NOTES TO THE FINANCIAL STATEMENTS 84 

Note 4. Loans Receivable, Net and Loan Guarantee Liabilities 

Loans Receivable, net as of September 30, 2023 

Subsidy 

Expense 

Loans Subsidy Loans (Income) 

Receivable, Interest Foreclosed Cost Receivable, for the 

(In billions of dollars) Gross Receivable Property Allowance Net Fiscal Year 

 

Federal Direct Student Loans - 

Education 1,336.2 83.4 - (388.7) 1,030.9 (116.5) 

Disaster Assistance Loans - SBA 311.3 13.3 - (53.9) 270.7 34.4 

Federal Housing Admin Loans - 

HUD 61.8 25.8 0.7 (17.6) 70.7 (0.1) 

Electric Loans - USDA 56.5 0.2 - 0.7 57.4 (1.3) 

FDIC (acting in its capacity as 

receiver)1 50.0 0.1 - - 50.1 - 

Federal Family Education Loans - 

Education 79.0 20.9 - (60.5) 39.4 2.3 

All other programs 190.1 4.2 0.8 (19.2) 175.9 2.0 

Total loans receivable 2,084.9 147.9 1.5 (539.2) 1,695.1 (79.2) 

1

Treasury purchased a $50 billion note issued by a trust created by FDIC in its receivership capacity and guaranteed by FDIC in its 

 corporate capacity. 

Loans Receivable, net as of September 30, 2022 

Subsidy 

Expense 

Loans Subsidy Loans (Income) 

Receivable, Interest Foreclosed Cost Receivable, for the 

(In billions of dollars) Gross Receivable Property Allowance Net Fiscal Year 

 

Federal Direct Student Loans - 

Education 1,341.8 86.7 - (611.9) 816.6 385.4 

Disaster Assistance Loans - SBA 367.0 14.8 - (61.5) 320.3 43.0 

Federal Housing Admin Loans - 

HUD 53.8 20.9 0.5 (14.3) 60.9 (0.1) 

Electric Loans - USDA 53.9 - - (2.2) 51.7 0.7 

Federal Family Education Loans - 

Education 80.3 21.6 - (62.1) 39.8 10.8 

All other programs 159.6 4.0 0.8 (19.6) 144.8 0.1 

Total loans receivable 2,056.4 148.0 1.3 (771.6) 1,434.1 439.9 

Loans Receivable 

Loans receivable consists primarily of direct loans disbursed by the government, receivables related to guaranteed loans 

that have defaulted, and certain receivables for guaranteed loans that the government has purchased from lenders. Direct 

loans are used to promote the nation’s welfare by making financing available to segments of the population not served 

adequately by non-federal institutions, or otherwise providing for certain activities or investments. For those unable to afford 
85 NOTES TO THE FINANCIAL STATEMENTS 

credit at the market rate, federal credit programs provide subsidies in the form of direct loans offered at an interest rate lower 

than the market rate. 

The amount of the long-term cost of post-1991 direct loans equals the subsidy cost allowance for direct loans as of 

September 30. The amount of the long-term cost of pre-1992 direct loans equals the allowance for subsidy amounts (or PV 

allowance) for direct loans. The long-term cost is based on all direct loans disbursed in this fiscal year and previous years that 

are outstanding as of September 30. It includes the subsidy cost of these direct loans estimated as of the time of loan 

disbursement and subsequent adjustments such as modifications, reestimates, amortizations, and write-offs. 

Loans receivable, net includes related interest and foreclosed property. Foreclosed property is property that is 

transferred from borrowers to a federal credit program, through foreclosure or other means, in partial or full settlement of 

post-1991 direct loans or as compensation for losses that the government sustained under post-1991 loan guarantees. Please 

refer to the financial statements of HUD, USDA, and VA for additional information regarding foreclosed property. 

The total subsidy expense/(income) is the cost recognized during the fiscal year. It consists of the subsidy 

expense/(income) incurred for direct loans disbursed during the fiscal year, for modifications made during the fiscal year of 

direct loans outstanding, and for upward or downward reestimates as of the end of the fiscal year. This expense/(income) is 

included in the Statements of Net Cost. 

The majority of loans receivable programs are provided by Education, SBA, HUD, and USDA. For additional 

information regarding the direct loan programs listed in the tables above, please refer to the financial statements of the 

entities. 

Education has loan programs that are authorized by Title IV of the Higher Education Act of 1965. The William D. Ford 

Federal Direct Loan Program (referred to as the Direct Loan Program), was established in FY 1994 and offers four types of 

educational loans: Stafford, Unsubsidized Stafford, Parent Loan for Undergraduate Students, and consolidation loans. With 

this program, the government makes loans directly to students and parents through participating institutions of higher 

education. Education disbursed approximately $122.3 billion in direct loans to eligible borrowers in FY 2023 and 

approximately $120.4 billion in FY 2022. In FY 2023, there was a $214.3 billion increase in Education’s Federal Direct Loan 

program primarily due to the combination of 1) broad based debt relief announced in FY 2022 causing a decrease in the net 

loans receivable reported in FY 2022; and 2) an increase in the net loans receivable balance during FY 2023 largely due to a 

downward modification to reverse the inclusion of student loan debt relief as a result of the Supreme Court’s ruling on June 

30, 2023. In FY 2023, there were also upward modifications of $23.3 billion related to COVID-19 administrative actions. In 

addition, Education stopped all federal wage garnishments and collection actions for borrowers with federally held loans in 

default. For additional information regarding the CARES Act refer to the financial statements of Education and Note 29—

COVID-19 Activity. 

The SBA makes loans to microloan intermediaries and provides a direct loan program that assists homeowners, renters 

and businesses recover from disasters. SBA’s Disaster Assistance Loan Program makes direct loans to disaster survivors 

under four categories: physical disaster loans to repair or replace damaged homes and personal property; physical disaster 

loans to businesses of any size; EIDLs to eligible small business and nonprofit organizations without credit available 

elsewhere; and economic injury loans to eligible small businesses affected by essential employees called up to active duty in 

the military reserves. In FY 2023, SBA’s credit program receivables saw a decrease of $49.6 billion from FY 2022 from a 

decrease in direct disaster loans as a result of disaster lending activity returning to a comparable level with the pre-pandemic 

period due to the EIDL program no longer approving loans for COVID-19 in FY 2023, recoupment of loans previously 

dispersed, and current year write-offs. 

HUD’s loans receivable balance largely comprises defaulted single-family mortgages and reverse mortgages that were 

insured by FHA. In addition, HUD finances mortgages and provides loans to support construction and rehabilitation of lowrent housing, principally for the elderly and disabled. 

USDA’s Rural Development offers direct loans with unique missions to bring prosperity and opportunity to rural areas. 

The Rural Housing programs provide affordable, safe, and sanitary housing and essential community facilities to rural 

communities. Rural Utility programs help improve the quality of life in rural areas through a variety of loan programs for 

electric energy, telecommunications, and water and environmental projects. 

In FY 2023, Treasury purchased a $50 billion note guaranteed by the FDIC in its corporate capacity as deposit insurer 

and regulator. FDIC as Receiver for the First Republic Bank created a trust and sold a PMN to the trust. JPMorgan had issued 

the PMN to the FDIC as Receiver for the First Republic Bank in connection with the resolution of the First Republic Bank 

and JPMorgan’s acquisition of certain assets and liabilities of First Republic Bank. The PMN, which matures in 2028, is fullrecourse to JPMorgan and is collateralized by a pool of mortgage loans acquired by JPMorgan through the related 

receivership and sale of First Republic Bank. Cash flows from the PMN will be used to repay the principal and interest due 

on the Treasury-purchased note issued by the trust. The Treasury-purchased note principal is due to Treasury from the trust 

on May 4, 2028, with semi-annual interest payments at 4.445% beginning May 2024. The Treasury-purchased note is 

recorded at cost ($50 billion) and considered to be fully collectable by Treasury based on the following factors: 1) 
 NOTES TO THE FINANCIAL STATEMENTS 86 

JPMorgan’s strength as a counterparty and commitment under the PMN; 2) over-collateralization of the PMN’s underlying 

collateral; 3) a funded reserve account to cover shortfalls in interest owed on the Treasury-purchased note relative to the 

PMN; and 4) an option to prepay the note at par prior to maturity. For information on additional receivership activity see 

Note 30—Subsequent Events. 

All other programs saw an increase of $31.2 billion in FY 2023 largely due to fluctuations in loan programs for HUD, 

DOT, and DFC. The increase in HUD’s Other Non-Credit Reform Loans of $19.5 billion is primarily due to Ginnie Mae’s 

new Home Equity Conversion Mortgage portfolio, as a result of the Reverse Mortgage Funding issuer default. 

 

Loan Guarantee Liabilities as of September 30, 2023, and 2022 

Principal 

Principal Amount Amount Subsidy Expense 

Loan Guarantee of Loans Under Guaranteed (Income) for the 

Liabilities Guarantee by the U.S. Fiscal Year 

(In billions of dollars) 2023 2022 2023 2022 2023 2022 2023 2022

 

Federal Housing Administration Loans 

- HUD (32.6) (39.8) 1,669.1 1,533.7 1,481.3 1,368.0 (2.2) (37.8)

Small Business Loans 7.9 25.7 165.5 187.9 140.3 163.8 (1.1) (5.0)

Federal Family Education Loans - 

Education 10.9 10.4 80.6 98.6 80.6 98.6 5.3 11.2 

Veterans Housing Benefit Programs 9.1 9.9 994.7 940.9 250.1 237.3 (4.5) (2.2)

All other guaranteed loan programs 0.1 0.2 189.0 195.0 172.3 178.3 (1.6) (2.3)

Total loan guarantee liabilities (4.6)1 6.4 3,098.9 2,956.1 2,124.6 2,046.0 (4.1) (36.1)

1

Loan guarantees are recorded as a liability except when cash inflows are expected to exceed cash outflows on a PV basis. 

 This results in a negative loan guarantee that is reported as an asset on the Balance Sheet. 

Loan Guarantee Liabilities 

Loan guarantee programs are also used to promote the nation’s welfare by making financing available to segments of 

the population not served adequately by non-federal institutions, or otherwise providing for certain activities or investments.

For those to whom non-federal financial institutions are reluctant to grant credit because of the high risk involved, federal 

credit programs guarantee the payment of these non-federal loans and absorb the cost of defaults. 

The amount of the long-term cost of post-1991 loan guarantees outstanding equals the liability for loan guarantees as of 

September 30. The amount of the long-term cost of pre-1992 loan guarantees equals the allowance for subsidy amounts (or 

PV allowance) and the liability for loan guarantees. The long-term cost is based on all guaranteed loans disbursed in this 

fiscal year and previous years that are outstanding as of September 30. It includes the subsidy cost of the loan guarantees 

estimated as of the time of loan disbursement and subsequent adjustments such as modifications, reestimates, amortizations, 

and write-offs. 

The total subsidy expense/(income) is the cost of loan guarantees recognized during the fiscal year. It consists of the 

subsidy expense/(income) incurred for guaranteed loans disbursed during the fiscal year, for modifications made during the 

fiscal year of loan guarantees outstanding, and for upward or downward reestimates as of the end of the fiscal year of the cost

of loan guarantees outstanding. This expense/(income) is included in the Statements of Net Cost. 

The majority of the loan guarantee programs are provided by HUD, SBA, Education and VA. For additional 

information regarding the guaranteed loan programs listed in the tables above, please refer to the financial statements of the 

entities. 

HUD’s Office of Housing promotes equal housing opportunities. It includes FHA who provides mortgage insurance on 

mortgages for single family mortgage loans made by FHA-approved lenders as well as providing mortgage insurance on 

multifamily rental housing, healthcare facilities and single-family Title I manufactured housing and property improvement 

loans. FHA strives to meet the needs of many first-time and minority homebuyers who, without the FHA guarantee, may find 

mortgage credit to be unaffordable or simply unavailable. These programs are a critical component of FHA’s efforts to meet 

the nation’s need for decent, safe, and affordable housing. FHA’s total loan guarantee subsidy expense increased by $35.7 

billion in FY 2023, primarily due to a smaller downward reestimate in FY 2023 as compared to FY 2022. 
87 NOTES TO THE FINANCIAL STATEMENTS 

The SBA provides guarantees that help small businesses obtain bank loans and licensed companies to make investments 

in qualifying small businesses. Their business loan programs include the Loan Guaranty program in which the SBA 

guaranties up to 90 percent of the amount of loans made by participating banks and other lending institutions to eligible small

businesses not able to obtain credit elsewhere. The CARES Act added the PPP which was designed to provide a direct 

incentive for small businesses to keep their workers on the payroll. SBA’s Loan Guarantee Liabilities decreased $17.8 billion 

primarily because of claim payments to lenders and miscellaneous recoveries in FY 2023, which are mostly attributable to 

PPP purchase guarantee and forgiveness payments. As of September 2023, over 10.6 million applications have been 

submitted requesting PPP loan forgiveness, with nearly $760.0 billion total forgiveness paid. Approximately 96 percent of 

total PPP loan value has been forgiven, in full or in part. 

Education has loan programs that are authorized by Title IV of the Higher Education Act of 1965. The FFEL Program 

was established in FY 1965 and operates through state and private, nonprofit guaranty agencies that provided loan guarantees 

on loans made by private lenders to eligible students. The Student Aid and Fiscal Responsibility Act, which was enacted as 

part of the Health Care Education and Reconciliation Act of 2010 (P.L. 111-152), eliminated the authority to guarantee new 

FFEL after June 30, 2010. 

VA operates the following loan guarantee programs: Housing Guaranteed Loans and Loan Sale Guarantees. The Home 

Loans program provides loan guarantees to veterans, service members, qualifying dependents, and limited non-veterans to 

purchase homes and retain homeownership with favorable market terms.