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Guaranty Agency

Financial Report for


Beginners
(ED Form 2000)

Barbara Johnson
Sandra Simmons
Agenda
• Introduction
• Insurance vs. Reinsurance
• “Secretary’s Share” How is it Calculated
• How Much Do I Get “GA Retention”
• GAFR Line-by-Line
• Statement of Account (SOA)
• Web Application Demo (Navigation and Running Reports)

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Introduction
• What is the Guaranty
Agency Financial Guaranty Agency
Report Financial Report
(GAFR)
ED Form 2000
• FSA’s Role
• GA’s Role Instruction
Guide

Revised: June 2006

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Insurance vs. Reinsurance
• Insurance
– Amount the GA Pays the Lender
– Based on 1st Disbursement of Loan
• Reinsurance
– Amount ED Pays the GA
• Based on 1st Disbursement of Loan
• Reinsurance Complement

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Insurance vs. Reinsurance Rates
Description Loan Reimburse- Reimburse- Reimburse- Reimburse-
Amount/ ment Rate ment ment Rate ment
Claim (GA to Amount to (ED to GA) Amount to
Amount Lender) Lender GA
Lender Insurance (Loan $1,000.00 100% $1,000.00 100% $1,000.00
1st Disbursed Before
10/1/93)
Lender Insurance (Loan $1,000.00 100% $1,000.00 98% $980.00
1st Disbursed On/After
10/1/93 and Before
10/1/98)
Lender Insurance (Loan
1st Disbursed On/After $1,000.00 98% $980.00 95% $931.00
10/1/98 and Before
7/1/06)

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Insurance vs. Reinsurance Rates
Reimburse- Reimburse- Reimburse- Reimburse-
Description Loan Amount/ ment ment ment ment Amount
Claim Amount Rate (GA to Amount to Rate to GA
Lender) Lender (ED to GA)
Lender Insurance (Loan 1st
Disbursed On/After 7/1/06) $1,000.00 97% $970.00 95% $921.50

Lender Insurance for Exempt


Claims (Loan 1st Disbursed $1,000.00 98% $980.00 95% $931.00
Before 7/1/06)
Lender Insurance for Exempt
Claims (Loan 1st Disbursed
On/After 7/1/06) $1,000.00 100% $1,000.00 100% $1,000.00
Exceptional Performer (Claim
Submitted Before 7/1/06) $1,000.00 100% $1,000.00 95% $950.00
Exceptional Performer (Claim
Submitted On/After 7/1/06) $1,000.00 99% $990.00 95% $940.50

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Secretary’s Share
• The amount of the collections, which
a guaranty agency must return to
ED, is referred to as the “Secretary’s
equitable share” of collections.
• The formula for calculating the
Federal share of collections is:
Total Collected
less Reinsurance Complement
less GA Retention
= Secretary’s Share of Collections.
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How Much Do I Get – GA Retention
The guaranty agency is also allowed to retain—
• 30 percent of the amount of collections received
prior to October 1, 1993,
• 27 percent of the amount of collections received on
or after October 1, 1993 and before October 1, 1998,
• 24 percent of the amount of collections received on
or after October 1, 1998 and before October 1, 2003,
and
• 23 percent of the amount of collections received on
or after October 1, 2003.

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Statement of Account Requested Amount
Due To/(From)
Category Guarantor
1 Loans In Repayment 5,128,162,386.00

2 5% Trigger $256,408,119.30
3 9% Trigger $461,534,614.74

4 Amount Requested Fiscal Year to Date $23,433,672.50


5 Dollars Paid Fiscal Year to Date $23,043,226.70
6 Rehabilitated Loans Applied $1,581,819.43
7 Refunds Applied $818,499.79
8 Trigger Basis Amount $20,642,907.48
9 Percent of Request Paid 98%
10 Trigger Rate 0.40%

11 Beginning Balance $999,999,999,999.99


12 Outstanding Balance Interest $999,999,999,999.99
13 Claims Paid Amount (All Claim Categories) $999,999,999,999.99
14 Borrower Payment Returns $999,999,999,999.99
15 Status Changes $999,999,999,999.99
16 TOP Overpayments $999,999,999,999.99
17 Repurchases/Refunds/Overpayments CFY -$999,999,999,999.99

18 Rehabilitated Loans -$999,999,999,999.99


19 FFEL Consolidations -$999,999,999,999.99
20 Default/Administrative W age Garnishment Collections -$999,999,999,999.99
21 Bankruptcy Collections -$999,999,999,999.99
22 Default FFEL Consolidated by DL Fee #################

23 Total Due To/From Guarantor +/-$999,999,999.99

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MR-1, Claims Paid
• Reinsurance
– Claim Categories
• Default
• Exempt/LLR
• Death/Disability
• Closed School/False
Certification
• Bankruptcy
• Unpaid Refunds/
Discharges

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MR-1-A, Defaults Reinsurance
Amount
Requested
• Example: GA pays lender Paid
From ED
claim $9,800, based on the to Lender
lender requested amount of
$10,000 on a default loan
first disbursed on or after
10/1/98 and before 7/1/06
(i.e., .95% Reinsurance
Reimbursement Rate. The
guaranty agency’s reporting
would look like this.

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MR-2, Borrower Payment Return
• Refund of Default Collections to Borrower
– GA Refunds Borrower’s Collection
– GA Requests Reimbursement from ED
• Claim Originally Paid as Default
• Borrower Made Payments
• Subsequent Change in Status from Default to
– Closed School
– False Certification

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MR-3, Status Changes
• Loan Status Changes from Default to:
– Death/Disability
– Bankruptcy
– Closed School/False Certification
• GA is Entitled to Additional Reinsurance
– If, Original Claim paid at < 100%
• Account Balance at Conversion (MR-20 through
MR-23)

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MR-4, TOP Overpayments
• GA Requests Reimbursement from ED
– After Treasury Offset Activity has occurred
– Which Results in a Refund to Borrower
– Where Offset Exceeds Balance Due on
Borrower Account

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MR-5 & 6, Repurchases
• Full Refund of Reinsurance
– Current and Prior Fiscal Year
• Reduced by Borrower
Payments
• Refunded at Claim
Reimbursement Rate
• Impact on “Trigger”
– Repurchase
Agreement
– No Repurchase
Agreement

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MR-7 & 8, Partial Refunds
• Partial Refund of Reinsurance
– Lender Refunds
– Current and Prior Fiscal Year
• Reduced by Borrower
Payments
• Refunded at Claim
Reimbursement Rate
• Impact on “Trigger”
– Repurchase
Agreement
– No Repurchase
Agreement

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MR- 9, Overstated Claims

• Principal Amount = Decrease in Amounts for


Principal, Lender and GA Claim Interest
– Claim Categories
• MR-9-A Default
• MR-9-B Exempt/Lender of Last Resort
• MR-9-C Death/Disability
• MR-9-D Closed School/False Certification
• MR-9-E Bankruptcy (All chapters)

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Example: Rehabilitation Loan
Calculation
• Reinsurance Reimbursement Rate – 98%
• Outstanding Principal and Interest Balance at
Time of Rehabilitation – $1,000.00 (Outstanding
Principal Balance – $993.27; Accrued Interest –
$6.73)
• Payoff Amount (for lender to purchase
rehabilitated loan) – $1,185.00 [Outstanding
Principal and Interest Balance of $1,000.00 plus
Collection Cost of $185.00 ($1,000.00 * 18.5%)]
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MR-10, Rehabilitated Loan Refund
Principal Accrued Other Total Payoff
Interest Charges Amount

Payoff Amount $993.27 $6.73 $185.00 $1,185.00

Secretary’s Share $993.27* 98% * 81.5% =


$793.32

GA Retention $993.27* 18.5% = $183.75

Complement
(for informational $1,185.00– $793.32–
purposes only) $183.75– $6.73– $185.00
= $16.20

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MR-11, FFEL Consolidation Refund
Example: FFELP Loan Consolidation Reporting (ReinsuranceRate=
98%)
Calculated Calculated GA
Payoff Amount $30,000.00 Secretary’s Retention
Share
$20,000.00 *
Outstanding Principal $20,000.00 98% =
$19,600.00
$10,000.00 *
Outstanding Accrued $10,000.00 98% = $9,800.00
Interest
$30,000.00 * $30,000.00 x 10%
Other Charges 8.5%= = $3,000.00
$2,550.00

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Secretary’s
Fee

GA
Reinsurance Retention
Complement

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MR- 12, Wage Garnishment
Example: WageGarnishment Collections (ReinsuranceReimbursement Rate
= 95%, Collection Retention Rate– 24%)
Total
Collected Principal Interest Other
Charges
$8,000.00 5,000.00 2,000.00 1,000.00
($5000 * .95) ($2000 *. ($1000 * .95) -
Secretary’s - ($5000 *. 95) - ($2000 ($1000 * .24)
Share 24) *. 24) = = $710.00
= $3,550.00 $1,420.00
GA $5000 * .24% $2000 * $1000 *.24% =
Retention = $1,200 .24% = $480 $240

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MR-13, Default Collections
Sample Default Collections: (Reinsurance Reimbursement Rate = 98%,
Collection Retention Rate– 24%)
Total Principal Interest Other Charges
Collected
$38,000.00 15,000.00 12,000.00 11,000.00

Secretary’s ($15000 *. 98) ($12000 *. 98) - ($11000 * .98) -


Share - ($15000 * ($12000 * .24) ($11000 * .24)
.24)= $11,100 = $8,880.00 = $8,140.00

GA $15000 * .24% $12000 * .24% $11000 * .24%


Retention = $3,600 = $2880.00 = $2,640.00

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MR-14, Bankruptcy Collections
– All Chapters (7, 11, 12 & 13)
• Principal Amount = Amount Applied to Principal
and Purchased Interest
• Interest Amount = Amount Applied to Accrued
Interest
• Other Amounts =Other Charges, if any

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MR-15, Default FFEL
Consolidated by DL Fee
• Secretary’s fee on defaulted
FFEL Loans Consolidated by
DL
– GA Collection Cost 18.5%
– Up to 8.5% due to the
Secretary
• This fee is effective for
defaulted loans
consolidated on or after
October 1, 2006.
• No collection costs no fee
due,
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• Any collection costs the
MR 16, Total
• Amount Due To/From Guarantor
– Total equals the sum of amounts reported in
MR-1 through MR-15.
– The total will be displayed as a positive or
negative amount
• Positive represents the amount due to the
guarantor.
• Negative represents amount due ED.
– Amounts due ED from monthly processing
may be offset by pending Account
Maintenance Fee or Loan Processing and
Issuance Fee payments.. 29
MR-17 - MR-23, Non Payment Activity
– Must be submitted Monthly
– Adjustments to the Federal Receivable Balance
– MR-17 - MR-19
• Treasury Offset Transactions
– MR-20 - MR -23
• Status Changes - Account Balance at Conversion
• Include Exempt Claims in MR-20 through MR-22

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MR 24 through MR 31, Agency Accruals
• Report Fiscal Year-To-Date
• Report Principal, Interest and Other Charges
– MR-24 Collection Terminations
– MR-25 Compromises
– MR-26 Agency’s Accruals
• Accrued Interest calculated by the GA on the loan
principal of a claim for collection from the borrower
during the fiscal year.

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MR 24 through MR 31, Agency Accruals
• Other Charges including the the total amount of fees, penalties, collection
charges, and any other charges which have accrued for any loan.
● MR-27 Default FFEL Consolidated by DLP
● MR-28 Subrogated Loans (Assignments)
Loans accepted into the Debt Collection Management System
– MR-29 Default Loans Transferred Out
● MR-30 Default Loans Transferred In
● MR-31 Other Transactions Affecting the Federal Receivable

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MR 24 through MR 31, Agency Accruals
• Other Charges including the the total amount of fees, penalties, collection
charges, and any other charges which have accrued for any loan.
●MR-27 Default FFEL Consolidated by DLP
●MR-28 Subrogated Loans (Assignments)
• Loans accepted by the Default Resolution Group

–MR-29 Default Loans Transferred Out


●MR-30 Default Loans Transferred In
●MR-31 Other Transactions Affecting Federal Receivable

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MR-32 – MR-40, Delinquency by Debt
• MR-32 Ending Balance
• MR-33 through MR-40: Delinquency by Debt
– Cumulative from inception of the FFELP Program
Delinquency by Debt

• MR-33: Not Delinquent (Current Loans)


• MR-34: 1 - 90 Days Delinquent
• MR-35: 91 - 180 Days Delinquent

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MR-33 - MR-40, Delinquency by Debt
(Continued)

• MR-36: 181 - 365 Days Delinquent


• MR-37: 1 - 2 Years Delinquent
• MR-38: 2 - 6 Years Delinquent
• MR-39: 6 - 10 Years Delinquent
• MR-40: Over 10 Years Delinquent

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MR-41 & 42, Bankruptcy
• Bankruptcy
– MR-41 Ending Balance on Bankruptcies
• Balance is reported fiscal year-to-date.
– MR-42 Bankruptcies Transferred
• Dollar amount of bankruptcies transferred to ECMC
fiscal year-to-date.

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Technical Slide
We appreciate your feedback and comments.

Barbara Johnson Sandra Simmons


202.377.3327 202.377.3332

BJ.Johnson@ed.gov Sandra.Simmons@ed.gov
Or: FSA_GAR@ed.gov

202.275.3481 202.275.3481

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