The Office of Federal Student Aid as a Performance-Based Organization
Congressional research reportDec 4, 2025
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The Office of Federal Student Aid as a
Performance-Based Organization
Updated December 4, 2025
Congressional Research Service
https://crsreports.congress.gov
R46143
SUMMARY
The Office of Federal Student Aid as a
Performance-Based Organization
The Office of Federal Student Aid (FSA), within the U.S. Department of Education (ED), is
established as a performance-based organization (PBO) pursuant to Section 141 of the Higher
Education Act (HEA). FSA is a discrete management unit “responsible for managing the
administrative and oversight functions supporting” the HEA Title IV federal student aid
programs, including the Pell Grant and the Direct Loan programs. As such, it is the largest
provider of postsecondary student financial aid in the nation. In FY2024, FSA oversaw the
provision of approximately $120.8 billion in Title IV aid to approximately 9.9 million students
attending approximately 5,400 participating institutions of higher education (IHEs). In addition,
in FY2024, FSA managed a student loan portfolio encompassing approximately 45 million
borrowers with outstanding federal student loans totaling about $1.6 trillion.
R46143
December 4, 2025
Alexandra Hegji
Specialist in Social Policy
Henry B. Hogue
Specialist in American
National Government
Among other administrative and oversight functions, FSA
•
•
•
develops and maintains the Free Application for Federal Student Aid (FAFSA);
•
provides oversight of the numerous third parties (e.g., contracted student loan servicers and IHEs) that play
a role in administering the Title IV programs; and
obtains funds from the Department of the Treasury to make aid available to students;
contracts with numerous third parties to provide goods and services related to Title IV administration, such
as student loan servicing;
•
provides information to third-party stakeholders—such as students, the public, and Congress—regarding
Title IV program operations and performance.
Responsibility for developing policy and promulgating regulations relating to Title IV programs, however, remains with the
Secretary of Education.
Congress established FSA’s PBO structure under the Higher Education Amendments of 1998 (P.L. 105-244) in response to a
belief in Congress and ED that Title IV student aid programs were “severe[ly]” mismanaged and that ED was in need of
restructuring to improve federal student aid delivery. In general, PBOs are intended to be business-like, results-driven
organizations that have clear objectives and measurable goals designed to improve an agency’s performance and
transparency. PBO leaders are to be held professionally accountable for meeting organization goals, with continued tenure
and a portion of compensation linked to these measures of success. In exchange, PBOs and their leaders are granted greater
discretion to deviate from certain government-wide management processes and to operate more like private-sector
companies.
Specific to FSA’s structure as a PBO, the HEA vests management of FSA in a chief operating officer (COO) who is
appointed based on demonstrated ability and without regard to political affiliation. Each year, the COO and the Secretary
must agree on and publicly make available a five-year performance plan for FSA that establishes measurable goals and
objectives addressing a variety of statutory specifications, such as FSA’s responsibilities in improving customer service to
stakeholders and reducing costs of administering Title IV student aid programs. The COO is required to annually submit to
Congress a report on FSA’s performance. In addition, each year the COO and the Secretary, and the COO and FSA senior
managers, enter into performance agreements that set forth measurable organizational and individual goals. The COO and
senior managers are eligible to receive bonus compensation based on an evaluation of work performed relative to the annual
goals specified in their annual performance agreements. The HEA provides FSA with some flexibilities with regard to
general federal rules around hiring, compensation, and procurement.
Since FSA’s creation as a PBO, it has experienced some notable successes, including Title IV aid programs’ removal from
the Government Accountability Office’s High-Risk List in 2005, the transition to 100% direct lending under the Direct Loan
program, and implementation of the Internal Revenue Service (IRS) Data Retrieval Tool.
Since FSA’s establishment, the programs it administers have grown substantially larger, and the federal student aid programs
and benefits have become substantially more complex to administer (e.g., with the addition of numerous loan forgiveness and
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The Office of Federal Student Aid as a Performance-Based Organization
income-driven repayment plans). In recent years, several issues have arisen related to FSA’s Title IV program administration.
In broad terms, they pertain to oversight of entities participating in and helping with administration of Title IV programs,
transparency, and accountability to certain stakeholders and consumers (i.e., aid recipients).
Oversight issues relate to FSA’s oversight of IHEs participating in Title IV HEA aid programs. Criticisms have focused on
FSA’s ability to proactively and consistently mitigate institutional risk in Title IV programs. Other concerns relate to FSA’s
oversight of its contracted student loan servicers, including its monitoring of such entities and the accountability of servicers
to FSA in certain areas of their performance. Concerns have also been raised about the shortage of operational guidance FSA
has provided to loan servicers to enable them to ensure they are meeting Title IV statutory and regulatory requirements and to
assist borrowers in navigating the aid programs.
Transparency issues relate to the extent to which FSA makes available information about Title IV programs’ performance
and operations to relevant parties. Policymakers sometimes have imperfect information on Title IV program performance and
operations, which can make it difficult to make informed, well-honed policy or enforcement decisions. FSA has sometimes
not made operational guidance available to Title IV program participants (e.g., IHEs), which can lead to a deterioration in
trust between FSA and those participants. In addition, consumers may be faced with incomplete information on Title IV
programs and the IHEs that participate in such programs, which may make it difficult to make informed college-going and
financial decisions.
Stakeholder accountability issues include the extent to which FSA is fulfilling its statutory mandate to consult with relevant
stakeholders in developing performance plans and annual reports and whether FSA is leveraging information garnered from
stakeholder interactions to make program administration improvements. They also relate to whether FSA is sufficiently
responsive to customer needs, especially given that FSA administers programs for which, arguably, there are no comparable
competitors.
As part of its oversight role, Congress might consider whether any adjustments should be made to address any of these issues
and, if so, the extent to which any efforts to address issues might involve or affect FSA’s PBO function and structure.
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Contents
Introduction ..................................................................................................................................... 6
FSA as a PBO: Distinctions from Most Agencies ........................................................................... 7
FSA Leadership ......................................................................................................................... 8
FSA Personnel Flexibilities ..................................................................................................... 10
FSA Procurement Flexibilities ................................................................................................ 10
FSA Independence ................................................................................................................... 11
Establishment of a PBO to Administer Federal Student Aid ......................................................... 12
Legislation to Establish a PBO to Administer Federal Student Aid ........................................ 14
2008 Higher Education Act PBO Amendments ...................................................................... 18
Subsequent Amendments ........................................................................................................ 19
Changes to Title IV Aid Affecting FSA’s Operations .................................................................... 19
FSA Functions and Structure ......................................................................................................... 22
Statutorily Specified FSA Functions ....................................................................................... 22
FSA Awarding, Disbursing, and Servicing Aid ................................................................. 23
FSA Contracting ............................................................................................................... 24
FSA Information and Assistance to Third-Party Stakeholders ......................................... 24
FSA Oversight................................................................................................................... 25
Selected FSA Statistics ............................................................................................................ 27
Funding for Federal Student Aid Administration .............................................................. 27
FTE Employment for Federal Student Aid Administration .............................................. 28
Trends Relevant to Federal Student Aid Administration .................................................. 29
FSA Structure .......................................................................................................................... 31
Statutorily Mandated Roles............................................................................................... 31
FSA’s Relationship with Other Actors .............................................................................. 34
FSA’s Performance Under Five-Year Performance Plan ............................................................... 38
Assessments of FSA as a PBO ...................................................................................................... 45
Current Issues ................................................................................................................................ 48
Oversight Functions ................................................................................................................ 49
IHE Oversight ................................................................................................................... 49
Loan Servicer Oversight ................................................................................................... 51
Discussion of Issues in Oversight and the PBO Structure ................................................ 54
Transparency ........................................................................................................................... 55
Information for Policymakers and Stakeholders ............................................................... 56
Information for Members of the Public ............................................................................ 58
Discussion of Issues in Transparency and the PBO Structure .......................................... 60
Stakeholder Accountability ..................................................................................................... 61
Figures
Figure 1. Inflation-Adjusted Obligations for Federal Student Aid Administration,
FY2009-FY2024 ($ in millions)................................................................................................. 28
Figure 2. Full-Time Equivalent (FTE) Employment for Federal Student Aid
Administration, FY2009-FY2024 .............................................................................................. 29
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Tables
Table 1. Selected Trends Related to Federal Student Aid Administration ..................................... 30
Table 2. FSA’s Performance Under Its Five-Year Performance Plan ............................................ 39
Table 3. Summary of Selected Current Issues Relating to FSA .................................................... 49
Appendixes
Appendix. Selected Acronyms Used in This Report ..................................................................... 63
Contacts
Author Information........................................................................................................................ 63
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Introduction
The Office of Federal Student Aid (FSA) within the U.S. Department of Education (ED) is the
primary entity responsible for the administration and oversight of the federal student aid
programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA; P.L.
89-329, as amended).1 As such, FSA is the largest provider of postsecondary student financial aid
in the nation.2 It performs functions that are akin to those of large banks, to which it has
sometimes been compared.3 In FY2024, FSA oversaw the provision of $120.8 billion in Title IV
aid to 9.9 million students attending approximately 5,400 institutions of higher education (IHEs).4
In addition, in FY2024, FSA managed a student loan portfolio encompassing 45 million
borrowers with outstanding federal student loans totaling about $1.6 trillion.5
FSA is a performance-based organization (PBO) pursuant to Section 141 of the HEA.
Conceptually, PBOs are intended to be results-driven organizations that have clear objectives and
measurable goals designed to improve an agency’s performance and transparency. PBOs are led
by chief executives who are personally accountable for meeting measurable goals within the
organization. In exchange, PBOs are granted greater discretion than other government agencies to
operate more like private-sector companies, with more control over the budget, personnel
decisions, and procurement. FSA was established under the Higher Education Amendments of
1998 (P.L. 105-244) as the federal government’s first PBO. This was done in response to the
belief that ED needed restructuring to improve federal student aid delivery.6
In recent years, FSA has come under scrutiny for its oversight of IHEs participating in the Title
IV student aid programs7 and contracted loan servicers,8 its implementation of the FAFSA
Simplification Act,9 its accounting related to the federal student loan programs,10 and its
1 In addition, FSA administers the Health Education Assistance Loan program. This program, which was previously
authorized under Title VII, Part A, subpart I of the Public Health Services Act, was transferred to ED from the
Department of Health and Human Services in FY2014. No new loans have been made under the program since
September 30, 1998.
2 U.S. Department of Education (ED), Federal Student Aid (FSA), “About Us,” https://studentaid.gov/about.
3 National Association of Student Financial Aid Administrators (NASFAA), Improving Oversight and Transparency at
the U.S. Department of Education’s Office of Federal Student Aid: NASFAA Recommendations, May 2017, p. 1.
4 FSA, FY2024 Report, November 15, 2025, p. 15.
5 FSA, FY2024 Report, p. 16.
6 See, for example, testimony of the chair of the Advisory Committee on Student Financial Assistance, in U.S.
Congress, House Committee on Education and the Workforce, Subcommittee on Postsecondary Education, Training
and Life-Long Learning, Field Hearing on H.R. 6: the Higher Education Amendments of 1998, hearing held in
Clemson, SC, 105th Cong., 1st sess., May 2, 1997 (Washington: GPO, 1997), pp. 63-69. See also CRS Report RL32098,
The Office of Federal Student Aid: The Federal Government’s First Performance-Based Organization (archived,
available to congressional clients upon request).
7 See, for example, U.S. Government Accountability Office (GAO), Higher Education: Department of Education
Should Improve Enforcement Procedures Regarding Substantial Misrepresentation by Colleges, GAO-23-104832,
December 2022, https://www.gao.gov/assets/gao-23-104832.pdf.
8 See, for example, Consumer Financial Protection Bureau (CFPB), Annual Report of the CFPB Student Loan
Ombudsman, November 2024, https://files.consumerfinance.gov/f/documents/cfpb_2024-annual-student-loanombudsmans-report_2024-11.pdf.
9 See, for example, GAO, FAFSA: Education Needs to Improve Communications and Support Around the Free
Application for Federal Student Aid, GAO-24-107407, September 2024.
10 See, for example, FSA, FY2024 Report, pp. 186-194.
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engagement with stakeholders.11 This report provides information about the structure and
organization of FSA, the nature of the work it performs, and its characteristics as a PBO.
Additionally, the report discusses FSA challenges that have received considerable attention in
recent years. Should Congress contemplate the reauthorization of the HEA or exercise oversight
over FSA, it might examine some of the issues raised by these critiques and the way FSA’s
organization as a PBO may affect congressional goals and policies.
This report begins by discussing the HEA provisions that distinguish FSA from other types of
federal agencies. This is followed by a discussion of the legislative history of the creation of FSA
as a PBO and of the HEA Title IV programmatic changes that may affect its operations. Next, the
report describes the current operations and structure of FSA. Finally, it discusses several issues
related to FSA’s operations and how they may relate to its structure as a PBO. The issues
presented have received recent congressional and stakeholder attention and have been identified
in reviews of FSA’s operations.12 Appendix provides a list of selected acronyms used in this
report.
FSA as a PBO: Distinctions from Most Agencies
Federal programs are usually carried out by or through agencies that are established in statute,
with structural refinements established through directives issued by the agency head.13 Over time,
Congress has created governmental and quasi-governmental entities with varying characteristics
to address diverse needs in different contexts.14 Most federal agencies in the executive branch,
however, are designed to be directly or indirectly accountable to the President. Furthermore, most
federal agencies must comply with general management laws regarding financial management,
procurement, information management, personnel, and other administrative practices.
As a PBO, FSA has organizational features that are distinct from most other departmental
subunits in the executive branch of the federal government.15 As the name suggests, PBOs are
designed to have a greater focus on results—outcomes rather than outputs. To this end, they are
required to have clear objectives and measurable goals. PBO leaders are to be held professionally
accountable for meeting measurable goals within the organization, with continued tenure and a
portion of compensation linked to these measures of success. In exchange, these organizations
11 See, for example, ED, Office of Inspector General (OIG), Federal Student Aid’s FY2020-2024 Strategic Planning
Process, August 16, 2021, pp. 3-4, https://oig.ed.gov/sites/default/files/reports/2025-06/
FY21A20GA0002021624v100SECURED.pdf.
12 Numerous recent reports have examined aspects of FSA’s operations, such as GAO, FAFSA: Education Needs to
Improve Communications and Support ; and ED, OIG, U.S. Department of Education’s Assessment and Recoupment of
Liabilities from Closed Institutions of Higher Education, January 28, 2025, https://oig.ed.gov/sites/default/files/reports/
2025-05/FY25%2520I24GA0163%2520%25281.28.2025%2529v100_508_SECURED.pdf. The issues described in
this report are not intended to be exhaustive.
13 For more on statutory and administrative reorganization mechanisms, see CRS Report R44909, Executive Branch
Reorganization; and CRS Report R48523, Organizing Executive Branch Agencies: Structure and Delegations of
Authority.
14 For example, Congress has sometimes established federal agencies that are relatively independent from the President.
See CRS Report R43391, Independence of Federal Financial Regulators: Structure, Funding, and Other Issues. For
more on the taxonomy of federal organizational forms, see GAO, Federally Created Entities: An Overview of Key
Attributes, GAO-10-97, October 2009.
15 One other federal entity that was established as a PBO is the Federal Aviation Administration’s Air Traffic
Organization. See Executive Order 13180, “Air Traffic Performance-Based Organization,” 65 Federal Register 77493,
December 11, 2000. The U.S. Patent and Trademark Office (PTO) also has a PBO-like structure, and some observers
liken it to such. See, for example, NASFAA, Improving Oversight and Transparency, p. 1.
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and leaders are granted greater discretion to deviate from certain government-wide management
processes and to operate more like private-sector companies.
Key statutorily established features of FSA include, among others, the appointment and
compensation arrangements for its chief operating officer (COO) and other senior managers,
exemptions from certain government-wide personnel and procurement requirements, and greater
independence from political pressure in the exercise of its functions.
FSA Leadership
Most high-level subunits within departments are led by political appointees who are appointed by
the President or the Secretary and serve at their pleasure for an indefinite term.16 Political
appointments are not subject to the same statutory requirements as career appointments to the
Senior Executive Service (SES) or appointments to the competitive service.17 Depending on the
authority used to make a political appointment, compensation will usually be determined by the
Executive Schedule,18 the SES pay system,19 or the General Schedule.20 Consistent with the PBO
framework, the HEA contains provisions designed to enable FSA to attract leadership with
demonstrated ability and expertise, incentivize leadership to meet performance goals, and shield
FSA leadership from political pressures.
FSA is led by a COO, whom the Secretary of Education appoints for a term of three to five
years.21 The appointment is to be made based on “demonstrated management ability and expertise
in information technology (IT), including experience with financial systems, and without regard
to political affiliation or activity.”22 The COO’s work and priorities are governed by a
performance agreement with the Secretary that includes measurable organizational and individual
16 In general, political appointees have included those who are appointed by the President with the advice and consent
of the Senate, those who are appointed by the President alone, those who are given non-career Senior Executive Service
appointments, and those who are given Schedule C appointments. Schedule C covers middle- or lower-level positions
that are not required to be filled using merit-based hiring requirements, because appointees to such positions carry out
confidential or policy-determining duties.
17 The SES is a government-wide personnel system that includes most of the middle- and top-level positions in federal
agencies. It comprises career and non-career (political) appointees. Career SES appointments are made through a
competitive, merit staffing process set out in Title 5, Sections 317.501-317.503, of the Code of Federal Regulations.
The competitive service consists of most civil service positions below the SES level. The system is intended to be
merit-based and free from political influence and is governed by the provisions of Title 5 of the U.S. Code. Additional
information on the SES and the competitive service may be found in CRS Report R41801, The Senior Executive
Service: Background and Options for Reform; and CRS Report R45635, Categories of Federal Civil Service
Employment: A Snapshot.
18 “The Executive Schedule, which is divided into five pay levels, is the basic pay schedule for positions, other than
Senior Executive Service positions and positions in the Federal Bureau of Investigation and Drug Enforcement
Administration Senior Executive Service, to which this subchapter [‘Executive Schedule Pay Rates’] applies” (5 U.S.C.
§5311). This schedule covers, for example, Secretaries and most other agency heads, as well as Assistant Secretaries
and most other top-level agency leaders.
19 For more on this system, see U.S. Office of Personnel Management (OPM), “Senior Executive Service:
Compensation,” https://www.opm.gov/policy-data-oversight/senior-executive-service/compensation/.
20 The General Schedule is the compensation system for most positions in the competitive service. Schedule C
appointees are usually also compensated under this schedule. For more on the General Schedule, see OPM, “Pay &
Leave—Pay Systems: General Schedule Overview,” https://www.opm.gov/policy-data-oversight/pay-leave/paysystems/general-schedule/.
21 HEA §141(d)(1).
22 HEA §141(d)(1).
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goals.23 The COO may be reappointed to additional terms of three to five years if her or his
performance is satisfactory.24
The HEA also specifies the manner in which a COO may be removed:
REMOVAL.—The Chief Operating Officer may be removed by—
(A) the President; or
(B) the Secretary, for misconduct or failure to meet performance goals set forth in the
performance agreement in paragraph (4).
The President or Secretary shall communicate the reasons for any such removal to the
authorizing committees.25
The law appears to authorize the President to remove the COO at will.26 In addition, the Secretary
may remove the COO “for misconduct or failure to meet performance goals set forth in the
performance agreement.”27 Either the President or the Secretary must provide their reasons for
removal to the authorizing congressional committees.28
The COO’s compensation includes basic pay, which is tied to the pay levels of the SES, and an
annual bonus not to exceed 50% of the basic pay.29
The senior managers of FSA are appointed by the COO without regard for the competitive service
appointment provisions of Title 5 of the U.S. Code.30 The work and priorities of these senior
officials are governed by annual performance agreements with the COO that include measurable
organizational and individual goals.31 Senior managers serve at the pleasure of the COO or, in the
event that the COO position is vacant, the Secretary.32 As is the case for the COO, the
compensation of senior managers includes basic pay, which is tied to the pay levels of the SES,
23 HEA §141(d)(4).
24 HEA §141(d)(2).
25 HEA §141(d)(3).
26 The removal provision could be subject to multiple interpretations. No explanation of the provision could be located
in the legislative history of the Higher Education Amendments of 1998. It appears, however, that the provision might
have been drawn from Section 2 of the Clinton Administration’s model PBO bill at https://govinfo.library.unt.edu/npr/
initiati/21cent/billlegi.html. The section-by-section analysis that accompanied this model bill states, “The COO may be
removed by the President at will, or the Secretary for misconduct or non-satisfactory performance under the
performance agreement” (emphasis added). This analysis may be found at https://govinfo.library.unt.edu/npr/initiati/
21cent/billsect.html. Arguably, the evidence is not definitive, but a reasonable reading of the statute can distinguish
these standards for removal by the President and the Secretary. In any event, because the COO is accountable to the
Secretary on the basis of measurable organizational and individual performance goals, at-will removal by the President
might be more difficult politically than would be the case for most presidential political appointees.
27 HEA §141(d)(3)(B).
28 HEA §141(d)(3).
29 HEA §141(d)(4). For example, in 2022, the COO reportedly received a base pay of $203,685, close to the maximum
SES pay for that year, and a bonus of $50,539 (U.S. Federal Government Employee Lookup at
https://www.federalpay.org/employees; OPM, “Pay and Leave,” https://www.opm.gov/policy-data-oversight/payleave/salaries-wages/salary-tables/22Tables/exec/html/ES.aspx; and FSA, FY2024 Report, p. 127). The COO’s
aggregate annual compensation may not exceed the President’s salary (HEA §141(d)(4)(C).
30 HEA §141(e)(1).
31 HEA §141(e)(2).
32 HEA §141(e)(4).
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and an annual bonus.33 The total annual compensation of a manager may not exceed 125% of the
maximum basic pay for the SES pay system.34
FSA Personnel Flexibilities
Unless otherwise specified in law, executive branch employment is governed by the civil service
laws of Title 5 of the U.S. Code. Consistent with the PBO framework, the HEA includes
provisions that give FSA more flexibility in the staffing, classification, and pay of its employees.
The statute stipulates that FSA shall not be subject to any cap on the number or grade of its
employees.35 FSA and the Office of Personnel Management (OPM) are directed to jointly develop
and implement personnel flexibilities that are consistent with Title 5 of the U.S. Code.36 In
addition, the COO is authorized to establish technical and professional positions that are not
subject to the provisions of Title 5 pertaining to competitive service appointments.37 The HEA
provision places covered positions in the excepted service, under which FSA could use alternative
hiring procedures that relax the traditional competitive hiring procedures in Title 5 (such as
application of veterans’ preference, public notice, and/or modified qualification standards). FSA
is directed to develop a performance management system consistent with Title 5 that establishes
goals or objectives for employees.38
FSA Procurement Flexibilities
When executive branch agencies need to acquire goods or services to carry out their functions,
they are required to comply with the Federal Acquisition Regulation (FAR)39 and applicable
procurement statutes. The PBO procurement provisions of the HEA are consistent with this
overarching requirement while also permitting certain flexibilities. They state, “Except as
provided in this section, the PBO shall abide by all applicable Federal procurement laws and
regulations when procuring property and services.”40
The procurement flexibilities provided to the PBO include, for example, those related to the use
of experts and consultants. Whereas agencies are generally constrained in obtaining such services
by limitations and conditions of Title 5 of the U.S. Code41—such as requirements for a specific
appropriation or other statutory authorization and for reporting to OPM on such actions—the
PBO may obtain such services without regard to this provision.42
33 HEA §141(e)(3).
34 HEA §141(e)(3).
35 HEA §141(g)(1). Determination of the number and grade of an agency’s employees is usually part of the executive
branch budget process. The final decisions on the agency’s employment levels are made after consultation with and
approval of OMB in accordance with the guidance provided in Section 85 of Circular A-11 at
https://www.whitehouse.gov/omb/information-for-agencies/circulars/. (See subsection on estimating employment
levels.) The budget process for ED is described in greater detail at https://www2.ed.gov/about/overview/budget/
process.html.
36 HEA §141(g)(2). CRS was unable to locate information concerning the implementation of this provision.
37 HEA §141(g)(3). This provision originally capped the number of these excepted service positions at 25. This ceiling
was removed as part of amendments to the HEA’s PBO provisions that were included in the HEOA. P.L. 110-315,
§117(6); 122 Stat. 3078, 3116.
38 HEA §141(h).
39 See the FAR at https://www.acquisition.gov/browse/index/far.
40 HEA §142(b).
41 5 U.S.C. §3109.
42 HEA §142(b)(2).
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In another example of procurement flexibility, the HEA provides the PBO with authority to “use a
two-phase process for selecting a source for a procurement of property or services.”43 In such a
process, an agency first issues a general solicitation and then issues a second solicitation with
more specific requirements to a limited group of vendors from among respondents to the first
solicitation. In contrast, the FAR provides for the use of this authority under limited
circumstances.44
In a final example, the circumstances and criteria under which the PBO may pursue a
procurement with only one company differ from those followed by most agencies. The
Competition in Contracting Act of 1984, as amended, allows seven statutory exceptions to “full
and open competition” under which most agencies may make “sole-source” contract awards.45
FSA is not subject to these competition requirements when dividing the procurement of a system
into smaller components or “modules.” After awarding the first module of a system to a vendor
on a competitive basis, FSA may award contracts for subsequent modules to the same vendor on a
noncompetitive or “single-source basis.”46
FSA Independence
As noted above, most high-level subunits within departments are led by political appointees who
serve at the pleasure of, and under the direction of, the Secretary. In some cases, however,
subunits are statutorily structured to have some independence from political leadership. A variety
of structural mechanisms in different combinations have been used over time to establish such
independence. Consequently, agencies vary in their level of structural independence from
political leadership. In addition, notwithstanding these structural features, a specific leader of
such a departmental subunit might elect to adhere to the Secretary’s agenda for other political or
policy reasons.47
Although the HEA explicitly states that FSA is subject to the direction of the Secretary of
Education,48 the agency is afforded a greater level of independence from political leadership than
most departmental subunits in the executive branch.49 This is due to the HEA provisions that
pertain to the appointment and removal of the FSA COO, as well as those that stipulate FSA’s
43 HEA §142(d).
44 See, for example, 48 C.F.R. Subpart 36.3.
45 41 U.S.C. §3304 and 10 U.S.C. §3204. See also 48 C.F.R. §6.302.
46 HEA §142(g)(4)(A). See also “Procurement” in the appendix of Ben Miller and Jason Delisle, Ensuring
Accountability and Effectiveness at the Office of Federal Student Aid, Center for American Progress and American
Enterprise Institute, May 2019, p. 29, http://www.aei.org/publication/ensuring-accountability-and-effectiveness-at-theoffice-of-federal-student-aid/. Single-source basis is defined as the award of a contract “to a source after soliciting an
offer or offers from, and negotiating with, only such source (although such source is not the only source in the
marketplace capable of meeting the need) because such source is the most advantageous source for purposes of the
award.” HEA §142(l)(4).
47 For more on this kind of agency independence, see CRS Report R43391, Independence of Federal Financial
Regulators: Structure, Funding, and Other Issues.
48 HEA §141(b)(1).
49 The independence features discussed here are those provided for in statute. The actual level of independence
exercised by the agency might be influenced by additional factors, including, for example, administrative
implementation decisions, organizational culture, and leadership styles. For a discussion of the evolution of FSA’s
relationship with ED during the initial implementation of this statute, see GAO, Federal Student Aid: Additional
Management Improvements Would Clarify Strategic Direction and Enhance Accountability, GAO-02-255, April 2002,
pp. 22-24, https://www.gao.gov/new.items/d02255.pdf. The independence of FSA and its potential policy and
operational effects are also discussed in Miller and Delisle, Ensuring Accountability and Effectiveness at the Office of
Federal Student Aid.
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independence in carrying out certain functions. As noted above, the COO’s appointment is to be
made for a three- to five-year term on the basis of specified abilities, expertise, and experience
“without regard to political affiliation or activity.”50 Although the COO may be removed from
office before the end of a term, the statute includes atypical specifications of the circumstances
and manner in which this may occur.51 The statute also specifies that FSA “shall exercise
independent control of its budget allocations and expenditures, personnel decisions and processes,
procurements, and other administrative and management functions.”52 Although this authority is
subject to the direction of the Secretary, it is not a common specification for a departmental
subunit.53
Establishment of a PBO to Administer Federal
Student Aid
FSA54 was established as the federal government’s first PBO in 1998. When Congress established
this structure, it departed from conventional organizational arrangements that were then in use
within the federal government. The PBO model was drawn from government innovations in Great
Britain in the 1980s and 1990s.55 It was then developed and promoted for American governmental
use by the National Partnership for Reinventing Government (NPR),56 a major Clinton
Administration governmental reform initiative. The Administration’s rollout of the PBO touted
the model’s potential benefits and portrayed it as a commonsense development in the effort to
streamline the federal government and make it more responsive to its “customers.”
The NPR initiative, led by Vice President Al Gore, aimed to improve federal government
performance by reorganizing agencies and processes to be guided by market principles and
50 HEA §141(d)(1).
51 HEA §141(d)(3). As previously noted, this removal provision could be subject to multiple interpretations. (See
footnote 27.) Removal of an incumbent COO might be more politically difficult than would be the case for most
presidential political appointees.
52 HEA, §141(b)(4).
53 The conference report for the Higher Education Act Amendments of 1998, in which this provision was added, stated,
“The conferees explicitly clarify that the PBO, while a part of the Department of Education, shall exercise independent
control from the principal offices of the Department in carrying out its day-to-day activities, including its budget
allocations and expenditures, its personnel decisions, its procurements, and its other administrative and management
functions. This level of independence is critical to providing the PBO with greater flexibility in the management of the
operational functions assigned to it.” U.S. Congress, Higher Education Amendments of 1998 Conference Report, report
to accompany H.R. 6, 105th Cong., 2nd sess., September 25, 1998, H.Rept. 105-750 (Washington: GPO, 1998), p. 281.
54 When it was first established, FSA was known as the Office of Student Financial Assistance. In order to prevent
confusion, FSA is consistently used to refer to the PBO that was established in 1998, notwithstanding the name change.
55 The approach developed in Great Britain, which became known as the Next Steps Initiative, arose out of a 1988
study by a senior adviser to Prime Minister Margaret Thatcher. The study proposed to change the incentives and
structures within the British civil service to prioritize performance and results and thereby improve the government’s
service delivery. The decision to adapt this approach for American national government was reportedly made after Vice
President Al Gore and other Administration officials met with the British officials who had been responsible for the
development of that nation’s initiative. Alasdair Roberts, “Command Performance,” Government Executive, August
1996, pp. 21-26; and Alasdair Roberts, “Performance-Based Organizations: Assessing the Gore Plan,” Public
Administration Review, vol. 57 (November/December 1997), p. 465.
56 The initiative was initially called the National Performance Review, also with the abbreviation NPR, and was
renamed the National Partnership for Reinventing Government for President Clinton’s second term.
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incentives.57 The NPR’s first report put forth hundreds of recommendations.58 These
recommendations were intended to lead to better government service delivery and greater
“customer” satisfaction.59 In general, this would be accomplished through the streamlining of
personnel practices, procurement, and other government operations; improvement of management
tools and incentives; and promotion of efficiency and economy in administration.
Administration-endorsed PBO-related legislation was introduced in late 1995,60 but it was not
until early 1996 that the Vice President introduced the PBO concept as a major new focus of the
ongoing NPR.61 The aim was to improve government service delivery by implementing certain
functions through the use of business-like practices and incentive structures. Agencies
reorganized as PBOs would be freed from adherence to certain procurement and civil service
laws and would, at the same time, develop systems of performance incentives and accountability
for results. In advocating for the creation of federal PBOs, Vice President Gore stated:
Government agencies need to change their incentives and internal cultures to shift from a
focus on process to a focus on customers and achieving results. They need to become more
responsive to citizens, yet account for program costs and safeguard broader public interests.
This can be done by creating performance-based organizations (PBOs) that set forth clear
measures of performance, hold the head of the organization clearly accountable for
achieving results, and grant the head of the organization authority to deviate from
governmentwide rules if this is needed to achieve agreed-upon results. PBOs involve
structural changes as well as changes in incentives affecting federal employees. 62
The NPR identified seven candidates for conversion, but none has been formally converted into a
PBO.63 However, one of the entities targeted for conversion, the Patent and Trademark Office,
was statutorily reorganized and given many PBO-like structural characteristics. Because it has
57 For a critique of the NPR in comparison with other 20th-century management reform initiatives, see Ronald C. Moe,
Administrative Renewal: Reorganization Commissions in the 20 th Century (Lanham, MD: University Press of America,
2003), pp. 117-130.
58 Office of the Vice President, From Red Tape to Results: Creating a Government That Works Better and Costs Less:
Report of the National Performance Review (Washington, GPO: 1993).
59 The NPR’s use of customer to refer to beneficiaries of specific governmental services exemplifies its intentional
adoption of private sector business terminology in line with the initiative’s focus on adoption of market principles and
forces for public sector bureaucracies.
60 See H.R. 2533 (104th Congress), the United States Intellectual Property Organization Act. This legislation would
have reestablished the PTO, then a bureau within the Department of Commerce, as an agency with many PBO-like
attributes. It did not specifically use the PBO nomenclature, however. Vice President Gore made reference to such
legislation in his remarks introducing the PBO model in early 1996, cited below. Other legislation introduced in the
104th Congress (e.g., H.R. 1659, H.R. 3460, and S. 1458) would have reestablished the PTO as a government
corporation. In 1999, the office was re-established as the U.S. PTO, an agency within the Department of Commerce
with many PBO-like attributes. P.L. 106-113, Div. B, §1000(a)(9) (referencing App. I, Title IV, Subtitle G).
61 NPR, Reinvention’s Next Steps: Governing in a Balanced Budget World: A Speech by Vice President Al Gore and
Supporting Background Papers (Washington, NPR: 1996), pp. 6-8, 17-20. The Vice President’s remarks were
delivered at the National Press Club on March 4, 1996.
62 NPR, Reinvention’s Next Steps, p. 17. The excerpted text is drawn from the background papers that accompanied the
speech.
63 The seven functions and entities that were initially identified included inspections of international shipments of
agricultural products of the Animal and Plant Health Inspection Service, Department of Agriculture; dissemination of
technical information of the National Technical Information Service, Department of Commerce; Intellectual property
rights of the PTO, Department of Commerce; commissary services of the Defense Commissary Agency, Department of
Defense; mortgage insurance services of the Federal Housing Administration and Government National Mortgage
Association, Department of Housing and Urban Development; retirement and benefit management services of the
Federal Retirement and Insurance Service, OPM; and St. Lawrence Seaway operations of the St. Lawrence Seaway
Development Corporation, Department of Transportation. NPR, Reinvention’s Next Steps, p. 20.
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these features, some observers have referred to it as a PBO.64 Though not contemplated as a
potential PBO within the scope of the initial NPR list, FSA represented the first organization
aligned with the PBO framework outlined in the NPR. In addition to FSA, one other entity—the
Air Traffic Organization of the Federal Aviation Administration—has been explicitly established
as a PBO in statute.
Legislation to Establish a PBO to Administer Federal Student Aid
Prior to the establishment of FSA, federal student loan programs were administered by the Office
of Student Financial Assistance Programs (SFAP), a unit within ED’s Office of Postsecondary
Education (OPE). As discussed below, in the mid-1990s, leadership of these programs had
temporarily become divided between SFAP and a unit in the Secretary of Education’s office that
had been established for the purpose of accelerating the implementation of the Direct Loan
program.
Although the Higher Education Amendments of 1998 (P.L. 105-244) established FSA’s PBO
structure, interest in converting SFAP into a PBO seems to have arisen as early as 1996 amid
growing concerns within Congress and ED that the student financial aid programs were
“severe[ly]” mismanaged.65 The model was attractive to some congressional advocates of SFAP
reform, as it appeared that its design features might address some of the agency’s perceived
problems while maintaining the financial assistance function within ED.66 Moreover, it appears
that the possibility of establishing a PBO within ED to implement these programs was under
consideration by the Secretary of Education prior to Vice President Gore’s introduction of the
new organizational model in 1996, which, as described earlier, did not include SFAP as a
candidate for conversion into a PBO.67
As the Clinton Administration was introducing the PBO model, congressional committees were
monitoring and expressing concern about difficulties in the management of the student financial
aid programs at ED. At a July 1996 hearing, ED’s IG reported on a number of difficulties at ED,
64 See, for example, Thomas H. Stanton et al., U.S. Patent and Trademark Office: Transforming to Meet the Challenges
of the 21st Century, National Academy of Public Administration, August 2005, p. 157, https://www.napawash.org/
studies/academy-studies/us-patent-trademark-office-transforming-to-meet-the-challenges-of-the-21st: “In 1999,
Congress passed legislation making USPTO the second federal PBO as ‘an agency of the United States within the
Department of Commerce.’” Characterizations like these in the public administration literature suggest that, in that
discipline, the PBO designation might connote a cluster of characteristics and organizational arrangements based
around certain principles rather than a discrete organizational type that must be established in statute as such.
65 As discussed below, for example, in the context of a July 1996 hearing on perceived mismanagement of student
financial aid programs at ED, the IG discussed the Secretary of Education’s interest in the PBO model as well as the
IG’s assessment of the potential merits and drawbacks of converting student financial aid administration to it. See U.S.
Congress, House Committee on Economic and Educational Opportunities, Subcommittee on Oversight and
Investigations, Hearing on Split Decision: The Inspector General’s Report on the Divided Management Structure of
Student Financial Aid Programs at the Department of Education, 104th Cong., 2nd sess., July 10, 1996 (Washington:
GPO, 1996), pp. 4, 11-12. Prior to 1996, Congress and the Administration had explored options for improving the
servicing and collection of student loans that would have involved organizational changes. See Departments of the
Treasury and Education, A Study of the Feasibility of the IRS Collecting Repayments of Federal Student Loans, June
1995, which was undertaken pursuant to a congressional directive. In addition, the Administration was considering at
least one additional federal student aid delivery organizational change alternative—a mutual benefit corporation—
while the PBO model was under consideration. See U.S. Congress, House Education and the Workforce, Postsecondary
Education, Training, and Life-Long Learning, Hearing on H.R. 6—The Higher Education Amendments of 1998, 105th
Cong., 1st sess., June 19, 1997 (Washington: GPO, 1998), p. 35.
66 See, for example, testimony of the chair of the Advisory Committee on Student Financial Assistance, Subcommittee
on Postsecondary Education, Training and Life-Long Learning, Field Hearing on H.R. 6, pp. 63-69.
67 Subcommittee on Oversight and Investigations, Hearing on Split Decision, p. 11.
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including program leadership being divided between OPE and the Senior Advisor to the Secretary
for Direct Lending, poor coordination and communication between these offices, poor OPE staff
morale, and a shortage of employees qualified in IT and financial analysis. Related problems
included an interruption in efforts to improve the existing Federal Family Education Loan
program, growth in the backlog of institutional cohort default rate appeals, confusion in the
student loan community about where to find help for technical questions, concerns about the
monitoring of financial statements and the procurement of needed IT, and difficulties with the
processing the Free Application for Federal Student Aid (FAFSA).68
In a February 12, 1996, memorandum, the Secretary of Education reportedly expressed an interest
in establishing SFAP as a PBO.69 ED’s IG testified in July of that year that such a transition
appeared to be premature but that certain changes—such as leadership from a highly qualified
chief executive officer to provide a stable, long-term leadership and consistency of purpose and a
significant, focused reengineering effort—could be made to SFAP to prepare it for such a
transition.70
In May 1997, the Advisory Committee on Student Financial Assistance (ACSFA)71 reported that
implementation of financial aid programs was plagued by staff without the necessary experience,
outdated computer systems and “a web of large, uncoordinated, uncompetitive contracts which
fail to deliver on time and produce unacceptable cost overruns.”72 ACSFA recommended
restructuring the delivery of federal student aid under a PBO and reengineering Title IV systems
and contracts, two processes the committee asserted were closely linked.73
During a July 1997 hearing, the Assistant Secretary heading OPE testified that the Administration
was reviewing the PBO model among several different organizational modifications that might
improve management of federal student assistance programs.74 By March 1998, the Secretary of
Education was voicing his support specifically for the PBO approach, stating that such a
conversion would enhance ED’s flexibility with regard to potential management and procurement
reforms and allow it to more efficiently deliver student aid yet also hold it accountable for results
and allow the Secretary to maintain control of policy.75
68 Subcommittee on Oversight and Investigations, Hearing on Split Decision.
69 Subcommittee on Oversight and Investigations, Hearing on Split Decision, p. 11.
70 Subcommittee on Oversight and Investigations, Hearing on Split Decision, p. 11.
71 ACSFA was established by the Higher Education Amendments of 1986 to “provide advice and counsel to the
Congress and to the Secretary on student financial aid matters.” (P.L. 99-498; see also 20 U.S.C. §1098). Authority for
ACSFA expired on October 1, 2015 (HEA §491(k)).
72 See Subcommittee on Postsecondary Education, Training and Life-Long Learning, Field Hearing on H.R. 6, pp. 6369, at 67. A copy of an ACSFA letter to House Committee on Education and the Workforce Chair William F. Goodling
transmitting the recommendations may be found as an attachment to the record of a hearing held in July of that year:
U.S. Congress, House Committee on Education and the Workforce, Subcommittee on Postsecondary Education,
Training and Life-Long Learning, H.R. 6, The Higher Education Amendments of 1998 Student Loan Programs, 105th
Cong., 1st sess., July 22, 1997 (Washington: GPO, 1998), pp. 110-116.
73 U.S. Congress, House Committee on Education and the Workforce, Subcommittee on Postsecondary Education,
Training and Life-Long Learning, H.R. 6, the Higher Education Amendments of 1998: System Modernization Efforts at
the Department of Education and Accreditation, 105th Cong., 1st sess., July 29, 1997 (Washington: GPO, 1998), p. 7.
74 Subcommittee on Postsecondary Education, Training and Life-Long Learning, H.R. 6, the Higher Education
Amendments of 1998, p. 81. The Assistant Secretary’s testimony echoed that of the Secretary during a hearing held the
previous month. U.S. Congress, House Education and the Workforce, Postsecondary Education, Training, and LifeLong Learning, Hearing on H.R. 6—The Higher Education Amendments of 1998, 105th Cong., 1st sess., June 19, 1997
(Washington: GPO, 1998), p. 35.
75 Letter from Secretary of Education Richard Riley to congressional leaders, March 2, 1998.
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In September 1997, the chair and ranking member of the House Committee on Education and the
Workforce subcommittee with jurisdiction over higher education policy introduced a standalone
bill to establish a PBO within ED to manage the information systems associated with Title IV
programs.76 In his introductory remarks, the chair noted problems with federal student aid
information systems and financial statements before asserting, “A customer-focused,
performance-based organization within the Department, run by an experienced Chief Operating
Officer, can take the steps necessary to properly reengineer the current systems and contracts.”77
Provisions from this bill were included in the HEA reauthorization bill as reported by the
committee in April 1998.78
The Senate Committee on Labor and Human Resources reported out its main bill for the HEA
reauthorization in May 1998.79 This bill included provisions that were “developed in cooperation
with the administration” to establish a federal student aid-related PBO in ED.80 The role of the
PBO that would have been established by this legislation was arguably broader than that in the
House committee-reported measure. The PBO established in the House bill would have been “a
discrete management unit responsible for managing the information systems supporting” Title IV
programs,81 whereas the Senate bill would have empowered the PBO “to administer various
functions relating to student financial assistance programs authorized under” Title IV.82
Text from the committee reports concerning the PBO sections of the reauthorization legislation
provides a snapshot of the committees’ perceptions about the management of financial aid
distribution programs by ED at the time. Report language also laid out the committees’ intentions
for and expectations of this change in organizational structure and management paradigm.
Both the House and Senate committees of jurisdiction appeared to be concerned with perceived
management problems at ED. The House Committee on Education and the Workforce discussed
the prevalence and persistence of IT problems and their apparent impact on the ability of ED to
deliver student aid economically, effectively, and efficiently. Specifically, the committee noted
ED’s limited progress in integrating numerous data systems despite legislative mandates; the
tripling over five years of ED’s budget for student aid information systems; and the fact that even
with significant expenditures, student aid systems required dozens of paper forms and
experienced “needless” process delays and breakdowns.83
76 H.R. 2536 (105th Congress). This bill was referred to committee and not further acted upon.
77 Representative Howard P. “Buck” McKeon, “Introducing the 21 st Century Student Financial Aid System
Improvement Act of 1997,” extensions of remarks, Congressional Record, daily edition, vol. 143, part 129 (September
24, 1997), p. E1834.
78 U.S. Congress, House Committee on Education and the Workforce, Higher Education Amendments of 1998, report
on H.R. 6, 105th Cong., 2nd sess., April 17, 1998, H.Rept. 105-481 (Washington: GPO, 1998), p. 104.
79 S. 1882 (105th Congress).
80 U.S. Congress, Senate Committee on Labor and Human Resources, Higher Education Act Amendments of 1998,
report to accompany S. 1882, 105th Cong., 2nd sess., May 4, 1998, S.Rept. 105-181 (Washington: GPO, 1998), p. 28.
Further commenting on the process of developing the PBO provisions, the report stated, “In order to address these
problems, the committee has worked closely with members of the higher education community and representatives of
the Secretary to create a new performance-based organization within the Department of Education. The committee is
pleased that the Department has finally become a full partner in this effort and looks forward to working with the
Secretary to improve the quality and efficiency of services provided to students and other participants in the student
financial aid programs” (p. 75).
81 H.R. 2536 (105th Congress).
82 S. 1882 (105th Congress).
83 U.S. Congress, House Committee on Education and the Workforce, Higher Education Amendments of 1998, report
on H.R. 6, 105th Cong., 2nd sess., April 17, 1998, H.Rept. 105-481 (Washington: GPO, 1998), p. 104.
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The Senate Committee on Labor and Human Resources described a more general and
overlapping set of issues related to the need to improve the administration of Title IV aid and
problems regarding the Direct Loan Consolidation program, the printing of the FAFSA, and
reports that ED was falling significantly behind in its efforts to become Year 2000 compliant.84
Both the House and Senate committees intended for the establishment of a PBO organizational
structure to address the management problems they had identified. For example, the House
Committee on Education and the Workforce noted that the purposes of the proposed change were
to increase effectiveness, economy, and efficiency by giving administrators greater management
flexibility while requiring greater accountability for results. The committee also expected that a
PBO structure would accomplish the following aims that were specifically delineated in the HEA:
•
•
•
•
•
Improve service to program participants,
Reduce the costs of administering the programs,
Increase accountability,
Provide greater flexibility in management and administration of the programs,
and
Integrate the information systems that support the federal student aid programs.85
In doing so, the committee stated:
The Committee firmly believes that a customer-based, Performance-Based Organization
within the Department, operated by an experienced Chief Operating Officer can take the
necessary steps to properly reengineer the current systems and contracts…. The Committee
also believes the creation of a PBO will result in a more efficient, effective, less expensive
and less bureaucratic financial aid delivery system. The end result should be a system that
is easy for students and parents to use and one that ensures that students have the
information they need to select the education that is best for them—all while ensuring that
taxpayer funds are being used efficiently and effectively.86
The Senate Committee on Labor and Human Resources also identified its goal for the change,
although it did so more generally. The committee also noted its effort to divide policy functions,
which were to be retained by OPE, from operational functions, which were to be carried out by
the new PBO:
The goal of the performance-based organization has been, and remains, to improve the
delivery of student financial aid to students and their families. In order to accomplish this,
the committee has attempted to identify the functions performed by the Office of
Postsecondary Education and segregate those that are essentially policy functions that must
be retained by OPE from those that are administrative and that may appropriately be
handled by the performance-based organization. The PBO will be responsible for
administration of the information and financial systems that support student financial
84 U.S. Congress, Senate Committee on Labor and Human Resources, Higher Education Act Amendments of 1998,
report to accompany S. 1882, 105th Cong., 2nd sess., May 4, 1998, S.Rept. 105-181 (Washington: GPO, 1998), pp. 7576. Year 2000 compliance refers to the efforts of the federal government to prevent widespread and severe IT problems
that might have arisen at the turn of the new century as a consequence of date formatting in computer programming that
did not provide for a distinction between years in the 20 th and the 21st centuries.
85 HEA §141(a)(1).
86 U.S. Congress, House Committee on Education and the Workforce, Higher Education Amendments of 1998, report
on H.R. 6, 105th Cong., 2nd sess., April 17, 1998, H.Rept. 105-481 (Washington: GPO, 1998), p. 104.
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assistance programs as well as any additional functions that the Secretary determines are
necessary or appropriate to improve the delivery of student aid.87
Both the Senate- and House-passed bills would have established a new PBO vested with
responsibilities related to federal student aid delivery. Specific differences between the competing
versions regarding the new entity’s authority, purposes, functions, relationship with ED, and other
organizational features were ironed out through a conference process that yielded a consensus
measure.88 Resolution of the PBO-related differences does not appear to have been a sticking
point in the conference process.89 The conference report was agreed to by the two chambers and
President Clinton signed the Higher Education Amendments of 1998 into law on October 7, 1998.
2008 Higher Education Act PBO Amendments
In 2008, the Higher Education Opportunity Act (HEOA; P.L. 110-315)90 amended the HEA PBO
provisions. The report of the Senate Committee on Health, Education, Labor and Pensions noted
its general approval, at that time, of the PBO as implemented:
The committee applauds the efforts since the last reauthorization to implement the PBO.
Schools and individuals have benefited from improved efficiency in originating, servicing
and processing grant and loan aid. The ombudsman has provided needed guidance to
students struggling to navigate the complex system. There is strong support for
continuation of these efforts to make further progress in the delivery of student financial
aid.91
In line with this assessment, the 2008 amendments appear to have clarified and expanded FSA’s
role in the administration of Title IV programs. They changed the characterization of the PBO’s
functions from “operational” to “administrative and oversight,” seemingly broadening the
mandate of the agency.92 In addition, whereas the previous provisions vested the PBO with
responsibility for administration of the information and financial systems supporting Title IV
programs, the 2008 amendments enlarged the scope of responsibilities beyond this specified
support function to administration of “the Federal student financial assistance programs
authorized under title IV.”93 The HEOA also amended FSA’s personnel and procurement
flexibility provisions, as discussed below.94
87 U.S. Congress, Senate Committee on Labor and Human Resources, Higher Education Act Amendments of 1998,
report to accompany S. 1882, 105th Cong., 2nd sess., May 4, 1998, S.Rept. 105-181 (Washington: GPO, 1998), pp. 7576.
88 U.S. Congress, Higher Education Amendments of 1998, conference report to accompany H.R. 6, 105th Cong., 2nd
sess., September 25, 1998, H.Rept. 105-750 (Washington: GPO, 1998).
89 See, for example, a news report on the conference outcome and related controversies that notes the existence of
PBO-related provisions in a single sentence: The agreement “would set up a performance-based organization in the
Education Department to improve oversight of federal student aid.” Sue Kirchhoff, “Rewrite of Higher Education Act
Has a Bipartisan Glow,” CQ Weekly, September 26, 1998, pp. 2593-2594.
90 Amendments to the PBO provisions that had been enacted in 1998 may be found in §117 at 122 Stat. 3114.
91 U.S. Congress, Senate Committee on Health, Education, Labor, and Pensions, Higher Education Amendments of
2007, report to accompany S. 1642, 110th Cong., 1st sess., November 15, 2007, S.Rept. 110-231 (Washington: GPO,
2007), p. 12.
92 See, for example, HEA §141(a)(1).
93 P.L. 110-315, §117(2)(B)(ii)(I).
94 See report subsections entitled “FSA Personnel Flexibilities” and “FSA Procurement Flexibilities.”
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Subsequent Amendments
Since enactment of the HEOA, the HEA PBO provisions have been updated to address somewhat
limited issues. For example, the John S. McCain National Defense Authorization Act for Fiscal
Year 2019 (P.L. 115-232) made modest changes to FSA’s procurement flexibilities as part of a set
of amendments across multiple federal statutes to update federal procurement flexibilities.95
Additionally, the Stop Student Debt Relief Scams Act (P.L. 116-251) updated the PBO’s statutory
functions to include helping prevent improper use of FSA’s student loan systems by unauthorized
users as part of broader updates to the HEA to prevent fraud, commercial advantage, or private
financial gain.96
Changes to Title IV Aid Affecting FSA’s Operations
Since FSA’s inception, both statutory and regulatory changes have been made to the Title IV
student aid programs. These changes may have had an effect on FSA’s operations.
At the time of FSA’s formation in 1998, Title IV of the HEA authorized and ED administered two
primary federal student loan programs: the Federal Family Education Loan (FFEL) program and
the Direct Loan program. These two programs provided borrowers with loans for postsecondary
education with substantially similar terms and conditions as one another, but each program had
significantly different administrative structures. Private lenders originated FFEL program loans,
and either they or secondary market loan purchasers (who bought loans from originating lenders)
were responsible for completing many loan servicing tasks, including working with
postsecondary institutions to track students’ enrollment and loan eligibility status, billing
borrowers, and conducting initial collection services if a loan became delinquent. Additionally,
under the FFEL program, state and nonprofit guaranty agencies received federal funds to
administer many aspects of the program, such as providing technical assistance to IHEs and
lenders, providing credit and loan rehabilitation counseling to borrowers, and performing
collections work.
Under the Direct Loan program, the federal government essentially serves as the “banker” by
providing loans to students and their families using federal capital. ED assumes the primary role
in administering the Direct Loan program (described below), including providing technical
assistance to IHEs, contracting with loan servicers to perform day-to-day administrative tasks,
providing loan counseling to borrowers, and initiating collections work.
In May 2008, in response to concerns about the continued availability of FFEL program loans due
to several FFEL program lenders curtailing or ceasing their participation in the program, the
Ensuring Continued Access to Student Loans Act of 2008 (P.L. 110-227) granted ED the
temporary authority to purchase student loans made under the FFEL program. In October 2008,
P.L. 110-350 extended this authority through July 1, 2010. After purchasing loans made under the
FFEL program, control of loan servicing was transferred to ED. In 2009, the SAFRA Act (P.L.
111-152, Title II) terminated the authority to make new loans under the FFEL program after June
30, 2010. Since July 1, 2010, the Direct Loan program has been the primary federal student loan
95 P.L. 115-232, Division A, Title VIII, §836(g)(2); 132 Stat. 1872-1873.
96 P.L. 116-251, §5; 134 Stat. 1131.
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program,97 although many FFEL program loans remain outstanding,98 and FFEL program lenders
and guaranty agencies remain responsible for administering several aspects of those programs.
These changes have vested FSA with a larger scope of responsibility than Congress might have
originally contemplated when it authorized FSA’s PBO structure, as FSA became responsible for
administering a larger share of the federal student loan programs (in terms of loan volume and
individual borrowers associated with these changes) than that for which it had previously been
responsible under the FFEL program.
Moreover, the switch to almost 100% direct lending in 2010 had the effect of fundamentally
altering the federal student loan marketplace. During the roughly 15-year period that the two
programs operated concurrently, IHEs and borrowers were provided the opportunity to “shop
around.” That is, IHEs chose whether to apply to participate in the FFEL program or Direct Loan
program, and the caliber of administrative and servicing work available within the respective loan
programs may have been a factor in those decisions.99 Additionally, schools opting to participate
in the FFEL program usually compiled preferred lender lists that they shared with students.
Again, assessments of the caliber of administrative and servicing work provided through differing
lenders likely factored into the selection of lenders for such lists.100 Borrowers attending FFEL
program participating IHEs were free to select among an array of lenders, including but not
limited to those on the preferred lender lists.101 There were opportunities available for IHEs and
for borrowers who were dissatisfied with customer service to pursue other options.102 The
competition that existed within the FFEL program and across the loan programs provided
incentives for those involved in administrative and servicing work to provide enhanced customer
service. By transitioning to a single model of federal student lending (the Direct Loan program)
under which a single entity (the federal government) both makes and is responsible for
administering loans, the federal student loan marketplace transitioned from one with some builtin incentives to provide enhanced customer service to one in which there may be less incentive to
do so.103
97 As of the fourth quarter of 2024, approximately $1.5 trillion in Direct Loan program loans were outstanding. This
accounts for approximately 90% of all outstanding Title IV student loan debt. ED, Office of Federal Student Aid
(FSA), “Federal Student Aid Portfolio Summary.”
98 As of the fourth quarter of 2024, approximately $165 billion in FFEL program loans were outstanding. This accounts
for approximately 10% of all outstanding Title IV student loan debt. ED, FSA, “Federal Student Aid Portfolio
Summary.”
99 In addition, the HEA explicitly permitted FFEL program lenders and guaranty agencies to offer borrowers interest
rate and loan fee discounts (see HEA §433(b)(5)(A)). Thus, the variation in discounts offered by FFEL program lenders
may have factored into an IHEs’ decisions to participate in either program and into students’ decisions on FFEL
program lenders.
100 The process by which IHEs compiled lender lists was governed by the HEA and ED regulations. For example, in
compiling a preferred lender list, IHEs were required to disclose the criteria for including lenders on the list, including
“high quality servicing.” HEA §487(h)(1)(C)(iii).
101 Borrowers often selected a lender on their IHEs’ preferred lender lists. However, there were concerns that some
lenders were providing compensation or other benefits to some IHEs to secure placement on their preferred lender lists.
Such arrangements, it was argued, created a conflict of interest for IHEs and “undermine[d] students’ trust in the
process, and magnifie[d] the risk of illegal quid pro quo deals.” U.S. Senate, Health, Education, Labor and Pensions
Committee, Report on Marketing Practices in the Federal Family Education Loan Program, July 14, 2007, p. 11.
102 One of the benefits Congress perceived in the dual system of federal student loans was that it allowed for students
and IHEs to “benefit from a competitive environment.” See U.S. Congress, Senate Committee on Labor and Human
Resources, Higher Education Amendments of 1998, report to accompany S. 1882, 105th Cong., 2nd sess., May 8, 1998,
S.Rept. 105-181 (Washington: GPO, 1998), p. 2.
103 FSA’s practice of contracting with multiple loan services and private collection agencies may have sustained a
(continued...)
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Several other statutorily and administratively driven changes in the Title IV aid programs since
FSA’s creation as a PBO may have also had the effect of increasing the scope and complexity of
FSA’s administrative functions. These include but are not limited to the following:
•
•
•
•
increases in the amount and type of aid benefits available to students, including
extension of PLUS Loan availability to graduate and professional students under
the Deficit Reduction Act of 2005 (P.L. 109-171) and the authorization of the
TEACH Grant program under the College Costs Reduction and Access Act of
2007 (P.L. 110-84);
authorization and implementation of myriad income-driven loan repayment plans
that allow borrowers to make monthly payments in amounts indexed to their
adjusted gross income;104
increased complexity of aid benefits, including establishment of a 6% interest
rate cap on federal student loans during military service under the
Servicemembers Civil Relief Act (P.L. 108-189), the Public Service Loan
Forgiveness (PSLF) program105 under the College Costs Reduction and Access
Act (P.L. 110-84), cumulative lifetime maximums on certain students’ eligibility
to receive Pell Grants established under the HEOA106 and amended under the
Consolidated Appropriations Act, 2012 (P.L. 112-74);107and administrative
attempts to effectuate broad-based student loan cancellation policies;108 and
changes made to aid administration, including the process to receive a discharge
of federal student loans after a determination that a borrower is totally and
permanently disabled as established under the HEOA and implemented via
subsequent regulatory changes, statutory changes made by the FUTURE Act
(P.L. 116-91) authorizing ED to access Internal Revenue Service tax return data
for the purposes of administering Title IV student aid programs, and significant
statutory changes to the underlying processes and methodologies for determining
federal student aid eligibility made by the FAFSA Simplification Act (Title VII,
Division FF of P.L. 116-260).
degree of competition among participants in the federal student loan marketplace. This may be viewed as having been
intended to promote enhanced customer service. See, for example, U.S. Congress, House Committee on
Appropriations, Departments of Labor, Health, and Human Services, and Education, and Related Agencies
Appropriation Bill 2019, report to accompany S. 3158, 115th Cong., 2nd sess., June 28, 2018, S.Rept. 115-289, pp. 200201.
104 For additional information on the income-driven repayment plans, see CRS Report R45931, Federal Student Loans
Made Through the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers.
105 For additional information on the PSLF program, see CRS Report R45931, Federal Student Loans Made Through
the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers.
106 The HEOA amendments introduced lifetime eligibility limited for Pell Grants. For students who received their first
Pell Grant on or after July 1, 2008, cumulative Pell Grant lifetime eligibility was limited to 18 full-time semesters (or
the equivalent).
107 The Consolidated Appropriations Act, 2012, reduced the cumulative lifetime eligibility for Pell Grant aid from 18
semesters to 12 semesters beginning in award year 2012-2013. Any Pell Grant received prior to award year 2012-2013
is included in the student’s lifetime limited.
108 For additional information, see CRS Insight IN11997, The Biden Administration’s One-Time Student Loan Debt
Relief Policy under the HEROES Act of 2003 (available to congressional clients on request); CRS Report R48156, The
Biden Administration’s Student Loan Debt Relief Rulemaking; and CRS Insight IN12454, Student Loan Debt Relief:
The Biden Administration’s Second Proposed Rule.
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FSA Functions and Structure
Section 141 of the HEA tasks FSA with managing administration and oversight of the Title IV
federal student aid programs. Among other functions, FSA develops and maintains the FAFSA;
obtains student aid funds from the Treasury and makes them available for disbursement to
students; contracts with third parties that perform myriad administrative tasks associated with the
Title IV programs (e.g., loan servicing); provides information on the Title IV programs to
students, Title IV participants (e.g., IHEs), Congress, and other stakeholders; and provides
oversight of Title IV program participants, including IHEs and the third-party loan servicers with
which it contracts.
The HEA specifically establishes two roles within FSA—the COO and the Student Loan
Ombudsman—to carry out FSA’s functions, but much of FSA’s organizational structure has been
established through administrative action by the COO. In addition, many outside entities may
have an interest in or have asserted a role over aspects of the federal student aid programs.109
Thus, in coordination with ED, FSA maintains relationships with outside stakeholders, executive
branch entities, and Congress. FSA also maintains relationships with offices within ED at large.
Statutorily Specified FSA Functions
Section 141 of the HEA specifies several high-level aspects of aid administration for which FSA
is responsible. These include the following:
•
•
•
The administrative, accounting, and financial management functions for the Title
IV aid programs, including
• collecting, processing, and transmitting of data to students, IHEs, and
other authorized stakeholders;
• development of specifications for software and procurement of systems
to support Title IV aid administration;
• acquisitions of all hardware and software and procurement and
management of all IT contracts to support Title IV aid administration;
• contracting for information and financial systems to support Title IV aid
administration;
• providing customer service, training, and user support related to Title IV
aid administration; and
• ensuring the integrity of the Title IV aid programs.
Development, in consultation with the Secretary, of FSA’s annual budget, and
Taking action on improper access and use of FSA’s student loan systems by
unauthorized users.110
109 For example, the CFPB has asserted supervisory authority over selected federal student loan servicers. Bureau of
Consumer Financial Protection, “Defining Larger Participants of the Student Loan Servicing Market,” 78 Federal
Register 73383, December 6, 2013.
110 This includes, for instance, detecting patterns of improper systems use, maintaining a reporting system to permit
FSA contractors to alert ED of the potential misuse of such systems, and proactively contacting federal student loan
borrowers whose accounts may have been improperly used regarding such suspicious activity. HEA §141(b)(2).
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The Secretary may delegate additional functions to FSA as necessary or appropriate to achieve
FSA’s purposes.111 FSA is given control of its budget allocations and expenditures, procurements,
personnel decisions and processes, and other administrative and management functions but
remains subject to the direction of the Secretary.112
The HEA specifies that the Secretary “shall maintain responsibility for the development and
promulgation of policy and regulations” related to Title IV aid.113 In doing so, the HEA requires
the Secretary to “request the advice of, and work in cooperation with” FSA.114
To fulfill its statutory responsibilities, FSA undertakes many discrete tasks (discussed below).
FSA Awarding, Disbursing, and Servicing Aid
Students wishing to receive Title IV student aid must annually apply for assistance using the
FAFSA, which is developed and maintained by FSA in accordance with specifications set forth in
the HEA.115 After a student submits the FAFSA, an automated system contracted by FSA
processes the FAFSA,116 and then IHEs (or the third-party servicers with which they contract)117
use information from it to calculate the amount of aid for which a student is eligible. FSA obtains
funds from the Treasury and makes them available to IHEs, which in turn disburse those funds to
students.
Once a grant is disbursed, in many cases administrative functions are significantly decreased.118
However, FSA may be required to implement and/or oversee administrative functions after a
grant has been disbursed. For instance, if an individual receives a Pell Grant in excess of the
amount for which they are eligible, they may be required to return a portion to FSA.
Once a Direct Loan program119 loan is disbursed, FSA assigns it to a contracted loan servicer.
Loan servicers perform a variety of administrative functions such as collecting payments and
performing delinquency prevention activities. Certain “specialty loan servicing programs” (such
as the Public Service Loan Forgiveness program and Total and Permanent Disability discharges)
are managed internally by FSA, although some third-party contractors—known as business
process operations vendors—may perform manual processing and customer service functions for
111 HEA §141(b)(3).
112 HEA §141(b)(4).
113 HEA §141(b)(1).
114 HEA §141(b)(1).
115 HEA Sections 473-480 specify the data that are collected in the FAFSA. HEA Section 483 requires that ED (via
FSA) make available for free, and for individuals to file with ED, the FAFSA “to determine the eligibility of a student
for Federal financial aid” under Title IV.
116 The system is known as the FAFSA Processing System.
117 IHEs may contract with third-party servicers for assistance in administering the Title IV aid programs. However, an
IHE ultimately remains responsible for the Title IV funds and is held accountable if a third-party servicer mismanages
the programs or funds. HEA §481(c); 34 C.F.R. §668.25.
118 An exception to this is the TEACH Grant program. Post-disbursement administration of the TEACH Grant program
is somewhat similar to administration of the Direct Loan program in that ED and its third-party contractors perform
various functions related to the TEACH Grant program, such as tracking the recipient’s progress toward fulfilling
program service requirements. Individuals who do not fulfill the service requirements have their TEACH Grants
converted into Direct Loans, which are then serviced by a contracted loan servicer. For additional information on the
TEACH Grant program, see CRS Report R46117, Teacher Education Assistance for College and Higher Education
(TEACH) Grants: A Primer.
119 FSA administrative tasks for FFEL and Perkins Loan program loans vary considerably from those of the Direct
Loan program. Many of these tasks are not detailed in this report, as they comprise a relatively small portion of FSA’s
total loan portfolio in FY2019. FSA, FY2024 Report, p. 28.
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these programs.120 FSA may, if necessary, assign a defaulted loan to its defaulted loan servicer,
the Default Resolution Group, which attempts to recover payment on defaulted loans from
borrowers. FSA may also use other options to collect on defaulted Direct Loans, including
referring a borrower’s account to the Treasury Offset Program.121
FSA Contracting
FSA “relies on a multitude of contracts and thousands of vendor employees to deliver its
mission.”122 Services for which FSA maintains contracts include servicing of Direct Loans and
ED-held FFEL program loans and Perkins Loans,123 collection of defaulted Direct Loans and EDheld FFEL program loans and Perkins Loans, and IT infrastructure to support myriad tasks such
as the processing of submitted FAFSAs. FSA also has a contract for the National Student Loan
Data System (NSLDS), which is a central database for student aid. NSLDS maintains detailed
administrative data to track Title IV grants and loans throughout their lifecycle and to support
Title IV administrative functions.124
FSA Information and Assistance to Third-Party Stakeholders
Numerous individuals and entities have a stake in the Title IV federal student aid programs and
rely on FSA to provide timely and accurate information about them. Students, their families, and
borrowers rely on FSA to provide information and assistance throughout the entire financial aid
process. IHEs and FSA’s third-party contractors rely on communications and assistance from FSA
to administer various aspects of the aid programs. Members of Congress and the general public
rely on FSA for information about the performance of the Title IV aid programs.
FSA operates several websites that enable stakeholders to access relevant information about
program operations. FSA maintains the website http://www.studentaid.gov, which is FSA’s
“primary customer-facing website”125 and the FSA Partner Connect website, which consolidates
guidance and resources related to Title IV administration for use by individuals involved in Title
IV administration.126
FSA also operates several repositories of Title IV program data to enable it and stakeholders to
access information about the programs and their performance. Section 485B of the HEA tasks ED
with development of the NSLDS. FSA has primary responsibility for administration of the
NSLDS and has contracted with a third party to operate it. FSA also maintains the Federal
Student Aid Data Center—a centralized, publicly available source for selected administrative data
120 ED, Justification of Appropriation Estimates to the Congress FY2025, “Student Aid Administration,” p. 15,
https://www.ed.gov/sites/ed/files/about/overview/budget/budget25/justifications/r-saa.pdf.
121 The Treasury Offset Program collects delinquent debts owed to federal agencies by withholding certain federal
benefits (e.g., Social Security benefits, income tax refunds) and remitting those payments to the relevant federal
agency.
122 FSA, FY2024 Report, p. 109.
123 ED-held FFELs include, for example, those acquired by ED with authority provided to it under the Ensuring
Continued Access to Student Loans Act of 2008 (P.L. 110-227). ED-held Perkins Loans include, for example, those
assigned to ED by an IHE that elects not to independently service the loans.
124 President’s FY2025 Budget Request for the ED, Congressional Budget Justification, “Student Aid Administration,”
p. 35.
125 FSA, FY2024 Report, p. 69.
126 FSA Partner Connect, “About This Site,” https://fsapartners.ed.gov/more-info/about-this-site.
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and other information related to the Title IV programs.127 The Title IV program data on FSA’s
Data Center are often derived from NSLDS. In addition, FSA operates the Enterprise Data
Management Analytics Platform Service, which is a “data analytics platform that ingests data
from multiple Federal Student Aid (FSA) systems of records to perform big-data analytics on
FSA data in one common location, produce reports and statistical models, and serve as a
centralize repository of information about FSA customers across the full student aid life cycle.”128
FSA also makes its statutorily required annual report129 to Congress publicly available.130 Finally,
the Office of Consumer Education and Ombudsman131—a subunit within FSA—serves as a single
point of contact for students and aid recipients to provide feedback or to file complaints and
disputes about the Title IV programs.132
FSA Oversight
FSA has a large oversight role in ensuring that various Title IV program participants comply with
Title IV program requirements. Both statute and regulations prescribe many aspects of the Title
IV programs, including student aid program terms and conditions and requirements IHEs must
meet to participate in the programs. IHEs and third-party contractors play a significant role in
ensuring that the Title IV programs are administered properly. In addition, some Title IV
programs (e.g., the campus-based aid programs133) vest a larger share of administrative functions
with IHEs, while others (e.g., the FFEL program) vest additional administrative functions with
outside entities such as guaranty agencies.
IHEs and Their Third-Party Servicers
FSA’s oversight of IHEs relates largely to ensuring that they meet eligibility requirements to
participate in the Title IV programs134 and that they (and any third-party servicers with which they
may contract) properly administer the Title IV programs.135 FSA certifies an IHE’s eligibility to
participate in the Title IV programs and recertifies its eligibility thereafter.136 FSA verifies each
127 The Data Center includes, among other information, data on student aid amounts disbursed and number of
recipients, IHEs participating in the Title IV programs, and lenders and guaranty agencies participating in the FFEL
program and documents related to FSA’s management and business processes, such as loan servicer contracts. FSA,
“Federal Student Aid Data Center,” https://studentaid.gov/data-center.
128 ED, “Notice of a New System of Records,” 87 Federal Register 56038, September 13, 2022.
129 HEA §141(c)(2).
130 See FSA, FY2024 Report.
131 The HEA establishes within FSA the Student Loan Ombudsman, which is tasked with providing assistance to Title
IV loan borrowers (HEA §141(f)). The Office of Consumer Education and Ombudsman appears to fulfill this statutory
requirement and also provides assistance to other types of FSA customers.
132 FSA, FY2024 Report p. 128. In FY2024, the Office of Consumer Education and Ombudsman (at the time, called the
Ombudsman Office) received approximately 290,000 complaints, more than double the number of complaints from
FY2023. The Ombudsman Office attributed this increase to a number of factors, such as FSA’s implementation of
“notable changes to federal financial aid programs,” including the end of the COVID-19 student loan repayment pause
and implementation of the FAFSA Simplification Act. FSA, FY2024 Report, pp. 128-133, 138.
133 These include the Federal Supplemental Educational Opportunity Grant program, the Federal Work-Study program,
and the Perkins Loans program. For additional information on these programs, see CRS Report RL31618, CampusBased Student Financial Aid Programs Under the Higher Education Act.
134 For additional information on the requirements IHEs must meet to participate in the Title IV programs, see CRS
Report R43159, Eligibility for Participation in Title IV Student Financial Aid Programs.
135 For data on the types of oversight activities in which FSA engaged for FY2024, see FSA, FY2024 Report, pp. 115119.
136 HEA §498; 34 C.F.R. Part 668.
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IHE’s accreditation status and whether the IHE is legally authorized to operate within a state. FSA
also evaluates an IHE’s financial responsibility and administrative capability to administer the
Title IV programs.
After an IHE is certified to participate in the Title IV programs, FSA ensures that it is conforming
to eligibility and administrative requirements. FSA does this by performing program reviews and
by reviewing required IHE compliance audits and financial statement audits conducted by thirdparty auditors.137 FSA reviews the IHE’s required third-party compliance and financial statement
audits and attempts to resolve issues with them. During a program review, FSA evaluates an
IHE’s compliance with Title IV requirements. Review priority is given to certain IHEs specified
in statute (e.g., those IHEs with high cohort default rates).138
FSA has the authority to impose sanctions and corrective actions on IHEs and their third-party
servicers. Examples include imposing fines, imposing specific conditions or restrictions related to
administration of Title IV funds, and terminating Title IV participation.139
FSA Contractors
FSA’s oversight of its third-party contractors generally consists of ensuring that they fulfill the
terms and conditions of their contracts with FSA. In general, federal agencies, including FSA,
have a number of tools to help ensure a contractor adequately performs a contract.140 Examples
include requiring corrective action,141 using performance-based incentives,142 and terminating the
contract. FSA contracts with numerous third-parties for a variety of goods and services related to
administration of the Title IV programs, including student loan servicers.
FSA contracts with seven vendors to perform a variety of student loan servicing and debt
collection tasks largely related to the Direct Loan program.143 For the primary set of loan
servicing contracts (referred to as the Unified Servicing and Data Solution), FSA uses
performance-based incentives to encourage vendors to meet desired results (e.g., ensuring
borrowers are in current repayment status and meeting customer service goals). It does so by
basing the number of borrower loan accounts allocated and compensation levels on servicers’
ability to meet stated goals.144 For contracts related to the specialty loan servicing program (i.e.,
those FSA contracts with business process operations vendors), FSA similarly uses performancebased metrics to determine future work allocations.145 In addition, FSA issues guidance to
vendors to assist them in day-to-day operations and conducts monitoring activities, such as audits
137 HEA §498A.
138 HEA §498A(a)(2).
139 34 C.F.R. Part 668, Subpart G. For additional information, see CRS In Focus IF12939, HEA Title IV Student Aid
Program Enforcement Actions.
140 For additional information on maintaining government contractor accountability, see CRS Report R45322, Selected
Legal Tools for Maintaining Government Contractor Accountability.
141 Corrective actions typically require contractors to remove, correct, or replace goods or reperform services for failing
to conform to contract specifications.
142 Performance-based incentives reward contractors with payments for meeting or exceeding goals or standards.
143 The FY2024 appropriation to support these contracts totaled $1 billion. ED, “Fiscal Year 2024 Congressional
Action” table, https://www.ed.gov/sites/ed/files/about/overview/budget/budget24/24action.pdf.
144 See, for example, FSA contract with Central Research, Attachment 08, “Service Level Methodology Performance
Metrics,” Attachment 20, “At-Risk Borrower Performance Incentive,” and Attachment 21, “Future Borrower
Allocation Methodology,” available at https://sam.gov/opp/0264de6ac3354dd6814455e535e783e9/view.
145 See, for example, contract with Edfinancial Services, https://studentaid.gov/sites/default/files/ed-financialservices.pdf.
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and quality assurance reviews.146 The terms of the final FSA contract with the vendor that
performs debt collection work are not publicly available.
Entities Engaged in Selected Title IV Programs
For FFEL program loans not held by ED, guaranty agencies administer many aspects of the
program, such as providing default aversion assistance147 to FFEL program lenders and services
related to the federal loan guarantee. In the campus-based programs, IHEs perform many of the
administrative functions described earlier in this section (e.g., award disbursement and loan
servicing) and are also afforded some discretion in determining the mix and amount of campusbased aid funds awarded to students. FSA oversees these entities in their fulfillment of these
functions.
Selected FSA Statistics
As described above, the scope of FSA’s operations covers many activities and responsibilities.
Selected statistics and additional information provide insight into the scale of FSA’s operations.
Figure 1 presents information on funds obligated for student aid administration. Figure 2
presents data on FTE employment for federal student aid administration.
Funding for Federal Student Aid Administration
Funding obligations for federal student aid administration generally comprise two broad
categories: (1) salaries and expenses148 and (2) student loan servicing.149 Figure 1 presents annual
inflation-adjusted funding obligated for federal student aid administration for FY2009-FY2024.150
Over this period, obligations for federal student aid administration increased from $1.1 billion in
FY2009 to about $2.2 billion in FY2024. Obligations for student aid administration have
increased by 30% since FY2011 (the first full fiscal year in which no new FFEL program loans
were made). Since FY2016, the composition of student aid administration between salaries and
expenses and discretionary servicing activities has remained somewhat even (about 50% for each
category). Prior to that time, salaries and expenses comprised the majority of obligations for
student aid administration.151
146 Ibid.
147 When undertaking default aversion assistance, guaranty agencies work with borrowers to bring into current
repayment status loans that are in danger of going into default. HEA §422B(d)(3).
148 Salaries and expenses include, for example, personnel compensation and benefit costs of federal employees.
149 Student loan servicing includes payments made to loan servicers pursuant to their contracts with FSA. Loan
servicers perform myriad functions related to student loan administration, including but not limited to processing
payments, communicating with borrowers about the status of their loans, and providing information about loan benefits
and features.
150 FY2009 was the fiscal year following enactment of the HEOA, the most recent comprehensive reauthorization of
the HEA.
151 Some of the growth in loan servicing costs (evident since FY2011) is likely attributable to the growth in the number
of borrowers with loans being serviced and in outstanding loans. Some is also likely due to the termination of authority
to make new loans under the FFEL program, under which loan servicing was largely the responsibility of private
lenders. Under the FFEL program, different mechanisms were used to provide federal subsidies that helped cover such
loan servicing costs. For additional information, see CRS Report RL33674, The Administration of the Federal Family
Education Loan and William D. Ford Direct Loan Programs: Background and Provisions (archived, available to
congressional requesters upon request).
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Figure 1. Inflation-Adjusted Obligations for Federal Student Aid Administration,
FY2009-FY2024 ($ in millions)
Figure is interactive in the HTML version of this report.
Source: Office of Management and Budget, Budget of the United States Government, FY2011-FY2026,
Appendix for the Department of Education.
Notes: Obligation means a binding agreement that will result in an outlay either immediately or in the future.
See OMB’s Circular A-11 (2018), Section 20—Terms and Concepts. Data are inflation-adjusted using the
Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPI-U). In FY2009, servicing
activities were not reported separately from student aid administration.
FY2024 figures exclude approximately $17 million in “reimbursable program activity,” which comprised about
$16.5 million allotted to FSA from ED’s Nonrecurring Expenses Fund to support FSA’s Unified Servicing and
Data Solution and about $55,000 in “reimbursables” to ED for parking at ED’s Lyndon Baines Johnson building.
CRS communication with ED, Office of Congressional Affairs, August 26, 2025.
FTE Employment for Federal Student Aid Administration
Figure 2 presents data on FTE employment for FY2009-FY2024 for federal student aid
administration. The number of FTE employees working on federal student aid administration has
risen from 1,058 in FY2009 to 1,568 in FY2024, a 48% increase. Other offices within ED besides
FSA also perform student-aid related administrative activities.152 In addition, a number of
contractor staff (e.g., loan servicing staff) provide outsourced business operations for student aid
administration. In winter and spring of 2025, ED’s total workforce decreased by almost 50%
through a number of administrative actions, including a reduction in force and employee
participation in a deferred resignation option and a voluntary separation incentive payment
option.153 Reports indicate that FSA’s staff decreased by about 700 employees as part of this
152 These offices include the Office of Finance and Operations; the Office of Chief Information Officer; the Office of
General Counsel; the Office of Postsecondary Education; the Office of Planning, Evaluation, and Policy Development;
and the Office of the Under Secretary. President’s FY2026 Budget Request for the U.S. Department of Education,
Congressional Budget Justification, “Student Aid Administration,” pp. 7-8.
153 ED, “U.S. Department of Education Initiates Reduction in Force,” press release, March 11, 2025,
https://www.ed.gov/about/news/press-release/us-department-of-education-initiates-reduction-force.
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decrease.154 Figure 2. represents FTE employment for federal student aid administration through
FY2024; thus, it does not depict the 2025 reduction in force.
Figure 2. Full-Time Equivalent (FTE) Employment for Federal Student Aid
Administration, FY2009-FY2024
Figure is interactive in the HTML version of this report.
Source: Office of Management and Budget (OMB), Budget of the United States Government, FY2011-FY2025,
Appendix for the Department of Education (ED); FSA, Annual Reports, FY2009-FY2024.
Notes: FTE employment “is the basic measure of the levels of employment used in the Budget. It is the total
number of hours worked (or to be worked) divided by the number of compensable hours applicable to each
fiscal year.” See OMB’s Circular A-11(2024), Section 20—Terms and Concepts. The number of FTE employment
for other ED offices in FY2024 is estimated.
Trends Relevant to Federal Student Aid Administration
Over the past several years, the workload of FSA has varied. Table 1 provides information related
to FSA’s workload, including the number of FAFSAs processed, the number of students receiving
aid, the total dollar amount of federal student aid provided through the Title IV federal student aid
programs, the total number of federal student loan recipients who have outstanding balances, and
the total dollar amount of principal and interest outstanding for even-numbered years during the
FY2010-FY2024 period.
As shown in Table 1, the number of individuals receiving Title IV aid and the number of FAFSAs
processed has declined since FY2012. However, the total number of federal student loan
recipients with outstanding loan balances and the total dollar amount of principal and interest
outstanding increased over the period examined.
154 Cory Turner, “The Education Department Is Being Cut in Half. Here’s What’s Being Lost,” NPR, March 13, 2025,
https://www.npr.org/2025/03/12/nx-s1-5325854/trump-education-department-layoffs-civil-rights-student-loans; Liam
Knox, “Education Department Reeling After Layoffs,” Inside Higher Ed, March 25, 2025,
https://www.insidehighered.com/news/government/politics-elections/2025/03/25/education-department-staff-struggleafter-mass.
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Table 1. Selected Trends Related to Federal Student Aid Administration
Even-Numbered Years FY2010-FY2024 (in millions)
2010
2012
2014
2016
2018
2020
2022
2024
Total number
of FAFSAs
processed
(award year)a
19.5
21.9
21.2
19.8
18.9
18.1
17.5
17.9
Unduplicated
count of
student aid
recipientsb
13.8
13.9
12.8
11.9
10.8
9.5
8.2
9.3
Total amount
of federal
student aid
awarded
(dollars)c
162,296
177,225
169,614
170,920
167,982
148,443
148,184
203,415
Total amount
of federal
student aid
awarded,
excluding
Consolidation
Loans
(dollars)d
145,138
141,261
135,045
125,257
126,350
118,042
112,358
132,304
Unduplicated
count of
recipientse
who have
federal student
loans
outstanding
34.3
38.3
40.7
42.3
42.9
42.9
43.5
42.7
Total principal
and interest
outstanding on
federal student
loans (dollars)f
749,800
948,200
1,129,800
1,292,200
1,439,200
1,566,300
1,634,500
1,638,600
Source: FSA, Application Volume Reports, FAFSA Volume Reports, by State, Application Cycle 2009-2010
through Application Cycle 2023-2024; OMB, Budget of the United States Government, FY2011-FY2026, Appendix
for FSA; FSA, Federal Student Loan Portfolio Summary FY2010-FY2024, Q4.
Notes: All figures are for fiscal years, with the exception of total number of FAFSAs processed, which are
presented based on final year of application cycle.
a. Prior to award year 2017-2018, the FAFSA became available for submission 18 months prior the award year
ending in the calendar year shown in the header. Beginning in award year 2017-2018, the FAFSA became
available for submission 21 months prior to the award year ending in the calendar year shown in the header.
For additional information, see ED, “Changes Impacting the 2017-2018 FAFSA: Frequently Asked
Questions,” https://financialaidtoolkit.ed.gov/resources/fafsa-changes-17-18-faq.pdf.
b. Unduplicated count of students aided through federal student aid programs authorized under Title IV of the
HEA.
c. Total aid available through federal student aid programs authorized under Title IV of the HEA.
d. Total aid available through federal student aid programs authorized under Title IV of the HEA, other than
Consolidation Loans. A Consolidation Loan allows a borrower to combine one or more previously
obtained federal student loans into a single, new loan.
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e.
f.
A recipient is the student who benefits from the federal student loan. In most cases, the recipient is the
borrower. For Parent PLUS Loans, the parent is the borrower and the child is the recipient.
Outstanding balance of principal and interest at the end of the fiscal year for federal student loans made
through the Direct Loan, FFEL, and Perkins Loan programs.
FSA Structure
Section 141 of the HEA establishes FSA’s PBO structure as a discrete management unit within
ED and subject to the direction of the Secretary in the exercise of its functions. FSA operates
under the coordination of the Office of the Under Secretary, which is the office within ED that
coordinates policies and programs related to postsecondary education, as well as vocational and
adult education.155 Although the HEA specifically establishes two roles within FSA (the COO and
the student loan ombudsman), much of FSA’s organizational structure and leadership
arrangements have been established through administrative action by the COO, subject to the
direction of the Secretary.156 In addition, FSA interacts with various other offices within ED to
facilitate the implementation of ED policies in aid administration.
Statutorily Mandated Roles
FSA is composed of numerous offices, each responsible for varying aspects of Title IV student
aid administration.157 Two FSA roles are specifically mandated by the HEA: the chief operating
officer and the student loan ombudsman. These offices have been charged with carrying out both
statutory and administratively delegated functions, as discussed below.
Chief Operating Officer (COO)
The HEA assigns several responsibilities to FSA’s COO. The Secretary has delegated additional
responsibilities to the COO. In practice, while responsibilities are assigned or delegated to the
COO, individual employees or offices within FSA may perform the day-to-day tasks associated
with fulfilling those responsibilities.
Section 141(d) of the HEA vests management of FSA in a COO and mandates several of the
COO’s activities and responsibilities. Annually, the COO and the Secretary must publicly make
available a five-year performance plan for FSA that establishes measurable goals and objectives
for FSA.158 In developing the plan, the Secretary and the COO are to consult with stakeholders
such as students, IHEs, and Congress.159
The COO is required annually to submit to Congress a report on FSA’s performance that is to
include, among other items, (1) an independent financial audit, (2) the results achieved during the
year relative to the performance plan goals, (3) the evaluation of the COO and senior managers,
and (4) recommendations for legislative and regulatory changes to improve administration of the
Title IV student aid programs.160 FSA states that the Annual Report satisfies these
155 ED, FY2024 Agency Financial Report, November 14, 2024, p. 15.
156 HEA §141(b)(4).
157 For a chart depicting FSA’s organization as of November 15, 2024, see FSA, FY2024 Report, p. 10.
158 FSA’s performance plans are available at FSA, “Strategic Planning and Reporting,” https://studentaid.gov/data-
center/business-info/strategic-planning-and-reporting.
159 HEA §141(c)(1).
160 HEA §141(c)(2).
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responsibilities.161 In preparing the report, the COO is to establish appropriate ways to consult
with stakeholders, including students and IHEs.162
Section 142 of the HEA authorizes the COO, subject to the authority of the Secretary, to procure
property and services to perform its functions. In practice, while the Secretary is considered ED’s
senior procurement official, it appears that FSA typically has significant autonomy in its
contracting functions.163
The HEA specifies that the Secretary maintains responsibility for the development and
promulgation of policy and regulations related to Title IV aid. However, in developing and
promulgating Title IV student aid policies and regulations, the Secretary is required to request the
advice of, and work in cooperation with, the COO.164 FSA’s Policy Implementation and Oversight
Directorate (PIOD) is the unit within FSA that leads FSA’s involvement with the Secretary on
Title IV student aid policies and regulations. Among other functions, PIOD provides information
and advice about Title IV program administration and operations to ED and other federal agencies
and assists other FSA offices to ensure proper implementation of Title IV statutory, regulatory,
and other policy requirements.
PIOD facilitates the implementation of policy (and supports FSA staff in implementing policy)
developed by ED through the Office of the Secretary, the Office of the Under Secretary, and OPE.
PIOD also165
•
•
•
•
formulates policy recommendations and identifies policy issues affecting the
Title IV student aid programs;
provides advice on regulations, policies, administrative policy guidance, and
procedures;
prepares preliminary drafts of subregulatory guidance for consideration by ED
and drafts policy electronic announcements for review by FSA staff; and
designs, manages, and monitors the Experimental Sites Initiative.166
Finally, the HEA specifies that the COO is to disseminate information to stakeholders on the
student loan ombudsman (described below).167
The Secretary may delegate additional functions to the COO (and FSA in general) to achieve
FSA’s purposes.168 Authorities that the Secretary has previously delegated to the COO include,
but are not limited to,
161 FSA, FY2024 Report, p. viii.
162 HEA §141(c)(3).
163 CRS communication with FSA personnel, April 17, 2019.
164 HEA §141(b)(1). Additionally, the Secretary shall request cost estimates from FSA for system changes required by
specific policy proposals and assist FSA in identifying goals for the administration of systems used to administer the
Title IV aid programs and updating such systems to current technology.
165 ED, “FSA Functional Statements—Partner Participation and Oversight,” https://www.ed.gov/about/ed-organization/
functional-statements/fsa-functional-statements/partner-participation-and-oversight, accessed August 21, 2025.
166 HEA Section 487A(b) authorizes ED to waive certain statutory and regulatory requirements related to IHEs’ aid
award processes to test and provide recommendations to the Secretary on the impact and effectiveness of proposed
regulations or new management initiatives. See FSA, “Experimental Sites,” https://experimentalsites.ed.gov/exp/
index.html.
167 HEA §141(f)(2).
168 HEA §141(b)(3)).
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•
•
•
•
authority to take certain personnel actions, such as carrying out reductions-inforce for FSA in coordination with ED, approving telework agreements, and
handling FSA employee grievances;169
programmatic authorities related to Title IV programs, such as awarding certain
formula grants (e.g., awarding campus-based funds to IHEs) and entering into
agreements with entities outside of ED (e.g., IHEs or other federal agencies);170
authority to compromise, waive, and write-off certain claims against individuals
under Title IV programs, such as waiving or writing off the collection of current
or defaulted federal student loans; and171
authority to develop, implement, and manage an Employee Personnel Security
Program in accordance with established ED directives and guidance.172
Student Loan Ombudsman
Section 141(f) of the HEA specifies that the COO, in consultation with the Secretary, shall
appoint an ombudsman “to provide timely assistance to borrowers of loans made, insured, or
guaranteed under Title IV.” Specifically, the ombudsman is to (1) review and attempt to
informally resolve borrower disputes with Title IV loan program participants and (2) compile and
analyze data on borrower complaints and make recommendations. Each year, the ombudsman is
to submit to the COO (for inclusion in the COO’s annual report) a report describing the
ombudsman’s activities and effectiveness during the preceding year.
FSA’s Office of Consumer Education and Ombudsman (the Ombudsman) is the specific office
tasked with fulfilling the HEA Section 141 requirements for a student loan ombudsman. The
office also administers FSA’s comprehensive informal complaint resolution and customer
inquiry/case resolution processes related to all Title IV student aid programs, not just those
related to student loans. The most frequent types of cases received by the office relate to student
loans, however.173 Addressing customer cases regarding non-loan Title IV student aid programs is
not part of the ombudsman’s specific statutory mandate.174 On September 5, 2025, FSA
announced that the office’s mission and work was “expanding … to focus on providing
information to students and families on the benefits and risks of federal student loan borrowing”
by taking a “proactive approach to improve financial literacy among students, parents, and
borrowers.”175
169 Memorandum from the Secretary of Education to the FSA COO, “Delegations of Human Resources Authority,”
January 9, 2006.
170 Memorandum from the Secretary of Education to the FSA COO, “Delegation of Program Authority,” May 29, 2008.
171 Memorandum from the Secretary of Education to Director, Program Management Services, Business Operations,
FSA, through the FSA COO, “Delegation of Authority for Collection and Compromise of Claims Against Individuals
under the Federal Student Aid (FSA) Programs,” November 9, 2009.
172
Memorandum from the Acting Assistant Secretary, Office of Management to the FSA COO, “Delegation of
Authority: Employee Personnel Security Program,” September 13, 2018.
173 FSA, FY2024 Report, p. 132.
174 However, HEA Section 141(a)(2) does specify that one of FSA’s broad purposes is to improve customer service to
students and other Title IV student aid program participants. The FSA’s Office of Consumer Education and
Ombudsman’s role of addressing disputes regarding non-loan Title IV aid programs could be viewed as fulfilling this
statutory purpose.
175 ED, “U.S. Department of Education Bolsters Office of the Ombudsman to Improve Consumer Education and
Increase Transparency for Student Borrowers,” press release, September 5, 2025, https://www.ed.gov/about/news/
press-release/us-department-of-education-bolsters-office-of-ombudsman-improve-consumer-education-and-increasetransparency-student-borrowers.
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FSA’s Relationship with Other Actors
Many tasks related to student aid are vested (either through statute or secretarial authority) in
other ED offices,176 and other executive branch entities may have an interest in, or jurisdiction
over, aspects of federal student aid. In addition, FSA is subject to congressional direction (e.g.,
via amendments to the HEA and appropriations laws) and oversight. As such, FSA may have
occasion to interact and maintain relationships with numerous outside stakeholders.
FSA and the Office of the Secretary
The Secretary “is responsible for the overall direction, supervision, and coordination of all
activities of [ED] and is the principal adviser to the President on Federal policies, programs, and
activities related to education in the United States.”177 The Office of the Secretary directly
oversees the Office of the Under Secretary (which, in turn, oversees FSA). In addition, the Office
of the Secretary oversees several other entities that interact with FSA on a regular basis:
•
•
•
The Office of the Inspector General is responsible for “identifying fraud, waste,
abuse, and criminal activity involving [ED] funds, programs, and operations.”178
To this end, it conducts independent audits and reviews of ED programs,
including the Title IV student aid programs and FSA’s operations.
The Office of General Counsel (OGC) is responsible for providing “legal
assistance to the Secretary concerning the programs and policies of the
Department.”179 OGC also provides legal assistance to other ED offices,
including FSA. Among other services, OGC provides legal advice, litigation
services, legislative services (e.g., drafts legislative proposals), and assistance in
drafting regulatory documents.180
The Office of Budget Service181 has the lead responsibility for, among other
functions, developing and implementing ED’s budget.182 It develops cost
estimates for the Title IV student aid programs and maintains computer models to
estimate such costs, coordinates methodology and data with FSA and OPE, and
liaises with FSA other ED offices to analyze data sources and assumptions for the
student aid cost estimation models.
FSA and Office of the Under Secretary
The Office of the Under Secretary “coordinates policies, programs, and activities related to
postsecondary education, career and technical education, and adult education.”183 The Under
176 For an organizational chart of ED, see ED, “U.S. Department of Education: Organizational Charts,” May 8, 2025,
https://www.ed.gov/media/document/ed-department-org-charts-5-8-25-109982.pdf.
177 ED, “Office of the Secretary (OS),” https://www.ed.gov/about/ed-offices/os, accessed August 21, 2025.
178 ED, “Office of Inspector General,” https://oig.ed.gov/about, accessed August 21, 2025.
179 ED, “Office of the General Counsel,” https://www.ed.gov/about/ed-offices/ogc, accessed August 21, 2025.
180 Ibid.
181 The Office of Budget Service is housed within the Office of Planning, Evaluation, and Policy Development, which
advises the Secretary on “all matters relating to policy development, implementation, and review.” ED, “Office of
Planning, Evaluation, and Policy Development (OPEPD),” https://www.ed.gov/about/ed-offices/opepd, accessed
August 21, 2025.
182 ED, “Fiscal Year 2024 Agency Financial Report,” November 14, 2024, p. 192, https://www.ed.gov/media/
document/fy-2024-agency-financial-report-109508.pdf.
183 ED, “ED Offices,” https://www.ed.gov/about/ed-offices, accessed August 21, 2025.
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Secretary also oversees FSA, which administers federal student aid, and OPE, which “works to
strengthen the capacity of colleges and universities to promote reform, innovation and
improvement in postsecondary education” and to “promote and expand access to postsecondary
education.”184
As previously described, Section 141 of the HEA specifies that the Secretary maintains
responsibility for the development and promulgation of policy and regulations related to Title IV
aid but must coordinate with FSA.185 With Under Secretary oversight, OPE fulfills the policy
development and promulgation role for the Secretary. OPE develops both regulations and
subregulatory guidance for the Title IV student aid programs (e.g., Dear Colleague letters to
financial aid professionals).186 In doing so, OPE liaises with FSA’s PIOD (and other offices such
as OGC) in the development, implementation, and dissemination of Title IV student aid policy.
FSA and Other Executive Branch Entities
Other executive branch entities may have some level of authority over or interest in aspects of
federal student aid programs. As such, ED and FSA may maintain relationships with these entities
to help ensure proper functioning of the aid programs. Based on its functions, FSA likely, at least
in part, has played a role in these partnerships even when ED may be officially responsible.187
Executive branch entities with which ED and FSA may maintain relationships to help ensure
proper functioning of the aid programs include the following:
•
Department of the Treasury. FSA obtains funds from Treasury to make
available to students in the form of federal student aid. FSA may refer a
borrower’s defaulted loan to the Treasury Offset Program for offset of certain
benefits such as federal income tax refunds and Social Security benefits.
Moreover, while the Debt Collections Improvement Act generally requires
federal agencies to transfer nontax debts that are 180 days or more delinquent to
Treasury’s Fiscal Service for centralized debt collection (referred to as crossservicing),188 since 2001, the Secretary of the Treasury has granted FSA a
permanent exemption from this requirement.189 Thus, FSA is responsible for
collecting delinquent and defaulted federal student loan debt assigned to or held
by ED. The act also authorizes the Secretary of the Treasury to exempt certain
classes of debt from cross-servicing. Debts that are being collected through
184 ED, “Office of Postsecondary Education (OPE),” https://www.ed.gov/about/ed-offices/ope#home, accessed August
21, 2025.
185 HEA §141(b)(1).
186
ED, “Office of Postsecondary Education (OPE),” https://www.ed.gov/about/ed-offices/ope#home, accessed August
21, 2025.
187 This section of the report describes some of those entities that may have jurisdiction over or interest in the federal
student aid programs. It is not intended to be an exhaustive list. In many instances, publicly available materials relating
to these relationships mention ED and not specifically FSA. In this section of the report, ED may be referenced when
the precise nature of the relationship among ED, FSA, and other entities is unclear.
188 31 U.S.C. §3711(g)(1).
189 The exemption applies to delinquent and defaulted federal student loan debt assigned to or held by ED (e.g., Direct
Loan program loans, and FFEL program loans and Perkins Loans that have been purchased by or assigned to ED). U.S.
Department of the Treasury, Under Secretary, Letter from Donald V. Hammond, Acting Under Secretary for Domestic
Finance, to James R. Lynch, Chief Financial Officer, Student Financial Assistance, ED, May 11, 2001.
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•
•
administrative wage garnishment190 and meet certain conditions have been
exempted from cross-servicing.191
Consumer Financial Protection Bureau (CFPB): The CFPB192 has asserted a
role in ensuring compliance with consumer protection laws that may apply to
federal student loans. For example, the CFPB has brought lawsuits against some
FSA-contracted federal student loan servicers for consumer compliance
violations relating to federal student loan servicing.193 CFPB also maintains
resources for both federal student loan and private education loan borrowers,194
and it fields complaints from student loan borrowers.195 The level of
collaboration between the CFPB and ED has varied over time. For example,
during the Obama Administration, the CFPB and ED had entered into
memoranda of understanding to share data and information relating to the student
loan servicing market. In 2017, under the first Trump Administration, ED
terminated the memoranda, stating that the CFPB violated the terms of the
memoranda.196 Subsequently, in 2020, the CFPB and ED entered into a
memorandum of understanding under the first Trump Administration to share
data and information relating to student loan complaints (including Title IV loan
servicing).197
Department of Justice (DOJ): DOJ may play a role in law enforcement related
to federal student loans, including, through U.S. Attorneys’ offices, prosecuting
violations of federal criminal laws and representing the federal government in
civil proceedings. For instance, FSA may refer a defaulted federal student loan
borrower’s account to DOJ for civil litigation against the borrower.198 In addition,
DOJ may file lawsuits against federal student loan program participants, such as
contracted student loan servicers, for failure to comply with federal statutes
related to student loans199 and individuals for acts of fraud.200 DOJ also serves as
190 Under administrative wage garnishment, ED is authorized to collect up to 15% of a borrower’s disposable pay from
her or her employer to pay the borrower’s debt. 34 C.F.R. Part 34.
191 U.S. Department of the Treasury, “Debts Exempt from Cross-Servicing Referral Requirements,”
https://fiscal.treasury.gov/files/debt-management/cross-servicing-transfer-exemption-chart.pdf.
192 For additional information on the CFPB, see CRS In Focus IF10031, Introduction to Financial Services: The
Consumer Financial Protection Bureau (CFPB).
193 See, for example, CFPB, “CFPB Sues Nation’s Largest Student Loan Company Navient for Failing Borrowers at
Every Stage of Repayment,” press release, January 18, 2017, https://www.consumerfinance.gov/about-us/newsroom/
cfpb-sues-nations-largest-student-loan-company-navient-failing-borrowers-every-stage-repayment/.
194 See, for example, CFPB, “Student Loans,” https://www.consumerfinance.gov/ask-cfpb/category-student-loans/.
195 See, for example, CFPB, “Submit a complaint about a financial product or service,”
https://www.consumerfinance.gov/complaint/.
196 Andrew Kreighbaum, “Education Dept. Ends Partnership with CFPB,” Inside Higher Ed, September 5, 2017. Letter
from Kathleen Smith, Acting Assistance Secretary, Office of Postsecondary Education, and Dr. A Wayne Johnson,
Chief Operating Officer, FSA, to Richard Cordray, Director, CFPB, August 31, 2017.
197 Memorandum of Understanding between the Bureau of Consumer Financial Protection and the U.S. Department of
Education Concerning the Coordination in Resolving Borrower Complaints, January 31, 2020.
198 34 C.F.R. §30.1(a)(3).
199 DOJ, “Justice Department Reaches $60 Million Settlement with Sallie Mae to Resolve Allegations of Charging
Military Servicemembers Excessive Rates on Student Loans,” press release, May 13, 2014, https://www.justice.gov/
opa/pr/justice-department-reaches-60-million-settlement-sallie-mae-resolve-allegations-charging.
200 DOJ, “Danville Man Sentenced on Wire Fraud, Identity Theft, Student Loan Fraud Charges,” press release, March
6, 2019, https://www.justice.gov/usao-wdva/pr/danville-man-sentenced-wire-fraud-identity-theft-student-loan-fraudcharges.
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the lead agency representing the federal government in bankruptcy proceedings
to discharge student loan debt. Previously, ED and DOJ have coordinated to
implement policies related to these bankruptcy proceedings.201
Other executive branch entities with which ED and FSA may interact include the Federal Trade
Commission,202 the Internal Revenue Service (IRS),203 the Department of Veterans Affairs,204 and
the Social Security Administration.205
In processing the FAFSA, FSA’s FAFSA Processing System matches student provided
information against other federal entities’ databases to confirm elements of each student’s aid
eligibility. In total, the FAFSA Processing System performs matches against databases maintained
by the Social Security Administration, the Department of Veterans Affairs, and the Department of
Homeland Security.206
To initiate and/or maintain these relationships, ED and FSA may enter into formal agreements
(e.g., memoranda of understanding) with the relevant federal entity or maintain a less formal
interagency relationship.207
FSA and Congress
Congress may guide and affect the way FSA operationalizes and manages the day-to-day
functions of the federal student aid programs. First, Congress and the President may enact laws
that impact or amend federal student aid programs or FSA itself. For example, Congress could
amend the Sections 141-143 of the HEA, which relate specifically to FSA as a PBO, or the Title
IV student aid programs in general. In addition, during the appropriations process, Congress
determines discretionary funding levels for FSA activities.208 In some instances, Congress may
include stipulations or directives regarding the use of these funds.209
201 DOJ, “Guidance for Department Attorneys Regarding Student Loan Bankruptcy Litigation,” November 17, 2022,
https://www.justice.gov/civil/file/1553726/dl?inline=.
202 See, for example, Inside Higher Ed, “Feds Act Against DeVry,” January 27, 2016, https://www.insidehighered.com/
news/2016/01/28/ftc-and-education-department-take-action-against-devry-university.
203 For example, under the HEA, students and borrowers may authorize the Internal Revenue Service to disclose certain
income information to ED for the purposes of completing the FAFSA and for calculating monthly payments under the
student loan income-driven repayment plans. See HEA §494.
204 For example, FSA and the Department of Veterans Affairs (VA) maintain a computer matching agreement to enable
ED to identify student loan borrowers who may be eligible for a total and permanent disability discharge due to their
meeting certain VA disability determinations. “Computer Matching Agreement between U.S. Department of Veterans
Affairs (VA) and the U.S. Department of Education (ED) Federal Student Aid (FSA),” October 10, 2023,
https://www.ed.gov/media/document/computer-matching-agreement-btwn-ed-and-vapdf-35757.pdf.
205 For example, FSA and the Social Security Administration (SSA) maintain a computer matching agreement to enable
ED to identify student loan borrowers who may be eligible for a total and permanent disability discharge due to their
meeting certain SSA disability determinations. “Computer Matching Agreement between the Social Security
Administration (SSA) and the U.S. Department of Education (ED) Federal Student Aid (FSA),” July 1, 2021,
https://www.ssa.gov/privacy/cma/ED-FSA-CMA%20w%20SSA%20Auto%20Discharge-CMA%2006-212021_Authorizing%20Official%20Signatures%207-2-2021.pdf.
206 FSA, 2025-2026 Federal Student Aid Handbook, Application and Verification Guide, p. 5.
207 The extent to which relationships are formalized depends on the nature of the relationship.
208 Funds for Title IV aid administration are largely provided via discretionary annual appropriations, pursuant to HEA
Section 458.
209 For example, in providing funds for Title IV administration under the Further Consolidated Appropriations Act,
2024 (P.L. 118-47), Congress stipulated that ED “shall not award funding for any contract solicitation for a new
Federal student loan servicing environment … unless such an environment provides for the participation of multiple
(continued...)
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Second, Congress exercises oversight of FSA.210 This oversight may include requiring FSA or ED
representatives to testify before Congress, requiring or requesting FSA to report additional
information regarding its operations, and requesting that GAO or the IG conduct an in-depth
investigation of FSA. Congress has exercised its oversight authority regarding Title IV aid
administration numerous times in recent years.211
FSA’s Performance Under Five-Year Performance
Plan
The COO is required to annually report to Congress on FSA’s progress in achieving its goals and
objectives described in its five-year performance plan (also known as the strategic plan). Among
other items, the performance plan is to address FSA’s responsibilities in improving service to
stakeholders, reducing costs of administering the Title IV student aid programs, improving and
integrating the systems that support the student aid programs, and making progress in other areas
identified by the Secretary. The Secretary and FSA, in consultation with stakeholders, develop the
strategic goals and objectives described in FSA’s five-year performance plan. As part of the plan,
FSA develops the indicators (or metrics) by which its performance under these goals and
objectives are measured. FSA also sets its specific annual targets for meeting each indicator. In its
annual report, FSA is to include an evaluation of its performance under the goals and objectives
of the five-year performance plan.212
Table 2 presents information on FSA’s performance for each indicator under its strategic goals
and objectives for FY2023-FY2024 as set forth in its most recent strategic plan—its Strategic
Plan: FY2023-27.213 For each goal, FSA developed objectives and then indicators by which to
measure its performance under the objectives. FSA’s targets and actual performance under each
indicator are presented. The text for FSA’s actual performance under each indicator shows
whether FSA met its goal in the given year. Bolded text indicates that FSA did not achieve its
goal, while regular text indicates that FSA did achieve its goal.
Table 2 summarizes the performance information for FY2023 and FY2024. Many of FSA’s goals,
objectives, and indicators were new for its FY2023-2027 strategic plan. As such, in FY2023, FSA
completed baseline assessments for 16 (50%) of its indicators against which to measure FSA’s
performance in future years. FSA generally met or exceeded those goals, objectives, and
indicators already in place in FY2023. For FY2023 and FY2024, FSA consistently met its
student loan servicers that contract directly with the Department of Education to manage a unique portfolio or borrower
accounts and the full life-cycle of loans from disbursement to pay-off with certain limited exceptions, and allocates
student loan borrower accounts to eligible student loan servicers based on performance.”
210 For additional information on congressional oversight, see CRS In Focus IF10015, Congressional Oversight and
Investigations.
211 See, for example, U.S. Congress, House Education and Workforce Committee, Higher Education and Workforce
Development Subcommittee, Examining the Policies and Priorities of the Office of Federal Student Aid, 117th Cong.,
1st sess., October 27, 2021; and U.S. Congress, House Education and Workforce Committee, Higher Education and
Workforce Development Subcommittee, FAFSA (Free Application for Federal Student Aid) Fail: Examining the
Impact on Students, Families, and Schools, 118th Cong., 2nd sess., April 10, 2024.
212 HEA §141(c)(2).
213 For a full description of FSA’s strategic goals and the objectives encompassed by those goals, see FSA, Strategic
Plan Fiscal Years 2023-27, on file with authors. The finalized version of FSA’s Strategic Plan for Fiscal Years 20232027 was removed from its website as it drafts a new strategic plan “that reflects FSA’s core mission to manage the
student financial assistance programs” (CRS communication with ED, Office of Legislation and Congressional Affairs,
August 25, 2025). A draft version of the strategic plan is available at FSA, Federal Student Aid Strategic Plan: Fiscal
Year 2023-2027, December 2, 2022, https://files.eric.ed.gov/fulltext/ED626756.pdf.
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The Office of Federal Student Aid as a Performance-Based Organization
objectives under Strategic Goal 3—strengthen engagement and accountability for educational and
financial institutions—and most of its objectives under Strategic Goal 5—boost operational
efficiency—which includes objectives related to strengthening FSA’s information management,
enhancing its procurement processes, and improving its cybersecurity posture. FSA also met
many of its FY2024 goals for Strategic Goal 1—improve customer service and outcomes for
students and borrowers. Perhaps most notably under this strategic goal, the number of borrowers
who received student loan forgiveness (an indicator for one of the strategic goal’s objectives)214
increased about 76% from FY2023 to FY2024.
FSA did not meet most of its targets for Strategic Goal 2—advance equity and access to student
financial assistance. This was driven by the fact that FSA did not meet all targets for the strategic
goal’s objective “Provide accurate, seamless, easy, and customized interactions throughout the
student aid lifecycle.” FSA attributed this trend primarily to the rollout of the 2024-2025 FAFSA,
which reflected significant statutory changes made to the FAFSA and need analysis
methodologies by the FAFSA Simplification Act (Title VII, Division FF of P.L. 116-260) and the
Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act; P.L.
116-91)215 and for which FSA and ED received considerable criticism.216
Finally, in FY2024, FSA did not meet most (75%) of its target indicators for Strategic Goal 4—
increase workforce and workplace capabilities. For example, it did not meet all targets for its
objective “Foster an organizational culture that promotes a productive, connected, and engaged
workforce, particularly in a hybrid workplace environment.” FSA hypothesized that these missed
targets might be attributed to a number of factors, such as return-to-office policies following a
prolonged period of telework in light of the COVID-19 pandemic, FSA staff needing to take on
additional responsibilities for a prolonged period to support the rollout of the 2023-2024 FAFSA,
and “unexpected operational changes within the organization and leadership.”217
Table 2. FSA’s Performance Under Its Five-Year Performance Plan
FY2023-FY2024
(Figures in bolded text indicates a target was not met)
FY2023
Performance Indicator
Target
FY2024
Actual
Goal
Actual
Strategic Goal 1: Improve customer service and outcomes for students and borrowers
Objective 1.1: Simplify the student loan repayment process to reduce future delinquency and default rates and improve
accessibility of loan forgiveness programs.
Number of borrowers that
received loan forgivenessa
Baseline
1.32 million
1.36 million
2.39 million
Percentage of borrowers using
auto-debit
Baseline
20.90%
23.90%
21.50%
214 This indicator measures the total number of student loan borrowers who received loan forgiveness through the
Public Service Loan Forgiveness program, Borrower Defense to Repayment, Total and Permanent Disability
Discharge, and income-driven repayment plan forgiveness.
215 FSA, FY2024 Report, pp. 73-74.
216 See, for example, U.S. Congress, House Education and Workforce Committee, Higher Education and Workforce
Development Subcommittee, Hrg. 118-43, FAFSA (Free Application for Federal Student Aid) Fail: Examining the
Impact on Students, Families, and Schools, 118th Cong., 2nd sess., April 10, 2024; and GAO, “Botched FAFSA Rollout
Leaves Uncertainty for Students Seeking Financial Aid for College,” September 24, 2024, https://www.gao.gov/blog/
botched-fafsa-rollout-leaves-uncertainty-students-seeking-financial-aid-college.
217 FSA, FY2024 Report, p. 97.
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The Office of Federal Student Aid as a Performance-Based Organization
FY2023
Performance Indicator
Percentage of borrowers
submitting applications through
the PSLF Help Toolb
Target
≥56.70%
FY2024
Actual
60.50%
Goal
≥60.50%
Actual
64.10%
Objective 1.2: Enhance the quality of contact center and loan servicing operations, leveraging data to assess progress toward
customer service and product delivery standards.
Percentage of contractor
interactions reviewed that
received a passing scorec
Baseline
98.10%
≥95%
98.60%
Baseline
7%
Objective 1.3: Engage with stakeholders to improve delivery of student aid.
Surveys to third-party
stakeholdersd
Implement
survey
Survey
implemented
Objective 1.4: Address complaints and inquiries regarding financial aid products and services.
Timeliness of case handlinge
Baseline
78%
≥78%
74%
Accuracy of business process
operationsf
Baseline
58%
≥58%
87%g
Accuracy of first-level complaint
responseh
Baseline
32%
≥32.1%
38.10%
Strategic Goal 2: Advance equity and access to student financial assistance
Objective 2.1: Enable financial education and empowerment by helping students and families understand the benefits and
responsibilities of financing postsecondary education.
Overall borrower satisfaction
score for online counselingi
Baseline
90
≥90
90
80
80
Objective 2.2: Simplify the Free Application for Federal Student Aid (FAFSA) process.
Customer satisfaction survey
score associated with completing
the Free Application for Federal
Student Aid
78
80
Objective 2.3: Provide accurate, seamless, easy, and customized interactions throughout the student aid lifecycle.j
StudentAid.gov digital satisfaction
≥66
72
≥72
60
StudentAid.gov post-transaction
satisfaction
Baseline
83
≥83
82
Customer Center satisfaction
Baseline
71
≥71
52
Email campaign helpfulness
Baseline
79
≥79
58
Strategic Goal 3: Strengthen engagement and accountability for educational and financial
institutions
Objective 3.1: Utilize a comprehensive suite of monitoring tools to oversee participating partners.
Review for participating partners
that have been provisionally
certifiedk
40%
66.50%
60%
79.10%
Objective 3.2: Build enforcement capabilities, in coordination with federal and state partners, to protect students, families,
and taxpayers from deceptive, fraudulent, or harmful practices in the student aid marketplace.
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The Office of Federal Student Aid as a Performance-Based Organization
FY2023
Performance Indicator
Build and implement an FSA
Enforcement Strategy that
incorporates a risk model for
identifying schools that pose risk
to students and taxpayers
FY2024
Target
Actual
Develop
strategic plan
Strategic plan
completed
Goal
Implement
strategic plan
Actual
Strategic plan
implemented
Objective 3.3: Provide inclusive and effective partner outreach, training, and technical assistance.
Institutional participation rates in
Title IV training and specialized
technical assistance programs
75%-80%
84%
80%-82%
86%
Strategic Goal 4: Increase Workforce and Workplace Capabilities
Objective 4.1: Promote workforce diversity, equity, inclusion, and accessibility.
Federal Employee Viewpoint
Survey (FEVS)l Diversity and
Inclusion Index: New Inclusion
Quotient Indexm
Baseline
73%
≥74%
72%
Percentage of qualified new hires
and backfills coming from
identified underrepresented
workforce populations
Baseline
37%
3%-5% of new
hires
51%
Percentage of underrepresented
populations included in
organizational talent acquisition,
promotion, and
development/training activities
Baseline
36%
≥37%
39%
Percentage of employees
participating in formal diversity,
equity, inclusion, and accessibility
efforts
10%-15% of total
employee count
8%
12%-17%
10%
Objective 4.2: Attract, develop, and retain an agile workforce that can quickly respond to a changing environment and
emerging priorities.
FEVS: Intrinsic Work Experiencen
Baseline
76%
≥77%
74%
Objective 4.3: Foster an organizational culture that promotes a productive, connected, and engaged workforce, particularly
in a hybrid workplace environment.
FEVS: Employee Engagement
Indexo
≥73%
75%
≥76%
72%
FEVS: Leaders Leadp
Baseline
61%
≥62%
58%
FEVS: Supervisorsq
Baseline
84%
≥85%
83%
Strategic Goal 5: Boost Operational Efficiency
Objective 5.1: Strengthen enterprise-wide data analytics and information management to foster a customer-centric, datadriven, performance-based organization.
The sum of Annual Data Maturity
Assessment (DMA) for DMA
Processing Areass
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The Office of Federal Student Aid as a Performance-Based Organization
FY2023
FY2024
Performance Indicator
Target
Actual
Goal
Actual
Successful maintenance and use
of statistical models in Title IV
operations
8 total number
of new and
existing
modeling
initiatives
8
9 total number
of new and
existing
modeling
initiatives
9
Implement new Statistical
Modeling Initiatives
2 total number
of new initiatives
2
2 total number
of new initiatives
2
Objective 5.2: Continuously improve systems, structures, and operations to enhance organizational efficiency and
performance.
Operational performancet
Investment
portfolio aligned
to key
organizational
drivers and
current fiscal
year enacted
appropriation.
Investment
portfolio
achieves 75%
milestones.
Organization/pr
ogram risks are
documented.
(Y/N)
Y
Enhance
continual
delivery and
implementation
of improved
Financial
Management and
support sound
investment
decision making
to effectively
drive FSA’s
mission. (Y/N)
Y
Objective 5.3: Enhance procurement planning, management, and execution.
Time-duration estimates for
procurement-related tasks for
use in Program Schedules
Identify requisite
tasks and
durations for
other
procurement
methods based
upon law,
regulation,
policy, and
historic
performance.
Completion of
FSA Acquisitions
Directorate
Collaboration
Site (met)
Identify requisite
tasks and
durations for
other
procurement
methods based
upon law,
regulation,
policy, and
historic
performance.
Identified
requisite tasks
and durations
for government
policy’s
preferred
procurement
method, i.e., full
and open
competition
(met)
Plan, develop and implement a
new investment management
process aligning acquisitions,
budget, and human capital with
program planning
Planning
Planning
Development
Planning
Objective 5.4: Improve cybersecurity detection, prevention, and protection ensuring data confidentiality, integrity, and
availability.
Cybersecurity Maturity-Level
(OIG Maturity Levels)u
60% at level 3 or
higher
100%
70% at level 3 of
higher
100%
Source: FSA, Annual Reports, FY2023-FY2024.
Notes:
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a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
Represents the number of total student loan borrowers who received loan forgiveness through the Public
Service Loan Forgiveness program, Borrower Defense to Repayment, Total and Permanent Disability
Discharge, and income-driven repayment plan forgiveness.
The PSLF Help Tool is an online tool that assists student loan borrowers in determining their eligibility for
PSLF program benefits and to submit an electronic PSLF application.
“Passing score” is defined in contractors’ Service Level Agreements (SLAs), which are required performance
criteria agreed upon by FSA and its vendors in their contracts. SLAs are intended to incentivize vendors to
provide high levels of service to FSA customers. For example, SLAs for loan servicers include call abandon
rates and customer satisfaction scores.
Represents the stakeholder response rate to FSA’s solicitation of their opinions and priorities of Title IV aid
delivery.
Measures the number of FSA customer complaint cases that were closed timely.
Measures the accuracy with which business process operations vendors populate data fields and route FSA
customer complaint cases to appropriate parties.
Measure taken at the mid-year point of FY2024. FSA stopped tracking this measure in April 2024, as it
implemented procedures to auto-route cases to appropriate parties.
Measures the accuracy and quality of complaint responses from FSA vendors.
Measures borrower comprehension and satisfaction with various FSA counseling tools such as student loan
entrance and exit counseling and TEACH Grant counseling.
FSA did not meet its targets for all four performance indicators under this objective in FY2024. FSA
attributed this trend primarily to the roll-out of the 2024-2025 FAFSA form, which reflected significant
statutory changes made to the FAFSA and need analysis methodologies by the FAFSA Simplification Act
(Title VII, Division FF or P.L. 116-260) and the Fostering Undergraduate Talent by Unlocking Resources for
Education Act (FUTURE Act; P.L. 116-91).
Measures the completion rate of comprehensive Title IV compliance reviews for provisionally certified
institutions of higher education (IHEs). Provisionally certified IHEs are those that FSA has determined have
demonstrated their capability to meet Title IV institutional participation requirements within a specified
timeframe.
The Federal Employee Viewpoint Survey (FEVS) is an “organizational climate survey that contains questions
designed to measure employees’ feelings and attitudes in topic areas … important to creating an effective
work environment.” FSA, FY2024 Report p. 88.
Represents FSA’s score on the FEVS Diversity, Equity, Inclusion, and Accessibility Index of the FEVS, which
measures “employee perceptions of the agency’s commitment to diversity, equity, inclusion, and
accessibility.” FSA, FY2024 Report, p. 90.
Represents FSA’s score on the FEVS Intrinsic Work Experience subindex within the FEVS Employee
Engagement Index (EEI). The subindex “reflects employees’ feelings of motivation and competency relating
to their roles in the workplace.” FSA, FY2024 Report, p.93.
Represents FSA’s score on the FEVS EEI. The EEI “assesses the critical conditions conducive for employee
engagement such as effective leadership, meaningful work, and opportunities to grow on the job.” FSA,
FY2024 Report, p. 97.
Represents FSA’s score on the FEVS Leaders Lead subindex the within the EEI. The subindex “reflects
employees’ perceptions of the integrity of leadership, as well as leadership behaviors such as communication
and workforce motivation.” (FSA, FY2024 Report, p. 97) In FY2023, the indicator used was derived from
specific questions on the FEVS and was referred to as “FEVS: Communication.” To better align with FSA’s
2023-2027 strategic plan, the indicator was derived from the entirety of the Leaders Lead subindex.
Represents FSA’s score on the FEVS Supervisors subindex within the EEI. The subindex “reflects employees’
perception of the interpersonal relationship between worker and supervisor, including trust, respect, and
support.” (FSA, FY2024 Report p. 97) In FY2023, the indicator used was derived from specific questions on
the FEVS and was referred to as “FEVS: Collaboration.” To better align with FSA’s 2023-2027 strategic plan,
the indicator was derived from the entirety of the Supervisors subindex.
The result for this indicator was unavailable at the time of publication.
The Data Maturity Assessment provides a “comprehensive framework of data management practices
organized into key categories that allow for the benchmarking of capabilities, the identification of strengths
and gaps, and the leveraging of data assets to improve business performance.” FSA, FY2024 Report, p. 101.
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t.
u.
Measures the effectiveness of FSA’s financial planning, budget execution, management of financial systems,
and compliances with applicable laws, regulations, and policies.
Measures FSA’s progress toward achieving compliance with the five major categories of the Federal
Information Security Modernization Act of 2014 (FISMA)—identify, protect, detect, respond, and recover—
that strengthen federal cybersecurity.
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The Office of Federal Student Aid as a Performance-Based Organization
Assessments of FSA as a PBO
Close observers assessed FSA’s progress in addressing the congressionally identified issues that
prompted FSA’s establishment as a PBO in 1998.
Immediately following the enactment of the HEA provisions establishing a PBO, ACSFA
acknowledged the difficulty of simultaneously undertaking a major reorganization and system
modernization. ACSFA noted the commitment and energy of the first permanent COO and
praised “his willingness to communicate with the higher education community” as well as his
early senior personnel choices.218
ACSFA also criticized the priorities of the new unit as well as its adherence to the congressional
intent behind, and the requirements of, the new statute. Among other concerns, it noted that
•
•
•
ED appeared to be transplanting the organizational arrangements of SFAP (FSA’s
predecessor), as an office of OPE, into a new PBO that reported directly to the
Secretary without making more fundamental changes to its management and
organizational structure;
ED was failing to “adequately separate policy making and regulatory
responsibilities of OPE and operations responsibilities of the PBO as intended by
Congress;”219 and
rather than “directing its attention and scarce resources toward solving its basic
systems, data, and contract problems, the PBO appear[ed] to be … concentrating
on the twin objectives of improving day-to-day customer service and providing
students web access to their data through ‘a single federal point of contact’ for all
financial aid transactions.”220
In 2002, ACSFA reported, among other findings, that some progress had been made on
transferring policymaking functions to OPE but that “functions related to institutional eligibility
and guarantor and lender oversight” remained within the purview of FSA.221 ASFCA called for
218 ACSFA, letter to Senator James M. Jeffords, chair of the Senate Committee on Health, Education, Labor, and
Pensions, November 30, 1999, p. 1. A copy of this document can be provided by the authors to congressional clients
upon request. This report was made pursuant to Section 490C of the Higher Education Amendments of 1998, which
directed ACFSA to conduct specified analyses related to delivery systems for student financial aid. Among other
mandated activities, the committee was to “monitor and evaluate the modernization of student financial aid systems and
delivery processes, including the implementation of a performance-based organization within the Department, and
report to Congress regarding such modernization on not less than an annual basis, including recommendations for
improvement.”
219 ACSFA, “Implementing the Higher Education Amendments of 1998: Update on Key Issues,” January 1999, p. 4.
This committee’s evaluation was based on its review of ED transition plans and organizational charts that had been
formulated in the summer of 1998 in anticipation of the bill’s passage, communications between ACSFA and the
department, and communications between Congress and ED. A copy of this document can be provided by the authors
to congressional clients upon request.
220 ACSFA, “The PBO and Modernization: Progress to Date,” November 1999, p. 13. A copy of this document can be
provided by the authors to congressional clients upon request.
221 ACSFA, letter to Senator Edward M. Kennedy, January 10, 2002. A copy of this document may be provided by the
authors to congressional clients upon request. ACSFA had expressed its concerns about these specific functions
beginning early in the implementation process. These concern
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