10 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Financial Highlights

financial statements and notes are prepared in accordance 

with accounting principles generally accepted in the 

United States for federal agencies issued by the Federal 

Accounting Standards Advisory Board and the format 

and content specified by Office of Management and 

Budget (OMB) Circular No. A-136, Financial Reporting 

Requirements. The financial statements, notes, and 

underlying business processes, systems, and controls are 

audited by an independent accounting firm with audit 

oversight provided by the Office of Inspector General 

(OIG). For 20 consecutive years, the Department has 

INTRODUCTION

This section provides summarized information and 

analyses about the Department’s assets, liabilities, net 

position, sources and uses of funds, program costs, and 

related trend data. It also provides a high-level perspective 

of the detailed information contained in the financial 

statements and related notes.

The Department consistently produces complete, accurate, 

and timely financial information. The Department’s 

Financial Statement Lines 

with Significant Changes

Amount Total Changes Changes Due to COVID-19

 FY 2021 FY 2020 Amount Percentage Amount Percentage

Balance Sheets

Fund Balance with Treasury $ 351.9 $ 136.0 $ 215.9 158.8% $ 202.4 148.8%

Loan Receivables, Net - Direct Loan Program 1,104.9 1,100.5 4.4 0.4% (49.5) -4.5%

Loan Receivables, Net - Federal Family Education 

Loan (FFEL) Program 58.2 67.4 (9.2) -13.6% (3.0) -4.5%

Debt Associated with Loans - Direct 

Loan Program 1,142.2 1,160.1 (17.9) -1.5% (49.5) -4.3%

Debt Associated with Loans - FFEL Program 78.3 89.0 (10.7) -12.0% (3.0) -3.4%

Loan Guarantee Liabilities 7.5 1.1 6.4 581.8% 0.6 54.5%

Accrued Grant Liability 7.6 1.9 5.7 300.0% 3.9 205.3%

Statements of Net Cost

Improve Learning Outcomes for All P-12 Students 60.9 40.0 20.9 52.3% 21.0 52.5%

Expand Postsecondary Opportunities, Improve 

Outcomes to Foster Economic Opportunities, and 

Promote Productive Citizenry

 178.8 149.4 29.4 19.7% 85.2 57.0%

Statements of Budgetary Resources

Unobligated Balance from Prior Year Budget 

Authority (Net) 41.4 26.9 14.5 53.9% 0.7 4.8%

Appropriations (Discretionary and Mandatory) 476.8 245.0 231.8 94.6% 235.0 95.9%

New Obligations and Upward Adjustments (Total) 627.5 430.8 196.7 45.7% 217.2 50.4%

Unobligated Balance, End of Year (Total) 62.1 42.6 19.5 45.8% 17.8 41.8%

Outlays, Net 267.1 218.0 49.1 22.5% 37.5 17.2%

Distributed Offsetting Receipts (6.6) (13.6) 7.0 -51.5% - 0.0%

Table 1.

Key Financial Statement Changes

(Dollars in Billions)
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 11

MANAGEMENT’S DISCUSSION AND ANALYSIS

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

financial statements and notes for FY 2021 are on pages 

48–93 and the Independent Auditors’ Report begins on 

page 98.

The principal financial statements are prepared to report 

the financial position and results of operations of the 

reporting entity, pursuant to the requirements of 31 

F I N A N C I A L S TAT E M E N T I M PAC T S O F C OV I D -19 AC T I V I T I E S 

Most of the significant changes to the Department’s 

financial statements resulted from the impacts due to 

coronavirus disease 2019 (COVID-19) activities. Congress 

passed multiple COVID-19 relief bills in FY 2020 and 

FY 2021, including the following that provided a total 

of $282.5 billion of direct appropriation funding for 

educational purposes:

• Coronavirus Aid, Relief, and Economic Security Act of 

2020 (CARES Act) $31.0 billion

• Coronavirus Response and Relief Supplemental 

Appropriations Act of 2021 (CRRSAA) $82.0 billion

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

These appropriations funded a variety of programs 

administered primarily through grant programs. The 

largest component of the education funding provided 

by the COVID-19 relief appropriations established the 

Education Stabilization Fund which included (1) the 

Elementary and Secondary School Emergency Relief 

Fund, (2) the Higher Education Emergency Relief Fund, 

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

(4) funds for outlying areas. 

The COVID-19 relief legislation and administrative 

actions also provided support for student loan borrowers 

primarily by suspending nearly all federal loan payments 

until January 31, 2022, interest free. The Department 

also stopped all federal wage garnishments and collection 

actions for borrowers with federally held loans in default. 

Funding for the student loan repayment deferrals was 

provided through FY 2020 and FY 2021 indefinite 

appropriations totaling $98.4 billion. 

Cost impacts of the student loan pause on interest 

and collections were recorded as loan modifications in 

FY 2020 ($41.9 billion) and FY 2021 ($53.1 billion). 

These COVID-19 loan modifications are a component 

of subsidy expense, which reduced the overall loan 

receivable balances for the Direct Loan and Federal Family 

Education Loan (FFEL) programs by $88.0 billion and 

$6.9 billion respectively over the past two years. Detailed 

explanations of the FY 2021 COVID-19 Direct Loan 

Program loan modifications are provided in the Analysis of 

Direct Loan Program Subsidy Expense section beginning 

on page 19 and in Note 5 of the financial statements 

beginning on page 62.

The direct and indirect funding stemming from the 

combined FY 2020 and FY 2021 COVID-19 relief 

legislation and administrative actions is summarized in 

Figure 1. Obligated and unobligated COVID-19 funds 

remaining to be disbursed as of the end September 30, 

2021, totaled $222.0 billion. Most of the undisbursed funds 

are for the Elementary and Secondary School Emergency 

Relief (ESSER) Fund. While states may have made 

subawards for all of their ESSER funding, subawardees may 

still be in the process of completing their obligations and 

requesting reimbursement from the states who will then in 

turn drawdown the remaining undisbursed funds.

In addition to COVID-19 relief, the Department 

provided targeted relief to thousands of borrowers 

by canceling $11.5 billion of loans using authorities 

previously provided by Congress. The targeted 

beneficiaries include those qualifying for total and 

permanent disability discharge, those who were 

defrauded by failed for-profit schools, soldiers 

deployed to war zones, and other public servants 

previously denied eligibility for forgiveness under the 

Public Service Loan Forgiveness (PSLF) program. 

Additional changes to the PSLF program that will 

increase loan forgiveness are coming in FY 2022— 

see page 91.

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

the Department’s books and records in accordance with 

generally accepted accounting principles for federal entities 

and the formats prescribed by OMB. Reports used to 

monitor and control budgetary resources are prepared 

from the same books and records. The financial statements 

should be read with the realization that they are for a 

component of the U.S. government.
12 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Elementary and Secondary School Emergency Relief 

(ESSER) Fund—Funds provided for state education 

agencies (SEAs) and local educational agencies (LEAs) 

to support continued learning for K-12 students whose 

educations have been disrupted by COVID-19, and 

grants for the specific needs of homeless children and 

youth to address the challenges of COVID-19.

Higher Education Emergency Relief Fund (HEERF) 

—Funds provided for institutions of higher education 

(IHEs) to address needs directly related to COVID-19, 

including transitioning courses to distance education and 

granting aid to students for educational costs such as food, 

housing, course materials, health care, and child care. 

Figure 1.

COVID-19 Funding Flow

(Dollars in Billions)

Governor’s Emergency Education Relief (GEER) 

Fund—Grants provided to state governors to ensure 

education continues for students of all ages impacted by 

the COVID-19 national emergency. 

Outlying Areas, Bureau of Indian Education (BIE), 

and Discretionary Grants—Funds provided for outlying 

areas and discretionary grants to states with the highest 

COVID-19 burdens.
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 13

MANAGEMENT’S DISCUSSION AND ANALYSIS

BALANCE SHEETS

The consolidated balance sheets present, as of a specific 

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

total assets, total liabilities, and net position.

The Department’s assets totaled $1,519.3 billion as of 

September 30, 2021. As shown in Figure 2, most assets 

relate to loans receivables, $1,165.1 billion, which 

comprised 76.6 percent of all assets. Direct loans comprise 

the largest share of these receivables. Analysis of the net 

change in Direct Loan Program receivable balances begins 

on page 14. All other assets totaled $354.2 billion, most 

of which was Fund Balance with Treasury which increased 

by $215.9 billion, mostly as a result of an increase in 

undisbursed COVID-19 funds as of September 30, 2021.

The Department’s liabilities totaled $1,246.2 billion 

as of September 30, 2021. As shown in Figure 3, most 

of the Department’s liabilities are also associated with 

loan programs, primarily amounts borrowed from the 

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

student loans. Debt associated with direct loans totaled 

$1,142.2 billion as of September 30, 2021. Analysis of 

debt associated with the Direct Loan Program begins on 

page 16.

 

 

 

 

 

 

 

 

Figure 2.

Assets by Type

 

 

 

 

 

 

 

 

 

Figure 3.

Liabilities by Type
14 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

A N A LYS I S O F D I R EC T LO A N P R O G R A M 

R EC E I VA B L E S , N E T 

Figure 4 shows the changes in the Direct Loan Program 

receivable components over the past five years. The principal 

amount has continued to grow as the Direct Loan Program 

has originated all new federal loans since July 2010, when 

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

the rate of increase in principal has slowed in recent years 

as enrollment has stagnated and sometimes declined. Also, 

accrued interest amounts had been increasing as more 

Direct Loans were moving into active repayment statuses 

and the rate of enrollment in income-driven repayment 

plans that allow for payments to be lower than interest 

accrual had increased. 

The rate of increase in principal has slowed in recent years 

as the Direct Loan program has disbursed fewer than $95 

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

stagnant and in some cases declining enrollment. Even so, 

new loan disbursements continue to exceed overall loan 

principal repayments—student loan borrowers have many 

options to stretch out their repayment terms and reduce 

their monthly payments. The student loan repayment 

deferrals implemented in response to COVID-19 caused 

the rate of increase in principal to rise in FY 2021.

In accordance with the Federal Credit Reform Act of 1990, 

the Department’s financial statements report the value of 

direct loans (credit program receivables) at the net present 

value of their future cash flows, discounted at a fixed rate 

established based on Treasury securities. The difference 

between the recorded principal and interest balance and the 

net present value of the loans is referred to as the “allowance 

for subsidy,” which can be positive or negative.

A negative allowance for subsidy balance means that the 

present value of funds expected to be recovered is less than 

the principal outstanding. The increase in the negative 

allowance since FY 2017 is due primarily to higher subsidy 

costs, the main causes being high participation in incomedriven repayment (IDR) plans and the COVID-19 deferrals 

of student loan repayments (see discussion in the Analysis of 

Direct Loan Program Subsidy Expense section on page 19).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 4.

Components of Direct Loan Receivables, Net

(Dollars in Billions)

Direct Loan 

Component 

(Dollars in 

Billions)

Fiscal Year

2017 2018 2019 2020 2021

Principal $ 998.8 $ 1,083.7 $ 1,164.9 $ 1,224.8 $ 1,292.2

Rate of Increase 

in Principal 10.6% 8.5% 7.5% 5.1% 5.5%

Accrued Interest $ 59.5 $ 72.0 $ 83.3 $ 92.1 $ 86.5

Allowance for 

Subsidy $ (16.8) $ (40.7) $ (124.4) $ (216.4) $ (273.9)

Total No. of 

Direct Loan 

Borrowers (in 

Millions)

33.0 34.2 35.1 35.9 37.0 
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 15

MANAGEMENT’S DISCUSSION AND ANALYSIS

Loan Status

Fiscal Year

FY 

2017

FY 

2018

FY 

2019

FY 

2020**

FY 

2021**

Total No. of 

Direct Loan 

Borrowers (in 

Millions)

33.0 34.2 35.1 35.9 37.0

Total Dollar 

Amount of 

Direct Loans 

Outstanding

1,058.4 1,155.7 1,248.1 1,316.9 1,378.7

Current 

Repayment1 467.8 531.2 594.7 14.2 16.2

% Current 

Repayment 44.2% 46.0% 47.6% 1.1% 1.2%

In School, 

Grace Period, 

and Education 

Deferments

291.7 295.5 294.8 282.8 271.9

% In School, 

Grace Period, 

and Education 

Deferments

27.6% 25.6% 23.6% 21.5% 19.7%

Forbearance 

and 

Noneducation 

Deferments

122.5 121.5 133.2 887.5 967.8

% Forbearance 

and 

Noneducation 

Deferments

11.6% 10.5% 10.7% 67.4% 70.2%

Delinquent (Past 

Due 31-360 

Days)

79.7 92.5 90.8 0.5 0.0

% Delinquent 

(Past Due 31-

360 Days)

7.5% 8.0% 7.3% 0.0% 0.0%

Default/

Bankruptcy/

Other*

96.7 115.0 134.6 131.9 122.8

% Default/

Bankruptcy/

Other*

9.1% 10.0% 10.8% 10.0% 8.9%

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

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

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

case of loans on income-driven repayment plans.

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

Portfolio (principal and Interest)

**Student loan payment pause in effect from March 2020.

Table 2.

Payment Status of Direct Loan Principal and 

Interest Balance

(Dollars in Billions)

Table 2 shows the payment status of the direct loan 

principal and interest balances outstanding over the past 

five years. The Current Repayment category consists of 

loans that are being paid back on time, including the 

current portion of loans being repaid pursuant to IDR 

plans. Loans in the Delinquent category are past due 

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

includes loans that are more than 360 days delinquent 

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

and loans in disability status.

While technical default is 271 days delinquent, default is 

defined as 361 days delinquent for reporting purposes. 

The balances reported for Current Repayment and 

Delinquent in FY 2020 and FY 2021 are significantly 

lower than prior years, primarily due to the COVID-19 

student loan repayment deferrals that placed loans in 

forbearance and subsequently cured delinquencies. As a 

result of the COVID-19 student loan repayment deferrals, 

the FY 2020 and FY 2021 delinquent balances are zero.

While the COVID-19 student loan repayment deferrals 

suspended payments for federally owned student loans, 

some borrowers elected to continue to make student 

loan payments. In addition to improving borrowers’ 

overall financial health, factors that may have influenced 

borrowers to continue making payments on their student 

loans during forbearance include the following: 

• Borrower flexibility to make payments or suspend 

payments as their financial circumstances permitted 

without notification to the loan servicer.

• Potential earlier loan payoff.

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

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

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

principal. During the pause, this quickly increased to 

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

each dollar goes toward principal).
16 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 5.

Direct Loan Program Cumulative Financing Activity

(Dollars in Billions)

• Potentially improving the borrower’s credit rating by 

reducing the student debt balance. The relative strength 

of FSA borrower payment activity has been driven, in 

part, by efforts of borrowers to improve their credit 

stance to purchase homes during much of 2020 and 

2021. During the pandemic, the U.S. Department 

of Housing and Urban Development and Federal 

Housing Authority implemented nontemporary policy 

changes to improve the underwriting stance of federal 

student loan borrowers.

• Potentially improved overall borrower financial health 

and reduced financial stress by reducing student debt.

A N A LYS I S O F D E B T A S S O C I AT E D W I T H 

LO A N S , D I R EC T LO A N P R O G R A M 

The Department borrows funds to disburse new loans 

and pay credit program outlays and related costs. The 

Department repays Treasury after consideration of cash 

position and the liability for future cash outflows. Figure 5 

shows the Direct Loan Program cumulative borrowing 

and repayment activity that resulted in the debt amount 

on the balance sheet. A diagram depicting the Direct Loan 

Program financing process is displayed with related trend 

data as Figure 6 on page 17 of this report.
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 17

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Fiscal Year 2017 2018 2019 2020 2021

Net Borrowing $ 67.3 $ 89.1 $ 41.5 $ (32.0) $ (17.9)

Borrowing from Treasury 160.5 155.3 137.6 116.9 120.0 

Debt Repayments to Treasury (93.2) (66.2) (96.1) (148.9) (137.9)

Interest Expense to Treasury (31.3) (32.3) (33.8) (34.7) (33.0)

Interest Earned from Treasury 4.3 3.9 4.1 4.8 4.2 

Cumulative Taxpayer Cost / (Savings) 16.8 40.7 124.4 216.4 273.9 

Current Subsidy Expense (Revenue) 5.3 4.4 61.5 100.9 93.9 

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

Fiscal Year 2017 2018 2019 2020 2021

Loan Disbursements $ 142.5 $ 134.1 $ 130.7 $ 117.4 $ 104.8 

Stafford Subsidized 23.4 20.3 20.0 19.1 18.3 

Stafford Unsubsidized 51.4 49.0 48.1 46.1 44.1 

PLUS 18.7 23.1 22.7 21.7 20.8 

Consolidation1 49.0 41.6 39.8 30.4 21.5 

Loan Collections2 82.0 84.9 91.3 69.9 37.2 

Principal 62.6 63.5 67.0 55.3 33.3 

Interest 17.6 19.5 22.4 12.9 2.3 

Fees 1.9 1.9 1.9 1.7 1.6

* Numbers may not add due to rounding.

1

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

2

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

Figure 6.

William D. Ford Federal Direct Loan Program: Following the Funding
18 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

STATEMENTS OF NET COST

The consolidated statements of net cost report the 

Department’s components of the net cost of operations 

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

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

revenue from activities. Gross costs are composed of the 

cost of credit and grant programs, and operating costs. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 8.

Primary Components of Gross Costs and Earned Revenue

(Dollars in Billions)

Exchange revenue is primarily interest earned on credit 

program loans. Figure 7 shows the Department’s gross 

costs and earned revenue over the past five years. As 

shown in Table 1 and discussed in more detail below, 

significant increases in the Department’s net costs for 

FY 2021 were primarily due to loan modifications 

(subsidy expense) and grant expenses related to 

COVID-19 activities. 

G R O S S C O S T S A N D E A R N E D R E V E N U E 

BY T Y P E 

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

earned revenue include three primary components:

• Credit program interest expense offset by credit 

program interest revenue and administrative fees as the 

result of subsidy amortization. 

• Credit program subsidy expense (see Analysis of Direct 

Loan Program Subsidy Expense below).

• Grant expenses (see Figure 10).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 7.

Gross Costs & Earned Revenue

(Dollars in Billions)
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 19

MANAGEMENT’S DISCUSSION AND ANALYSIS

A N A LYS I S O F D I R EC T LO A N P R O G R A M 

S U B S I DY E X P E N S E 

The Department’s gross costs can fluctuate significantly 

each year as a result of changes in estimated subsidy 

expenses—primarily subsidy expenses for direct loans. The 

primary components of subsidy expenses include year-end 

subsidy re-estimates and loan modifications. 

Subsidy expenses are estimates of the present value cost 

of providing direct loans but excludes the administrative 

costs of issuing and servicing the loans. The Department 

estimates subsidy expenses using a set of econometric and 

financial models as well as cash flow models. 

The Department estimates subsidy expenses annually for 

new loans disbursed in the current year and updates the 

previous cost estimates for outstanding loans disbursed in 

prior years based on various updated assumptions (subsidy 

re-estimates). The Department also updates subsidy 

expenses due to changes to terms of existing loans (subsidy 

modifications). Figure 9 shows these three components of 

the Direct Loan Program subsidy expense for the past five 

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

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

costs, and assumptions concerning borrowers’ selection of 

repayment plans impact the estimated cost calculation and 

determine whether the individual components and overall 

subsidy expense is positive or negative.

The Direct Loan Program subsidy expense for new loans 

disbursed in the current year was negative from FY 2017 

through FY 2019 primarily because lending interest 

rates charged were greater than the historically low rates 

at which the Department borrowed from Treasury. In 

practical terms, a negative subsidy occurs when the 

interest and/or fees charged to the borrower are more than 

sufficient to cover the interest on Treasury borrowings and 

the costs of borrower default. Subsidy expense for new 

loans disbursed in FY 2020 and FY 2021 was positive 

due to rising enrollment in IDR plans and a reduction 

in projected future income of borrowers in IDR plans, 

both of which contribute to a higher expected cost to 

the government for issuing student loans by reducing 

the amount that many borrowers will repay over the life 

of their loans and/or creating a student loan forgiveness 

benefit for amounts remaining after 20 or 25 years, 

particularly common among high-debt borrowers.

The components of the Direct Loan Program subsidy 

re-estimates and loan modification costs are summarized 

below. More detail about these components can be found in 

the notes to the financial statements beginning on page 64.

Figure 9.

Direct Loan Program Subsidy

(Dollars in Billions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 2018 2019 2020 2021

Subsidy Expense for 

New Loans Disbursed in 

the Current Year $ (2.6) $ (3.1) $ (3.0) $ 5.1 $ 1.6 

Subsidy Re-estimates 7.9 7.4 64.5 56.1 24.0 

Loan Modifications - 0.1 - 39.7 68.3 

Total Subsidy $ 5.3 $ 4.4 $ 61.5 $ 100.9 $ 93.9 

Subsidy Re-estimate Components 2021 2020

Income Driven Repayment (IDR) 

Model Changes $ 22.4 $ 35.5 

Prior Year's Cohort Assumption Changes 15.5 4.8 

Interest on the Re-Estimate 5.0 5.9 

Default (6.4) 1.8 

Repayment Plan Selection 0.7 6.5 

Discount Rates (11.5) - 

Death, Disability, and Bankruptcy (DDB) 3.2 - 

Deferment And Forbearance (4.8) - 

Collections 1.5 - 

Interactive Effects (1.6) 1.5 

Other Assumptions - 0.1 

Total Direct Loan Program Subsidy 

Re-estimates $ 24.0 $ 56.1 

Loan Modification Components 2021 2020

Student Loan Repayment Deferrals $ 49.5 $ 38.6 

Total and Permanent Disability 18.7 1.1 

Faith-Based Final Rule 0.1 - 

Total Direct Loan Program 

Loan Modifications $ 68.3 $ 39.7 
20 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

GRANT EXPENSES

As shown in Figure 10, overall grant expenses increased 

primarily because of COVID-19 grants. More detail 

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

the financial statements beginning on page 81. In addition 

to COVID-19 funded grants, the Department has more 

than 100 other grant and loan programs. The three largest 

of these grant program areas are:

• Pell Grants—Provides need-based grants to students 

to promote access to postsecondary education. 

Grant amounts are dependent on the student’s 

expected family contribution, the cost of attendance 

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

enrollment status (full-time or part-time), and whether 

the student attends for a full academic year or less. 

Pell Grants are the single largest source of grant aid for 

postsecondary education.

• Education for the Disadvantaged—Primarily consists 

of grants that provide financial assistance through 

SEAs to LEAs and public schools with high numbers 

or percentages of poor children to help ensure that all 

children meet challenging state academic content and 

student academic achievement standards. The program 

also provides funds to states to support educational 

services to children of migratory farmworkers and 

fishers and to neglected or delinquent children and 

youth in state-run institutions, attending community 

day programs, and in correctional facilities.

• Special Education—Primarily consists of Individuals 

with Disabilities Education Act grants that provide 

funds by formula to states to assist them in providing 

a free appropriate public education in the least 

restrictive environment for children with disabilities 

ages 3 through 21 and assists states in providing early 

intervention services for infants and toddlers from 

birth through age 2 and their families. Also provides 

discretionary grants to IHEs and other nonprofit 

organizations to support research, demonstrations, 

technical assistance and dissemination, technology, 

personnel development and parent-training, and 

information centers.

In addition to student loans and grants, the Department 

offers other discretionary grants under a variety of 

authorizing legislation, with approximately 90 percent of 

nonstudent aid funds awarded by formula and 10 percent 

through competitive processes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 10.

Grant Expenses by Program Areas

(Dollars in Billions)

COVID-19 Grant Expenses

(Dollars in Millions)

COVID-19 Grants FY 2021 FY 2020

Education Stabilization Fund:

Elementary and Secondary School 

Emergency Relief Fund

$ 20,036 $ 1,552 

Higher Education Emergency 

Relief Fund

 31,407 9,135 

Governor’s Emergency Education 

Relief Fund

 1,341 536 

Outlying Areas & Discretionary Grants 130 21 

Total Education Stabilization Fund 52,914 11,244 

Other COVID-19 Grants 66 15 

Total COVID-19 Grants $ 52,980 $ 11,259 
FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION 21

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 11.

Components of Budgetary Resources 

(Dollars in Billions)

S TAT E M E N T S O F C H A N G E S I N 

NET POSITION

The consolidated statements of changes in net position 

report the beginning net position, the summary effect 

of transactions that affect net position during the fiscal 

year, and the ending net position. Net position consists 

of unexpended appropriations and cumulative results 

of operations. Unexpended appropriations include 

undelivered orders and unobligated balances for grant and 

administrative operations. Cumulative results of operations 

represent the net difference since inception between 

(1) expenses and (2) revenues and financing sources.

STATEMENTS OF BUDGETARY RESOURCES

The combined statements of budgetary resources present 

information on how budgetary resources were made 

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

Information in the statements is based on budgetary 

transactions as prescribed by OMB and Treasury.

Figure 11 shows the components of the Department’s 

budgetary resources, which totaled $689.6 billion 

for FY 2021, increasing from $473.4 billion, or 

45.7 percent from the prior year. This increase was 

primarily due to increases in appropriations received 

totaling $231.8 billion, of which $235.0 billion was 

for increases in direct and indirect appropriations for 

COVID-19 activity.

Other significant changes to the Department’s combined 

statements of budgetary resources include the following:

• Unobligated Balances from Prior Year Budget 

Authority (Net) increased by $14.6 billion, or 

54.4 percent. Of this increase, $0.7 billion was due 

to COVID-19-funded balances and the remaining 

increase was due primarily to an increase in Direct 

Loan Program unapportioned authority from FY 2019 

to FY 2020 and repayment of Direct Loan Program 

debt in FY 2021 for prior year balances.

• New Obligations and Upward Adjustments (Total) 

increased by $196.7 billion, or 45.7 percent due 

primarily to an increase of $203.0 billion for grant 

obligations funded by the COVID-19 appropriations 

and an increase of $14.0 billion in obligations 

associated with loan modifications for COVID-19 

student loan deferrals.

• Unobligated Balance, End of Year increased 

$19.3 billion or 45.3 percent. Of this increase, 

$17.8 billion was due to COVID-19-funded balances.
22 FY 2021 AGENCY FINANCIAL REPORT | U.S. DEPARTMENT OF EDUCATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Table 3.

Outlays, Distributed Offsetting Receipts, and 

Disbursements, Net

(Dollars in Billions)

FY 2021 FY 2020

Outlays, Net

Credit Programs $ 141.7 $ 129.8 

Grants 122.4 85.5 

Contractual Services 2.3 2.0 

Personnel Compensation and Benefits 0.7 0.7 

Total Outlays, Net $ 267.1 $ 218.0 

Distributed Offsetting Receipts

Subsidies (5.6) (12.3)

Repayment of Perkins Loans and 

Capital Contributions (0.9) (1.3)

Other (0.1) - 

Total Distributed Offsetting Receipts $ (6.6) $ (13.6)

Disbursements, Net

Direct Loan Program

Gross Disbursements $ 143.8 $ 158.2 

Offsetting Collections (171.5) (188.1)

Total Direct Loan Program 

Disbursements, Net (27.7) (29.9)

FFEL Program

Gross Disbursements 8.3 17.5 

Offsetting Collections (19.2) (30.6)

Total FFEL Program Disbursements, Net (10.9) (13.1)

Other Loan Programs

Gross Disbursements 0.7 0.5 

Offsetting Collections (2.0) (0.4)

Total Other Loan Program 

Disbursements, Net (1.3) 0.1 

Total Disbursements, Net $ (39.9) $ (42.9)

The combined statements of budgetary resources also 

present the Department’s summary disbursement and 

collection amounts shown in Table 3.

Outlays, Net is comprised of gross outlays and offsetting 

collections in the Department’s budgetary funds. Outlays, 

net increased $49.1 billion (22.5 percent) due primarily to 

an increase of $37.5 billion in COVID-19 grant outlays. 

Distributed Offsetting Receipts primarily represents 

amounts paid from the Direct Loan Program and 

FFEL Program financing accounts to Treasury General 

Fund receipt accounts for downward current fiscal year 

executed subsidy re-estimates and negative subsidies. Of 

the $7.0 billion decrease in FY 2021 versus FY 2020, 

$6.3 billion was attributed to the FFEL Program. 

Disbursements, Net is comprised of gross outlays and 

offsetting collections in the Department’s credit program 

nonbudgetary financing funds.