A r c h i v e d I n f o r m a t i o n

Biennial Evaluation Report - FY 93-94

Chapter 525

College Facilities Loan Program

(CFDA No. 84.142)

I. Program Profile

Legislation: Higher Education Act (HEA) of 1965, Title VII, Part C, as amended (20 U.S.C. 1132d). (Expires September 30, 1997.).

Purpose: Provides low-interest loans to assist intitutions of higher education or higher education building agencies to construct, reconstruct, or renovate housing, academic facilities, and other educational facilities for students and faculty.

Funding History - Before FY 1987

Fiscal Year	Appropriation	Fiscal Year	Appropriation
1977	$13,052,000	1983	$40,000
1980	13,857,000	1984	0
1981	279,000	1985	0
1982	232,000	1986	0

Funding History - After FY 1986

Fiscal Year	Borrowing Authority	Appropriation
1987	$60,000,000	$0
1988	62,231,000	0
1989	29,640,000	1,675,000
1990	30,000,000	5,129,000
1991	29,297,000	8,449,000
1992	30,000,000	11,693,000
1993	29,465,055	7,223,000
1994	0	6,615,000

Before FY 1987, appropriations were made to supplement amounts available in the program's revolving fund from repayments on prior loans and investment income from previously issued participation sales fund. The program's revolving fund, including the appropriation, supported new loan commitments, interest payments on U.S. Treasury obligations and participation certificates, and program operating expenses such as loan servicing. After FY 1986, the program's revolving fund has been used solely to support obligations on loans made prior to FY 1987. No new loans are being made from the revolving find. Appropriations after FY 1986 have been utilized to support payments on post-1986 borrowing from U.S. Treasury. New loans commitments after FY 1986 are aupported through additional borrowing from the U.S. Tresury as annually authorized in Congressional appropriations bills.

II. Performance Indicators

Comparison of loan applications received and actual loans awarded
Number of fully disbursed loans by type of institution
Dollar value of fully disbursed loans by type of institution
Comparison of total number of loans outstanding to number of loans in default
Comparison of total value of loans outstanding to number of loans in default
Average size of new loans during the past six award years
Comparison of number and types of loans awarded during the past 6 years
Number and dollar value of loand outstanding by State
Fiscal 1993, number ans amount of loans awarded by State; number of new loans, building and square feet; distribution of new loans by public/private institutions

Population Targeting

Graduate and undergraduate institutions of higher education

Services

The College Facilities Loan program provides institutions of higher education ot higher education building agencies with direct, low-interest facilities loans. These loans are provided only to institutions unable to secure loan terms and conditions from other sources that are comparable to those offered by the program. Loans must be repaid within 30 years and currently bear an annual interest rate of 5.5 percent. Currently loand are targeted for construction and renovation of academic facilities.

In 1986, Congress authorized a private, for-profit insurance company, commonly referred to as Connie Lee, to insure and reinsure municipal bonds for education facilities. Thirty-five percent of Connie Lee's equity capital is owned by the Student Loan Marketing Association and 15 percent by the U.S. Department of Education and 50 percent by private investors. Connie Lee's organizational and start-up activities have resulted in minimal issuance of facilities loan insurance during the 1987-1991 period. Connie Lee's insurance volume should increases rapidly and will comprise a large percentage of insured facilities loan volume in the future. Increases in Connnie Lee insurance volume are likely to reduce further required borrowing authority and appropriations for Ed's College Facilities Loan Program.

Program Administration

Loans are awarded through an application process on the basis of forulae that consider a variety of factors, including current use of facilities and financial need. The Secretary of Education may announce priorities annually; from FY 1987 to FY 1992, priorty had been placed upon housing construction and the reconstruction and renovation of academic facilities; during FY 1993, priorty was placed upon reconstruction and renovation of exiating academic facilities and construction of new academic facilities.

In administering the program, the Department of Educatin uses engineers under an interagency agreement with the Department of Health and Human Services to review and monitor projects to ensure project feasibility and compliance with architectural, engineering, and other building design requirements.

Outcomes

Table 1, below indicates that the total amount of loan commitments remained steady, at around $30 million, during the four-year period, Fys 1990-1993. Historically. Loans have been made for both housing construction and academic facilities. The proportion of loans fir academic facilities charged sharply in FY 1993 from about 50-60 percent of total loans to 100 percent. As noted in the previous sectin, this change was due to new Secretarial priorities and adoption of new criteria as published in Federal regulations.

Table 1

Loan Commitments, Fiscal Years 1990-1993

(in thousands of dollars)

Year of Commitment	FY 1990		FY 1991		FY 1992		FY 1993
Type of Award	Number	Amount	Number	Amount	Number	Amount	Number	Amount
Housing Construction	6	$14,565	7	$14,277	6	$14,500	0	$0
Academic Facilities	11	15,435	11	15,000	9	15,500	19	29,465
Total	17	$30,000	18	$29,277	15	$30,000	19	$29,465

Source: Program files.

graph omitted

Table 6

Distribution of New Loans to Private/Public Institutions

	Amounts			Percent
Fiscal Year	Total Loan	Private	Public	Private	Public
1987	$58,377,815	$33,203,000	$25,174,815	56.9	43.1
1988	$51,454,000 (1)	$27,671,000	$23,783,000	53.8	46.2
1989	$29,640,000	$15,700,000	$13,940,000	53.0	47.0
1990	$27,526,000 (1)	$16,907,500	$10,618,500	61.4	38.6
1991	$27,502,000 (1)	$14,863,000	$12,639,000	54.0	46.0
1992	$30,000,000	$6,898,000	$23,102,000	23.0	77.0
1993	$29,465,055	$20,895,000	$8,570,055	70.9	29.1

Table 7

	Number of Loans			Percent
Fiscal Year	Total	Private	Public	Private	Public
1987	24	14	10	58.3	41.7
1988	25(1)	16	9	64.0	36.0
1989	15	9	6	60.0	40.0
1990	16 (1)	11	5	68.8	31.3
1991	16 (1)	10	6	62.5	37.5
1992	15	6	9	40.0	60.0
1993	19	14	5	73.7	26.3

(1) The numbers have been adjusted for loans subsequently canceled.

Table 8

Applications Received and Loans Awarded in Recent Years

	Applications			Amounts
Fiscal Year	Number Received	Loans Awarded	Percent of Loan Applications Approved	Loans Requested	Loans Awarded	Percent of Requested Dollars Awarded
1987	167	24	14.4%	$319,116,050	$58,377,815	18.3%
1988	200	25 (1)	12.5%	$408,105,732	$51,454,000 (1)	12.6%
1989	148	15	10.1%	$294,848,646	$29,640,000	10.1%
1990	175	16 (1)	10.7%	$287,381,374	$27,526,000 (1)	15.5%
1991	150	16 (1)	10.7%	$287,381,374	$27,502,000 (1)	9.6%
1992	98	15	15.3%	$194,113,719	$30,000,000	15.5%
1993	75	19	25.3%	$111,458,910	$29,465,055	26.4%

(1) The numbers have been adjusted for loans subsequently canceled.

Table 9

New Facilities Loans Awarded in Recent Years

Fiscal Year	Total Loan Amount	Number of Loans	Average Loan Amount	Number of Buildings	Number of Square Feet
1987	$58,377,815	24	$2,432,409	37	2,430,411
1988	$51,454,000 (1)	25 (1)	$2,058,160	45 (1)	1,789,575
1989	$29,640,000	15	$1,976,000	33	2,122,871
1990	$27,526,000 (1)	16 (1)	$1,720,375	58 (1)	3,564,288
1991	$27,502,000 (1)	16 (1)	$1,718,875	55 (55)	2,777,060
1992	$30,000,000	15	$2,000,000	83	4,217,818
1993	$29,465,055	19	$1,550,792	19	428,957

(1) The numbers have been adjusted for loans subsequently canceled.

Management Improvement Strategies

The Deaprtment of Education ensures effective credit management in the following ways:

by taking steps to ensure the financial soundness of new loans, using such rresources as delinquency listings, financiak status reports, and regulatory provisions;
by reviewing its inventory of all completed projects to ensure prompt and proper billing by the Federal Reserve Bank, cancelling inactive loans, and enforcing the policy requiring institutions to begin construction within 18 months of loan reservation;
by using a procedure to ensure prompt delivery of notes and bonds to the Federal Reserve Bank; and
by conducting in-depth credit reviews and imposing special conditions in loan agreements when necessary.

III. Sources of Information

Program Files.

IV. Planned Studies

None.

V. Contacts for Further Information

Program Operations:: Walter B. Stevens, (202) 260-3230
Program Studies:: Dan Morrissey, (202) 401-0182

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