Federal Student Aid (FSA), the office within the U.S. Department of Education that handles loans and grants, recently published its fiscal year 2009 report. This document provides a lot of interesting information about the general state of federal postsecondary assistance and also rates the office’s performance over the past year. It’s a fairly long document, so here are some initial findings that are worth mentioning. There’s also some interesting information in here on default rates, unit costs, and even the supposedly dreadful customer service (hint: it’s actually much better than everyone claims). But these are worth taking a closer look at on their own.

How Many Loans? All told, there are $457 billion worth of student loans still outstanding in the Federal Family Education Loan (FFEL) Program. If every single one of those loans defaulted, the government would be on the hook for $445 billion. In other words, the government is already responsible for 97.4 percent of all FFEL loans. (The Direct Loan figure is harder to ascertain, so I left it out.)

What’s also kind of interesting is the distribution of when the FFEL loans were disbursed. Page 29 of the PDF document has the following chart:

This graph shows that 60 percent of outstanding FFEL loans were issued within the last two years, while 40 percent were issued in the previous 14. There are a couple of reasons that might explain why the data skew toward newer loans. First, the standard repayment length is only 10 years, so we would expect that the balance of older loans are being repaid, decreasing the amount outstanding. Second, if the Department treats consolidation loans as a new loan, than it is possible that some of the loans issued after Oct. 1, 2007 are actually made up of older underlying loans. Finally, general upward borrowing trends mean that each successive year results in greater loan volume than the one prior.

Crackdown on unwarranted subsidies In addition to its daily management functions, FSA also targeted a specific series of unnecessary lender subsidies in which companies received a 9.5 percent return on loans that should not have been eligible for such payments. (This report and blog series explain it in greater detail.) According to the annual report, FSA audited the loans that were trying to claim the subsidy and removed all of those that should not be receive it—reducing the balance of loans eligible for this payment rate from $11 billion to $1.3 billion.

More money for guaranty agencies While the government compensates lenders for the vast majority of losses due to defaulted FFEL loans, the actual job of making the payment falls to a number of public or not-for-profit entities known as guaranty agencies. These 33 agencies also are expected to work with borrowers to prevent loan default and then collect on loans that do default. Since guaranty agencies are expected to make loan payments on behalf of the government, they act as caretakers of a fund of federal dollars that are used for this purpose. In fiscal year 2008 they held $1.7 billion in these accounts. In 2009, that amount increased to $2.4 billion. That’s money that must be audited and overseen by FSA just so a third-party agency can make payments.

Increase in complaints A little over 10 years ago, FSA created an ombudsman to handle student complaints about loan and grant issues. According to the report, that office handled 23,765 complaints in fiscal year 2009, a 25 percent increase over the prior year. Most of these were “general assistance” issues, which are dealt with in a few days. The report does note, however, that 22 percent are research cases, which require more in-depth work and deal with issues such as discharging a loan due to disability. It started the fiscal year with 1,610 research cases open and ended the year with 1,339. At the same time, the number of these cases grew by 6.5 percent.

Stay tuned for more about what’s in the report.