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ERIC Number: ED353881
Record Type: Non-Journal
Publication Date: 1992-Nov-13
Pages: 31
Abstractor: N/A
Guaranty Agency Solvency: Can the Government Recover HEAF's First-Year Liquidation Cost of $212 Million? Briefing Report to the Chairman, Committee on Labor and Human Resources, U.S. Senate.
General Accounting Office, Washington, DC. Div. of Human Resources.
This study examined the federal cost incurred from the Higher Education Assistance Foundation's (HEAF) planned liquidation for fiscal year 1991 and whether the government can recover those costs. The study reviewed agreements between the Department of Education and guarantor agencies, examined HEAF's financial data for fiscal year 1991, and analyzed the Department's reinsurance payments for defaulted HEAF loans for fiscal year 1991. Also, officials from these entities were interviewed for additional information about the liquidation agreement and its costs. The study estimated that of the HEAF liquidation costs of $212.4 million during fiscal year 1991, the largest portion, $138.8 million, was due to the Department's agreeing to pay 100 percent reinsurance for all of HEAF's defaulted loans during the year, rather than reimbursing at the 90 and 80 percent rates for those claims submitted over the threshold. The remaining $73.6 million was primarily due to HEAF retaining default collections that normally would be forwarded to the Department. In addition, Department and other officials believe that net federal cost for the liquidation will be lower in fiscal years 1992 and 1993, and that loan collections after the Department receives all of HEAF's defaulted loan portfolio will eventually exceed the government's cost for liquidating HEAF. (JB)
U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20877 (first copy free, additional copies $2).
Publication Type: Reports - Evaluative
Education Level: N/A
Audience: Policymakers
Language: English
Sponsor: N/A
Authoring Institution: General Accounting Office, Washington, DC. Div. of Human Resources.