Annual Reports Highlight FSA’s Performance, Student Loan Portfolio, and ED’s Use of Resources
By Hugh T. Ferguson, NASFAA Senior Staff Reporter
As the calendar winds down on 2021, the Department of Education (ED) has published a pair of reports detailing key metrics and performance standards in an effort to keep stakeholders informed on how the agency is approaching its portfolio for the upcoming fiscal year.
In the first annual report centered on the activities of the Office of Federal Student Aid (FSA), the agency offered a detailed account of its student loan portfolio, the impact of federal aid administered in response to the pandemic, and metrics detailing performance on annual goals.
The report specifically notes the growing scope of the student loan portfolio and how individuals’ loan balances have lasting effects on the lives of borrowers.
“While expanding access to higher education is fundamental to our mission, we also focus on the size and complexities of the federal student loan portfolio, which now surpasses $1.6 trillion,” said Richard Cordray, FSA's chief operating officer. “We recognize the need to enhance our stewardship of the various programs, products, services, and operations that address the nation’s accumulated student loan debt.”
On the student loan front, FSA detailed how the federal pause in student loan repayments and interest accrual resulted in “significant and atypical shifts” in borrowers being classified as in repayment or not in repayment.
During the period for fiscal years 2017-19, the outstanding student loan debt in repayment grew to represent 65.7% of the total principal and interest amount outstanding, but from fiscal years 2020-21, due to emergency relief measures extended to student loan borrowers, the loan balances in repayment massively declined to just 10.1% of the total principal and interest amount outstanding, while the balances not in repayment jumped to represent 89.9%.
This repayment trend remains consistent with data unveiled by FSA in June of 2021 further indicating that ED will need to transition the vast majority of borrowers back into repayment once the benefit expires at the end of next month.
In FSA’s annual performance report, which touches on the department’s progress in achieving its goals outlined in its five-year strategic plan, key metrics were outlined with an updated overview of the agency’s near-term goals.
For fiscal year 2021, FSA met or exceeded 22 of its 38 measurable performance metrics, and performed below the target for six others. Another three metrics were baselined or did not have an established target. Additionally, one metric was not available before publication of the report, and six metrics were not able to establish a target due to the COVID-19 administrative forbearance period.
FSA’s annual report detailed the manner in which the office either achieved or failed to meet its annual metrics. While the majority of the goals were met with satisfactory marks, FSA recorded a handful of data points where they fell short:
— Percentage of high school seniors submitting the FAFSA: FSA sought 66.25% and recorded 60.87%
— Number of customers submitting the FAFSA via a mobile platform, such as the myStudentAid mobile app or fafsa.gov: FSA aimed to have 2.6 million submissions and received 2.5 million
— American Customer Satisfaction Index (ACSI) Aid Lifecycle Survey score: FSA sought to achieve a score between 73-75 and instead recorded 71.4
— Customer Satisfaction Survey(s) for StudentAid.gov site and associated tools: FSA wanted to develop and implement those surveys, but did not complete the implementation process
— Increase partner/vendor cybersecurity effectiveness by reducing the total number of FSA system assessment findings by 20% per year. While FSA aimed to achieve 2,800 or less, it recorded 3,976
— Decrease the number of employee-related cybersecurity events associated with inappropriate use, distribution, or storage of personally identifiable information (PII) and financial information by 20% a year: FSA sought to reduce this to 1,440 incidents or less and instead recorded 2,642 cases
The report also contains three recommendations from the ombudsman, who urged FSA to reevaluate the financial sustainability of the Federal Family Education Loan (FFEL) Program and recall the entirety of the defaulted FFEL portfolio, extend Public Service Loan Forgiveness (PSLF) protections to borrowers enrolled in alternative repayment plans, and limit Credit Alert Verification Reporting System (CAIVRS) reporting after seven years of furnishing.
For the full version of FSA’s wide-ranging internal report, be sure to check out the detailed document.
ED’s second year-end report highlighted how the department oversaw the entirety of the nation’s education portfolio, with Education Secretary Miguel Cardona touting a number of higher education policies meant to expand access and mitigate the impact of the pandemic.
Cardona specifically highlighted ED’s efforts to expand the Second Chance Pell experiment to enable incarcerated students to be eligible to receive and use the federal grants to pursue postsecondary education. The department is currently sorting through a negotiated rulemaking process which touches on that topic in both the full and subcommittee level.
ED also called attention to its efforts to ensure students retain data privacy both within the department and at educational institutions. To account for this effort, ED reported that in fiscal year 2021 they engaged with nearly 1,000 schools to inform, collaborate, and improve the security of student financial and privacy data.
The report also outlined how financial statements were impacted by the pandemic, with ED pausing student loan payments, and allocating $282.5 billion in emergency aid provided by Congress.
While those funds enabled the department to address the financial strain of the pandemic, it also created new burdens like being able to oversee and monitor new grant programs.
“While these laws provide more than $161 million to the Department for student aid administration and $38 million for program administration, the Department must design and implement related processes timely and effectively to help ensure the overall success of its pandemic relief activities,” the report said. “In addition to the programs funded by the pandemic relief laws, the Department must oversee more than 100 other grant and loan programs, including a Federal student loan portfolio of about $1.5 trillion.”
In order to best oversee and monitor the ways in which emergency funds were used, ED will look to assess results from its monitoring efforts and in the near future identify potential problem areas or areas that could benefit from additional guidance or technical assistance.
Publication Date: 12/15/2021
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