FY 2023 AGENCY FINANCIAL REPORT 122 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Notes to the Consolidated Statement of Net Cost, 

Consolidated Statement of Changes in Net Position, and 

Combined Statement of Budgetary Resources 

for the Year Ended September 30, 2023 (Unaudited)

NOTE 11. Other Accounting Policies

Basis of Accounting and Presentation

These financial statements were prepared to report the 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. For FY 2023, the Department elected 

to present these financial statements as unaudited and include them in the Other 

Information section. 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 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.

Subsidy Cost and Budgetary Accounting for Federal 

Credit Programs 

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) 
FY 2023 AGENCY FINANCIAL REPORT 123 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 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 7.8 percent of the amount obligated for new loan 

awards will not be disbursed.

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 
FY 2023 AGENCY FINANCIAL REPORT 124 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 

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 Government-wide 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. Non-budgetary amounts include 

the non-budgetary financing account amounts for loan and loan guarantee programs 
FY 2023 AGENCY FINANCIAL REPORT 125 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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.

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 costs 

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. Administrative overhead costs are allocated to 

loan and non-credit programs based on number of applications processed, number of 

loans serviced, dollar amount of loan originations, cost of school compliance actions, and 

the cost to collect defaulted loans.

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. 

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 
FY 2023 AGENCY FINANCIAL REPORT 126 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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. 

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

Allocation transfers are an arrangement established by statute that allow an agency to 

delegate authority and financial operations to other Federal agencies. Treasury establishes a 

separate subsidiary account (allocation account) under the parent fund account to provide 

for the reporting of obligations and outlays incurred by the child 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 has established a child relationship with the Department of the Interior for 

transactions related to the Bureau of Indian Affairs, and receives allocation transfers, as the 

child, from the Department of Health and Human Services. 

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 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 Consolidated Statement of Net Cost and the Consolidated 

Statement of Changes in Net Position include: allocation of Department administrative 

overhead costs; and subsidy expense for direct, defaulted guaranteed, and acquired loans. 

(See Notes 13 and 15)
FY 2023 AGENCY FINANCIAL REPORT 127 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

NOTE 12. Property and Equipment

Changes in property and equipment balances were as follows:

Property and Equipment

(Dollars in Millions)

2023 (Unaudited)

Acquisition Value Accumulated 

Depreciation Net

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

Dispositions (4) - (4)

Balance at End of Year $ 164 $ (162) $ 2 

NOTE 13. Credit Program Subsidy Expense and Reconciliations of Loans Receivable, Allowance 

for Subsidy, and Liabilities for Loan Guarantees 

The net loans receivable increased by $214.3 billion during FY 2023 (as a result of activity identified in the following table).

Reconciliation of Loans Receivable, Net

(Dollars in Millions)

2023 (Unaudited)

Direct Loan 

Program

Defaulted FFEL 

Guaranteed 

Loans

Acquired 

FFEL Loans

Other Credit 

Programs for 

Higher Education Total

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

Add Loan Disbursements:

New Loan Disbursements 84,477 - - 188 84,665 

Consolidations 37,792 - - - 37,792 

Add Defaulted Loan Claim Payments - 4,605 - - 4,605 

Less Principal, Interest, and Fee Payments Received:

Principal (42,123) (364) (766) (52) (43,305)

Interest (2,147) (18) (276) (8) (2,449)

Fees (1,656) - 1 - (1,655)

Add Interest Accruals 3,180 80 (969) 9 2,300 

Less Loans Written Off:

Principal (83,789) (1,984) (2,986) (55) (88,814)

Interest (4,990) (201) (92) (5) (5,288)

Fees - (41) - - (41)

Allowance for Subsidy 88,779 2,226 3,078 60 94,143 

Add Amortization of Net Interest:

Interest Revenue on Uninvested Funds (6,266) - (261) (12) (6,539)

Interest Revenue from the Public (3,180) - 970 (13) (2,223)

Administrative Fees 2 - (1) (4) (3)

Interest Expense on Borrowing 28,234 - 1,159 32 29,425 

Positive Subsidy Transfers (18,392) - - (37) (18,429)

Negative Subsidy Transfers 2,109 - - - 2,109 

Upward Subsidy Re-Estimate (58,932) - (5,808) (100) (64,840)

Downward Subsidy Re-Estimate (12,466) - (1,634) 50 (14,050)

Loan Modifications 204,156 - 5,181 38 209,375 

Other:

Other Adjustments to Allowance for Subsidy 851 793 252 (106) 1,790 

Other Non-Cash Reconciling Items (1,241) (3,184) (248) 449 (4,224)

Ending Balance of Loans Receivable, Net $ 1,030,912 $ 11,843 $ 27,471 $ 2,766 $ 1,072,992 
FY 2023 AGENCY FINANCIAL REPORT 128 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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.

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 reestimates and modifications to the allowance for subsidy for Department-held defaulted 

FFEL guaranteed loans. 

What follows is additional analysis for each of the loan programs. 

Direct Loan Program 

Direct Loan Program Reconciliation of Allowance for Subsidy 

(Dollars in Millions)

2023 (Unaudited)

Beginning Balance of Allowance for Subsidy $ 611,919 

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 16,283 

Adjustments

Loan Modifications (204,156)

Fees Received 1,660 

Loans Written Off (88,779)

Subsidy Allowance Amortization (18,790)

Other Activities (850)

Ending Balance of Allowance for Subsidy Before Re-Estimates 317,287 

Net Upward/(Downward) Subsidy Re-Estimates 71,398 

Ending Balance of Allowance for Subsidy $ 388,685 

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 
FY 2023 AGENCY FINANCIAL REPORT 129 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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.

Direct Loan Program Subsidy Expense 

(Dollars in Millions)

2023 (Unaudited)

Subsidy Expense for Direct Loans Disbursed in the Current Year

Interest Rate Differential $ 27,937 

Defaults, Net of Recoveries 1,196 

Fees (1,625)

Other (11,225)

Total Subsidy Expense for Direct Loans Disbursed in the Current Year 16,283 

Modifications and Re-Estimates

Loan Modifications

Modification Adjustment Transfer Gain (7,683)

Modification Adjustment Transfer Loss 6,590 

Loan Modifications (203,063)

Total Loan Modifications (204,156)

Net Upward/(Downward) Subsidy Re-Estimates

Interest Rate Re-Estimates 2,093 

Technical and Default Re-Estimates 69,305 

Total Net Upward/(Downward) Subsidy Re-Estimates 71,398 

Total Modifications and Re-Estimates (132,758)

Direct Loan Subsidy Expense $ (116,475)

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 2023 

included the following:

• Loan Deferral Extension. In FY 2023, the administration extended the student loan 

repayment deferrals through August 31, 2023. The extended relief for borrowers 

resulted in an upward modification cost of $23.2 billion. There was a net positive 

$0.1 billion modification adjustment transfer associated with this modification, 

bringing the total FY 2023 modification cost for the Direct Loan Program student 

loan repayment deferrals to $23.3 billion.
FY 2023 AGENCY FINANCIAL REPORT 130 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• Borrower Defense to Repayment and Arbitration. The Department developed 

regulations to create a fair path for borrowers to receive a discharge if their colleges 

lied or took advantage of them. The regulations established a process for group claims 

based on common evidence, to provide for full relief of loans and refund of payments 

made, stop interest accrual within a certain period upon granting a forbearance related 

to a claim, establish timeframes for resolving a claim, and establish a reconsideration 

process for denied borrower defense claims. These changes resulted in an upward 

modification cost of $4.2 billion. There was a net negative $0.1 billion modification 

adjustment transfer associated with this modification, bringing the total modification 

cost to $4.1 billion. 

• PSLF. The PSLF Program removes the burden of student debt on public servants 

by canceling loans after 10 years of public service. The Department updated the 

PSLF application process and expanded the types of payments considered to qualify 

toward loan cancellation and described the types of qualifying employment. The 

updates included features of the limited-time PSLF waiver related to the treatment of 

specific deferments and forbearances and payments made prior to consolidation. A 

provision was included that allows individuals who work as contractors for a qualifying 

employer in a position or providing services that, under applicable state law, cannot 

be filled or provided by a direct employee of the qualifying employer, to receive 

PSLF. These changes resulted in an upward modification cost of $4.0 billion. There 

was a net positive $0.1 billion modification adjustment transfer associated with this 

modification, bringing the total modification cost to $4.1 billion. 

• Total and Permanent Disability Discharges. The Department streamlined the 

application process, eliminated the 3-year post discharge income monitoring period, 

and expanded the Social Security Administration categories that qualify for the 

discharge. These changes resulted in an upward modification cost of $4.3 billion. There 

was a net positive $0.1 billion modification adjustment transfer associated with this 

modification, bringing the total modification cost to $4.4 billion. 

• Closed School Discharge. The Department expanded the automatic discharge process 

for borrowers that attended a college that closed and clarified the treatment for 

borrowers that re-enroll in comparable programs. These changes resulted in an upward 

modification cost of $3.4 billion. There was a net positive $0.3 billion modification 

adjustment transfer associated with this modification, bringing the total modification 

cost to $3.7 billion. 

• Interest Capitalization. Interest capitalization occurs when accrued interest is added to 

the principal balance of the loan, so that future interest accrues on a higher amount. 

The Department eliminated interest capitalization wherever it is not required by 

statute. This change resulted in an upward modification cost of $3.4 billion. There 

was a net positive $0.1 billion modification adjustment transfer associated with this 

modification, bringing the total modification cost to $3.5 billion. 

• IDR Saving on a Valuation Education (SAVE) Plan. The Department published a 

Final Rule to revise the existing Revised Pay-As-You-Earn (REPAYE) repayment plan, 

which may also be referred to as the SAVE Plan. These changes resulted in an upward 

modification cost of $70.9 billion. There was a net negative $0.5 billion modification 

adjustment transfer associated with this modification, bringing the total modification 

cost to $70.4 billion. 

• Broad Based Debt Relief Reversal. A downward modification was calculated to reverse 

the inclusion of student loan debt relief from the baseline subsidy cost as a result of 
FY 2023 AGENCY FINANCIAL REPORT 131 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

the Supreme Court’s ruling on Biden v. Nebraska on June 30, 2023. These changes 

resulted in a downward modification cost of $319.4 billion. There was a net negative 

$0.5 billion modification adjustment transfer associated with this modification, 

bringing the total modification cost (savings) to $319.9 billion.

• Fresh Start/On Ramp. Fresh Start is a one-time temporary program that offers special 

benefits for borrowers with defaulted federal student loans. In addition to Fresh 

Start, the President announced that the Department is instituting a 12-month “onramp” to repayment, running from October 1, 2023, to September 30, 2024, so that 

financially vulnerable borrowers who miss monthly payments during this period are 

not considered delinquent, reported to credit bureaus, placed in default, or referred 

to debt collection agencies. These actions resulted in an upward modification cost of 

$2.9 billion. There was a net negative $0.7 billion modification adjustment transfer 

associated with this modification, bringing the total modification cost to $2.2 billion. 

Net Upward/Downward Subsidy Re-Estimates for All Prior-Year Loan Cohorts.

The Direct Loan Program subsidy re-estimate increased subsidy expense in FY 2023 by 

$71.4 billion. Re-estimated costs only include cohorts that are 90 percent disbursed (i.e., 

cohort years 1994–2022). 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 include a standard 

data update with data from NSLDS that included an update to closed school 

discharges and PSLF waiver discharges for borrowers not enrolled in IDR. The primary 

adjustment to the model this cycle was removing adjustments to the rates for total 

permanent disability and projecting those factors from the actuals in the data. The 

combined effect of these updates led to a net upward re-estimate of $29.9 billion.

• IDR Model Changes. The Department completed a standard IDR data update 

that included updates for defaults and collections, updated poverty guidelines, and 

revised inflation rates provided in OMB’s economic assumption package. This cycle 

also featured an update to the deferment and forbearance rates in the IDR model 

to account for updated projections based on servicing guidelines that suggest that 

there may be many fewer forbearances in IDR in the future as well as adjustments for 

retroactive changes implemented regarding past forbearances. The combined effect of 

these updates led to a net upward re-estimate of $26.5 billion.

• Deferment and Forbearance. The Department updated deferment and forbearance 

rates for fiscal years 2023 and prior with updated forecasted rates. Economic 

assumptions were updated for unemployment rate, and fiscal years 2020 through 

2023 were updated for actual payments made by students during the repayment 

deferral period using data from FSA. The combined effect of these changes led to a net 

downward re-estimate of $2.3 billion. 

• Collections. The Department updated FY 2023 collection rates to reflect the extension 

of the repayment deferral, along with other technical changes. The combined effect of 

these changes led to a net upward re-estimate of $16.4 billion.
FY 2023 AGENCY FINANCIAL REPORT 132 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• Default. The default assumption was updated to include forecasted rates that spread 

future defaults more evenly across future fiscal years at the end of the Fresh Start 

period. The effect of these changes led to a net downward re-estimate of $0.6 billion.

• Repayment Plan Selection. The Department incorporated new repayment plan data 

through FY 2022 and updated the repayment plan assumption for cohorts prior to FY 

2020. This update led to a net upward re-estimate of $6.4 billion.

• 2022 Cohort Assumption Changes. The technical re-estimate cannot reflect the 

impacts of certain assumption changes applicable to the current year loan cohort until 

the following fiscal year per OMB guidance. The current year’s re-estimate includes 

a net upward adjustment of $0.2 billion for these current-year assumption changes 

attributable to the FY 2022 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 upward re-estimate of $16.8 billion.

• Interactive Effects. The re-estimate includes a net downward re-estimate of $18.2 

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 2021 and 2022 cohorts were calculated. All other 

cohorts are actual. The combined effect of these changes led to a net upward reestimate of $0.8 billion.

Direct Loan Program Interest Expense and Revenues

(Dollars in Millions)

2023 (Unaudited)

Interest Expense on Treasury Borrowing $ 28,234 

Total Interest Expense $ 28,234 

Interest Revenue from the Public 3,180 

Interest Revenue on Uninvested Funds 6,266 

Administrative Fees (2)

Amortization of Subsidy 18,790 

Total Revenues $ 28,234 
FY 2023 AGENCY FINANCIAL REPORT 133 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Federal Family Education Loan Program

Reconciliation of Liabilities for Loan Guarantees 

(Dollars in Millions)

2023 (Unaudited)

Beginning Balance of Post-1991 FFEL Loan Guarantee Liability $ 10,409 

Adjustments

Loan Modifications 1,018 

Interest Supplements Paid (1,706)

Claim Payments to Lenders (4,593)

Fees Received 601 

Interest on Accumulation on the Liability Balance (88)

Other Activities 1,160 

Net Upward Subsidy Re-Estimates 4,283 

Ending Balance of Post-1991 FFEL Loan Guarantee Liability 11,084 

Pre-1992 FFEL Liquidating Account Liability for Loan Guarantees (138)

FFEL Liabilities for Loan Guarantees 10,946 

HEAL Liabilities for Loan Guarantees 251 

Total Liabilities for Loan Guarantees $ 11,197 

Other activity includes negative special allowance collections, collections on defaulted 

FFEL loans, guaranty agency expenses, and loan cancellations due to death, disability, 

or bankruptcy.

Allowance for Subsidy Reconciliation for Acquired FFEL Loans 

(Dollars in Millions)

2023 (Unaudited)

Loan Purchase 

Commitment

Loan Participation 

Purchase ABCP Conduit Total

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

Adjustments

Loan Modifications (1,808) (3,373) - (5,181)

Subsidy Allowance Amortization (317) (1,500) (50) (1,867)

Loans Written Off (485) (2,529) (64) (3,078)

Other Activities (19) (225) (12) (256)

Ending Balance of Allowance for Subsidy Before 

Re-Estimates 5,316 5,325 167 10,808 

Net Upward Subsidy Re-Estimates 2,888 4,554 - 7,442 

Ending Balance of Allowance for Subsidy $ 8,204 $ 9,879 $ 167 $ 18,250 
FY 2023 AGENCY FINANCIAL REPORT 134 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

FFEL Program Subsidy Expense 

(Dollars in Millions)

2023 (Unaudited)

Loan Modification Costs

FFEL Guaranteed Loan Program

 Net Modification Adjustment Transfer (Gain)/Loss $ 302 

 Loan Modifications 716 

 Total FFEL Guaranteed Loan Program Loan Modifications 1,018 

Loan Purchase Commitment

 Net Modification Adjustment Transfer (Gain)/Loss 39 

 Loan Modifications (1,847)

 Total Loan Purchase Commitment Loan Modifications (1,808)

Loan Participation Purchase

 Net Modification Adjustment Transfer (Gain)/Loss 61 

 Loan Modifications (3,434)

 Total Loan Participation Purchase Loan Modifications (3,373)

Total Loan Modification Costs (4,163)

Upward/(Downward) Subsidy Re-Estimates

FFEL Loan Guarantee Program 4,283 

Loan Purchase Commitment 2,888 

Loan Participation Purchase 4,554 

Total FFEL Program Subsidy Re-Estimates 11,725 

FFEL Program Subsidy Expense $ 7,562 

Loan Modifications. Loan modifications for the FFEL Loan Program for FY 2023 

included the following:

• Loan Deferral Extension. In FY 2023, the administration extended the student loan 

repayment deferrals through August 31, 2023. The extended relief for borrowers 

resulted in an upward modification cost of $2.6 billion for the FFEL Program student 

loan repayment deferrals.

• Broad Based Debt Relief Reversal. A downward modification was calculated to reverse 

the inclusion of student loan debt relief from the baseline subsidy cost as a result of 

the Supreme Court’s ruling on Biden v. Nebraska on June 30, 2023. These changes 

resulted in a downward modification cost of $13.6 billion. There was a net positive 

$0.7 billion modification adjustment transfer associated with this modification, 

bringing the total modification cost (savings) to $12.9 billion.

• Fresh Start/On Ramp. Fresh Start is a one-time temporary program that offers special 

benefits for borrowers with defaulted federal student loans. In addition to Fresh 

Start, the President announced that the Department is instituting a 12-month “onramp” to repayment, running from October 1, 2023, to September 30, 2024, so that 

financially vulnerable borrowers who miss monthly payments during this period are 

not considered delinquent, reported to credit bureaus, placed in default, or referred 

to debt collection agencies. These actions resulted in an upward modification cost of 

$3.2 billion. There was a net negative $0.2 billion modification adjustment transfer 

associated with this modification, bringing the total modification cost to $3.0 billion. 
FY 2023 AGENCY FINANCIAL REPORT 135 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• 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 during the Fresh Start period. 

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 $0.7 billion.

• IDR Saving on a Valuation Education (SAVE) Plan. The Department published a 

Final Rule to revise the existing Revised Pay-As-You-Earn (REPAYE) repayment plan, 

which may also be referred to as the SAVE plan. The SAVE plan is available to student 

borrowers with a FFEL loan that has been converted into a Direct Consolidation Loan 

that is in good standing. These changes resulted in an upward modification cost of 

$2.6 billion. There was a net negative $0.2 billion modification adjustment transfer 

associated with this modification, bringing the total modification cost to $2.4 billion. 

Net Upward/Downward Subsidy Re-Estimates. The total FFEL subsidy re-estimate 

increased subsidy expense in FY 2023 by $11.7 billion. The net upward re-estimates in the 

FFEL Program were due primarily to increased non-IDR discharges in the Loan Purchase 

Commitment and Loan Participation Purchase programs.

Other Credit Programs for Higher Education

TEACH Program.

Loan Modifications. Loan modifications for the TEACH Program for FY 2023 included 

the following:

• Loan Deferral Extension. In FY 2023, the administration extended the student loan 

repayment deferrals through August 31, 2023. The extended relief for borrowers 

resulted in an upward modification cost of $9.2 million in the TEACH Program. 

There was a net positive $0.1 million modification adjustment transfer associated with 

this modification, bringing the total modification cost to $9.3 million. 

• Broad Based Debt Relief Reversal. A downward modification was calculated to reverse 

the inclusion of student loan debt relief from the baseline subsidy cost as a result of 

the Supreme Court’s ruling on Biden v. Nebraska on June 30, 2023. These changes 

resulted in a downward modification cost of $51.1 billion. There was a net positive 

$1.8 billion modification adjustment transfer associated with this modification, 

bringing the total modification cost (savings) to $49.3 billion.

• Fresh Start/On Ramp. Fresh Start is a one-time temporary program that offers special 

benefits for borrowers with defaulted federal student loans. In addition to Fresh 

Start, the President announced that the Department is instituting a 12-month “onramp” to repayment, running from October 1, 2023, to September 30, 2024, so that 

financially vulnerable borrowers who miss monthly payments during this period are 

not considered delinquent, reported to credit bureaus, placed in default, or referred 

to debt collection agencies. These actions resulted in an upward modification cost of 

$1.9 billion. There was a net negative $0.4 billion modification adjustment transfer 

associated with this modification, bringing the total modification cost to $1.5 billion. 
FY 2023 AGENCY FINANCIAL REPORT 136 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• IDR Saving on a Valuation Education (SAVE) Plan. The Department published a 

Final Rule to revise the existing Revised Pay-As-You-Earn (REPAYE) plan, which may 

also be referred to as the SAVE plan. The SAVE plan, which is available to student 

borrowers with a Direct Loan in good standing, will replace the existing Revised PayAs-You-Earn (REPAYE) plan which is the most generous existing IDR plan for most 

borrowers. These changes resulted in an upward modification cost of $0.9 billion. 

HEAL Program.

Loan Modifications. Loan modifications for the HEAL Program for FY 2023 included 

the following:

• Loan Deferral Extension. In FY 2023, the administration extended the student loan 

repayment deferrals through August 31, 2023. The extended relief for borrowers 

resulted in an upward modification cost of $0.9 million in the HEAL Program. 

NOTE 14. Roll-Forward of Debt Associated with Loans

(Dollars in Millions)

2023 (Unaudited)

Beginning 

Balance Borrowing Repayments Accrued Interest Ending Balance

Debt to the Bureau of Public Debt

Direct Loan Program $ 837,440 $ 445,038 $ (155,467) $ - $ 1,127,011 

FFEL Program 66,995 15,438 (21,537) - 60,896 

Other Credit Programs for Higher Education 641 98 (61) - 678 

Total Debt to the Bureau of Public Debt 905,076 460,574 (177,065) - 1,188,585 

Debt to the Federal Financing Bank

Other Credit Programs for Higher Education 271 134 (33) 6 378 

Total Debt Associated with Loans $ 905,347 $ 460,708 $(177,098) $ 6 $ 1,188,963 

Most of the $445.0 billion new Direct Loan Program borrowing activity for the year was 

designated for funding downward modifications. Principal repayments during FY 2023 

for the Direct Loan Program totaled $155.5 billion.

During FY 2023, TEACH net borrowing was used for the advance of new grants and 

repayments of principal made to Treasury.
FY 2023 AGENCY FINANCIAL REPORT 137 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

NOTE 15. 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 16)

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 2023 AGENCY FINANCIAL REPORT 138 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Gross Costs and Earned Revenue by Program 

(Dollars in Millions)

2023 (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 $ - $ 26,124 $ 13,868 $ 56,576 $ 2,496 $ 99,064 

Other - 89 1 16 923 1,029 

Earned Revenue - - - - (104) (104)

Net Program Costs - 26,213 13,869 56,592 3,315 99,989 

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 28,234 - - - - 28,234 

Subsidy Expense 179,712 - - (288,504) - (108,792)

Administrative Expenses 1,777 - - - - 1,777 

Earned Revenue

Subsidy Expense (1,739) - - (5,944) - (7,683)

Interest & Administrative Fees (9,444) - - - - (9,444)

Subsidy Amortization (18,790) - - - - (18,790)

Net Cost (Surplus) of Direct Loan Programs 179,750 

 - 

 

 - (294,448) 

 - (114,698)

FFEL Program

Gross Cost

Credit Program Interest Expense 3,261 - - - - 3,261 

Subsidy Expense 14,324 - - (6,404) - 7,920 

Subsidy Amortization (Guaranteed Loans) (88) - - - - (88)

Guaranty Agencies 580 - - - - 580 

Administrative Expenses 175 - - - - 175 

Earned Revenue

Subsidy Expense (145) - - (213) - (358)

Interest & Administrative Fees (1,306) - - - - (1,306)

Subsidy Amortization (Acquired FFEL Loans) (1,867) - - - - (1,867)

Guaranty Agencies (463) - - - - (463)

Net Cost of FFEL Program 14,471 - - (6,617) - 7,854 

Other Credit Programs for Higher Education

Gross Cost

Credit Program Interest Expense 17 - - - 15 32 

Subsidy Expense 53 - - (37) 35 51 

Administrative Expenses 1 - - - - 1 

Earned Revenue

Interest & Administrative Fees (14) - - - (15) (29)

Subsidy Amortization (3) - - - - (3)

Other (874) - - - (1) (875)

Net Cost (Surplus) of Other Credit Programs 

for Higher Education (820) - - (37) 34 (823)

Non-Credit Programs

Gross Cost

Grants 32,011 5 4,092 7,705 4,750 48,563 

Other 130 - 6 59 326 521 

Earned Revenue - - - - (10) (10)

Net Cost of Non-Credit Programs 32,141 5 4,098 7,764 5,066 49,074 

Net Program Costs (Surplus) 225,542 5 4,098 (293,338) 5,100 (58,593)

Total Program Gross Costs 260,187 26,218 17,967 (230,589) 8,545 82,328 

Total Program Earned Revenues (34,645) - - (6,157) (130) (40,932)

Net Cost $ 225,542 $ 26,218 $ 17,967 $ (236,746) $ 8,415 $ 41,396 
FY 2023 AGENCY FINANCIAL REPORT 139 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Credit Program Interest Expense and Revenues 

(Dollars in Millions)

2023 (Unaudited)

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

Direct Loan Program $ 28,234 $ - $ 28,234 $ 6,266 $ 3,178 $ 18,790 $ 28,234 

FFEL Program 3,261 (88) 3,173 2,276 (970) 1,867 3,173 

Other Credit Programs 

for Higher Education 32 - 32 12 17 3 32 

Total $ 31,527 $ (88) $ 31,439 $ 8,554 $ 2,225 $ 20,660 $ 31,439 

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 until August 

31, 2023, new interest revenues were only recognized for part of FY 2023. Interest 

adjustments and reapplication activities are also 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 2023 

interest revenues for the FFEL Program.
FY 2023 AGENCY FINANCIAL REPORT 140 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

Grant Expenses by Appropriation

(Dollars in Millions)

2023 (Unaudited)

PROMOTE EQUITY FOR PREKINDERGARTEN THROUGH GRADE 12 STUDENTS WITH ACCESS TO 

EDUCATIONAL RESOURCES, OPPORTUNITES, AND INCLUSIVE ENVIRONMENTS

COVID-19 $ 56,576 

Education for the Disadvantaged 17,840 

Special Education – IDEA Grants 13,868 

School Improvement Programs 6,099 

Impact Aid 1,736 

Innovation and Improvement 1,036 

English Language Acquisition 829 

Career, Technical, and Adult Education 431 

Hurricane Education Recovery 30 

Institute of Education Sciences 213 

Other 406 

Subtotal 99,064 

INCREASE POSTSECONDARY VALUE BY FOCUSING ON EQUITY STRATEGIES TO ADDRESS 

ACCESS TO AFFORDABILITY, COMPLETION, AND POST-ENROLLMENT SUCCESS 

COVID-19 $ 7,705 

Student Financial Assistance

Pell Grants 29,714 

Federal Work-Study Program 1,214 

Federal Supplemental Educational Opportunity Grants 1,083 

Rehabilitation Services 3,682 

Higher Education 2,877 

Career, Technical, and Adult Education 1,572 

Special Education – IDEA Grants 123 

Hurricane Education Recovery 5 

Institute of Education Sciences 47 

Other 541 

Subtotal 48,563 

Total Grant Costs $ 147,627 

The Department has more than 100 grant programs. Descriptions of COVID-19 grant 

programs are provided in Note 16. 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. 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.
FY 2023 AGENCY FINANCIAL REPORT 141 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• 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.

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 lowest-performing 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, first-generation 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 
FY 2023 AGENCY FINANCIAL REPORT 142 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 one-time 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.

NOTE 16. 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 145. 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

during FY 2023 for student loan borrowers by suspending nearly all federal student loan

payments through August 31, 2023, interest free. Additionally, support for student loan

borrowers was provided in previous fiscal years by the following COVID-19 relief legislation

and administrative actions.

• Authorizing Guaranty Agencies to reimburse themselves from the Federal Student Loan

Reserve Fund for lost revenue that resulted from student loan repayment deferrals.
FY 2023 AGENCY FINANCIAL REPORT 143 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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. 

• 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 13)

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 2023. Unobligated CARES Act balances as of the end of FY 2022 totaling $564 

million were carried forward to FY 2023 and are reported in the FY 2023 COVID-19 

schedule as Unobligated Balance from Prior Year Budget Authority (Net) together with 

$40 million of downward adjustments recorded in FY 2023 to prior years’ CARES Act 

obligations. Obligated and unobligated COVID-19 funds remaining to be disbursed as of 

the end of FY 2023 totaled $75.3 billion. (See Note 3 and 17)
FY 2023 AGENCY FINANCIAL REPORT 144 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

COVID-19 Activity

(Dollars in Millions)

2023 (Unaudited)

Unobligated Balance 

from Prior Year 

Budget Authority (Net)

Appropriations

New Obligations 

and Upward Adjustments 

of Prior Year Obligations

Unobligated Outlays

Transfers 

to General 

Fund

Net Costs 

(See Note 

15)

COVID-19 Direct Appropriations

Education Stabilization Fund

Elementary and Secondary School 

Emergency Relief Fund

Allocations to States $ 1 $ - $ - $ 1 $ 54,470 $ - $ 52,656 

Assistance for Homeless Children 

and Youth 1 - - 1 176 - 176 

Higher Education Emergency 

Relief Fund

Higher Education Funds to Students 84 - - 84 881 - 880 

Higher Education Funds to 

Institutions 19 - 4 15 4,868 - 4,830 

Proprietary Institutions Grant Funds 

for Students 238 - - 238 25 - 25 

Schools Serving Low-Income 

Students, HBCUs, and Minority 

Serving Institutions (MSIs) 

MSIs 28 - - 28 387 - 387 

HBCUs 1 - - 1 672 - 669 

Tribally Controlled Colleges and 

Universities (TCCUs) 1 - - 1 57 - 57 

Strengthening Institutions Program 55 - - 55 173 - 171 

Fund for the Improvement of 

Postsecondary Education 112 - - 112 2 - 2 

Supplemental Assistance 

and Support (113) - - (113) 215 - 217 

Governor’s Emergency Education 

Relief Fund

Emergency Education Relief Grants - - - - 780 - 780 

Emergency Assistance to Non-Public 

Schools Program - - - - 1,418 - 1,574 

Outlying Areas - - - - 322 - 322 

Bureau of Indian Education - - - - - - - 

Discretionary Grants - - - - 84 - 84 

Total Education Stabilization Fund 427 - 4 423 64,530 - 62,830 

Individuals with Disabilities Education 

Act Grants - - - - 1,359 - 1,361 

School Improvement Programs 27 - 21 6 48 - 48 

American Indian Resilience in 

Education 13 - 13 - 4 - 4 

Gallaudet University - - - - 5 - 5 

Howard University - - - - 11 - 11 

National Technical Institute for the Deaf - - - - 8 - 8 

HBCU Loan Deferment 30 - - 30 - - - 

Student Aid Administration 26 - 23 3 57 - 57 

Program Administration 9 - 5 4 7 - 7 

Inspector General 7 - 3 4 3 - 3 

Institute of Education Sciences 65 - 20 45 22 - 23 

Total COVID-19 Direct Appropriations 604 - 89 515 66,054 - 64,357 

COVID-19 Indirect Appropriations (See 

Note 5)

Loan Deferral Extension - 26,084 26,084 - 26,084 197 25,887 

Broad Based Debt Relief Reversal - 5,318 5,318 - 5,318 338,176 (332,858)

Fresh Start - 6,047 6,047 - 6,047 849 5,198 

Support for FSLRF - 670 670 - 670 - 670 

Total COVID-19 Indirect 

Appropriations - 38,119 38,119 - 38,119 339,222 (301,103)

Total COVID-19 Activity $ 604 $ 38,119 $ 38,208 $ 515 $ 104,173 $ 339,222 $ (236,746)
FY 2023 AGENCY FINANCIAL REPORT 145 U.S. DEPARTMENT OF EDUCATION

Other Information (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 Hawaiian-Serving 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 
FY 2023 AGENCY FINANCIAL REPORT 146 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 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 

education-related organizations.
FY 2023 AGENCY FINANCIAL REPORT 147 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

• Emergency Education Relief Grants—Provide grants to state governors for the 

purpose of providing local educational agencies (LEA), IHEs, and other educationrelated 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 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.

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.

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 
FY 2023 AGENCY FINANCIAL REPORT 148 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 17. Statement Of Budgetary Resources

The SBR compares budgetary resources with the status of those resources. As of 

September 30, 2023, budgetary resources were $850.2 billion, and net agency outlays 

were $41.1 billion. 

Net Adjustments to Unobligated Balances Brought Forward, October 1

(Dollars in Millions)

2023 (Unaudited)

Budgetary

Nonbudgetary 

Credit Reform 

Financing 

Accounts

Prior Year Unobligated Balance, End of Year (Total) $ 22,711 $ 65,579 

Recoveries of Prior Year Unpaid Obligations 2,362 10,174 

Borrowing Authority Withdrawn - (6,966)

Actual Repayments of Debt, Prior-Year Balances - (41,216)

Actual Capital Transfers to the Treasury General Fund (11) - 

Canceled Authority (523) - 

Downward Adjustments of Prior-Year Paid Delivered Orders 3 202 

Other Differences 2 3 

Unobligated Balance from Prior Year Budget Authority (Net) $ 24,544 $ 27,776 

During the year ended September 30, 2023, certain adjustments were made to the balance 

of unobligated budgetary resources available as of October 1, 2022. These adjustments 

included, among other things, recoveries of prior year unpaid obligations that resulted from 

downward adjustments of undelivered orders that were obligated in a prior fiscal year.

Unused Borrowing Authority 

(Dollars in Millions)

2023 (Unaudited)

Beginning Balance – Unused Borrowing Authority $ 42,109 

Current Year Borrowing Authority 472,659 

Funds Drawn from Treasury (460,708)

Borrowing Authority Withdrawn (6,966)

Ending Balance - Unused Borrowing Authority $ 47,094 
FY 2023 AGENCY FINANCIAL REPORT 149 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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)

2023 (Unaudited)

Intragovernmental With the Public

Unpaid $ 336 $ 211,050 

Paid 146 916 

Undelivered Orders $ 482 $ 211,966 

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)

2023 (Unaudited)

Negative Subsidies and Downward Re-estimates of Subsidies:

Direct Loan Program $ 332,029 

FFEL Program 14,546 

TEACH Program 63 

Facilities Loan Programs 39 

Total Negative Subsidies and Downward Re-estimates of Subsidies 346,677 

Repayment of Perkins Loans and Capital Contributions 548 

Other 388 

Distributed Offsetting Receipts $ 347,613 

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, 

downward modifications, and negative subsidies.

Reconciliation of the SBR to 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 $ 901,996 $ 813,706 $ 29,086 $ 639,369 

Expired Funds (5,638) (1,509) - - 

Distributed Offsetting Receipts - - - 29,086 

Other - (1) - (3)

Budget of the United States Government 1 $ 896,358 $ 812,196 $ 29,086 $ 668,452 

1

 Amounts obtained from the Appendix, Budget of the United States Government, FY 2024
FY 2023 AGENCY FINANCIAL REPORT 150 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

The FY 2025 President’s Budget, which presents the actual amounts for the year ending 

September 30, 2023, has not been published as of the issue date of these financial 

statements. The FY 2025 President’s Budget is scheduled for release in February 2024 and 

will be made available on OMB’s website. The table above reconciles the FY 2022 SBR to 

the FY 2024 President’s Budget (FY 2022 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.

Budgetary Status of Fund Balance with Treasury 

(Dollars in Millions)

2023 (Unaudited)

COVID-19 Funds All Other Funds Total

Unobligated Balance

 Available $ 486 $ 12,973 $ 13,459

 Unavailable 29 59,280 59,309 

Obligated Balance, Not Disbursed 74,748 145,359 220,107 

Authority Temporarily Precluded from Obligation - (2,507) (2,507)

Borrowing Authority Not Yet Converted to Fund Balance with Treasury - (47,094) (47,094)

Other - 755 755

Total Fund Balance with Treasury $ 75,263 $ 168,766 $ 244,029 

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 ($59.3 billion) differs from unapportioned and expired amounts on the SBR 

($59.9 billion) due to the Guarantee Agencies’ Federal Funds ($0.6 billion).
FY 2023 AGENCY FINANCIAL REPORT 151 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

NOTE 18. Reconciliation of Net Cost to Net Outlays

(Dollars in Millions)

2023 (Unaudited)

Intragovernmental

Other than 

IntragovernmentalTotal

Net Cost $ 23,596 $ 17,800 $ 41,396 

Components of Net Cost Not Part of Budgetary 

Outlays:

Year-End Credit Reform Subsidy 

Accrual Re-Estimates - (66,061) (66,061)

Loan Modification Adjustment Transfers - 688 688 

Property and Equipment Disposals and Revaluations - (4) (4)

Increase/(Decrease) in Assets:

Loans Receivables, Net (Non-FCRA) - 204 204 

Other Assets 60 5 65 

(Increase)/Decrease in Liabilities:

Accounts Payable - (168) (168)

Loan Guarantee Liabilities (Non-FCRA) - 137 137 

Other Liabilities (271) (398) (669)

Financing Sources:

Imputed Costs (64) - (64)

Total Components of Net Cost Not Part of 

Budgetary Outlays (275) (65,597) (65,872)

Components of Budget Outlays Not Part of Net 

Cost:

Effect of Prior-Year Credit Reform 

Subsidy Re-estimates - (16,954) (16,954)

Total Components of Budget Outlays Not Part of 

Net Cost - (16,954) (16,954)

Miscellaneous Items:

Other Loan Activities (Non-FCRA) (1) - (1)

Non-Entity Activity 325 - 325 

Non-Exchange Revenues (3) - (3)

Total Miscellaneous Items 321 - 321 

Budgetary Agency Outlays, Net $ (41,109)

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. 

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-
FY 2023 AGENCY FINANCIAL REPORT 152 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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 reestimates 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 19. 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, 2022 FR can be found on Treasury’s website, and a copy of 

the September 30, 2023 FR will be posted to this site as soon as it is released.

Reclassification of Statement of Net Cost to Line Items Used for the Government-wide 

Statement of Net Cost for the Year Ended September 30, 2023

(Dollars in Millions)

FY 2023 Department Statement of Net Cost (Unaudited) Line Items Used to Prepare FY 2023 Government-wide 

Statement of Net Cost 

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Total Gross Cost $ 82,328 $ 50,175 Non-Federal Gross Cost

 163 Benefit Program Costs

 64 Imputed Costs

 380 Buy/Sell Cost

 31,527 Borrowing and Other Interest Expense

 19 Other Expenses (Without Reciprocals)

Total Gross Cost $ 82,328 $ 82,328 Department Total Gross Cost

Total Earned Revenue $ (40,932) $ (32,375) Non-Federal Earned Revenue

 (3) Buy/Sell Revenue (Exchange)

 (8,554) Borrowing and Other Interest Revenue (Exchange)

Total Earned Revenue (40,932) (40,932) Department Total Earned Revenue

Net Cost $ 41,396 $ 41,396 Net Cost
FY 2023 AGENCY FINANCIAL REPORT 153 U.S. DEPARTMENT OF EDUCATION

Other Information (Unaudited)

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

Statement of Operations and Changes in Net Position for the Year Ended September 30, 2023

(Dollars in Millions)

FY 2023 Department Statement of Changes in Net Position (Unaudited) Line Items Used to Prepare FY 2023 Government-wide 

Statement of Operations and Changes in Net Position 

Financial Statement Line Amounts Amounts Reclassified Financial Statement Line

Unexpended Appropriations

Beginning Balance $ 231,216 $ 231,216 Net Position, Beginning of Period

Appropriations Received 255,795 254,166 Appropriations Received as Adjusted (Rescissions and 

Other Adjustments)

Other Adjustments (Rescissions, etc.) (1,629)

Appropriations Transferred 4 4 Non-Expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources

Appropriations Used (313,824) (313,824) Appropriations Used

Unexpended Appropriations, Ending Balance 171,562 171,562 

Cumulative Results of Operations

Beginning Balance (9,487) (9,487) Net Position, Beginning of Period

Appropriations Used 313,824 313,824 Appropriations Expended

Nonexchange Revenue 3 3 Collections Transferred into a TAS Other Than the 

General Fund of the U.S. Government – Nonexchange

Imputed Financing from Costs Absorbed by Others 64 64 Imputed Financing Sources

Negative Subsidy Transfers, Downward Subsidy 

Re-Estimates, and Other (330,204) (355,384) Non-Entity Collections Transferred to the General Fund of the U.S. Government

 25,178 

Accrual for Non-Entity Amounts to Be Collected and 

Transferred to the General Fund of the 

U.S. Government

 2 Other Taxes and Receipts

Net Cost (41,396) (41,396) Net Cost 

Cumulative Results of Operations, Ending Balance $ (67,196) $ (67,196)

Net Position $ 104,366 $ 104,366 Net Position, End of Period

NOTE 20. Other Matters 

Some portion of the current-year financial assistance expenses (grants) may include 

funded recipient expenditures that are subsequently disallowed through program review or 

audit processes. In the opinion of management, the ultimate disposition of these matters 

will not have a material effect on the Department’s financial position.