report is organized into five sections. 

Management’s Discussion and Analysis

This Management’s Discussion and Analysis provides an overview of 

the Annual Report. It includes a discussion of the FSA mission, its 

organizational structure, and the fiscal year financial and performance 

highlights. The section concludes with a discussion of the 

organization’s systems, controls, and compliance with laws and 

regulations, and the Limitations of Financial Statements. 

Annual Performance Report

This Annual Performance Report presents the strategic goals included 

in the Federal Student Aid: Strategic Plan, Fiscal Years 2015–19 (FSA 

FY 2015–19 Strategic Plan) and a discussion of the results of the 

performance metrics related to each strategic goal. The section also 

includes FSA’s fiscal year accomplishments; its legislative and 

regulatory recommendations to the Department; the Annual Bonus 

Awards; and the Report of the Federal Student Aid Ombudsman. 

Financial Section

This Financial Section provides a detailed view of FSA’s stewardship 

and accountability for its resources. The audited financial statements

begin the section, followed by the accompanying Notes to the Financial 

Statements, Required Supplementary Stewardship Information, 

Required Supplementary Information, and the Independent Auditors’ 

Report.

Other Information

The Other Information includes a summary of the Financial Statement 

Audit and links to the Summary of Management Assurances, and 

FSA’s Management Challenges included in the AFR. The section 

concludes with the Payment Integrity section, which contains a detailed 

discussion of FSA’s efforts regarding improper payments.

Appendices

The Appendices include Appendix A, which lists the acronyms cited 

throughout the report and Appendix B, which provides information on 

the availability of the Annual Report.
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Fiscal Year 2019 Annual Report | Federal Student Aid 1 

Management’s Discussion and Analysis 

Management’s Discussion and Analysis

(Unaudited)
2 Fiscal Year 2019 Annual Report | Federal Student Aid

Overview of the Management’s Discussion and Analysis 

Overview of the Management’s Discussion and Analysis

The Management’s Discussion and Analysis provides an overview of the Annual Report. It 

includes the following subsections: 

Fiscal Year 2019 Organizational Highlights

Fiscal Year 2019 Organizational Highlights presents Looking Forward at Federal Student Aid,

which details the most important events and challenges that FSA faces and discusses the 

actions taken and progress made by FSA in addressing those challenges. This subsection also 

includes a presentation of FSA by the Numbers. 

Mission and Organizational Structure 

Mission and Organizational Structure provides the history of FSA and discussion of its federal 

student aid programs. This subsection also highlights the mission, vision, and values of FSA as 

presented in the FSA FY 2015–19 Strategic Plan. 

Performance Management

Performance Management presents an overview of FSA’s strategic and performance-planning

framework, an overview of the FSA FY 2015–19 Strategic Plan, and the results of the FY 2019

performance metrics. 

Analysis of Financial Statements 

Analysis of Financial Statements provides an overview of FSA’s financial data, an analysis of 

the financial data presented in the audited financial statements, and a discussion of FSA’s 

financial management highlights. 

Analysis of Systems, Controls, and Legal Compliance

Analysis of Systems, Controls, and Legal Compliance provides FSA’s management assessment 

in conjunction with the Department’s assessment on FSA’s internal controls related to the 

Federal Manager’s Financial Integrity Act of 1982. This subsection discusses the organization’s 

compliance with the Federal Financial Management Improvement Act of 1996, and other laws 

and regulations related to the compliance of financial systems with federal requirements.

Limitations of Financial Statements

Limitations of Financial Statements details the limitations of the financial statements and 

recommends that the financial statements be read and reviewed in conjunction with the Notes to 

the Financial Statements. 
Fiscal Year 2019 Annual Report | Federal Student Aid 3 

Fiscal Year 2019 Organizational Highlights

Fiscal Year 2019 Organizational Highlights

Looking Forward at Federal Student Aid

As FSA moves into FY 2020, one of the first major milestones is the release of the FSA 

FY 2020-24 Strategic Plan. The FSA FY 2020–24 Strategic Plan will outline new goals and 

objectives to assist FSA in meeting the deliverables it has established to improve customer 

service and transform the loan servicing program for students, borrowers and taxpayers. In 

conjunction with executing a new strategic plan, FSA will continue to develop major elements of 

its 21st century vision to continue the momentum associated with organizational change that 

began in FY 2019.

FSA’s primary focus for FY 2020 and beyond is to deliver on the promise of Next Gen 

FSA. Through Next Gen FSA, FSA will transform the experience of applying for, receiving, and 

repaying federal student aid for millions of students, parents, and borrowers, as well as over 

5,700 postsecondary institutions. More specifically, Next Gen FSA will create a customer and 

partner experience throughout the life cycle of student financing that will ensure:

• Easier, more seamless customer and partner interactions, primarily through new FSAbranded web and mobile technology that provides state-of-the-art capabilities all 

customers and partners can use to perform tasks simply and intuitively; 

• Features and tools are designed based on direct customer feedback on what works for 

them, and refined through ongoing customer and partner data and feedback; and

• Customers better understand the financial implications of their student debt and make 

more informed decisions regarding the various repayment options and protections 

available to Federal customers. 

In addition, Next Gen FSA will improve FSA’s operational flexibility by creating a modern 

technology and contract environment that can efficiently and effectively integrate new and 

existing capabilities and features, continuously improve and innovate, and adjust to stay in 

compliance with changing Federal rules, regulations, and laws. Next Gen FSA will also drive 

greater efficiency; reduce complexity; improve the stability, resiliency, enterprise risk 

management, and cybersecurity of our systems; and ensure effective and efficient use of 

taxpayer dollars. 

Next Gen FSA also will enable FSA to improve customer outcomes; facilitate compliance with 

Federal consumer protection standards and the legal requirements of Title IV of the Higher 

Education Act of 1965, as amended (Title IV); and hold ourselves and our vendors accountable 

for performance. Explicit standards and accessible data will be used to leverage greater 

transparency and improved outcomes, with specific goals including:

• Increased customer satisfaction;

• Better informed borrowing decisions;

• Decreased percentage of borrowers in delinquency or default;

• Fewer borrowers in deferment and forbearance;

• Increased digital self-service by customers (instead of calls to FSA); and

• Reduced mail correspondence and payments (in favor of digital solutions that provide 

faster, better service).
4 Fiscal Year 2019 Annual Report | Federal Student Aid

Fiscal Year 2019 Organizational Highlights

Development of the Next Generation Partner Participation and Oversight (Next Gen PPO) 

platform will transform the way FSA interacts with the thousands of schools, financial institutions 

and other partners that participate in FSA programs. Goals for Next Gen PPO include a single 

portal through which institutions can access all FSA systems and processes; streamlined 

processes for submitting and reviewing program participation and other eligibility materials; and 

improved FSA workflow tools to support faster decision-making.

Customer engagement is the motivation behind FSA’s current and future efforts. FSA will 

continue to ensure accurate and timely information is available and promoted through the 

Department’s multiple engagement and information dissemination channels, (including FSA’s 

social media properties, customer facing websites, outreach with counselors and partners, 

promotional campaigns, and targeted emails), with a continued focus on providing information 

geared toward the needs of students at each stage of the student aid life cycle.

FSA is confident that over the next several years it can support positive change in student 

lending. One avenue is to increase oversight and monitoring of federal student loan servicers to 

ensure they meet their contractual obligations and improve their services to borrowers. In 

alignment with servicer accountability, FSA also will conduct outreach efforts to student loan 

borrowers and perform listening sessions of customer call center interactions to identify areas 

for continual improvement in service and the customer experience.

To mitigate future risk to the portfolio as well as aid borrowers in a proactive way, FSA will 

incorporate delinquency and default prevention strategies in Next Gen FSA. These strategies 

include early targeted outreach and counseling for at-risk borrowers; and the use of mobile and 

other digital engagement tools to maintain contact with borrowers and provide information on 

repayment options and other strategies to avoid default. FSA also will have more targeted and 

intensive outreach during the later stages of delinquency, with the goal of increasing students’ 

and parents’ awareness of and access to information, tools and assistance to help them repay 

their loans.

As always, FSA will continue to evaluate, monitor, and report on non-default federal student 

loan servicers’ performance as well as continue adjusting servicers’ allocation percentages (i.e., 

volume of new borrowers received) to benefit customer service outcomes. Lastly, FSA will 

continue to work with its partners at the Department to operationalize the College Scorecard 

measures in the National Student Loan Data System (NSLDS) on debt and related federal 

student aid metrics. By automating this functionality and others in the student aid environment, 

and ensuring valuable information is available for prospective and current student aid recipients, 

FSA will continue to change the long-term success outcomes of its most important 

stakeholder—the students. 
Fiscal Year 2019 Annual Report | Federal Student Aid 5 

Fiscal Year 2019 Organizational Highlights

Federal Student Aid Fiscal Year 2019 by the Numbers

Figure 1: Federal Student Aid Net Outlays1

Fiscal Years 2015–19

$44.6 

$32.1 

$65.5 

$18.6 

$57.3 

$76.9 $82.6 

$40.5 

$83.1 

$40.1 

2015 2016 2017 2018 2019

Dollars in Billions

Budgetary (Program Account) Non-Budgetary Credit Reform (Financing Account)

Figure 2: Federal Student Aid Administrative Budget

Fiscal Years 2015–19

$1.4 

$1.6 $1.6 $1.5 

$1.7 

2015 2016 2017 2018 2019

Dollars in Billions

Figure 3: Federal Student Aid Student Loan Portfolio2

Fiscal Years 2015–19

$1,212 $1,292 $1,367 $1,439 $1,510 

2015 2016 2017 2018 2019

Dollars in Billions

1

The Budgetary account is also known as the Program account; the Non-budgetary credit reform account is also known as the 

Financing account. For more information on these two accounts, please refer to Note 5.

2

The amounts in Figure 3 include both lender-held FFEL loans and School-held Perkins loans. 
6 Fiscal Year 2019 Annual Report | Federal Student Aid

Fiscal Year 2019 Organizational Highlights

Federal Student Aid Fiscal Year 2019 by the Numbers (continued)

Figure 4: Total FAFSAs3 Processed and Total Students Receiving Aid 

Fiscal Years 2015–19

19.9 19.2 19.1 18.6 18.0

11.9 13.2 12.9 12.7

10.4

2015 2016 2017 2018 2019

in Millions

Total Applications Processed Total Postsecondary Students Receiving Aid

Figure 5: Total Federal Student Aid Delivered

Fiscal Years 2015-19

$128.7 

$125.7 

$122.5 $122.4 $121.8 

2015 2016 2017 2018 2019

Dollars in Billions

Figure 6: Federal Student Aid Federal Employees

Fiscal Years 2015-19

1,291

1,369 1,382

1,257 1,251

2015 2016 2017 2018 2019

3

Free Applications for Federal Student Aid. 
Fiscal Year 2019 Annual Report | Federal Student Aid 7 

Mission and Organizational Structure

Mission and Organizational Structure

FSA, a principal office of the U.S. Department of Education (the Department), seeks to ensure 

that all eligible individuals can benefit from federal financial assistance for education beyond 

high school. As the nation’s largest provider of student financial aid, FSA is responsible for 

implementing and managing federal student financial assistance programs authorized under the 

Higher Education Act of 1965, as amended (HEA). Specifically, Title IV of the HEA (Title IV) 

authorizes the federal student assistance programs for which FSA is responsible. These 

programs provide grants, loans, and work-study funds to students attending colleges or career 

and technical schools.

To execute the Title IV programs, FSA is responsible for a range of functions across the student 

aid lifecycle, which include: 

• informing students and families about the availability of the federal student aid programs 

and the process of applying for and receiving aid from those programs; 

• processing millions of Free Applications for Federal Student Aid (FAFSA®); 

• accurately disbursing, reconciling, and accounting for billions of dollars of federal student 

aid funds that are delivered to students annually; 

• managing the outstanding federal student loan portfolio and securing repayment from 

federal student loan borrowers;

• offering free assistance to students, parents, and borrowers throughout the entire 

financial aid process; and

• providing oversight and monitoring of all program participants—schools, financial 

entities, and students—to ensure compliance with the laws, regulations, and policies 

governing federal student aid programs.

This complex, multifaceted mission calls on a range of staff skills and demands coordination by 

all levels of management. Designated as a Performance-Based Organization (PBO) by 

Congress in 1998, FSA emphasizes tangible results and efficient performance, as well as 

continuous improvement of the processes and systems that support its mission.
8 Fiscal Year 2019 Annual Report | Federal Student Aid

Mission and Organizational Structure

Significant Legislation that Directs the Federal Student Aid Mission

Several legislative acts guide FSA’s mission. The Higher Education Amendments of 1998 

established FSA as a PBO to administer the Title IV programs. The following table, while not 

all-inclusive, identifies additional significant legislation that has influenced FSA’s mission. 

Overview of Legislative Authority

Legislation Purpose

Higher Education Act of 1965, as amended Created the federal student financial assistance 

programs known as Title IV programs.

Student Loan Reform Act of 1993 Authorized a multi-year phased implementation of 

the William D. Ford Federal Direct Loan Program.

Higher Education Reconciliation Act of 2005 Allowed graduate and professional students to use

the PLUS Loan Program. 

College Cost Reduction and Access Act of 2007

Authorized the Teacher Education Assistance for 

College and Higher Education Grant Program, 

created the Public Service Loan Forgiveness 

Program, and established Income Based 

Repayment plans.

Ensuring Continued Access to Student Loans Act of 2008 

Provided the Department with the authority to 

implement programs to ensure eligible students 

and parents were not denied access to federal 

student loans during the credit market disruptions 

of 2008.

SAFRA Act of 2009

Provided that, beginning July 1, 2010, no new 

loans would be originated under the Federal Family 

Education Loan Program.

Bipartisan Student Loan Certainty Act of 2013

Established that federal student loan interest rates 

will be tied to financial markets and that each loan 

will have a fixed interest rate for the life of the loan.

Consolidated Appropriations Act, 2014

Transferred all Health Education Assistance Loan 

Program loans as of July 1, 2014 from the U.S. 

Department of Health and Human Services to the 

Department.
Fiscal Year 2019 Annual Report | Federal Student Aid 9 

Mission and Organizational Structure

FSA Stakeholders

The community of stakeholders in the student aid delivery system includes students and 

parents, lenders, guaranty agencies, postsecondary institutions, contracted servicers and 

collection agencies, as well as taxpayers and other federal entities such as Congress and the 

U.S. Office of Management and Budget (OMB).

Role of FSA and Participants in the Federal Student Aid System

Participants Participants’ Role FSA’s Engagement with Participants

Students • Receive student aid and repay student

aid loans used to finance

postsecondary education.

• Increasing awareness of federal student

aid and the process for applying for and

receiving aid;

• Identifying students for whom financial

assistance can make a difference;

• Protecting students from unfair,

deceptive, or fraudulent practices in the

student aid marketplace; and

• Informing borrowers of their repayment

options and securing repayment from

borrowers.

Guaranty Agencies • Insure Federal Family Education Loan

Program loans and service their

defaulted loan portfolios.

• Monitoring compliance;

• Assisting Guaranty Agencies in meeting

requirements;

• Providing education regarding policy; and

• Paying default claims.

Federal Family 

Education Loan

Program Lenders

• Hold and service outstanding Federal

Family Education Loan Program loans

to students.

• Monitoring compliance;

• Paying interest and Special Allowance

Payments; and

• Providing education regarding policy.

FSA-Contracted Loan 

Servicers 

• Service William D. Ford Federal Direct

Loan Program portfolio and portions of

Federal Family Education Loan

Program portfolio;

• Provide systems and services to

support FSA’s core operations (e.g.,

applications, disbursements); and

• Recover funds from defaulted loans.

• Acquiring services;

• Setting performance standards; and

• Overseeing operations.

Postsecondary 

Institutions

• Determine students’ aid packages and

disburse funds.

• Monitoring compliance;

• Providing education regarding policy; and

• Assisting institutions in meeting

requirements.

Congress • Set statutory standards on student aid

funding and appropriate student aid

and FSA funding.

• Providing data and information for

decision making; and

• Providing updates on operational

performance.

The President, the 

Department and others 

in the Executive Branch

• Set regulatory standards and policy on

student aid funding.

• Providing data and information for

decision making; and

• Providing recommendations for

implementation.

FSA’s responsibilities include coordinating and monitoring the activity of the large number of 

federal, state, nonprofit, and private entities involved in delivering federal student aid within the 

statutory framework established by Congress and regulatory framework established by the 

Department.
10 Fiscal Year 2019 Annual Report | Federal Student Aid

Mission and Organizational Structure

FSA Organizational Structure

In Fiscal Year (FY) 2019, FSA operated under a functional organizational structure that aligned

the organization with its strategic drivers, business objectives, and mission goals. A Chief 

Operating Officer (COO) is appointed by the Secretary of Education (Secretary) to lead FSA. In 

March 2019, the Secretary appointed Mark A. Brown as the FSA COO. Figure 7 illustrates the 

functional organizations within FSA.

Figure 7: Fiscal Year 2019 Federal Student Aid Organizational Chart

During FY 2019, FSA operated on an annual administrative budget of approximately $1.7 billion. 

As of September 30, 2019, FSA is staffed by 1,251 full-time employees and augmented by 

contractors who provide outsourced business operations. The workforce is primarily based in

FSA’s headquarters located in Washington, DC, with ten regional offices located throughout the 

country as reflected in the following Figure 8. The number of full-time employees at each 

location is shown in parentheses immediately following the location name. 

Figure 8: Fiscal Year 2019 Federal Student Aid Regional Map
Fiscal Year 2019 Annual Report | Federal Student Aid 11

Mission and Organizational Structure

Federal Student Financial Aid Programs

Each year, FSA delivers billions of dollars in financial aid to students through Title IV programs. 

These programs collectively represent the nation’s largest source of federal financial aid for

postsecondary education students. This aid covers expenses such as tuition and fees, room 

and board, books and supplies, and transportation. Federal financial aid is mainly distributed to

students through: 

• Loans

o Student aid funds that are borrowed to help pay for eligible education programs and 

must be repaid with interest; 

• Grants

o Student aid funds that do not have to be repaid, unless other conditions apply; and 

• Work-Study

o A part-time employment program that allows students enrolled in college to earn 

money to help pay for school.

To obtain federal financial aid, prospective aid recipients must complete the FAFSA. In 

FY 2019, FSA processed more than 18.0 million FAFSAs, resulting in the delivery of 

approximately $121.8 billion in Title IV aid to over 10.4 million postsecondary students and their 

families. These students attend 5,767 active institutions of postsecondary education that 

participate in student aid programs and are accredited by dozens of agencies. 

The following table presents a comparison of the amounts of Title IV aid disbursed to students 

by program in FY 2019 and FY 2018. A summary discussion of each Title IV program is 

presented in the paragraphs after the table. 

Table 1: Summary of Federal Aid Disbursed to Students by Program4

(Dollars in Millions) 

Programs

2019

Aid Disbursed 

to Students

2018

Aid Disbursed 

to Students

Difference Percentage 

Change

Federal Loan Programs

William D. Ford Federal Direct Loan Program $ 90,156.0 $ 91,484.6 $ (1,328.6) (1.5)% 

Federal Perkins Loan Program 630.5 886.3 (255.8) (28.9) 

Other Loan Programs - (0.1) 0.1 (100.0)

Subtotal Loan Programs $ 90,786.5 $ 92,370.8 $ (1,584.3) (1.7)% 

Federal Grant Programs

Federal Pell Grant Program $ 28,974.7 $ 28,249.8 $ 724.9 2.6% 

Federal Supplemental Educational Opportunity 

Grant Program 853.5 750.1 103.4 13.8 

The Teacher Education Assistance for College 

and Higher Education Grant Program 78.5 83.9 (5.4) (6.4) 

Other Grant Programs 0.4 0.3 0.1 33.3

Subtotal Grant Programs $ 29,907.1 $ 29,084.1 $ 823.0 2.8% 

Federal Work-Study Program

Federal Work-Study Program $ 1,078.5 $ 983.3 $ 95.2 9.7% 

Rounding (0.1) 0.1 0.0 - 

Grand Total $ 121,772.2 $ 122,438.3 $ (666.1) (0.5)% 

4

Aid disbursed to students as cited in the table above, and in the following sections concerning the Federal Loan Programs, the 

Federal Grant Programs, and the Federal Work-Study Program in the Management’s Discussion and Analysis, excluding the 

Federal Perkins Loan Program amounts, are derived from amounts from FSA’s and the Department’s financial systems. All 

amounts are fiscal year amounts, except for the Federal Perkins Loan Program, which is reported as the prior award year amount 

(e.g., Award Year 2017–18 reported in FY 2019). The number of awards or recipients reported in the Management’s Discussion 

and Analysis is derived from a variety of sources including FSA’s Common Origination and Disbursement System and data used to 

support the President’s Budget. Recipient counts are based on award year.
12 Fiscal Year 2019 Annual Report | Federal Student Aid

Mission and Organizational Structure

Federal Loan Programs 

In fulfilling its program responsibilities, FSA directly manages or oversees a loan portfolio of

over $1.5 trillion, representing almost 210 million student loans to more than 45 million

borrowers. These loans were made primarily through the first two federal student loan 

programs described below.

The William D. Ford Federal Direct Loan (Direct Loan) Program lends funds directly to

students and parents through participating schools. Created in 1993, this program is funded

primarily by borrowings from the U.S. Department of the Treasury (Treasury), as well as an

appropriation for subsidy costs. Four different types of direct loans are available for borrowers: 

• Direct Subsidized Loans

o Federal loans based on financial need made to undergraduate students for which the

federal government generally does not charge interest while the borrower is in school,

in grace, or in deferment status. For Direct Subsidized Loans first disbursed between

July 1, 2012, and July 1, 2014, the borrower is responsible for paying any interest that

accrues during the grace period. If the interest is not paid during the grace period, the

interest is added to the loan’s principal balance.

• Direct Unsubsidized Loans

o Federal loans made to undergraduate students and graduate students for which the

borrower is fully responsible for paying the interest regardless of the loan

status. Interest on unsubsidized loans accrues from the date of disbursement and

continues throughout the life of the loan.

• Direct PLUS Loans

o Federal loans made to graduate or professional students and parents of dependent

undergraduate students for which the borrower is fully responsible for paying the

interest regardless of the loan status.

• Direct Consolidation Loans

o Federal loans that allow the borrower to combine multiple existing federal student

loans into one new loan. The borrower will only have to make one monthly payment

on the consolidation loan, and the repayment term of the loan may be longer than the

terms of the original loans, which may result in a lower monthly payment.

As of September 30, 2019, FSA’s portfolio of Direct Loans included $1,123.7 billion in credit 

program receivables, net. In FY 2019, the Department made $90.2 billion5 in net loans to 

8.8 million recipients. 

Under the Federal Family Education Loan (FFEL) Program, students and parents obtained 

federal loans through private lenders. Guaranty agencies insure lenders against borrower 

default; the federal government, in turn, reinsures the guaranty agencies. Federal subsidies 

ensure private lenders earn a certain yield on the loans they made. 

The passage of the SAFRA Act, which was included in the Health Care and Education 

Reconciliation Act of 2010 (HCERA) (Pub. L. 111-152), ended the origination of new FFEL 

Program loans as of July 1, 2010. Nevertheless, FSA, lenders, and guaranty agencies continue 

to service and collect outstanding FFEL Program loans. FSA, FFEL lenders, and guaranty 

5

Excludes consolidation loans of $39.8 billion.
Fiscal Year 2019 Annual Report | Federal Student Aid 13

Mission and Organizational Structure

agencies held a FFEL Program loan portfolio of approximately $261.6 billion as of 

September 30, 2019. Of this portfolio, $76.8 billion represented FSA’s credit program 

receivables, net. In FY 2019, FSA made gross payments of approximately $1.3 billion to 

lenders for interest and special allowance subsidies and $5.7 billion to guaranty agencies for 

reinsurance claims and fees paid for account maintenance, default aversion, and collection 

activities.

The Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) authorized the 

Department to implement a number of programs to ensure credit market disruptions did not 

deny eligible students and parents access to federal student loans for the 2008–09 and 

2009–10 academic years. The authority of two ECASLA Programs, the Loan Purchase 

Commitment Program and the Loan Participation Interest Purchase Program, expired after 

September 30, 2010. The third ECASLA Program, the Asset-Backed Commercial Paper 

Conduit (ABCP Conduit) Program, ended in January 2014. 

As of September 30, 2019, FSA-held FFEL credit program receivables, net totaled $76.8 billion, 

comprising $23.0 billion acquired under the "traditional" (Non-ECASLA) guaranteed loan 

program, and $53.7 billion in loans acquired under the ECASLA authorization.

The Federal Perkins Loan Program is one of three campus-based student aid programs. 

These federal loans were made by schools to undergraduate and graduate students who 

demonstrate financial need. Historically, participating schools received a certain amount of 

funds each year from FSA for distribution under this program, which supplemented funds in a 

school’s revolving fund, from which new disbursements were made. These funds enabled 

eligible institutions to offer low-interest loans to students based on financial need. Once the full 

amount of the school’s funds had been awarded to students, no additional loans were to be 

made under this program for the year. In FY 2019, FSA reported Award Year 2017–18 

disbursements of approximately $630.5 million of funds, comprising approximately 

256,000 awards to eligible students.

The Health Education Assistance Loan (HEAL) Program was transferred to the Department 

from the U.S. Department of Health and Human Services in FY 2014 under the Consolidated 

Appropriations Act, 2014 (Pub. L. 113-76). This program enabled graduate students in schools 

of medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, public health, 

pharmacy, chiropractic, or programs in health administration and clinical psychology to obtain 

federally insured loans through participating lenders. Since September 30, 1998, no new loans 

have originated through this program; however, borrowers are still obligated to repay any 

outstanding loans obtained through the program.

The Department assumed responsibility for the program and the authority to administer, service, 

collect, and enforce the loans. Credit program receivables, net of allowance for subsidy, were 

$394.7 million for FY 2019.
14 Fiscal Year 2019 Annual Report | Federal Student Aid

Mission and Organizational Structure

Federal Grant Programs

In its responsibility for administering Title IV aid, FSA oversaw the disbursement of $29.9 billion 

in grants to 8.2 million recipients. The following provides a summary for each grant program, 

including aid disbursed in FY 2019. 

The Federal Pell Grant (Pell Grant) Program helps ensure financial access to postsecondary 

education by providing grant aid to low-income and middle-income undergraduate students. 

Considered the foundation of a student’s financial aid package, Pell Grants vary according to 

the financial circumstances of students and their families. In FY 2019, the Department 

disbursed $29.0 billion in Pell Grants averaging approximately $4,168 to almost 8.2 million 

students. The maximum Pell Grant award was $6,095 in the 2018–19 award year and 

increased to $6,195 in the 2019–20 award year. 

The Federal Supplemental Educational Opportunity Grant Program is one of three campusbased programs through which the Department provides funds directly to eligible institutions. 

Funds provided through this program 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. Each participating school receives a certain 

amount of Federal Supplemental Educational Opportunity Grant funds each year from FSA. 

Once the full amount of the school’s grant funds has been awarded to students, no additional

awards can be made under this program for the year. This form of aid does not require 

repayment. In FY 2019, approximately $853.5 million were disbursed through approximately 

1.7 million campus-based awards. 

The Teacher Education Assistance for College and Higher Education (TEACH) Grant

Program provides individual awards up to $4,000 per year to students agreeing to teach 

mathematics, science, or other specialized subjects in a high-poverty school for at least four 

years within eight years of their graduation. This grant program began in the 2008–09 school 

year, starting July 1, 2008. For any 2019–20 TEACH Grant first disbursed on or after 

October 1, 2018, and before October 1, 2019, the maximum award is $3,752. For any 2019–20 

TEACH Grant first disbursed on or after October 1, 2019, and before October 1, 2020, the 

maximum award is $3,764. If students fail to fulfill the service requirements specific to the 

program, their TEACH Grants convert to Direct Unsubsidized Loans, with interest accruing from 

the time of the award. In FY 2019, the Department disbursed more than 35,000 grants totaling 

$78.5 million under the TEACH Grant Program. 

The Iraq and Afghanistan Service Grant Program, which became effective July 1, 2010, 

provides non-need-based grants to students whose parent or guardian was a member of the 

Armed Forces and died in Iraq or Afghanistan as a result of military service after

September 11, 2001. These grants are awarded to students who are not eligible for a Federal 

Pell Grant based on financial need, but meet the remaining Federal Pell Grant eligibility 

requirements, and: 

• Have a parent or guardian who was a member of the U.S. Armed Forces and died as a

result of military service in Iraq or Afghanistan after the 9/11 events, and;

• Were under 24 years old or enrolled in college at least part-time at the time of the parent

or guardian’s death.
Fiscal Year 2019 Annual Report | Federal Student Aid 15

Mission and Organizational Structure

For any 2019–20 Iraq and Afghanistan Service Grant first disbursed on or after October 1, 2018, 

and before October 1, 2019, the maximum award amount is $5,810.91. For any 2019–20 Iraq 

and Afghanistan Service Grant first disbursed on or after October 1, 2019, and before 

October 1, 2020, the maximum award amount is $5,829.50. The Department disbursed 

approximately $407,000 to support fewer than 100 awards in FY 2019. 

Federal Work-Study Program

The Federal Work-Study Program is one of three campus-based programs through which the 

Department provides funds directly to eligible institutions. Funds provided through this program 

enable eligible institutions to offer part-time employment to undergraduate, graduate, and 

professional students based on financial need, allowing them to earn money to help pay 

education expenses. 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. In 

FY 2019, approximately $1.1 billion were disbursed through more than 700,000 campus-based 

awards.
16 Fiscal Year 2019 Annual Report | Federal Student Aid

Mission and Organizational Structure

Mission, Vision, and Core Values

FSA’s mission is student-focused. This mission drives the organization’s vision to be a reliable 

provider of federal student aid and services and to be the most trusted source of postsecondary 

education information to students and their families. As part of its vision, FSA strives to assist 

students and families in making better decisions about their postsecondary education funding 

options. The core values reflect a culture of integrity, excellence, and collaboration—key 

components in building a high-performing organization.

FSA Mission, Vision, and Core Values

MISSION

MISSION Funding America’s Future, One Student at a Time6

VISION

VISION To be the most trusted and reliable source of student 

financial aid, information, and services in the nation. 

VALUES

Integrity Do the right thing above other interests and hold everyone 

accountable.

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

expectations.

Excellence Strive to be the very best in all we do by embracing a 

culture of continuous improvement.

Respect Value individuals by acknowledging the diversity of their 

contributions, ideas, and beliefs.

Stewardship Uphold the sacred trust of taxpayers as we work to support 

the goals of Congress and the Administration.

Teamwork Work in collaboration with our colleagues and partners to 

produce the best possible results.

As discussed in detail in the next section, FSA has translated this vision into a set of clearly 

defined strategic goals and objectives, with related measurable performance metrics. The 

realization of these goals will enable the organization to accomplish its mission successfully. 

6

The mission stated above represents the Federal Student Aid’s mission statement as published in the FY 2015–19 FSA Strategic 

Plan. A new mission statement, Keeping the Promise: Funding America’s Future, One Student at a Time, has been developed and 

will be published in the new FSA Strategic Plan.
Fiscal Year 2019 Annual Report | Federal Student Aid 17

Performance Management

Performance Management

The FSA Annual Report provides a detailed view of the past year’s goals, challenges, and 

accomplishments in the context of the FSA FY 2015–19 Strategic Plan. 

This section of the Annual Report provides a general overview of the performance management 

processes at FSA. It includes a summary of FSA’s FY 2019 performance metrics, objectives, 

and results; discussion of FSA’s Agency Priority Goals; and discussion of FSA’s efforts to 

validate the quality of performance data reported.

Performance Management Processes at Federal Student Aid

During FY 2019, FSA used three tools to establish goals and communicate, measure, and 

report performance:

• FSA FY 2015–19 Strategic Plan; 

• Annual Performance Report; and 

• Annual Organizational Performance Review. 

FSA FY 2015‒19 Strategic Plan

As part of the strategic planning process, FSA continuously identifies and evaluates key drivers 

that significantly influence FSA’s long-term goals and objectives. FSA analyzes these drivers to 

identify long-term core strategic goals that will serve as the foundation of FSA’s strategic 

planning. These strategic goals collectively provide the framework for continuous improvement 

at FSA, guiding the organization in managing its programs more effectively, and providing clear 

strategic direction to all of FSA’s internal and external constituencies. The five-year strategic 

goals developed must be:

• Appropriate to the mission of the organization; 

• Realistic and measurable; 

• Achievable in the time frame established and challenging in their targets; and

• Understandable to the layperson with language that is unambiguous, and terminology 

that is adequately defined. 

Each strategic goal encompasses objectives and identifies performance metrics to measure 

FSA’s level of success in meeting the strategic goal. For each performance metric, FSA 

identifies a target level of performance for each fiscal year. FSA sets the target level of 

performance at a challenging, but realistic level that is achievable within the timeframe. Meeting 

or exceeding the target indicates that FSA succeeded in attaining the established performance 

metric, while falling short of the target indicates that FSA did not attain the performance metric. 

The following table summarizes the key components of the FSA FY 2015–19 Strategic Plan.
18 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Key Components of the FSA FY 2015–19 Strategic Plan

Key Component Description

Strategic Goals

Statements of long-term purpose outlined in the 

FSA FY 2015–19 Strategic Plan that define 

how FSA will accomplish its mission. These 

goals are aligned to FSA’s responsibilities as a 

PBO. 

Objectives

Statements that describe the tactical activities 

FSA will perform to achieve the associated 

strategic goal. 

Performance Metrics

Levels of performance over a certain timeframe 

used to gauge FSA’s success in reaching its 

strategic goals. These metrics include targets 

and timeframes. 

Targets

Indicators of the desired performance levels or 

specific desired results targeted for a given 

fiscal year. Targets are expressed in 

quantifiable terms and are compared to the 

actual result to determine level of performance. 

Throughout the fiscal year, FSA measures and analyzes performance based upon performance 

metric results. For any performance metrics not on track, FSA’s analysis includes identifying 

the root cause of the unexpected result and determining the appropriate corrective actions 

necessary to improve performance. 

Annual Performance Report

To report progress on meeting the strategic goals, FSA prepares and publishes an Annual

Performance Report, which is included in FSA’s Annual Report. In addition to the Annual 

Performance Report, the Annual Report includes FSA management’s discussion and analysis of 

financial and performance results, its audited financial statements and notes, and the report of 

the independent auditors. 

Annual Organizational Performance Review

The annual Organizational Performance Review (OPR) is part of the Department-wide 

performance management system. It operates at the principal office level and is designed to 

integrate and align all of the Department’s performance management elements, including the

U.S. Department of Education Strategic Plan for Fiscal Years 2018–22, Agency Priority Goals, 

the priorities of the principal offices, and other requirements of law and of the President. The 

OPR framework primarily focuses on process improvements and capacity building, providing 

principal offices an opportunity to establish specific milestones. FSA tracks the status of its 

OPR metrics and reports on its progress to the Department.
Fiscal Year 2019 Annual Report | Federal Student Aid 19

Performance Management

Fiscal Year 2019 Strategic Goals, Objectives, and Performance Metrics

The FSA FY 2015–19 Strategic Plan reflects the organization’s focus on quality of service as 

well as increasing analytical and research capabilities. Key strategic drivers, listed below, 

influenced the development and implementation of FSA’s strategic plan, as well as the 

development and tracking of performance measures. 

Key Strategic Drivers Relevant to FSA Strategic Planning

Key Strategic Driver Relevance to FSA’s Strategic Planning Process

The Higher Education Act of 1965 legislation Prescribes Title IV program and PBO requirements 

(i.e., improve service, reduce costs, improve and 

integrate support systems, develop delivery and 

information systems, and enhance staff development 

and talent).

Student and borrower needs Students and borrowers are key customers of FSA 

services and products. 

Key trends and conditions for the financial 

aid environment

Indicates student aid environment within which FSA 

must operate. Listed below are key trends that may 

affect the financial aid environment.

• Changing demand for Federal Student Aid. 

• Continuing growth of student debt and focus 

on delinquency and default.

• Increasing pressure to improve student 

interaction within the aid system. 

• Increasing demand for accountability in the 

use of federal funds.

• Increasing attention to availability and uses of 

data.

• Continuing focus on data security.

The Department’s Five-Year Strategic Plan Requires FSA’s support of the Department’s strategic 

goals related to postsecondary education. 

The Office of Inspector General’s 

Management Challenges

Requires the Department and FSA senior 

management’s consideration for establishing 

priorities. The Office of Inspector General’s 

Management Challenges for FY 2019 include:

• Improper Payments;

• Information Technology Security;

• Oversight and Monitoring; and

• Data Quality and Reporting. 

The Office of Inspector General and 

Government Accountability Office audits

Requires FSA senior management’s consideration for 

establishing priorities to address findings and 

recommendations.

Federal financial management laws and 

regulations

Prescribes financial management requirements.
20 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Key Strategic Driver Relevance to FSA’s Strategic Planning Process

Federal performance reporting legislation 

and requirements

Prescribes performance and reporting requirements.

Federal budget deficits Requires FSA to look for opportunities to reduce 

operating costs through improved efficiency.

FSA’s five Strategic Goals, based upon analysis of the above key strategic drivers, are:

• Strategic Goal A: Improve quality of service for customers across the entire student aid

life cycle. 

• Strategic Goal B: Proactively manage the student aid portfolio to mitigate risk.

• Strategic Goal C: Improve operational efficiency and flexibility.

• Strategic Goal D: Foster trust and collaboration among stakeholders.

• Strategic Goal E: Invest in expanded workforce capability.

The remainder of this section provides a discussion of each strategic goal, including the 

associated objectives and a summary of performance metric results. For a more detailed 

discussion, refer to the Annual Performance Report section of this document.
Fiscal Year 2019 Annual Report | Federal Student Aid 21

Performance Management

How the Remainder of this Section is Organized. This section is organized by the 

five strategic goals. For each strategic goal, this section provides an overview of the goal, lists 

the associated objectives that support the strategic goal, and details the performance metrics

used to measure performance. Specifically, the following information is included for each 

strategic goal: 

• Strategic Goal: States the strategic goal and provides a discussion of the 

relevance of the goal to FSA’s mission. 

• Objective: Includes a brief discussion of the objectives identified for the 

strategic goal.

• Performance Metrics: Includes a summary of FSA’s performance as measured by the

performance metrics for the strategic goal. This summary is 

followed by a performance metric table that details, the prior years’ 

actual results; the current reporting period target; the current year 

actual result; and the page reference to the detailed discussion

located in the Annual Performance Report section of this 

document. The following is the legend for the performance result 

indicator included in the table. 

Performance Result Indicator Legend

Performance Result Indicator

Performance result met or exceeded the 

target. 

Met

Performance result did not meet the 

target. 

Not met

x

Performance result is not applicable 

because the performance metric was not 

developed, the performance metric was 

not implemented, or the required data 

were not available in time for inclusion. 

N/A

– 

✔

The performance metric results reported are as of fiscal year-end, September 30, 2019, unless 

otherwise noted. If the required data are not available as of fiscal year-end in time for inclusion 

in this report, data as of the most recent period available are used. Data as of fiscal year-end 

may not be available in some instances, where the required data are obtained from external 

sources including state and private nonprofit guaranty agencies, lenders and loan servicers, and 

grant and loan recipients. 
22 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Strategic Goal A: Improve quality of service for customers across the entire 

student aid life cycle.

FSA recognizes the importance of continuing to strive for improvements in quality of service. 

Connecting customers with the appropriate resources is a cornerstone of FSA’s mission. To 

achieve this goal, FSA continues to work on providing increased outreach and information on all 

aspects of the student aid environment. These efforts allow students and families to make 

decisions in the most well-informed manner. FSA also takes great care to ascertain that highquality service does not begin and end with aid disbursement and ensures customers remain 

connected to the best resources available at every stage of the student aid lifecycle.

Strategic Goal A focuses directly on student/aid recipient awareness and giving individuals and 

families the best resources to ensure sound financial decisions while also working to identify 

patterns and trends to deliver information to customers proactively rather than reactively. 

Objectives supported: To support this strategic goal, FSA identified a set of objectives, which 

includes detailed initiatives designed to assist with meeting each objective. Meeting each 

objective will result in accomplishing the strategic goal. The objectives that support this 

strategic goal include:

• Objective 1: Improve outreach and awareness efforts to support aid recipients and their

families in making sound financial decisions.

• Objective 2: Optimize the borrower service model to improve the customer experience.

• Objective 3: Predict, identify, and understand existing and emerging customer trends

and patterns. 

• Objective 4: Enhance outreach, training, and tools to improve institutional performance

and help postsecondary institutions understand responsibilities and 

requirements under the Higher Education Act.

Performance Metrics measured: To determine the success of FSA’s efforts to meet this 

strategic goal, FSA identified a set of performance metrics, including a target level of 

performance. For this strategic goal, the following tables display the performance metrics, prioryear actual results, FY 2019 target and actual performance levels, result (met or not met), and 

reference to supporting detail in the Annual Performance Report section of this document. In 

summary, FSA met the target for four of the performance metrics and did not meet the target for 

one of the performance metrics under this strategic goal.
Fiscal Year 2019 Annual Report | Federal Student Aid 23

Performance Management

Performance Summary for Strategic Goal A

Table 2: Performance Metric A.1* 

Percent of First-Time FAFSA Filers Among High School Seniors

Metric Status 2017 2018 2019 Reference page

Target – 66.4%–68.4% 67.0%–69.0% 

Actual 64 – 67.4% 65.9%

Result N/A x

*Note: This performance metric was revised in FY 2018; prior-year data not available under revised method.

Table 3: Performance Metric A.2 

Persistence Among First-Time Filing Aid Recipients

Metric Status 2017 2018 2019 Reference page

Target 78.7%–80.7% 81.6%–83.6% 82.0%–84.0%

Actual 66 82.6% 82.5% 82.8%

Result

Table 4: Performance Metric A.3 

Customer Visits to StudentAid.gov

Metric Status 2017 2018 2019 Reference page

Target >=43.3 million >=43.3 million >=150.0 million

Actual 67 44.3 million 44.5 million 183.7 million

Result

Table 5: Performance Metric A.4 

Social Media Channel Subscribership

Metric Status 2017 2018 2019 Reference page

Target >=500,000 >=590,000 >=615,000

Actual 68 584,241 607,241 634,556

Result

Table 6: Performance Metric A.5 

ACSI Aid Life Cycle Surveys

Metric Status 2017 2018 2019 Reference page

Target 69.4–71.4 68.9–70.9 70.0–72.0

Actual 69 69.9 70.6 70.0

Result

✔

✔ ✔ ✔

✔ ✔ ✔

✔ ✔ ✔

✔ ✔ ✔
24 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Strategic Goal B: Proactively manage the student aid portfolio to mitigate risk.

FSA has committed to an increased effort in the expansion and enhancement of analytical and 

data-driven processes. These efforts play a vital role in the mitigation of risk by identifying and 

resolving problematic elements. FSA’s risk mitigation effort also extends to students and 

families potentially affected by misleading practices within the student aid environment. Using 

increased analytical tools and data-driven resources, FSA continues its leadership role in the 

universe of postsecondary education funding to ensure that all system participants effectively 

serve the interests of students.

Strategic Goal B aims to increase operational effectiveness and strengthen FSA’s role in 

working to ensure protection of customers and holding stakeholders accountable for their 

actions. FSA strives to provide the opportunity of postsecondary education to all Americans, 

and a critical element of this task is ensuring effective identification and mitigation of risks to 

ensure a safe and accountable environment surrounding the student aid lifecycle.

Objectives supported: To support this strategic goal, FSA identified a set of objectives, which 

includes detailed initiatives designed to assist FSA with meeting each objective. Meeting each 

objective will result in accomplishing the strategic goal. The objectives that support this 

strategic goal include:

• Objective 1: Enhance analytical and research capabilities to proactively identify

operational and reputational risk.

• Objective 2: Develop robust, data-driven processes to manage identified risks.

• Objective 3: Provide access to resources to protect students and families from unfair,

deceptive, or fraudulent practices in the student aid marketplace. 

Performance Metrics measured: To determine the success of FSA’s efforts to meet this 

strategic goal, FSA identified a set of performance metrics, including a target level of 

performance. For this strategic goal, the following tables display the performance metrics, prioryear actual results, FY 2019 target and actual performance levels, result (met or not met), and 

reference to supporting detail in the Annual Performance Report section of this document. In 

summary, FSA met the target for both performance metrics under this strategic goal.
Fiscal Year 2019 Annual Report | Federal Student Aid 25

Performance Management

Performance Summary for Strategic Goal B

Table 7: Performance Metric B.1* 

Improper Payment Rate

Metric Status 2017 2018 2019 Reference page

Target 4.85% 4.97% 4.95%

Actual 4.97% 4.95% 0.93% 70

Result x

*Note: This performance metric methodology was revised in FY 2019.

Table 8: Performance Metric B.2* 

Percent of Borrowers > 90 Days Delinquent

Metric Status 2017 2018 2019 Reference page

Target 7.4% 8.2% 10.1% 

Actual 8.3% 7.4% 9.8% 72

Result x

*Note: This performance metric methodology was revised in FY 2019.

✔ ✔

✔ ✔
26 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Strategic Goal C: Improve operational efficiency and flexibility.

FSA continues to recognize the need for flexibility relating to changes in the environment of 

postsecondary education as well as the world itself. As part of the federal government push to 

migrate to more cost-effective operating models, FSA began implementation of new efficient 

governance processes that will enable the organization to more readily adapt to changing 

policies and needs, while continuing to effectively manage and deliver student aid programs.

FSA has implemented several initiatives focused on developing mechanisms to facilitate 

collaboration and information sharing across the organization that will help the organization 

accurately and effectively analyze its data. FSA has also refined acquisition strategies to 

ensure the most efficient and economic acquisition of products and services.

Recent technological improvements in processing and analyzing data have greatly increased 

FSA’s ability to serve its customers. However, the rising sophistication of external network 

threats necessitates a proactive approach to identify and prevent unauthorized access and 

accidental or deliberate data loss. FSA places a high priority on strengthening its Information 

Technology (IT) systems’ security in order to ensure appropriate identification and management 

of potential threats.

Strategic Goal C aims to pursue further efficiencies and flexibilities on an enterprise level at 

FSA. These efforts will increase collaboration between business units and reduce waste 

resulting from outdated and inefficient processes. 

Objectives supported: To support this strategic goal, FSA identified a set of objectives, which 

includes detailed initiatives designed to assist FSA with meeting each objective. Meeting each 

objective will result in accomplishing the strategic goal. The objectives that support this 

strategic goal include:

• Objective 1: Link disparate data sources to improve cross-organizational information

exchange.

• Objective 2: Refine acquisition management to ensure that services and products are

consistent with business objectives.

• Objective 3: Enhance governance processes to support enterprise decision-making.

• Objective 4: Strengthen FSA’s information technology (IT) systems’ security.

Performance Metrics measured: To determine the success of FSA’s efforts to meet this 

strategic goal, FSA identified a set of performance metrics, including a target level of 

performance. For this strategic goal, the following tables display the performance metrics, prioryear actual results, FY 2019 target and actual performance levels, result (met or not met), and 

reference to supporting detail in the Annual Performance Report section of this document. In

summary, FSA met the target for both performance metrics under this strategic goal.
Fiscal Year 2019 Annual Report | Federal Student Aid 27

Performance Management

Performance Summary for Strategic Goal C

Table 9: Performance Metric C.1

Aid Delivery Costs Per Application

Metric Status 2017 2018 2019 Reference page

Target $11.46 $12.16 $11.99

Actual $10.68 $8.83 $9.55 74

Result ✔ ✔

Table 10: Performance Metric C.2 

Outstanding Direct Loan Portfolio in Current Repayment Status

Metric Status 2017 2018 2019 Reference page

Target 84.9%–85.9% 85.0%–86.0% 85.5%–86.6%

Actual 85.7% 86.5% 86.7% 75

Result ✔ ✔ ✔

✔
28 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Strategic Goal D: Foster trust and collaboration among stakeholders.

As the nation’s largest provider of federal student assistance, FSA’s role requires the 

organization to provide careful oversight of taxpayer dollars. In FY 2019, FSA disbursed 

approximately $121.8 billion in aid and administered a loan portfolio valued at over $1.5 trillion. 

FSA has increased collaboration with all stakeholders in the Title IV process and worked to 

promote its commitment to transparency and accountability. 

The education environment includes a significant number of stakeholders with a variety of 

needs, objectives, and priorities. This diversity presents opportunities for FSA to strengthen 

effective partnerships with internal partners in the federal government and external stakeholders 

in the field of higher education to address priorities that serve the best interest of students. FSA 

also understands that different stakeholders have different communication needs, interests, and 

familiarity with federal financial aid programs. This has resulted in the expansion of available 

resources as well as the use of an increasing number of outreach methods.

Strategic Goal D aims to build trust between FSA and stakeholders through collaborative efforts 

and a continuous dialogue. Transparent operations allow stakeholders vastly improved 

accessibility to data and information from the student aid universe and help to foster wellinformed discussions and partnerships.

Objectives supported: To support this strategic goal, FSA identified a set of objectives, which 

includes detailed initiatives designed to assist FSA with meeting each objective. Meeting each 

objective will result in accomplishing the strategic goal. The objectives that support this 

strategic goal include:

• Objective 1: Engage with stakeholders to be the most trusted and reliable source of

information on federal student aid.

• Objective 2: Provide timely and proactive communication to promote accurate,

consistent messaging on federal funding of postsecondary education.

• Objective 3: Promote transparency and accountability within FSA and across the

higher education environment.

Performance Metrics measured: To determine the success of FSA’s efforts to meet this 

strategic goal, FSA identified a set of performance metrics, including a target level of 

performance. For this strategic goal, the following tables display the performance metrics, prioryear actual results, FY 2019 target and actual performance levels, result (met or not met), and 

reference to supporting detail in the Annual Performance Report section of this document. In 

summary, FSA met the target for all of the performance metrics under this strategic goal.
Fiscal Year 2019 Annual Report | Federal Student Aid 29

Performance Management

Performance Summary for Strategic Goal D

Table 11: Performance Metric D.1

Ease of Doing Business with FSA

Metric Status 2017 2018 2019 Reference page

Target 71.3–73.3 71.9–74.9 73.4–75.4

Actual 73.4 74.5 74.0 76

Result ✔ ✔ ✔

Table 12: Performance Metric D.2 

Percentage of Contract Dollars Competed by FSA

Metric Status 2017 2018 2019 Reference page

Target 89.3%-91.3% 89.3%–91.3% 95.8%–97.8%

Actual 95.2% 96.8% 97.6% 77

Result ✔ ✔ ✔

Table 13: Performance Metric D.3 

Collection Rate

Metric Status 2017 2018 2019 Reference page

Target $51.68 $59.24 $53.30

Actual $59.69 $62.15 $58.56 78

Result ✔ ✔ ✔
30 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

Strategic Goal E: Invest in expanded workforce capability.

As the environment of postsecondary education and student aid continues to evolve, FSA must 

ensure that its workforce has the capabilities to adapt to changing business needs and priorities, 

which reflect the needs of FSA customers. Acquiring talent and maintaining a skilled workforce 

remain priority areas for FSA. FSA has launched several initiatives to increase the capability of 

its workforce ranging from a streamlined hiring process to coaching and competency based 

training programs.

Strategic Goal E aims to maintain a diverse workforce that is well-versed in the specialty skill 

sets necessary to address evolving models of higher education delivery.

Objectives supported: To support this strategic goal, FSA identified a set of objectives, which 

includes detailed initiatives designed to assist FSA with meeting each objective. Meeting each 

objective will result in accomplishing the strategic goal. The objectives that support this 

strategic goal include:

• Objective 1: Create an enterprise-wide workforce plan to attract, develop, and retain

employees with the skills required to meet evolving business needs.

• Objective 2: Develop a succession planning strategy to identify and create

opportunities for future leadership talent.

Performance Metric measured: To determine the success of FSA’s efforts to meet this 

strategic goal, FSA identified a performance metric, including a target level of performance. For 

this strategic goal, the following table displays the performance metric, prior-year actual results, 

FY 2019 target and actual performance levels, result (met, or not met), and reference to 

supporting detail in the Annual Performance Report section of this document. In summary, 

FSA met the target for the performance metric under this strategic goal.

Performance Summary for Strategic Goal E

Table 14: Performance Metric E.1 

Employee Engagement Index

Metric Status 2017 2018 2019 Reference page

Target 65.4%–69.4% 68.7%–70.7% 61.0%–63.0%

Actual 69.7% 62.0% 61.0% 79

Result ✔ x ✔
Fiscal Year 2019 Annual Report | Federal Student Aid 31

Performance Management

Agency Priority Goals 

Agency Priority Goals (APGs) are a performance accountability structure of the Government 

Performance and Results Modernization Act of 2010 (Pub. L. 111-352) that provide agencies a 

mechanism to focus on leadership priorities, set outcomes, and measure results, bringing focus 

to mission areas where agencies need to drive significant progress and change.

APG statements are outcome-oriented, ambitious, and measurable with specific targets set that 

reflect a near-term result or achievement agency leadership wants to accomplish within 

approximately 24 months.

For the 24 months commencing October 1, 2017, the Department established four APGs in 

support of its broader mission to promote student achievement and preparation for global 

competitiveness by fostering educational excellence and ensuring equal access. Of the four 

APGs, two were closely tied to FSA’s mission and were supported by FSA during FY 2019. 

They are:

• Goal 2.4: Improve Borrowers’ Access to Quality Customer Service; and

• Goal 3.2: Improve Student Privacy and Data Security at Institutions of Higher Education

through Outreach and Compliance Efforts.

Each quarter, the Department analyzes the progress toward accomplishing the Departmental 

APGs, with the objective of successfully accomplishing the current APGs by 

September 30, 2019. In FY 2018, Quarter 4, with the transition to a new paradigm of student 

loan processing, Next Generation Financial Services Environment (Next Gen FSA), FSA 

proposed a change to the Goal 2.4 APG and the associated metrics. The revised APG offered 

the following metrics as improved indicators of performance:

• Number of downloads of the myStudentAid mobile app;

• Number of customers checking loan balances via the myStudentAid mobile app;

• Number of customers submitting the FAFSA via a mobile platform—either through the

myStudentAid mobile app or mobile-optimized FAFSA.gov; and

• Number of visits (sessions) to the redesigned StudentAid.gov website.

In FY 2019, Quarter 1, the Department approved FSA’s proposed change to the APG and 

provided feedback on the associated metrics. Through Quarter 1, FSA baselined the APG 

metrics and used that information to forecast the annual APG target goals which incorporated 

Departmental recommendations. The FY 2019 approved Goal 2.4 APG statement is:

By September 30, 2019, the Office of Federal Student Aid (FSA) will advance the 

adoption of the Next Generation Financial Services Environment, enabling over 

1.8 million customers to submit their Free Application for Federal Student Aid 

(FAFSA) through the FSA mobile platform and 30,000 customers to use the 

mobile platform to check on their loan balances.

The new APG addressed the lack of quality and efficient loan information available to students 

and borrowers which has impacted their ability to make informed financial decisions. During FY 

2019, FSA tracked, monitored, and reported all the APG metrics each quarter to the 

Department’s Performance Improvement Office in accordance with the Quarterly Performance 

Review. For FY 2019, all metrics associated with the Goal 2.4 APG were met.
32 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Management

For data validation purposes, mobile app and FAFSA data are collected from Apple’s App Store, 

Google Play, and FSA’s online platform analytics. For number of downloads of the app, FSA 

generates a monthly report directly from Apple’s App Store and Google Play. The data are

reported as a cumulative number for all three months within the quarter, and summarily for the 

entire fiscal year reporting.

For the Goal 3.2 APG, FSA works with the Department’s Office of the Chief Information Officer

(OCIO). The Goal 3.2 APG statement is:

By September 30, 2019, the Department of Education will increase information 

security program outreach activities to institutions of higher education (IHEs) by 

40 percent in order to help protect IT systems and data privacy; and begin 

receiving audits of IHEs subject to the Single Audit and Gramm-Leach-Bliley Act 

(GLBA), resulting in 36 IHEs (from a baseline of zero) completing an audit of 

GLBA-related information security safeguards with no significant findings. 

The Goal 3.2 APG target set by FSA and the Department with respect to security outreach 

activities for the FY 2018–19 measurement period was 31 (14 and 17 in FY 2018 and FY 2019, 

respectively). FSA and the Department exceeded the target in both FY 2018 and FY 2019 and 

overall by engaging in 63, 40, and 103 outreach activities in each period respectively, that 

targeted data privacy and the IT security requirements of IHEs.

FSA and the Department did not meet the APG target for 36 IHEs to complete an audit of 

GLBA-related information security safeguards with no significant findings. New audit standards 

for GLBA-related information security safeguards were published in the June 2019 2 Code of 

Federal Regulations Part 200 Appendix IX Compliance Supplement and impacted the 

requirement of IHEs to conduct and submit an audited assessment of data security programs. 

IHEs subject to the Single Audit Act have nine months from their fiscal year end to submit the 

audits to the Department; therefore IHEs did not include the newly required standards in time to 

meet the Department’s FY 2019 APG target. However, from March–September 2019, FSA 

engaged with 708 IHEs for technical assistance when they reported a potential breach at the 

1-3 severity level. FSA's contact with these institutions consisted of discussing industry best

practices, mitigation strategies, guidance for improving processes, and documentation to

improve their security postures.

For data validation purposes regarding the outreach metric, the activity records maintained by 

FSA are on a secure SharePoint site. Those activities, completed by the Department’s OCIO 

through the Department’s Privacy Technical Assistance Center, are also recorded on a 

SharePoint site. Based on actions by contractors, Department personnel, and FSA personnel, 

data accuracy is high, reliable and consistent. In addition, in FY 2019, FSA tracked, monitored, 

and reported all the Goal 3.2 APG metrics each quarter to the Department’s Performance 

Improvement Office in accordance with the Quarterly Performance Review procedure.

The metric results were also made available on Performance.gov each quarter for public view.
Fiscal Year 2019 Annual Report | Federal Student Aid 33

Performance Management

Quality of Performance Data

Ensuring the integrity of the data required to determine performance results is a critical step in 

reporting performance. For this step, FSA developed and implemented a Validation and 

Verification Matrix. Specifically, FSA uses this matrix as a tool to validate the completeness and 

reliability of the underlying data gathered and used to calculate each performance metric for the 

reporting period, including the performance results reported in this Annual Report. 

For each performance metric, this matrix is used to document the following: measurement 

definition and owner; data source, availability, security procedures, and known limitations; 

whether data are subject to FSA’s OMB Circular A-123 Internal Control Review process; and 

procedures for accessing the data, calculating the performance metric, and validating and 

verifying the data gathered.

For a discussion of data quality and limitations for each performance metric, please see the 

section Performance Results by Strategic Goal, contained in the Annual Performance Report

section. 
34 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

Analysis of Financial Statements

Introduction

The Financial Analysis section provides an overview of FSA’s financial results for FY 2019. 

This section assists readers in understanding FSA’s financial results, position, and condition as 

reflected in the financial statements and notes located in the Financial Section of this report. 

The financial analysis explains major changes in assets, liabilities, costs, and budgetary 

resources. It also includes comparisons of the current year to the four prior years and 

discusses the relevance of significant balances, amounts, and trends reflected in the financial 

statements and notes.

FSA is committed to providing sound management, financial systems, and controls to ensure 

students receive aid and repay loans according to applicable laws and regulations. FSA’s 

financial statements are prepared in accordance with established federal accounting standards

and reporting requirements. The financial statements are subject to an annual independent 

audit to determine whether FSA’s financial statements fairly present FSA’s financial position, net 

cost, changes in net position, and budgetary resources. In FY 2019, FSA achieved an 

unmodified audit opinion on its financial statements for the eighteenth consecutive year.

FSA presents its financial statements and notes in the format required by OMB Circular A-136, 

Financial Reporting Requirements. For FY 2019 and FY 2018, the Balance Sheet, Statement of 

Net Cost, and Statement of Changes in Net Position were prepared on a consolidated basis, 

whereas the Statement of Budgetary Resources was prepared on a combined basis. These 

financial statements, along with the Independent Auditors’ Report on these statements, can be 

found in the Financial Section of this Annual Report. 

FSA has oversight responsibilities for over $1.5 trillion in federal student loans, of which it 

directly owns and manages nearly $1.4 trillion. The remaining balance represents nondefaulted FFEL Guaranteed loans owned by lenders and Federal Perkins loans owned by 

schools, as detailed in Note 5 and Note 13. As described in Note 1 and Note 5, FSA reports its 

portfolio of federal student loans on its Balance Sheet, on the line item Credit Program 

Receivables, Net. This is the gross amount of loans and interest receivable less an allowance 

for the present value of amounts not expected to be recovered (Allowance for 

Subsidy). Subsidy Expense is a factor included in the Allowance for Subsidy and represents an 

estimate in present value terms of the cost to the government of direct loans and loan 

guarantees. Subsidy Expense is recorded in the year a loan is disbursed and updated annually 

through a re-estimation process. It includes default costs (net of recoveries), contractual 

payments paid to third-party private collection agencies (PCAs), and net borrowing costs, less 

any origination or other fees collected. If the net cost to the government is greater than zero, 

then the subsidy expense is said to be positive. However, the subsidy expense may also be 

zero (break-even), or it may be negative if the estimated cost of providing loans to borrowers is 

less than the value of collections received as interest and fees. As of September 30, 2019, FSA 

reported $1.2 trillion in Credit Program Receivables, Net after deducting an Allowance for 

Subsidy of approximately $160.7 billion. Credit Program Receivables, Net was 0.6 percent less 

than the prior-year amount which resulted from a 7.0 percent increase in FSA’s underlying 

portfolio of credit program receivables that was offset by adjustments that increased the 

FY 2019 Allowance for Subsidy by almost 150 percent from the FY 2018 amount. The reasons 

for the adjustment to the Allowance for Subsidy estimate are explained in Note 5. 
Fiscal Year 2019 Annual Report | Federal Student Aid 35

Analysis of Financial Statements 

The FY 2019 FSA Financial Highlights tables presented below provide a condensed summary 

of the significant balances in FSA’s Balance Sheets and Statements of Net Cost over a five-year 

period, beginning with FY 2015. The tables also show the percentage change between the prior 

and current fiscal years as of September 30, 2018 and 2019, respectively. The figures and 

tables presented in this section include rounding adjustments to ensure that the component line 

items sum to the corresponding total. As a result, there may be small discrepancies between 

the amounts shown in a particular figure or table when compared to similar items discussed in 

the text or presented in other areas of the Annual Report.

Table 15: Federal Student Aid Financial Highlights

Condensed Balance Sheets 

Fiscal Years 2015–19

(Dollars in millions) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Percentage 

Change7

Fund Balance with Treasury $ 67,985 $ 60,358 $ 74,032 $ 73,405 $ 62,567 (14.8%)

Credit Program Receivables, Net 1,016,425 1,075,227 1,145,406 1,209,495 1,202,092 (0.6)%

Remaining Assets 1,648 1,334 2,256 2,365 2,217 (6.3)%

Total Assets $ 1,086,058 $ 1,136,919 $ 1,221,694 $ 1,285,265 $ 1,266,876 (1.4%)

 

Debt $ 1,050,344 $ 1,126,345 $ 1,178,473 $ 1,258,481 $ 1,287,494 2.3%

Subsidy due to Treasury General Fund8 8,237 2,642 7,013 7,528 10,302 36.8%

Remaining Liabilities 7,169 9,614 13,000 10,197 13,971 37.0%

Total Liabilities $ 1,065,750 $ 1,138,601 $ 1,198,486 $ 1,276,206 $ 1,311,767 2.8%

 

Unexpended Appropriations $ 28,325 $ 26,531 $ 28,524 $ 32,487 $ 31,400 (3.3%)

Cumulative Results of Operations (8,017) (28,213) (5,316) (23,428) (76,291) 225.6%

 Net Position $ 20,308 $ (1,682) $ 23,208 $ 9,059 $ (44,891) (595.5%)

Total Liabilities & Net Position $ 1,086,058 $ 1,136,919 $ 1,221,694 $ 1,285,265 $ 1,266,876 (1.4%)

Table 16: Statements of Net Cost

(Summarized) 

Fiscal Years 2015–19

(Dollars in millions) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Percentage 

Change9

Gross Cost $ 59,500 $ 93,032 $ 73,771 $ 71,232 $ 144,865 103.4%

Less: Earned Revenue (31,547) (34,260) (35,825) (36,224) (36,820) 1.6%

Net Cost of Operations $ 27,953 $ 58,772 $ 37,946 $ 35,008 $ 108,045 208.6%

7

The percentage change is calculated as the difference between FY 2018 and FY 2019, divided by the FY 2018 amount. In some 

instances, where the current-year amount has an opposite sign to the prior-year amount, the percentage change may be negative 

even though the annual change is positive (and vice versa). Similarly, if the current-year negative amount has a larger negative 

value than the prior-year negative amount, the difference will be negative, but the percentage change will be positive.

8

Prior to FY 2016, Subsidy due to Treasury General Fund was included in the Condensed Balance Sheet line item, Other 

Intragovernmental Liabilities. Beginning in FY 2016, Subsidy due to Treasury General Fund is reported separately, while Other 

Intragovernmental Liabilities is now included in the category Remaining Liabilities. Data for FY 2015 have been restated using the 

FY 2016 format.

9

Refer to Footnote 7. 
36 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

Balance Sheet

The Balance Sheet presents the recorded value of assets and liabilities retained or managed by 

FSA as of a specific point in time. The assets represent resources available for use by FSA to 

pay its liabilities or to satisfy its future service needs. The liabilities are amounts FSA owes, the 

probable and measurable future outflows of its resources arising from past transactions or 

events. The difference between the assets and the liabilities represents FSA’s net position. 

Composition of FSA Assets. The consolidated Balance Sheet shows that FSA had total 

assets of $1,266.9 billion as of September 30, 2019, a decrease of $18.4 billion, or 1.4 percent 

over the September 30, 2018 total assets balance of $1,285.3 billion. The difference resulted 

primarily from a 14.8 percent reduction in Fund Balance with Treasury ($10.8 billion), combined 

with a 0.6 percent decrease in net Credit Program Receivables ($7.4 billion). Together, FSA’s 

Fund Balance with Treasury and its net Credit Program Receivables accounted for 

approximately 99.8 percent of Total Assets as of September 30, 2019, as illustrated in the 

Composition of Assets chart (Figure 9). The Comparison of Assets chart (Figure 10) presents 

changes in these two principal Balance Sheet line items over the past five fiscal years.

Figure 9: Composition of Federal Student Aid Assets*

Fiscal Years 2015–19

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Credit Program Receivables, Net 93.6% 94.6% 93.8% 94.1% 94.9%

Fund Balance with Treasury 6.3% 5.3% 6.1% 5.7% 4.9%

Remaining Assets 0.1% 0.1% 0.1% 0.2% 0.2%

0%

20%

40%

60%

80%

100%

Composition of 

FSA Assets

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

Figure 10: Comparison of Federal Student Aid Assets*

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Credit Program Receivables, Net $1,016.4 $1,075.2 $1,145.4 $1,209.5 $1,202.1

Fund Balance with Treasury $68.0 $60.4 $74.0 $73.4 $62.6

Remaining Assets $1.7 $1.4 $2.3 $2.4 $2.2

Total Assets $1,086.1 $1,137.0 $1,221.7 $1,285.3 $1,266.9

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Assets

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.
Fiscal Year 2019 Annual Report | Federal Student Aid 37

Analysis of Financial Statements 

Credit Program Receivables, Net. With a $1,202.1 billion balance as of September 30, 2019, 

Credit Program Receivables, Net represent FSA’s most important asset category and 

accounted for almost 95 percent of Total Assets. This balance includes $1,362.8 billion in 

principal, interest, and fees, less an allowance for subsidy cost of approximately $160.7 billion 

that adjusted the loan portfolio to its estimated present value. FSA reports the total amount 

under the three major program categories Direct Loan, FFEL, and Other, as illustrated in 

Figure 11 below and discussed more fully in the following sections.

Figure 11: Total Federal Student Aid Loan Portfolio*

Net of Allowance for Subsidy 

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

 Direct Loans $880.6 $958.9 $1,041.6 $1,115.1 $1,123.7

 FFEL $134.7 $114.9 $102.4 $92.9 $76.8

Other Programs $1.1 $1.4 $1.4 $1.5 $1.6

Total $1,016.4 $1,075.2 $1,145.4 $1,209.5 $1,202.1

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Credit Program 

Receivables, Net 

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

Figure 11 also shows that over the four-year period FY 2015–18, FSA’s portfolio of FSA net 

credit program receivables increased by $193.1 billion or 19.0 percent. The Direct Loan 

program accounted for most of this change, increasing by $234.5 billion (26.6 percent), offset by 

the $41.8 billion (31.0 percent) reduction of the FFEL Portfolio over the same period. However, 

the overall upward trend reversed slightly in FY 2019 when the $16.2 billion (17.4 percent) net 

reduction in FFEL net credit program receivables offset the $8.7 billion (0.8 percent) increase in 

Direct Loan credit program receivables. The overall reduction in FSA’s net credit program 

receivables portfolio was $7.4 billion or 0.6 percent.

The directional changes observed in the Direct Loan and FFEL portfolios are principally related 

to the impact of the SAFRA Act, which as of June 30, 2010, eliminated all new loan 

disbursements under the FFEL Program in favor of direct lending. Loan consolidation has also 

played a role. Consolidation is the process of combining one or more federal student loans into 

one loan. For more information about which federal loans may be eligible for consolidation and 

other requirements please visit StudentAid.gov/consolidation. Another significant factor in 

FY 2019 was an adjustment to the allowance for subsidy cost that increased estimated costs by 

$96.2 billion (almost 150 percent). The reasons for the adjustment to the subsidy cost estimate 

are explained in Note 5. 

Direct Loan Credit Program Receivables, Net. Direct Loan Credit Program receivables 

continue to be the major component of FSA’s credit program receivable portfolio in FY 2019. As 
38 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

of September 30, the $1,123.7 billion Direct Loan portfolio ending balance comprises 

93.5 percent of FSA's total credit program receivables net, compared to the prior year ending 

balance of $1,115.1 that represented 92.2 percent. The FY 2019 Direct Loan ending balance 

total includes $1,248.1 billion in principal, interest, and fees, with an allowance for subsidy cost 

to the government of $124.4 billion. This amount contrasts to the prior year where the subsidy 

costs were projected at $40.7 billion on Direct Loan principal, interest and fees of 

$1,155.7 billion. The factors that contributed to the variance in subsidy cost at a time when the 

underlying loan balances increased by 8.0 percent are addressed in Note 5. 

The FY 2019 $92.4 billion increase in Direct Loan Receivables (before subsidy costs) was 

mainly driven by the growth in the outstanding amount owed by borrowers, principally resulting 

from new loan originations ($90.2 billion), consolidation disbursements ($39.8 billion), interest 

capitalization ($21.7 billion) and the net increase in accrued interest and fees ($11.3 billion). 

This was offset by reductions to principal due to loan payments by borrowers ($67.0 billion), 

loan discharges ($4.5 billion) and other adjustments.

The growth in principal outstanding has accounted for virtually all growth of the Direct Loan 

portfolio over the past five years in dollar terms, as seen in Figure 12. Over the same period, 

Table 18 shows that accrued interest increased at a higher average annual rate than did 

principal outstanding (17.1 percent versus 9.8 percent), although, as illustrated by Table 17, 

accrued interest only increased from 5.0 percent to 7.4 percent of the net receivable amount, 

while principal outstanding increased from 91.0 percent to 103.7 percent of the net amount. 

See Note 5 for more details.

Figure 12: Components of Direct Loan Receivables, Net*

Fiscal Years 2015–1910

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Principal $800.8 $902.8 $998.8 $1,083.7 $1,164.9

Accrued Interest* $44.3 $50.8 $59.6 $72.0 $83.3

Allowance for Subsidy $35.5 $5.3 $(16.8) $(40.6) $(124.5)

Net Receivable $880.6 $958.9 $1,041.6 $1,115.1 $1,123.7

Total Recipients 29.9 31.5 33.0 34.2 35.1

27

28

29

30

31

32

33

34

35

36

($200)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Recipients in Millions

Direct Loan Credit Program 

Receivables, 

Net

Figure 12 also includes the number of recipients corresponding to the outstanding loan portfolio 

at each fiscal year end. Recipients are the students that benefit from the federal student loans. 

In most cases, the recipient is the borrower; but in Parent PLUS loans, the parent is the 

borrower and the student is the recipient. The chart shows that Direct Loan recipients grew 

10Line items may include rounding adjustments to reconcile to the total amount being reported. Recipient numbers come from the 

Data Center or NSLDS. See Footnote 12.
Fiscal Year 2019 Annual Report | Federal Student Aid 39

Analysis of Financial Statements 

from 29.9 million to 35.1 million over the five-year period, reflecting, as reported in Table 18, an 

average annual increase of 4.1 percent, well below the rate of increase of principal and interest 

described earlier. As a result, the average debt (principal and interest) balance outstanding per 

Direct Loan recipient increased by 25.8 percent during this time, from $28,263 to $35,560; the 

higher debt burden per student is likely an indication of increasing postsecondary education 

costs. 

Table 17: Components of Direct Loan Credit Program Receivables, Net by Percentage*

Fiscal Years 2015–19

Direct Loan Component FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Principal* 91.0% 94.1% 95.9% 97.2% 103.7% 

Accrued Interest 5.0% 5.3% 5.7% 6.5% 7.4% 

Allowance for Subsidy 4.0% 0.6% (1.6%) (3.7%) (11.1%)

Net Receivable 100.0% 100.0% 100.0% 100.0% 100.0% 

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

Table 18: Increase in Principal, Interest and Subsidy Components of Direct Loan Credit 

Program Receivables, Net and Recipient Counts*

Direct Loan Component FY 2015–16 FY 2016–17 FY 2017–18 FY 2018–19

FY 2015–19

Average Year-to-Year 

change

Principal 12.7% 10.6% 8.5% 7.5% 9.8% 

Accrued Interest 14.7% 17.7% 21.0% 15.7% 17.1% 

Allowance for Subsidy (85.1%) (415.1%) (143.1%) (206.7%) (37.6%)

Net Receivable 8.9% 8.6% 7.1% 0.8% 6.3% 

Total Recipients 5.4% 4.8% 3.6% 2.6% 4.1% 

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

While the Direct Loan portfolio has grown rapidly in recent years, it has also changed in 

character as an increasing proportion of students begin the repayment phase of their loans. 

Under Title IV, each loan may pass through several distinct statuses as the student progresses 

through the loan life cycle, from borrowing to repaying. 

Repayment on most federal student loans is not required while the student recipient is “In 

School” unless they drop below half-time enrollment. However, PLUS loans enter repayment as 

soon as the loan is fully disbursed (paid out). Then, after the student graduates, leaves school, 

or drops below half-time enrollment, student borrowers are frequently entitled to a “Grace” 

period. During this period, repayment is not required to begin on the loan. Not all federal 

student loans have a grace period and for most loans, interest will accrue during the grace 

period. At the end of the grace period, the loan will enter “Repayment” status and regular 

monthly payments will be required according to an agreed upon payment schedule. If the 

borrower continues to make timely payments such that no more than 30 days elapse after the 

due date without payment, then the loan is classified as “Current.” If more than 30 days elapse, 

then the loan will be reclassified as “Delinquent.” Under Title IV, if more than 270 days pass 

without payment being received to satisfy the oldest payment due, Direct Student Loans are 
40 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

technically considered “In Default”11. The status continues to be tracked through the life of the 

loan until the loan is paid in full or otherwise closed out.

Figure 1312 divides FSA’s portfolio of direct loans into two main categories, based on repayment 

status. For the purpose of this discussion13 loans are classified as “In Repayment” if, under the 

terms of the promissory note, the loan is current, delinquent, defaulted, in non-defaulted 

bankruptcy, or in a disability status. Alternatively, loans are classified as “Not in Repayment” if 

the borrower is “In School”, “In Grace”, or has been granted a deferment or a forbearance. The 

loan status “Deferment” includes loans for which payments have been postponed due to certain 

circumstances, such as returning to school, military service, or economic hardship. Similarly, 

“Forbearance” includes loans for which payments have been temporarily suspended or reduced 

because of certain types of financial hardships. Figure 13 reports the portfolio balance as the 

sum of principal and interest balances (i.e. the gross amount) owed by the borrower and 

excludes any subsidy cost or allowance that would adjust the outstanding balance to its net 

present value.

Figure 13: Direct Loan Portfolio by Repayment Status*

Principal and Interest Only 

Fiscal Years 2015–19 

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

In Repayment* $457.8 $557.5 $644.2 $738.7 $820.1

Not in Repayment $387.3 $396.1 $414.2 $417.0 $428.0

Total Direct Loan Portfolio* $845.1 $953.6 $1,058.4 $1,155.7 $1,248.1

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Direct Loan Portfolio 

Principal and Interest Outstanding

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported. Also, prior data may be

restated, as explained in Footnote 12. 

As can be seen in Figure 13, although both segments grew during the past five years, the “In 

Repayment” segment has grown more rapidly and has become the larger portfolio segment. It 

now comprises 65.7 percent of the total principal and interest amount outstanding, increasing 

the need for FSA to facilitate the ability of Direct Loan borrowers to meet their repayment 

obligations timely.

11FSA’s policy is to not transfer such loans to the defaulted debt servicer until more than 360 days pass without payment being 

received, in order to ensure parity of Direct Loan borrower treatment with that of FFEL borrowers by lenders and guaranty agencies.

12FY 2015–18 data are based on data published by the FSA Data Center, StudentAid.gov/portfolio. FY 2019 data are taken 

directly from the NSLDS. Also, the FY 2018 data published in the FY 2018 Annual Report, taken directly from NSLDS, have been 

replaced with data subsequently published by the Data Center.

13The In Repayment/Not in Repayment classifications used for this discussion are slightly different from the definitions under eCFR 

685.207, 685.204, and 685.205 which specify that a borrower first enters repayment before receiving a deferment or forbearance. 

Under 685.205(a), borrowers in forbearance may still make payments on their loans. In addition, under Cohort Default Regulations 

at 668 Subpart N, borrowers in a deferment or forbearance are considered to be in repayment for purposes of calculating the CDR.
Fiscal Year 2019 Annual Report | Federal Student Aid 41

Analysis of Financial Statements 

In Figures 14A and 14B14, the Direct Loan portfolio of “In Repayment” principal and interest has 

been subdivided into three categories, “Current”, “Delinquent”, and “Default/Bankruptcy/Other”, 

as those terms are defined above. With a September 2019 balance of $594.7 billion, the

current portion of the “In Repayment” segment is its largest component and has grown the 

fastest in dollar terms over the past five years, FY 2015–19, although in percentage terms it has 

remained around 72.5 percent of the portfolio. At the same time, while both the Delinquent and 

Default/Bankruptcy/Other segments also increased in dollar terms, there was a continuing trend 

of debt moving from the Delinquent to the Default/Bankruptcy/Other segment, with the latter 

increasing from 13.3 percent to 16.4 percent of the segment, a trend that FSA hopes to reverse 

with the customer-focused servicing innovations that will be introduced by the implementation of 

Next Gen FSA in the coming years.

Figure 14A: Direct Loan Portfolio Segment in Repayment by Status*

Principal and Interest only

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Current $332.0 $406.8 $467.9 $531.2 $594.7

Delinquent $65.1 $71.8 $79.5 $92.3 $90.9

Default/Bankruptcy/Other* $60.7 $79.0 $96.8 $115.2 $134.5

$0

$100

$200

$300

$400

$500

$600

$700

Direct Loan Portfolio 

Segments in Repayment

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported. Also, prior data may be

restated, as explained in Footnote 12. 

Figure 14B: Direct Loan Portfolio Segment in Repayment by Status*

Principal and Interest only

Fiscal Years 2015–19

(Percentage of Total)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Current 72.5% 72.9% 72.6% 71.9% 72.5%

Delinquent 14.2% 12.9% 12.3% 12.5% 11.1%

Default/Bankruptcy/Other* 13.3% 14.2% 15.1% 15.6% 16.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Direct Loan Portfolio 

Segments in Repayment

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported. Also, prior data may be

restated, as explained in Footnote 12. 

14Please refer to footnotes 12 and 13. 
42 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

In addition, of the total $1,248.1 billion in Direct Loan principal and interest at the current fiscal 

year end, $99.7 billion (8.0 percent of total receivables) in loan principal was in default and had 

been transferred to the Department’s defaulted loan servicer, compared to $84.9 billion 

(7.3 percent of total receivables) as of September 30, 2018. For related performance 

information about the percentage of borrowers more than 90 days delinquent, please see 

Performance Metric B.2 located in the Annual Performance Report section of this Annual 

Report. 

The portfolio of Direct Loan principal and interest receivables “Not in Repayment” can also be 

further subdivided based on the reason why the debt is not currently subject to repayment. 

Figures 15A and 15B15 subdivide this segment into two such categories, “In School/Grace” and 

“In Deferment/Forbearance,” as defined earlier.

Figure15A shows that the amount of Direct Loan principal and interest categorized as “In 

School/Grace” has declined steadily from $198.6 billion in FY 2015 to $176.7 billion at the end 

of the current year. This reflects both the decline in new Direct Loan disbursements over the 

period, and the aging of the Direct Loan portfolio of principal and interest receivable, as a 

greater proportion of debt moved from “In School/Grace” category to the “In Repayment” 

segment. Over the same five-year period, the “In Deferment/Forbearance” segment has grown 

from $188.7 billion to $251.3 billion, increasing from 48.7 percent to 58.7 percent of the Not in 

Repayment segment. However, as a percentage of the total portfolio of Direct Loan principal 

and interest receivable, the “In Deferment/Forbearance” portion has declined from 22.3 percent

to 20.1 percent.

Figure 15A: Direct Loan Portfolio Segment not in Repayment by Status*

Principal and Interest only

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

In School/Grace $198.6 $192.6 $187.3 $181.6 $176.7

In Deferment/

Forbearance $188.7 $203.5 $226.9 $235.4 $251.3

$0

$50

$100

$150

$200

$250

$300

Direct Loan Portfolio Segments 

not in Repayment

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

15Please refer to footnotes 12 and 13. 
Fiscal Year 2019 Annual Report | Federal Student Aid 43

Analysis of Financial Statements 

Figure 15B: Direct Loan Portfolio Segment not in Repayment by Status

Principal and Interest only

Fiscal Years 2015–19 

(Percentage of Total)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

In School/Grace 51.3% 48.6% 45.2% 43.5% 41.3%

In Deferment/

Forbearance 48.7% 51.4% 54.8% 56.5% 58.7%

0%

10%

20%

30%

40%

50%

60%

70%

Direct Loan Portfolio Segments 

not in Repayment

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

FSA FFEL Credit Program Receivables, Net. FSA’s portfolio of FFEL loans includes debt 

acquired under the Conduit, Loan Participation Purchase, and Loan Purchase Commitment 

Programs established through the 2008 ECASLA authorization and referred to collectively as 

the FFEL ECASLA Loan Programs. It also includes debt acquired under “traditional” (NonECASLA) defaulted guaranteed loan programs, known collectively as the “FFEL Guaranteed” 

portfolio segment. Changes in these FFEL loan portfolio segments over the past five fiscal 

years are shown in Figure 16. 

Figure 16: Total Federal Student Aid FFEL Loan Portfolio

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

 FFEL, Guaranteed* $40.5 $32.0 $29.3 $28.1 $23.1

 FFEL, ECASLA** $94.2 $82.9 $73.1 $64.8 $53.7

Total FFEL $134.7 $114.9 $102.4 $92.9 $76.8

$0

$20

$40

$60

$80

$100

$120

$140

$160

FFEL Credit Program 

Receivables, Net 

**FFEL, Guaranteed (Non-ECASLA) Program

**FFEL, ECASLA Acquired Loan Program

***Note: Line items may include rounding adjustments to reconcile to the total amount being reported.
44 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

Figure 16 illustrates that with $53.7 billion outstanding, the ECASLA FFEL portfolio segment 

remains the major component of the FFEL portfolio of net credit program receivables as of 

September 30, 2019 but declined by $40.4 billion (42.9 percent) during the five-year period 

shown. This decrease was mainly the result of collections of principal and interest (31.7 billion), 

including as the result of borrowers consolidating their loans under the Direct Loan Program, to 

take advantage of more favorable repayment options available. Further reductions were due to 

subsidy re-estimate transactions ($14.1 billion), amortization of subsidy ($7.0 billion) and 

collections on defaulted debt ($4.1 billion), offset by interest accruals ($15.8 billion). Despite 

this decrease, the proportion of ECASLA FFEL loans remained around 70.0 percent of the total 

$76.8 billion of FFEL loans outstanding as of the current year-end.

Over the same five-year period, the smaller FFEL Guaranteed portfolio also declined 

steadily, resulting in a $17.5 billion reduction over the five years to $23.0 billion as of 

September 30, 2019. The overall decrease was mainly due to the changes in subsidy cost 

estimates and to the elimination of the negative liability for Loan Guarantee that together 

reduced the net credit program receivable balance by $19.7 billion. This decrease was offset by 

a $2.2 billion increase in principal and interest outstanding.

The overall impact of changes in the principal, accrued interest and subsidy components of the 

FFEL portfolio are shown in Figure 1716. The reduction in FFEL recipients during the period 

FY 2015–19 also demonstrates the impact of debt consolidations and refinancing on the 

outstanding portfolio balance.

Figure 17: Components of Federal Student Aid FFEL Receivables, Net

Fiscal Years 2015–19

(Dollars in Billions) 

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Principal $114.7 $109.8 $101.6 $95.1 $90.2

Accrued Interest $17.5 $18.2 $19.3 $21.1 $22.3

Allowance for Subsidy $2.5 $(13.1) $(18.5) $(23.3) $(35.7)

Total Receivable $134.7 $114.9 $102.4 $92.9 $76.8

Total Recipients 7.9 7.5 7.0 6.6 6.1

 -

 1.0

 2.0

 3.0

 4.0

 5.0

 6.0

 7.0

 8.0

 9.0

($60)

($40)

($20)

$0

$20

$40

$60

$80

$100

$120

$140

$160

Recipients in Millions

Credit Program Receivables, Net

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

16Recipients in Millions for FY 2015–18 are based on data published by the FSA Data Center, at: StudentAid.gov/portfolio. 

FY 2019 data are taken directly from NSLDS. Also, the FY 2018 data published in the FY 2018 Annual Report, taken directly from 

NSLDS, have been replaced with data subsequently published by the Data Center.
Fiscal Year 2019 Annual Report | Federal Student Aid 45

Analysis of Financial Statements 

Other Credit Program Receivables, Net. As shown in Figure 18 below, TEACH Grants, 

Perkins Loans, and HEAL Loans make up the third segment of Credit Programs Receivable, net 

that FSA reports on its balance sheet.

Figure 18: Federal Student Aid Other Loan Portfolio

Fiscal Years 2015–19

 (Dollars in Millions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

 TEACH Grant Program $630.9 $690.6 $594.3 $584.1 $616.0

 Perkins Loan Program $410.3 $449.3 $494.7 $551.0 $607.1

HEAL $123.1 $335.8 $353.1 $359.9 $394.6

$0

$100

$200

$300

$400

$500

$600

$700

$800

Credit Program Receivables, Net 

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

This segment, known as Other Credit Program Receivables, Net, increased by 39.0 percent 

during the past five years, but still accounted for only 0.1 percent of FSA’s total loan portfolio 

throughout that period. Other Credit Program Receivables, net ended FY 2019 with a balance 

of $1.6 billion, a $122.8 million increase compared to the prior year-end.

Composition of FSA Liabilities. FSA’s liabilities represent probable and measurable future 

outflows of resources arising from past transactions or events. As of September 30, 2019, FSA 

had total liabilities of $1.3 trillion, an increase of $35.6 billion or 2.8 percent over the 

September 30, 2018 total, in contrast to the 1.4 percent reduction in FSA’s total assets.

Debt. FSA’s debt is the primary component of its liabilities, accounting for 98.1 percent of the 

total. FSA’s $1.3 trillion debt balance as of September 30, 2019 is 2.3 percent above the prioryear amount, continuing the trend of increasing debt levels seen over the past five years. As 

shown in Figure 19, the Direct Loan Program was the principal debt component throughout the 

FY 2015–19 period, and ended FY 2019 with a $1,192.1 billion balance, 3.6 percent above the 

prior-year amount, representing 92.6 percent of total debt.
46 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

Figure 19: Comparison of Federal Student Aid Debt

Fiscal Years 2015–19

(Dollars in Billions) 

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Direct Loan Program $909.9 $994.3 $1,061.6 $1,150.6 $1,192.1

FFEL Program $139.8 $131.3 $116.3 $107.3 $94.7

Other Programs (TEACH) $0.6 $0.7 $0.6 $0.6 $0.7

Total Debt $1,050.3 $1,126.3 $1,178.5 $1,258.5 $1,287.5

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Student Aid Debt

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

FSA borrows funds from Treasury to support the disbursement of new loans, and for the 

payment of credit program outlays and related costs. FSA then makes repayments after 

considering its cash position and liability for future cash outflows, as mandated by the Federal 

Credit Reform Act of 1990. The net impact of these activities on the outstanding debt portfolio 

are illustrated for the Direct Loan and FFEL Programs in Figures 20 and 21 respectively. 

Figure 20: Direct Loan Program Net Financing Activity

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Borrowing $159.7 $147.0 $160.5 $155.3 $137.6

Repayments $(68.7) $(62.6) $(93.2) $(66.2) $(96.1)

Net Change $90.9 $84.4 $67.3 $89.1 $41.5

($150)

($100)

($50)

$0

$50

$100

$150

$200

Direct Loan 

Financing Activity

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.
Fiscal Year 2019 Annual Report | Federal Student Aid 47

Analysis of Financial Statements 

Direct Loan net financing activity (Figure 20) also accounted for most of the overall increase in 

FSA’s outstanding debt level during the same five years. By comparison, in the absence of any 

borrowing for new loan disbursements (Figure 21), FFEL-related debt decreased consistently 

from FY 2015–19. These changes in net financing activity for Direct Loan and FFEL Programs 

reflect the impact of the SAFRA Act on disbursements, interest rate driven loan consolidations, 

and related changes in estimated subsidy costs.

Figure 21: Federal Student Aid FFEL Loan Program Net Financing Activity

Fiscal Years 2015–19

(Dollars in Billions)

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Borrowing $2.6 $0.2 $- $0.2 $-

Repayments $(8.6) $(8.6) $(15.1) $(9.2) $(12.6)

Net Change $(6.0) $(8.4) $(15.1) $(9.0) $(12.6)

($16)

($14)

($12)

($10)

($8)

($6)

($4)

($2)

$0

$2

$4

FFEL 

Financing Activity

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.

Statement of Net Cost

The Statement of Net Cost is the federal financial statement that presents the net cost of 

operations for FSA programs. FSA net cost is the gross cost incurred during its operations less 

any exchange (i.e., earned) revenues earned from its activities. Gross cost is composed of the 

cost of credit programs, grant programs, and operating costs. Exchange revenues are primarily 

interest earned on credit program loans.

Figure 22: Composition of Federal Student Aid Net Cost

Fiscal Years 2015–19

(Dollars in Billions) 

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Gross Costs $59.5 $93.0 $73.7 $71.2 $144.9

Earned Revenue $(31.5) $(34.2) $(35.8) $(36.2) $(36.8)

Net Costs $28.0 $58.8 $37.9 $35.0 $108.0

 $(60)

 $(40)

 $(20)

 $-

 $20

 $40

 $60

 $80

 $100

 $120

 $140

 $160

Cost/(Revenue)

*Note: Line items may include rounding adjustments to reconcile to the total amount being reported.
48 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

As shown in Figure 22, FSA’s earned revenues (mainly interest and fee accruals net of subsidy 

amortization) increased from $31.5 billion in FY 2015 to $36.8 billion in FY 2019, an overall 

increase of 16.7 percent or about 3.8 percent annually on average. By comparison, FSA’s 

gross costs fluctuated much more widely over the same period, from $59.5 billion in FY 2015 to 

$144.9 billion in FY 2019, mainly the result of subsidy-related transactions. As a result, net 

costs fluctuated also, most notably increasing 208.6 percent from $35.0 billion reported in 

FY 2018 to $108.0 billion in FY 2019. FSA’s total costs exceeded its earned revenues in both 

years, but the margin was greater in FY 2019 by $73.0 billion, of which $55.9 billion was 

attributable to the Direct Loan Program, and a further $11.6 billion represented an increase in 

FFEL net costs.

For the Direct Loan Program, the $55.9 billion increase in net costs was the result of subsidy 

transfer re-estimates ($46.6 billion), subsidy collection re-estimates ($10.5 billion), subsidy 

amortization ($4.4 billion) and other subsidy cost-related transactions, net of accrued interest 

and fees from borrowers ($5.7 billion). Similarly, the $11.6 billion increase in FFEL Program net 

costs was mostly the result of a $14.4 billion increase in current fiscal year upward financial 

statement re-estimates, $11.6 billion of which was attributable to FSA’s portfolio of traditional 

FFEL Guaranteed credit program receivables. This was offset by a $3.3 billion increase in 

current fiscal year downward financial statement re-estimates, of which $3.1 billion also related 

to FSA’s FFEL Guaranteed loan portfolio. 

Both the FFEL and Direct Loans Programs are mandatory programs whose costs are largely 

driven by Federal borrowing costs, prevailing interest rates, in-school interest benefits for 

borrowers, the costs related to borrower defaults, and loan volume demand. The programs are 

funded by mandatory and indefinite budget authority and therefore do not receive annual 

appropriations. For more details regarding the inherent difficulty of estimating the impact of 

these complex factors, please refer to Note 5. 

Statement of Changes in Net Position

The Statement of Changes in Net Position presents those amounts that caused the net position 

section of the Balance Sheet to change from the beginning to the end of the reporting period 

and is affected by changes in its two components, cumulative results of operations and 

unexpended appropriations.

FSA’s net position as of September 30, 2019, was negative $44.9 billion, a decrease of 

$53.9 billion compared to the previous September 30 net position. The difference reflects a 

decrease in the cumulative results of operations by the amount of $52.9 billion, from 

$(23.4) billion, to $(76.3) billion, of which $(38.4) billion of the reduction related to the Direct 

Loan Program and $(14.6) billion was attributable to the FFEL Program. In addition, 

unexpended appropriations decreased by $1.1 billion, of which $1.6 billion were attributable to 

the combined Perkins Loan and Grants Programs, with an offsetting $0.6 billion increase in 

Direct Loan Program unexpended appropriations accounting for most of the remaining 

difference.

Statement of Budgetary Resources

The Statement of Budgetary Resources compares the budgetary resources provided with the 

status or execution of those resources. It also details the composition of the resources and 

shows the amount of net outlays. Appropriations are available to cover the subsidy cost of each 

loan program and administrative expenses. Subsidy expense represents the difference 

between the net present value of expected future cash flows and the face value of each loan 

portfolio. Appropriation authority is available as needed on a permanent basis to finance costs 
Fiscal Year 2019 Annual Report | Federal Student Aid 49

Analysis of Financial Statements 

resulting from loans guaranteed in the years before FY 1992. The Pell Grant Program receives 

appropriations to cover actual grant disbursements.

This statement shows that as of September 30, 2019, FSA had $306.1 billion in combined 

budgetary resources, of which $20.1 billion remained unobligated and not apportioned. This 

compared to $305.9 billion in budgetary resources twelve months earlier of which $25.6 billion 

were unobligated and not apportioned. Overall budgetary resources increased by only 

$0.3 billion or 0.1 percent, as the net result of increases in budgetary resources for the 

combined Perkins Loan and Grants Programs ($2.0 billion) and the Direct Loan Program 

($1.4 billion) offset by a $3.1 billion decrease attributable to the FFEL Program. The latter was 

mainly due to a decrease in spending authority from offsetting collections ($3.1 billion), a 

decrease in net unobligated balance from the prior year budget authority ($0.9 billion), together 

with a decrease in borrowing authority ($0.2 billion) offset by an increase in current year 

appropriations ($1.1 billion).

FSA’s Net Outlays after Distributed Offsetting Receipts as of September 30, 2019, were 

$97.3 billion, a decrease of $4.3 billion or 4.2 percent compared to the prior September 30 

amount of $101.7 billion. The Direct Loan Program accounted for an $8.1 billion reduction, with 

offsetting increases of $2.2 billion and $1.4 billion attributable to the FFEL Program and to the 

combined Perkins Loan and Grants Programs respectively. FFEL Program activity was mainly 

due to an increase in gross outlays ($2.8 billion), together with a decrease in offsetting 

collections ($1.3 billion), net of an increase in distributed offsetting receipts 

($1.9 billion). Additional information is provided in Note 11.
50 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

Financial Management Highlights

During FY 2019, FSA engaged in the following activities to maximize the protection of borrower 

and taxpayer interests in the face of identified challenges. 

Next Generation Financial Services Environment. When fully implemented, Next Gen FSA 

offers key financial benefits on several levels. Providing customers with intuitive, personalized 

information in real-time through digital and mobile technology designed to facilitate self-service 

should drive improved outcomes for student loan borrowers; even small reductions in loan 

delinquency and default would have significant implications on a loan portfolio exceeding 

$1.5 trillion. At the same time, the adoption of digitally driven technology focused on increasing 

customer self-service also offers the possibility of significantly reduced administrative costs for 

FSA, as relatively expensive phone and paper transactions are replaced by less costly digital 

services. Next Gen FSA contracts are being designed both to encourage vendors to drive 

automation and efficiency—while not sacrificing quality customer service—and to ensure that 

resulting savings are passed onto FSA through reduced contract costs. Lastly, the adoption of 

modern, modular, and web-based technology should further reduce costs while also making it 

easier and less expensive to incorporate new legislative or policy initiatives or stay abreast of 

the latest data security standards.

Next Gen FSA is the largest, most complex implementation effort in FSA’s history. Projects of 

this scale, scope, and cost inevitably involve significant risks; accordingly, FSA has devoted 

significant resources to documenting, managing, and mitigating these risks. In addition to 

enterprise risk tracking and mitigation efforts, the Next Gen FSA Program Office has a 

dedicated risk manager and maintains a detailed risk log at the project and program level, with a 

particular focus on project cost and schedules. Key risks that have been identified and are 

being tracked include:

• Contract awards that could be delayed by protests;

• Appropriations could be insufficient to support planned implementation activities;

• The need for complex technical and process integration across multiple elements of

Next Gen FSA; and

• FSA could be unable to attract sufficient staff with the technical skills and experience

needed under the new environment.

Improper Payment Estimation. The Direct Loan Program and the Pell Grant Program are 

susceptible to significant improper payments and were designated as “high-priority” programs 

by OMB. FY 2019 outlays for these programs were: 

• Direct Loan Program: $92.9 billion

• Pell Grant Program: $29.0 billion

FSA is required to annually estimate improper payments for the Direct Loan and Pell Grant 

Programs. In FY 2019, FSA implemented a new methodology for estimating these improper 

payments.

In FY 2018, FSA developed a statistically valid estimation methodology that addressed the 

acknowledged limitations of the prior non-statistically valid estimation methodology. The new 

methodology implemented in FY 2019 is based on a larger, random sample of the complete 

population of over 5,700 schools and uses data from the compliance audits performed by 
Fiscal Year 2019 Annual Report | Federal Student Aid 51

Analysis of Financial Statements 

external auditors for those schools, as opposed to the prior non-statistical methodology that 

used a smaller, non-random sample of a subset of schools selected for program reviews. A 

small number of schools may apply for and receive a waiver or exemption from the compliance 

audit requirements. FSA includes a sample of these schools in the improper payment 

estimation calculation. 

To execute this new methodology, a sample of schools was selected by dividing the population 

of Pell Grant and Direct Loan disbursing schools into mutually exclusive groups or "strata" 

based on school disbursement amounts. FSA randomly selected schools into the sample from 

each stratum so that schools in the same stratum had equal probabilities of selection. All 

schools in the two strata containing the schools disbursing the largest amounts (i.e., schools 

with Direct Loan disbursements over $150 million and schools with Pell disbursements over 

$50 million) were included in the sample. The Pell Grant and Direct Loan improper payment 

estimates are based in part on all improper payments identified by the auditors for each of the 

395 sampled schools. 

This new methodology improves the accuracy of the improper payment estimates allowing for 

more precise root cause analyses to improve corrective actions and improve the effectiveness 

of correction action plans to mitigate identified root causes. As shown in the following table, 

sampling from the total school population, rather than the limited number of schools subject to 

program reviews, reduced the improper payment estimate for both programs.

Table 19: Improper Payment Estimates for Risk-Susceptible Programs

(Dollars in Millions)

Program Name

FY 2018 FY 2019 Improper 

Payment Rate

Variance

Improper 

Payment 

Amount 

Variance

Improper 

Payment 

Rate

Improper 

Payment 

Amount

Improper 

Payment 

Rate

Improper 

Payment 

Amount

Direct Loan Program 3.99 % $3,752.9 0.52 % $483.1 (3.47 %) ($3,269.8)

Pell Grant Program 8.15 % $2,302.4 2.23 % $646.1 (5.92 %) ($1,656.2) 

Aggregate/Blended 4.95 % $6,055.3 0.93 % $1,129.3 (4.02 %) ($4,926.0) 

*Note: Line items may include rounding adjustments to that do not reconcile to the total amount being reported.

The primary causes of the FY 2019 estimated improper payments were misreported income by 

applicants and incorrect amounts of Federal funds disbursed by schools to students because of 

administrative or other process errors. Improper payments attributed to FSA include, for the 

Pell Grant Program, estimates of misreported income for students not selected for verification 

and who did not use the Internal Revenue Service (IRS) Data Retrieval Tool (DRT) and, for the 

Direct Loan Program, consolidation and refund improper payments related to the Department’s 

loan servicing operations.

When control deficiencies are detected, either within FSA or at external entities, FSA seeks to 

identify the root causes, develop corrective action plans, and track corrective actions through to 

completion. In FY 2019, the most significant root cause, misreported income, is associated with 

the FAFSA/IRS Data Statistical Study (Study) performed for the Pell Grant Program that 

compares information reported by applicants on the FAFSA and income details reported to the 

IRS. The Department is coordinating with Treasury and OMB to pursue legislation that would 

provide an exemption to the IRS Tax Code Section 6103 to further streamline FSA’s ability to 

receive and verify applicants’ and borrowers’ income data.

FSA will continue to refine its execution of this new methodology, including evaluation of data 

collection. For example, if information needed to calculate improper payments for the school 
52 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Financial Statements 

was not provided in the audit report this year, FSA obtained this information directly from the 

school or auditor. To facilitate data collection for this purpose going forward, FSA coordinated 

with OMB to clarify these data and reporting requirements in the FY 2019 OMB Compliance 

Supplement.

For more information regarding FSA’s assessment of improper payment risk and planned 

strategies to mitigate this risk, please refer to the Payment Integrity narrative in the Other 

Information section located in this FY 2019 FSA Annual Report and in the Department’s AFR. 

Debt Collection. As of September 30, 2019, the Department managed a Net Credit Program 

Receivable portfolio of approximately $1.2 trillion, a decrease of 0.6 percent from FY 2018. This 

portfolio includes the Direct Loan Program, FFEL Program (guaranteed loans held by guaranty 

agencies or FSA), FFEL loans acquired via authorization of the ECASLA, Federal Perkins 

Loans Program receivables, HEAL Program loans, and TEACH Program receivables. FSA 

realizes that as the size of the loan portfolio grows, so does the level of financial risk associated 

with the collections on these loans.

FSA manages maximizing collections, while minimizing negative borrower impacts. During 

FY 2019, FSA saw a slight decrease in the portfolio’s three-year default rate, from 11.5 percent 

reported in FY 2017 and 10.8 percent reported in FY 2018, for the FY 2014 and FY 2015 threeyear cohorts, respectively, to 10.1 percent reported in FY 2019 for the FY 2016 three-year 

cohort default rate. FSA reported a collection rate of $58.56, which represents the total dollars 

collected per dollar spent on collection activities. This demonstrates the continued maintenance 

of a relatively low default rate, while ensuring the efficiency of funds spent on collections and 

maintaining customer satisfaction along the entire aid lifecycle. More information on FSA’s 

performance, as it relates to debt collection and the collection rate, is provided in the Annual 

Performance Report section, in Performance Metric D.3, of this Annual Report.
Fiscal Year 2019 Annual Report | Federal Student Aid 53

Analysis of Systems, Controls, and Legal Compliance 

Analysis of Systems, Controls, and Legal Compliance

FSA adheres to the Government Accountability Office (GAO) published guidance on internal 

control and recognizes that internal control is an integral part of managing an organization. 

Internal control includes the plans, methods, and procedures used to meet the organization’s 

missions, goals, and objectives. In carrying out these components of internal control, FSA 

supports an environment for performance-based management. Internal control also serves as 

the first line of defense in safeguarding assets and preventing and detecting errors and fraud. 

Internal control helps government program managers achieve desired results through effective 

stewardship of public resources.

Internal controls should provide reasonable assurance that the objectives of the agency are 

being achieved in the following categories:

• Effective and efficient operations;

• Reliability of reporting for internal and external use; and

• Compliance with applicable laws and regulations.17

FSA is responsible for establishing and maintaining effective internal control over reporting and 

financial management systems that meet the objectives of the Federal Managers’ Financial 

Integrity Act of 1982 and annually assessing the effectiveness and efficiency of its internal 

controls over operations and compliance with applicable laws and regulations in accordance 

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

Internal Control (OMB Circular A-123). On June 6, 2018, OMB updated OMB Circular A-123, 

Appendix A, Management of Reporting and Data Integrity Risk (Appendix A) to further align to 

the revised OMB Circular A-123, updated in 2016. FSA continues to coordinate with the 

Department and internally to execute these requirements.

Based on the results of this year’s assessment, FSA reported to the Department’s management 

that its internal control over operations, including internal controls intended to prevent, detect 

and recover improper payments, and compliance with applicable laws and regulations, as of 

September 30, 2019, was operating effectively, with one exception noted in the Legal 

Compliance section of the Department’s AFR: Debt Collection Improvement Act of 1996. More

details about this issue and the efforts being taken to remediate the non-compliance can be 

found in the Department’s AFR. 

In addition, FSA, working with the Department, conducted its current year assessment of the 

effectiveness of internal control in accordance with the requirements of Appendix A of OMB 

Circular A-123, updated on June 6, 2018. OMB Circular A-123, Appendix A provides 

requirements to agencies for conducting management’s assessment of internal control over 

reporting. The Department’s evaluation for FY 2019 did not identify any material weaknesses in 

controls as of September 30, 2019. The scope of FSA’s assessment focuses on new processes 

and processes with high-risk profiles reviewed and tested every year. Processes with lower-risk 

profiles are reviewed and tested on a 3-year cycle. In FY 2019, FSA continued to rely on audits 

of loan servicers conducted by independent public accountants in accordance with Statement 

on Standards for Attestation Engagements Number 18, Reporting on Controls at a Service 

Organization.

17Government Accountability Office Standards for Internal Control in the Federal Government, GAO-14-704G, 

September 10, 2014, p.5.
54 Fiscal Year 2019 Annual Report | Federal Student Aid

Analysis of Systems, Controls, and Legal Compliance 

FSA’s participation in the Department's implementation of the requirements of OMB Circular 

A-123, including Appendix A, enables it to continue to build upon its internal control framework.

This framework will be used in continuing efforts to monitor and improve internal control. Please

refer to the Analysis of Systems, Controls and Legal Compliance section of the Department’s

AFR for additional information related to management’s assurances and disclosures.

Please also refer to the Analysis of Systems, Controls and Legal Compliance section of the 

Department’s AFR for information related to the Department's compliance with the Federal 

Financial Management Improvement Act of 1996. 

FSA’s financial management systems strategy is formulated and managed as part of the 

Department’s strategy. For details on FSA’s financial management systems strategy, please 

refer to the Financial Management Systems Strategy narrative found in the Management’s 

Discussion and Analysis section of the Department’s AFR.
Fiscal Year 2019 Annual Report | Federal Student Aid 55

Limitations of Financial Statements 

Limitations of Financial Statements

Management has prepared the accompanying financial statements to report the financial 

position and operational results for FSA, for FY 2019 and FY 2018 pursuant to the requirements 

of Title 31 of the United States Code, Section 3515(b).

While these statements have been prepared from the books and records of FSA in accordance 

with generally accepted accounting principles for federal entities and the formats prescribed by 

OMB, these statements are in addition to the financial reports used to monitor and control 

budgetary resources, which are prepared from the same books and records.

The statements should be read with the realization that they are for FSA, a component of the 

U.S. Government, a sovereign entity. One implication of this is that the liabilities presented 

herein cannot be liquidated without the enactment of appropriations, and ongoing operations are 

subject to the enactment of future appropriations.
56 Fiscal Year 2019 Annual Report | Federal Student Aid

Limitations of Financial Statements 

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Fiscal Year 2019 Annual Report | Federal Student Aid 57

Annual Performance Report 

Annual Performance Report (Unaudited)
58 Fiscal Year 2019 Annual Report | Federal Student Aid

Overview of the Annual Performance Report

Overview of the Annual Performance Report

The Annual Performance Report section of the FSA Annual Report provides detailed 

performance information on FSA’s progress in achieving the goals and objectives described in 

the FSA FY 2015–19 Strategic Plan. This section also includes reports on other areas of 

performance that are required by the Higher Education Amendments of 1998. The subsections 

of the Annual Performance Report are listed and briefly discussed below.

Fiscal Year 2019 Organizational Performance

Fiscal Year 2019 Organizational Performance presents the performance metrics, the targets, 

and the actual performance results for FY 2019. It also includes an overview of FSA’s 

performance in meeting its established targets over the past five years and an overview of the 

FSA strategic plan, linking its objectives to each strategic goal.

Introduction to the Annual Performance Report

The Introduction to the Annual Performance Report provides an overview of the Annual 

Performance Report and includes a high-level summary of the FSA Strategic Plan.

Performance Results by Strategic Goal

This subsection details the results of each overall strategic goal by performance metric. Each 

performance metric includes a table that presents five years of data results, where available, its 

current target and results. The performance metric section also includes a discussion of the 

metric’s target context, analysis of progress, and data quality limitations.

Fiscal Year 2019 Accomplishments of Federal Student Aid

This subsection describes additional accomplishments that were not measured by the 

performance metrics included in the strategic plan but were the result of initiatives that FSA 

undertook to support the implementation of the strategic plan or legislative changes.

Legislative and Regulatory Recommendations

This subsection details legislative and regulatory recommendations that FSA provided to the 

Department in support of the Department’s regulatory activities.

Annual Bonus Awards

This subsection discusses executive compensation at FSA in compliance with the legislative 

requirements under the PBO legislation that created FSA.

Report of the Federal Student Aid Ombudsman

The report discusses the FSA Ombudsman’s activities in accomplishing its statutory mission of 

addressing complaints about Title IV financial aid programs.
Fiscal Year 2019 Annual Report | Federal Student Aid 59

Fiscal Year 2019 Organizational Performance 

Fiscal Year 2019 Organizational Performance 

Federal Student Aid Strategic Goals and Strategic Objectives

Table 20: Strategic Goals and Strategic Objectives for Fiscal Years 2015-19 

FSA FY 2015–19 Strategic Plan

Mission

Funding America’s Future, One Student at a Time18

Vision

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

Strategic Goal A Objectives

Improve quality of service for customers 

across the entire student aid life cycle.

A.1: Improve outreach and awareness efforts to support aid recipients

and their families in making sound financial decisions.

A.2: Optimize the borrower service model to improve the customer

experience.

A.3: Predict, identify, and understand existing and emerging customer

trends and patterns.

A.4: Enhance outreach, training and tools to improve institutional

performance and help postsecondary institutions understand 

responsibilities and requirements under the Higher Education Act. 

Strategic Goal B Objectives

Proactively manage the student aid 

portfolio to mitigate risk.

B.1: Enhance analytical and research capabilities to proactively identify

operational and reputational risk.

B.2: Develop robust, data-driven processes to manage identified risks.

B.3: Provide access to resources to protect students and families from

unfair, deceptive or fraudulent practices in the student aid 

marketplace. 

Strategic Goal C Objectives

Improve operational efficiency and 

flexibility.

C.1: Link disparate data sources to improve cross-organizational

information exchange.

C.2: Refine acquisition management to ensure that services and

products are consistent with business objectives. 

C.3: Enhance governance processes to support enterprise decisionmaking.

C.4: Strengthen FSA’s information technology (IT) systems’ security.

Strategic Goal D Objectives

Foster trust and collaboration among 

stakeholders.

D.1: Engage with stakeholders to be the most trusted and reliable

source of information on federal student aid.

D.2: Provide timely and proactive communication to promote accurate,

consistent messaging on federal funding of postsecondary 

education.

D.3: Promote transparency and accountability within FSA and across

the higher education environment.

Strategic Goal E Objectives

Invest in expanded workforce capability

E.1: Create an enterprise-wide workforce plan to attract, develop, and

retain employees with the skills required to meet evolving 

business needs.

E.2: Develop a succession planning strategy to identify and create

opportunities for future leadership talent.

18The mission stated above represents the Federal Student Aid’s mission statement as published in the FY 2015–19 FSA Strategic 

Plan. A new mission statement, Keeping the Promise: Funding America’s Future, One Student at a Time, has been developed and 

will be published in the new FSA Strategic Plan.
60 Fiscal Year 2019 Annual Report | Federal Student Aid

Fiscal Year 2019 Organizational Performance

Federal Student Aid Strategic Goals, Performance Metrics, and Results

Table 21: Fiscal Year 2019 Strategic Goals, Performance Metrics and Results

Performance Metrics FY 2019

Target

FY 2019

Actual

Result Reference 

Page

Strategic Goal A: Improve quality of service for customers across the entire student aid life cycle. 

A.1 Percent of First-Time FAFSA Filers Among

High School Seniors 67.0%–69.0% 65.9% x 64

A.2 Persistence Among First-Time Filing Aid

Recipients 82.0%–84.0% 82.8% ✔ 66

A.3 Customer Visits to StudentAid.gov >=150 million 183.7 million ✔ 67

A.4 Social Media Channel Subscribership >=615,000 634,556 ✔ 68

A.5 ACSI Aid Life Cycle Surveys 70.0–72.0 70.0 ✔ 69

Strategic Goal B: Proactively manage the student aid portfolio to mitigate risk.

B.1 Improper Payment Rate 4.95% 0.93% 70

B.2 Percent of Borrowers > 90 Days Delinquent 10.1% 9.8%

✔

✔ 72

Strategic Goal C: Improve operational efficiency and flexibility.

C.1 Aid Delivery Costs Per Application $11.99 $9.55 ✔ 74

C.2 Outstanding Direct Loan Portfolio in Current

Repayment Status 85.5%–86.6% 86.7% ✔ 75

Strategic Goal D: Foster trust and collaboration among stakeholders.

D.1 Ease of Doing Business with FSA 73.4–75.4 74.0 ✔ 76

D.2 Percentage of Contract Dollars Competed by

FSA 95.8%–97.8% 97.6% ✔ 77

D.3 Collection Rate $53.30 $58.56 ✔ 78

Strategic Goal E: Invest in expanded workforce capability. 

E.1 Employee Engagement Index 61.0%–63.0% 61.0% ✔ 79
Fiscal Year 2019 Annual Report | Federal Student Aid 61

Fiscal Year 2019 Organizational Performance

Federal Student Aid Performance Results by Strategic Goal

The following table provides an overview of the performance metrics results by strategic goal

over the past five years.

Table 22: Performance Results by Strategic Goal for Fiscal Years 2015-19 

Strategic Goals Target FY 

2015

FY 

2016

FY 

2017

FY 

2018

FY 

2019

Goal A: 

Improve quality of service for 

customers across the entire 

student aid life cycle. 

Met/Exceeded 3 3 4 5 4 

Not Met - - - - 1

Data Not Available 2* 2* 1* - -

Goal B:

Proactively manage the student 

aid portfolio to mitigate risk.

Met/Exceeded 1 1 - 2 2

Not Met 1 - 2 - -

Data Not Available - 1* - - -

Goal C: 

Improve operational efficiency 

and flexibility.

Met/Exceeded 1 2 2 2 2

Not Met - - - - -

Data Not Available 1* - - - -

Goal D: 

Foster trust and collaboration 

among stakeholders. 

Met/Exceeded 2 2 3 3 3

Not Met 1 1 - - -

Data Not Available - - - - -

Goal E: 

Invest in expanded workforce 

capability 

Met/Exceeded 1 1 1 - 1

Not Met - - - 1 -

Data Not Available - - - - -

Total

Met/Exceeded 8 9 10 12 12

Not Met 2 1 2 1 1

Data Not Available 3* 3* 1* - -

Total Measures 13 13 13 13 13

*These metrics were revised, and the prior-year results were not restated under the revised method.
62 Fiscal Year 2019 Annual Report | Federal Student Aid

Introduction to the Annual Performance Report 

Introduction to the Annual Performance Report

The FSA Strategic Plan guides FSA towards achieving its vision “To be the most trusted and 

reliable source of student financial aid, information, and services in the nation.” Through the 

strategic plan, FSA documents the strategic goals, objectives, and performance metrics of the 

organization. FSA is required, by the PBO-enabling legislation, to report annually its level of 

performance. This section, the Annual Performance Report, satisfies this annual reporting 

requirement.

For additional performance-related information—including a more complete discussion of FSA’s 

mission, organization, and performance management—refer to the Management’s Discussion 

and Analysis section of this document.

The FSA FY 2019 Annual Report provides a detailed view of the past year’s goals, challenges, 

and accomplishments in the context of FSA’s FY 2015–19 Strategic Plan. 

The strategic goals are: 

• Strategic Goal A: Improve quality of service for customers across the entire student aid

life cycle.

• Strategic Goal B: Proactively manage the student aid portfolio to mitigate risk.

• Strategic Goal C: Improve operational efficiency and flexibility.

• Strategic Goal D: Foster trust and collaboration among stakeholders.

• Strategic Goal E: Invest in expanded workforce capability.

The table on the following page presents the strategic plan and the objectives linked to each 

strategic goal. To gauge its success in meeting these strategic goals, FSA identified 13 

performance metrics. For more information about FSA’s strategic goals and performance 

metrics, visit the FSA Data Center. 

StudentAid.gov/strategic-planning-and-reporting
Fiscal Year 2019 Annual Report | Federal Student Aid 63

Performance Results by Strategic Goal 

Performance Results by Strategic Goal

This section presents detailed performance results including a discussion of progress made to 

date in achieving the strategic goal and the data used to assess performance. 

How this Section is Organized. This section is organized by the five strategic goals and the 

associated performance metric(s). The section contains the following information for each 

performance metric: 

• Table: Identifies the performance metric associated with the strategic goal and provides

the historical actual results for the four previous fiscal years (if available); the target and

actual result for the current fiscal year; and an indicator as to whether FSA met the

performance metric for each fiscal year reported. The following is the legend for the

performance result indicator included in the table.

Performance Result Indicator Legend

Performance Result Indicator

Performance result met or exceeded the 

target. 

Met

✔

Performance result did not meet the 

target. 

Not met

x

Performance result is not applicable 

because the performance metric was not 

developed, the performance metric was 

not implemented, or the required data 

were not available in time for inclusion.

N/A

–

The performance metric results reported are as of fiscal year-end, September 30, 2019,

unless otherwise noted. If the required data are not available as of fiscal year-end in 

time for inclusion in this report, data as of the most recent period available are used. 

Data as of fiscal year-end may not be available in some instances, where the required 

data are obtained from external sources including state and private nonprofit guaranty 

agencies, lenders and loan servicers, and grant and loan recipients. 

• Target Context: Explains the parameters or rationale for targets, especially where

anomalies exist.

• Analysis of Progress: Provides a discussion of FSA’s progress in meeting its targets

and includes explanations for unmet targets and actions being taken or planned.

• Data Quality and Limitations: Describes the source of data required to calculate the

actual result for the performance metric, any calculation required to determine the actual

result, and any known data quality issues or limitations. For an overview of FSA’s

business process to confirm the quality of performance data, please see Quality of

Performance Data in the Management’s Discussion and Analysis section of this Annual

Report.
64 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Strategic Goal A: Improve quality of service for customers across the 

entire student aid life cycle.

Table 23

Performance Metric A.1

Percent of First-Time FAFSA Filers Among High School Seniors

Fiscal Year Target Actual Target Achieved Performance Result

FY 2019 67.0%–69.0% 65.9% x Not met

FY 2018 66.4%–68.4% 67.4% ✔ Met

FY 2017* – – – N/A

FY 2016* – – – N/A

FY 2015* – – – N/A

*Performance metric revised in FY 2018; prior-year data not available under revised method.

Target Context:

A major component of FSA’s mission is to ensure that all eligible individuals have access to 

federal student aid. In order to achieve this goal, FSA works diligently to increase awareness 

about the availability of student financial assistance. This performance indicator measures the 

largest and most visible outcome of FSA’s customer engagement efforts, the percent of 

graduating high school seniors who successfully file a FAFSA as a first step in furthering their 

education beyond the secondary level.

FSA would have met this goal if the estimate of the number of high school seniors had remained

the same as it was when the goal was set, but the number of seniors continually increased, 

which then decreased the percentage of seniors filing a FAFSA. Per FSA policy, the current 

projection is based on the most recently released data from National Center for Education 

Statistics (NCES). The FY 2018 performance metric that was used to set the target for FY 2019 

was calculated using the 2016 Digest of Education Statistics, which estimated the number of 

graduating high school seniors in 2017–18 as 3,612,500 and in 2018–19 as 3,606,230. Both 

years have been reestimated by NCES and are now estimated to have been 3,672,200 in 

2017–18 and 3,683,540 in 2018–19. Using estimates of graduating seniors from the 2016 

Education Digest would produce an FY 2018 metric of 67.4 percent (as actually reported) and 

an FY 2019 metric of 67.3 percent (counterfactual). Using estimates of graduating seniors from 

the 2018 Education Digest would produce an FY 2018 metric of 66.3 percent (counterfactual) 

and an FY 2019 metric of 65.9 percent. 

Analysis of Progress:

FSA did not meet its target for this metric with a result of 65.9 percent.

In a fiscal year when unemployment hit a 50-year low, the percentage of high school seniors 

filing the FAFSA decreased only slightly more than 1 percent, and it only decreased because 

estimates of the number of seniors nationwide continually increased. FSA has successful 

awareness and outreach campaigns and a consistent social media presence to reach high 

school seniors. In addition, FAFSA filing for the start of the FY 2020 year increased, and two 

large states (Illinois and Texas) have passed laws requiring FAFSA filing as a requirement to
Fiscal Year 2019 Annual Report | Federal Student Aid 65

Performance Results by Strategic Goal 

graduate from high school, so FSA anticipates that the percentage of high school seniors filing a 

FAFSA will increase in FY 2020. 

Data Quality and Limitations: 

The denominator is the number of graduating high school seniors according to the most recent 

projection by NCES. The numerator is based on the number of applications for first-time filers 

during the first nine months of the application cycle that are, as of September 30 of the first year 

of the application cycle, complete (not rejected). First-time filers are defined as incoming 

freshmen, with or without previous college attendance; age 19 or less as of June 30 of the first 

year of the application cycle; reporting high school diploma attainment; and attended a high 

school in the 50 states or Washington, DC. Applicants are identified using several criteria to 

reflect likely high school seniors (first-time filing, entering college freshmen with high school 

diploma, who are no older than 19 years of age). Completed applications are a subset of 

submitted applications and represent all submitted applications that were not rejected. Data are 

based on last transaction on file as of September 30, 2018. Data include all applications 

submitted listing high schools in the 50 states and Washington, DC. Applications from seniors 

at Department of Defense Education Activity schools in other geographic areas are excluded.
66 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Table 24

Performance Metric A.2

Persistence Among First-Time Filing Aid Recipients

Fiscal Year Target Actual Performance Result

FY 2019 82.0%–84.0% 82.8% Met

FY 2018 81.6%–83.6% 82.5% Met

FY 2017 78.7%–80.7% 82.6% Met

FY 2016 78.5%–80.5% 79.7% Met

FY 2015 78.6%–80.6% 79.5%

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

This metric helps track performance across one of the desired outcomes of federal student aid 

and its impact on program completion. By following first-time filing aid recipients—such as 

college freshmen or non-traditional students, into their second year—it is possible to see 

whether FSA is making improvements in how applicants are translating the aid that they receive 

into educational persistence.

Analysis of Progress:

FSA met its target for this metric with a result of 82.8 percent.

Continuing FAFSA outreach campaigns, the premiere of a mobile FAFSA, and a strong social 

media presence all allowed FSA to meet its goal for persistence among first-time FAFSA filers.

FSA plans to increase its outreach efforts to students while in school in FY 2020. This should 

help to increase the number of first-time filers who return to file a second FAFSA.

Data Quality and Limitations: 

The denominator is the number of first-time FAFSA filers in the previous cycle with a program or 

degree length greater than one year that received aid for that award year (grants and/or loans). 

The numerator is the number of 2017–18 return applicants (by September 30 of the first year of 

the application cycle) that were identified in the denominator.
Fiscal Year 2019 Annual Report | Federal Student Aid 67

Performance Results by Strategic Goal 

Table 25

Performance Metric A.3 

Customer Visits to StudentAid.gov

Fiscal Year Target Actual Performance Result

FY 2019 >=150.0 million 183.7 million Met

FY 2018 >=43.3 million 44.5 million Met

FY 2017 >=43.3 million 44.3 million Met

FY 2016 >=43.4 million 47.2 million Met

FY 2015 >=32.7 million 43.3 million

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

By focusing on overall customer visits to FSA’s primary online portal for customers, this 

performance metric helps gauge the success of FSA’s efforts to become the most trusted 

source for accurate and accessible student aid information for Americans nationwide.

Analysis of Progress:

FSA met its target for this metric with a result of 183.7 million visits. 

The October 2018 migration of the FAFSA home page to StudentAid.gov continued to drive a 

large number of customers to the website, resulting in an increase in the number of sessions on 

the site.

FSA’s performance on this metric is a testament to the success of its effort on promoting the site 

as a trusted source and driving improvements to the student experience. Since its launch in 

2012, StudentAid.gov has evolved into FSA’s primary information interface for federal student 

aid tools, resources, and services.

Data Quality and Limitations: 

The metric value is based on the number of visits (as opposed to unique visitors and page 

views).
68 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Table 26

Performance Metric A.4 

Social Media Channel Subscribership

Fiscal Year Target Actual Performance Result

FY 2019 >=615,000 634,556 Met

FY 2018 >=590,000 607,241 Met

FY 2017 >=500,000 584,241 Met

FY 2016 >=454,000 528,251 Met

FY 2015 >=368,000 454,066

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

By focusing on engaging content to increase subscribership across FSA’s most prolific social 

media channels, this metric helps FSA measure the success of enterprise efforts to increasingly 

become the trusted source for accurate and accessible federal student aid information across 

the organization’s digitally engaged customer base.

Analysis of Progress:

FSA met its target for this metric with a result of 634,556 subscribers. 

FSA exceeded its target for this metric for the sixth year in a row, with subscribers to FSA’s 

Facebook, Twitter, and YouTube social media channels. In today’s information age, digital 

media techniques are becoming increasingly critical for effective customer engagement. Within 

the past several years, FSA has aggressively leveraged social media tools to drive awareness, 

uncover insights, engage and interact with students and borrowers, and drive traffic to FSA’s 

websites and blogs. This metric helps track FSA’s progress in this domain.

Data Quality and Limitations: 

The metric is calculated as the aggregate sum of subscribers across Facebook, Twitter, and 

YouTube. The tool that tracks Social Media Channel Subscribership for YouTube, Facebook, 

and Twitter is dynamic. Depending on the moment in time that the subscribership result is 

captured, the total could be different.
Fiscal Year 2019 Annual Report | Federal Student Aid 69

Performance Results by Strategic Goal 

Table 27 

Performance Metric A.5 

ACSI Aid Life Cycle Surveys

Fiscal Year Target Actual Target Achieved Performance 

Result

FY 2019 70.0–72.0 70.0 ✔ Met

FY 2018 68.9–70.9 70.6 ✔ Met

FY 2017* 69.4–71.4 69.9 ✔ Met

FY 2016* – – – N/A

FY 2015* – – – N/A

*Performance metric revised in FY 2017. Prior-year data not available under revised method.

Target Context: 

This metric measures how FSA is improving in terms of streamlined processes for interactions

with customers applying for, receiving, and repaying federal student aid. The metric measures 

the accessibility of information FSA provides to customers. Historically, to measure the overall 

customer satisfaction level throughout the student aid life cycle, FSA has calculated a weighted 

score for the American Customer Satisfaction Index (ACSI) surveys for applicants, students in 

school, and borrowers in repayment.

Analysis of Progress:

FSA met its target for this metric with a result of 70.0. 

The most heavily weighted of these measures is borrowers who are currently having their loans 

serviced—this is the largest segment of the population served by FSA (FSA has over 43 million 

borrowers in the entire portfolio it oversees) and therefore accounts for 70 percent of the 

measure. Nearly 25 percent of this metric is made up of scores collected by FAFSA applicants 

(approximately 18 million FAFSAs are filed each year) and the smallest component of the metric 

is the 5 percent of the measure that accounts for students still in school who are receiving 

Title IV funds. Together, the three measures span the three major parts of the student aid 

lifecycle. As Next Gen FSA efforts improve the customer experience of borrowers repaying 

their loans, FSA expects to see this score increase.

Data Quality and Limitations: 

Traditionally, the ACSI survey has been conducted annually for FSA’s major programs. The 

index provides a national, cross-industry, cross-sector economic indicator, using widely 

accepted methodologies to obtain standardized customer satisfaction information. Survey 

scores are indexed on a 100-point scale. The ACSI scores for application, in-school 

experience, and servicing are weighted by the utilization of each process/service and the 

intensity of the service provided.
70 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Strategic Goal B: Proactively manage the student aid portfolio to mitigate 

risk.

Table 28 

Performance Metric B.1* 

Improper Payment Rate

Fiscal Year Target Actual Performance Result

FY 2019* 4.95% 0.93% Met

FY 2018 4.97% 4.95% Met

FY 2017 4.85% 4.97%

Target Achieved 

✔

✔

x Not met

FY 2016 N/A19 4.85% N/A N/A

FY 2015 1.65%20 2.38% x Not met

*This performance metric methodology was revised in FY 2019.

Target Context:

FSA develops and reports in the Department’s AFR, improper payment estimates for programs 

determined to be susceptible to significant improper payments. For FY 2015–2019, FSA’s risksusceptible programs are the Pell Grant and Direct Loan Programs. The Improper Payment 

Rate metric presented here is a single ‘blended’ rate for these two programs that divides 

aggregated estimated improper payments for both programs by aggregated estimated program 

outlays.

Analysis of Progress:

FSA achieved its target for this metric with a blended rate of 0.93 percent. 

In FY 2019, FSA implemented a statistically valid estimation methodology to replace the nonstatistically valid estimation methodology used in prior years. As a result, the FY 2019 estimate 

more accurately identifies the improper payment amounts in these programs and allows for 

more precise root cause analyses to improve corrective actions.

FSA continues to enhance its internal control framework to prevent, detect, and recover 

improper payments. For more information on FSA’s improper payment program, including 

improper payment related internal controls for the Pell Grant and Direct Loan Programs, please 

see the Payment Integrity section of this report and of the Department’s AFR. 

19At the time FY 2016 targets were set, it was known that the estimation methodology would change to address improper payment 

risks not previously incorporated, but the impact was not known. Accordingly, no target was set for this measure for FY 2016. 

20The FY 2015 improper payment Target and Actual rates reported in the table above reflect the corrected improper payment rates

for FY 2015 as determined by the FY 2015 IPERA Compliance Audit Report published by OIG on May 10, 2016. The corrected 

improper payment rates are prepared in accordance with the alternative sampling and estimation methodology approved by OMB as

of October 20, 2015. The rate reported in FSA’s FY 2015 Annual Report was 1.44 percent. 
Fiscal Year 2019 Annual Report | Federal Student Aid 71

Performance Results by Strategic Goal 

Data Quality and Limitations:

The FY 2019 result for Performance Metric B.1 was prepared using a statistically valid and 

rigorous estimation methodology, as defined by OMB. Therefore, the unaggregated Pell Grant 

and Direct Loan improper payments, used to calculate the blended rate, have a +/-3 percent or 

better margin of error at the 95 percent confidence level for the improper payment percentage 

estimate. The estimates are based on an analysis of data primarily obtained from a random 

sample of schools receiving Title IV aid.

To calculate Performance Metric B.1 in prior years, FSA used an OMB-approved non-statistical 

estimation methodology. Accordingly, the estimates lack the precision of other estimates 

developed, using random, statistical methodologies. The non-statistical methodology was based 

on an analysis of data primarily obtained from program reviews conducted at schools identified 

through a risk-based (i.e., non-random) selection process.
72 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Table 29

Performance Metric B.2* 

Percent of Borrowers >90 Days Delinquent

Fiscal Year Target Actual Performance Result

FY 2019* 10.1% 9.8% Met

FY 2018 8.2% 7.4% Met

FY 2017 7.4% 8.3% Not met

FY 2016 9.9% 8.8% Met

FY 2015 10.4% 9.8%

Target Achieved 

✔

✔

x

✔

✔ Met

*This performance metric methodology was revised in FY 2019.

Target Context:

A focus on reducing the number of borrowers more than 90 days delinquent provides FSA with 

insight on how to communicate information about repayment options in a targeted and timely 

manner.

Analysis of Progress:

FSA met its target for this metric with a result of 9.8 percent. 

FSA continues to reap benefits from the migration of borrowers from traditional repayment plans 

to Income Driven Repayment (IDR) plans. The movement to IDR plans has been facilitated by 

extensive outreach conducted by both FSA and its partners. Borrowers in Current Repayment 

are also less costly to service than borrowers in more-adverse repayment categories like 

delinquency.

Data Quality and Limitations:

The data source is NSLDS. The calculation uses the rounded results appearing in the FSA 

Data Center’s Direct Loan Delinquency report. The fiscal year metric is a moving average of the 

four quarters.

The rate of recipients with loans greater than 90 days delinquent represents the number of 

nationwide Direct Loan recipients who have loans in a repayment status21 that are more than 

90 days overdue on their student loan debt. FSA continues to monitor overall performance of all 

the federal loan servicers to identify any areas where errors have occurred and notifies 

servicers of results and corrective actions as needed. While no specific efforts are underway to 

directly improve this performance metric with the current federal loan servicers, resources are 

concentrating on the overall Next Gen FSA effort as it continues to move forward with goals to 

improve the customer experience and decrease the number of borrowers in delinquency and 

default. Once fully implemented FSA expects to see increased borrower repayment rates, 

reductions in deferment and forbearance usage in addition to a decreased percentage of 

delinquent borrowers within the Department’s student loan portfolio.

21Borrowers with loans in a repayment status are no longer in school/grace period and are not currently in a deferred or forbearance 

status.
Fiscal Year 2019 Annual Report | Federal Student Aid 73

Performance Results by Strategic Goal 

This calculation was adjusted in FY 2019 to better measure all pre-default accounts more than 

90 days delinquent relative to all accounts where payments are expected. The FY 2019 target 

was 10.1 percent rather than the previous baseline of 8.2 percent because the new calculation 

includes more categories of loans in the numerator than the previous calculation and fewer 

categories of loans in the denominator than the previous calculation. This results in a higher 

baseline. In other words, the new calculation is a higher, less-favorable one, but it moreprecisely focuses on active repayment delinquency. Active repayment includes all current and 

delinquent loans serviced by federal loan servicers. Delinquencies beyond 270 days are 

included, so long as the loan is still with the federal loan servicer. Borrowers with loans in 

school, in grace period, in deferment, in forbearance, or in bankruptcy or disability status are not 

expected to make payments and are not included in the denominator.

The previous methodology calculated borrower accounts 91-270 delinquent divided by accounts 

in grace, current repayment, and delinquencies through 270 days. The new methodology 

calculates Direct Loan recipients who have loans more than 90 days delinquent divided by 

Direct Loan recipients with loans in current repayment or delinquency. Both the numerator and 

the denominator now include delinquencies of 271-360 days and greater than 360 days if the 

loan is still at a federal loan servicer.
74 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Strategic Goal C: Improve operational efficiency and flexibility.

Table 30

Performance Metric C.1

Aid Delivery Costs Per Application

Fiscal Year Target Actual Performance Result

FY 2019 $11.99 $9.55 Met

FY 2018 $12.16 $8.83 Met

FY 2017 $11.46 $10.68 Met

FY 2016 $13.11 $11.53 Met

FY 2015 $12.28 $10.73

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

The aid delivery cost per application monitors the direct costs to process FAFSAs and originate 

aid in a 12-month period relative to the average number of original FAFSAs processed during 

that period. The fiscal time period measured is July through June.

Analysis of Progress:

FSA met the target for this metric with a result of $9.55.

FSA continues to focus on reducing costs and increasing efficiencies within the federal student 

aid process. During FY 2019, the aid delivery cost per application was approximately 

26 percent lower than the FY 2019 target, but 8 percent above the FY 2018 result. Significant 

savings are expected to be realized after the implementation of the Next Generation Data 

Center to host application processing systems. 

Data Quality and Limitations:

The cost data for this metric are derived from general ledger data uploaded to FSA’s ActivityBased Costing model, which is updated on a quarterly basis and reconciled to FSA’s Statement 

of Net Cost, ensuring all costs assigned to FSA are included in the cost model. The FAFSA 

volumes are derived from the Central Processing System, FSA’s system for processing student 

aid applications.
Fiscal Year 2019 Annual Report | Federal Student Aid 75

Performance Results by Strategic Goal 

Table 31

Performance Metric C.2 

Outstanding Direct Loan Portfolio in Current Repayment Status

Fiscal Year Target Actual Performance Result

FY 2019 85.5%–86.6% 86.7% Met

FY 2018 85.0%–86.0% 86.5% Met

FY 2017 84.9%–85.9% 85.7% Met

FY 2016 85.3% 85.4% Met

FY 2015* – –

Target Achieved 

✔

✔

✔

✔

– N/A

*Performance metric revised in FY 2016. Prior-year data not available under revised method.

Target Context:

This metric demonstrates an increase or decrease in the percentage of FSA loan portfolio 

dollars in a current repayment status. “Current” is defined as the percentage of Direct Loan 

principal and interest identified as being in an “active repayment” status. For this metric, loans 

are defined as being in “active repayment status” if they are being serviced by a non-default 

servicer, payments have not been temporarily suspended (in school/grace or 

deferment/forbearance), and if they have not been identified as being in non-defaulted 

bankruptcy, at the default servicer or otherwise excluded (e.g., due to a total and permanent 

disability determination). Direct Loans are further categorized as being “current” if no more than 

30 days have passed since the next payment date.

Analysis of Progress:

FSA met its target for this metric with a result of 86.7 percent.

FSA continues to reap benefits from the migration of borrowers from traditional repayment plans 

to IDR plans. The movement to IDR plans has been facilitated by extensive outreach 

conducted by both FSA and its partners. Borrowers in Current Repayment are also less costly 

to service than borrowers in more-adverse repayment categories like delinquency. 

Data Quality and Limitations:

The metric is calculated using the Direct Loan Portfolio by Delinquency Status Report published 

by the FSA Data Center using data provided by NSLDS. It is the outstanding principal and 

interest balance of “current” Direct Loans in the active repayment status divided by the total 

principal and interest balance of Direct Loans in an active repayment status at the non-default 

servicers. The metric result is calculated as a four-quarter moving average as of September 30 

of the current fiscal year. This allows FSA to account for changes relating to seasonality and 

indirect factors that could be false indicators of change.
76 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Strategic Goal D: Foster trust and collaboration among stakeholders.

Table 32

Performance Metric D.1 

Ease of Doing Business with FSA

Fiscal Year Target Actual Performance Result

FY 2019 73.4–75.4 74.0 Met

FY 2018 71.9–74.9 74.5 Met

FY 2017 71.3–73.3 73.4 Met

FY 2016 74.3–77.3 72.3

Target Achieved 

✔

✔

✔

x Not met

FY 2015 75.9–77.9 75.8 x Not met

Target Context:

FSA works closely with postsecondary institutions to provide students with federal student aid. 

Successfully delivering aid through a complex system depends on FSA’s ability to work well with 

its institutional, financial, and state partners by supporting them with technical assistance that 

will help them improve their performance and by providing adequate oversight to ensure that 

participants are complying with program requirements. To ensure that all participants in the 

postsecondary education funding system can easily access the information they need to 

perform their important functions and serve the interests of students, FSA conducts a survey 

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

Analysis of Progress:

FSA met its target for this metric with a result of 74.0.

The FY 2019 score for the “Ease of Doing Business” question item on the Schools Partners 

survey was 74.0. The School Partners Survey reaches out to Financial Aid Administrators 

across the nation who work and interact with FSA. This score comes from the May 2019 survey 

of Financial Aid Administrators and was the sole measurement for FY 2019. FSA feels that the 

score reflects the value and strong reputation for FSA’s training. 

Data Quality and Limitations:

A survey of 15-20 questions, regarding the ease of doing business with FSA, is sent to financial 

aid administrators annually. The questions focus on the ease of use of FSA’s major delivery 

and information systems. The ease of doing business score question is based on 1,201 

responses (with a 20.6 item response rate). There were 5,819 survey invitations sent with 

1,226 surveys completed (a 21.1 percent overall survey response rate), a high response rate for 

a customer satisfaction on-line survey.
Fiscal Year 2019 Annual Report | Federal Student Aid 77

Performance Results by Strategic Goal 

Table 33

Performance Metric D.2 

Percentage of Contract Dollars Competed by FSA

Fiscal Year Target Actual Performance Result

FY 2019 95.8%–97.8% 97.6% Met

FY 2018 89.3%–91.3% 96.8% Met

FY 2017 89.3%–91.3% 95.2% Met

FY 2016 89.3%–91.3% 92.9% Met

FY 2015 87.7%–89.7% 90.3%

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

Federal Acquisition Regulations require agencies to compete contracts, unless otherwise 

justified and approved in accordance with regulation. Competition increases transparency; 

drives savings and quality; and helps maintain a supplier base for future acquisition needs. This 

metric tracks the percentage of contract dollars competed by FSA.

Analysis of Progress:

FSA met its target for this metric with a result of 97.6 percent. 

FSA met the target for this performance metric in FY 2019 as the result of FSA’s commitment to 

competitively award a high percentage of contract dollars each year, driving value for taxpayers 

through a competitive acquisition process.

Data Quality and Limitations:

The metric is a five-year rolling average. The numerator is the total amount of dollars competed 

over a five-year period ending in the most recently completed fiscal year; the denominator is the 

total amount of dollars expended on contracts over the same period. The data are extracted 

from the Federal Procurement Data System-Next Generation using the standard “Competition 

Report” for contracting office “Federal Student Aid Procurement Activity.”
78 Fiscal Year 2019 Annual Report | Federal Student Aid

Performance Results by Strategic Goal 

Table 34

Performance Metric D.3 

Collection Rate

Fiscal Year Target Actual Performance Result

FY 2019 $53.30 $58.56 Met

FY 2018 $59.24 $62.15 Met

FY 2017 $51.68 $59.69 Met

FY 2016 $51.79 $53.07 Met

FY 2015 $36.56 $51.58

Target Achieved 

✔

✔

✔

✔

✔ Met

Target Context:

FSA’s collection rate measures the amount of dollars collected from borrowers in the fiscal year 

per dollar spent to collect. Measuring this rate helps FSA gauge the efficiency of its back-end 

systems and processes.

Analysis of Progress:

FSA met its target for this metric with a result of $58.56. 

Four main components led to the FY 2019 Collection Rate Metric being met. Actual Loan 

Servicing costs are lower than projected in part because the anticipated servicer recompete has 

not yet occurred. The PCA costs are lower than projected as the ‘flat rate’ pricing paid to the 

PCAs is fully implemented. Actual collections increased 2.1 percent over the projected rate 

which led to an increase in actual vs. forecasted Default collection costs.

Data Quality and Limitations:

Collections are defined as the total amount of principal collected on both current and defaulted 

debt during the 12-month period ending June 30 of each year. Costs include the total direct 

costs calculated for loan servicing plus debt collections for the same period using FSA’s ActivityBased Costing process. The cost data are derived from FSA’s Activity-Based Costing model 

(Default Collections and Loan Servicing) and PCA spending. A program from the general 

ledger captured the amount of collections and repayment.
Fiscal Year 2019 Annual Report | Federal Student Aid 79

Performance Results by Strategic Goal 

Strategic Goal E: Invest in expanded workforce capability.

Table 35

Performance Metric E.1 

Employee Engagement Index

Fiscal Year Target Actual Performance Result

FY 2019 61.0%–63.0% 61.0% Met

FY 2018 68.7%–70.7% 62.0% Not Met

FY 2017 65.4%–69.4% 69.7% Met

FY 2016 66.9%–68.9% 67.4% Met

FY 2015 66.7%–68.7% 67.9%

Target Achieved 

✔

x

✔

✔

✔ Met

Target Context:

Beginning in FY 2014, FSA has measured its progress on Strategic Goal E via the Federal 

Employee Viewpoint Survey (FEVS) and most specifically the Employee Engagement Index 

(EEI) within the FEVS. The EEI is based on a subset of 15 questions within the FEVS. The 

questions that formulate the EEI are a government-wide standard developed by the U.S. Office 

of Personnel Management and the Partnership for Public Service, which jointly administer and 

analyze the FEVS. Doing so aligns FSA with the Federal standard for FEVS analysis.

Analysis of Progress:

FSA met its target for this metric with a result of 61.0 percent.

FSA experienced significant shifts in management; restructuring of its workflow and business 

units; along with significant policy changes to employee’ work/life balance in FY 2019. FSA 

believes that these changes caused a decrease to its scores. The Leaders Lead and the 

Supervisors subsection of the EEI both decreased by one percentage point. The focus of these 

questions reflects the employees’ perceptions of the integrity of leadership; leadership 

behaviors such as communication; and the internal relationship between worker and supervisor, 

including trust, respect, and support. The Intrinsic Work Experience subsection increased by 

one percentage point. These questions reflect the employees’ feelings of motivation and 

competency relating to their role in the organization. 

Despite the significant changes in leadership, FSA’s Employee Engagement team delivered 

meaningful programs (under the FSA First Class initiative). These programs were designed to 

(a) increase employees’ awareness of FSA’s mission and priorities; (b) help employees map

their own work to the organization’s mission; and (c) increase employees’ knowledge about

other areas within FSA outside of their own business unit. Implementing strategic initiatives was

instrumental in sustaining the scores within the 60th percentile in positive responses associated

with the EEI questions.

Data Quality and Limitations:

The EEI is calculated as the average of positive response percentages to a predetermined set 

of questions in the annual FEVS. These questions can be found as part of the FY 2019 FEVS 

results located at fedview.opm.gov. 
80 Fiscal Year 2019 Annual Report | Federal Student Aid

Fiscal Year 2019 Accomplishments of Federal Student Aid 

Fiscal Year 2019 Accomplishments of Federal Student Aid

During FY 2019, FSA realized additional accomplishments that were not measured specifically 

by the performance metrics implemented to measure performance against the FSA FY 2015–19 

Strategic Plan. Although not measured by FSA performance metrics, these accomplishments 

were the result of initiatives FSA undertook to support the implementation of the strategic plan

or legislative changes. This section describes its additional accomplishments.

FSA realized the following additional accomplishments in support of Strategic Goal A: 

Improve quality of service for customers across the entire student aid life cycle. 

Over the past year, Federal Student Aid has taken several key steps toward realizing the Next 

Gen FSA vision. 

• On February 20, 2019, FSA awarded a contract for services collectively known as Digital

and Customer Care (DCC). This contract will create FSA’s “digital front door” for all

customer interactions, consolidating multiple customer-facing websites and expanding

the functionality available in the myStudentAid mobile app. More broadly, DCC will

implement the Next Gen FSA engagement layer, transforming FSA into a trusted source

of information and greatly simplifying the process of assisting customers in applying for

and receiving postsecondary financial assistance and choosing the best options for

managing their student debt. Key DCC functionality will begin to be deployed in early FY

2020.

• Work began on building the FSA Enterprise-wide Data Management and Analytics

Platform (EDMAPS), which will provide a single solution for all of FSA’s data, including

operational data stores and other data repositories necessary to support all student aid

processing and analytic needs. EDMAPS will allow FSA to implement data standards,

increase data quality, enhance its data security posture, and minimize costs and risks; it

will also provide key infrastructure for modernizing and reducing the cost of the National

Student Loan Data System.

• Procurements moved forward to provide processing system, call center, and business

operation centers that will form the technical backbone of Next Gen FSA. Over the

course of FY 2019 the Department worked with the Department of Justice to

successfully resolve a series of procurement protests and move all these acquisitions

forward to the point where awards are anticipated for early FY 2020. Once all awards

are in place, FSA will finalize plans to transition all student borrower accounts from

existing systems and contracts on a prudent schedule that minimizes disruption for its

customers.

• A Next Gen FSA Program Office was established in late FY 2019 to centralize

management of this enterprise-level project. This office brings together existing staff

and new hires with specific technical and management expertise to coordinate the

disparate Next Gen activities; integrate plans, resources, and technology to drive

success; and engage outside experts who have successfully led commercial and

government transformation efforts to inform our implementation efforts.

• On October 1, 2018, FSA launched its inaugural full version of the myStudentAid mobile

app. The app, downloaded more than 1.2 million times in FY 2019, allows students and

parents to easily and securely complete and submit a FAFSA form through myFAFSA,

one of the app’s components. myFAFSA includes useful and time-saving features,

including the IRS DRT, which allows eligible students and parents to securely transfer
Fiscal Year 2019 Annual Report | Federal Student Aid 81

Fiscal Year 2019 Accomplishments of Federal Student Aid 

their federal income tax information directly into the FAFSA form. Additionally, the app 

allows students and parents the ability to manage their username and password (FSA 

ID); view federal student aid history; get in touch with Federal Student Aid contact 

centers; and access Studentaid.gov., FSA’s key source of information about the federal 

student aid programs. Throughout FY 2019, FSA made improvements to the app, 

including making the signature process simpler; providing a checklist feature that allows 

students to track where they are in the financial aid process; enabling push notifications 

that let FSA communicate directly with its users; and creating role-based messaging, 

allowing users to receive helpful information targeted specifically to their role.

• In August 2018–March 2019, FSA conducted the “But first, FAFSA®!” campaign to 

inform students and their parents about the availability of the FAFSA on a mobile device, 

especially highlighting the myStudentAid mobile app. The “But first, FAFSA®!” campaign 

featured a disruption theme encouraging students to complete and submit their FAFSA 

before doing anything else. The scope of this campaign was the first-ever of its kind for 

FSA using these various channels:

o Online audio such as SoundCloud, Spotify, iHeart Radio, and Pandora;

o Digital display banners and ads, paid search, and retargeting; 

o Paid and organic social media posts on Facebook, Instagram, Reddit, and 

Twitter; and 

o Videos featuring various social media influencers.

FSA also coordinated with college access organizations by providing resources on the 

Financial Aid Toolkit to help promote the “But first, FAFSA®!” message among their 

constituencies. Some of the resources include a mobile app video, email templates for 

students and parents reminding them of state deadlines, sample social media posts, 

screen wallpaper for computer labs in school, printable posters to place in school, public 

announcement system scripts, and printable "how to" sheets. 

FSA realized the following additional accomplishments in support of Strategic Goal B: 

Proactively manage the student aid portfolio to mitigate risk. 

• In FY 2019, FSA implemented a new methodology to estimate improper payments. The 

new statistically valid sampling and estimation methodology was used to estimate the 

improper payment rates for the Pell Grant and Direct Loan Programs. This new 

methodology, which is based on a larger, random sample of schools and used data 

obtained from compliance audits performed by external auditors at the over 5,700 

schools, improves the accuracy of the improper payment estimates allowing for more 

precise root cause analyses to improve corrective actions. The new methodology 

reduced the overall improper payment rate to 0.93 percent from 4.95 percent in FY 

2019.

• FSA continues to expand its Enterprise Risk Management (ERM) capabilities across all 

aspects of the ERM system including governance and culture; strategy and objective 

setting; performance; and communication and reporting. In FY 2019, FSA continued to 

build upon its portfolio view of risk, analyzing and incorporating changes in the business 

and operating environments. Cyber and Fraud risk areas of focus have continued to 

develop with the creation of formalized frameworks that integrate with the overall ERM 

system. FSA also developed its first formal risk appetite statement to assist the 

organization in determining appropriate risk responses and increasing consistency and 

transparency in decision making throughout the organization. FSA continues to identify, 
82 Fiscal Year 2019 Annual Report | Federal Student Aid

Fiscal Year 2019 Accomplishments of Federal Student Aid 

assess and monitor its risks and corresponding mitigation strategies to support meeting 

its strategic goals and objectives. 

FSA realized the following additional accomplishments in support of Strategic Goal C: 

Improve operational efficiency and flexibility. 

• In October 2018, the U.S. District Court for the District of Columbia made the 2016

Borrower Defense to Repayment (BDR) regulation at 81 FR 75926 effective, retroactive

to July 1, 2017. FSA developed a solution to implement the Automatic Closed School

Discharge (ACSD) provision in December 2018, identifying nearly 15,000 borrowers

eligible for a discharge of their federal student loans. As of September 2019, there are

more than 28,000 borrowers with approximately $320 million in loans which have been

determined eligible for ACSD and over 20,000 borrowers with nearly $220 million in

eligible loans discharged to date via ACSD.

• In FY 2019, FSA conducted oversight for over 5,700 institutions participating in Title IV

programs. Throughout FY 2019, the staff resolved over 2,400 deficient audits and

flagged financial statements; issued more than 385 Program Review Reports, Expedited

Determination Letters, and Final Program Review Determinations (FPRDs) to institutions

and third party servicers subjected to a Program Review; and processed more than

6,400 eligibility-related actions, including recertification applications.”. Focused

oversight resulted in more than $227 million in assessed liabilities against institutions

and third party servicers via the 188 FPRDs issued to those entities throughout FY 2019.

FSA accomplished this work while also successfully managing the precipitous closure of

3 large school chains which collectively impacted over 30,000 students enrolled at over

100 campuses across dozens of states and generated over $125 million in closed school

discharges to borrowers to date.

• FSA implemented a series of process improvements and enhancements to improve

performance through modernized and automated processes, as well as newly formed

oversight structures. The newly developed Heightened Cash Monitoring 2 method of

payment process incorporated the workflow into the Common Origination and

Disbursement system and automates student file sample selection, error rate

calculations, allows institutions to securely upload student documents, allows payment

analysts to input student file evaluation results online, and improves overall performance

management. To provide further oversight, a new Virtual Change in Ownership

Workgroup of national experts provided guidance on complex changes in ownership

applications and nonprofit conversions. FSA also initiated a new Concurrence Advisory

Board consisting of managers and senior experts across the Department to expedite

approvals for final audit determinations and final program review determinations on

approximately 60 cases with liabilities exceeding $57.4 million.

• FSA managed the Experimental Sites Initiatives in accordance with the requirements of

the HEA and policy guidance provided by senior Department officials. There are

currently 9 active experiments, ranging from Loan Counseling to Second Chance Pell,

that include more than 180 institutions from all sectors of postsecondary education.
Fiscal Year 2019 Annual Report | Federal Student Aid 83

Fiscal Year 2019 Accomplishments of Federal Student Aid 

FSA realized the following additional accomplishments in support of Strategic Goal D:

Foster trust and collaboration among stakeholders. 

• FSA published a series of updated data sets, reports, and other information regarding

institutional outcomes and financial oversight including quarterly Heightened Cash

Monitoring reports, the Financial Responsibility Standards Requiring a Letter of

Credit Report, Proprietary 90/10 Revenue Percentages Report, Financial

Responsibility Composite Scores, the Foreign Schools Gifts and Contracts

Report, the School Fines Report, and the Top 10 Program Review and Audit

Findings Report.

• In September 2019, after an intensive 20-month investigation, the Department fined

Michigan State University a record $4.5 million following its systemic failure to properly

report instances of sexual violence and non-compliance with the Jeanne Clery

Disclosure of Campus Security Policy and Campus Crime Statistics Act. In addition to

the $4.5 million dollar fine, the institution is required to take major corrective actions.

FSA imposed a total of approximately $8.5 million in fines against 14 institutions in

FY 2019.

FSA realized the following additional accomplishments in support of Strategic Goal E:

Invest in expanded workforce capability. 

• FSA utilized its Administratively Determined hiring authority to successfully execute the

hiring of over 100 employees, known as Next Gen 100. These new employees were

identified as strategic hires needed to support FSA’s newly formed Next Gen FSA

operational and administrative structures. FSA’s streamlined hiring process has ensured

that FSA is able to compete for top talent with the private sector and comparable Federal

government entities in the areas of pay, strategic selection, and placement of

employees.

• FSA conducted performance management training for both bargaining unit and nonbargaining employees in October 2018 and August-September 2019. The October 2018

training placed special emphasis on aligning performance plans with FSA’s Five-Year

Strategic Plan, and the September 2019 training focused on writing effective

accomplishments.
84 Fiscal Year 2019 Annual Report | Federal Student Aid

Legislative and Regulatory Recommendations 

Legislative and Regulatory Recommendations

One of FSA’s mission responsibilities under the law is to provide input on legislative proposals 

from Congress and from the administration and to support the Department’s regulatory 

activity. FSA also may suggest legislative or regulatory changes for consideration by the 

Department’s senior policy officials. These recommendations customarily center on improving 

and simplifying the Title IV federal student assistance programs, minimizing administrative 

costs, and improving program integrity. FSA’s recommendations inform the Department’s 

policymaking process, including its activities and decisions related to each year’s budget 

process. FSA provides this input and recommendations by direct contact with colleagues in the 

various policy offices within the Department, including the Office of the Under Secretary, the 

Office of Postsecondary Education, and the Office of Planning, Evaluation and Policy 

Development at both the senior policy level and at the staff level. During the past year, FSA 

provided specific recommendations to policy officials on several issues including:

• Developing proposals for alternatives to the IRS eliminated 1040A/1040EZ tax forms as

qualifying criteria for Auto Zero and Simplified Needs tests as specified in the HEA;

• Ending the prohibition on Pell Grants for students incarcerated in Federal and State

penal institutions;

• Recommending improvements to regulatory and statutory provisions of Public Service

Loan Forgiveness (PSLF);

• Developing guidance and providing regulatory flexibility and relief, and statutory

proposals, for the purpose of assisting students, borrowers, institutions of higher

education and others affected by natural disasters; and

• Requesting an amendment to Section 6103 of the tax code to allow data sharing for

more accurate and timely filing of the FAFSA.
Fiscal Year 2019 Annual Report | Federal Student Aid 85

Annual Bonus Awards 

Annual Bonus Awards

As required by the 1998 amendments to the HEA, the Annual Report includes performance 

ratings and related awards for FSA senior managers and Senior Executive Service 

staff. Included in this section are the number of senior managers and Senior Executive Staff on 

board as of the end of FY 2019. However, because FY 2019 performance results were not 

finalized at the time this report was prepared, the section discusses FY 2018 performance 

results.

At the end of FY 2019, there were 77 FSA senior managers and 6 Senior Executive Service 

members. The number of senior managers and Senior Executive Service members in FY 2019 

differed from FY 2018 due to the hiring of backfilled and newly created positions. The FSA 

Executive Committee contained 17 of the 77 senior managers and 1 of the 6 Senior Executive 

Service members. As members of the FSA Executive Committee, these senior managers and 

Senior Executive Service staff reported directly to the COO or executives in the COO office. 

The remaining 60 senior managers and 5 Senior Executive Service staff served in a variety of 

senior positions and capacities within FSA.

The following section discusses FY 2018 performance results.

For performance year 2018, the composition of ratings for the 26 senior managers who did not 

serve on the FSA Executive Committee last year were as follows: 13 senior managers 

achieved a performance rating of Exceptional Results; 9 achieved a performance rating of High 

Results; and 4 achieved a performance rating of Results Achieved.

Award amounts for those senior managers achieving an Exceptional Results rating ranged from 

$5,107 to $9,950 with a median award of $9,500. Award amounts for those achieving a High 

Results rating ranged from $2,000 to $7,555 with a median award of $6,305.

There were also 2018 performance ratings and awards for 18 senior manager members of the 

FSA Executive Committee. The composition of those rated included: 16 senior managers 

achieved a performance rating of Exceptional Results; 1 achieved a performance rating of High 

Results; and 1 achieved a performance rating of Results Achieved. Two of the eight Senior 

Executive Service members were on the FSA Executive Committee of which one was not 

eligible for a rating and one achieved a performance rating of Exceptional. The composition of 

ratings for the remaining 6 Senior Executive Service members not on the FSA Executive 

Committee were as follows: 4 Senior Executive Service members achieved a performance 

rating of Exceptional and 2 achieved a performance rating of High Results.

Award amounts for the FSA Executive Committee ranged from approximately $12,500 to 

$35,000, depending on the performance rating of each individual. Only individuals with 

performance ratings of High Results Achieved or Exceptional Results achieved were eligible for 

performance-based awards.

For additional information, please refer to: Higher Education Amendments 1998/sec101D
86 Fiscal Year 2019 Annual Report | Federal Student Aid

Report of the Federal Student Aid Ombudsman 

Report of the Federal Student Aid Ombudsman

The FSA Ombudsman Group entered its twentieth year of service to federal student aid 

recipients in FY 2019. Established by the 1998 amendments to the HEA, the Ombudsman 

began operations on September 30, 1999.

The Ombudsman Group addresses disputes regarding Title IV Financial Aid programs through 

informal dispute resolution processes. The Ombudsman Group uses a collaborative approach 

in working with institutions of higher education, lenders, guaranty agencies, loan servicers, and 

other participants in student loan programs. This approach allows them to conduct fact-finding, 

review student loan data and records, and facilitate contacts between borrowers and their loan 

servicers in an effort to promote mutually agreeable resolution of issues brought by individual 

student loan customers.

Since July 2016, the Ombudsman Group also has the responsibility of administering and 

managing FSA’s comprehensive informal complaint resolution process through the Feedback 

system. This process engages FSA business units and contracted vendors to receive, review, 

respond, and report on individual direct customer feedback about the programs FSA 

administers and the participants it oversees. The Feedback system was designed to augment 

established operational resources such as FSA websites, resources, contact centers, and loan 

servicers to give students and borrowers another way to clarify programmatic questions, file 

complaints, and provide feedback about federal student loan lenders, servicers, collection 

agencies, institutions of higher education, and the Department. 

The Feedback and Dispute Management System (FDMS) is the single point of entry for all FSA 

financial aid recipients to provide feedback, complaints, and disputes regarding the programs 

FSA administers. The FDMS simplified the feedback submission process for federal student aid 

recipients. It also imposed a more formal structure around FSA’s complaint management and 

resolution process. Customers providing their feedback to FSA have access to a robust, multilevel approach to resolution that includes the primary service/program delivery partner (e.g., the 

loan servicer, PCA, school, or others), the FSA business unit responsible for oversight of those 

entities (e.g., FSA Program Compliance and Business Operations), and as an avenue of last 

resort, the Ombudsman Group. All feedback is documented within one system, unifying the 

record of the efforts of multiple parties to resolve a matter.

This report provides information about the volume and nature of all feedback FSA received, 

reviewed, and resolved during FY 2019.

Summary of All Feedback Received During Fiscal Year 2019

Demographic Profile of All Feedback Customers

FSA leverages the Enterprise Data Warehouse and Analytics (EDWA) System to better 

understand the characteristics of customers submitting complaints. Through better 

understanding of customer characteristics, FSA can improve processes and communication to 

more effectively meet customer’s needs. EDWA is an analytical platform that combines federal 

student aid lifecycle data from application through repayment into a centralized repository.
Fiscal Year 2019 Annual Report | Federal Student Aid 87

Report of the Federal Student Aid Ombudsman 

Some of the most common attributes of a customer submitting feedback to FSA through FDMS:

• Is between 25 and 34 years of age (33.0 percent);

• Owes student loans greater than $40,000 (34.5 percent);

• Does not have an IDR plan (57.3 percent); and

• Never defaulted on their federal student loans (70.0 percent).

All Feedback Classification and Categorization

Customers may submit feedback (cases) about any type of federal student aid. All cases are 

assigned among two lines of business: Feedback and Dispute. Cases pertaining to federally 

held loans are researched and resolved through the Feedback line of business. Federally 

owned loans include all Direct, FFEL, and Perkins Program loans owned by the Department. 

Cases pertaining to federally insured loans owned by commercial lenders or guaranty 

agencies— commonly referred to as commercially-held loans—are classified as Research 

cases and researched by the Ombudsman Group. 

This section of the report summarizes all cases received through both lines of business.

All incoming feedback is classified into a case type based on the customer’s perceptions and 

makes no judgement as to the validity of the feedback. Feedback is classified into one of five 

case types:

• General Inquiry: Cases involving general federal student aid questions; 

• Complaint: A customer’s dissatisfaction with the federal financial aid 

experience; 

• Suspicious Activity: A report or allegation of suspected fraud during the student aid

process; 

• Positive Feedback: Compliment about programs, FSA staff or contractors, and 

other Title IV program participants; or

• Research: Disputes assigned to the Ombudsman Group. 

Activity in the system during FY 2019 equated to 50,083 feedback (cases) received. Those 

cases were comprised of: 

• General Inquiry: 3,048 cases, 

• Complaints: 44,155 cases, 

• (Allegations of) Suspicious Activity: 2,283 cases, 

• Positive Feedback: 192 cases, and

• Research: 405 cases. 
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Report of the Federal Student Aid Ombudsman 

Table 36: All Feedback Received by Category and Case Type in Fiscal Year 2019

Subcategory Volume

Feedback

General Inquiry 3,048

Applying for Aid (FAFSA) form or My FSA ID 1 

Applying for Student Aid (FAFSA) 1,188

Credit Reporting 18

Disbursing Student Financial Aid 200

Loan Discharge, Cancellation, or Forgiveness 1 

Public Service Loan Forgiveness (PSLF) Program 37

Repaying Student Financial Aid 977

Repaying Student Financial Aid – In Default 142

School 208

Student Eligibility 132

Department Customer Support 144

Complaint 44,155

Allegation of Identity Theft 3 

Allegation of Misuse of Departmental Resources 4 

Allegation of Misuse of FSA ID 8 

Allegation of Misuse of FSA Intellectual Property or Claim of a Department Affiliate 48

Allegation of a Whistleblower 12

Applying for Aid (FAFSA) form or My FSA ID 623

Applying for Student Aid (FAFSA) 6,336

Credit Reporting 1,251

Disbursing Student Financial Aid 1,112

My Customer Service Experience 5 

My School 1 

Public Service Loan Forgiveness (PSLF) Program 1,452

Receiving My Aid 81

Repaying My Aid 177

Repaying Student Financial Aid 14,364

Repaying Student Financial Aid – In Default 4,174

School 9,385

Student Eligibility 1,894

Department Customer Support 3,224

Department Website, Application, or Service 1 

(Allegations of) Suspicious Activity 2,283

Allegation of Identity Theft 154

Allegation of Misuse of Departmental Resources 172

Allegation of Misuse of FSA ID 266

Allegation of Misuse of FSA Intellectual Property or Claim of a Department Affiliate 1,286

Allegation of a Whistleblower 405

Positive Feedback 192

My Collection Agency 1 

My Customer Service Experience 104

My School 22

My Servicer 15

Department Website, Application, or Service 50
Fiscal Year 2019 Annual Report | Federal Student Aid 89

Report of the Federal Student Aid Ombudsman 

Research 405

Applying for Student Aid (FAFSA) 2 

Credit Reporting 14

Disbursing Student Financial Aid 1 

Public Service Loan Forgiveness (PSLF) Program 11

Repaying Student Financial Aid 297

Repaying Student Financial Aid – In Default 53

School 8 

Student Eligibility 10

Department Customer Support 9 

Grand Total 50,083

In addition to categorizing by case type, all feedback submitted is further categorized into 

subcategories based on the customer’s description. Subcategories further refine the feedback 

submitted. Using this taxonomy assists FSA in identifying the areas that need attention as it 

relates to identifying program and operational changes and improvements. The following chart

(Figure 23) shows the Top Five category/subcategory combination of all cases received in 

FY 2019.

Figure 23: All Cases Received by Top Five Category/Subcategory in Fiscal Year 2019

Figure 23 shows the Top Five Categories/Subcategories of feedback customers submit. While 

the Ombudsman Group pays attention to all feedback received, the Top Five represent 

32.9 percent of all feedback received, which shows a consistent pattern of concerns customers 

raise most frequently and require heightened attention. A focus on the Top Five issues helps 

FSA develop strategies and processes for improving the customer’s experience with the federal 

financial aid programs.

Subcategory Volume

Dispute
90 Fiscal Year 2019 Annual Report | Federal Student Aid

Report of the Federal Student Aid Ombudsman 

Loan Accuracy, under the category Repaying Student Financial Aid was the most common type 

of feedback received in FY 2019 and includes all feedback in which the customer asserts the 

current balance of their loan, the interest rate, loan amount disbursed, or loan status is incorrect 

or misstated.

The application process—specifically completing the FAFSA—generated the second-most 

common type of feedback received in the fiscal year. Feedback concerning completing the 

FAFSA pertains to any issue a customer may encounter when completing this application.

Customers who are seeking loan discharge, cancellation, or forgiveness under the various 

programs offered by the Department submit feedback that is categorized under Loan Discharge, 

Cancellation, or Forgiveness. Individual subcategories for PSLF, BDR, and TPD, are used to 

track more specific feedback about those programs.

Title IV Debt owned by the government may be referred to the Treasury Offset Program (TOP) 

after it both (a) reaches a delinquency of more than 120 days, and (b) is in default. The 

Department can refer the account to Treasury for collection by an offset of the Borrower's 

federal (and in some cases, state) tax returns. The only option to remove loans from TOP

would be to enter into a repayment arrangement that removes the loans from default and make 

regular payments.

Department Customer Support/Website Error refers to issues customers experience when 

either trying to access, or while accessing the FAFSA website. These issues can include things 

such as, being kicked out of the system; receiving the same error message repeatedly; or even 

having the site freeze while a customer is working in it.

How FSA Resolves Feedback

Feedback resolution must be executed within the boundaries established by law and regulation. 

These cases are grouped under three common Resolution Types. The Resolution Type 

“Resolved” designates feedback on which FSA has concluded all review and research activity. 

“Referred” is most commonly used with the case type of General Inquiry, but also may be used 

to designate situations on other case types when FSA determines another resource external to 

FSA should assist the customer because the nature of the feedback does not pertain to the Title 

IV federal student aid programs or must be reported to another agency or entity. “Submission 

Logged” relates to feedback on which no assistance is provided. The most common use for this 

Resolution Type is for feedback submitted anonymously or containing specific direction to 

change Title IV law or regulation.

Resolution Actions indicate the specific way in which the feedback was resolved. Resolution 

Actions achieved on cases in FY 2019, by a vast margin, consisted of providing to the customer 

additional explanation or information about the action or circumstance that prompted the 

customer to submit feedback to FSA. These are identified with a Resolution Action of 

“Communication/Process Clarified for Customer.” 
Fiscal Year 2019 Annual Report | Federal Student Aid 91

Report of the Federal Student Aid Ombudsman 

Table 37: Resolution Type and Resolution Action for All Cases Closed 

Fiscal Year 2019

Resolution Type Resolution Action Volume Percentage

Resolved

Action Taken 4,720 9.9%

Communication/Process Clarified for Customer 14,498 30.3%

Referred

Referred to Accrediting Agency 589 1.2%

Referred to FSA Contact Center 8,221 17.2%

Referred to FSA Website 1,064 2.2%

Referred to Other Government Entity 2,185 4.6%

Referred to Outside Third-Party 3,299 6.9%

Referred to School 3,956 8.3%

Referred within the Department of Education 4,573 9.6%

Submission Logged

Feedback Logged 2,937 6.1%

No Response from Customer 1,643 3.4%

Policy Suggestion Logged 126 0.3%

Total 47,811 100%

Table 37 highlights that 30.3 percent of all cases are resolved with another explanation and/or 

more information about the circumstances that prompted the customer to submit feedback to 

FSA. As noted above, FSA must resolve complaints within the framework of existing law and 

regulation, which means that FSA often is constrained from offering a solution to the customer 

that directly and precisely resolves the matter in a way the customer most desires. For 

example, a customer may not like the interest rate on their loans. While this is certainly valid 

feedback, legislation mandates the interest rate on federal student loans. 

There are key factors explaining why so many cases are resolved with FSA providing additional 

or clarifying information:

• Customer understanding and awareness of how loan balances are affected by interest

accrual and/or capitalization, and are reduced by monthly payments;

• Customers’ difficulty understanding requirements and proving eligibility for loan program

benefits such as IDR plans or loan discharge, cancellation, or forgiveness;

• Customers having difficulty with requirements associated with completing and submitting

the FAFSA such as electronic signatures, completing the FAFSA, and required income

information;

• Unclear, hard-to-understand, or inconsistent information from FSA and its service

providers about repayment plan eligibility requirements; and

• Customers may not access their online accounts to review servicer notifications or

provide updated contact information, leaving them unaware of the loan status.
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Report of the Federal Student Aid Ombudsman 

This method of recording the way individual cases are resolved helps highlight areas of 

customer confusion versus problems with program implementation that may require legislative, 

regulatory or operational changes. It also enables FSA to show how specific categories and 

subcategories of cases are resolved and provides a more refined picture of the relative flexibility 

of FSA to meet and satisfy customer expectations as expressed within individual feedback 

submissions. Table 38 presents the Resolution Type and Actions achieved for each of the Top 

Five Categories/Subcategories shown in Figure 23. 

Table 38: Top Three Resolution Type/Resolution Actions

for Top Five Categories/Subcategories Cases Closed22

Fiscal Year 2019

Category Sub-Category Resolution Type Resolution Action Volume

Repaying Student 

Financial Aid Loan Accuracy

Resolved

Action Taken 435

Communication/Process Clarified for Customer 1,730

Referred Referred within the Department 728

Submission Logged Feedback Logged 303

Applying for Student 

Aid (FAFSA) Completing the FAFSA

Resolved

Action Taken 186

Communication/Process Clarified for Customer 461

Referred Referred to FSA Contact Center 2,714

Submission Logged Feedback Logged 227

Repaying Student 

Financial Aid

Loan Discharge, 

Cancellation, or 

Forgiveness

Resolved

Action Taken 242

Communication Process Clarified 1,108

Referred Referred to Outside Third Party 325

Submission Logged No Response from Customer 134

Repaying Student 

Financial Aid - in 

Default

Treasury Offset Program 

Resolved

Action Taken 204

Communication Process Clarified 1,312

Referred Referred to Outside Third Party 372

Submission Logged Feedback Logged 90

Department Customer 

Support Site Error Message

Resolved

Action Taken 15

Communication Process Clarified 257

Referred Referred within the Department 11

Submission Logged Feedback Logged 87

Total 10,941

22Subset of Resolution Type and Action for all cases closed in FY 2019 as detailed in the table above. 
Fiscal Year 2019 Annual Report | Federal Student Aid 93

Report of the Federal Student Aid Ombudsman 

Feedback Cases Assigned to FSA Business Units

The top five categories of feedback cases received in this line of business are reflected in the 

Figure 24. 

Figure 24: Top Five Feedback Cases Received by Category/Subcategory

Fiscal Year 2019

Repaying Student Financial Aid/Loan Accuracy pertains to customer’s concerns about the 

accuracy of one or more of their loans. Examples of this subcategory include interest rate; loan 

disbursement amount; current loan balance; loan payment amount; and current loan status.

Case Example 1: Customer says after having taxes taken and wages 

garnished, she fully paid off her son’s debt. Six months later he received a 

letter saying he was in default for the student loans that she paid off. She 

would like this situation corrected asap as it is a blemish on her son’s credit 

that can keep him from purchasing a car or home.

Applying for Student Aid (FAFSA)/Completing the FAFSA pertains to any issue the 

customer experiences when applying for or receiving federal financial aid. Examples include

unable to electronically sign the FAFSA; completing the FAFSA takes too long; requirement of

two years of tax returns; timing when the FAFSA needs to be filled out; and other challenges 

related to completion of the FAFSA.

Case Example 2: Every time the customer has attempted to utilize the online 

FAFSA, he’s always had a problem. He says either the website is down, or 

accounts cannot be accessed. The customer says that he strongly 

recommends that FAFSA return to having representatives in the communities

to assist with issues and registration.
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Repaying Student Financial Aid/Loan Discharge, Cancellation, or Forgiveness pertains to 

any such issue except for TPD, BDR, and PSLF, as those are separate categories or 

subcategories. Examples include Teacher Loan Forgiveness, Ability to Benefit discharge, False 

Signature, and Identity Theft.

Case Example 3: Customer filed for loan forgiveness when his school was 

closed. After filing he was told to refile and add more details. It’s been in review 

for eight months. After being garnished several years ago, he paid the loan in 

full. Every time he calls no one can give him an update, other than telling him it’s 

in review.

Repaying Student Financial Aid – In Default/TOP refers to student loans that have been in 

delinquency long enough to default. TOP is a centralized offset program which collects 

delinquent debts owed to federal agencies and states. It matches borrowers who owe 

delinquent debts with money that federal agencies owe to the borrowers (i.e., tax refunds) 

Case Example 4: Customer has been trying to get a hold of her servicer, but no 

one is answering when she calls. Despite being on a rehabilitation, she had her 

tax return offset. Customer is confused and this is causing a major hardship for 

her.

Department Customer Support/Site Error Message refers to issues that customers 

encounter while trying to access or navigate the FAFSA website. This feedback refers to 

borrowers encountering an error message when trying to access the site itself.

Case Example 5: Customer says the site repeatedly asks him to create a 

password, then gives him an error message when he gets back to the form. He 

says he keeps getting, “FAFSA on the web has encountered an error. We 

apologize for any inconvenience.” This situation is keeping him from completing 

his FAFSA.

School-Related Feedback

The majority of feedback about schools is assigned to FSA’s Program Compliance business unit 

for research and resolution. Customers submitted a total of 9,601 school-related feedback. 

Figure 25: Top Five School-Related Feedback Received in Fiscal Year 2019
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Report of the Federal Student Aid Ombudsman 

The school-related feedback identified in Figure 25 is defined as:

• School Owes Me Money (Credit Balance Refund) is feedback about situations that occur

whenever the amount of federal student aid funds credited to a student’s account for a

payment period exceeds the amount assessed the student for allowable charges

associated with that payment period.

• Financial Allegations (Tuition and Fee Charges) is customer feedback concerning school

tuition, fee charges, or a customer has a balance owed to the school. These cases are

typically non-Title IV issues the customer describes in the feedback.

• Administrative Capability relates to a school’s ability to administer the federal financial

aid programs in accordance with law and regulation. Types of feedback would include

insufficient number of financial aid staff, lack of financial aid related policies and

procedures, or failure to follow school policies regarding financial aid awards.

• School Closure refers to feedback regarding difficulties students encounter with regards

to federal student aid when an institution closes.

• Delays Receiving Aid relates to feedback when a customer expresses that a school is

unnecessarily or improperly delaying federal aid disbursement.

Program Compliance staff review the feedback and, as needed, contact the school and the 

customer for additional information. Program Compliance uses data from the school-related 

feedback received to inform its program review and school performance monitoring 

responsibilities. For optimal application of feedback data to these activities, it is necessary to 

examine also how most feedback gets resolved. Table 39 examines the most common 

Resolution Type and Resolution Action for the Top Five School-Related Feedback. 

Table 39: Top Five School-Related Feedback by Top Three 

Resolution Type/Resolution Action

Fiscal Year 2019

Category Subcategory Resolution Type Resolution Action Volume School

Schools Owes Me Money 

(Credit Balance Refund)

Resolved Action Taken 1,293

Communication/Process Clarified for Customer 239

Referred Referred to School 141

Submission Logged Feedback Logged 41

Financial Allegations (Tuition 

and Fee Charges)

Resolved Action Taken 28

Communication/Process Clarified for Customer 399

Referred Referred to School 627

Submission Logged No Response from Customer 103

Administrative Capability 

Resolved Action Taken 31

Communication Process Clarified 136

Referred Referred to School 209

Submission Logged Feedback Logged 106

School Closure

Resolved Action Taken 135

Communication Process Clarified 255

Referred Referred to FSA website 134

Submission Logged Feedback Logged 12

Delays Receiving Aid

Resolved Action Taken 60

Communication Process Clarified 385

Referred Referred to School 167

Submission Logged Feedback Logged 80

Total 4,581
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Report of the Federal Student Aid Ombudsman 

Effects of Argosy University & Art Institutes Closures

FSA publicized the Feedback System to students and former students adversely affected when 

it terminated the eligibility of Dream Center Education Holdings schools’ (Argosy University and 

select Art Institutes) participation in the Title IV programs. This termination and the subsequent 

closure of many campuses drove up the volume of cases classified as School/School Owes 

Me Money (Credit Balance Refund) so that it appears in the Top Five. Most students who 

contacted FSA through the Feedback System reported that credit balance refunds were still 

owed to students. FSA was unable to issue those refunds to the students. However, FSA 

canceled all disbursements and loan repayment obligations for the affected students.

Loan Servicing-Related Feedback

FSA contracts with ten23 entities to manage the servicing of non-defaulted federal student loans. 

These entities are responsible for advising borrowers about resources and benefits to better 

manage their federal student loan obligations; respond to customer service inquiries; address 

billing and collecting payments24 on a loan; and perform other administrative tasks associated 

with maintaining a loan on behalf of the Department. The Debt Management and Collection 

System (DMCS) is a system used by FSA that manages the collection activities on the defaulted 

loan portfolio.

Figure 26: Top Five Loan Servicing-Related Feedback in Fiscal Year 2019

23One of these servicers, ECSI services Perkins loans; it does not service loans made under the Direct Loan or FFEL Programs.

24All payments on non-defaulted federal student loans that the Department owns are remitted to Treasury. That agency then reports 

payment information to the various servicers, which are then credited to the borrower’s account. 
Fiscal Year 2019 Annual Report | Federal Student Aid 97

Report of the Federal Student Aid Ombudsman 

Table 40 shows the manner in which these most common cases were closed.

Table 40: Top Five Loan Servicing-Related Feedback by 

Resolution Type/Resolution Action

Fiscal Year 2019

Category Sub-Category Resolution Type Resolution Action Volume

Repaying Student 

Financial Aid Loan Accuracy

Resolved Action Taken 354

Communication/Process Clarified for Customer 1,447

Referred Referred within the Department 714

Submission Logged Feedback Logged 286

Repaying Student 

Financial Aid

Loan Delinquency or 

Default

Resolved Action Taken 80

Communication/Process Clarified for Customer 465

Referred Referred within the Department 457

Submission Logged Feedback Logged 54

Repaying Student 

Financial Aid

Loan Discharge, 

Cancellation, or 

Forgiveness

Resolved Action Taken 215

Communication/Process Clarified for Customer 937

Referred Referred to FSA Contact Center 602

Submission Logged No Response from Customer 124

Repaying Student 

Financial Aid

Loan Repayment 

Plan 

Resolved Action Taken 147

Communication/Process Clarified for Customer 466

Referred Referred within the Department 382

Submission Logged Feedback Logged 56

Repaying Student 

Financial Aid - in 

Default

Treasury Offset 

Program 

Resolved Action Taken 188

Communication/Process Clarified for Customer 1,250

Referred Referred to Outside Third Party 359

Submission Logged Feedback Logged 87

Total 8,670

Table 41 shows the volume of Feedback cases categorized as servicing-related, broken down 

for each servicer contracted to perform servicing activities on behalf of the Department. It 

should be noted that the volume of cases assigned to a specific servicer is often affected by the 

nature of the accounts assigned to the servicer. For example, DMCS services only defaulted 

loans; FedLoan Servicing is the designated servicer for all PSLF and TEACH grants. FSA 

personnel resolves the cases in which the feedback received may be related to former 

servicers.

Table 41: Feedback by Department Servicer by Case Type in Fiscal Year 2019

Servicer Complaint General 

Inquiry

Positive 

Feedback

Suspicious 

Activity Volume

Debt Management and Collection System/DRG 6,851 279 1 121 7,252

ED-ACS 18 1 - 1 20

ED-Cornerstone 237 30 - 14 281

ED-ECSI Perkins Loan Servicer 71 5 - - 76

ED-FedLoan Servicing (PHEAA) 4024 165 9 237 4,435

ED-Granite State (GSMR) 275 18 - 16 309

ED-Great Lakes 1801 109 1 152 2,063

ED-HESC/EdFinancial 442 55 - 18 515

ED-MOHELA 557 38 - 29 624

ED-Navient 2,456 103 - 164 2,723

ED-Nelnet 1,982 78 6 135 2,201

ED-OSLA 239 17 - 11 267

TPD-NelNet 93 2 - 3 98

Total Volume 19,046 900 17 901 20,864
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Feedback Submitted by Members of the Military, Veterans, or Their Dependents

FSA asks all customers to indicate if they are a member of the military, a veteran, or a 

dependent of a military member or veteran. FSA collects this information to ensure continued 

support of Executive Order 13607, signed in April 2012, which established the Principles of 

Excellence (POE) for Educational Institutions Servicing Service Members, Veterans, Spouses, 

and Other Family Members.

For all feedback received in FY 2019, POE-identified customers submitted 1,482 feedback 

cases specifically related to their military status and/or educational benefits.

Table 42: Top Five Principles of Excellence-Identified Case 

Category Feedback Submissions

Fiscal Year 2019

POE-Identified Top 5 Case Category Feedback Received Volume

School 458

Repaying Student Financial Aid 427

Repaying Student Financial Aid – In Default 118

Applying for Student Aid (FAFSA) 105

Department Customer Support 82

Total 1,190

Dispute Cases Assigned to the Ombudsman Group

The Ombudsman Group researches and resolves all cases within the Dispute line of business. 

Customers who dispute the outcome of a case previously responded to by an FSA business unit 

or one of FSA’s contracted servicers or private collection agencies may elect to have their issue 

reviewed by the Ombudsman Group. Cases pertaining to federal loans owned by commercial 

lenders or guaranty agencies—commonly referred to as commercially-held loans—are also 

classified as Research cases. Review by the Ombudsman Group is a customer’s last 

opportunity for informal resolution of an issue within the Department. 

During FY 2019, the Ombudsman Group received 405 new dispute cases for review and 

resolution, and closed 647 dispute cases overall. 

Figure 27: All Dispute Cases Received by Category in Fiscal Year 2019
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Report of the Federal Student Aid Ombudsman 

Table 43: Top Five Dispute Cases by Category/Subcategory

Assigned to the Ombudsman Group

Fiscal Year 2019

Repaying Student Financial Aid Volume

Loan Accuracy 104

Loan Discharge, Cancellation, or Forgiveness 59

Loan Delinquency or Default 45

Loan Repayment Plan 16

Repaying Student Loans in Default Volume

Treasury Offset Program (TOP) 24

Total 248

As a neutral, independent third-party separate from FSA operations, the Ombudsman Group 

fulfills a role as the third tier in FSA’s feedback resolution process. The Ombudsman Group can 

reach across technical and responsibility boundaries within the federal financial student aid 

ecosystem to collect facts, review circumstances, and facilitate collaboration among differing 

parties associated with a dispute to reach a resolution that may not have otherwise been 

considered. Example cases described below illustrate this activity.

Case Example 6: Loan Accuracy. Customer called and stated that he was not 

aware that his payments were not going through to the servicer until nine months 

or so had passed. He immediately got on the phone and setup recurring 

payments. Shortly after, they cancelled his recurring payment and locked his 

account for delinquency, despite confirmed payments. They added over a 

thousand dollars in fees as well.

Outcome: After speaking with the servicer, we were able to assist in having the 

customers’ collection costs removed from the loans. The borrower is now eligible 

for a rehabilitation or to pay the loans in full.

Case Example 7: Loan Delinquency or Default. Customer stated he owed 

$81,606 in student loans. He sent in a payment for that amount, but then was 

told he still owes $12,000. The customer doesn’t understand why a balance 

remains unpaid.

Outcome: After researching the case, the Ombudsman Group determined that 

the payment of $81,606 satisfied the debt in full. No further balances or 

payments are due. The account has been closed and reported to the credit 

bureaus as ‘paid in full.’

Case Example 8: Loan Discharge, Cancellation, or Forgiveness. The 

customer had FFEL Program loans in default and wages were being garnished. 

Customer was approved for BDR discharge. FFEL Program loans are not 

eligible for BDR, so the customer had to consolidate with the Direct Loan 

Program to complete the BDR discharge. Subsequent to consolidation, the 

customer asked to have wage garnishment payments refunded. FSA correctly 

advised the customer that no payments were made on the Direct Loan, so no 

refund was due.
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Outcome: When the BDR application was submitted, FFEL holders could, but 

were not required to stop collection efforts. The Ombudsman worked with the 

guaranty agency and the customer to retroactively implement voluntary cessation 

of collection efforts and refunded some of the garnishment payments to the 

customer.

Case Example 9: TOP. Customer thought she consolidated all of her loans, but 

one was left out by the servicer. She never received any notification regarding a 

defaulted loan, even though she was still receiving federal student loans. She’s 

now scheduled to receive an offset. Customer says prior to submitting her taxes, 

she never received any notification that she owed a debt.

Outcome: After confirming that the remaining loan was consolidated, FSA 

returned the offset payment to the customer.

Case Example 10: Wage Garnishment. Customer has a wage garnishment 

that is causing difficulty and stress because payments are not credited timely to 

her account. Customer says currently there are over $2,000 in payments that 

have not been applied to her account.

Outcome: The loan holder advised that the garnishment payments have been 

properly applied to the account, and the account is considered satisfied. Wage 

garnishment has been cancelled and a letter was mailed to her employer.

Table 44: All Dispute Cases Closed by Resolution Type in Fiscal Year 2019

Category Volume

Resolved 590

Referred 21

Submission Logged 36

Total 647

Other Case Types

Suspicious Activity

FSA carefully reviews each customer submission to determine if there is a credible allegation of 

fraud or illegal activity associated with the federal financial student aid programs. Table 45

identifies all Suspicious Activity cases received by category. 

Table 45: All Suspicious Activity Cases Received by Category in Fiscal Year 2019

Category Volume

Allegation of Misuse of FSA Intellectual Property or Claim of a Departmental Affiliation 1,286

Allegation of Whistleblower 405

Allegation of Misuse of FSA ID 266

Allegation of Misuse of Departmental Resources 172

Allegation of Identity Theft 154

Total 2,283
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As with all other feedback, the way Suspicious Activity cases are resolved is tracked on cases 

closed by Resolution Type and Resolution Action.

Table 46: All Suspicious Activity Cases by Resolution Type/Resolution Action

Fiscal Year 2019

Category Resolution Type Resolution Action Volume

Allegation of Misuse of FSA 

Intellectual Property or Claim of 

a Departmental Affiliation

Resolved Action Taken 4 

Communication/Process Clarified for Customer 32

Referred Referred to Other Government Entity 1,275

Submission Logged Feedback Logged 8 

Allegation of Whistleblower

Resolved Action Taken 25

Communication/Process Clarified for Customer 76

Referred Referred to Other Government Entity 9 

Submission Logged Feedback Logged 300

Allegation of Misuse of FSA ID

Resolved Action Taken 2 

Communication/Process Clarified for Customer 146

Referred Referred to Other Government Entity 90

Submission Logged No Response from Customer 4 

Allegation of Misuse of 

Department Resources

Resolved Action Taken 3 

Communication/Process Clarified for Customer 31

Referred Referred to Other Government Entity 25

Submission Logged Feedback Logged 64

Allegation of Identity Theft

Resolved Action Taken 18

Communication/Process Clarified for Customer 107

Referred Referred to Outside Third Party 12

Submission Logged Feedback Logged 13

Total 2,244

Allegation of Misuse of FSA Intellectual Property or Claim of a Departmental Affiliation. 

This is a broad category that that many resolution types fall under. This can refer to any 

individual who falsely claims he or she is employed by or affiliated with the Department. 

Allegation of a Whistleblower. This is a claim or assertion by a person who exposes any kind 

of information or activity that is deemed illegal, unethical, or not correct with regards to practices 

involving obtaining student aid, and/or any of the processes of student loan borrowing.

Allegation of Misuse of FSA ID. This is the claim or assertion that someone has fraudulently 

obtained a borrowers FSA ID in order to illegally gain access to private information and/or FSA

funds. 

Allegation of Misuse of Department Resources. This is a claim or assertion that an 

individual or individuals are not using student aid funds for tuition or other school-based items.

Allegation of Identity Theft. This is a claim or assertion that an individual has wrongfully 

obtained and used another persons’ personal data, in some way that involves fraud or 

deception, in order to gain access to FSA funds.

FSA shares enforcement authority over schools, loan servicers, and other participants in the 

federal student aid programs with the Department’s Office of Inspector General (OIG) and other 

agencies at the federal and state level. All allegations of Suspicious Activity are shared with 

OIG and the Federal Trade Commission Consumer Sentinel database. Sharing the information 
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Report of the Federal Student Aid Ombudsman 

with the Consumer Sentinel database renders individual, case-level information available to a 

broader network of federal and state law enforcement entities.

Positive Feedback

Customers can provide positive feedback regarding their experience with FSA, schools, 

servicers, and other entities involved with the application, receipt, or repayment of federal 

student aid, including PCAs. 

Case Example 11: “Our customer service representative was extremely helpful 

to my mom when she needed to make corrections to my FAFSA after thinking 

she ruined it. Our rep’s ability to calmly and professionally walk her through the 

corrections and support her, transformed a stressful situation into a positive 

experience.”

Table 47: All Positive Feedback by Category in Fiscal Year 2019

Category Volume

My Customer Service Experience 104

U.S. Department of Education Web Site, Application or Service 50

My School 22

My Servicer 15

My Collection Agency 1 

Total 192

Using Feedback to Improve the Federal Student Aid Programs

As noted at the beginning of this report, Feedback system data is shared in EDWA. Data 

concerning the Suspicious Activity case type is shared with the OIG, and information about the 

Complaint and Suspicious Activity case types is shared with the Federal Trade Commission’s 

Consumer Sentinel database. The Ombudsman Group facilitates the sharing of information 

from feedback that customers submit by responding to ad hoc requests for data about feedback 

received. Further, the Ombudsman Group shares feedback data that is, in turn, compiled with 

other sources of feedback (e.g., received through social media or at community outreach 

events) on a monthly basis and shared with representatives across FSA.

Most significantly, data from the Feedback system was examined and is being used to inform 

the requirements for the Next Gen FSA project—a project that will transform FSA’s technology 

and operations infrastructure used to administer the federal student aid programs. The 

Ombudsman Group is hopeful the improvements brought about by this transformation will 

reduce the volume of feedback received as a result of confusing or conflicting information 

customers receive from FSA and its service providers.

Another example of how FSA is using feedback data is connected to the PSLF Program. The 

PSLF Program allows government and nonprofit entity employees to have their loans forgiven 

after 120 qualifying payments, which is generally ten years.

During FY 2019, FSA received 1,500 cases related to PSLF. The primary reason for feedback 

about PSLF related to qualifying for the program was from customers who have no loans from 

the Direct Loan Program or were not on the correct repayment plan.
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Report of the Federal Student Aid Ombudsman 

The statute does not allow for consideration of loans other than those issued under the Direct 

Loan Program. However, in recent years, as borrowers approached qualifying for PSLF, they 

often learned that their loans were not on a qualifying repayment plan. In many of those 

instances, borrowers asserted that their loan servicers frequently confirmed that the borrower 

was making progress toward forgiveness. The statute does not give the Secretary authorization 

to waive qualifying criteria for the PSLF Program. 

In response, legislation referred to as Temporary Expanded Public Service Loan Forgiveness 

(TEPSLF) gives assistance to individuals who thought they were on the correct plan. TEPSLF 

is only for those customers who have made 120 payments since 2007 and have been denied 

PSLF on that basis.

Table 48: Public Service Loan Forgiveness Cases by Resolution Type/Resolution Action

Fiscal Year 2019

Category Sub-Category Resolution Type Resolution Action Volume Public Service Loan Forgiveness (PSLF)

Direct Loan Eligibility

Resolved Action Taken 18

Communication/Process Clarified for Customer 80

Referred Referred to Outside Third Party 44

Submission Logged Feedback Logged 6 

No Response from Customer 6 

Employee Certification 

Form

Resolved Action Taken 15

Communication/Process Clarified for Customer 13

Referred Referred within the Department 3 

Submission Logged Feedback Logged 1 

No Response from Customer 1 

PSLF Applications

Resolved Action Taken 27

Communication/Process Clarified for Customer 214

Referred Referred within the Department 13

Submission Logged Policy Suggestion Logged 14

Qualifying Employment or 

Employer

Resolved Action Taken 13

Communication/Process Clarified for Customer 23

Referred Referred within the Department 16

Submission Logged Feedback Logged 1 

No Response from Customer 1 

Qualifying Monthly 

Payments

Resolved Action Taken 453

Communication/Process Clarified for Customer 334

Referred Referred within the Department 104

Submission Logged Feedback Logged 8 

Qualifying Repayment 

Plan

Resolved Action Taken 41

Communication/Process Clarified for Customer 51

Referred Referred within the Department 17

Submission Logged No Response from Customer 3 

Total 1,520

Anonymous Cases

There are many instances where customers prefer to give feedback anonymously, without 

providing any name, contact, or personal information. From the beginning days of the 

Ombudsman Group through to the present time, FSA customers had, and continue to have, the 

option to submit feedback anonymously.

While the Ombudsman Group welcomes feedback from any and all customers, it should be 

noted that when a customer files anonymously, the Ombudsman Group is unable to further 
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Report of the Federal Student Aid Ombudsman 

review and resolve their situation because it does not have the personally identifying 

information. Anonymous cases can range from something as minor as a comment regarding 

the Ombudsman website to something as major as a whistleblower case involving someone 

reporting suspicious activity. In FY 2019, 2,219 cases were submitted anonymously. 

Table 49: Top Five Anonymous Case Submissions by Category in Fiscal Year 2019

Category Volume

Applying for Student Aid (FAFSA) 718

Repaying Student Financial Aid 359

School 327

Departmental Customer Support 236

Allegation of a Whistleblower 210

Total 1,850

The Ombudsman Group received comments received this year that asked if the process could

be improved for submission of anonymous feedback. Based on those comments, the 

Ombudsman Group will be modifying the Feedback submission portal in FY 2020 to enable 

customers to easily and more efficiently submit anonymous feedback. Although anonymous 

customers cannot be responded to directly, their submissions can be tracked and have action 

taken on similar issues raised. 

Policy Suggestion Logged

Policy Suggestion Logged refers to cases where the customer provides feedback regarding 

their opinion on improvement of specific rules and regulations. Specifically, they offer a 

particular suggestion regarding a current policy that they feel needs to be improved upon.

The Top Three Policy Suggestion Categories/Subcategories are:

Applying for Student Aid (FAFSA)/Completing the FAFSA pertains to any issue the 

customer experiences when applying for or receiving federal financial aid. Examples include

unable to electronically sign FAFSA; completing the FAFSA takes too long; requirement of two 

years of tax returns; timing when the FAFSA needs to be filled out; and other challenges related 

to completion of the FAFSA.

Repaying Student Financial Aid/Loan Discharge, Cancellation, or Forgiveness pertains to 

any such issue except for TPD, BDR, and PSLF, as those are separate categories or 

subcategories. Examples include Teacher Loan Forgiveness, Ability to Benefit discharge, False 

Signature, and Identity Theft.

Applying for Student Aid/Dependency Status pertains to the issue of determining whose 

information you must report on your FAFSA form. A dependent student is assumed to have the 

support of his parents, so the parents’ information must be assessed along with the student’s, in 

order to get a full picture of the family’s financial strength. An independent student will only 

report their own information (and if they’re married, their spouse’s information).
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Report of the Federal Student Aid Ombudsman 

Three Categories/Subcategories all received the same number of submissions: 

• Department Customer Support/Unclear or Insufficient Directions;

• Repaying Student Financial Aid/Loan Accuracy; and,

• Repaying Student Financial Aid/Loan Interest Rates. 

Other Ombudsman Group Activity

Customer Satisfaction Survey Results

The Ombudsman Group contracts with a third-party vendor to conduct the customer satisfaction 

survey using ACSI methodology. Approximately two weeks after a case is closed, the vendor 

sends a survey to all Feedback system customers who provided an email address. The vendor 

then compiles those results on a quarterly basis, which are then shared with the Ombudsman 

Group. No information about survey respondents is provided to FSA.

For all surveys completed in FY 2019, the ACSI score for the Ombudsman Group was 48. 

Analysis of the numbers continues to show the Ombudsman Group’s ACSI scores are 

distributed in an inverted Bell curve, with the lowest and highest scores at the upper ends and 

lowest in the middle.

The Ombudsman Group functions as a neutral third-party in attempting to resolve disputes. 

Customers sometimes express dissatisfaction because they expect the Ombudsman to act as 

their advocate and provide an outcome that falls outside the law and regulations. Conversely, 

customers attaining a favorable outcome tend to provide higher ratings. This suggests 

customers base their satisfaction on the outcome achieved rather than the service Ombudsman 

Group staff provided.

Beginning in the third quarter of FY 2019, the survey was expanded to include all case types 

closed within the Feedback system. Results from the full year of survey data will be published 

in next year’s report.

Student Loan Ombudsman Caucus

The Ombudsman Group hosted the annual meeting of the Student Loan Ombudsman Caucus 

(Caucus) in September 2019. The Caucus, chartered by the National Council of Higher 

Education Resources, is an informal group of individuals who serve as ombudsmen, or in an 

informal dispute resolution capacity at lenders, loan servicers, and guaranty agencies. The 

Caucus meets on a bi-monthly basis via conference call, and annually in a face-to-face session.

During this year’s annual meeting, attendees reviewed case studies for handling situations 

related to joint consolidation loans and credit reporting. Presentations include information about 

identity theft application review, and FSA’s activities in support of Minority Serving and UnderResourced Schools.
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Report of the Federal Student Aid Ombudsman 

Recommendations

The statute provides that the Ombudsman, as part of this Annual Report, make 

recommendations for policy changes based on feedback received from federal financial student

aid recipients. Although the majority of feedback received is resolved with additional information 

offered or clarified for the customer, the root circumstances driving customers to provide 

feedback lie in the complexity of the requirements to qualify for aid and to secure benefits during 

loan repayment, such as IDR and loan discharge. This complexity not only frustrates customers, 

but it challenges FSA service providers to provide high-quality service.

Recommendation: The Ombudsman recommends reducing the number of repayment plans 

offered.

Federal loans, depending on program, loan type, and disbursement date are eligible for as 

many as eight different repayment plans. Each of these repayment plans has different eligibility 

criteria, calculations that result in different payment amounts, and different repayment terms. It 

is difficult for borrowers to understand the differences between plans and impacts of the various 

plans. Many select the lowest possible payment amount that can be offered, but do not 

understand the long-term implications of interest accrual, leaving many to express their 

frustration that monthly payments are having lower-than-expected impact on their total amount 

owed.

Recommendation: IDR renewal should be “opt-out” through use of data retrieval from the IRS. 

Entering repayment, all borrowers are offered the opportunity to select (or, “opt-in”) the 

preferred repayment plan. If the borrower makes no selection, the monthly payment amount is 

calculated based on the standard repayment plan. A borrower approved for an IDR plan must 

submit a renewal request annually. Borrowers frequently do not receive or understand notices 

to submit renewal information; or they do not timely submit the renewal application. By 

considering IDR plans as “opt-in,” borrowers frequently find themselves in a situation where the 

IDR plan expired and the new payment amount due is a standard payment amount based on a 

10-year repayment term. Expiration or a change in repayment plan also causes interest to

capitalize.

Expanding use of the DRT through the IRS, a borrower’s IDR can automatically renew unless 

the borrower makes a specific request to change their repayment plan. Doing so reduces the 

administrative burden on borrowers and provides continuity in repayment.

Recommendation: Interest capitalization should occur only when a federal student loan 

borrower consolidates outstanding federal student loans.

The law and regulations mandate or permit interest capitalization in multiple circumstances. 

The result is an increased principal balance, increased future accrued interest, and increased 

payment amounts. Interest capitalization serves no purpose, other than to generate additional 

interest income.

Capitalizing interest cannot be avoided when consolidating because the borrower is taking a 

new loan for the purpose of paying in full existing federal student loans.

Recommendation: Use of data match capabilities with the IRS for borrowers approved for 

TPD discharge will ease the administrative burden for a vulnerable 

population.
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Report of the Federal Student Aid Ombudsman 

Feedback about TPD discharge of federal student loans has declined in recent years. This is

due, in large part, to the data sharing agreements between the Social Security Administration,

the Department of Veterans Affairs, and the Department. 

Most borrowers awarded TPD discharges are subject to a 3-year monitoring period upon 

approval of that discharge. During this monitoring period, the borrower must provide proof of 

earned income. 

Borrowers routinely have loans reinstated because they do not provide proof of income. The 

reasons range from neglect on their part up through an inability to understand what is required. 

Once the loans are reinstated, regardless of the circumstances, borrowers must reapply (often 

incurring costs to have a physician complete the discharge request) and enter a new three-year 

monitoring period. 

Recommendation: Statutory changes are needed, either through amendment or 

reauthorization of the HEA regarding PSLF and TEPSLF. 

Existing statutory prohibitions for federal agencies to share data was a recent discussion during 

a hearing of the U.S. House of Representatives’ Education and Labor subcommittee conducted 

September 19, 2019. This discussion focused on the impacts on FSA’s ability to provide 

effective service to Title IV financial aid recipients. 

For example, matching student loan borrower information with data other agencies hold 

regarding employment can help the Department identify individuals who may hold employment 

eligible for PSLF. The Department can then reach out to those customers and facilitate the 

necessary steps toward loan forgiveness. 

Borrowers determined ineligible for PSLF only because they were not in the correct payment 

plan are also found ineligible for TEPSLF because the eligibility requirements mandate that the 

customer’s twelve most recent payments had to be made under a qualifying repayment plan or 

a payment plan that is at least equal to a payment made under a qualifying repayment plan. 

Based on feedback received, as well as reports from the OIG and the GAO, borrowers are 

frequently found ineligible due to the complexity of the cancellation qualifying requirements 

such as maintaining the appropriate payment plan and/or not having Direct Loans. Making IDR 

plans “opt-out” and automatic data sharing with the IRS are likely to have significant impact on 

eligibility for PSLF. 
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Fiscal Year 2019 Annual Report | Federal Student Aid 109

Financial Section 

Financial Section
110 Fiscal Year 2019 Annual Report | Federal Student Aid

Overview of the Financial Section 

Overview of the Financial Section

This section provides a financial presentation of FSA’s stewardship and accountability for its 

resources. The audited financial statements are followed by the accompanying notes to the 

financial statements, required supplementary information, and the Independent Auditors’ 

Report. 

Financial Statements

The Financial Statements consist of the following comparative statements: the Balance Sheet, 

Statement of Net Cost, Statement of Changes in Net Position and Statement of Budgetary 

Resources.

Notes to the Financial Statements

The Notes to the Financial Statements provide a description of significant accounting policies 

and detailed information on select statement line items. 

Required Supplementary Stewardship Information (Unaudited)

The unaudited Required Supplementary Stewardship Information provides information on the 

stewardship of the resources entrusted to FSA (human capital) and the subsequent 

responsibilities that cannot be measured in traditional financial reports.

Required Supplementary Information (Unaudited)

The unaudited Required Supplementary Information presents the Combining Statements of 

Budgetary Resources by Program.

Independent Auditors’ Report

The Independent Auditors’ Report presents the combined audit report issued by the 

Independent Auditors. Included in the combined audit report are the Report on the Financial 

Statements, the Report on Internal Control, and the Report on Compliance and Other Matters. 

The subsection also includes the Office of Inspector General Audit Transmittal Letter and 

Management’s Response to the Audit.
Bala

Fiscal Year 2019 Annual Report | Federal Student Aid 111

Financial Statements

Financial Statements

FSA prepares the following statements: the Consolidated Balance Sheets, the Consolidated 

Statements of Net Cost, the Consolidated Statements of Changes in Net Position, and the 

Combining Statements of Budgetary Resources. These statements are prepared pursuant to 

the requirements of the Chief Financial Officers Act of 1990, the Government Management 

Reform Act, and OMB Circular A-136, Financial Reporting Requirements; and demonstrate 

FSA’s accountability and stewardship of the resources entrusted to it. 

Below is a brief description of the principal financial statements and the accompanying notes 

presented in this report: 

Consolidated Balance Sheets:

• The Consolidated Balance Sheets present, as of a specific time, the amount of 

resources FSA has to use or distribute (assets), the amounts owed by FSA (liabilities) 

and the difference between the two (net position).

Consolidated Statements of Net Cost:

• The Consolidated Statements of Net Cost present the annual cost of agency operations. 

The gross cost less any offsetting revenue is used to determine the net cost.

Consolidated Statements of Changes in Net Position:

• The Consolidated Statements of Changes in Net Position report the accounting 

activities, including changes to Cumulative Results of Operations and Unexpended 

Appropriations that caused the change in net position during the reporting period.

Combining Statements of Budgetary Resources:

• The Combining Statements of Budgetary Resources report the budgetary resources that 

were made available to FSA, the status of those resources at fiscal year-end, along with 

the outlays of budgetary resources. 

Notes to the Financial Statements:

• The accompanying Notes to the Financial Statements provide a description of significant 

accounting policies and detailed information on select financial statement line items. 

The Notes also include information that supports the computation of the various financial 

statement activities. 
112 Fiscal Year 2019 Annual Report | Federal Student Aid

Financial Statements 

Consolidated Balance Sheets 

United States Department of Education

Federal Student Aid

Consolidated Balance Sheets 

As of September 30, 2019 and 2018 (Dollars in Millions)

FY 2019 FY 2018 

Assets:

Intragovernmental:

Fund Balance with Treasury (Note 3) $ 62,567 $ 73,405

Other Intragovernmental Assets (Note 4) 7 19 

Total Intragovernmental 62,574 73,424

Public:

 Credit Program Receivables, Net (Note 5)

 Direct Loan Program 1,123,707 1,115,053

 FFEL Program 76,767 92,947

 Other Credit Programs for Higher Education 1,618 1,495

 Other Assets (Note 4) 2,210 2,346

Total Public 1,204,302 1,211,841

Total Assets (Note 2) $1,266,876 $1,285,265

Liabilities:

Intragovernmental:

Debt (Note 7)

Direct Loan Program $1,192,138 $1,150,610

FFEL Program 94,671 107,261

Other Credit Programs for Higher Education 685 610

Subsidy Due to Treasury General Fund (Note 8) 10,302 7,528

Other Intragovernmental Liabilities (Note 9) 2,606 2,769

Total Intragovernmental 1,300,402 1,268,778

Other Liabilities (Note 9) 11,365 7,428

Total Liabilities (Note 6) $1,311,767 $1,276,206

Commitments and Contingencies (Note 13) 

Net Position:

Unexpended Appropriations $ 31,400 $ 32,487

Cumulative Results of Operations (76,291) (23,428)

Total Net Position $ (44,891) $ 9,059

Total Liabilities and Net Position $1,266,876 $1,285,265

The accompanying notes are an integral part of these statements.
Fiscal Year 2019 Annual Report | Federal Student Aid 113

Financial Statements 

Consolidated Statements of Net Cost

United States Department of Education

Federal Student Aid

Consolidated Statements of Net Cost

For the Years Ended September 30, 2019 and 2018

(Dollars in Millions)

FY 2019 FY 2018

Program Costs

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE OUTCOMES TO FOSTER ECONOMIC 

OPPORTUNITY, AND PROMOTE PRODUCTIVE CITIZENRY

Direct Loan Program

# Gross Costs $ 96,696 $ 37,965 

# Earned Revenue (33,817) (32,329)

Net Cost of Direct Loan Program $ 62,879 $ 5,636 

FFEL Program

# Gross Costs $ 15,759 $ 4,599 

# Earned Revenue (2,870) (3,336)

Net Cost of FFEL Program $ 12,889 $ 1,263 

Other Credit Programs for Higher Education

# Gross Costs $ 20 $ 76 

# Earned Revenue (133) (559)

Net Cost of Other Credit Programs for Higher Education $ (113) $ (483)

Non-Credit Programs

# Gross Costs $ 32,390 $ 28,592 

# Earned Revenue - - 

Net Cost of Non-Credit Programs $ 32,390 $ 28,592 

Net Program Costs $ 108,045 $ 35,008 

Total Program Gross Costs $ 144,865 $ 71,232

Total Program Earned Revenue (36,820) (36,224)

Net Cost of Operations (Notes 10 & 12) $ 108,045 $ 35,008 

The accompanying notes are an integral part of these statements.
114 Fiscal Year 2019 Annual Report | Federal Student Aid

Financial Statements 

Consolidated Statements of Net Position

United States Department of Education

Federal Student Aid

Consolidated Statements of Changes in Net Position

For the Years Ended September 30, 2019 and 2018

(Dollars in Millions)

FY 2019 FY 2018 

Cumulative 

Results of 

Operations

Unexpended 

Appropriations

Cumulative 

Results of 

Operations

Unexpended 

Appropriations

Beginning Balances:

Beginning Balances $ (23,428) $ 32,487 $ (5,316) $ 28,524

Budgetary Financing Sources:

Appropriations Received $ - $ 73,109 $ - $ 49,784

Other Adjustments (Rescissions, etc.) - (3,393) - (1,224)

Appropriations Used 70,803 (70,803) 44,597 (44,597)

Nonexchange Revenue - - (1) - 

Other Financing Sources:

Imputed Financing from Costs Absorbed by Others 14 - 14 - 

Negative Subsidy Transfers, Downward Subsidy 

Re-Estimates, and Other (15,635) - (27,714) - 

Total Financing Sources $ 55,182 $ (1,087) $ 16,896 $ 3,963

Net Cost of Operations: $ (108,045) $ - $ (35,008) $ - 

Net Change: $ (52,863) $ (1,087) $ (18,112) $ 3,963

Net Position $ (76,291) $ 31,400 $ (23,428) $ 32,487

The accompanying notes are an integral part of these statements.
Fiscal Year 2019 Annual Report | Federal Student Aid 115

Financial Statements 

Combined Statements of Budgetary Resources

United States Department of Education

Federal Student Aid

Combined Statements of Budgetary Resources

For the Years Ended September 30, 2019 and 2018

(Dollars in Millions

 FY 2019 FY 2018

 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 11) $ 15,378 $ 14,858 $ 12,015 $ 15,859

Appropriations (Discretionary and Mandatory) 69,804 - 48,627 - 

Borrowing Authority (Discretionary and Mandatory) (Note 11) - 148,272 - 167,543

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory)

409 57,418 393 61,439

Total Budgetary Resources $ 85,591 $ 220,548 $ 61,035 $ 244,841

Status of Budgetary Resources 

New Obligations and Upward Adjustments (Total) $ 71,433 $ 202,405 $ 46,002 $ 221,384

Unobligated Balance, End of Year: 

 Apportioned, Unexpired Accounts 11,361 - 12,290 - 

 Unapportioned, Unexpired Accounts 1,935 18,143 2,168 23,457

Unexpired Unobligated Balance, End of year $ 13,296 $ 18,143 $ 14,458 $ 23,457

Expired Unobligated Balance, End of Year 862 - 575 - 

Unobligated Balance, End of Year (Total) $ 14,158 $ 18,143 $ 15,033 $ 23,457

Total Status of Budgetary Resources $ 85,591 $ 220,548 $ 61,035 $ 244,841

Outlays, Net (Discretionary and Mandatory) $ 69,396 $ 40,085 $ 45,918 $ 83,059

Distributed Offsetting Receipts (-) (Note 11) (12,145) - (27,321) - 

Agency Outlays, Net (Discretionary and Mandatory) (Note 11) $ 57,251 $ 40,085 $ 18,597 $ 83,059

The accompanying notes are an integral part of these statements.
116 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Notes to the Financial Statements 

Note 1 Summary of Significant Accounting Policies

Note 2 Non-Entity Assets

Note 3 Fund Balance with Treasury

Note 4 Other Assets

Note 5 Credit Programs for Higher Education: Credit Program Receivables, Net and 

Liabilities for Loan Guarantees 

Note 6 Liabilities Not Covered by Budgetary Resources

Note 7 Debt

Note 8 Subsidy Due to Treasury General Fund

Note 9 Other Liabilities

Note 10 Net Cost of Operations

Note 11 Statements of Budgetary Resources

Note 12 Reconciliation of Net Cost to Net Outlays

Note 13 Commitments and Contingencies
Fiscal Year 2019 Annual Report | Federal Student Aid 117

Notes to the Financial Statements 

Notes to the Financial Statements for the Years Ended, 

September 30, 2019 and 2018

Note 1. Summary of Significant Accounting Policies

Reporting Entity and Programs 

Federal Student Aid (FSA) was created as a Performance Based Organization (PBO) within the 

U.S. Department of Education (the Department) in 1998, as a result of amendments to the 

Higher Education Act of 1965 (HEA), from previously existing Department student financial 

assistance program offices. FSA operates under the PBO mandate to develop a management 

structure driven by strong incentives to manage for results. FSA’s primary goal is to assist 

lower-income and middle-income students in overcoming the financial barriers that make it 

difficult to attend and complete postsecondary education.

Federal Student Loan Programs. FSA and the Department administer the William D. Ford 

Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) 

program, the Health Education Assistance Loan program (HEAL), and the Federal Perkins Loan 

program to help students and their families finance the costs of postsecondary education. A 

direct loan is any debt instrument issued to the public by the federal government. A FFEL loan 

guarantee is a guarantee, insurance, or other pledge with respect to the payment of all or part of 

the principal or interest on any debt obligation of a non-federal borrower to a non-federal lender.

The Direct Loan program, added to the 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. 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 provide loan guarantees on loans made by private lenders to eligible 

students. The Student Aid and Fiscal Responsibility Act (SAFRA), which was included in the 

Health Care and Education Reconciliation Act of 2010 (HCERA), 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 FSA temporary authority to purchase FFEL loans and participation 

interests in those loans. FSA 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. (See Notes 5 and 10)

Grant Programs. FSA and the Department manage numerous grant programs, which provide 

financial aid, that in most cases does not need to be repaid, to students with financial need. The 

largest of these programs is the Federal Pell Grant (Pell Grant) program, which provides needbased grants to low-income undergraduate and certain post baccalaureate students that 

promotes access to postsecondary education. Other grant programs include Federal Work-
118 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Study Program, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher 

Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and 

Afghanistan Service Grants. (See Note 10)

Basis of Accounting and Presentation

These financial statements were prepared to report the financial position, net cost of operations, 

changes in net position, and budgetary resources of FSA 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 and FSA, in 

accordance with Generally Accepted Accounting Principles (GAAP) accepted in the U.S. for 

federal entities, issued by the Federal Accounting Standards Advisory Board (FASAB), and the 

Office of Management and Budget (OMB) Circular No. 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 

FSA’s use of budgetary resources.

FSA’s financial statements should be read with the realization that they are for the reporting 

organization FSA, within the Department of Education, which is itself a component of the U.S. 

Government, a sovereign entity. One implication of this is that the liabilities cannot be liquidated 

without legislation providing resources and legal authority to do so.

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.

Transactions and balances among FSA funds have been eliminated from the consolidated 

financial statements.

Accounting standards require all reporting entities to disclose that accounting standard practices 

allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure 

of classified information.

Accounting for Federal Credit Programs 

FSA’s accounting for its loan and loan guarantees 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 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 FSA on its borrowings from the 

Department of Treasury (Treasury) and interest rates charged to particular borrowers is also 

subsidized (or may provide an offset to subsidy if FSA’s rate is less). 

Under the FCRA, subsidy cost is estimated using the net present value of future cash flows to 

and from FSA. 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 
Fiscal Year 2019 Annual Report | Federal Student Aid 119

Notes to the Financial Statements 

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.

The subsidy cost 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.

In order 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 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 

non-budgetary 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. 

• 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 reestimates of the subsidy cost of existing loans. (See Notes 11 and 12)

FSA 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. FSA advances funds to schools based on these 

estimates. Promissory notes are signed when schools reach individual agreements with 

borrowers and the schools subsequently report each disbursement of advanced funds to FSA. A 

new promissory note is usually not required for students in the second or later year of study. 

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. FSA’s obligation estimate may also not reflect the actual 

amount of awards made. Based on historical averages, FSA expects approximately 7.8 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 cancelled if a person dies, meets disability requirements, 
120 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

or occasionally through the bankruptcy courts. Loans are also cancelled 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, FSA

offers the Pay As You Earn (PAYE) program. This student loan repayment program is designed 

to help borrowers who struggle to make their normal student loan payments. The plan allows 

payments to be limited to 10 percent of discretionary income if qualifications are met. Under the 

PAYE program, if all requirements are met, forgiveness of the remaining balance of a student 

loan is possible after 20 years of consistent payments.

Budgetary Resources

Budgetary resources are amounts available to enter into new obligations and to liquidate them. 

FSA’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.

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. FSA may carry forward borrowing 

authority to future fiscal years provided that cohorts are disbursing loans. All borrowings from 

Treasury are effective on October 1st of the current fiscal year, regardless of when FSA

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 program, 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 cancelled 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, multi-year, 

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. Parts B and D of the HEA 

pertain to the existence, purpose, and availability of permanent indefinite budget authority for 

these programs.
Fiscal Year 2019 Annual Report | Federal Student Aid 121

Notes to the Financial Statements 

Reauthorization of Legislation. Funds for most FSA 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 Budget of the United 

States Government presumes all programs continue per congressional budgeting rules. (See 

Note 11)

Entity and Non-Entity Assets

Assets are classified as either entity or non-entity assets. Entity assets are those that FSA has 

authority to use for its operations. Non-entity assets are those held by FSA but not available for 

use in its operations. FSA non-entity assets are offset by liabilities to third parties and have no 

impact on net position. FSA 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

The 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 FSA. FSA’s records 

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

Accounts Receivable

Accounts receivable are amounts due to FSA from the public and other federal agencies. 

Receivables from the public result from overpayments to recipients of grants and other financial 

assistance programs, and disputed costs resulting from audits of educational assistance 

programs. Amounts due from federal agencies result from reimbursable agreements entered 

into by FSA 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 FSA’s experience in the collection of 

receivables and an analysis of the outstanding balances. (See Note 4)

Guaranty Agencies’ Federal Funds

Guaranty Agencies’ Federal Funds are primarily comprised of the federal government’s interest 

in the program assets held by state and nonprofit FFEL program guaranty agencies. Section 

422A of the HEA required FFEL guaranty agencies to establish federal student loan reserve 

funds (federal funds). Federal funds include initial federal start-up funds, receipts of federal 

reinsurance payments, insurance premiums, guaranty agency share of collections on defaulted 

loans, investment income, administrative cost allowances, and other assets.

The balance in the Federal Fund represents consolidated reserve balances of the 23 guaranty 

agencies based on the Guaranty Agency financial reports that each agency submits annually to 

FSA. Although FSA 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 

FSA’s balances in order to comply with federal accounting principles and disclose funds held 

outside of Treasury.

Guaranty Agencies’ Federal Funds are classified as non-entity assets with the public and are 

offset by a corresponding liability due to Treasury. The federal funds are held by the guaranty 

agencies but can only be used for certain specified purposes listed in FSA’s regulations. The 
122 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

federal funds are the property of the U.S. and are reflected in the Budget of the United States 

Government. Payments made to the FSA from guaranty agencies’ federal funds through a 

statutory recall or agency closures represent capital transfers and are returned to Treasury’s 

General Fund. (See Notes 2, 4, and 9) 

Credit Program Receivables, Net and Liabilities for Loan Guarantees 

The financial statements reflect FSA’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, FSA 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 FSA less 

the present value of related inflows. The estimated present value of net long-term cash outflows 

of FSA for subsidized costs is net of recoveries, interest supplements, and offsetting fees. 

The liability for loan guarantees presents 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 FSA

and held by FSA or guaranty agencies. In most cases, after approximately four years, defaulted 

guaranteed loans not in repayment are turned over by the guaranty agencies to FSA 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)

Property and Equipment, Net and Leases

FSA has very limited acquisition costs associated with buildings, furniture, and equipment as all 

federal and contractor staff are housed in leased buildings. The Department and FSA also lease 

information technology and telecommunications equipment, as part of a contractor-owned, 

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 Note 4) 

Liabilities

Liabilities represent actual and estimated amounts to be paid as a result of transactions or 

events that have already occurred.
Fiscal Year 2019 Annual Report | Federal Student Aid 123

Notes to the Financial Statements 

• 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. 

• 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

FSA 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. FSA 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 30th. (See Note 7)

Subsidy Due To Treasury General Fund

FSA 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 FSA’s pre-1992 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 FSA for goods and services received from other 

entities and scheduled payments transmitted but not yet processed. Accounts payable to the 

public primarily consists of in-process grant and loan disbursements, including an accrued 

liability for schools that have disbursed loans prior to requesting funds. (See Note 9)

Accrued Grant Liability

Some grant recipients incur allowable expenditures as of the end of an accounting period but 

have not been reimbursed by FSA. FSA accrues a liability for these allowable expenditures. The 

amount is estimated using statistical sampling of unliquidated balances. (See Note 9)

Personnel Compensation And 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.
124 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

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.

Contributions for CSRS, FERS, and other retirement benefits are insufficient to fund the 

programs fully and are subsidized by the Office of Personnel Management (OPM). The 

Department imputes its share of the OPM subsidy, using cost factors provided by OPM, and 

reports the full cost of the programs related to its employees in FSA’s Statements of Net Cost.

These OPM imputed costs are offset by imputed financing sources from costs absorbed by 

others in FSA’s Statements of Changes in Net Position.

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 program is administered by the 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 threeyear 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 a liability with the public, 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)

Inter-Entity Costs

Services are received from other federal entities at no cost or at a cost less than the full cost to 

FSA. Consistent with accounting standards, certain costs of the providing entity that are not fully 

reimbursed by FSA 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 FSA’s financial statements.
Fiscal Year 2019 Annual Report | Federal Student Aid 125

Notes to the Financial Statements 

Net Cost of Operations

Net cost consists of gross costs and earned revenue. Major components of FSA’s net costs 

include credit program subsidy expense, credit program interest revenue and expense, and 

grant expenses. Administrative overhead costs are allocated to loan and non-credit programs 

based on number of applications processed, number of loans serviced, dollar amount of loan 

originations, cost of school compliance actions, and the cost to collect defaulted loans. (See 

Note 10)

Credit Program Subsidy Expense. Subsidy expense is an estimate of the present value cost 

of providing loans, but excludes the administrative costs of issuing and servicing the loans. In 

order to estimate subsidy expense, FSA must project lifetime cash flows associated with loans 

disbursed in a specific fiscal year (i.e., the loan cohort). FSA projects these lifetime cash flows

using a set of econometric and financial models, as well as cash flow models. FSA 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). (See Notes 5 

and 10)

Credit Program Interest Revenue and Expense. FSA recognizes interest revenue from the 

public 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 30th. 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) 

Net Position

Net position consists of unexpended appropriations and cumulative results of operations. 

Unexpended appropriations include undelivered orders and unobligated balances, except for 

federal credit financing and liquidating funds and trust funds. Cumulative results of operations 

represent the net difference since inception between (1) expenses and (2) revenues and 

financing sources.

Taxes

FSA is a Federal entity and is not subject to Federal, state or local taxes. Therefore, no 

provision for income taxes is recorded.
126 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Use of Estimates

FSA and Department management are 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. FSA’s estimates are based on management’s best knowledge of current events, 

historical experiences, and other assumptions that are believed to be reasonable under the 

circumstances. Significant estimates reported on the financial statements include: allocation of 

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) 

FSA’s estimates for credit reform 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 (DMCS), and economic 

assumptions provided by the Office of Management and Budget. 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. FSA recognizes the sensitivity of credit reform modeling. Slight 

changes in modeling methodology or data used to derive assumptions can produce largely 

varied results. FSA therefore continually reviews its model factors and statistical modeling 

techniques to reflect the most accurate credit program costs possible in its annual financial 

statements. FSA 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 FSA’s modeling 

methodology is essential to the budget process, so that the Department can forecast the costs 

of various program options when making policy decisions. (See Note 5)

Note 2. Non-Entity Assets

(Dollars in Millions)

 

FSA’s FY 2019 assets are predominantly entity assets (99.8 percent), leaving the small portion 

of assets remaining as non-entity assets. Non-entity assets with the public primarily consist of 

guaranty agency reserves (75.1 percent), reported as Guaranty Agencies’ Federal Funds, and 

Federal Perkins Loan program loan receivables (23.3 percent), reported as credit program 

receivables, net. The corresponding liabilities for these 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)
Fiscal Year 2019 Annual Report | Federal Student Aid 127

Notes to the Financial Statements 

Note 3. Fund Balance with Treasury

(Dollars in Millions)

 

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 ($18.9 billion) differs 

from unapportioned and expired amounts on the SBR ($20.9 billion) due to the Guaranty 

Agencies’ Federal Funds ($2.0 billion).

Note 4. Other Assets

(Dollars in Millions) 

 

Note 5. Credit Programs for Higher Education: Credit Program 

Receivables, Net and Liabilities for Loan Guarantees

Credit Program Receivables, Net (Dollars in Millions)

 

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 
128 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

permanent indefinite budget authority. What follows is additional analysis of the activity, costs 

and adjustments for each of the loan programs.

Direct Loan Program. The federal government makes loans directly to students and parents 

through participating institutions of higher education 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 and held 

by FSA. Of the $1,248.1 billion in gross loan receivables, as of September 30, 2019, $99.7 

billion (8.0 percent) in loan principal was in default and had been transferred to FSA’s defaulted 

loan servicer, compared to $84.9 billion (7.3 percent) as of September 30, 2018.

Direct Loan Program Reconciliation of Allowance for Subsidy

(Dollars in Millions)

 

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 which 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 with regard 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 
Fiscal Year 2019 Annual Report | Federal Student Aid 129

Notes to the Financial Statements 

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.

Loan cancellations consist of write-offs of loans because the borrower died, became disabled, 

or declared bankruptcy. 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.

The two major components of the subsidy expense for direct loans disbursed in the current 

period (subsidy transfers) are Interest Rate Differential and Other Components. Interest rate 

differential is attributable to the difference between the borrowers’ interest payments due to FSA 

and the FSA’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. In FY 2019, FSA began including the prepayment effect 

on principal and interest repayments in the interest rate differential component rather the other 

component as in previous years.

Direct Loan Program Interest Expense and Revenues (See Note 10)

(Dollars in Millions)

 

Direct Loan Program Subsidy Expense

(Dollars in Millions) 

 
130 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Net Upward Subsidy Re-estimates for All Prior Year Loan Cohorts. The Direct Loan 

program subsidy re-estimate increased subsidy expense in FY 2019 by $64.5 billion. Reestimated costs only include cohorts that are 90 percent disbursed; cohort years 1994–2018. 

The re-estimate reflects the assumption updates and other changes described below.

• IDR Model Changes. During FY 2019, FSA enhanced the IDR model by examining the 

most current available IDR application data from NSLDS to supplement information 

previously used from the Department of Treasury’s Office of Tax Analysis, in order to 

calibrate projected incomes. FSA’s analysis determined a downward calibration was 

warranted, with the Departmental and FSA senior management concurrence. The 

impact of this calibration was the most significant factor in the IDR component of the reestimate. The IDR update also reflects further refinement in the logic for switching 

borrowers among IDR plans and the appropriate balance to be paid off when they do 

switch. These updates led to a net upward re-estimate of $43.6 billion.

• Deferment and Forbearance. FSA made enhancements in the methodology for 

delinquency, to more precisely reflect interest accrual and the extension of the payment 

period than the method previously employed. These enhancements resulted in a lower 

rate of forbearance which lead to an upward re-estimate of subsidy as less interest is 

accrued, capitalized, and collected. Deferment rates increased for PLUS loans eligible 

for in-school deferments. The combined effect of these changes, in addition to updated 

data from NSLDS, was a net upward re-estimate of $18.3 billion.

• Maturity, Prepayment, and Loan Payoff. FSA further enhanced the forecasting of 

amount of debt distributions and aligned all three sub-components of this assumption to 

enter repayment cohorts. The loan payoff component was improved as well by using a 

more precise method to estimate payoff for loans enrolled in graduated repayment 

plans. As mentioned above, the impact on repayment of delinquency was moved to the 

payoff maturity assumption to better reflect interest accrual and the extension of the 

payment period. These adjustments resulted in longer assumed terms, resulting in a 

longer stream of payments, more interest accrual and less subsidy. The combined effect 

of these changes led to a net downward re-estimate of $26.1 billion.

• Financing Account Interest Adjustment. Beginning in FY 2019, FSA implemented a 

process to calculate and execute a financing account interest adjustment to address 

differences between net financing account interest executed for cohorts each year and 

amounts earned based on final Treasury interest rates for those cohorts. This resulted in 

a net upward re-estimate of $6.3 billion.

• Default. FSA updated the data and made a change in methodology to a weighted 

fractional logit in order to more appropriately reflect the different sizes of the grouped 

data. The combined effect of these changes led to a net downward re-estimate of 

$1.0 billion.

• Collections. As a result of analyzing updated DMCS data, collection rate estimates 

were revised which resulted in a net upward re-estimate of $4.2 billion.

• 2018 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 re-estimate includes a 

net upward adjustment of $5.8 billion for these prior year changes attributable to the 

FY 2018 cohort.
Fiscal Year 2019 Annual Report | Federal Student Aid 131

Notes to the Financial Statements 

• 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 

upward re-estimate of $9.7 billion.

• Interactive Effects. The re-estimate includes a net upward re-estimate of $3.2 billion 

attributed to the interactive effects of the assumption changes described above.

Direct Loan Subsidy Rates—Cohort 2019 

 

The subsidy rate represents the subsidy expense of the program in relation to the obligations or 

commitments made during the fiscal year and are weighted on gross volume. The subsidy rates 

shown above, which reflect aggregate positive subsidy in the FY 2019 cohort, cannot be applied 

to direct loans disbursed during the current reporting year to yield the subsidy expense, nor are 

these rates applicable to the portfolio as a whole. The Department does not re-estimate student 

loan cohorts until they are at least 90 percent disbursed. As a result, the financial statement 

re-estimate does not include a re-estimate of the current year cohort. The first re-estimate of this 

cohort will take place upon execution of the FY 2021 President’s Budget.

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 Loan Disbursements by Loan Type

(Dollars in Millions)

 

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. 
132 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

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 current-year cohort; the effect of prepayments on existing loans could contribute to reestimates 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 $39.8 billion during FY 2019 and $41.6 billion during FY 2018. 

Under the FCRA, the subsidy costs of new consolidation loans are not reflected until the future 

fiscal year in which they are disbursed. 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.

Federal Family Education Loan Program. FFEL was established in fiscal year 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 FSA through an ECASLA 

authority (acquired FFEL loans), consolidated into a direct loan, or otherwise satisfied, 

discharged, or cancelled.

FFEL Guaranteed Loans Outstanding

(Dollars in Billions)

 

As of September 30, 2019, the total principal value of guaranteed loans outstanding and the 

amount of that principal which is guaranteed is approximately $141.6 billion.

Additionally, the FFEL program guarantees outstanding interest balances. As of 

September 30, 2019, the interest balances outstanding for guaranteed loans held by lenders 

was approximately $4.0 billion.

FSA’s total FFEL program guarantees (principal and interest) are approximately $145.6 billion 

as of September 30, 2019. Of the total guaranteed amount, FSA 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 FSA’s total risk exposure for 

FFEL guarantees, the highest reimbursement rate of 100 percent is assumed.
Fiscal Year 2019 Annual Report | Federal Student Aid 133

Notes to the Financial Statements 

Defaulted and acquired FFEL loans are accounted for as assets as shown in the following table.

FFEL Program Loan Receivables

(Dollars in Millions)

 

FFEL Program Reconciliation of Liabilities for Loan Guarantees

(Dollars in Millions)

 

Liabilities for Loan Guarantees is included as a component of other liabilities on the balance 

sheet (see Note 9).
134 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Other activity includes negative special allowance collections, collections on defaulted FFEL 

loans, guaranty agency expenses, and loan cancellations due to death, disability, or bankruptcy.

Allowance for Subsidy Reconciliation for Acquired FFEL Loans

(Dollars in Millions)

 

FFEL Program Subsidy Expense

(Dollars in Millions)

 

The FFEL subsidy re-estimate increased subsidy expense in FY 2019 by $12.7 billion. The net 

upward re-estimates in these programs were due primarily to interest rates provided by OMB 

and updated collection and prepayment rates.
Fiscal Year 2019 Annual Report | Federal Student Aid 135

Notes to the Financial Statements 

Other Credit Programs for Higher Education

(Dollars in Millions)

 

Federal Perkins Loan Program. The Federal Perkins Loan program provides low-interest 

loans to eligible postsecondary school students. In some statutorily defined cases, funds are 

provided to reimburse schools for loan cancellations. For defaulted loans assigned to FSA, 

collections of principal, interest, and fees, net of amounts paid by FSA to cover contract 

collection costs, are transferred to Treasury annually. 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.

TEACH Grant Program. FSA 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. 

TEACH Subsidy Rates—Cohort 2019

 

HEAL Program. FSA 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 prior to 1992. All loan 

activity for 1992 and beyond is recorded in corresponding financing accounts.
136 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Note 6. Liabilities Not Covered by Budgetary Resources

(Dollars in Millions)

 

Note 7. Debt

(Dollars in Millions)

 

FSA borrows from Treasury to fund the disbursement of new loans and the payment of 

credit program outlays and related costs. During FY 2019, debt increased 2.3 percent from 

$1,258.5 billion in the prior year to $1,287.5 billion. FSA makes periodic principal payments, 

after evaluating the cash position and liability for future outflows in each program and pays 

interest, as mandated by the FCRA.

Approximately 92.6 percent of FSA’s debt, as of September 30, 2019, is attributable to the 

Direct Loan program. The majority of the net borrowing activity (borrowing less repayments) for 

the year was designated for funding new Direct Loan disbursements.

FSA also borrows from Treasury for activity in the Other Credit Programs for Higher Education. 

During FY 2019, TEACH net borrowing of $63.3 million was used for the advance of new grants 

and repayments of principal made to Treasury.
Fiscal Year 2019 Annual Report | Federal Student Aid 137

Notes to the Financial Statements 

Note 8. Subsidy Due to Treasury General Fund

(Dollars in Millions)

 

When downward subsidy re-estimates are executed, the amounts will be transferred to the 

Treasury General Fund in the following fiscal year. Future liquidating account collections 

represent the net present value of estimated future excess collections (estimated collections in 

excess of estimated outlays) for FSA’s pre-1992 FFEL and HEAL loan programs.

Note 9. Other Liabilities

(Dollars in Millions) 

 
138 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Note 10. Net Cost of Operations

Gross Costs and Exchange Revenue by Program

(Dollars in Millions)

 
Fiscal Year 2019 Annual Report | Federal Student Aid 139

Notes to the Financial Statements 

Credit Program Interest Expense and Revenues 

(Dollars in Millions)

 

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.

Grant Expenses

(Dollars in Millions)

 

Federal Pell Grants Program 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 parttime 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.
140 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Federal Supplemental Education Opportunity Grants Program 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.

Note 11. Statements of Budgetary Resources

The SBR compares budgetary resources with the status of those resources. As of September 

30, 2019, budgetary resources were $306.1 billion and net agency outlays were $97.3 billion. As 

of September 30, 2018, budgetary resources were $305.9 billion and net agency outlays were 

$101.7 billion.

Net Adjustments to Unobligated Balances Brought Forward

(Dollars in Millions)

 

Unused Borrowing Authority

(Dollars in Millions)

 

FSA 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. FSA 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)

 
Fiscal Year 2019 Annual Report | Federal Student Aid 141

Notes to the Financial Statements 

Undelivered orders represent the amount of goods and/or services ordered which have not 

been actually or constructively received. The paid amount includes any orders which may have 

been prepaid or advanced but for which delivery or performance has not yet occurred.

Distributed Offsetting Receipts

(Dollars in Millions)

 

The majority 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. The collections are recorded as offsetting receipts and they offset the agency's 

budget authority and outlays.

Explanation of Differences Between the Statements of Budgetary 

Resources and the Budget of the United States Government

Budgetary accounting as shown in 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 FSA’s direct control, budgetary resources and obligations are estimated and disclosed in 

the President’s Budget to approximate the gross activities of the combined Federal Funds. 

Amounts reported on the SBR for the Federal Fund are compiled through combining all 

guaranty agencies’ annual reports to determine a net valuation amount for the Federal Fund.
142 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

Note 12. Reconciliation of Net Cost to Net Outlays

(Dollars in Millions)

 

FSA implemented SFFAS 53, Budget and Accrual Reconciliation, in FY 2019 requiring this 

reconciliation to explain the relationship between FSA’s net cost of operations and its net 

outlays. Reconciling items result from transactions which 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. Comparison with the prior year is not required in the initial year of implementation.

Subsidy expense included in net cost of operations primarily represents subsidy re-estimates 

that are recognized without a concurrent cash disbursement. For credit programs, most loan 

disbursement and collection activities, other than those related to loan administrative costs, 

increase or decrease loan asset and liability balances and therefore do not affect net cost of 

operations. Loan subsidy transfers are amounts paid from FSA’S financing accounts to 

Treasury receipt accounts when there are negative subsidies for new loan disbursements or 

downward re-estimates of the subsidy cost of existing loans.
Fiscal Year 2019 Annual Report | Federal Student Aid 143

Notes to the Financial Statements 

Note 13. Commitments and Contingencies

FSA 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)

 

FSA leases three buildings from the General Services Administration. The table above presents 

the estimated future minimum lease payments for these buildings.

Guaranty Agencies

FSA may assist guaranty agencies experiencing financial difficulties. FSA has not done so in 

fiscal years 2019 or 2018 and does not expect to in future years. No provision has been made in 

the financial statements for potential liabilities.

Federal Perkins Loan Program

The Federal Perkins Loan program provided financial assistance to eligible postsecondary 

school students. In FY 2019, FSA reported for Academic Year 2017-2018 that it provided 

funding of 83.0 percent of the capital used to make loans to eligible students through 

participating schools at 5 percent interest. The schools provided the remaining 17.0 percent of 

program funding. For the academic year that ended June 30, 2018, approximately 256 thousand 

loans were made totaling $630.5 million at 1,079 institutions, making an average of $2,461 per 

loan. FSA’s equity interest, as of the end of Academic Year 2016-2017 (June 30, 2017), was 

approximately $5.8 billion.

Federal Perkins Loan program borrowers who meet statutory eligibility requirements—such as 

those who provide service as teachers in low-income areas or as Peace Corps or AmeriCorps 

VISTA volunteers, as well as those who serve in the military, law enforcement, nursing, or family 

services—may receive partial loan forgiveness for each year of qualifying service. 

The Federal Perkins Loan program was scheduled to officially end on September 30, 2015. 

However, the program was extended through September 30, 2017 by the Federal Perkins Loan 

Program Extension Act of 2015 (Extension Act). The Extension Act eliminated the Perkins Loan 

grandfathering provisions that FSA had put in place, and establishes new eligibility requirements 

for undergraduate and graduate students to receive Perkins Loans. As of September 30, 2017, 

schools are no longer authorized to make new Perkins Loans.
144 Fiscal Year 2019 Annual Report | Federal Student Aid

Notes to the Financial Statements 

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 effect on 

FSA’s financial position.

The cost of loan forgiveness related to borrower defense claims reflected in the accompanying 

financial statements is limited to loans originated through September 30, 2019. The final 

disposition of claims filed and those yet to be filed from loans originated before 

September 30, 2019, is not expected to have a material impact on these financial statements.

Other Matters

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 FSA’s financial position.
Fiscal Year 2019 Annual Report | Federal Student Aid 145

Required Supplementary Stewardship Information (Unaudited) 

Required Supplementary Stewardship Information

(Unaudited)

Human Capital investments are those expenses included in net cost for general public 

education and training programs that are intended to increase or maintain national economic 

productive capacity.

Year to date expenses incurred for human capital investments consisted of the following as of 

September 30, 2019 and the preceding four fiscal years’ end:

Summary of Human Capital Expenses

(Dollars in Millions)

 2019 2018 2017 2016 2015

Federal Student Aid Expense 

 Direct Loan Program Subsidy $ 61,510 $ 4,369 $ 5,329 $ 16,119 $ (892)

 FFEL Program Subsidy 12,654 1,228 3,411 10,235 (3,856)

 Perkins Loans, Pell and Other Grants 32,204 28,512 28,770 30,671 31,400

 FSA Salaries and Administrative 262 246 224 308 242

Total $ 106,630 $ 34,355 $ 37,734 $ 57,333 $ 26,894

The William D. Ford Federal Direct Loan (Direct Loan) program is a direct-lending program in 

which loan capital is provided to students by the federal government through borrowings from 

the United States (U.S.) Department of the Treasury. This program has expanded dramatically 

since the passage of the SAFRA Act, which was included in the Health Care and Education 

Reconciliation Act of 2010 (HCERA), under which no new loan originations were permitted to be 

made from the Federal Family Education Loan (FFEL) program after June 30, 2010, so that 

loans that may have previously been made through the FFEL program are now made through 

the Direct Loan program.

The FFEL Loan program has originated no new loans since June 30, 2010, but its permanent 

budget authority allows it to continue to operate with state and private nonprofit guaranty 

agencies to honor loan guarantees and for the Department to pay or collect (special allowance 

or subsidy) payments on outstanding loans made by private lenders to eligible students. The 

FFEL Loan program expenses include the Loan Participation Purchase, Loan Purchase 

Commitment, and ABCP Conduit expenses.

Perkins Loan and Grant programs include the Federal Pell Grant program that awards direct 

grants through participating institutions to undergraduate students with financial need. 

Participating institutions either credit the appropriated funds to the student’s school account or 

pay the student directly once per term.

The Teacher Education Assistance for College and Higher Education (TEACH) Grant program 

awards annual grants to students who agree to teach in a high-need subject area in a public or 

private elementary or secondary school that serves low-income students. If the students do not 

satisfy their agreement to serve, the grants are converted to Direct Unsubsidized Loans.

Federal Student Aid’s programs link with the overall initiatives of the Department in enhancing 

education—a fundamental stepping-stone to higher living standards for American citizens. 

While education is vital to national economic growth, education’s contribution is more than 

increased productivity and incomes. Education improves health, promotes social change, and 

opens doors to a better future for children and adults.
146 Fiscal Year 2019 Annual Report | Federal Student Aid

Required Supplementary Stewardship Information (Unaudited) 

In the past, economic outcomes, such as wage and salary levels, have been determined largely

by the educational attainment of individuals and the skills employers expect of those entering 

the labor force. Both individuals and society as a whole continue to place increased emphasis 

on educational attainment as the workplace has become increasingly technological, and 

employers now seek employees with the highest level of skills. For prospective employees, the 

focus on higher-level skills means investing in learning or developing skills through education. 

Like all investments, developing higher-level skills involves costs and benefits.

Returns, or benefits, of investing in education come in many forms. While some returns accrue 

for the individual, others benefit society and the nation in general. Returns related to the 

individual include higher earnings, better job opportunities, and jobs that are less sensitive to 

general economic conditions. Returns, related to the economy and society, include reduced 

reliance on welfare subsidies, increased participation in civic activities, and greater productivity.

Over time, the returns of developing skills through education have become evident. Statistics 

illustrate the rewards of investing in postsecondary education.
Fiscal Year 2019 Annual Report | Federal Student Aid 147

Required Supplementary Information (Unaudited) 

Required Supplementary Information (Unaudited)

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

 Combined

Health Education Assistance 

Loans

 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 11) $ 15,378 $ 14,858 $ - $ 21

Appropriations (Discretionary and Mandatory) 69,804 - - - 

Borrowing Authority (Discretionary and Mandatory) (Note 11) - 148,272 - 34

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 409 57,418 7 7 

Total Budgetary Resources $ 85,591 $ 220,548 $ 7 $ 62

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) (Note 11) $ 71,433 $ 202,405 $ 1 $ 40 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 11,361 - - - 

 Unapportioned, Unexpired Accounts 1,935 18,143 6 22

Unexpired Unobligated Balance, End of year $

 

13,296 $ 18,143 $ 6 $ 22 

Expired Unobligated Balance, End of Year 862 - - - 

Unobligated Balance, End of Year (Total) $ 14,158 $ 18,143 $ 6 $ 22 

Total Status of Budgetary Resources $ 85,591 $ 220,548 $ 7 $ 62

Outlays, Net (Discretionary and Mandatory) 69,396 40,085 (6) 33

Distributed Offsetting Receipts (-) (Note 11) (12,145) - (34) - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 11) $ 57,251 $ 40,085 $ (40) $ 33
148 Fiscal Year 2019 Annual Report | Federal Student Aid

Required Supplementary Information (Unaudited) 

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

Direct Student Loan Program Teach Program

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 11) $ 522 $ 375 $ 12 $ (1)

Appropriations (Discretionary and Mandatory) 33,812 - 34 - 

Borrowing Authority (Discretionary and Mandatory) (Note 11) - 148,159 - 79

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) - 44,443 - 46

Total Budgetary Resources $ 34,334 $ 192,977 $ 46 $ 124

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) (Note 11) $ 33,812 $ 187,172 $ 34 $ 123 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts - - - - 

 Unapportioned, Unexpired Accounts - 5,805 - 1 

Unexpired Unobligated Balance, End of year $ - $ 5,805 $ - $ 1 

Expired Unobligated Balance, End of Year 522 - 12 - 

Unobligated Balance, End of Year (Total) $ 522 $ 5,805 $ 12 $ 1 

Total Status of Budgetary Resources $ 34,334 $ 192,977 $ 46 $ 124

Outlays, Net (Discretionary and Mandatory) 33,235 46,829 31 32

Distributed Offsetting Receipts (-) (Note 11) (9,906) - (1) - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 11) $ (23,329) $ 46,829 $ 30 $ 32
Fiscal Year 2019 Annual Report | Federal Student Aid 149

Required Supplementary Information (Unaudited) 

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

Federal Family Education 

Loan Program

Perkins Loans 

and Grants

Administrative 

Funds

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts Budgetary Budgetary

Budgetary Resources:

Unobligated Balance from Prior Year Budget Authority, Net

(Note 11) $ 2,049 $ 14,463 $ 12,781 $ 14 

Appropriations (Discretionary and Mandatory) 3,661 - 30,618 1,679

Borrowing Authority (Discretionary and Mandatory) (Note 11) - - - - 

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 403 12,922 (1) - 

Total Budgetary Resources $ 6,113 $ 27,385 $ 43,398 $ 1,693

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) 

(Note 11) $ 3,913 $ 15,070 $ 31,986 $ 1,687 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 287 - 11,070 4 

 Unapportioned, Unexpired Accounts 1,913 12,315 17 (1)

Unexpired Unobligated Balance, End of year $ 2,200 $ 12,315 $ 11,087 $ 3 

Expired Unobligated Balance, End of Year - - 325 3 

Unobligated Balance, End of Year (Total) $ 2,200 $ 12,315 $ 11,412 $ 6 

Total Status of Budgetary Resources $ 6,113 $ 27,385 $ 43,398 $ 1,693

Outlays, Net (Discretionary and Mandatory) 3,507 (6,809) 30,907 1,722

Distributed Offsetting Receipts (-) (Note 11) (2,099) - (105) - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 11) $ 1,408 $ (6,809) $ 30,802 1,722
150 Fiscal Year 2019 Annual Report | Federal Student Aid

Required Supplementary Information (Unaudited) 

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

Combined

Health Education Assistance 

Loans

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

Budgetary Resources:

Unobligated Balance from Prior Year Budget Authority, Net $ 12,015 $ 15,859 $ - $ 25

Appropriations (Discretionary and Mandatory) 48,627 - - - 

Borrowing Authority (Discretionary and Mandatory) (Note 11) - 167,543 - - 

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 393 61,439 6 8 

Total Budgetary Resources $ 61,035 $ 244,841 $ 6 $ 33

Memorandum (non-add) entries:

 Net adjustments to unobligated balance brought forward, Oct. 1 $ 901 $ (7,024) $ (6) $ - 

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) 

(Note 11) $ 46,002 $ 221,384 $ 1 $ 10 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 12,290 - - - 

 Unapportioned, Unexpired Accounts 2,168 23,457 5 23

Unexpired Unobligated Balance, End of year $ 14,458 $ 23,457 $ 5 $ 23

Expired Unobligated Balance, End of Year 575 - - - 

Unobligated Balance, End of Year (Total) $ 15,033 $ 23,457 $ 5 $ 23 

Total Status of Budgetary Resources $ 61,035 $ 244,841 $ 6 $ 33

Outlays, Net (Discretionary and Mandatory) 45,918 83,059 (5) 2 

Distributed Offsetting Receipts (-) (Note 11) (27,321) - (8) - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 11) $ 18,597 $ 83,059 $ (13) $ 2 
Fiscal Year 2019 Annual Report | Federal Student Aid 151

Required Supplementary Information (Unaudited) 

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

Direct Student Loan Program Teach Program

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts

Budgetary Resources:

Unobligated Balance from Prior Year Budget Authority, Net $ 276 $ 472 $ 4 $ - 

Appropriations (Discretionary and Mandatory) 12,490 - 75 - 

Borrowing Authority (Discretionary and Mandatory) (Note 12) - 167,206 - 110

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) - 45,435 - 42

Total Budgetary Resources $ 12,766 $ 213,113 $ 79 $ 152

Memorandum (non-add) entries:

 Net adjustments to unobligated balance brought forward, Oct. 1 $ 276 $ (5,786) $ - $ (2)

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) 

(Note 12) $ 12,490 $ 207,845 $ 75 $ 150 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts - - - - 

 Unapportioned, Unexpired Accounts - 5,268 - 2 

Unexpired Unobligated Balance, End of year $ - $ 5,268 $ - $ 2 

Expired Unobligated Balance, End of Year 276 - 4 - 

Unobligated Balance, End of Year (Total) $ 276 $ 5,268 $ 4 $ 2 

Total Status of Budgetary Resources $ 12,766 $ 213,113 $ 79 $ 152

Outlays, Net (Discretionary and Mandatory) 12,014 92,745 64 (11) 

Distributed Offsetting Receipts (-) (Note 12) (26,539) - - - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 12) $ (14,525) $ 92,745 $ 64 $ (11) 
152 Fiscal Year 2019 Annual Report | Federal Student Aid

Required Supplementary Information (Unaudited) 

United States Department of Education

Federal Student Aid

Combining Statement of Budgetary Resources

For the Year Ended September 30, 2019

(Dollars in Millions)

Federal Family Education 

Loan Program

Perkins Loans 

and Grants

Administrative 

Funds

Budgetary

Non-Budgetary 

Credit Reform 

Financing Accounts Budgetary Budgetary

Budgetary Resources:

Unobligated Balance from Prior Year Budget Authority, Net $ 2,091 $ 15,362 $ 9,613 $ 31 

Appropriations (Discretionary and Mandatory) 2,596 - 31,787 1,679

Borrowing Authority (Discretionary and Mandatory) (Note 12) - 227 - - 

Spending Authority from Offsetting Collections 

(Discretionary and Mandatory) 388 15,954 (1) - 

Total Budgetary Resources $ 5,075 $ 31,543 $ 41,399 $ 1,710

Memorandum (non-add) entries:

 Net adjustments to unobligated balance brought forward, Oct. 1 $ (85) $ (1,236) $ 728 $ (12)

Status of Budgetary Resources:

New Obligations Incurred and Upward Adjustments (Total) 

(Note 12) $ 2,678 $ 13,379 $ 29,053 $ 1,705 

Unobligated Balance, End of Year:

 Apportioned, Unexpired Accounts 249 - 12,039 2 

 Unapportioned, Unexpired Accounts 2,148 18,164 15 - 

Unexpired Unobligated Balance, End of year $ 2,397 $ 18,164 $ 12,054 $ 2 

Expired Unobligated Balance, End of Year - - 292 3 

Unobligated Balance, End of Year (Total) $ 2,397 $ 18,164 $ 12,346 $ 5 

Total Status of Budgetary Resources $ 5,075 $ 31,543 $ 41,399 $ 1,710

Outlays, Net (Discretionary and Mandatory) 2,275 (9,677) 29,985 1,585

Distributed Offsetting Receipts (-) (Note 12) (236) - (538) - 

Agency Outlays, Net (Discretionary and Mandatory) 

(Note 12) $ 2,039 $ (9,677) $ 29,447 1,585
Fiscal Year 2019 Annual Report | Federal Student Aid 153

Required Supplementary Information (Unaudited) 

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154 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 

Office of Inspector General Audit Transmittal Letter

Independent Auditors’ Report

Office of Inspector General Audit Transmittal
Fiscal Year 2019 Annual Report | Federal Student Aid 155

Independent Auditors’ Report 

Office of Inspector General Audit Transmittal Letter
156 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 

Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 157

Independent Auditors’ Report 
158 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 159

Independent Auditors’ Report 
160 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 161

Independent Auditors’ Report 
162 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 163

Independent Auditors’ Report 
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Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 165

Independent Auditors’ Report 
166 Fiscal Year 2019 Annual Report | Federal Student Aid

Independent Auditors’ Report 
Fiscal Year 2019 Annual Report | Federal Student Aid 167

Other Information 

Other Information (Unaudited)
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Other Information 

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Fiscal Year 2019 Annual Report | Federal Student Aid 169

Other Information

Other Information

Summary of Financial Statement Audit and Management Assurances

Summary of Financial Statement Audit

Audit Opinion: Unmodified

Restatement: No

Material Weaknesses Beginning Balance New Resolved Consolidated Ending Balance

Total Material Weaknesses 1 0 0 0 1 

For details on the management assurances related to the FSA programs, please refer to the 

Analysis of Systems, Controls and Legal Compliance discussion in the Management’s 

Discussion and Analysis section of this document as well as the Summary of Financial 

Statement Audit and Management Assurances section in the Other Information section of the 

Department’s AFR.

FSA Management Challenges

For details on FSA Management Challenges, please refer to the Office of Inspector General’s 

Management Challenges for FY 2019 Executive Summary found in the Other Information 

section located within the Department’s AFR.
170 Fiscal Year 2019 Annual Report | Federal Student Aid

Other Information 

Payment Integrity

Improper Payment Information Act (as Amended by IPERA and IPERIA) Reporting Details

The Improper Payments Information Act of 2002 (Pub. L. 107-300) as amended by the Improper 

Payments Elimination and Recovery Act of 2010 (IPERA; Pub. L. 111-204) and the Improper 

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

requires federal agencies to report information annually on improper payments to the President 

and Congress through the annual Performance and Accountability Reports or Annual Financial 

Reports. For improper payments information, FSA’s activities are part of an overall 

Departmental integrated reporting effort and reported within the Department’s AFR. 

In FY 2019, the Pell Grant and Direct Loan Programs are the FSA programs identified as

susceptible to significant improper payments and OMB-designated high priority programs.

Improper Payment Estimates

In FY 2019, FSA implemented a new methodology to estimate improper payments. The new 

statistically valid sampling and estimation methodology was used to estimate the improper 

payment rates for the Pell Grant and Direct Loan Programs. This new methodology, which is 

based on a larger, random sample of schools and used data obtained from compliance audits 

performed by external auditors at the over 5,700 schools, improves the accuracy of the 

improper payment estimates allowing for more precise root cause analyses to improve 

corrective actions. 

FSA estimated improper payments for the Pell Grant and Direct Loan Programs by reviewing 

the results of annual compliance audits performed by external auditors of the sampled schools. 

A compliance audit sample was selected by dividing the population of Pell Grant and Direct 

Loan disbursing schools into mutually exclusive groups or "strata" based on school 

disbursement amounts. FSA randomly selected schools into the sample from each stratum so 

that schools in the same stratum had equal probabilities of selection. All schools in the two 

strata containing the schools disbursing the largest amounts (i.e., schools with Direct Loan 

disbursements over $150 million and schools with Pell disbursements over $50 million) were 

included in the sample. The Pell Grant and Direct Loan improper payment estimates are based 

in part on improper payments identified by the auditor for each sampled school. To account for 

improper payments associated with misreported income, the Pell Grant improper payment 

estimate also incorporates improper payment rates reported in the Study, which estimates Pell 

Grant improper payment rates based on a comparison between information reported by 

applicants on the FAFSA and income details reported to the IRS.

To estimate Direct Loan improper payments, the Direct Loan compliance audit estimate was

combined with two independent statistical sample estimates derived from the sampling of loan 

consolidations and refund payments. FSA reviewed an independent sample of FFEL to Direct 

Loan consolidation overpayment and underpayment activity using a Probability Proportional to 

Size (PPS) technique. The PPS technique was based on dollar amount and used to draw the 

sample reducing the probability that small Direct Loan consolidations were selected. After 

selecting the monthly samples, each overpayment and underpayment was reviewed to 

determine which of these transactions were improper payments. Similarly, an independent 

sample of Direct Loan refund activity was selected. The selection was also made using a PPS 

technique. Each refund was tested to determine if it was an improper payment.
Fiscal Year 2019 Annual Report | Federal Student Aid 171

Other Information

The Pell Grant and Direct Loan improper payments estimated using this new statistically valid 

estimation methodology are included in Figure 28 and Figure 29, respectively.

Figure 28: Fiscal Year 2019 Pell Grant 

Program Estimates

(Dollars in Millions)

Figure 29: Fiscal Year 2019 Direct Loan 

Program Estimates

(Dollars in Millions

For the Pell Grant and Direct Loan Programs, respectively, FSA estimates the portion of 

projected improper payments that are attributed to monetary loss to the Federal Government, 

attributed to non-monetary loss, and unknown due to inability to discern whether a payment was 

proper as a result of insufficient or lack of documentation. These estimates are reported in 

Figure 30.

Figure 30: FY 2019 Monetary Loss, Non-Monetary Loss, and Unknown

(Dollars in Millions)

$189.03

$380.04

$50.78

$211.18

$243.33

$54.92

$0 $50 $100 $150 $200 $250 $300 $350 $400

Direct Loan

Pell Grant

Unknown Non-Monetary Loss Monetary Loss
172 Fiscal Year 2019 Annual Report | Federal Student Aid

Other Information 

Monetary loss to the Federal Government, as defined by OMB, is an amount that should not 

have been paid and in theory should/could be recovered. The monetary loss amounts reported 

in Figure 30 are estimates, and therefore, not all reported monetary loss is recoverable. Of the 

estimated monetary loss for the Pell Grant and Direct Loan programs, the majority is outside of 

the agency’s control. FSA must rely heavily on controls established by external entities that 

receive FSA payments, including federal, state, and private organizations and institutions, 

because they further distribute the funds they receive from FSA to subordinate organizations 

and individuals. These “third-party” controls are outside of FSA’s operational control.

Non-Monetary loss to the Federal Government is either an underpayment or a payment to the 

right recipient for the correct amount where the payment process fails to follow applicable 

regulations and/or statutes.

An “Unknown” amount to the Federal Government, as defined by OMB, is the estimated amount 

within the improper payment estimate that could be either proper or improper, but the agency is 

unable to discern whether the payment was proper or improper as a result of insufficient or lack 

of documentation. Documentation deficiencies for the Pell Grant and Direct Loans programs 

include but are not limited to, inadequate tracking of attendance by schools, including 

inadequate tracking of students’ last date of attendance or withdrawal date, lack of supporting 

eligibility documentation retained by schools, and lack of evidence to support a school 

completed required verification of information reported by an applicant on their FAFSA.

Of the total projected improper payments for the Pell Grant and Direct Loan Programs, 

99 percent are estimated to be made by recipients of federal money and 1 percent are

estimated to be made by FSA. Improper payments attributed to recipients include improper 

disbursements of Title IV funds by schools. Improper payments attributed to FSA include, for 

Pell, estimates of misreported income for students not selected for verification and who did not 

use the IRS DRT and, for Direct Loan, consolidation and refund improper payments related to 

the Department’s loan servicing operations. Misreported income accounts for approximately 

77.2 percent of the estimated FY 2019 Pell Grant improper payments.

Figure 31: FY 2019 Sources of Improper Payments

(Dollars in Millions)

$476.43

$646.14

$6.71

$0.00

$0 $100 $200 $300 $400 $500 $600 $700

Direct Loan

Pell Grant

Made directly by the Department Made by recipients of Federal money
Fiscal Year 2019 Annual Report | Federal Student Aid 173

Other Information

Controls to Prevent, Detect, and Recover Improper Payments

FSA maintains an internal control framework which includes an integrated system of 

complementary oversight functions to help prevent, detect, and recover improper payments, and 

ensure compliance by all participating parties.

In designing controls, FSA attempts to strike a 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, there are limitations to the availability of data necessary to verify FAFSA 

information without increasing the burden on schools and students. For example, the Internal 

Revenue Code does not currently permit a database match with the IRS. Such a match would 

eliminate the need to rely on tax transcripts submitted by the applicant (and the applicant’s 

parent, if the applicant is a dependent) to verify income data in cases where the IRS DRT is not 

used to transfer tax information directly into the FAFSA form. In its most recent budget 

submission, the Department included information on pursuing legislation to aid an income data 

match between FSA and the IRS. 

Improper Payment Corrective Actions

When control deficiencies are detected, either within FSA or at external entities, FSA seeks to 

identify the root causes, develop corrective action plans, and track corrective actions through to 

completion. In FY 2019, the most significant root cause, misreported income, is derived from 

the Study performed for the Pell Grant Program that compares information reported by 

applicants on the FAFSA and income details reported to the IRS. The Department is 

coordinating with Treasury and OMB to pursue legislation that would provide an exemption to 

the IRS Tax Code Section 6103 to further streamline FSA’s ability to receive and verify 

applicants’ and borrowers’ income data.

For additional details about the root causes of improper payments identified from FY 2019 

improper payment fieldwork, and the corrective actions FSA has identified to address these root 

causes of improper payments, please refer to the Other Information section located within the 

Department's AFR.
174 Fiscal Year 2019 Annual Report | Federal Student Aid

Other Information 

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Fiscal Year 2019 Annual Report | Federal Student Aid 175

Appendices 

Appendices
176 Fiscal Year 2019 Annual Report | Federal Student Aid

Appendices 

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Fiscal Year 2019 Annual Report | Federal Student Aid 177

Appendix A 

Glossary of Acronyms and Terms

Appendix A: Glossary of Acronyms and Terms

Acronym Description 

A

ABCP Conduit Asset-Backed Commercial Paper Conduit

ACSD Automatic Closed School Discharge

ACSI American Customer Satisfaction Index

AFR U.S. Department of Education FY 2019 Agency Financial Report

APG Agency Priority Goal

Appendix A OMB Circular A-123, Appendix A, Management of Reporting and Data 

Integrity Risk

Annual Report Federal Student Aid FY 2019 Annual Report 

B 

BDR Borrower Defense to Repayment

C

Caucus Student Loan Ombudsman Caucus

COO Chief Operating Officer

CSRS Civil Service Retirement System

D

DCC Digital and Customer Care

the Department U.S. Department of Education

Direct Loan William D. Ford Federal Direct Loan

DMCS Debt Management and Collection System

DOL U.S. Department of Labor

DRT IRS Data Retrieval Tool

E

ECASLA Ensuring Continued Access to Student Loans Act of 2008

EDMAP Enterprise-wide Data Management and Analytics Platform

EDWA Enterprise Data Warehouse and Analytics

EEI Employee Engagement Index

ERM Enterprise Risk Management
178 Fiscal Year 2019 Annual Report | Federal Student Aid

Appendix A 

Glossary of Acronyms and Terms

F

FAFSA® Free Application for Federal Student Aid

FASAB Financial Accounting Standards Advisory Board

FCRA Federal Credit Reform Act of 1990

FECA Federal Employees’ Compensation Act

Federal Funds Federal Student Loan Reserve Funds

FERS Federal Employees Retirement System

FEVS Federal Employee Viewpoint Survey

FDMS Feedback and Dispute Management System

FFEL Federal Family Education Loan 

FMFIA Federal Managers’ Financial Integrity Act of 1982

FPRD Final Program Review Determinations

FSA Federal Student Aid

FSA FY 2015–19 

Strategic Plan 

Federal Student Aid: Strategic Plan, FY 2015–19

FSEOG Federal Supplemental Educational Opportunity Grants

FY Fiscal Year

G

GAAP Generally Accepted Accounting Principles

GAO Government Accountability Office

GLBA Gramm-Leach-Bliley Act

H

HCERA Health Care and Education Reconciliation Act of 2010

HEA Higher Education Act of 1965, as amended

HEAL Health Education Assistance Loan

I

IDR Income Driven Repayment

IHE Institution of Higher Education

IPERA Improper Payments Elimination and Recovery Act of 2010

IPERIA Improper Payments Elimination and Recovery Improvement Act of 2012

IRS Internal Revenue Service

IT Information Technology

M

Met Performance result met or exceeded target
Fiscal Year 2019 Annual Report | Federal Student Aid 179

Appendix A 

Glossary of Acronyms and Terms

N

N/A Performance result is not applicable because the performance metric

was not developed, the performance metric was not implemented, or 

the required data were not available in time for inclusion.

NCES National Center for Education Statistics

Next Gen FSA Next Generation Financial Services Environment

Next Gen PPO Next Generation Partnership Participation and Oversight

Not met Performance result did not meet target

NSLDS National Student Loan Data System

O

OCIO Office of the Chief Information Officer

OIG Office of Inspector General

OMB U.S. Office of Management and Budget

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

Management and Internal Control

OPM U.S. Office of Personnel Management

OPR Organizational Performance Review

P

PAYE Pay As You Earn

PBO Performance-Based Organization

PCA Private Collection Agency

Pell Grant Federal Pell Grant Program

PLUS Parent Loan for Undergraduate Students

POE Principles of Excellence

PPS Probability Proportional to Size

Pub. L Public Law

PSLF Public Service Loan Forgiveness

S

SAFRA Student Aid and Fiscal Responsibility Act

SBR Statement of Budgetary Resources

Secretary Secretary of Education

Study FAFSA/IRS Data Statistical Study
180 Fiscal Year 2019 Annual Report | Federal Student Aid

Appendix A 

Glossary of Acronyms and Terms

T

TEACH Teacher Education Assistance for College and Higher Education Grant

TEPSLF Temporarily Expanded Public Service Loan Forgiveness

Title IV Title IV of the Higher Education Act of 1965, as amended

TOP Treasury Offset Program

TPD Total and Permanent Disability

Treasury U. S. Department of the Treasury

U

U.S. United States
Fiscal Year 2019 Annual Report | Federal Student Aid 181

Appendix B 

Availability of the Federal Student Aid Annual Report

Appendix B: Availability of the Federal Student Aid Annual 

Report

The Federal Student Aid FY 2019 Annual Report and the Annual Reports from prior years are

available on the following websites:

FSA: StudentAid.gov/strategic-planning-reporting

The Department: http://www.ed.gov/about/reports/annual/index.html

The Federal Student Aid: Strategic Plan, Fiscal Years 2015–19 and the strategic plans from 

prior years are also available at StudentAid.gov/strategic-planning-reporting

Stay connected to Federal Student Aid through social media: 

• Visit the FSA website: StudentAid.gov

• Like FSA on Facebook : Facebook.com/FederalStudentAid

• Follow FSA on Twitter : @FAFSA

• Find FSA on YouTube : YouTube.com/user/FederalStudentAid
182 Fiscal Year 2019 Annual Report | Federal Student Aid

Appendix B 

Availability of the Federal Student Aid Annual Report

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Fiscal Year 2019 Annual Report | Federal Student Aid 183

Acknowledgements 

Acknowledgements

The FSA FY 2019 Annual Report was prepared with the energies and talents of many Federal 

Student Aid employees. To these dedicated individuals, the Chief Operating Officer and Chief 

Financial Officer would like to offer their sincere appreciation and recognition.

In particular, we would like to recognize the following Federal Student Aid offices for their 

contributions:

• Finance Office

• Strategic Planning and Reporting

• Office of the Ombudsman

• Office of Strategic Communications

• COO Front Office

We also offer our sincerest thanks and acknowledgement to the staff of the following 

Department of Education offices for their contributions: 

• Office of Finance and Operations

• Budget Service

• Office of the Secretary

• Office of Legislative and Congressional Affairs

• Office of Chief Information Officer

We would also like to acknowledge the Office of Inspector General and KPMG LLP for the 

professional manner in which they conducted the audit of the FY 2019 Financial Statements. 

The Federal Student Aid FY 2019 Annual Report

Federal Student Aid

A Principal Office of the U.S. Department of Education

Finance Office

November 2019