ARCHIVED INFORMATION -- Fiscal Year 1996 Annual Accountability Report

Notes

NOTE 3 - FUND BALANCES WITH U.S. TREASURY

Fund balances with the U.S. Treasury at September 30 were as follows (in thousands):


1996

Obligated Unobligated      Total     
Forward Funded - Revolving Funds $ 809,437 $ 8,152,428 $ 8,961,865
- Appropriations     13,945,184 4,391,785 18,336,969
Current Year - Appropriations 8,062,416 588,574 8,650,990
- Trust Funds                            55              64              119
Total Appropriated Balances 22,817,092 13,132,851 $ 35,949,943
Deposit Funds 1,031,315
Budget Clearing Accounts         36,223
Total $ 37,017,481


1995

Obligated Unobligated      Total     
Forward Funded - Revolving Funds $ 1,939,555 $ 7,579,417 $ 9,518,972
- Appropriations          16,021,632 4,406,537 20,428,169
Current Year - Appropriations 7,986,591 734,129 8,720,720
- Trust Funds                                 73             104              177
Total Appropriated Balances $ 25,947,851 $ 12,720,187 $ 38,668,038
Deposit Funds 722,915
Budget Clearing Accounts      ( 15,701)
Total $ 39,375,252

NOTE 4 - LOANS AND LOAN GUARANTEES

Analyses of credit program receivables, liabilities for loan guarantees and subsidy expenses are provided in the following sections.

A. Credit Program Receivables, at September 30 were (in thousands):

1996

Direct Loans Defaulted
Guaranteed Loans 		Facilities Loans
Loans Receivable $ 12,486,42    $ 17,459,659    $ 646,408   
Interest Receivable   191,033     2,159,047      11,306   
Gross Program Receivables $ 12,677,454    $ 19,618,706    $ 657,714   
Less: Allowances 1,151,997    16,395,088    138,687   
Net Program Receivables $ 11,525,457    $ 3,223,618    $ 519,027   


1995

Direct Loans Defaulted
Guaranteed Loans		 Facilities Loans
Loans Receivable $ 3,647,074    $ 17,049,007    $ 683,023   
Interest Receivable 28,205    2,673,315    11,559   
Gross Program Receivables $ 3,675,279    $ 19,722,322    $ 694,582   
Less: Allowances 535,398    16,519,294    161,496   
Net Program Receivables $ 3,139,881     $ 3,203,028     $ 533,086   

B. Liabilities for Loan Guarantees

Outstanding loan guarantees were approximately $92 billion at September 30, 1996 and $93 billion at September 30, 1995. These loans were made by about 7,000 lenders and guaranteed by 36 guaranty agencies, operating in 54 states and territories. ED is contingently liable for guaranteed student loans made by lenders. These liabilities are estimated based on historical data received from guaranty agencies and lenders, and ED's cash flow data. The estimates are significantly affected by Treasury projections of future market interest rates that change the amount of special allowances to compensate lenders for program interest rates below market levels. The estimates are also affected by the types of schools attended (i.e., proprietary, two-year colleges, four-year colleges and universities, etc.) and the types of loans received (i.e., Stafford, Unsubsidized Stafford, Parents Loans for Undergraduate Students, etc.) by the borrowers. ED's estimates, using an econometric model for 1996 and an actuarial model for 1995, determined that ED's liabilities at September 30, 1996 and September 30, 1995 for loan guarantees were approximately $15.0 billion and $12.9 billion, respectively, as detailed below.

Liabilities for loan guarantees at September 30 were (in thousands):


1996

Pre-1992 Post-1991     Total     
Covered by Budgetary Resources $    577,968 $ 12,223,286 $ 12,801,254
Not Covered by Budgetary Resources  1,617,950     599,161   2,217,111
Total Loan Guarantee Liabilities $ 2,195,918 $ 12,822,447 $ 15,018,365


1995

Pre-1992 Post-1991     Total     
Covered by Budgetary Resources $ 3,482,046 $ 8,368,378 $ 11,850,424
Not Covered by Budgetary Resources 1,056,039           -0-  1,056,039
Total Loan Guarantee Liabilities $ 4,538,085 $ 8,368,378 $ 12,906,463

C. Subsidy Expenses

For fiscal years ended September 30, loan guarantee subsidy expenses were (in thousands):


1996    1995   
Provision for Loan Defaults (Net) $ 2,085,760 $ 1,246,732
Provision for Interest Subsidies 1,505,700 2,798,731
Fees ( 836,400) ( 586,471)
Mandatory Administrative Expense    62,658    88,256
Total Current Year Estimate 2,817,718 3,547,248
Total Reestimates 1,746,786 ( 895,260)
Total Loan Guarantee Subsidy Expense $ 4,564,504 $ 2,651,988

For fiscal years ended September 30, Direct loan subsidy expenses were (in thousands):


1996    1995   
Loan Defaults (Net) $ 691,829 $ 291,031
Interest Subsidies ( 149,664) 206,746
Fees ( 309,052) ( 116,419)
Other Subsidy 133,669   43,161
Total Current Year Estimate 366,782 424,519
Add: Total Reestimates 127,206   11,613
Total Direct Student Loan Subsidy Expense 493,988 436,132
Other    1,201          - 
Total Direct Loan Subsidy Expense $ 495,189 $ 436,132

NOTE 5 - GUARANTY AGENCY ADVANCES

Advances to guaranty agencies represent amounts provided under sections 422(a) and 422(c) of the HEA for commencement of agency operations and making loan default payments to lenders.

Advances to guaranty agencies at September 30 were (in thouands):


1996    1995   
Advances to Guaranty Agencies $ 39,309 $ 40,164
Less: Allowance for Uncollectible Receivables      393      401
Advances to Guaranty Agencies, Net $ 38,916 $ 39,763

NOTE 6 - ACCOUNTS RECEIVABLE

A. Entity

Entity receivables include delinquent and defaulted accounts receivable from credit and other programs that have been assigned to the Department for collection. The Other category, below, includes receivable amounts for about $2.7 million of overpaid Impact Aid awaiting offset and $3.8 million of accrued Pell interest. The Other category also includes receivables related to travel, salary overpayments and other administrative items.

Entity receivables at September 30 are summarized as follows (in thousands):


1996

FFEL  All Other Total 
Gross Accounts Receivable $ 4,248 $ 19,355 $ 23,603
Less: Allowance for Uncollectible Receivables 1,271 5,056 6,327
Accounts Receivable, Net $ 2,977 $ 14,299 $ 17,276


1995

FFEL All Other Total 
Gross Accounts Receivable $ 5,011 $ 21,632 $ 26,643
Less: Allowance for Uncollectible Receivables 1,503 13,371 14,874
Accounts Receivable, Net $3,508 $ 8,261 $11,769

B. Non-Entity

Non-entity receivables consist of promissory notes and related interest receivables, other program receivables, audit receivables, reimbursables and recipient excess cash receivables. These receivables are partially offset by an allowance derived from prior collection experience.

Non-entity receivables at September 30 were as follows (in thousands):


1996    1995   
Gross Accounts Receivable $ 35,823 $ 47,117
Less: Allowance for Uncollectible Receivables 10,747 14,135
Net Accounts Receivable $ 25,076 $ 32,982

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