Blazing the Guaranty Agency Financial Report ED Form 2000

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Session 69

• Blazing the Guaranty Agency Financial Report (ED
  Form 2000)
• Sandra Simmons
• Katrina Turner

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Agenda

• When to Submit the Guaranty Agency Financial
  Report (GAFR)
• Uses of the GAFR Data
• Changes to GAFR Reporting as a Result of the
  Higher Education Reconciliation Act (HERA)
• Clarification on Rehabilitated Loan Reporting
• Verification and Analysis of the Annual GAFR Data
  Submitted
• Reconciliation of Annual GAFR Data to Guaranty
  Agencys Financial Statements

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1. When to Submit the Guaranty Agency Financial
Report (GAFR)

• Monthly
• Claims submitted within 30 days
• Collections within 45 Days
• Monthly/Quarterly required monthly
• Annual
• Data is reported as of September 30 on an accrual
  basis and due by December 1.

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2. Uses of GAFR Data

• Receive and make payments to guarantors
• Monitor guarantors financial activities
• Collection recovery rate
• Federal receivable balance
• EDs financial statements
• Reasonability to NSLDS data
• Minimum Reserve Ratio and
• Trigger Rate.

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2. Uses of GAFR Data (Cont.)

• Minimum Reserve Ratio
• If a guarantor drops below the minimum reserve
  ratio of .25 for two consecutive years, they are
  required to submit and implement a Management
  Plan acceptable to the Department.
• Higher Education Act of 1965 (HEA, as
  amended), Section 428(c)(9)(C)

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2. Uses of GAFR Data (Cont.)

• Minimum Reserve Ratio Calculation
• Historical method of calculating the minimum
  reserve ratio is
• Federal Fund Balance (AR-26) divided by
  Original Principal Outstanding (OPO)
• The historical calculation is used for
  evaluating a guaranty agencys financial
  condition.

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2. Uses of GAFR Data (Cont.)

• Currently, the ratio published on the FP Portal
  is
• Federal Fund Balance (AR-26) Loan Loss
  Liability (AR- 56) FY06 and FY07 Reserve
  Recalls Not Returned divided by Original
  Principal Outstanding (OPO)

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2. Uses of GAFR Data (Cont.)

• Original Principal Outstanding (OPO)
• AR-1 (-) AR-2 () AR-3 (-) AR-4 (-) AR-5 ()
  AR-6 (-) AR-7 (-) AR-8 (-) AR-9 (-) AR-10 (-)
  AR-11 (-) AR-12

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2. Uses of GAFR Data (Cont.)

• Trigger Rate
• If the guarantors reinsurance claims paid by the
  Department reaches 5 or 9 (trigger rate) of the
  loans in repayment at the end of the preceding
  year, then the reimbursement rate on claims are
  reduced.
• The method for calculating the Trigger Rate is
• Trigger Basis Amount divided by Loans In
  Repayment

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2. Uses of GAFR Data (Cont.)

• Trigger Basis Amount
• Dollars Paid CFY (-) Rehab Loan Refunds (-)
  Refunds
• Loans in Repayment _at_ 9/30 of the prior year
• AR-1 (-) AR-2 () AR-3 (-) AR-4 (-) AR-5 ()
• AR-6 (-) AR-7 (-) AR-8 (-) AR-9 (-) AR-10 (-)
• AR-11 (-) AR-12 (-) AR-13 (-) AR-14

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2. Uses of GAFR Data (Cont.)

• Category Calculations
• Loans in Repayment (see calculation above)
• 5 Trigger (In Repayment) 5 of Calculated Value
  Above
• 9 Trigger (In Repayment) 9 of Calculated Value
  Above
• Amount Requested Fiscal Year to Date FYTD Total
  MR-1 Other Amount
• Dollars Paid Fiscal Year to Date FYTD Total MR-1
  Principal Amount
• Rehabilitated Loans Applied If a GA has an
  Rehabilitation Agreement Cumulative total
  of MR-10 Rehabilitated Loan Principal Amount.
  If a GA has no Rehabilitation Agreement this
  Field would be zero.
• Refunds Applied All GAs receive credit for
  Partial Refunds (MR-7-A). GAs with
  Repurchase Agreement Receive credit for
  Repurchases CFY,
• MR-5-A, Defaults. W/agreement total for
  MR-5-A plus MR-7-A. W/out agreement total
  for MR-7-A only.
• Trigger Basis Amount Represents the fiscal year
  to date amount of Dollars Paid FY to Date
  reduced by the amounts calculated for
  Rehabilitated Loans Applied and
• Refunds Applied.
• Percent of Request Paid Dollars Paid FY to Date
  divided by Amount Requested FY to Date.
• Trigger Rate Trigger Basis Amount divided by
  Loans in Repayment.

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3. Changes to GAFR Reporting as a result of the
HERA

• Insurance/Reinsurance Rates
• Lender Insurance (Loan 1st Disbursed On/After
  7/1/06)  Lender 97 GA 95
• Lender Insurance for Exempt Claims (Loan 1st
  Disbursed On/After 7/1/06) Lender 100 GA 100
•  Exceptional Performer (Claim Submitted On/After
  7/1/06) Lender 99 GA 95

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3. Changes to GAFR Reporting as a result of the
HERA (Cont.)

• 30-Day Claim Filing
• New Supplemental GA Report
• GA Claims
• VFA Weekly
• Supplemental Detail Reports

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3. Changes to GAFR Reporting as a result of the
HERA (Cont.)

• Secretarys Fee on Consolidation Loans
• FFEL to FFEL
• FFEL to DL
• Monthly GAFR Reporting

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3. Changes to GAFR Reporting as a result of the
HERA (Cont.)

• Account Maintenance Fee
• FY 06
• Spending cap 220 million
• Payment methodology
• Authority to transfer funds rescinded 7/1/06
• FY 07
• No spending cap

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3. Changes to GAFR Reporting as a result of the
HERA (Cont.)

• Federal Default Fee
• Effective on all loans guaranteed on or after
  7/1/2006, a fee of 1 on all loans guaranteed
  must be deposited into the Federal Fund
• This amount is reported in line AR-19 on the
  Annual GAFR.

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4. Example of Rehabilitated Loan Reporting
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5. Verification of Annual GAFR Reporting

• Loans in Repayment (CFYgtPFY)
• Fed Fund Bal AR-26 PFY AR-15 CFY
• Reinsurance AR-17 lt AR-21 Claims pd.
• DAF transfers AR-23 AR-30
• Operating Fund Bal AR-40 PFY AR-29 CFY
• Verify amounts reported for LPIF and AMF
• Validate AR-56

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5. Verification of Annual GAFRReporting (Cont.)

• Compare Monthly Data Elements to Annual
• Reinsurance from ED (AR-17)
• MR-16 AR-51 AR-54
• Collections (AR-20 and AR-25)
• Secretarys Share

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6. Reconciliation of Annual GAFR Data to
Guaranty Agencys Financial Statements

• Data submitted must reconcile to the guaranty
  agencys financial statements.
• Guarantor must maintain supporting documentation
  for all line items.
• Periodically, the Department conducts Forms 2000
  program reviews.

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Technical Slide

• We appreciate your feedback and comments.
• Sandra Simmons Katrina Turner
• 202.377.3332 202.377.3311
• Sandra.Simmons_at_ed.gov Katrina.Turner_at_ed.gov
• or FSA_GAR_at_ed.gov
• 202.275.3481 202.275.0913