FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 9

MANAGEMENT’S DISCUSSION AND ANALYSIS

FINANCIAL HIGHLIGHTS

INTRODUCTION

This section provides summarized information and 

analyses about the Department’s assets, liabilities, 

net position, sources and uses of funds, program 

costs, and related trend data. It also provides a high-level 

perspective of the detailed information contained in the 

financial statements and related notes.

The Department consistently produces complete, accurate, 

and timely financial information. The Department’s 

financial statements and notes are prepared in accordance 

with accounting principles generally accepted in the 

United States for federal agencies issued by the Federal 

Accounting Standards Advisory Board and the format and 

content specified by OMB Circular No. A-136, Financial 

Reporting Requirements. The financial statements, notes, 

and underlying business processes, systems, and controls 

are audited by an independent accounting firm with audit 

oversight provided by the Office of Inspector General 

(OIG). For 19 consecutive years, the Department has 

earned an unmodified (or “clean”) audit opinion. The 

financial statements and notes for FY 2020 are on pages 

40–85 and the Independent Auditors’ Report begins on 

page 90.

The principal financial statements are prepared to report 

the financial position and results of operations of the 

reporting entity, pursuant to the requirements of 31 

U.S.C. § 3515(b). The statements are prepared from 

the Department’s books and records in accordance with 

generally accepted accounting principles for federal entities 

and the formats prescribed by OMB. Reports used to 

monitor and control budgetary resources are prepared 

from the same books and records. The financial statements 

should be read with the realization that they are for a 

component of the U.S. Government.

FI NA NCI A L STAT E M ENT IMPAC TS OF 

COV ID -19 AC T I V IT IE S 

Most of the significant changes to the Department’s 

financial statements resulted from the impacts due to 

COVID-19 activities. The CARES Act totaled roughly 

$2 trillion dollars and included almost $31 billion of 

direct appropriations to the Department for educational 

purposes. The largest component of this funding 

established a $30.8 billion Education Stabilization Fund 

for K-12 and higher education. This fund is comprised of 

categories including: (1) the Elementary and Secondary 

School Emergency Relief Fund; (2) the Higher Education 

Emergency Relief Fund; (3) the Governor’s Emergency 

Education Relief Fund; and (4) funds provided for 

outlying areas and discretionary grants. The CARES Act

also provided other direct appropriations – primarily to 

Table 1. Key Financial Statement Changes 

(Dollars in Billions)

Financial Statement Lines with Significant Changes

Amount Total Changes Changes Due to 

COVID-19

FY 2020 FY 2019 Amount Percentage Amount Percentage

Balance Sheets

Fund Balance with Treasury $ 136.0 $ 104.9 $ 31.1 29.6% $ 19.6 63.0%

Statements of Net Cost

Expand Postsecondary Opportunities, Improve Outcomes to 

Foster Economic Opportunity, and Promote Productive Citizenry 149.4 116.0 33.4 28.8% 51.3 153.6%

Statements of Budgetary Resources

Appropriations (Discretionary and Mandatory) 245.0 118.5 126.5 106.8% 73.2 57.9%

New Obligations and Upward Adjustments (Total) 430.8 323.1 107.7 33.3% 72.3 67.1%

Unobligated Balance, End of Year (Total) 42.6 35.1 7.5 21.4% 0.7 9.3%

Outlays, Net 218.0 116.6 101.4 87.0% 53.4 52.7%

Disbursements, Net (42.9) 40.1 (83.0) -207.0% 42.1 -50.7%
10 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

fund increased grants for Safe Schools & Citizenship 

Education grants, Historically Black Colleges and 

Universities loan deferrals, and loan administration costs. 

The CARES Act provided support for student loan 

borrowers, primarily by suspending nearly all federal 

loan payments until September 30, 2020, interest free. 

The Department extended certain provisions of the 

student loan deferrals not covered by the CARES Act

to defaulted guaranteed loans held by the Department. 

The Administration subsequently issued a Presidential 

Memorandum which extended the student loan deferrals 

through December 31, 2020. The Department also stopped 

all federal wage garnishments and collection actions for 

borrowers with federally held loans in default. Funding 

for the student debt provisions of the CARES Act and the 

Presidential Memorandum are provided through indefinite 

appropriations.

The cost impacts of the student loan repayment deferrals 

were recorded as loan modifications, a component of 

subsidy expense, which reduced the overall loan receivable 

balances for the Direct Loan and Federal Family Education 

Loan (FFEL) programs by $38.6 billion and $3.3 

billion, respectively. Detailed explanations of these loan 

modifications are provided in the Analysis of Direct Loan 

Program Subsidy Expense section beginning on page 16 and 

in Note 5 of the financial statements beginning on page 57.

Figure 1. COVID-19 Funding Flow 

(Dollars in Billions)

The direct and indirect funding stemming from the 

CARES Act and the Presidential Memorandum is reflected 

in Figure 1.

Elementary and Secondary School Emergency Relief 

(ESSER) Fund—$13.2 billion provided for state 

education agencies (SEAs) and local educational agencies 

(LEAs) to support continued learning for K-12 students 

whose educations have been disrupted by COVID-19. 

Higher Education Emergency Relief (HEER) Fund—

$14.0 billion provided for IHEs to address needs directly 

related to COVID-19, including transitioning courses 

to distance education and granting aid to students for 

educational costs such as food, housing, course materials, 

health care, and child care. 

Governor’s Emergency Education Relief (GEER) 

Fund—$3.0 billion provided to state governors to ensure 

education continues for students of all ages impacted by 

the COVID-19 national emergency. 

Outlying Areas, Bureau of Indian Education (BIE), and 

Discretionary Grants—$0.6 billion provided for outlying 

areas and discretionary grants to states with the highest 

COVID-19 burdens.
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 11

MANAGEMENT’S DISCUSSION AND ANALYSIS

BALANCE SHEETS

The consolidated balance sheets present, as of a specific 

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

total assets, total liabilities, and net position.

The Department’s assets totaled $1,309.4 billion as of 

September 30, 2020. As shown in Figure 2, the vast 

majority of the assets relate to credit program receivables, 

$1,171.0 billion, which comprised 89.4 percent of all 

assets. Direct Loans comprise the largest share of these 

receivables. All other assets totaled $138.4 billion, most of 

which was Fund Balance with Treasury.

The Department’s liabilities totaled $1,264.5 billion as 

of September 30, 2020. As shown in Figure 3, the vast 

majority of the Department’s liabilities are also associated 

with credit programs, primarily amounts borrowed from 

the U.S. Department of the Treasury (Treasury) to fund 

student loans. Debt associated with Direct Loans totaled 

$1,160.1 billion as of September 30, 2020. 

Figure 4 shows the changes in the Direct Loan receivables 

components over the past five years. The principal amount 

has continued to grow as the Direct Loan program has 

Figure 2. Assets by Type Figure 3. Liabilities by Type

originated all new federal loans since July 2010, when 

originations of new FFEL loans ended. However, the 

rate of increase in principal has slowed, as the Direct 

Loan program has disbursed decreased amounts of new 

loans each year since FY 2016 as a result of stagnant 

and in some cases declining enrollment, while accrued 

interest amounts have increased as more loans have 

moved into active repayment statuses. Even so, new loan 

disbursements continue to exceed overall loan principal 

repayments—student loan borrowers have many options 

to stretch out their repayment terms and reduce their 

monthly payments.

In accordance with the Federal Credit Reform Act of 

1990, the Department’s financial statements report the 

value of direct loans (credit program receivables) at the 

net present value of their future cash flows, discounted 

at a fixed rate established based on Treasury securities. 

The difference between the recorded principal and 

interest balance and the net present value of the loans is 

referred to as the “allowance for subsidy,” which can be 

positive or negative.
12 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

the main cause being high participation in income-driven 

repayment (IDR) plans. As of FY 2017, the allowance for 

subsidy changed to a negative balance. In practical terms, 

this means that the present value of funds expected to be 

recovered is now less than the principal outstanding.

Participation in IDR plans has increased as (a) new plans 

have become available that are more advantageous to 

borrowers, (b) new plans have become available that expand 

the potential pool of borrowers, and (c) the Department has 

conducted targeted outreach to borrowers to make them 

aware of their potential eligibility for these plans.

In addition to the impact of the IDR plans, the negative 

subsidy allowance also increased in FY 2020 due to actions 

taken to defer student loans in response to COVID-1 (see 

discussion in the Analysis of Direct Loan Program Subsidy 

Expense section on page 16).

Table 2 shows the payment status of the Direct Loan 

principal and interest balances outstanding over the past 

five years. The Current Repayment category consists of 

loans that are being paid back on time, including the 

current portion of loans being repaid pursuant to IDR 

plans. The balances reported for “Current Repayment” 

and “Delinquent” are significantly lower than prior years, 

primarily due to the COVID-19 student loan deferrals 

that placed loans in forbearance and subsequently 

cured delinquencies. 

Loans in the Delinquent category are past due anywhere 

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

loans that are more than 360 days delinquent (default 

status); loans in a nondefaulted bankruptcy status; and 

loans in disability status. While technical default is 271 

days delinquent, default is defined as 361 days delinquent 

for reporting purposes. The percentage of loans in default 

continues to grow, even as delinquencies and new defaults 

have declined, because defaulted loans can be difficult to 

collect or rehabilitate. 

The FY 2020 delinquent balance is zero due to the 

ongoing deferral of all student loans through December 

31, 2020.

The positive allowance for subsidy balance in FY 2016 

represented estimates of funds expected to be recovered 

in excess of principal loaned less anticipated defaults, 

loan cancellations, and other adjustments. This positive 

allowance for subsidy balances resulted primarily from 

the difference between the interest rates charged by the 

Department to borrowers and the interest rates charged to 

the Department on amounts borrowed from Treasury to 

make the loans. The reduction in the positive allowance 

since FY 2016 is due primarily to higher subsidy costs, 

Direct Loan 

Component

(Dollars

 in Billions)

Fiscal Year

2016 2017 2018 2019 2020

Principal $ 902.8 $ 998.8 $ 1,083.7 $ 1,164.9 $ 1,224.8 

Rate of 

Increase in 

Principal

12.7% 10.6% 8.5% 7.5% 5.1%

Accrued Interest $ 50.8 $ 59.5 $ 72.0 $ 83.3 $ 92.1 

Allowance for 

Subsidy $ 5.3 $ (16.8) $ (40.7) $ (124.4) $ (216.4)

Total No. of 

Direct Loan 

Recipients 

(in Millions)

31.5 33.0 34.2 35.1 35.9 

Figure 4. Components of Direct Loan 

Receivables, Net

(Dollars in Billions)
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 13

MANAGEMENT’S DISCUSSION AND ANALYSIS

Loan Status

Fiscal Year

2016 2017 2018 2019 2020

Total No. of 

Direct Loan 

Recipients 

(in Millions)

31.5 33.0 34.2 35.1 35.9

Total Dollar 

Amount of 

Direct Loans 

Outstanding

953.6 1,058.4 1,155.7 1,248.1 1,316.9

Current 

Repayment1 406.7 467.8 531.2 594.7 14.7

% Current

Repayment 42.6% 44.2% 46.0% 47.6% 1.1%

In School, 

Grace Period, 

and Education 

Deferments

289.5 291.7 295.5 294.8 282.8

% In School, 

Grace Period, 

and Education 

Deferments

30.4% 27.6% 25.6% 23.6% 21.5%

Forbearance 

and 

Noneducation 

Deferments

106.6 122.5 121.5 133.2 887.5

% Forbearance 

and 

Noneducation 

Deferments

11.2% 11.6% 10.5% 10.7% 67.4%

Delinquent 

(Past Due

31-360 Days)

71.9 79.7 92.5 90.8 0.0

% Delinquent 

(Past Due

31-360 Days)

7.5% 7.5% 8.0% 7.3% 0.0%

Default/

Bankruptcy/

Other*

78.9 96.7 115.0 134.6 131.9

% Default/

Bankruptcy/

Other*

8.3% 9.1% 10.0% 10.8% 10.0%

1 Loans in Current Repayment status include loans that are being repaid ontime. However, these on-time loans can include loans for which the amount of 

interest accruing is higher than payments that are being made, which can occur 

in the case of loans on income-driven repayment plans.

* Adjusted to eliminate differences between NSLDS and FSA Total Reported 

Direct Loan Portfolio (Principal and Interest)

Table 2. Payment Status of Direct Loan Principal 

and Interest Balance

(Dollars in Billions)

The Department borrows funds to disburse new loans 

and pay credit program outlays and related costs. The 

Department repays Treasury after consideration of cash 

position and the liability for future cash outflows. Figure 

5 shows the Direct Loan program cumulative borrowing 

and repayment activity that resulted in the debt amount 

on the balance sheet. A diagram depicting the Direct Loan 

program financing process is displayed with related trend 

data as Figure 6 on page 14 of this report.

Figure 5. Direct Loan Program Cumulative 

Financing Activity

(Dollars in Billions)
14 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

Fiscal Year 2016 2017 2018 2019 2020 

Net Borrowing 84.4 67.3 89.1 41.5 (32.0)

 Borrowing from Treasury 147.0 160.5 155.3 137.6 116.9 

 Debt Repayments to Treasury (62.6) (93.2) (66.2) (96.1) (148.9)

Interest Expense to Treasury (30.5) (31.3) (32.3) (33.8) (34.7)

Interest Earned from Treasury 3.9 4.3 3.9 4.1 4.8 

Cumulative Taxpayer Cost / (Savings) (5.3) 16.8 40.7 124.4 216.4 

Current Subsidy Expense (Revenue) 16.1 5.3 4.4 61.5 100.9 

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

Fiscal Year 2016 2017 2018 2019 2020 

Loan Disbursements 140.5 142.5 134.1 130.7 117.4 

 Stafford Subsidized 23.8 23.4 20.3 20.0 19.1 

 Stafford Unsubsidized 52.3 51.4 49.0 48.1 46.1 

 PLUS 19.0 18.7 23.1 22.7 21.7 

 Consolidation1 45.5 49.0 41.6 39.8 30.4 

Loan Collections2 73.2 82.0 84.9 91.3 69.9 

 Principal 55.9 62.6 63.5 67.0 55.3 

 Interest 15.5 17.6 19.5 22.4 12.9 

 Fees 1.8 1.9 1.9 1.9 1.7 

* Numbers may not add up due to rounding.

1

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

2

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

Figure 6. William D. Ford Federal Direct Loan Program: Following the Funding
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 15

MANAGEMENT’S DISCUSSION AND ANALYSIS

STATEMENTS OF NET COST

The consolidated statements of net cost report the 

Department’s components of the net cost of operations for 

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

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

from activities. Gross costs are composed of the cost of 

credit and grant programs, and operating costs. Exchange 

revenue is primarily interest earned on credit program 

loans. Figure 7 shows the Department’s gross costs and 

earned revenue over the past five years. 

GROSS COSTS A ND E XCH A NGE 

R E V ENU E BY T Y PE 

As shown in Figure 8, the Department’s gross costs and 

earned revenue include three primary components:

 Credit program interest expense offset by credit 

program interest revenue and administrative fees as the 

result of subsidy amortization; 

 Credit program subsidy expense (see Analysis of Direct 

Loan Program Subsidy Expense below); and

 Grant expenses (see Figure 10). 

Figure 7. Gross Costs & Earned Revenue

(Dollars in Billions)

Figure 8. Primary Components of Gross Costs and Earned Revenue

(Dollars in Billions)
16 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Factors such as interest rates charged to the borrower, 

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

costs, and assumptions concerning borrowers’ selection of 

repayment plans impact the estimated cost calculation and 

determine whether the overall subsidy expense is positive 

or negative. Subsidy expense for new loans disbursed in 

the current year has been negative in recent years primarily 

because lending interest rates charged were greater than 

the historically low rates at which the Department 

borrowed from Treasury. In practical terms, a negative 

subsidy occurs when the interest and/or fees charged to 

the borrower are more than sufficient to cover the interest 

on Treasury borrowings and the costs of borrower default. 

Subsidy expense for new loans disbursed in the current 

year was positive in FY 2020 due to rising enrollment in 

IDR plans and a reduction in projected future income of 

borrowers in IDR plans.

The Direct Loan program subsidy re-estimate for FY 2020 

totaled $56.1 billion. In addition to the major assumption 

updates described below, the re-estimate reflects several 

other assumption updates, including interest rates provided 

by OMB, loan volume, and contract collection costs.

 IDR Model Changes (including Public Service 

Loan Forgiveness (PSLF)). The Department 

completed a standard IDR data update to reflect the 

immediate prior cycle for defaults, prepayments and 

Death, Disability, and Bankruptcy (DDB). The DDB 

update includes adjustments for the Total Permanent 

Disability for Veterans regulation. In addition, an 

existing borrower income file was calibrated using an 

additional year of IDR application data through 2018. 

The additional year of borrower income data taken 

from IDR applications has been substantially lower 

than projected. As such, the Department reduced 

its projections of future borrower income by 35%, 

increasing costs associated with IDR. The Department 

also analyzed the actual PSLF approval rates and 

supplementary data. As a result of that analysis, the 

PSLF approval rate was adjusted downward for initial 

cohorts to better reflect the actual data. Trends indicate 

that there has been some improvement in PSLF 

approval rates over time as borrowers better understand 

the application process. PSLF estimates were revised to 

reflect the most recent borrower behavior and adjust 

the temporal element to ramp up PSLF forgiveness 

over time. The combined effect of these updates led to 

a net upward re-estimate of $35.5 billion. 

A NA LYSIS OF DIR EC T LOA N 

PROGR A M SU BSIDY E X PENSE 

The Department’s gross costs can fluctuate significantly 

each year as a result of changes in the estimated subsidy 

expense. The increase in the Department’s gross costs 

from FY 2019 is primarily the result of an increase in the 

subsidy expense for Direct Loans in FY 2020, the primary 

components of which included year-end subsidy reestimates and loan modifications.

Subsidy expense is an estimate of the present value cost 

of providing direct loans, but excludes the administrative 

costs of issuing and servicing the loans. The Department 

estimates subsidy expense using a set of econometric and 

financial models, as well as cash flow models. 

The Department estimates subsidy costs annually for new 

loans disbursed in the current year; updates 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 

(subsidy modifications). Figure 9 shows these three 

components of the Direct Loan program subsidy expense 

for the past five years.

2016 2017 2018 2019 2020

Subsidy Expense for 

New Loans Disbursed 

in the Current Year

$ (5.7) $ (2.6) $ (3.1) $ (3.0) $ 5.1

Subsidy 

Re-estimates 21.8 7.9 7.4 64.5 56.1

Loan Modification - - 0.1 - 39.7

Total Subsidy Expense $ 16.1 $ 5.3 $ 4.4 $ 61.5 $ 100.9

Figure 9. Direct Loan Program Subsidy Expense

(Dollars in Billions)
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 17

MANAGEMENT’S DISCUSSION AND ANALYSIS

 Repayment Plans. The Department updated the 

data and made an adjustment to exclude special 

consolidation of FFEL loans in FY 2012 and FY 2013 

from the model. These loans are modeled separately 

and were less likely to enroll in income dependent 

repayment plans than typical consolidation loans. The 

combined effect of these changes led to a net upward 

re-estimate of $6.5 billion.

 Default. In addition to the adjustments for the 

CARES Act, the Department updated the data and 

incorporated actual unemployment rates from the 

Bureau of Labor Statistics through June 2020. The 

combined effect of these changes led to a net upward 

re-estimate of $1.8 billion.

 2019 Cohort Assumption Changes. The technical reestimate 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 

$4.8 billion for these current year assumption changes 

attributable to the FY 2019 cohort.

 Interest on the Re-estimate. Interest on re-estimates 

is the amount of interest that would have been earned 

or paid by each cohort on the subsidy re-estimate, if 

the re-estimated subsidy had been included as part of 

the original subsidy estimate. The interest on the reestimate calculated on the overall subsidy re-estimate 

resulted in a net upward re-estimate of $5.9 billion.

 Interactive Effects. The re-estimate includes a net 

upward re-estimate of $1.5 billion attributed to 

the interactive effects of the assumption changes 

described above. Each assumption described above is 

run independently. The interactive effect is a result of 

combining all assumptions together to calculate the 

final re-estimate. 

The Direct Loan program modifications were primarily 

the result of student loan deferral actions provided 

by Congress and the Administration in response to 

COVID-19. The student loan deferrals increased the 

government’s cost of student loans and were recognized 

as loan modifications for FY 2020. These modifications 

included the following:

 CARES Act. The CARES Act automatically suspended 

principal and interest payments and set interest rates 

to 0 percent on federally held student loans starting in 

March through September 30, 2020. The relief for 

borrowers resulted in an upward modification cost 

of $24.6 billion, with an additional $459 million for 

cancelled loans for students that did not complete the 

semester due to a qualifying emergency. There was 

a net positive $82 million modification adjustment 

transfer associated with this modification, bringing 

the total to $25.0 billion.

 Presidential Memorandum. On August 8, 2020, the 

President signed a Presidential Memorandum that 

continued the temporary suspension of payments 

and the waiver of all interest on federally held student 

loans through December 31, 2020. The relief for 

borrowers resulted in an upward modification cost of 

$13.5 billion. There was a net negative $66 million 

modification adjustment transfer associated with this 

modification, bringing the total to $13.6 billion.

 Total and Permanent Disability. The Department 

recorded an upward modification for costs associated 

with the regulatory action to provide proactive 

discharge (unless the borrower elects to reject the 

discharge) to borrowers for whom the Department 

of Veterans Affairs provides information showing the 

borrower has a total and permanent disability. These 

discharges resulted in an upward modification cost 

of $1.0 billion. There was a net negative $98 million 

modification adjustment transfer associated with this 

modification, bringing the total to $1.1 billion.

GRANT EXPENSES

Figure 10. Grant Expenses by Program Areas

(Dollars in Billions)
18 FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

As shown in Figure 10, overall grant expenses increased 

primarily as a result of the CARES Act—primarily the 

Education Stabilization Fund grants described on 

pages 76–77.

In addition to the CARES Act funded grants, the 

Department has more than 100 other grant and loan 

programs. The three largest of these grant program areas are:

 Pell Grants—provides need-based grants to students 

to promote access to postsecondary education. 

Grant amounts are dependent on: the student’s 

expected family contribution; the cost of attendance 

(as determined by the institution); the student’s 

enrollment status (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.

 Education for the Disadvantaged—primarily consists 

of grants that provide financial assistance through 

SEAs to LEAs and public schools with high numbers 

or percentages of poor children to help ensure that all 

children meet challenging state academic content and 

student academic achievement standards. Also provides 

funds to states to support educational services to 

children of migratory farmworkers and fishers, and to 

neglected or delinquent children and youth in Staterun institutions, attending community day programs, 

and correctional facilities.

 Special Education—primarily consists of Individuals 

with Disabilities Education Act (IDEA) grants that 

provide funds by formula to states to assist them 

in providing a free appropriate public education in 

the least restrictive environment for children with 

disabilities ages 3 through 21 and assists states in 

providing early intervention services for infants 

and toddlers from birth through age two and their 

families. Also provides discretionary grants to IHEs 

and other nonprofit organizations to support research, 

demonstrations, technical assistance and dissemination, 

technology, personnel development and parenttraining, and information centers.

In addition to student loans and grants, the Department 

offers other discretionary grants under a variety of 

authorizing legislation, with approximately 90 percent of 

non-student aid funds awarded by formula and 10 percent 

through competitive processes. 

STAT E M ENTS OF CH A NGE S I N 

NET POSITION

The consolidated statements of changes in net position 

report the beginning net position, the summary effect 

of transactions that affect net position during the fiscal 

year, and the ending net position. Net position consists 

of unexpended appropriations and cumulative results 

of operations. Unexpended appropriations include 

undelivered orders and unobligated balances for grant and 

administrative operations. Cumulative results of operations 

represent the net difference since inception between (1) 

expenses and (2) revenues and financing sources.

STAT E M ENTS OF BU DGETA RY 

RESOURCES

The combined statements of budgetary resources present 

information on how budgetary resources were made 

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

Information in the statements is based on budgetary 

transactions as prescribed by OMB and Treasury.

Figure 11 shows the components of the Department’s 

budgetary resources which totaled $473.4 billion for 

the year ended September 30, 2020, increasing from 

$358.2 billion, or approximately 32.2 percent from the 

prior year. This increase was primarily due to increases in 

appropriations received totaling $126.5 billion, of which 

$73.2 billion was for direct and indirect appropriations 

for COVID-19 activity. An increase of $45.5 billion in 

appropriations received for executed re-estimates in FY 

2020 versus FY 2019 also contributed to this overall 

increase (see the following outlay discussion). 

Figure 11. Components of Budgetary Resources

(Dollars in Billions)
FY 2020 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 19

MANAGEMENT’S DISCUSSION AND ANALYSIS

New obligations incurred increased by $107.7 billion, 

or approximately 33.3 percent, due primarily to grants 

funded by the CARES Act and loan modifications for 

COVID-19 student loan deferrals. 

The combined statements of budgetary resources also 

present the Department’s summary disbursement and 

collection amounts for which Table 3 provides 

additional detail.

Outlays, net is comprised of gross outlays and offsetting 

collections in the Department’s budgetary funds. Outlays, 

net increased $101.4 billion (87.0 percent) due primarily 

to transfers from the Department’s credit program 

budgetary funds to its credit program non-budgetary 

financing funds for (1) increased executed re-estimates 

in FY 2020 versus FY 2019 ($45.5 billion), and (2) 

COVID-19 related loan modifications recognized in FY 

2020 ($42.2 billion). 

Disbursements, net is comprised of gross outlays and 

offsetting collections in the Department’s credit program 

non-budgetary financing funds. Disbursements, net 

decreased $83.0 billion, primarily due to the transfers 

to the Department’s credit program non-budgetary 

financing funds from its credit program budgetary 

funds for the aforementioned executed re-estimate and 

COVID-19 loan modifications. 

FY 2020 FY 2019

Outlays, Net

Credit Programs $ 129.8 $ 36.8 

Grants 85.5 76.9 

Contractual Services 2.0 2.2 

Personnel Compensation and Benefits 0.7 0.6 

Other - 0.1 

Total Outlays, Net $ 218.0 $ 116.6 

Distributed Offsetting Receipts

Negative Subsidies and Downward 

Reestimates of Subsidies (12.3) (12.1)

Repayment of Perkins Loans and Capital 

Contributions (1.3) (0.1)

Other - (0.1)

Total Distributed Offsetting Receipts $ (13.6) $ (12.3)

Disbursements, Net

Direct Loan Program

Gross Disbursements $ 158.2 $ 175.5 

Offsetting Collections (188.1) (128.7)

Total Direct Loan Program Disbursements, 

Net (29.9) 46.8 

FEEL Program

Gross Disbursements 17.5 14.7 

Offsetting Collections (30.6) (21.5)

Total FEEL Program Disbursements, Net (13.1) (6.8)

Other Loan Programs

Gross Disbursements 0.5 0.3 

Offsetting Collections (0.4) (0.2)

Total Other Loan Program Disbursements, 

Net 0.1 0.1 

Total Disbursements, Net $ (42.9) $ 40.1 

Table 3. Outlays, Distributed Offsetting Receipts, 

and Disbursements, Net

(Dollars in Billions)