FY 2022 AGENCY FINANCIAL REPORT 56 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 1. Summary of Significant 

Accounting Policies

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

PROGRAMS

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

a Cabinet-level agency of the executive branch of the 

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

Department of Education Organization Act (Public Law 96-

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

of the Department is to promote student achievement 

and preparation for global competitiveness by fostering 

educational excellence and ensuring equal access. 

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

For this reason, some of the assets and liabilities reported 

by the Department may be eliminated for governmentwide 

reporting because they are offset by assets and liabilities of 

another U.S. government entity. These financial statements 

should be read with the realization that they are for a 

component of the U.S. government. 

The Department is primarily responsible for administering 

federal student loan and grant programs and provides 

technical assistance to loan and grant recipients and 

other state and local partners. The largest portions of the 

Department’s financial activities relate to the execution of 

loan and grant programs discussed below.

Federal Student Loan Programs. The Department 

administers direct loan, loan guarantee, and other student 

aid programs to help students and their families finance the 

cost of postsecondary education. These include the William 

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

Federal Family Education Loan (FFEL) Program.

The Direct Loan Program, added to the Higher Education 

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

of 1993, authorizes the Department to make loans through 

participating schools to eligible undergraduate and graduate 

students and their parents. The Direct Loan Program 

offers four types of loans: Stafford, Unsubsidized Stafford, 

Parent Loan for Undergraduate Students (PLUS), and 

Consolidation Loans. Evidence of financial need is required 

for an undergraduate student to receive a subsidized 

Stafford loan. The other three loan programs are available 

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

meet qualified educational expenses.

The FFEL Program, authorized by the HEA, operates through 

state and private, nonprofit guaranty agencies that provided 

loan guarantees on loans made by private lenders to eligible 

students with reinsurance and interest subsidies provided by 

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

Health Care and Education Reconciliation Act of 2010, stated 

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

FFEL Program receivables include defaulted FFEL loans and 

acquired FFEL loans. Acquired FFEL loans include student 

loan assets acquired using temporary authority provided in 

the Ensuring Continued Access to Student Loans Act of 2008

(ECASLA). ECASLA gave the Department temporary 

authority to purchase FFEL loans and participation interests 

in those loans. The Department implemented three activities 

under this authority: loan purchase commitments; purchases 

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

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

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

a result, loan purchase commitments and purchases of loan 

participation interests concluded. However, under the terms of 

the Put Agreement with the conduit, ABCP Conduit activity 

ceased operations in January 2014.

The Department also administers other credit programs for 

higher education. These include the Federal Perkins Loan 

program, the Teacher Education Assistance for College and 

Higher Education (TEACH) Grant program, the Health 

Education Assistance Loan (HEAL) program, and facilities 

loan programs that include the Historically Black Colleges 

and Universities (HBCU) Capital Financing program, 

along with low-interest loans to institutions of higher 

education (IHE) for the building and renovating of their 

facilities. (See Notes 5 and 10)

Grant Programs. The Department has more than 100 

grant programs. The three largest grant programs are Title 

I of the Elementary and Secondary Education Act, federal 

Pell Grant, and the Individuals with Disabilities Education 

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

other discretionary grants under a variety of authorizing 

legislation awarded using a competitive process, and 

formula grants using formulas determined by Congress 

with no application process. (See Note 10)

Notes to the Financial Statements for the Years Ended 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19. Congress passed multiple COVID-19 relief 

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

following that provided funding for educational purposes: 

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

2020 (CARES Act), the Coronavirus Response and Relief 

Supplemental Appropriations Act of 2021 (CRRSAA), and 

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

component of the education funding provided by the 

COVID-19 relief appropriations established the Education 

Stabilization Fund, which includes the (1) Elementary 

and Secondary School Emergency Relief Fund, (2) 

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

Emergency Education Relief Fund, and (4) funds for 

outlying areas. The Education Stabilization Fund is being 

distributed to recipients through various grant programs. 

The Department transferred $563 million of the funds to 

the Department of the Interior to be administered by the 

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

The COVID-19 relief legislation and administrative actions 

also provided support for student loan borrowers by: 

• Providing broad-based debt relief to address the financial 

harms of the pandemic.

• Temporarily suspending nearly all federal student loan 

payments, interest free.

• Authorizing Guaranty Agencies to reimburse 

themselves from the Federal Student Loan Reserve 

Fund for lost revenue that resulted from student loan 

repayment deferrals.

• Making temporary changes to the PSLF program to 

allow student borrowers to get credit for payments made 

while working for a qualifying employer.

• Addressing issues with IDR payment counting. 

Funding for these actions was provided through indefinite 

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

Other regulatory flexibilities and incentives provided in the 

COVID-19 legislation include:

• Stopping all federal wage garnishments and collection 

actions for borrowers with federally held loans in default.

• Federal Supplemental Educational Opportunity Grants 

to provide emergency aid to students.

• Continuation of work-study payments, even if students 

can no longer work on-site.

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

spring 2020 term, which students who have had to leave 

college campuses will not have to pay back. Moreover, 

none of this aid will count against students’ financial aid 

lifetime limits.

• Waiving satisfactory academic progress requirements to 

help ensure that students do not lose academic standing 

and the ability to receive federal financial student aid.

• Tax credits that incentivize employers to help pay for 

student loans.

PROGRAM OFFICES

The Department has three major program offices that 

administer most of its loan and grant programs: 

• Federal Student Aid (FSA) administers financial 

assistance programs for students pursuing postsecondary 

education and makes available federal grants, direct 

loans, and work-study funding to eligible undergraduate 

and graduate students.

• The Office of Elementary and Secondary Education 

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

educational agencies (LEA) to improve the achievement 

of preschool, elementary, and secondary school students; 

helps ensure equal access to services leading to such 

improvement—particularly children with high needs; and 

provides financial assistance to LEAs whose local revenues 

are affected by federal activities.

• The Office of Special Education and Rehabilitative 

Services (OSERS) supports programs that help provide 

early intervention and special education services to 

children and youth with disabilities. OSERS also supports 

programs for the vocational rehabilitation of youth 

and adults with disabilities, including preemployment 

transition services and other transition services designed 

to assist students with disabilities to enter postsecondary 

education and achieve employment.

Other offices that administer programs and provide 

leadership, technical assistance, and financial support to 

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

and innovation in education include: the Office of Career, 

Technical, and Adult Education (OCTAE); Office of 

Postsecondary Education (OPE); Institute of Education 

Sciences (IES); and Office of English Language Acquisition 

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

works to ensure equal access to education through the 

vigorous enforcement of civil rights and the collection of 

data from public schools, promotes educational excellence 

throughout the nation, and serves student populations facing 

discrimination and the advocates and institutions promoting 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

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

AND PRESENTATION

These financial statements were prepared to report the 

financial position, net cost of operations, changes in net 

position, and budgetary resources of the Department, as 

required by the Chief Financial Officers Act of 1990 and 

the Government Management Reform Act of 1994. The 

financial statements were prepared from the books and 

records of the Department, in accordance with Generally 

Accepted Accounting Principles (GAAP) accepted in the 

United States for federal entities, issued by the Federal 

Accounting Standards Advisory Board (FASAB), and the 

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

Financial Reporting Requirements, as revised. These financial 

statements are different from the financial reports prepared 

by the Department pursuant to OMB directives that are 

used to monitor and control the use of budgetary resources. 

FSA also issues audited stand-alone financial statements 

that are included in their annual report.

The accounting structure of federal agencies is designed to 

reflect both accrual and budgetary accounting transactions. 

Under the accrual method of accounting, revenues are 

recognized when earned and expenses are recognized when 

a liability is incurred, without regard to receipt or payment 

of cash. Budgetary accounting facilitates compliance with 

legal constraints and controls over the use of federal funds.

Intradepartmental transactions and balances have been 

eliminated from the consolidated financial statements. 

Accounting standards require all reporting entities 

to disclose that accounting standards allow certain 

presentations and disclosures to be modified, if needed, to 

prevent the disclosure of classified information.

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

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

The Department’s accounting for its loan and loan guarantee 

programs is based on the requirements of the Federal Credit 

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

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

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

loan is disbursed (subsidy). Components of subsidy costs 

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

contractual payments to third-party, private loan collectors 

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

an offset, origination and other fees collected. For direct 

loans, the difference between interest rates incurred by the 

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

Treasury (Treasury) and interest rates charged to particular 

borrowers is also subsidized (or may provide an offset to 

subsidy if the Department’s rate is less). 

Under the FCRA, subsidy cost is estimated using the 

net present value of future cash flows to and from the 

Department. In accordance with the FCRA, credit 

programs either estimate a subsidy cost to the government 

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

or estimate a negative subsidy cost. Negative subsidy 

occurs when the estimated cost of providing loans to 

borrowers from Treasury borrowing, collection costs, and 

loan forgiveness is less than the value of collections from 

borrowers for interest and fees, in present value terms.

Subsidy cost is an estimate of the present value cost of 

providing direct loans but excludes the administrative 

costs of issuing and servicing the loans. The Department 

estimates subsidy costs using a set of econometric and 

financial models, as well as cash flow models. 

The Department estimates subsidy costs annually for new 

loans disbursed in the current year; updates to the previous 

cost estimates for outstanding loans disbursed in prior 

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

estimates based on new legislation or other government 

actions that change the terms of existing loans (loan 

modifications) that alter the estimated subsidy cost and the 

present value of outstanding loans. Loan modifications can 

also include modification adjustment gains and losses to 

account for the difference between the discount rate used to 

calculate the cost of the modification and the interest rate at 

which the cohort pays or earns interest.

The subsidy costs of direct loan and loan guarantee 

programs are budgeted and tracked by the fiscal year in 

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

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

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

loan guarantees committed by a program in the same year 

even if disbursements occur in subsequent years.

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

loan portfolio over time, the subsidy cost is amortized 

each year. Amortization accounts for the differences in 

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

cohort, ensuring that cost is reflected in subsidy estimates 

and re-estimates. Amortization of subsidy is calculated as 

the difference between interest received from borrowers 

and Treasury (on uninvested funds) and interest paid to 

Treasury on borrowings. 

The FCRA establishes the use of financing, program, 

and Treasury General Fund receipt accounts for loan 

guarantees committed and direct loans obligated after 

September 30, 1991. 

• Financing accounts borrow funds from Treasury, 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

lenders and borrowers, pay claims on guaranteed 

loans, collect principal and interest from borrowers, 

earn interest from Treasury on any uninvested funds, 

and transfer excess subsidy to Treasury General Fund 

receipt accounts. Financing accounts are presented 

separately in the combined statements of budgetary 

resources (SBR) as nonbudgetary credit reform 

accounts to allow for a clear distinction from all other 

budgetary accounts. This facilitates reconciliation of 

the SBR to the Budget of the United States Government

(President’s Budget).

• Program accounts receive and obligate appropriations 

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

guarantee when the loan is approved and disburses the 

subsidy cost to the financing account when the loan is 

issued. Program accounts also receive appropriations for 

administrative expenses.

• Treasury General Fund receipt accounts receive amounts 

paid from financing accounts when there are negative 

subsidies for new loan disbursements or downward 

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

Notes 12 and 13) 

The Department records an obligation each year for direct 

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

of schools’ receipt of aid applications. The Department 

advances funds to schools based on these estimates. 

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

fiscal year. Loans awarded are typically disbursed in multiple 

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

be disbursed over multiple fiscal years. Loan awards may not 

be fully disbursed due to students leaving or transferring to 

other schools. The Department’s obligation estimate may 

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

historical averages, the Department expects approximately 

7.7 percent of the amount obligated for new loan awards 

will not be disbursed.

When a loan is placed in deferment or forbearance, loan 

repayment is temporarily suspended with the length of 

postponement different for each borrower. Interest accrues 

while a loan is in deferment or forbearance. Loans are 

canceled if a person dies, meets disability requirements, 

or occasionally through the bankruptcy courts. Loans are 

also canceled through the Public Service Loan Forgiveness 

(PSLF) program, which forgives the remaining balance 

on a direct loan after 120 qualifying monthly payments 

are made. These payments must be made under a 

qualifying repayment plan while working full-time for a 

qualifying employer. In addition, the Department offers 

income-driven repayment plans under which borrowers 

may receive forgiveness of the remaining balance of their 

loans after 20 or 25 years under certain rules.

BUDGETARY TERMS

The purpose of Federal budgetary accounting is to 

control, monitor, and report on funds made available to 

the Department by law and help ensure compliance with 

the law. 

Budgetary resources are amounts that are available to incur 

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

budgetary resources include unobligated balances of 

resources from prior years and new resources, which include 

appropriations, authority to borrow from Treasury, and 

spending authority from collections. Obligations are legally 

binding agreements that will result in outlays, immediately 

or in the future. Budgetary resources must be available 

before obligations can be incurred legally. 

Borrowing authority is an indefinite budgetary resource 

authorized under the FCRA. This resource, when realized, 

finances the unsubsidized portion of the Direct Loan, 

FFEL, and other loan programs. In addition, borrowing 

authority is requested to cover the cost of the initial loan 

disbursement as well as any related negative subsidy to be 

transferred to Treasury General Fund receipt accounts. 

Treasury prescribes the terms and conditions of borrowing 

authority and lends to the financing account amounts as 

appropriate. Amounts borrowed, but not yet disbursed, are 

included in uninvested funds and earn interest. Treasury 

uses the same weighted average interest rates for both the 

interest charged on borrowed funds and the interest earned 

on uninvested funds. Treasury sets a different fixed interest 

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

substantially disbursed. The Department may carry forward 

borrowing authority to future fiscal years if cohorts are 

disbursing loans. All borrowings from Treasury are effective 

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

the Department borrowed the funds, except for amounts 

borrowed to make annual interest payments.

Authority to borrow from Treasury provides most of the 

funding for disbursements made under the Direct Loan, 

FFEL, and other loan programs. Subsidy and administrative 

costs of the programs are funded by appropriations. 

Borrowings are repaid using collections from borrowers, 

fees, and interest on uninvested funds.

Unobligated balances represent the cumulative amount 

of budgetary resources that are not obligated and that 

remain available for obligation under law, unless otherwise 

restricted. Resources expiring at the end of the fiscal 

year remain available for five years, but only for upward 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

canceled and may not be used. Resources that have not 

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

as upward adjustments of prior-year obligations. Funds 

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

Appropriated funds expire on the last day of availability 

and are no longer available for new obligations. Amounts in 

expired funds are unavailable for new obligations but may 

be used to adjust previously established obligations.

Permanent Indefinite Budget Authority. The Direct Loan, 

FFEL, and other loan programs have permanent indefinite 

budget authority through legislation to fund subsequent 

increases to the estimated future costs of the loan programs. 

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

Federal Direct Student Loan, of the HEA pertain to the 

existence, purpose, and availability of permanent indefinite 

budget authority for these programs.

Reauthorization of Legislation. Funds for most 

Department programs are authorized, by statute, to be 

appropriated for a specified number of years, with an 

automatic one-year extension available under Section 422 

of the General Education Provisions Act. Congress may 

continue to appropriate funds after the expiration of the 

statutory authorization period, effectively reauthorizing the 

program through the appropriations process. The current 

President’s Budget presumes all programs continue in 

accordance with congressional budgeting rules.

Outlays are the liquidation of obligations that often 

takes the form of an electronic funds transfer. Outlays 

are reported on the SBR net of offsetting collections and 

distributed offsetting receipts.

Offsetting collections and offsetting receipts are generally 

amounts collected from (1) business-like transactions with 

the public or (2) intragovernmental transfers. Offsetting 

collections usually may be used by the Department once 

received without further legislation whereas offsetting 

receipts must be appropriated to be used. 

Offsetting receipts and offsetting collections both “offset” 

or reduce outlays. Offsetting collections reduce outlays at 

the expenditure account level, whereas offsetting receipts 

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

“undistributed,” with distributed offsetting receipts shown 

on the SBR reducing agency outlays and undistributed 

offsetting receipts reducing Government-wide outlays (and 

not shown on the SBR). 

Budgetary transactions are included as outlays or receipts 

in the Budget and ultimately affect the budget deficit or 

surplus whereas non-budgetary amounts are a means of 

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

account amounts for loan and loan guarantee programs 

shown on the SBR. Financing accounts reflect program 

cash flows as distinct from credit “program” accounts, 

which are budgetary and reflect the subsidy cost of the 

programs. (See Note 12)

ENTITY AND NON-ENTITY ASSETS

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

Entity assets are those that the Department has authority 

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

the Department but not available for use in its operations. 

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

have no impact on net position. The Department combines 

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

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

FUND BALANCE WITH TREASURY

Fund Balance with Treasury includes amounts available to 

pay current liabilities and finance authorized purchases, 

as well as funds restricted until future appropriations 

are received. Treasury processes cash receipts and cash 

disbursements for the Department. The Department’s 

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

ACCOUNTS RECEIVABLE

Accounts receivable are amounts due to the Department 

from other federal agencies (intragovernmental) and 

the public (other than intragovernmental). Other than 

intragovernmental receivables result from overpayments 

to recipients of grants and other financial assistance 

programs, as well as disputed costs resulting from audits of 

educational assistance programs. Amounts due from federal 

agencies result from reimbursable agreements entered into 

by the Department with other agencies to provide various 

goods and services. Accounts receivable are reduced to net 

realizable value by an allowance for uncollectible amounts. 

The estimate of an allowance for loss on uncollectible 

accounts is based on the Department’s experience in the 

collection of receivables and an analysis of the outstanding 

balances. (See Note 4)

C A S H A N D OT H E R 

MONETARY ASSETS

Cash and other monetary assets are the federal government’s 

interest in the program assets held by state and nonprofit 

FFEL Program guaranty agencies (guaranty agencies’ federal 

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

agencies to establish federal student loan reserve funds. 

Guaranty agencies’ federal funds include initial federal 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

insurance premiums, guaranty agency share of collections 

on defaulted loans, investment income, administrative cost 

allowances, and other assets.

The balance of guaranty agencies’ federal funds represents 

consolidated reserve balances of the 18 guaranty agencies 

based on the guaranty agency financial reports that each 

agency submits annually to the Department. Although the 

Department and the guaranty agencies operate on different 

fiscal years, all guaranty agencies are subject to an annual 

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

Department’s balances to comply with federal accounting 

principles and disclose funds held outside of Treasury.

Guaranty agencies’ federal funds are classified as other than 

intragovernmental non-entity assets and are offset by a 

corresponding liability due to Treasury on the Department’s 

balance sheets. The funds are held by the guaranty agencies 

but can only be used for certain specific purposes listed 

in the Department’s regulations. The guaranty agencies’ 

federal funds are the property of the United States and are 

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

Department from guaranty agencies’ federal funds through 

a statutory recall or agency closures represent capital 

transfers and are returned to Treasury’s General Fund. 

(See Note 2)

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

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

The financial statements reflect the Department’s estimate 

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

in accordance with the FCRA. Loans and interest receivable 

are valued at their gross amounts less an allowance for the 

present value of amounts not expected to be recovered, 

and thus having to be subsidized—called an “allowance 

for subsidy.” The difference between the gross amount and 

the allowance for subsidy is the present value of the cash 

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

receivables over their projected lives. Similarly, liabilities for 

loan guarantees are valued at the present value of the cash 

outflows from the Department less the present value of 

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

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

The loan guarantee liabilities represent the net present value 

of all future cash flows from currently insured FFEL loans, 

including claim payments, interest assistance, allowance 

payments, and recoveries from assigned loans. Guaranteed 

loans that default are initially turned over to guaranty 

agencies for collection. Defaulted FFEL loans are accounted 

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

to direct loans, although they are legally not direct student 

loans. Credit program receivables, net includes defaulted 

FFEL loans owned by the Department and held by the 

Department or guaranty agencies. In most cases, after 

approximately four years, defaulted guaranteed loans not in 

repayment are turned over by the guaranty agencies to the 

Department for collection.

FFEL Program receivables include purchased loans and 

other interests acquired under an expired program. The 

cash flows related to these receivables include collections on 

purchased loans and other activities, including transfers of 

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

include inflows and outflows associated with the underlying 

or purchased loans and other related activities, including 

any positive or negative subsidy transfers. 

Capitalization of interest occurs as a result of various 

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

receivable is reduced, and loan principal is increased. 

(See Note 5)

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

AND LEASES

The Department has very limited acquisition costs 

associated with buildings, furniture, and equipment as 

all Department and contractor staff are housed in leased 

buildings. The Department does not own real property 

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

from the General Services Administration (GSA). The 

lease contracts with GSA for privately and publicly owned 

buildings are operating leases.

The Department also leases information technology and 

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

payments associated with this equipment have been 

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

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

the Department holding the right to extend the lease term 

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

and 14)

LIABILITIES

• Liabilities represent actual and estimated amounts to 

be paid as a result of transactions or events that have 

already occurred.

• Liabilities are classified as covered by budgetary 

resources if budgetary resources are available to pay 

them. Credit program liabilities funded by permanent 

indefinite appropriations are also considered covered by 

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

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• Liabilities are classified as not covered by budgetary 

resources when congressional action is needed before 

they can be paid. Although future appropriations to 

fund these liabilities are likely, it is not certain that 

appropriations will be enacted to fund these liabilities. 

• Liabilities not requiring appropriated budgetary resources 

include those related to deposit funds, Subsidy Due to 

Treasury General Fund for Future Liquidating Account 

Collections (pre-1992 loan guarantee programs), and 

Federal Perkins Loan program balances due to be repaid 

to the Treasury General Fund. (See Note 6) 

DEBT ASSOCIATED WITH LOANS

The Department borrows from Treasury to provide funding 

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

higher education. The liability to Treasury from borrowings 

represents unpaid principal at year-end. The Department 

repays the principal based on available fund balances. 

Interest rates are based on the corresponding rate for 10-

year Treasury securities and are set for those borrowings 

supporting each cohort of loans once the loans for that 

cohort are substantially disbursed. Interest is paid to Treasury 

on September 30. In addition, the Federal Financing Bank 

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

on behalf of the Department, for the HBCU Capital 

Financing program. The debt for other credit programs for 

higher education includes the liability for full payment of 

principal and accrued interest for the FFB-financed HBCU 

Capital Financing program. (See Note 7) 

SUBSIDY DUE TO TREASURY

The Department must transfer to the Treasury General 

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

requirements. This excess funding is included in the 

liability for subsidy due to Treasury and will be transferred 

to Treasury in the succeeding fiscal year upon receipt of 

authority from OMB. Subsidy due to Treasury also includes 

future liquidating account collections (estimated collections 

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

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

ACCOUNTS PAYABLE

Accounts payable include amounts owed by the 

Department for goods and services received from other 

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

intragovernmental accounts payable primarily consists 

of in-process grant and loan disbursements, including an 

accrued liability for schools that have disbursed loans before 

requesting funds. (See Note 9)

ACCRUED GRANT LIABILITIES

The Department records grant expenses as grantees 

drawdown funding on their available grant balances. 

Some grant recipients incur allowable expenditures as 

of the end of an accounting period but have not yet 

drawn on their available balances to be reimbursed by 

the Department. The Department accrues liabilities for 

these allowable expenditures. The liability amounts are 

estimated using a combination of historical data and a 

statistical sample survey of current unliquidated balances. 

Some grantees drawdown funding in advance of incurring 

grant expenditures. A statistical estimate is made for 

these advance drawdowns and is recorded as other than 

intragovernmental advances (see Note 4).

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

OTHER EMPLOYEE BENEFITS

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

leave, compensatory time off, and other vested leave is 

accrued when earned and reduced when taken. Each year, 

the accrued annual leave account balance is adjusted to 

reflect current pay rates. Sick leave and other types of 

nonvested leave are expensed as taken. Annual leave earned 

but not taken, within established limits, is funded from 

future financing sources. (See Notes 6 and 9)

Retirement Plans and Other Retirement Benefits.

Employees participate in either the Civil Service 

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

Federal Employees Retirement System (FERS), a defined 

benefit and contribution plan. For CSRS employees, the 

Department contributes a fixed percentage of pay.

FERS consists of Social Security, a basic annuity plan, 

and the Thrift Savings Plan. The Department and the 

employee contribute to Social Security and the basic 

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

Department is required to contribute to the Thrift Savings 

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

of employees covered by this system, match voluntary 

employee contributions up to 3 percent of the employee’s 

basic pay, and match one-half of contributions between 

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

FERS employees, the Department also contributes the 

employer’s share of Medicare.

Federal Employees’ Compensation Act. The Federal 

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

provides income and medical cost protection to covered 

federal civilian employees injured on the job, to employees 

who have incurred work-related occupational diseases, and 

to beneficiaries of employees whose deaths are attributable 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

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

(DOL), which pays valid claims and subsequently seeks 

reimbursement from the Department for these paid claims.

The FECA liability consists of two elements. The first 

element, accrued FECA liability, is based on claims paid 

by DOL but not yet reimbursed by the Department. 

The Department reimburses DOL for claims as funds 

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

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

reimbursement to DOL by the Department. As a result, 

the Department recognizes an intragovernmental liability, 

not covered by budgetary resources, for the claims paid by 

DOL that will be reimbursed by the Department.

The second element, actuarial FECA liability, is the 

estimated liability for future benefit payments and is 

recorded as an other than intragovernmental liability, 

not covered by budgetary resources. The actuarial 

FECA liability includes the expected liability for death, 

disability, medical, and miscellaneous costs for approved 

compensation cases. DOL determines the actuarial FECA 

liability annually, as of September 30, using an actuarial 

method that considers historical benefit payment patterns, 

wage inflation factors, medical inflation factors, and other 

variables. The projected annual benefit payments are 

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

IMPUTED COSTS

Services are received from other federal entities at no cost 

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

Consistent with accounting standards, certain costs of 

the providing entity that are not fully reimbursed by 

the Department are recognized as imputed cost in the 

Statements of Net Cost and are offset by imputed revenue 

in the Statements of Changes in Net Position. Such 

imputed costs and revenues relate to employee benefits. 

However, unreimbursed costs of services other than 

those related to employee benefits are not included in the 

Department’s financial statements.

NET COST

As required by the GPRA Modernization Act of 2010, the 

Department’s programs have been aligned with the goals 

presented in the Department’s Strategic Plan. 

Net cost consists of gross costs less earned revenue. Major 

components of the Department’s net costs include credit 

program subsidy expense, credit program interest revenue 

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

Credit Program Subsidy Expense. Subsidy expense is 

an estimate of the present value cost of providing loans, 

excluding the administrative costs of issuing and servicing 

the loans. To estimate subsidy expense, the Department 

must project lifetime cash flows associated with loans 

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

The Department projects these lifetime cash flows using 

a set of econometric and financial models, as well as 

cash flow models. The Department estimates subsidy 

expenses annually for new loans disbursed in the current 

year; updates the previous cost estimates for outstanding 

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

updates previous cost estimates based on changes to terms 

of existing loans (loan modifications). Loan modifications 

include actions resulting from new legislation or from the 

exercise of administrative discretion under existing law, 

which directly or indirectly alters the estimated subsidy 

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

The change in book value of direct loans resulting from a 

modification and the cost of modification will normally 

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

of different measurement methods. Any difference between 

the change in book value and the cost of modification is 

recognized as a modification adjustment transfer gain or a 

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

Credit Program Interest Revenue and Expense. The 

Department recognizes other than intragovernmental 

interest revenue when interest is accrued on Direct Loan 

Program loans, defaulted and acquired FFEL loans, and 

outstanding principal for other loan programs. Interest due 

from borrowers is accrued at least monthly and is satisfied 

upon collection or capitalization into the loan principal. 

Federal interest revenue is recognized on the unused fund 

balances with Treasury in the financing accounts.

Federal interest expense is recognized monthly on the 

outstanding borrowing from Treasury (debt) used to finance 

direct loan and loan guarantee programs. Accrued interest 

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

federal interest expense is the same as the rate used for 

federal interest revenue.

Interest expense equals interest revenue plus administrative 

fees accrued for all credit programs due to subsidy 

amortization. Subsidy amortization is required by the 

FCRA and accounts for the difference between interest 

expense and revenue cash flows. For direct loans, the 

allowance for subsidy is adjusted with the offset to interest 

revenue. For guaranteed loans, the liability for loan 

guarantees is adjusted with the offset to interest expense. 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NET POSITION

Net position consists of unexpended appropriations 

and cumulative results of operations. Unexpended 

appropriations include undelivered orders and unobligated 

balances, except for amounts in financing accounts, 

liquidating accounts, and trust funds. Cumulative 

results of operations represent the net difference since 

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

financing sources.

ALLOCATION TRANSFERS

The Department is a party to allocation transfers with 

other federal agencies as both a transferring (parent) entity 

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

delegations by one entity of its authority to obligate budget 

authority and outlay funds to another entity. A separate 

fund account (allocation account) is created in the Treasury 

as a subset of the parent fund account for tracking and 

reporting purposes. All allocation transfers of balances are 

credited to this account, and subsequent obligations and 

outlays incurred by the child entity are charged to this 

allocation account as they execute the delegated activity on 

behalf of the parent entity. All financial activity related to 

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

outlays) is reported in the financial statements of the parent 

entity from which the underlying legislative authority, 

appropriations, and budget apportionments are derived.

The Department is a party to allocation transfers as a 

parent entity to the Department of the Interior and receives 

allocation transfers as a child entity from the Department 

of Health and Human Services. 

TAXES

The Department is a federal entity and is not subject to 

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

income taxes is recorded.

USE OF ESTIMATES

Department management is required to make certain 

estimates while preparing consolidated financial statements 

in conformity with GAAP. These estimates are reflected 

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

financial statements and may differ from actual results. The 

Department’s estimates are based on management’s best 

knowledge of current events, best available data, economic 

assumptions, historical experiences, and other assumptions 

that are believed to be reasonable under the circumstances. 

Significant estimates reported on the financial statements 

include: allocation of Department administrative overhead 

costs; allowance for subsidy and subsidy expense for direct, 

defaulted guaranteed, and acquired loans; the liability for 

loan guarantees; and grant liability and advance accruals. 

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

The Department’s estimates for credit programs are 

calculated using a series of assumption models that are 

updated using a statistically valid sample of National 

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

Debt Management and Collection System, and economic 

assumptions provided by OMB. Actual results may differ 

from those assumptions and estimates. Differences between 

actual results and these estimates may occur in the valuation 

of credit program receivables and liabilities for loan 

guarantees under guidelines in the FCRA. The Department 

recognizes the sensitivity of credit reform modeling. 

Slight changes in modeling methodology or data used to 

derive assumptions can produce largely varied results. The 

Department therefore continually reviews its model factors 

and statistical modeling techniques to reflect the most 

accurate credit program costs possible in its annual financial 

statements. The Department updates its assumption models 

in accordance with its model update plan, which takes 

into consideration statutory or new program requirements, 

major changes to the model structure or methodology, 

and data updates. This level of granularity in the modeling 

methodology is essential to the financial reporting and 

budgeting processes so that the Department can forecast 

the costs of various program options when making policy 

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 2. Non-Entity Assets

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Non-Entity Assets

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

Loans Receivable, Net - 1,066 - 693 

Cash and Other Monetary Assets - 725 - 1,913 

Accounts Receivable, Net - 32 - 66 

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

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

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

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

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

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

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

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

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

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

(See Note 9)

NOTE 3. Fund Balance with Treasury 

(Dollars in Millions)

2022 (Unaudited) 2021

COVID-19 

Funds

All Other 

Funds Total COVID-19 

Funds

All Other 

Funds Total

Unobligated Balance

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

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

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

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

Borrowing Authority Not Yet Converted to Fund 

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

Other - 401 401 - 255 255 

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

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

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

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

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

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

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

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

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 4. Other Assets 

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

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

Advances to Others and Prepayments 85 2 104 34 

Property and Equipment, Net - 6 - 6 

Other - 2 1 - 

Total Other Assets $ 92 $ 208 $ 114 $ 324 

Included in the other than intragovernmental accounts receivable are amounts owed because of criminal restitution orders 

that are to be collected by the Department of Justice on behalf of the Department of Education. Amounts collected for these 

criminal restitutions are generally returned to the Treasury General Fund. Gross receivables and the allowance for uncollectible 

amounts as of September 30, 2022, related to criminal restitutions totaled $127 million and $117 million, respectively.

Changes in property and equipment balances were as follows:

Property and Equipment 

(Dollars in Millions)

 Acquisition Value Accumulated 

Depreciation Net

2022 (Unaudited)

Balance Beginning of the Year $ 168 $ (162) $ 6 

Balance At End of Year $ 168 $ (162) $ 6 

2021

Balance Beginning of the Year $ 167 $ (161) $ 6 

Capitalized Acquisitions 1 - 1 

Depreciation Expense - (1) (1)

Balance At End of Year $ 168 $ (162) $ 6 

NOTE 5. Loan Receivables, Net and Loan Guarantee Liabilities 

Loans Receivables

(Dollars in Millions)

Principal Accrued Interest Allowance for Subsidy Net

2022 (Unaudited)

Direct Loan Program $ 1,341,770 $ 86,663 $ (611,919) $ 816,514 

FFEL Program 80,262 21,599 (62,059) 39,802 

Other Credit Programs for Higher Education 2,452 466 (586) 2,332 

Total Loans Receivable $ 1,424,484 $ 108,728 $ (674,564) $ 858,648 

2021

Direct Loan Program $ 1,292,214 $ 86,501 $ (273,864) $ 1,104,851 

FFEL Program 82,009 23,902 (47,665) 58,246 

Other Credit Programs for Higher Education 2,060 294 (387) 1,967 

Total Loans Receivable $ 1,376,283 $ 110,697 $ (321,916) $ 1,165,064 
FY 2022 AGENCY FINANCIAL REPORT 67 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The federal student loan programs provide students and their families with the funds to help meet postsecondary education 

costs. Funding for these programs is provided through permanent indefinite budget authority. The emergency relief measures 

provided by Congress and the administration in response to the COVID-19 pandemic were recorded as loan modifications 

and are described in each of the programs below. Per OMB guidance, loan modifications were calculated using the President’s 

Budget formulation discount rates. 

As the net loans receivable represents the net present value of future cash flows, it is not necessarily representative of the 

proceeds that might be expected if these loans were sold on the open market. The net loans receivable decreased by $306.4 

billion during FY 2022 as a result of activity identified in the following table.

Reconciliation of Loans Receivable, Net

(Dollars in Millions)

Direct Loan 

Program

Defaulted FFEL 

Guaranteed 

Loans

Acquired 

FFEL Loans

Other Credit 

Programs for 

Higher Education Total

2022 (Unaudited)

Beginning Balance of Loans Receivable, Net $ 1,104,851 $ 16,138 $ 42,108 $ 1,967 $ 1,165,064 

Add Loan Disbursements:

New Loan Disbursements 83,451 - - 173 83,624 

Consolidations 36,939 - - - 36,939 

Add Defaulted Loan Claim Payments - 3,680 - - 3,680 

Less Principal, Interest, and Fee Payments Received:

Principal (41,283) (1,172) (2,163) (47) (44,665)

Interest (2,561) (14) (309) (6) (2,890)

Fees (1,613) - - - (1,613)

Add Interest Accruals (564) (1,153) (117) (1) (1,835)

Less Loans Written Off:

Principal (23,416) (1,974) (786) (67) (26,243)

Interest (1,886) (865) (160) (8) (2,919)

Fees (1) (1) - - (2)

Allowance for Subsidy 25,303 2,840 946 75 29,164 

Add Amortization of Net Interest:

Interest Revenue on Uninvested Funds (7,631) - (290) (22) (7,943)

Interest Revenue from the Public 564 - 117 1 682 

Administrative Fees (5) - - - (5)

Interest Expense on Borrowing 30,589 - 1,334 41 31,964 

Positive Subsidy Transfers (10,827) - - (41) (10,868)

Negative Subsidy Transfers 3,535 - - - 3,535 

Upward Subsidy Re-Estimate (14,563) - (26) (367) (14,956)

Downward Subsidy Re-Estimate 36,500 - 2,031 295 38,826 

Loan Modifications (400,055) - (12,817) (67) (412,939)

Other:

Other Adjustments to Allowance for Subsidy 147 (6,593) 27 (115) (6,534)

Other Non-Cash Reconciling Items (960) (955) (24) 521 (1,418)

Ending Balance of Loans Receivable, Net $ 816,514 $ 9,931 $ 29,871 $ 2,332 $ 858,648 

When Department-held loans are written off, the unpaid principal and interest are removed from the gross amount of loans 

receivable, along with an offsetting amount charged to the allowance for subsidy. Prior to the write off transaction, the 

estimated uncollectible amounts are provided for in the subsidy cost allowance through the subsidy cost estimate, re-estimates, 

or loan modifications. Therefore, the write off transactions do not affect the net loan receivable or expenses.
FY 2022 AGENCY FINANCIAL REPORT 68 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Other adjustments to allowance for subsidy for defaulted FFEL guaranteed loans shown in the table above includes the 

Department’s allocation of current year subsidy re-estimates and modifications to the allowance for subsidy for Departmentheld defaulted FFEL guaranteed loans. 

What follows is additional analysis of the activity, costs, and adjustments for each of the loan programs. 

D I R EC T LOA N P R O G R A M 

The federal government makes loans directly to students and parents through participating IHEs under the Direct Loan Program. 

Direct loans are originated and serviced through contracts with private vendors.

Direct Loan Program loan receivables include defaulted and nondefaulted loans owned by the Department. Of the 

$1,428.4 billion in gross loan receivables, as of September 30, 2022, $85.8 billion (6.0 percent) in loan principal was in 

default and had been transferred to the Department’s defaulted loan servicer, compared to $91.5 billion (6.6 percent) as of 

September 30, 2021.

Direct Loan Program Loan Disbursements by Loan Type

(Dollars in Millions)

2022 (Unaudited) 2021

Stafford $ 15,728 $ 18,325 

Unsubsidized Stafford 45,486 44,146 

PLUS 22,237 20,824 

Consolidation 36,939 21,508 

Total Disbursements $ 120,390 $ 104,803 

The allocation of disbursements for the first three loan types is estimated based on historical trend information.

Student and parent borrowers may prepay existing loans without penalty through a new consolidation loan. Under the FCRA 

and requirements provided by OMB regulations, the retirement of direct loans being consolidated is considered a collection of 

principal and interest. This receipt is offset by the disbursement related to the newly created consolidation loan. Underlying direct 

or guaranteed loans, performing or nonperforming, are paid off in their original cohort; new consolidation loans are originated in 

the cohort in which the new consolidation loan was obligated. Consolidation activity is taken into consideration in establishing 

subsidy rates for defaults and other cash flows. The cost of new consolidations is included in subsidy expense for the currentyear cohort; the effect of prepayments on existing loans could contribute to re-estimates of prior cohort subsidy costs. The net 

receivables include estimates of future prepayments of existing loans through consolidations; they do not reflect subsidy costs 

associated with anticipated future consolidation loans.

Direct loan consolidations were $36.9 billion during FY 2022 and $21.5 billion during FY 2021. The effect of the early payoff of 

the existing loans—those being consolidated—is recognized in the future projected cash flows associated with that cohort.

Direct Loan Program Interest Expense and Revenues (See Note 10)

(Dollars in Millions)

2022 (Unaudited) 2021

Interest Expense on Treasury Borrowing $ 30,589 $ 32,957 

Total Interest Expense $ 30,589 $ 32,957 

Interest Revenue From the Public (564) (459)

Interest Revenue on Uninvested Funds 7,631 4,230 

Administrative Fees 5 32 

Amortization of Subsidy 23,517 29,154 

Total Revenues $ 30,589 $ 32,957 
FY 2022 AGENCY FINANCIAL REPORT 69 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Direct Loan Program Subsidy Expense 

(Dollars in Millions)

2022 (Unaudited) 2021

Subsidy Expense for Direct Loans Disbursed in the Current Year

Interest Rate Differential $ 24,653 $ 19,844 

Defaults, Net of Recoveries 353 606 

Fees (1,644) (1,603)

Other (16,070) (17,259)

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 7,292 1,588 

Modifications and Re-Estimates

Loan Modifications

Modification Adjustment Transfer Gain (28,242) (2,716)

Modification Adjustment Transfer Loss 2,483 182 

Loan Modifications 425,814 70,812 

Total Loan Modifications 400,055 68,278 

Net Upward/(Downward) Subsidy Re-Estimates

Interest Rate Re-estimates (1,652) (6,221)

Technical and Default Re-estimates (20,285) 30,246 

Total Net Upward/(Downward) Subsidy Re-estimates (21,937) 24,025 

Total Modifications and Re-estimates 378,118 92,303 

Direct Loan Subsidy Expense $ 385,410 $ 93,891 

Subsidy Expense for Direct Loans Disbursed in the Current 

Year. The two major components of the total subsidy expense 

for direct loans disbursed in the current year (subsidy transfers) 

are Interest Rate Differential and Other components. Interest 

Rate Differential is attributable to the difference between the 

borrowers’ interest payments due to the Department and the 

Department’s estimated cost to finance the direct loan on a 

present value basis. The Other components of subsidy transfers 

primarily consists of contract collection costs, program review 

collections, fees, and loan forgiveness.

Loan Modifications. Loan modifications for the Direct 

Loan Program for FY 2022 included the following:

• Broad-Based Debt Relief. To address the financial harms 

of the pandemic by smoothing the transition back to 

repayment and helping borrowers at highest risk of 

delinquencies or default once payments resume, the 

Department provided broad-based debt relief. Borrowers 

with loans held by the Department who received a Pell 

Grant in college and meet the specified income limits are 

eligible for up to $20,000 in debt relief, while non-Pell 

Grant recipients who meet the specified income limits are 

eligible for up to $10,000 in relief. Applications for this 

debt relief launched on October 17, 2022. This action 

resulted in an upward modification cost of $361.0 billion 

in the Direct Loan Program. There was a net negative 

$23.7 billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost for the Direct Loan Broad-Based Debt 

Relief to $337.3 billion.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals through 

December 31, 2022.6

 The extended relief for borrowers 

resulted in an upward modification cost of $48.4 billion. 

There was a net positive $0.2 billion modification 

adjustment transfer associated with this modification, 

bringing the total FY 2022 modification cost for the 

student loan repayment deferrals to $48.6 billion.

• PSLF Waiver. The PSLF Program removes the burden 

of student debt on public servants by cancelling loans 

after 10 years of payments while the borrower is in 

public service. Temporary changes were made to the 

program through a Limited PSLF Waiver to allow student 

borrowers to get credit for payments made while working 

for a qualifying employer, regardless of loan type or 

repayment plan. The Waiver, which ran through October 

31, 2022, applies to borrowers with Direct Loans, those 

who have already consolidated into the Direct Loan 

Program, and those with other types of federal student 

loans who submit a consolidation application into the 

Direct Loan Program while the waiver is in effect. These 

temporary changes resulted in an upward modification 

cost of $10.1 billion in the Direct Loan Program. There 

6 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16) 
FY 2022 AGENCY FINANCIAL REPORT 70 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

was a net negative $1.0 billion modification adjustment 

transfer associated with this modification, bringing the 

total FY 2022 modification cost for the Direct Loan 

Program PSLF Waiver to $9.1 billion. 

• Income-Driven Repayment (IDR) Waiver one time 

account adjustment. Borrowers on most IDR plans are 

entitled to forgiveness after 20 years of payments and 

depend on FSA and its servicers to accurately track their 

progress toward relief. However, the Department’s review 

of IDR payment-tracking procedures revealed significant 

flaws that suggested borrowers had been missing out on 

progress toward IDR forgiveness. To address past issues 

with IDR payment counting, the IDR Waiver allowed 

any borrower who made IDR-qualifying payments to 

count toward IDR, regardless of repayment plan. Any 

borrower who made the required number of payments 

for IDR forgiveness based on this payment-count 

revision would receive loan forgiveness automatically, 

and months spent in deferment prior to 2013 would 

count toward forgiveness as well. These changes resulted 

in an upward modification cost of $16.4 billion during 

FY 2022 in the Direct Loan Program. There was a net 

negative $2.3 billion modification adjustment transfer 

associated with this modification, bringing the total FY 

2022 modification cost for the Direct Loan Program IDR 

Waiver to $14.1 billion.

• Shift to Business Process Operations (BPO). The holder 

of defaulted federal student debt has historically entered 

into contracts with Private Collection Agencies (PCAs) 

to collect on defaulted student loans. FSA transitioned 

PCA services to new BPO contracts in FY 2022, which 

is estimated to result in lower costs for future defaulted 

student loan collection activities. This action resulted in 

a downward modification cost (savings) of $10.1 billion 

in the Direct Loan Program. There was a net positive 

$1.0 billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost (savings) for the Direct Loan Program 

shift to business process operations to $9.1 billion.

Net Upward/Downward Subsidy Re-Estimates for All 

Prior-Year Loan Cohorts. The Direct Loan Program 

subsidy re-estimate decreased subsidy expense in FY 2022 

by $21.9 billion. Re-estimated costs only include cohorts 

that are 90 percent disbursed (i.e., cohort years 1994–

2021). The re-estimate reflects the assumption updates and 

other changes described below. 

In addition to the major assumption updates described 

below, the re-estimate reflects several other assumption 

updates, including loan volume, enter repayment rates, and 

Teacher Loan Forgiveness.

• Non-IDR Discharges. The Department updated the 

assumption to reflect changes made in recent cycles, 

including adjustments made for COVID-related Return 

of Title IV Fund claims, the VA-match and SSAmatch TPD adjustments, and the change to a 30-year 

distribution. One addition in this update cycle was for 

an expected increase in closed school discharges. The 

combined effect of these updates led to a new upward 

re-estimate of $2.9 billion.

• IDR Model Changes. The Department completed a 

standard IDR data update. The income calibration 

used in the IDR model was updated to use more of the 

available data from NSLDS. The calibration was done 

by the risk groups used in the model. Doing so resulted 

in a smaller calibration for some groups (especially 

graduate students), which contributed significantly to 

savings for this component. Data on inflation, interest 

rates, and the poverty line were adjusted to reflect 

the latest current data, as well as OMB’s most recent 

forecasts. Several smaller technical updates were made 

to improve the accuracy and functioning of the IDR 

model, including the handling of payments during 

the COVID-19 payment pause and calculating the 

percentage of debt allocated to the borrower when 

jointly repaying with the borrower’s spouse. The 

combined effect of these updates led to a net downward 

re-estimate of $24.0 billion.

• Deferment and Forbearance. The Department updated 

actual deferment and forbearance rates for FY 2021 and 

calibrated FY 2022 and FY 2023 rates using data from 

FSA on borrower payments made during the period 

of repayment deferral. The combined effect of these 

changes led to a net upward re-estimate of $2.6 billion. 

• Collections. The Department updated the data and 

calibrated FY 2022 collection rates to reflect the extension 

of the repayment deferral. The combined effect of these 

changes led to a net downward re-estimate of $1.7 billion.

• Default. In addition to the adjustments for the 

extension of the student loan repayment deferrals, the 

Department updated the data and incorporated actual 

unemployment rates from the Bureau of Labor Statistics 

and projected unemployment rates from OMB. The 

combined effect of these changes led to a net upward 

re-estimate of $3.0 billion.

• Repayment Plan Selection. The Department 

incorporated new repayment plan data through 

FY 2021. This update led to a downward re-estimate 

of $3.0 billion.
FY 2022 AGENCY FINANCIAL REPORT 71 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

• 2021 Cohort Assumption Changes. The technical re-estimate cannot reflect the impacts of certain assumption changes 

applicable to the current year loan cohort until the following fiscal year per OMB guidance. The current year’s reestimate includes a net upward adjustment of $7.7 billion for these current-year assumption changes attributable to the 

FY 2021 cohort.

• Interest on the Re-Estimate. Interest on re-estimates is the amount of interest that would have been earned or paid by each 

cohort on the subsidy re-estimate if the re-estimated subsidy had been included as part of the original subsidy estimate. 

The interest on the re-estimate calculated on the overall subsidy re-estimate resulted in a net downward re-estimate of 

$0.4 billion.

• Interactive Effects. The re-estimate includes a net upward re-estimate of $7.4 billion attributed to the interactive effects of 

the assumption changes described above. Each assumption described above is run independently. The interactive effect is a 

result of combining all assumptions together to calculate the final re-estimate.

• Discount Rates. The rates are used to calculate the NPV of the cash flows to create subsidy rates. Adjustments to the 2020 

and 2021 cohorts were calculated. All other cohorts are actual. The combined effect of these changes led to a net downward 

re-estimate of $16.6 billion.

Direct Loan Subsidy Rates—Cohort 2022 (Unaudited)

Interest 

 Differential Defaults Fees Other Total

Stafford 22.42% 0.83% -1.06% -14.21% 7.98%

Unsubsidized Stafford 23.21% 0.60% -1.06% -20.50% 2.25%

PLUS 10.39% 0.39% -4.23% -20.70% -14.15%

Consolidation 18.83% -0.70% 0.00% 6.40% 24.53%

Weighted Average Total 20.04% 0.19% -1.31% -12.86% 6.06%

*The Other component reflects costs associated with loan cancelations and the interactive effects of payment plans on the components of subsidy.

The subsidy rates disclosed pertain only to the current year’s cohorts. These rates cannot be applied to the direct loans 

disbursed during the current reporting year to yield the subsidy expense. The subsidy expense for new loans reported in the 

current year could result from disbursements of loans from both current year cohorts and prior-year cohorts. The subsidy 

expense reported in the current year also includes modifications and re-estimates. 

The subsidy costs of the Department’s student loan programs, especially the Direct Loan Program, are highly sensitive 

to changes in actual and forecasted interest rates. The formulas for determining program interest rates are established by 

statute; the existing loan portfolio has a mixture of borrower and lender rate formulas. Interest rate projections are based on 

probabilistic interest rate scenario inputs developed and provided by OMB.

Direct Loan Program Reconciliation of Allowance for Subsidy 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance of Allowance for Subsidy $ 273,864 $ 216,404 

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 7,292 1,588 

Adjustments

Loan Modifications 400,055 68,278 

Fees Received 1,611 1,562 

Loans Written Off (25,303) (8,354)

Subsidy Allowance Amortization (23,517) (29,154)

Other Activities (146) (485)

Ending Balance of Allowance for Subsidy Before Re-Estimates 633,856 249,839 

Net Upward/(Downward) Subsidy Re-estimates (21,937) 24,025 

Ending Balance of Allowance for Subsidy $ 611,919 $ 273,864 
FY 2022 AGENCY FINANCIAL REPORT 72 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The estimation process used to determine the amount of 

positive or negative subsidy expense each fiscal year, and 

subsequently the cumulative taxpayer cost of the program 

(allowance for subsidy), is subject to various external risk 

factors that often show strong interdependence with one 

another. These risks include uncertainty about changes 

in the general economy, changes in the legislative and 

regulatory environment, and changing trends in borrower 

performance related to contractual cash flows within the 

loan programs.

Due to the complexity of the Direct Loan Program, there is 

inherent projection risk in the process used for estimating 

long-term program costs. As stated, some uncertainty 

stems from potential changes in student loan legislation 

and regulations because these changes may fundamentally 

alter the cost structure of the program. Operational and 

policy shifts may also affect program costs by causing 

significant changes in borrower repayment timing. Actual 

performance may deviate from estimated performance, 

which is not unexpected given the long-term nature of 

these loans (cash flows may be estimated up to 40 years), 

and the multitude of projection paths and possible 

outcomes. The high percentage of borrowers in IDR plans 

has made projection of borrower incomes a key input for 

the estimation process. This uncertainty is directly tied 

to the macroeconomic climate and is another inherent 

program element that displays the interrelated risks facing 

the Direct Loan Program. The Department utilizes the best 

data available with modeling techniques that have been 

examined over time by several outside entities. Management 

has confidence over the estimates by using several different 

tools to analyze cost estimates. Re-estimates on the loan 

portfolio are performed twice a year ensuring that the most 

up to date data and models are used.

Loans written off result from borrowers having died, 

becoming disabled, or having a loan approved for discharge 

in bankruptcy or other type of discharge, including 

borrower defense discharges. The interest rate re-estimate 

reflects the cost of finalizing the Treasury borrowing rate 

to be used for borrowings received to fund the disbursed 

portion of the loan awards obligated. 

FEDER AL FAMILY EDUCATION LOAN PROGR AM

FFEL was established in FY 1965 and is a guaranteed loan program. As a result of the SAFRA Act, no new FFEL loans have 

been made since July 1, 2010. Federal guarantees on FFEL Program loans and commitments remain in effect for loans 

made before July 1, 2010, unless they were sold to the Department through an ECASLA authority (acquired FFEL loans), 

consolidated into a direct loan, or otherwise satisfied, discharged, or canceled.

FFEL Guaranteed Loans Outstanding

(Dollars in Billions)

2022 (Unaudited)

Outstanding Principal of Guaranteed Loans, Face Value $ 98.6 

Amount of Outstanding Principal Guaranteed $ 98.6 

As of September 30, 2022, the total principal value of guaranteed loans outstanding and the amount of that principal which 

is guaranteed is approximately $98.6 billion. Additionally, the FFEL Program guarantees outstanding interest balances. 

As of September 30, 2022, the interest balances outstanding for guaranteed loans held by lenders was approximately 

$4.2 billion. The Department’s total FFEL Program guarantees (principal and interest) are approximately $102.8 billion as of 

September 30, 2022. Of the total guaranteed amount, the Department would expect to pay a smaller amount to the guaranty 

agencies. The guarantee rates range from 75 to 100 percent of the principal and interest balance depending on the type of 

claim, when the loan was made, and the guaranty agency’s claim experience. For purposes of disclosing the Department’s total 

risk exposure for FFEL guarantees, the highest reimbursement rate of 100 percent is assumed.
FY 2022 AGENCY FINANCIAL REPORT 73 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Defaulted and acquired FFEL loans are accounted for as assets as shown in the following table.

FFEL Program Loan Receivables 

(Dollars in Millions)

Principal Accrued Interest

Allowance 

for Subsidy 

(Present Value)

Net

2022 (Unaudited)

DEFAULTED FFEL GUARANTEED LOANS

FFEL GSL Program (Pre-1992) $ 3,310 $ 4,966 $ (7,940) $ 336 

FFEL GSL Program (Post-1991) 34,298 8,226 (32,929) 9,595 

Total Defaulted FFEL Guaranteed Loans 37,608 13,192 (40,869) 9,931 

ACQUIRED FFEL LOANS

Loan Purchase Commitment 14,189 2,593 (7,945) 8,837 

Loan Participation Purchase 27,181 5,461 (12,952) 19,690 

ABCP Conduit 1,284 353 (293) 1,344 

Total Acquired FFEL Loans 42,654 8,407 (21,190) 29,871 

FFEL Program Loan Receivables $ 80,262 $ 21,599 $ (62,059) $ 39,802 

2021

DEFAULTED FFEL GUARANTEED LOANS

FFEL GSL Program (Pre-1992) $ 3,638 $ 5,739 $ (8,418) $ 959 

FFEL GSL Program (Post-1991) 32,612 9,302 (26,735) 15,179 

Total Defaulted FFEL Guaranteed Loans 36,250 15,041 (35,153) 16,138 

ACQUIRED FFEL LOANS

Loan Purchase Commitment 15,238 2,716 (4,822) 13,132 

Loan Participation Purchase 29,178 5,776 (7,316) 27,638 

ABCP Conduit 1,343 369 (374) 1,338 

Total Acquired FFEL Loans 45,759 8,861 (12,512) 42,108 

FFEL Program Loan Receivables $ 82,009 $ 23,902 $ (47,665) $ 58,246 
FY 2022 AGENCY FINANCIAL REPORT 74 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

FFEL Program Subsidy Expense 

(Dollars in Millions)

2022 (Unaudited) 2021

Loan Modification Costs

FFEL Guaranteed Loan Program

Net Modification Adjustment Transfer (Gain)/Loss $ (979) $ (302)

Loan Modifications 10,813 3,164 

Total FFEL Guaranteed Loan Program Loan Modifications 9,834 2,862 

Loan Purchase Commitment

Net Modification Adjustment Transfer (Gain)/Loss (319) - 

Loan Modifications 4,454 1,069 

Total Loan Purchase Commitment Loan Modifications 4,135 1,069 

Loan Participation Purchase

Net Modification Adjustment Transfer (Gain)/Loss (604) - 

Loan Modifications 9,286 1,879 

Total Loan Participation Purchase Loan Modifications 8,682 1,879 

Total Loan Modification Costs 22,651 5,810 

Upward/(Downward) Subsidy Re-Estimates

FFEL Loan Guarantee Program 1,391 7,226 

Loan Purchase Commitment (428) 208 

Loan Participation Purchase (1,577) 397 

Total FFEL Program Subsidy Re-Estimates (614) 7,831 

FFEL Program Subsidy Expense $ 22,037 $ 13,641 

Loan Modifications. Loan modifications for the FFEL 

Loan Program for FY 2022 included the following:

• Broad-Based Debt Relief. To address the financial harms 

of the pandemic by smoothing the transition back to 

repayment and helping borrowers at highest risk of 

delinquencies or default once payments resume, the 

Department provided broad-based debt relief. Borrowers 

with loans held by the Department who received a Pell 

Grant in college and meet the specified income limits are 

eligible for up to $20,000 in debt relief, while non-Pell 

Grant recipients who meet the specified income limits are 

eligible for up to $10,000 in relief. Applications for this 

debt relief launched on October 17, 2022. This action 

resulted in an upward modification cost of $18.1 billion 

in the FFEL Program. There was a net negative $2.0 

billion modification adjustment transfer associated 

with this modification, bringing the total FY 2022 

modification cost for the FFEL Broad-Based Debt Relief 

to $16.1 billion.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals for 

Department-held loans through December 31, 2022.7

The extended relief for borrowers resulted in an 

7 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16)

upward modification cost of $5.8 billion. There was 

a net positive $0.1 billion modification adjustment 

transfer associated with this modification, bringing the 

total FY 2022 modification cost for the student loan 

repayment deferrals to $5.9 billion.

• Support for the Federal Student Loan Reserve Fund. 

The Department authorized the Guaranty Agencies to 

reimburse themselves from the Federal Fund for lost 

revenue that resulted from the student loan repayment 

deferrals. The reimbursements cover the share of what 

the Guaranty Agencies would have collected during 

the pandemic but for the suspension. This relief for the 

Guaranty Agencies resulted in an upward modification 

cost of $1.1 billion.

• Shift to Business Process Operations. The holder of 

defaulted federal student debt has historically entered 

into contracts with PCAs to collect on defaulted 

student loans. FSA transitioned PCA services to new 

BPO contracts in FY 2022, which is estimated to 

result in lower costs for future defaulted student loan 

collection activities. This action resulted in a downward 

modification cost (savings) of $0.6 billion in the FFEL 

Loan Program. 
FY 2022 AGENCY FINANCIAL REPORT 75 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

• Shift of FFEL Special Allowance to SOFR. For the purposes of Special Allowance Payment calculations on certain 

FFEL Program loans, lenders or beneficial owners were given the option to substitute the 1-month London Interbank 

Offered Rate (LIBOR) for the 3-month commercial paper rate. However, as LIBOR is expected to be discontinued by 

June 2023, lenders and servicers in the FFEL Program have begun switching to the Secured Overnight Financing Rate 

(SOFR), permitted by the Consolidated Appropriations Act of 2022. This shift resulted in an upward modification cost 

of $0.2 billion.

Net Upward/Downward Subsidy Re-Estimates. The total FFEL subsidy re-estimate decreased subsidy expense in FY 2022 

by $0.6 billion. The net upward re-estimates in the FFEL Program were due primarily to updated IDR model changes in the 

Loan Purchase Commitment and Loan Participation Purchase programs.

Reconciliation of Liabilities for Loan Guarantees 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance of Post-1991 FFEL Loan Guarantee Liability $ 7,252 $ 884 

Adjustments

Loan Modifications 9,834 2,862 

Interest Supplements Paid (351) (348)

Claim Payments to Lenders (3,657) (2,613)

Fees Received 780 1,014 

Interest on Accumulation on the Liability Balance (223) (863)

Other Activities (4,617) (910)

Net Upward Subsidy Re-estimates 1,391 7,226 

Ending Balance of Post-1991 FFEL Loan Guarantee Liability 10,409 7,252 

Pre-1992 FFEL Liquidating Account Liability for Loan Guarantees - - 

FFEL Liabilities for Loan Guarantees 10,409 7,252 

HEAL Liabilities for Loan Guarantees 246 244 

Total Liabilities for Loan Guarantees $ 10,655 $ 7,496 

Other activity includes negative special allowance collections, collections on defaulted FFEL loans, guaranty agency expenses, 

and loan cancellations due to death, disability, or bankruptcy.
FY 2022 AGENCY FINANCIAL REPORT 76 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Allowance for Subsidy Reconciliation for Acquired FFEL Loans 

(Dollars in Millions)

Loan Purchase 

Commitment

Loan Participation 

Purchase ABCP Conduit Total

2022 (Unaudited)

Beginning Balance of Allowance for Subsidy $ 4,822 $ 7,316 $ 374 $ 12,512 

Adjustments

Loan Modifications 4,135 8,682 - 12,817 

Subsidy Allowance Amortization (331) (787) (43) (1,161)

Loans Written Off (251) (658) (37) (946)

Other Activities (2) (24) (1) (27)

Ending Balance of Allowance for Subsidy 

Before Re-estimates 8,373 14,529 293 23,195 

Net Downward Subsidy Re-Estimates (428) (1,577) - (2,005)

Ending Balance of Allowance for Subsidy $ 7,945 $ 12,952 $ 293 $ 21,190 

2021

Beginning Balance of Allowance for Subsidy $ 4,102 $ 6,424 $ 434 $ 10,960 

Adjustments

Loan Modifications 1,069 1,879 - 2,948 

Subsidy Allowance Amortization (424) (952) (42) (1,418)

Loans Written Off (136) (424) (16) (576)

Other Activities 3 (8) (2) (7)

Ending Balance of Allowance for Subsidy 

Before Re-estimates 4,614 6,919 374 11,907 

Net Upward Subsidy Re-Estimates 208 397 - 605 

Ending Balance of Allowance for Subsidy $ 4,822 $ 7,316 $ 374 $ 12,512 

OTHER CREDIT PROGRAMS FOR HIGHER EDUCATION

Loans Receivables, Other Credit Programs for Higher Education 

(Dollars in Millions)

Principal Accrued Interest Allowance for Subsidy 

(Present Value) Net

2022 (Unaudited)

Federal Perkins Loans $ 997 $ 368 $ (299) $ 1,066 

TEACH Program Loans 790 71 (365) 496 

HEAL Program Loans 380 26 (7) 399 

Facilities Loan Programs 285 1 85 371 

Total $ 2,452 $ 466 $ (586) $ 2,332 

2021

Federal Perkins Loans $ 708 $ 197 $ (212) $ 693 

TEACH Program Loans 783 70 (256) 597 

HEAL Program Loans 388 26 (1) 413 

Facilities Loan Programs 181 1 82 264 

Total $ 2,060 $ 294 $ (387) $ 1,967 
FY 2022 AGENCY FINANCIAL REPORT 77 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Federal Perkins Loan Program. Loans made through the 

Federal Perkins Loan program were low-interest federal 

student loans for undergraduate and graduate students with 

exceptional financial needs. Schools made these Perkins loans 

to their students and are responsible for servicing the loans 

throughout the repayment term. Borrowers who undertake 

certain public, military, or teaching service employment are 

eligible to have all or part of their loans canceled. 

The Perkins Loan program was a revolving loan program 

where the loan repayments collected from former students 

were used to make new loans to current students. The 

Department provided most of the capital used by schools 

to make these loans to eligible students. Participating 

schools provided the remaining program funding. In 

some statutorily defined cases, funds were provided by the 

Department to reimburse schools for loan cancellations. 

The above schedule includes only Perkins loans that were 

assigned to the Department when schools discontinued 

their participation in the program. For these assigned 

Perkins loans, collections of principal, interest, and fees, 

net of amounts paid to cover contract collection costs 

totaled $393 million and $79 million for FY 2022 and 

FY 2021, respectively.

The Federal Perkins Loan Program Extension Act of 

2015 (Extension Act) eliminated the authorization 

for schools to make new Perkins loan disbursements 

as of September 30, 2017, and ended all Perkins loan 

disbursements by June 30, 2018. Before the authority for 

new Perkins loans ended, collections made by the schools 

would go back into each school’s Perkins fund to be used 

to make more loans. Schools are required to return to the 

Department the federal share of any excess beyond what is 

needed (excess liquid capital). 

Schools are not required to liquidate and close out their 

programs now that no new Perkins loans are being made. 

Schools continue to take in collections and are required 

to return the federal share of the capital that is collected 

to the Department on an annual basis. Schools returned 

$689 million and $850 million to the Department in 

FY 2022 and FY 2021, respectively, for the federal share 

of collected cash. 

Schools will continue to service outstanding Perkins 

loans to recover the money they contributed to their 

Perkins funds for as long as it is feasible to do so or until 

the eventual wind-down of their portfolios. Schools that 

liquidate and close out their programs must transfer any 

outstanding portfolio to the Department and liquidate any 

final cash. Most recent data from the 2022–23 reporting 

year shows a $2.6 billion outstanding principal balance on 

Perkins loans held by schools, and the Department’s equity 

interest on this portfolio is $2.2 billion.

The amounts collected by the Department annually for 

defaulted Perkins loans and for the return of the federal 

share of schools’ Perkins capital contributions are returned 

to the Treasury General Fund. (See Note 12)

TEACH Grant Program. The Department awards 

annual grants of up to $4,000 to eligible undergraduate 

and graduate students who agree to serve as full-time 

mathematics, science, foreign language, bilingual education, 

special education, or reading teachers at high-need 

schools for four years within eight years of graduation. 

The maximum lifetime grant for students is $16,000 for 

undergraduate programs and $8,000 for graduate programs. 

For students failing to fulfill the service requirement, the 

grants are converted to direct unsubsidized Stafford loans. 

The program is operated as a loan program under the 

FCRA for budget and accounting purposes since grants can 

be converted to direct loans.

Loan modifications for the TEACH Program for FY 2022 

included the following:

• Broad-Based Debt Relief. This action resulted in an upward 

modification cost of $55 million in the TEACH Program 

for Department-held TEACH Program loans. There was 

a net negative $4 million modification adjustment transfer 

associated with this modification, bringing the total FY 

2022 modification cost for the TEACH Broad-Based Debt 

Relief to $51 million.

• Loan Deferral Extension. In FY 2022, the administration 

extended the student loan repayment deferrals through 

December 31, 20228

 for Department-held TEACH 

Program loans. The extended relief for borrowers 

resulted in an upward modification cost of $16 million. 

There was a net positive $1 million modification, 

bringing the total FY 2022 modification for student 

loan repayment deferrals to $17 million.

• Shift to Business Process Operations. This action 

resulted in a downward modification cost (savings) of 

$2 million in the TEACH Program. 

8 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16)
FY 2022 AGENCY FINANCIAL REPORT 78 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

TEACH Subsidy Rates—Cohort 2022 (Unaudited)

Interest Differential Defaults Fees Other Total

Subsidy Rates 79.33% -0.14% 0.00% -36.62% 42.57%

*The Other component reflects costs associated with loan cancelations and the interactive effects of payment plans on the components of subsidy.

HEAL Program. The Department assumed responsibility in FY 2014 for the HEAL program and the authority to administer, 

service, collect, and enforce the program. The HEAL program is structured as required by the FCRA. A liquidating account is 

used to record all cash flows to and from the government resulting from guaranteed HEAL loans committed before 1992. All 

loan activity for 1992 and beyond is recorded in corresponding financing accounts. In FY 2022, the administration extended 

the student loan repayment deferrals through December 31, 2022.9

 The extended relief for borrowers resulted in an upward 

modification cost of $1.5 million. There was a net negative $0.1 million modification adjustment transfer associated with 

this modification, bringing the total modification cost to $1.4 million.

Facilities Loan Programs. The Department also administers the HBCU Capital Financing program. Since 1992, this 

program has given HBCUs access to financing for the repair, renovation, and in exceptional circumstances, the construction 

or acquisition of facilities, equipment, and infrastructure through federally insured bonds. The Department has authorized 

a designated bonding authority to make loans to eligible institutions, charge interest, and collect principal and interest 

payments. In compliance with HEA, as amended, the bonding authority maintains an escrow account to pay the principal and 

interest on bonds for loans in default. 

The FAFSA Simplification Act provided debt relief for most outstanding HBCU Capital Financing program loans as of 

December 27, 2020. This resulted in an upward loan modification cost of $1.6 billion during FY 2021.

The total amount of support for HBCU programs, along with any accrued interest and unpaid servicing fees, will be 

capitalized to principal and be reamortized through the original maturity date of June 1, 2037. The Department has 

approximately $271 million in outstanding borrowing from the FFB to support loans made to HBCU institutions and $617 

million obligated to support near term lending as of September 30, 2022. 

The Department administers the College Housing and Academic Facilities Loan program, the College Housing Loan program, 

and the Higher Education Facilities Loan program. From 1952 to 1993, these programs provided low-interest financing to 

IHEs for the construction, reconstruction, and renovation of housing, academic, and other educational facilities.

NOTE 6. Liabilities Not Covered by Budgetary Resources 

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Liabilities Not Covered By Budgetary Resources

Unfunded Leave $ - $ 52 $ - $ 52 

FECA Liabilities 3 15 2 14 

Total Liabilities Not Covered By Budgetary Resources 3 67 2 66 

Liabilities Not Requiring Budgetary Resources

Subsidy Due to Treasury General Fund 513 - 1,209 - 

Federal Perkins Loan Program 1,057 - 682 - 

Miscellaneous Receipt, Deposit Funds and 

Clearing Accounts (9) 453 38 289 

Custodial Liabilities 1 - 4 - 

Total Liabilities Not Requiring Budgetary Resources 1,562 453 1,933 289 

Total Liabilities Covered By Budgetary Resources 932,540 20,324 1,223,776 20,122 

Total Liabilities $ 934,105 $ 20,844 $ 1,225,711 $ 20,477 

9 Subsequent to the end of FY 2022, the administration announced an additional extension of the student loan repayment deferrals. (See Note 16) 
FY 2022 AGENCY FINANCIAL REPORT 79 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 7. Debt Associated with Loans

(Dollars in Millions)

Beginning 

Balance Borrowing Repayments Accrued Interest Ending Balance

2022 (Unaudited)

Debt to the Bureau of Public Debt

Direct Loan Program $ 1,142,195 $ 162,823 $ (467,578) $ - $ 837,440 

FFEL Program 78,254 3,283 (14,542) - 66,995 

Other Credit Programs for Higher Education 936 58 (353) - 641 

Total Debt to the Bureau of Public Debt 1,221,385 166,164 (482,473) - 905,076 

Debt to the Federal Financing Bank

Other Credit Programs for Higher Education 160 404 (293) - 271 

Total Debt Associated with Loans $ 1,221,545 $ 166,568 $ (482,766) $ - $ 905,347 

2021

Debt to the Bureau of Public Debt

Direct Loan Program $ 1,160,099 $ 119,950 $ (137,854) $ - $ 1,142,195 

FFEL Program 88,986 1,630 (12,362) - 78,254 

Other Credit Programs for Higher Education 784 308 (156) - 936 

Total Debt to the Bureau of Public Debt 1,249,869 121,888 (150,372) - 1,221,385 

Debt to the Federal Financing Bank

Other Credit Programs for Higher Education 1,518 192 (1,551) 1 160 

Total Debt Associated with Loans $ 1,251,387 $ 122,080 $ (151,923) $ 1 $ 1,221,545 

The Department borrows from Treasury’s Bureau of the Public Debt and the FFB to fund the disbursement of new loans and 

the payment of credit program outlays and related costs. During FY 2022, debt decreased 25.9 percent from $1,221.5 billion 

in the prior year to $905.3 billion. The Department makes periodic principal payments after considering the cash position and 

liability for future outflows in each cohort of loans, as mandated by the FCRA.

Approximately 92.5 percent of the Department’s debt, as of September 30, 2022, is attributable to the Direct Loan Program. 

Most of the new borrowing activity for the year was designated for funding new direct loan disbursements.

During FY 2022, TEACH net borrowing of $(96) million was used for the advance of new grants and repayments of principal 

made to Treasury. In FY 2022, debt in HBCU decreased by $81 million, or 19.5 percent. This total represents the aggregate of 

new bonds administered and repayments made on previously issued bonds.
FY 2022 AGENCY FINANCIAL REPORT 80 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 8. Subsidy Due to Treasury 

(Dollars in Millions)

2022 (Unaudited) 2021

Credit Program Downward Subsidy Re-estimates

Direct Loan Program $ 23,101 $ 303 

FFEL Program 3,351 1 

Total Credit Program Downward Subsidy Re-estimates 26,452 304 

Future Liquidating Account Collections

FFEL Program 513 1,209 

Total Future Liquidating Account Collections 513 1,209 

Total Subsidy Due to Treasury General Fund $ 26,965 $ 1,513 

NOTE 9. Other Liabilities

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental 

Federal Perkins Loan Program $ 1,057 $ - $ 682 $ - 

Miscellaneous Receipt, Deposit Funds and 

Clearing Accounts (9) 453 38 289 

Liability for Advances and Prepayments 3 - 3 - 

Accrued Funded Payroll and Leave - 29 - 26 

Accrued Unfunded Annual Leave - 52 - 52 

Employer Contributions and Payroll Taxes Payable 12 1 10 1 

FECA Liabilities 3 15 2 14 

Custodial Liabilities 1 - 4 - 

Total Other Liabilities $ 1,067 $ 550 $ 739 $ 382 
FY 2022 AGENCY FINANCIAL REPORT 81 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 10. Net Cost of Operations

As required by the GPRA Modernization Act of 2010, the Department’s programs have been aligned with the goals presented 

in the Department’s Strategic Plan as shown below. Goal 5 in the Strategic Plan is considered a crosscutting goal, and therefore 

costs and revenues associated with these activities are included in the net cost programs associated with Goals 1 through 4. 

Programs associated with COVID-19 activities are administered by multiple program offices but are summarized separately. 

(See Note 11)

Program Offices Strategic Goal Net Cost Program

Net Cost Statement Program Alignment with Strategic Plan

OESE

OSERS

Other:

OCTAE

IES

OELA

OCR

Goal 1: Promote equity in student access to educational resources, opportunities, and 

inclusive environments.

Goal 2: Support a diverse and talented educator workforce and professional growth to strengthen 

student learning.

Goal 3: Meet students’ social, emotional, and academic needs.

Promote equity for 

prekindergarten 

through grade 12 

students with access 

to educational 

resources, 

opportunities, 

and inclusive 

environments

FSA

OSERS

Other:

OCTAE

IES

OPE

OCR

Goal 4: Increase postsecondary value by focusing on equity-conscious strategies to address 

access to high-quality institutions, affordability, completion, post-enrollment success, and support for 

inclusive institutions.

Increase 

postsecondary value 

by focusing on equity 

strategies to address 

access to affordability, 

completion, and postenrollment success

All Offices Goal 5: Enhance the Department’s internal capacity to optimize the delivery of its mission. Crosscutting Goal
FY 2022 AGENCY FINANCIAL REPORT 82 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Gross Costs and Earned Revenue by Program 

(Dollars in Millions)

2022 (Unaudited)

FSA OESE OSERS COVID-19 Other Total

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 12 STUDENTS WITH ACCESS TO EDUCATIONAL RESOURCES, 

OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS

Gross Cost

Grants $ - $ 22,592 $ 13,570 $ 51,529 $ 2,217 $ 89,908 

Other - 80 - 30 834 944 

Earned Revenue - - - - (68) (68)

Net Program Costs - 22,672 13,570 51,559 2,983 90,784 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY STRATEGIES TO ADDRESS ACCESS TO AFFORDABILITY, 

COMPLETION, AND POST-ENROLLMENT SUCCESS 

Direct Loan Program

Gross Cost

Credit Program Interest Expense 30,589 - - - - 30,589 

Subsidy Expense (23,758) - - 437,410 - 413,652 

Administrative Expenses 1,658 - - 59 - 1,717 

Earned Revenue

Subsidy Expense - - - (28,242) - (28,242)

Interest & Administrative Fees (7,072) - - - - (7,072)

Subsidy Amortization (23,517) - - - - (23,517)

Net Cost of Direct Loan Program (22,100) - - 409,227 - 387,127 

FFEL Program

Gross Cost

Credit Program Interest Expense 3,202 - - - - 3,202 

Subsidy Expense (924) - - 25,140 - 24,216 

Subsidy Amortization (Guaranteed Loans) (223) - - - - (223)

Guaranty Agencies 1,193 - - - - 1,193 

Administrative Expenses 158 - - 7 - 165 

Earned Revenue

Subsidy Expense (6) - - (2,173) - (2,179)

Interest & Administrative Fees (1,818) - - - - (1,818)

Subsidy Amortization (Acquired FFEL Loans) (1,161) - - - - (1,161)

Guaranty Agencies (5) - - - - (5)

Net Cost of FFEL Program 416 - - 22,974 - 23,390 

Other Credit Programs for Higher Education

Gross Cost

Credit Program Interest Expense 18 - - - 27 45 

Subsidy Expense 109 - - 74 2 185 

Administrative Expenses 3 - - - 1 4 

Earned Revenue

Subsidy Expense - - - - - -

Interest & Administrative Fees (5) - - - (23) (28)

Subsidy Amortization (13) - - - (4) (17)

Other (1,088) - - - - (1,088)

Net Cost of Other Credit Programs for Higher 

Education (976) - - 74 3 (899)

Non-Credit Programs

Gross Cost

Grants 28,102 11 3,434 26,780 4,242 62,569 

Other 155 - 2 6 282 445 

Earned Revenue - - - - (3) (3)

Net Cost of Non-Credit Programs 28,257 11 3,436 26,786 4,521 63,011 

Net Program Costs 5,597 11 3,436 459,061 4,524 472,629 

Total Program Gross Costs 40,282 22,683 17,006 541,035 7,605 628,611 

Total Program Earned Revenue (34,685) - - (30,415) (98) (65,198)

Net Cost $ 5,597 $ 22,683 $ 17,006 $ 510,620 $ 7,507 $ 563,413 
FY 2022 AGENCY FINANCIAL REPORT 83 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Gross Costs and Earned Revenue by Program 

(Dollars in Millions)

2021

FSA OESE OSERS COVID-19 Other Total

IMPROVE LEARNING OUTCOMES FOR ALL P-12 STUDENTS

Gross Cost

Grants $ - $ 24,328 $ 12,685 $ 20,965 $ 2,173 $ 60,151 

Other - 68 - 30 764 862 

Earned Revenue - - - - (118) (118)

Net Program Costs - 24,396 12,685 20,995 2,819 60,895 

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE OUTCOMES TO FOSTER ECONOMIC OPPORTUNITY, 

AND PROMOTE PRODUCTIVE CITIZENRY

Direct Loan Program

Gross Cost

Credit Program Interest Expense 32,957 - - - - 32,957 

Subsidy Expense 44,426 - - 52,181 - 96,607 

Administrative Expenses 1,516 - - 8 - 1,524 

Earned Revenue

Subsidy Expense (9) - - (2,707) - (2,716)

Interest & Administrative Fees (3,803) - - - - (3,803)

Subsidy Amortization (29,154) - - - - (29,154)

Net Cost of Direct Loan Program 45,933 - - 49,482 - 95,415 

FFEL Program

Gross Cost

Credit Program Interest Expense 3,538 - - - - 3,538 

Subsidy Expense 9,994 - - 4,006 - 14,000 

Subsidy Amortization (Guaranteed Loans) (863) - - - - (863)

Guaranty Agencies 79 - - - - 79 

Administrative Expenses 144 - - - - 144 

Earned Revenue

Subsidy Expense - - - (359) - (359)

Interest & Administrative Fees (1,257) - - - - (1,257)

Subsidy Amortization (Acquired FFEL Loans) (1,418) - - - - (1,418)

Guaranty Agencies (61) - - - - (61)

Net Cost of FFEL Program 10,156 - - 3,647 - 13,803 

Other Credit Programs for Higher Education

Gross Cost

Credit Program Interest Expense 22 - - - 105 127 

Subsidy Expense 104 - - 22 1,393 1,519 

Administrative Expenses 1 - - - 26 27 

Earned Revenue

Subsidy Expense (1) - - - - (1)

Interest & Administrative Fees (4) - - - (49) (53)

Subsidy Amortization (18) - - - (56) (74)

Other (932) - - - - (932)

Net Cost of Other Credit Programs for Higher 

Education (828) - - 22 1,419 613 

Non-Credit Programs

Gross Cost

Grants 29,117 24 3,721 32,015 3,707 68,584 

Other 130 - 3 3 274 410 

Earned Revenue (1) - - - (14) (15)

Net Cost of Non-Credit Programs 29,246 24 3,724 32,018 3,967 68,979 

Net Program Costs 84,507 24 3,724 85,169 5,386 178,810 

Total Program Gross Costs 121,165 24,420 16,409 109,230 8,442 279,666 

Total Program Earned Revenue (36,658) - - (3,066) (237) (39,961)

Net Cost $ 84,507 $ 24,420 $ 16,409 $ 106,164 $ 8,205 $ 239,705 
FY 2022 AGENCY FINANCIAL REPORT 84 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Credit Program Interest Expense and Revenues 

(Dollars in Millions)

Gross Interest 

Expense

Subsidy 

Amortization

Net Interest 

Expense

Gross Interest and Administrative 

Fee Revenue

Subsidy 

Amortization

Net Revenue

Intragovernmental

Other than 

IntragovernmentalIntragovernmental

Other than 

Intragovernmental

Other than 

Intragovernmental

2022 (Unaudited)

Direct Loan Program $ 30,589 $ - $ 30,589 $ 7,631 $ (559) $ 23,517 $ 30,589 

FFEL Program 3,202 (223) 2,979 1,935 (117) 1,161 2,979 

Other Credit Programs 

for Higher Education 45 - 45 22 6 17 45 

Total $ 33,836 $ (223) $ 33,613 $ 9,588 $ (670) $ 24,695 $ 33,613 

2021

Direct Loan Program $ 32,957 $ - $ 32,957 $ 4,230 $ (427) $ 29,154 $ 32,957 

FFEL Program 3,538 (863) 2,675 1,326 (69) 1,418 2,675 

Other Credit Programs 

for Higher Education 127 - 127 28 25 74 127 

Total $ 36,622 $ (863) $ 35,759 $ 5,584 $ (471) $ 30,646 $ 35,759 

Interest expense equals interest revenue plus administrative fees accrued for all credit programs due to subsidy amortization. 

Subsidy amortization is required by the FCRA and accounts for the difference between interest expense and revenue cash 

flows. For direct loans, the allowance for subsidy is adjusted with the offset to interest revenue. For guaranteed loans, the 

liability for loan guarantees is adjusted with the offset to interest expense.

Due to the COVID-19 relief actions to temporarily suspend nearly all required federal student loan payments and set 

borrower interest rates to zero percent, no new interest revenues were recognized in FY 2021 and FY 2022. However, interest 

adjustments and reapplication activities are included in the current year’s other than intragovernmental interest in the schedule 

above. Adjustments and reapplications cause loan activity during the period between the original effective date and the new 

processing date to be reversed and reposted. As a result, interest accrued in a prior year is reversed and typically reposted. 

The amount of interest reposted can be different than the original amount depending on the purpose of the adjustment and 

whether the adjustment or reapplication caused an increase or decrease to the principal balance as of the original effective date. 

These adjustments and reapplications resulted in net negative FY 2021 and FY 2022 interest revenues for the Direct Loan 

Program and the FFEL Program.
FY 2022 AGENCY FINANCIAL REPORT 85 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Grant Expenses by Appropriation

(Dollars in Millions)

2022 (Unaudited)

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 

12 STUDENTS WITH ACCESS TO EDUCATIONAL RESOURCES, 

OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS

COVID-19 $ 51,529 

Education for the Disadvantaged 16,635 

Special Education - IDEA Grants 13,570 

School Improvement Programs 4,156 

Impact Aid 1,369 

Innovation and Improvement 849 

English Language Acquisition 750 

Career, Technical, and Adult Education 433 

Hurricane Education Recovery 83 

Institute of Education Sciences 186 

Other 348 

Subtotal 89,908 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY 

STRATEGIES TO ADDRESS ACCESS TO AFFORDABILITY, 

COMPLETION, AND POST-ENROLLMENT SUCCESS 

COVID-19 $ 26,780 

Student Financial Assistance

Pell Grants 26,983 

Federal Work-Study Program 668 

Federal Supplemental Educational 

Opportunity Grants 

 451 

Rehabilitation Services 3,030 

Higher Education 2,551 

Career, Technical, and Adult Education 1,403 

Special Education - IDEA Grants 124 

Hurricane Education Recovery 11 

Institute of Education Sciences 44 

Other 524 

Subtotal 62,569 

Total Grant Costs $ 152,477 

2021

IMPROVE LEARNING OUTCOMES FOR ALL P-12 STUDENTS

COVID-19 $ 20,965 

Education for the Disadvantaged 16,171 

Special Education - IDEA Grants 12,685 

School Improvement Programs 6,069 

Impact Aid 1,484 

Innovation and Improvement 928 

English Language Acquisition 667 

Career, Technical, and Adult Education 425 

Hurricane Education Recovery 271 

Institute of Education Sciences 152 

Other 334 

Subtotal 60,151 

EXPAND POSTSECONDARY OPPORTUNITIES, IMPROVE 

OUTCOMES TO FOSTER ECONOMIC OPPORTUNITY, 

AND PROMOTE PRODUCTIVE CITIZENRY

COVID-19 $ 32,015 

Student Financial Assistance

Pell Grants 26,852 

Federal Work-Study Program 1,145 

Federal Supplemental Educational 

Opportunity Grants 

 1,120 

Rehabilitation Services 3,347 

Higher Education 1,977 

Career, Technical, and Adult Education 1,440 

Special Education - IDEA Grants 122 

Hurricane Education Recovery 24 

Institute of Education Sciences 35 

Other 507 

Subtotal 68,584 

Total Grant Costs $ 128,735 

The Department has more than 100 grant programs. Descriptions of COVID-19 grant programs are provided in Note 11. 

Descriptions of non-COVID-19 major grant program areas are as follows: 

Student Financial Assistance

• Pell Grant—Provides need-based grants to students to promote access to postsecondary education. Grant amounts are 

dependent on the student’s expected family contribution; the cost of attendance (as determined by the institution); the 

student’s enrollment status (full-time or part-time); and whether the student attends for a full academic year or less. Pell 

Grants are the single largest source of grant aid for postsecondary education.

• Federal Work-Study Program—Provides funds by formula to enable eligible institutions to offer employment to students 

based on financial needs. The program is available to full-time or part-time students and encourages community service work. 

The work is often related to the student’s course of study. This program is administered by the schools that participate in 

the Federal Work-Study program. Hourly earnings under this program must be at least the federal minimum wage. Federal 

funding, in most cases, pays 75 percent of a student’s hourly wage, with the remaining 25 percent paid by the employer.

• Federal Supplemental Educational Opportunity Grant—Provides funds by formula to enable eligible institutions to offer 

grants to students based on need. Federal grants distributed under this program are administered directly by the financial 

aid office at each participating school.
FY 2022 AGENCY FINANCIAL REPORT 86 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Education for the Disadvantaged—Primarily consists of 

grants that provide financial assistance through SEAs to LEAs 

and public schools with high numbers or percentages of poor 

children to help ensure that all children meet challenging 

state academic content and student academic achievement 

standards. Also provides funds to states to support 

educational services to children of migratory farmworkers 

and fishers, and to neglected or delinquent children and 

youth in state-run institutions, attending community day 

programs, and correctional facilities.

Special Education—Consists primarily of IDEA Grants 

that provide funds by formula to states to assist them in 

providing a free appropriate public education in the least 

restrictive environment for children with disabilities ages 3 

through 21 and assists states in providing early intervention 

services for infants and toddlers birth through age 2 and their 

families. Also provides discretionary grants to IHEs and other 

nonprofit organizations to support research, demonstrations, 

technical assistance and dissemination, technology, personnel 

development and parent-training, and information centers. 

School Improvement Programs—Provides funds to SEAs 

to make competitive subgrants to LEAs that demonstrate the 

greatest need for the funds and the strongest commitment to 

use the funds to provide adequate resources to substantially 

raise the achievement of students in their lowestperforming schools.

Rehabilitation Services—Provides funds to states and 

other agencies to support vocational rehabilitation and 

other services to individuals with disabilities to maximize 

their employment, independence, and integration into the 

community and the competitive labor market.

Higher Education—Includes Institutional Service 

grants designed to improve academic quality, institutional 

management and fiscal stability, and strengthen physical 

plants and endowments of IHEs, with an emphasis on 

institutions that enroll large proportions of minority and 

financially disadvantaged students. Also includes Student 

Service grant programs supporting low-income, firstgeneration students and individuals with disabilities as they 

progress through the academic pipeline from middle school to 

graduate school, in addition to programs focused on college 

readiness, campus-based childcare, and graduate fellowships. 

Also includes International and Foreign Language Education 

grant and fellowship programs that strengthen foreign 

language instruction, area/international studies teaching 

and research, professional development for educators, 

and curriculum development at the K–12, graduate, and 

postsecondary levels.

Career, Technical, and Adult Education—Includes 

programs that are related to adult education and literacy, 

career and technical education, community colleges and 

correctional education.

Impact Aid—Provides funds to LEAs to replace the lost 

local revenue that would otherwise be to educate children of 

federal workers that live on government property, which is 

exempt from local property taxes that finance education.

Innovation and Improvement—Includes support for 

nontraditional programs that improve student achievement 

and attainment; supports the development of educational 

television and digital media programs targeted at preschool 

and early elementary school children and their families to 

promote early learning and school readiness, with a particular 

interest in reaching low-income children; and supports LEAs 

and their partners in implementing, evaluating, and refining 

tools and approaches for developing the noncognitive skills 

of middle school students to increase student success. 

English Language Acquisition—Provides funds primarily 

by formula to states to improve services for English learners. 

Also provides discretionary funds to support national 

activities, including professional development to increase 

the supply of high-quality teachers of English learners and a 

national clearinghouse on English language acquisition. 

Hurricane Education Recovery—Provides onetime emergency-relief grants, funded by supplemental 

appropriations acts enacted in response to specific events, 

to support schools and students directly affected by natural 

disasters. Assists students displaced or disrupted by such 

disasters as well as eligible agencies and institutions that 

require funding to cover unexpected expenses and return to 

normal operations. 

Institute of Education Sciences—Provides funding to: 

support research, development, and dissemination activities 

that provide parents, teachers, and schools with evidencebased information on effective educational practices; 

support statistical data collection activities conducted by 

the National Center for Education Statistics; support the 

ongoing National Assessment of Educational Progress 

and the National Assessment Governing Board; support 

research to build the evidence base on improving special 

education and early intervention services and outcomes for 

infants, toddlers, and children with disabilities; and support 

studies, evaluations, and assessments related to IDEA.
FY 2022 AGENCY FINANCIAL REPORT 87 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 11. COVID-19 Activity

Congress passed multiple COVID-19 relief bills in 

FY 2020 and FY 2021 including the following that 

provided the Department with a total of 282.5 billion of 

direct appropriation funding for educational purposes:

• Coronavirus Aid, Relief, and Economic Security Act of 

2020 (CARES Act) $31.0 billion.

• Coronavirus Response and Relief Supplemental 

Appropriations Act of 2021 (CRRSAA) $82.0 billion.

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

These appropriations funded a variety of programs 

administered primarily through grant programs as 

described starting on page 90. The largest component of 

the education funding provided by the COVID-19 relief 

appropriations established the Education Stabilization 

Fund which included the (1) Elementary and Secondary 

School Emergency Relief Fund, (2) Higher Education 

Emergency Relief Fund, (3) Governor’s Emergency 

Education Relief Fund, and (4) funds for outlying areas. 

The Education Stabilization Fund is being distributed to 

recipients through various grant programs.

The COVID-19 relief legislation and administrative actions 

also provided support for student loan borrowers by:

• Proposing broad-based debt relief to address the 

financial harms of the pandemic by smoothing the 

transition back to repayment and helping borrowers 

at the highest risk of delinquencies or default once 

payments resume. Applications for this debt relief 

launched on October 17, 2022.

• Suspending nearly all federal student loan payments 

through December 31, 2022,10 interest free. 

• Authorizing Guaranty Agencies to reimburse themselves 

from the Federal Student Loan Reserve Fund for lost 

revenue that resulted from student loan repayment 

deferrals. This reimbursement covers the share of what a 

guaranty agency might have reasonably collected during 

the pandemic, but for the suspension.

• Making temporary changes to the PSLF program 

through a Limited PSLF Waiver to allow student 

borrowers to get credit for payments made while 

working for a qualifying employer, regardless of loan 

type or repayment plan. 

10 Subsequent to the end of FY 2022, the administration announced an additional 

extension of the student loan repayment deferrals. (See Note 16) 

• Addressing issues with IDR payment counting by 

allowing any borrower who made IDR-qualifying 

payments to count toward IDR, regardless of 

repayment plan.

Funding for each of these actions was provided through 

indefinite appropriations, and the cost impacts were 

recorded as loan modifications. These COVID-19 loan 

modifications are a component of a subsidy expense that 

reduced the overall credit program loan receivable balances. 

(See Notes 5 and 10)

In addition, other COVID-19 relief provided to student 

loan borrowers included the following:

• The Department stopped all federal wage garnishments 

and collection actions for borrowers with federally held 

loans in default.

• The Department provided relief for certain borrowers 

who received student loan discharges due to total and 

permanent disability. Unless it is through a process 

with the VA, borrowers receiving this discharge are, by 

regulation, subject to a three-year monitoring period 

during which they must provide the Department with 

information about their earnings from employment. 

Per regulation, borrowers whose earnings exceed certain 

thresholds and borrowers who do not meet certain other 

criteria will have their loans reinstated. The Department 

provided relief to ensure no borrowers are at risk of 

having their loans reinstated, meaning they would have 

to repay their debt—for failure to provide earnings 

information during the COVID-19 emergency. This 

change was made retroactive to March 13, 2020, the 

start of the COVID-19 national emergency.

• The Department requested a waiver from the Small 

Business Administration to immediately help nearly 

30,000 small business owners in the Paycheck 

Protection program who faced difficulties because they 

were delinquent or in default on a federal student loan.

The following tables provide more detail on the 

Department’s funded COVID-19 activity for FY 2022 and 

FY 2021. Unobligated CARES Act balances as of the end 

of FY 2021 totaling $18,515 million were carried forward 

to FY 2022 and are reported in the FY 2022 COVID-19 

schedule as Unobligated Balance from Prior Year Budget 

Authority (Net) together with $104 million of downward 

adjustments recorded in FY 2022 to prior years’ CARES 

Act obligations. Obligated and unobligated COVID-19 

funds remaining to be disbursed as of the end of FY 

2021 totaled $222.0 billion. Obligated and unobligated 

COVID-19 funds remaining to be disbursed as of the end 

of FY 2022 totaled $141.3 billion. (See Note 3)
FY 2022 AGENCY FINANCIAL REPORT 88 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19 Activity

(Dollars in Millions)

2022 (Unaudited)

Unobligated 

Balance from 

Prior Year 

Budget Authority 

(Net)

Appropriations Appropriations

Transferred Obligated Unobligated Outlays

Transfers 

to General 

Fund

Net Costs 

(See Note 

10)

COVID-19 Direct Appropriations

Education Stabilization Fund

Elementary and Secondary School 

Emergency Relief Fund

Allocations to States $ 14,937 $ - $ - $ 14,936 $ 1 $ 46,889 $ - $ 48,415 

Assistance for Homeless 

Children and Youth 1 - - - 1 87 - 87 

Higher Education Emergency 

Relief Fund

Higher Education Funds to 

Students 252 (132) - 38 82 12,900 - 9,629 

Higher Education Funds to 

Institutions 362 (311) - 44 7 14,015 - 13,994 

Proprietary Institutions Grant 

Funds for Students 237 - - - 237 281 - 279 

Schools Serving Low-Income 

Students, HBCUs, and Minority 

Serving Institutions (MSIs) 

MSIs 44 - - 16 28 515 - 509 

HBCUs 1 - - - 1 1,028 - 1,034 

Tribally Controlled Colleges 

and Universities (TCCUs) 3 - - 3 - 105 - 105 

Strengthening Institutions 

Program 66 - - 11 55 289 - 291 

Fund for the Improvement of 

Postsecondary Education 112 - - - 112 21 - 21 

Supplemental Assistance 

and Support 85 - - 198 (113) 120 - 114 

Governor’s Emergency Education 

Relief Fund

Emergency Education 

Relief Grants - - - - - 1,493 - 1,488 

Emergency Assistance to NonPublic Schools Program 2,173 - - 2,173 - 1,168 - 1,166 

Outlying Areas - - - - - 257 - 257 

Bureau of Indian Education - - - - - - - -

Discretionary Grants - - - - - 55 - 55 

Total Education 

Stabilization Fund 18,273 (443) - 17,419 411 79,223 - 77,444 

Individuals with Disabilities 

Education Act Grants 39 - - 39 - 809 - 810 

School Improvement Programs 57 - - 30 27 29 - 29 

American Indian Resilience in 

Education 20 - - 7 13 2 - 2 

Safe Schools & 

Citizenship Education - - - - - - - -

Gallaudet University - - - - - 15 - 15 

Howard University - - - - - - - -

National Technical Institute for the 

Deaf - - - - - 9 - 9 

HBCU Loan Deferment 30 - - - 30 - - -

Student Aid Administration 64 - - 61 3 66 - 68 

Program Administration 22 - - 13 9 16 - 18 

Inspector General 13 - - 6 7 6 - 6 

Institute of Education Sciences 101 - - 37 64 14 - 13 

Total COVID-19 Direct 

Appropriations 18,619 (443) - 17,612 564 80,189 - 78,414 

COVID-19 Indirect Appropriations 

(See Note 5)

Loan Deferral Extension - 55,343 - 55,343 - 55,343 916 54,427 

Support for the Federal Student 

Loan Reserve Fund - 1,091 - 1,091 - 1,091 24 1,067 

PSLF Waiver - 10,152 - 10,152 - 10,152 997 9,155 

IDR Waiver - 16,443 - 16,443 - 16,443 2,365 14,078 

Broad-Based Debt Relief - 379,596 - 379,596 - 379,596 26,117 353,479 

Total COVID-19 Indirect 

Appropriations - 462,625 - 462,625 - 462,625 30,419 432,206 

Total COVID-19 Activity $ 18,619 $ 462,182 $ - $ 480,237 $ 564 $ 542,814 $ 30,419 $ 510,620 
FY 2022 AGENCY FINANCIAL REPORT 89 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

COVID-19 Activity

(Dollars in Millions)

2021

Unobligated 

Balance from 

Prior Year 

Budget Authority 

(Net)

Appropriations Appropriations

Transferred Obligated Unobligated Outlays

Transfers 

to General 

Fund

Net Costs 

(See Note 

10)

COVID-19 Direct Appropriations

Education Stabilization Fund

Elementary and Secondary School 

Emergency Relief Fund

Allocations to States $ - $ 176,286 $ - $ 161,349 $ 14,937 $ 19,021 $ - $ 20,035 

Assistance for Homeless 

Children and Youth - 800 - 799 1 1 - 1 

Higher Education Emergency 

Relief Fund

Higher Education Funds to 

Students 113 24,066 - 23,982 197 10,838 - 14,097 

Higher Education Funds to 

Institutions 155 32,157 100 32,084 328 15,225 - 15,226 

Proprietary Institutions Grant 

Funds for Students - 1,077 - 843 234 473 - 475 

HBCUs, and Minority Serving 

Institutions (MSIs) 

MSIs 5 1,207 - 1,169 43 391 - 397 

HBCUs - 2,576 - 2,575 1 791 - 793 

Tribally Controlled Colleges 

and Universities (TCCUs) - 225 - 223 2 36 - 36 

Strengthening Institutions 

Program 9 663 - 606 66 231 - 231 

Fund for the Improvement of 

Postsecondary Education 203 - - 91 112 140 - 140 

Supplemental Assistance 

and Support - 311 - 226 85 5 - 12 

Governor’s Emergency Education 

Relief Fund

Emergency Education 

Relief Grants 48 1,303 - 1,351 - 1,055 - 1,061 

Emergency Assistance to NonPublic Schools Program - 5,500 - 3,327 2,173 277 - 280 

Outlying Areas - 1,259 - 1,259 - 114 - 114 

Bureau of Indian Education - 409 (409) - - - - - 

Discretionary Grants - - - - - 16 - 16 

Total Education 

Stabilization Fund 533 247,839 (309) 229,884 18,179 48,614 - 52,914 

Individuals with Disabilities 

Education Act Grants - 3,030 - 2,991 39 - - - 

School Improvement Programs - 170 - 113 57 - - - 

American Indian Resilience in 

Education - 20 - - 20 - - - 

Safe Schools & 

Citizenship Education 100 - (100) - - - - - 

Gallaudet University - 30 - 30 - 16 - 16 

Howard University - 55 - 55 - 44 - 44 

National Technical Institute for 

the Deaf - 30 - 30 - 6 - 6 

HBCU Loan Deferment 30 - - - 30 - - - 

Student Aid Administration 24 121 - 91 54 8 - 8 

Program Administration 4 30 - 12 22 11 - 11 

Inspector General 7 10 - 4 13 2 - 2 

Institute of Education Sciences - 128 - 27 101 20 - 20 

Total COVID-19 Direct 

Appropriations 698 251,463 (409) 233,237 18,515 48,721 - 53,021 

COVID-19 Indirect Appropriations 

(See Note 5)

Student Loan Deferrals - 56,209 - 56,209 - 56,209 3,066 53,143 

Total COVID-19 Indirect 

Appropriations - 56,209 - 56,209 - 56,209 3,066 53,143 

Total COVID-19 Activity $ 698 $ 307,672 $ (409) $ 289,446 $ 18,515 $ 104,930 $ 3,066 $ 106,164 
FY 2022 AGENCY FINANCIAL REPORT 90 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Elementary and Secondary School Emergency Relief 

(ESSER) Fund—Supports continued learning for 

K–12 students whose education has been disrupted 

by COVID-19.

• Allocations to States—Provides grants to states based 

on the same proportion that each state receives under 

the Elementary and Secondary Education Act (ESEA) 

Title 1-A. States must distribute at least 90 percent 

of funds to local educational agencies based on their 

proportional share of ESEA Title I-A funds. States have 

the option to reserve 10 percent of the allocation for 

emergency needs as determined by the state to address 

issues responding to the COVID-19 pandemic. 

• Assistance for Homeless Children and Youth—

Provides grants to support the specific needs of 

homeless children and youth with wraparound services 

to address the challenges of COVID-19, and to enable 

homeless children and youth to attend school and fully 

participate in school activities.

Higher Education Emergency Relief Fund (HEERF)—

Provides grants for IHEs to address needs directly related 

to COVID-19, including transitioning courses to distance 

education and granting aid to students for educational 

costs such as food, housing, course materials, health 

care, and childcare. The fund is distributed through the 

following grant programs. 

• Higher Education Funds to Students—Provides 

grants to IHEs to give emergency financial aid grants 

to students whose lives have been disrupted, many of 

whom are facing financial challenges and struggling to 

make ends meet. Institutions have the responsibility of 

determining how grants will be distributed to students, 

how the amount of each student grant is calculated, and 

the development of any instructions or directions that 

are provided to students about the grant. 

• Higher Education Funds to Institutions—Provides 

grants to IHEs which can use up to one-half of 

the total funds to cover any costs associated with 

significant changes to the delivery of instruction due 

to COVID-19. Institutions are encouraged to use the 

funds to expand remote learning programs, build IT 

capacity to support such programs, and train faculty 

and staff to operate effectively in a remote learning 

environment. They are also encouraged to use the funds 

to expand support for students with the most significant 

financial needs arising from the COVID-19 pandemic, 

including eligible expenses under a student’s cost of 

attendance, such as course materials, technology, health 

care, childcare, food, and housing.

• Proprietary Institutions Grant Funds for Students—

Provides grants to proprietary IHEs to give emergency 

financial aid grants to students, which may be used for 

any component of the student’s cost of attendance or 

for emergency costs that arise due to COVID-19, such 

as tuition, food, housing, health care (including mental 

health care) or childcare.

• Minority Serving Institutions (MSIs)—Provides grants 

to MSIs to defray institutional expenses, which may 

include lost revenue, reimbursement for expenses already 

incurred, technology costs associated with the transition 

to distance education, faculty and staff training, and 

payroll. MSIs include institutions that are eligible to 

participate in the following programs: Predominantly 

Black Institutions, Alaska Native and Native HawaiianServing Institutions, Asian American and Native 

American Pacific Islander-Serving Institutions, Native 

American-Serving Nontribal Institutions, Developing 

Hispanic-Serving Institutions program, and Promoting 

Postbaccalaureate Opportunities for Hispanic 

Americans. MSIs are encouraged to use as much of 

these funds as possible to provide students eligible for 

financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Historically Black Colleges and Universities 

(HBCUs)—Provides grants to HBCUs to defray 

institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. HBCUs are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Tribally Controlled Colleges and Universities 

(TCCUs)—Provides grants to TCCUs to defray 

institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. TCCUs are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology. 

• Strengthening Institutions Program—Provides grants 

to institutions that are not participating in the MSI 

programs but have at least 50 percent of their degree 
FY 2022 AGENCY FINANCIAL REPORT 91 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

students receiving need-based assistance under Title 

IV of the Higher Education Act or have a substantial 

number of enrolled students receiving Pell Grants and 

have low educational and general expenditures. These 

funds can be used to defray institutional expenses, 

which may include lost revenue, reimbursement for 

expenses already incurred, technology costs associated 

with the transition to distance education, faculty 

and staff training, and payroll. These institutions are 

encouraged to use as much of these funds as possible 

to provide students eligible for financial aid with grants 

for any component of the student’s cost of attendance, 

including tuition, course materials, and technology. 

• Fund for the Improvement of Postsecondary 

Education (FIPSE)—Provides grants that support 

projects to encourage innovative reform and expand 

education opportunities to underrepresented groups. 

Institutions can use these additional FIPSE funds to 

defray institutional expenses, which may include lost 

revenue, reimbursement for expenses already incurred, 

technology costs associated with the transition to 

distance education, faculty and staff training, and 

payroll. Institutions are also encouraged to use as much 

of these funds as possible to provide students eligible 

for financial aid with grants for any component of the 

student’s cost of attendance, including tuition, course 

materials, and technology.

• Supplemental Assistance and Support—Provides 

discretionary grants to institutions of higher education 

with unmet needs related to recovery from disruptions 

in the finances, day-to-day operations, instruction, and 

student support due to COVID-19.

Governor’s Emergency Education Relief (GEER) 

Fund—Provides grants to state governors to ensure 

education continues for students of all ages impacted by 

the COVID-19 national emergency. The GEER Fund 

is a flexible emergency block grant designed to enable 

governors to decide how best to meet the needs of 

students, schools (including charter schools and non-public 

schools), postsecondary institutions, and other educationrelated organizations.

• Emergency Education Relief Grants—Provide 

grants to state governors for the purpose of providing 

local educational agencies (LEA), IHEs, and other 

education-related entities with emergency assistance as a 

result of COVID-19.

• Emergency Assistance to Non-Public Schools 

Program—Provides grants to state governors to provide 

services or assistance to eligible non-public schools to 

address COVID-19 impacts.

Outlying Areas, Bureau of Indian Education, and 

Discretionary Grants—Provides funding for outlying areas 

and states with the highest COVID-19 burdens. These 

funds are distributed through the following grant programs.

• Outlying Areas—Provides grants for the outlying 

areas of the United States, specifically: the U.S. Virgin 

Islands, Guam, the Commonwealth of the Northern 

Mariana Islands, and American Samoa. Money made 

available from these grants will be used in response 

to COVID-19 and was calculated via formula. Each 

outlying area received two block grants from the 

Education Stabilization Fund—one to the governor’s 

offices and one to the SEA.

• Bureau of Indian Education—Provides funding for 

programs operated by the Bureau of Indian Education 

(BIE), in consultation with the Secretary of Interior. The 

Department transferred these funds to BIE.

• Discretionary Grants—Provides grants to states to use 

to create adaptable, innovative learning opportunities 

for K–12 and postsecondary learners in response to the 

COVID-19 national emergency. 

In addition to the Education Stabilization Fund, 

COVID-19 appropriations also included funding for 

the following.

Individuals with Disabilities Education Act Grants—

Provides grants to states to help them recover from the 

impact of the COVID-19 and to safely reopen schools and 

sustain safe operations. These grants assist states in providing 

a free, appropriate public education in the least restrictive 

environment for children with disabilities ages 3 through 21 

and assists states in providing early intervention services for 

infants and toddlers birth through age 2 and their families.

School Improvement Programs—Provides additional 

funds to SEAs to make competitive subgrants to LEAs that 

demonstrate the greatest need for the funds and the strongest 

commitment to use the funds to provide adequate resources 

to substantially raise the achievement of students in their 

lowest-performing schools.
FY 2022 AGENCY FINANCIAL REPORT 92 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

American Indian Resilience in Education—Provides 

grants to tribal education agencies for activities authorized 

under Section 6121(c) of the Elementary and Secondary 

Education Act of 1965. Those activities include a broad range 

of direct services to Indian children and youth, their teachers, 

and families.

Safe Schools & Citizenship Education—The CARES 

Act provided additional funding for this program to 

prevent, prepare for, and respond to COVID-19, including 

disinfecting affected schools, and assisting in counseling and 

distance learning. The CRRSAA subsequently authorized 

these additional funds to be reallocated to the HEERF. 

Gallaudet University—Provides funding to help address 

challenges associated with COVID-19.

Howard University—Provides funding to help address 

challenges associated with COVID-19.

HBCU Loan Deferment—Provides funding for 

the deferment of loan repayments for HBCUs that 

were provided low-cost capital financing for campus 

maintenance and construction projects. During the period 

of the deferment, the Department was required to pay 

the required principal and interest due. At the end of the 

deferment, the HBCU is required to repay the Department 

for payments made on its behalf.

Student Aid Administration—Provides funding for the 

additional costs of administering the COVID-19 provisions 

affecting student financial aid programs.

Program Administration—Provides funding to 

the Department to fund costs of administrating the 

COVID-19 appropriations.

Inspector General—Provides funding for salaries and 

expenses necessary for Office of Inspector General oversight 

and audit of COVID-19 programs, grants, and projects.

Institute of Education Sciences—Provides funding for 

research to address learning loss caused by the coronavirus 

and to disseminate findings to SEAs, LEAs, and others, 

and for carrying out the National Assessment of Educational 

Progress Authorization Act.

NOTE 12. Statements of Budgetary Resources

The SBR compares budgetary resources with the status of those resources. As of September 30, 2022, budgetary resources 

were $902.0 billion, and net agency outlays were $639.4 billion. As of September 30, 2021, budgetary resources were $689.6 

billion, and net agency outlays were $260.5 billion.

Net Adjustments to Unobligated Balances Brought Forward, October 1

(Dollars in Millions)

2022 (Unaudited) 2021

Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Budgetary

Non-Budgetary 

Credit Reform 

Financing 

Accounts

Prior Year Unobligated Balance, End of Year (Total) $ 39,858 $ 22,252 $ 19,904 $ 22,726 

Recoveries of Prior Year Unpaid Obligations 3,648 14,486 1,317 16,676 

Borrowing Authority Withdrawn - (11,997) - (13,566)

Actual Repayments of Debt, Prior-Year Balances - (2,767) - (5,444)

Actual Capital Transfers to the Treasury General Fund (81) - (97) -

Canceled Authority (587) - (354) -

Downward Adjustments of Prior-Year Paid Delivered Orders 280 241 3 257 

Other Differences 13 1 (1) 1 

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

During the periods ended September 30, 2022, and September 30, 2021, certain adjustments were made to the balance of 

unobligated budgetary resources available as of October 1, 2021, and October 1, 2020. These adjustments included, among 

other things, recoveries of prior year unpaid obligations that result from downward adjustments of undelivered orders that 

were obligated in a prior fiscal year.
FY 2022 AGENCY FINANCIAL REPORT 93 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Unused Borrowing Authority 

(Dollars in Millions)

2022 (Unaudited) 2021

Beginning Balance - Unused Borrowing Authority $ 41,978 $ 48,230 

Current Year Borrowing Authority 178,717 129,407 

Funds Drawn from Treasury (166,568) (122,093)

Borrowing Authority Withdrawn (11,997) (13,566)

Decreases to Borrowing Authority (21) - 

Ending Balance - Unused Borrowing Authority $ 42,109 $ 41,978 

The Department is given authority to draw funds from Treasury to finance the Direct Loan, FFEL, and other loan programs. 

Unused borrowing authority is a budgetary resource and is available to support obligations for these programs. The 

Department periodically reviews its borrowing authority balances in relation to its obligations, resulting in the withdrawal of 

unused amounts.

Undelivered Orders at the End of the Period

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

 Other than 

Intragovernmental Intragovernmental

 Other than 

Intragovernmental

Unpaid $ 301 $ 262,438 $ 252 $ 321,379 

Paid 85 480 104 1,287 

Undelivered Orders $ 386 $ 262,918 $ 356 $ 322,666 

Undelivered orders represent the amount of goods and/or services ordered that have not been actually or constructively 

received. Paid amounts include any orders that may have been prepaid or advanced but for which delivery or performance has 

not yet occurred.

Distributed Offsetting Receipts

(Dollars in Millions)

2022 (Unaudited) 2021

Negative Subsidies and Downward Re-estimates of Subsidies:

Direct Loan Program $ 27,334 $ 4,809 

FFEL Program 546 589 

HEAL Program - 25 

TEACH Program 5 3 

Facilities Loan Programs 291 207 

Total Negative Subsidies and Downward Re-estimates of Subsidies 28,176 5,633 

Repayment of Perkins Loans and Capital Contributions 707 866 

Other 203 126 

Distributed Offsetting Receipts $ 29,086 $ 6,625 

Distributed offsetting receipts are amounts that the Department collects that are used to offset or reduce the Department’s 

budget outlays. The Department’s outlays are measured on both a gross and net basis, with net outlays being reduced by 

offsetting receipts.

Most of the distributed offsetting receipts line item on the SBR represents amounts paid from the Direct Loan Program and 

FFEL Program financing accounts to Treasury General Fund receipt accounts for downward current fiscal year executed 

subsidy re-estimates and negative subsidies.
FY 2022 AGENCY FINANCIAL REPORT 94 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Explanation of Differences between the SBR and the Budget of the U.S. Government 

(Dollars in Millions) (Unaudited)

Budgetary 

Resources

New Obligations 

and Upward 

Adjustments 

(Total)

Distributed 

Offsetting 

Receipts

Net Outlays

Combined Statements of Budgetary Resources $ 689,606 $ 627,496 $ 6,625 $ 260,451 

Expired Funds (2,494) (383) - - 

FFEL Guaranty Agency Amounts Included in the President's Budget 3,837 3,837 - - 

Distributed Offsetting Receipts - - - 6,625 

Other (5) (1) (1) (2)

Budget of the United States Government1 $ 690,944 $ 630,949 $ 6,624 $ 267,074 

1

 Amounts obtained from the Appendix, Budget of the United States Government, FY 2023

The FY 2024 President’s Budget, which presents the actual amounts for the year ending September 30, 2022, has not been 

published as of the issue date of these financial statements. The FY 2024 President’s Budget is scheduled for release in 

February 2023 and will be made available on OMB’s website. The table above reconciles the FY 2021 SBR to the FY 2023 

President’s Budget (FY 2021 actual amounts) for budgetary resources, new obligations and upward adjustments, distributed 

offsetting receipts, and net outlays.

Reconciling differences exist because the President’s Budget excludes expired funds. Additionally, the President’s Budget 

includes a public enterprise fund that reflects the gross obligations by the FFEL Program for the estimated activity of the 

consolidated federal fund of the guaranty agencies. Ownership by the federal government is independent of the actual control 

of the assets. Since the actual operation of the federal fund is independent from the Department’s direct control, budgetary 

resources and new obligations and upward adjustments are estimated and disclosed in the President’s Budget to approximate 

the gross activities of the combined federal fund. Amounts reported on the SBR for the federal fund are compiled by 

combining all guaranty agencies’ annual reports to determine a net valuation amount for the federal fund.
FY 2022 AGENCY FINANCIAL REPORT 95 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

NOTE 13. Reconciliation of Net Cost to Net Outlays

(Dollars in Millions)

2022 (Unaudited) 2021

Intragovernmental

Other than 

IntragovernmentalTotal Intragovernmental

Other than 

IntragovernmentalTotal

Net Cost $ 24,894 $ 538,519 $ 563,413 $ 31,606 $ 208,099 $ 239,705 

Components of Net Cost Not Part of 

Budgetary Outlays:

Year-End Credit Reform Subsidy 

Accrual Re-Estimates - 16,954 16,954 - (28,399) (28,399)

Loan Modification Adjustment Transfers - 27,665 27,665 - 2,837 2,837 

Property and Equipment Depreciation 

Expense - - - - (1) (1)

Increase/(Decrease) in Assets:

Loans Receivables, Net (Non-FCRA) - (255) (255) - (62) (62)

Other Assets (19) (65) (84) (13) 22 9

(Increase)/Decrease in Liabilities:

Accounts Payable - 397 397 (1) (597) (598)

Loan Guarantee Liabilities (Non-FCRA) - - - - (2) (2)

Other Liabilities 366 2,312 2,678 171 (5,728) (5,557)

Financing Sources:

Imputed Costs (38) - (38) (36) - (36)

Total Components of Net Cost Not Part of 

Budgetary Outlays 309 47,008 47,317 121 (31,930) (31,809)

Components of Budget Outlays Not Part of 

Net Cost:

Effect of Prior-Year Credit Reform 

Subsidy Re-estimates - 28,399 28,399 - 52,571 52,571 

Acquisition of Capital Assets - - - - 1 1 

Financing Sources:

 Donated Revenue - (1) (1) - (1) (1)

Total Components of Budget Outlays Not 

Part of Net Cost - 28,398 28,398 - 52,571 52,571 

Miscellaneous Items:

Other Loan Activities (Non-FCRA) (76) - (76) (89) - (89)

Non-Entity Activity 338 - 338 82 - 82

Non-Exchange Revenues (21) - (21) (9) - (9)

Total Miscellaneous Items 241 - 241 (16) - (16)

Budgetary Agency Outlays, Net $ 639,369 $ 260,451 

This reconciliation explains the relationship between the Department’s net cost and its net outlays. Reconciling items result 

from transactions that did not result in a current period outlay but did result in a current period cost, and current period 

outlays that did not result in a current period cost. 

Disbursements for new FCRA loans and collections of principal and interest on existing FCRA loans are recorded in 

nonbudgetary credit reform financing accounts. These disbursements and collections are reported on the Statement of 

Budgetary Resources as disbursements, net, and not as agency outlays, net. Since these disbursements and collections affect 

neither net cost of operations nor agency outlays, net, they are excluded from this reconciliation as are any increases or 

decreases in the FCRA loan receivable balances. 
FY 2022 AGENCY FINANCIAL REPORT 96 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

The two major reconciling differences, both associated 

with the Department’s FCRA loan programs, are for 

Year-End Credit Reform Subsidy Accrual Re-Estimates 

(current-year subsidy accrual costs) and Effect of Prior-Year 

Credit Reform Subsidy Re-Estimates (current-year budget 

subsidy costs).

• Current-year subsidy accrual costs are the portion of the 

current-year loan subsidy re-estimates not impacting the 

current year outlays.

• Current-year budget subsidy costs are current year 

indirect appropriations provided to fund subsidy 

costs accrued in the prior year. This includes the 

portion of the current year’s executed President’s 

Budget re-estimates not included in this year’s net cost 

subsidy expense. 

NOTE 14. Commitments and Contingencies

The Department discloses contingencies where any of the 

conditions for liability recognition are not met and there is 

at least a reasonable possibility that a loss or an additional 

loss may have been incurred in accordance with FASAB 

Standard No. 5, Accounting for Liabilities of the Federal 

Government. The following commitments are amounts 

for contractual arrangements that may require future 

financial obligations.

Future Minimum Lease Payments

(Dollars in Millions)

2022 (Unaudited) 2021

2023 $ 65 2022 $ 69 

2024 58 2023 71 

2025 48 2024 71 

2026 45 2025 72 

2027 45 2026 73 

After 2027 46 After 2026 75 

 Total $ 307 Total $ 431 

The Department leases from the GSA all or a portion of 

15 privately owned and 11 publicly owned buildings in 

21 cities. The table above presents the estimated future 

minimum lease payments for these privately and publicly 

owned buildings. The decrease in the estimated future 

minimum lease payments is due to anticipated releases of 

building and floor rentals.

GUARANTY AGENCIES

The Department may assist guaranty agencies experiencing 

financial difficulties. The Department has not done so in 

FY 2022 or FY 2021 and does not expect to in future years. 

No provision has been made in the financial statements for 

potential liabilities.

LITIGATION AND OTHER CLAIMS

The Department is involved in various lawsuits incidental 

to its operations. In the opinion of management, the 

ultimate resolution of pending litigation will not have a 

material impact on the Department’s financial position. 

As appropriate, the Department would seek recovery from 

Treasury’s Judgment Fund for any loss in litigation that 

may occur. The Judgment Fund is a permanent, indefinite 

appropriation available to pay judgments against the 

government if appropriated funds cannot be used. 

The cost of loan forgiveness related to borrower defense 

claims reflected in the accompanying financial statements 

is limited to loans originated through September 30, 

2022. The final disposition of claims filed and those yet 

to be filed from loans originated before September 30, 

2022, is not expected to have a material impact on these 

financial statements.
FY 2022 AGENCY FINANCIAL REPORT 97 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

OT H E R M AT T E R S 

Some portion of the current-year financial assistance 

expenses (grants) may include funded recipient 

expenditures that are subsequently disallowed through 

program review or audit processes. In the opinion of 

management, the ultimate disposition of these matters 

will not have a material effect on the Department’s 

financial position.

NOTE 15. Reclassification of Statement of 

Net Cost and Statement of Operations and 

Changes in Net Position for Financial Report 

Compilation Process

To prepare the Financial Report (FR) of the U.S. 

government, Treasury requires agencies to submit an 

adjusted trial balance, which is a listing of accounts that 

appear in the financial statements. Treasury uses the trial 

balance information reported in the Governmentwide 

Treasury Account Symbol Adjusted Trial Balance System 

to develop a Reclassified Statement of Net Cost and a 

Reclassified Statement of Operations and Changes in Net 

Position for each agency, all of which show how agency 

amounts are related to particular FR statement line items. 

Treasury eliminates all intragovernmental balances from the 

reclassified statements and aggregates lines with the same 

title to develop the FR statements. 

The two schedules in this note show the Department’s 

financial statements and the Department’s reclassified 

statements before elimination of intragovernmental 

balances and before aggregation of repeated FR line items. 

The term “Non-Federal” is used in this note to refer to 

federal government amounts that result from transactions 

with non-federal entities. These include transactions with 

individuals, businesses, nonprofit entities, and state, local, 

and foreign governments.

A copy of the September 30, 2021, FR can be found on 

Treasury’s website, and a copy of the September 30, 2022, 

FR will be posted to this site as soon as it is released.
FY 2022 AGENCY FINANCIAL REPORT 98 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Reclassification of Statement of Net Cost to Line Items Used for the Governmentwide Statement

of Net Cost for the Period Ending September 30, 2022

(Dollars in Millions)

FY 2022 Department Statement of Net Cost (Unaudited) Line Items Used to Prepare FY 2022 Governmentwide 

Statement of Net Cost 

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Total Gross Cost $ 628,611 $ 594,126 Non-Federal Gross Cost

 155 Benefit Program Costs

 38 Imputed Costs

 437 Buy/Sell Cost

 33,836 Borrowing and Other Interest Expense

 19 Other Expenses (Without Reciprocals)

Total Gross Cost $ 628,611 $ 628,611 Department Total Gross Cost

Total Earned Revenue $ (65,198) $ (55,607) Non-Federal Earned Revenue

(3) Buy/Sell Revenue (Exchange)

 (9,588) Borrowing and Other Interest Revenue (Exchange)

Total Earned Revenue (65,198) (65,198) Department Total Earned Revenue

Net Cost $ 563,413 $ 563,413 Net Cost
FY 2022 AGENCY FINANCIAL REPORT 99 U.S. DEPARTMENT OF EDUCATION

FINANCIAL SECTION (FISCAL YEAR 2022 UNAUDITED)

Reclassification of Statement of Changes in Net Position to Line Items Used for the

Governmentwide Statement of Operations and Changes in Net Position for the Period

Ending September 30, 2022

(Dollars in Millions)

FY 2022 Department Statement of Changes in Net Position (Unaudited) Line Items Used to Prepare FY 2022 Governmentwide 

Statement of Operations and Changes in Net Position

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Unexpended Appropriations

Beginning Balance 301,798 301,798 Net Position, Beginning of Period

Appropriations Received 599,069 596,657 Appropriations Received as Adjusted (Rescissions and 

Other Adjustments)

Other Adjustments (Rescissions, etc.) (2,412)

Appropriations Transferred 15 15 Non-Expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources

Appropriations Used (667,252) (667,252) Appropriations Used

Unexpended Appropriations, Ending Balance 231,218 231,218 

Cumulative Results of Operations

Beginning Balance (28,703) (28,703) Net Position, Beginning of Period

Appropriations Used 667,252 667,252 Appropriations Expended

Nonexchange Revenue 21 21 Collections transferred into a TAS Other Than the 

General Fund of the U.S. Government - Nonexchange

Donations and Forfeitures of Cash and Cash 

Equivalents 1 1 Other Taxes and Receipts

Imputed Financing from Costs Absorbed by Others 38 38 Imputed Financing Sources

Negative Subsidy Transfers, Downward Subsidy 

Re-estimates, and Other (84,683) (59,461) Non-Entity Collections Transferred to the General Fund 

of the U.S. Government

 (24,603)

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the 

U.S. Government

 (619) Other Budgetary Financing Sources

Net Cost (563,413) (563,413) Net Cost 

Cumulative Results of Operations, Ending Balance $ (9,487) $ (9,487)

Net Position $ 221,731 $ 221,731 Net Position, End of Period

NOTE 16. Subsequent Events

On November 10, 2022, a U.S. District Court in Texas 

issued an order to vacate the program for Broad-Based Debt 

Relief that was previously adopted by the U.S. Secretary 

of Education and announced on August 24, 2022. On 

November 14, 2022, the U.S. Court of Appeals for the 

Eighth Circuit stayed the Department’s implementation of 

the same program pending an appeal by six states of their 

case challenging the relief, on which the Department had 

prevailed in a U.S. District Court. The U.S. Department of 

Education subsequently requested a stay of both decisions, 

and ultimately sought stays as well as a hearing on the 

merits from the Supreme Court of the United States. Those 

stay requests were denied, but the Supreme Court of the 

United States granted certiorari and has agreed to hear 

both cases and to address both questions of standing and 

the Department’s authority to provide the debt relief. The 

Department is confident in its position in these matters 

before the Court.

On November 22, 2022, the Department announced 

that it would be extending the existing pause on student 

loan repayments through a period which would be largely 

determined by the court cases mentioned previously. The 

pause has been extended until 60 days after the Department 

is permitted to implement the program or the litigation is 

resolved. If the program has not been implemented and the 

litigation has not been resolved by June 30, 2023, payments 

will resume 60 days after that.