28 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

FORWARD-LOOKING INFORMATION

This section summarizes information pertinent to the 

Department’s future progress and success.

ENTERPRISE RISK MANAGEMENT

The Department’s Enterprise Risk Management (ERM) 

program supports agency-wide efforts to maximize the 

Department’s value to students and taxpayers through 

achievement of strategic goals and objectives. The 

Department’s ERM program strategically focuses on the 

complete spectrum of the organization’s significant risks 

and the combined impact of those risks as an interrelated 

portfolio rather than simply addressing risks within silos. 

This coordinated approach leverages data and analytical 

solutions to identify, measure, and assess challenges related 

to mission delivery and resource management. Through 

ERM, the Department seeks to embed a systematic and 

deliberate view of risk into key management practices, 

ultimately yielding more effective performance and 

operational outcomes. The Department’s implementation 

of ERM includes three critical strategies that are more 

fully described under Strategic Objective 4.2, Identify, 

assess, monitor and manage enterprise risks:

1. Creating a risk-aware culture that includes transparent 

discussions of risks.

2. Implementing an ERM framework and capability 

that leverages existing risk management activities and 

governance bodies.

3. Managing risks in a more coordinated and 

strategic manner.

In FY 2020, the Department took significant steps to 

further develop the ERM program by establishing the 

Office of Enterprise Data Analytics and Risk Management 

(OEDARM), within the Office of Finance and Operations 

(OFO), to direct the agency’s overall ERM strategy and 

formally align ERM and internal controls processes. 

OEDARM leadership established a formal Enterprise Risk 

Management Working Group (ERMWG) with senior 

representation across the agency to further solidify the 

Department’s ERM governance structure. The ERMWG 

helped to conduct coordinated risk assessments and 

incorporated the risks highlighted or exacerbated by the 

COVID-19 pandemic into short- and long-term risk 

planning. OEDARM leveraged partnerships with agency 

leaders to identify, measure, and assess challenges related 

to mission delivery and develop coordinated, actionable 

response plans.

OEDARM leadership actively sought to enhance 

strategic partnerships with ERM colleagues across the 

government as well as with Department’s own Office 

of Inspector General. To better understand how the 

Department’s ERM program has evolved over time, the 

Department enrolled in the Office of Management and 

Budget’s Pilot to validate the Federal ERM Maturity 

Model V1.0, a pilot that will extend through FY 2021. 

Through the pilot, the Department seeks to 1) test, assess, 

and validate sections or components of the Model for 

its iterative refinement; and 2) assess the maturity of the 

Department’s own ERM program. Evaluation will focus 

on an assessment of the Model’s operational viability and 

the influence of the Model on the Department’s riskinformed culture—including executive engagement and 

resourcing processes—with a goal of identifying potential 

improvements to the Model. 

Throughout FY 2021, the Department plans to further 

integrate ERM with key management processes to 

ensure risk indicators and considerations inform budget 

formulation, strategic planning, and performance 

management. OEDARM seeks to support a culture of 

continuous improvement within the Department—

where data and awareness of enterprise risk are used to 

objectively inform strategic and operational decisions 

and optimize agency performance. To that end, in FY 

2021, OEDARM plans to develop and implement a 

comprehensive ERM training program for all levels of 

the organization as well as to enhance digital tools for 

collecting, analyzing, and reporting risk data to promote 

transparency and accountability across the Department. 

In light of the current COVID-19 pandemic, the 

Department has intentionally shifted to an even more 

comprehensive, strategic approach to risk management—

one that seamlessly considers national health emergencies 

or other significant crises that could adversely impact 

continuity of operations.
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 29

MANAGEMENT’S DISCUSSION AND ANALYSIS

 Continue to support the development of additional 

tools, such as the College Scorecard and Financial Aid 

Shopping Sheet, to increase transparency around higher 

education costs and outcomes that may help students 

and families make informed decisions before 

college enrollment.

Managing Risks and Uncertainty Facing the Direct 

Loan Program’s Cost Estimates

Direct Loan program costs are estimated consistent with 

the requirements of the Federal Credit Reform Act of 1990. 

Under the Act, the future disbursements and collections 

associated with a cohort of loans are estimated for the 

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

actual performance of a loan cohort tends to deviate from 

the estimated performance during that time, which is not 

unexpected given the inherent uncertainty involved in 

developing estimates. There are four types of inherent risk, 

described below, that make estimating lifetime program 

costs a difficult task.

Legislative, Regulatory, and Policy Risk

There are inherent risks to estimating future lifetime 

disbursements and collections for a cohort stemming 

from legislative, regulatory, or administrative actions. For 

instance, the cost structure of the Direct Loan program 

may be significantly altered. In addition, the effects on 

financial modeling and estimation associated with recent 

legislative, regulatory, and policy action is difficult to 

interpret given the lack of actual trend data availability. 

Some examples of current risks include the following:

CARES Act and Presidential Memorandum 

(“Memorandum on Continued Student Loan Payment 

Relief During the COVID-19 Pandemic”): The CARES 

Act provided emergency relief measures in the Direct Loan 

program, including suspending loan payments, halting 

collections on defaulted loans, and setting interest rates 

to 0 percent through September 30, 2020. On August 

8, 2020, the President directed the Secretary to continue 

these measures through December 31, 2020. These actions 

have largely insulated federal student loan performance 

from economic disruption caused by the coronavirus 

pandemic, while at the same time reducing the amount 

of loan repayments being remitted to the Department 

of Education. As the pandemic is ongoing, there is great 

uncertainty regarding cost estimates as future legislative 

and administrative actions could extend these emergency 

relief measures past December 31, 2020.

Income-Driven Repayment Plans: Without 

consideration of impacts from the pandemic, IDR plans 

DIRECT LOAN PROGRAM

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

Federal Direct Loan (Direct Loan) program, provides 

students and their families with funds to help pay for their 

postsecondary education costs. The following describes 

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

student debt more manageable and (2) the risks inherent 

in estimating the cost of the program.

Managing Student Loan Debt

Each year, federal student loans help millions of Americans 

obtain a college education—an investment that, on 

average, has high returns. While the average return to 

having a college degree remains high,1

 some students leave 

school poorly equipped to manage their debt.

Traditionally, federal student loans had fixed-payment 10-

year repayment schedules, making it difficult for borrowers 

to begin repaying at the start of their career when their 

salaries are low. The recent expansion of income-driven 

repayment (IDR) plans allows students the opportunity 

for greater financial flexibility as it pertains to their 

monthly repayment. For more details on these plans, visit 

FSA’s How to Repay Your Loans Portal.

Recent trends in student loan repayment data show that:

 Nearly 70 percent of the Direct Loan portfolio is in 

administrative forbearance, the suspended payment 

status provided to students through the CARES Act.

 As of June 2020, nearly 8.2 million Direct Loan 

recipients were enrolled in IDR plans, representing a 

7 percent increase from June 2019 and a 16 percent 

increase from June 2018. Overall, more than 50 

percent of Direct Loan dollars and 32 percent of 

borrowers in repayment are enrolled in an IDR plan.

The Department continues to work relentlessly to make 

student loan debt more manageable. Looking to the 

future, the Department will:

 Continue conducting outreach efforts to inform 

student loan borrowers of their repayment options 

before the emergency loan relief measures expire on 

December 31, 2020. 

 Work to improve customer service and student aid 

systems and processes by implementing FSA’s Next 

Generation Federal Student Aid (Next Gen FSA), see 

page 33. 1 https://libertystreeteconomics.newyorkfed.org/2019/06/despite-rising-costscollege-is-still-a-good-investment.html
30 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

organization continues to increase. As of September 30, 

2020, the number of borrowers with certified employment 

totaled 1,357,699. The low number of approved PSLF 

applications in relation to employment certifications may 

be partially due to the complicated nature of the program, 

in particular the determination of what constitutes a 

qualifying payment. In addition, many borrowers who 

file employment certification forms early in their careers 

may also move into private sector employment before 

completing the 10 years of qualifying payments and 

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

forgiveness much later after returning to public service 

work. The Consolidated Appropriations Act, FY 2018, and 

the Department of Education Appropriations Act, FY 2019, 

each provided $350 million toward Temporary Expanded 

Public Service Loan Forgiveness (TEPSLF) for borrowers 

who met eligibility for public service employment but 

were not enrolled in a qualified repayment plan. The 

Consolidated Appropriations Act, FY 2020, provided $50 

million for TEPSLF. Future congressional action that 

may affect eligibility for PSLF continues to be an area of 

uncertainty. Lastly, although the Department continues 

to remain informed on and manage the risk associated 

with estimating participation in this program, uncertainty 

remains about further borrower outreach to boost 

participation in the PSLF program.

Estimation Risk

Actual student loan outcomes may deviate from estimated 

student loan outcomes, which is not unexpected given 

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

Loan program is subject to a significantly large number 

of borrower-level events and future economic factors that 

heavily impact the ultimate cost of student loans. For 

example, assumptions that need to be estimated for loans 

originating in FY 2020 include how long students will 

remain in school; what repayment plan will be chosen; 

whether the loan will be consolidated; whether the borrower 

will die, become disabled, bankrupt, or have another claim 

for discharge or forgiveness (closed school loan discharge, 

borrower defense to repayment, etc.); whether the loan will 

go into deferment or forbearance; whether the loan will 

go into default and, if so, what collections will be received 

on the defaulted loan; and, if the loan is in an IDR plan, 

what the borrower’s employment (public sector or not) and 

income and family status will be over the next 25 years. 

These projections are generally made based on historical 

data about borrower characteristics and behavior, which are 

more difficult to estimate during times of unprecedented 

tend to be more costly to the government than nonIDR plans. For the 2020 loan cohort, it is estimated that 

the government will recover 40 percent less for loans in 

IDR plans as compared to loans in standard plans. It is 

important to be careful in making such comparisons, 

however, as the underlying characteristics of borrowers 

(and the corresponding behavioral dynamics driving 

selection of plans) also impact the overall cost of loans 

under each plan. In general, the proliferation of IDR plans 

has made IDR terms more generous and made the plans 

available to a greater number of borrowers; however, these 

plans are traditionally more costly to the government. 

Also, having more repayment plan options complicates 

repayment plan selection, since the tradeoff decisions 

when selecting the plans vary by borrower and may not 

always be entirely clear. Selected comparisons between 

projected originations and borrower repayments under 

the different IDR plans are available on the Department’s 

website. Future commitment to market and increased 

participation in these plans are areas of uncertainty. Future 

legislative and regulatory activity could also affect the 

underlying cost of IDR plans.

Public Service Loan Forgiveness: Enacted in 2007, the 

Public Service Loan Forgiveness (PSLF) program allows 

a Direct student loan borrower to have the balance of 

their Direct student loans forgiven after having made 

120 qualifying monthly payments under a qualifying 

repayment plan, while working full time for a qualifying 

public service employer (such as government or certain 

types of nonprofit organizations). In general, forgiveness 

provided via PSLF raises the cost of the Direct Loan 

program; however, there is still uncertainty as to how 

many borrowers will take advantage of the program. 

Much of this uncertainty arises because borrowers are 

not required to apply for the program or provide any 

supporting documentation on their employment until 

after having made the 120 qualifying monthly payments, 

and data on actual PSLF forgiveness remains rather 

limited, as borrowers first became eligible in FY 2018.

Data on approved PSLF applications first became available 

in FY 2018 since borrowers first became eligible for PSLF 

loan forgiveness starting October 1, 2017, after having 

made 120 qualifying payments. As of September 30, 2020, 

the total number of borrowers who received forgiveness 

totaled 3,469. The value of this forgiveness totaled 

$260.49 million. Despite the relatively modest numbers 

of approved applications to date, the number of borrowers 

who have certified their employment in a public service 
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 31

MANAGEMENT’S DISCUSSION AND ANALYSIS

issued to use alternative assumptions. Consequently, the 

Department explored the possibility of using economic 

factors from other sources, including, but not limited 

to, the Congressional Budget Office (CBO). Ultimately, 

the Department made the decision after extensive 

consultations with Education leadership and OMB to 

calculate the FY 2020 financial statement re-estimate 

using the President’s Budget 2021 assumptions (OMB 

assumptions). Factors contributing to this decision include 

the fact that any available economic projections have a 

high degree of uncertainty due to the uniqueness of the 

potential economic conditions caused by the pandemic. 

In addition, there is little historical data comparable 

to the current crisis that can be used to extrapolate 

and adjust student loan assumptions. Finally, current 

legislation and the presidential memorandum (i.e., the 

CARES Act) provided temporary relief to student loan 

borrowers through December 31, 2020; as a result, there 

is no meaningful data on the impact of current economic 

conditions on student loan performance. Alternatively, 

the Department conducted targeted sensitivity analysis to 

address potential economic impacts of the pandemic. 

The Department conducts sensitivity analyses as one 

way to assess the degree of uncertainty around the 

economic assumptions. In the analysis reported here, the 

Department replaced the most important inputs from 

the President’s Budget 2021 economic assumptions used 

in the models with the numbers from CBO’s July 2020 

economic package. The following examples show the 

projections of cohorts 1994-2019, where one specific 

assumption is varied from the assumption used in the 

financial statement re-estimate.

The monthly unemployment rate is an assumption 

used in the default projection model. For the sensitivity 

analysis, the CBO projected quarterly unemployment 

rate assumptions were used after June of 2020. Actual 

data from the Bureau of Labor Statistics was available 

for unemployment prior to June 2020; therefore, the 

rates used in the financial statement re-estimate do not 

differ from those used in the sensitivity analysis for 

that timeframe. Changing this assumption resulted in a 

projected increase to the re-estimate of $3.7 billion. The 

chart below shows the changes to the default rate for a sub 

population of loans.

uncertainty facing students and borrowers in repayment 

plans today. Lastly, the Direct student loan portfolio has 

grown from approximately $356 billion in FY 2011 to more 

than $1.2 trillion as of the end of FY 2020. This growth 

naturally results in larger re-estimates, since a re-estimate 

worth 1 percent of the portfolio today would be more than 

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

Macroeconomic Risk

The ultimate amount, timing, and total value of future 

borrower repayments under the Direct Loan program are 

heavily affected by certain economic factors, especially 

since the introduction of IDR plans.

In 2020, the coronavirus pandemic caused widespread 

disruption to the American economy. The emergency 

relief measures provided by Congress and the President 

resulted in flexibilities for federal student loan borrowers, 

preventing spikes in delinquency and default rates. 

Involuntary loan collections from wage garnishment, 

tax refund reductions, and reductions of federal benefits 

such as Social Security are also suspended. However, the 

ultimate impact of the pandemic on long-term Direct 

Loan program costs is subject to significant uncertainty 

and will depend on, among other things, short and 

long-term unemployment, economic growth trends, 

and potential structural changes in the overall economy 

and job markets. Some types of macroeconomic risk 

are inherent to student loan cost estimation, and the 

Department analyzes them regularly—though some of 

these risks have been exacerbated by the unprecedented 

worldwide pandemic. New risks have also developed due 

to the conditions surrounding the pandemic. Specific 

examples of macroeconomic risk include:

Economic Assumptions: As part of its technical reestimate process for the financial statement re-estimates, 

the Department updates economic assumptions 

used to calculate forecasted borrower cash flows. The 

Department obtains the information used to update 

economic assumptions from the OMB. OMB typically 

provides an economic assumption package for MidSession Review (MSR) which updates the economic 

assumptions used for the President’s budget in November 

of the previous year. The Department historically has 

used the MSR assumptions for calculation of financial 

statement re-estimates.

OMB did not release a MSR economic assumptions 

package in FY 2020, and no official guidance was 
32 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

as a way to strengthen their credentials, change career 

paths, or improve future employment opportunities. 

While the coronavirus pandemic has been accompanied 

by a spike in unemployment (at least in the short term), 

the impact on student loan volume has been more mixed, 

as higher education has struggled to provide students the 

level of instruction they were receiving pre-pandemic. 

The exact impact on the cost estimates from the current 

recession remains a significant area of uncertainty. For 

instance, higher short-term unemployment rates could 

have an impact on future collections of already defaulted 

loans by increasing the risk of fewer collections from 

wage garnishment and tax refund reductions. A sensitivity 

analysis examining the impact of a 5 percent reduction in 

default collections for three years, starting in the second 

quarter of FY 2021 when the pandemic relief provisions 

are set to expire, resulted in a projected increase in the reestimate of $1 billion.

Wage Growth: The estimated costs of IDR plans are 

largely dependent on trends in observed wage growth. To 

the extent that future wage growth deviates significantly 

from prior wage growth, actual costs of IDR plans may 

deviate from estimated costs. The Department will 

closely monitor impacts to wage growth as a result of the 

pandemic. Data is not available for the FY 2020 financial 

statements, and the ultimate cost may not be known for 

some time. The estimates are sensitive to slight changes 

in model assumptions. For instance, a 10 percentage 

point increase in borrowers reporting zero discretionary 

income from FY 2020 to FY 2022 and a 5 percentage 

point increase for FY 2023 to FY 2025 would result in 

a projected increase to the re-estimate of $2.9 billion. 

The Department continues to manage risks in this area 

by building its knowledge about its borrower base and 

remaining informed of labor market statistics.

Operational Risk

Unforeseen issues in administering and servicing student 

loans may impact the cost estimates. For example, in 

December 2019, the President signed the Fostering 

Undergraduate Talent by Unlocking Resources for 

Education Act (FUTURE Act), which amends Section 

6103 of the Internal Revenue Code to allow the IRS to 

share taxpayer data directly with the Department. Once 

implemented, this will make it easier for borrowers to 

stay enrolled in an IDR plan by allowing automated data 

sharing between federal agencies and eliminating the need 

for borrowers to annually recertify their income. A timeline 

for implementation of the FUTURE Act is uncertain, 

which can make predicting the impact on student loan 

The IDR model is used to develop cash flows for Direct 

Loans being repaid under any of the IDR repayment 

plans, including the income contingent repayment (ICR) 

plan, the income based repayment (IBR) plan, the Pay as 

You Earn (PAYE) plan, and the Revised Pay as You Earn 

(REPAYE) plan. The IDR model also uses information 

from the OMB economic package on the Consumer Price 

Index (CPI-U) as a factor for borrower income inflation, 

balances, and poverty guidelines. A sensitivity analysis that 

replaces the CPI-U with the assumptions from the July 

CBO estimates resulted in a projected increase to the reestimate of $1.7 billion.

Interest Rates: Direct Loan program cost estimates are 

very sensitive to changes in interest rates. Under the 

current program terms, the fixed borrower rates for 

direct loans are established in advance of the upcoming 

school year, while the Treasury fixed interest rate on the 

Department’s borrowings to fund those loans is not set 

until after those awards are fully disbursed, which can 

be as much as 18 months later. Unexpected changes in 

interest rates during this time can significantly impact 

Direct Loan program cost.

Unemployment: Unemployment rates have been shown 

to affect both student loan volume and student loan 

repayment decisions and behavior. During periods of 

economic downturn, displaced workers have tended to 

pursue higher education opportunities in high numbers 

Figure 13. Default Rates Using Different 

Unemployment Rate Assumptions

(Subsidized Stafford Cohort 2012 Example)

4 Year Junior/Senior Standard Enter Repay=4
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 33

MANAGEMENT’S DISCUSSION AND ANALYSIS

failing to understand how to apply for and maintain 

their aid eligibility, which repayment options they qualify 

for, and the financial implications of their student debt. 

Additionally, operational complexities and out-of-date 

contracts result in higher administrative costs and hinder 

effective oversight of our vendors.

Next Gen FSA Environment

Multiple websites, mobile applications, contact centers, 

and other customer interfaces have been combined into a 

simplified, consistent, and engaging customer experience, 

which will be enhanced by standardized training and 

tools. Since December 2019, FSA has launched a single 

front door on the web, Studentaid.gov, and has launched 

multiple modern self-service and consumer information 

tools that help our customers understand the aid they have 

received, their remaining eligibility, and how they can 

manage loan repayment in a way that meets their goals. 

While FSA’s digital platform helps customers cut through 

the information clutter and access robust self-service, other 

components of Next Gen will bring onboard multiple 

contact centers that provide customers and partners with 

support across the entire student aid lifecycle, all under the 

FSA brand.

In addition to an improved customer experience, Next 

Gen FSA will completely modernize FSA’s back-end 

systems and infrastructure. This transformation will pave 

the way for improved application and loan processing and 

management of customer accounts. The contracts that 

bring onboard these new systems will include objective 

performance standards and accountability measures to 

ensure customers receive accurate, timely responses to 

their inquiries. These new technologies will also integrate 

modern cybersecurity protections, and a new enterprisewide data analytics platform will drive improved data and 

governance standards.

Solicitation and Procurement Process

In January 2019, FSA awarded a major contract for 

Digital and Customer Care, which provides FSA with 

new digital, marketing and communications, and 

customer care platforms that enable the implementation 

of a modern StudentAid.gov and myStudentAid mobile 

application, as well as improved tools for customer 

outreach. In June 2020, FSA awarded five Business 

Process Operations contracts, which bring on board 

vendors that will eventually provide enterprise-wide 

contact centers and back-office processing for all of FSA’s 

customers and institutional partners. In October 2020, 

FSA released a solicitation for the Interim Servicing 

Solution (ISS) which will provide the core processing 

cost estimates a challenge. The Department invests 

significant resources to ensure continuous improvements 

in cybersecurity defenses based on current and emerging 

threats. Despite this investment, security threats to 

operations are ongoing and incidents may happen without 

warning, potentially disrupting student loan administration 

and ultimately borrower cash flows, which can be impacted 

by the timing of when collections or disbursements are 

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

unpredictable disruptions in the administrative status quo 

may impact student loan cost estimates.

NEXT GEN FSA

About FSA

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

beyond high school, FSA delivers more than $115 billion 

in aid each year to students and their families. Through 

programs authorized under the Higher Education Act of 

1965, as amended, FSA provides grants, loans, and workstudy funds for college or career school. FSA also oversees 

the approximately 5,600 postsecondary institutions that 

participate in the federal student aid programs. In every 

interaction with students and their families, FSA strives to 

be the most trusted and reliable source of student financial 

aid information and services in the nation.

The Vision

FSA manages one of the largest consumer loan portfolios 

in the country, valued at $1.6 trillion.2

 It is critical that 

we provide an environment that provides customers with 

the services and experiences that they expect and the 

outcomes that they deserve. The Next Generation Federal 

Student Aid (Next Gen FSA) initiative is enabling FSA 

to realize this vision by modernizing the way we connect 

with our customers and streamlining our student aid 

systems and processes. This broad effort will deliver an 

improved customer experience for millions of Americans 

across the entire student aid life cycle, from fostering 

greater awareness about the availability of financial aid, 

to applying for aid, to repaying loans, to improving the 

participation experiences and oversight of our partners at 

postsecondary institutions.

Legacy Environment

In the current federal financial aid process, students 

and families must negotiate a complex and fragmented 

landscape, interacting with multiple systems, vendors, 

processes, and interfaces across a multitude of brands 

and user experiences. Too often, this poor customer 

experience creates confusion, resulting in borrowers 

2 Includes lender-held FFEL loans and school-held Perkins loans.
34 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Open Data

The Evidence Act requires agencies to make data “open by 

default.” The Department is planning to develop, release, 

and execute the Act’s required open data plan consistent 

with OMB guidance. The Department will balance 

privacy and security with the open data mandate and the 

priority of the Department to enable broader public use 

of data paid for by its citizens. The Department is also 

developing an Open Data Platform (ODP), a central 

repository for its data assets. Recently released in beta, it is 

a fully featured, robust, and highly scalable data repository 

that maintains all data assets in a fully searchable catalog. 

As required by the Evidence Act, the Department will build 

towards a comprehensive data inventory by expanding on 

the ODP and increasing its catalogued data assets for both 

externally available open data and internal sources subject 

to open data priorities, reviewing all data assets for release 

consistent with Evidence Act mandates and exclusions, and 

incrementally expanding the number of Department open 

data assets listed in in the Federal Data Catalogue.

Evaluation Officer and Evidence 

Leadership Group

The Evidence Act created a new role, a Department 

Evaluation Officer (EO), who is responsible for: (a) 

developing the Department’s Learning Agenda by 

assessing the Department’s portfolio of evaluations, policy 

research, and ongoing evaluation activities; (b) assessing 

the Department’s capacity to support the development 

and use of evaluation; (c) establishing and implementing 

the Department’s evaluation policy; and (d) coordinating 

a Department-wide evidence-building plan. IES’s 

Commissioner of the National Center for Education 

Evaluation and Regional Assistance is the Department’s EO. 

As required by the Evidence Act, the Department submitted 

its Draft Learning Agenda to OMB at the end of fiscal 

year 2020. The Learning Agenda was developed in 

consultation with the Department’s Evidence Leadership 

Group (ELG). The ELG is co-chaired by the EO and the 

Director of the Department’s Grants Policy Office (GPO) 

and includes members from the Department’s primary 

grant-making offices as well as mission-support units, such 

as the Department’s Budget Service, and Office of General 

Counsel, and ex-officio representatives from the Office 

of the Chief Data Officer, the Statistical Official, and the 

Performance Improvement Officer. Feedback from OMB 

and consultation with stakeholders across government, 

education, and the general public will be used to inform the 

system, fulfillment, and labor servicing for the federally 

managed loan portfolio.

The current Title IV Additional Servicing (TIVAS) and 

Not-for-Profit indefinite-delivery, indefinite-quantity 

contracts may be extended through December 2021 and 

March 2022, respectively. ISS will replace the current 

TIVAS and Not-for-Profit relationship upon award and 

migration of borrowers. In the event of a delay in the ISS 

implementation, the appropriate contractual actions will 

be taken to ensure continued servicing capabilities are 

maintained. FSA is taking a similar approach to all legacy 

contracts that will be impacted by the Next Gen FSA 

vision to ensure as smooth a transition as possible for our 

customers and partners.

L E V ER AGI NG DATA A S A 

STRATEGIC ASSET

The Department is focusing on further leveraging its data 

as a strategic asset, in part in response to requirements 

in the Foundations for Evidence-Based Policymaking 

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

Strategy. This section highlights three initiatives intended 

to help the Department realize the power of data in daily 

operations and national policy: (1) the development of an 

ED Data Strategy; (2) priorities for Open Data; and (3) a 

new focus for the Evidence Leadership Group in advising 

the Evaluation Officer and developing the Department’s 

learning agenda.

Data Strategy

The 22020 Action Plan under the Federal Data Strategy 

calls for agencies to “put in place a data strategy or road 

map.” The Agency-wide Data Governance Board (DGB) 

has initiated a process to develop the Department’s Data 

Strategy in order to realize the full potential of data to 

improve education outcomes and to lead the nation in a 

new era of evidence-based policy insights and data driven 

operations. This Department-wide effort will include 

agency-wide discussions about data priorities that will help 

improve data maturity and will focus on the Department’s 

capabilities to leverage data, operationalize and optimize 

data governance, and drive cultural change for the benefit 

of all stakeholders. It will build on strengths, weaknesses, 

and opportunities within the Department to 1) strengthen 

agency-wide data governance, 2) build human capacity to 

leverage data, 3) advance the strategic use of data, and 4) 

improve data access, transparency, and privacy.
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 35

MANAGEMENT’S DISCUSSION AND ANALYSIS

Department’s Final Learning Agenda to be submitted to 

OMB at the end of fiscal year 2021.

In addition to advising the EO on the development of 

the Draft Learning Agenda, the ELG advises Department 

leaders on how to support the capacity of ED staff to 

make better use of data and evidence. GPO, led by the 

ELG co-chair, has spearheaded a range of internal training 

opportunities for Department staff to bolster the use of the 

Secretary’s policy priorities, including the use of evidence 

in program design, and to consider how the Department’s 

grantmaking activities can build evidence for improvement 

in the future. This work, done in close collaboration with 

partners across the Department, will be informed in fiscal 

year 2021 by the recently-completed Interim Capacity 

Assessment, which included a systematic effort to collect 

information about staff members’ capacity to use evidence 

in their day-to-day work.

CONTINUOUS IMPROVEMENT

Improving critical infrastructure, systems and overall 

capacity, and ensuring sound strategic decision making 

regarding allocation of resources are essential to the 

Department’s future progress and success. Implementing 

Technology Business Management Solutions is one of the 

Department’s key initiatives.

Technology Business Management 

Solutions (TBMS) 

The purpose of the TBMS project is to provide greater 

cost transparency into IT spending. The TBMS project 

will allow OCIO to communicate the cost drivers and 

value of IT to senior leadership, improve the efficiency and 

predictability of the formulation of the IT budget, and 

optimize IT costs. 

Beginning in 2017, OMB required agencies to begin 

reporting IT spending in alignment with the TBM 

Framework, including using Cost Pools and IT Towers to 

classify IT spending. The Department intends to leverage 

TBM beyond the minimum OMB reporting requirements 

to encompass the full implementation of the TBM cost 

accounting framework. The Department of Education 

is refining the TBM effort to: 1) provide accurate cost 

analysis and accounting of operations and services to 

improve tracking cost variances; 2) provide ad hoc reports 

to stakeholders on IT spending; and 3) contextualize ED’s 

internal resource costs with real world data to inform 

decisions. Ultimately, the goal is to provide a “bill of IT” 

to form the basis of a show-back model to drive more 

informed decision-making around IT.

The objective is to implement an integrated solution that 

will allow OCIO to:

 Accurately account for and categorize IT spending in 

IT Cost Towers and Pools.

 Evaluate IT spending using a method that helps 

identify redundant IT assets (e.g. systems, applications, 

and licenses).

 Extract cost elements from disparate sources, analyze 

these elements, and report cost stressors and trends 

to stakeholders.

 Prepare accurate pricing through a show-back model to 

client offices for the services provided and consumed 

by each client office.