Title: Organization and Reporting Entity
Accounting Policies: Basis of Presentation - The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the Companies under programs of the federal government for the year ended June 30, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Companies, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Companies. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Indirect Cost Rate - The Companies have elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Federal Financial Assistance - The Companies receive interest subsidies on behalf of eligible students during qualified periods and special allowance on eligible qualifying loans disbursed before April 1, 2006. The Special Allowance Payment formula, or SAP rate, is determined by the DOE, based upon an average of all of the applicable floating rates (91-day Treasury bill, commercial paper, and 52-week Treasury bill) in a calendar quarter, plus a spread between 1.74% and 3.50%, depending on the underlying loan status and origination date. These rates are then applied to the quarterly average daily balance for loans eligible to receive SAP.For loans first disbursed prior to April 1, 2006, the Companies earn interest at the higher of the borrowers rate or the SAP rate. If the SAP rate exceeds the borrowers rate, the DOE makes a payment directly to the Companies. For loans first disbursed after April 1, 2006, the Companies earn interest at the SAP rate. If the SAP rate is less than the borrowers rate, the Companies rebate the difference between the borrowers rate and the lower SAP rate to the DOE. If the SAP rate is greater than the borrowers rate, the DOE makes SAP payments to the Companies for the difference between the two rates.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
Brazos Higher Education Authority, Inc. (BHEA), Brazos Student Finance Corporation(BSFC), Bosque Higher Education Authority, Inc. (Bosque), Federated Student Finance Corporation (FSFC), and Brazos Education Loan Authority (BELA), (collectively, the Companies) operate in the education loan industry. While the individual entities are independent of one another, they are controlled by common officers and certain common directors with the ability to influence the business performed by each entity. The Companies provide funds for the origination, acquisition and servicing of guaranteed student loans which are insured by the U.S. Department of Education (DOE) and guaranteed by various national guarantors under the Federal Family Education Loans Program (Lenders) as provided for in the Higher Education Act of 1965, as amended. To maintain such insurance and guarantee of student loans, the Companies must individually comply with the servicing, collecting, accounting, and reporting requirements of the Federal Family Education Loans Program (Lenders). On April 30, 2022, the Bosque merged with affiliated entity, Acapita Education Finance Corporation (AEFC), with the Authority being the surviving entity. As entities under common control in accordance with the appropriate accounting guidance, the financial statements, for all periods presented, have been accounted for on a retrospective basis as if the merger occurred prior to the beginning date of the financial statements being presented. Therefore, the outstanding loan receivable balance, interest subsidies and special allowance subsidies (payments) of Bosque include AEFC balances and transactions as of and for the year ended June 30, 2022.
Title: Student Loan Notes Servicing
Accounting Policies: Basis of Presentation - The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the Companies under programs of the federal government for the year ended June 30, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Companies, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Companies. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Indirect Cost Rate - The Companies have elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Federal Financial Assistance - The Companies receive interest subsidies on behalf of eligible students during qualified periods and special allowance on eligible qualifying loans disbursed before April 1, 2006. The Special Allowance Payment formula, or SAP rate, is determined by the DOE, based upon an average of all of the applicable floating rates (91-day Treasury bill, commercial paper, and 52-week Treasury bill) in a calendar quarter, plus a spread between 1.74% and 3.50%, depending on the underlying loan status and origination date. These rates are then applied to the quarterly average daily balance for loans eligible to receive SAP.For loans first disbursed prior to April 1, 2006, the Companies earn interest at the higher of the borrowers rate or the SAP rate. If the SAP rate exceeds the borrowers rate, the DOE makes a payment directly to the Companies. For loans first disbursed after April 1, 2006, the Companies earn interest at the SAP rate. If the SAP rate is less than the borrowers rate, the Companies rebate the difference between the borrowers rate and the lower SAP rate to the DOE. If the SAP rate is greater than the borrowers rate, the DOE makes SAP payments to the Companies for the difference between the two rates.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The Brazos Higher Education Service Corporation, Inc. (BHESC) provides the Companies with the necessary student loan servicing to maintain compliance with the requirements of the Federal Family Education Loans Program (Lenders) by holding subservicing agreements for loan servicing duties with various student loan servicing agencies. BHESC holds subservicing agreements for Federal Family Education Loans Program (Lenders) loan servicing duties with Navient Solutions, LLC (formerly known as Sallie Mae Servicing Corporation), Nelnet Diversified Solutions LLC, and American Education Services (Pennsylvania Higher Education Assistance Agency). Under the terms of these subservicing agreements, the sub servicer shall reimburse the Companies for any loss of principal and interest resulting from deficiencies in the loan servicing performed by the subservicer.
Title: Accrued Federal Interest and Subsidies Receivable
Accounting Policies: Basis of Presentation - The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the Companies under programs of the federal government for the year ended June 30, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Companies, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Companies. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Indirect Cost Rate - The Companies have elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Federal Financial Assistance - The Companies receive interest subsidies on behalf of eligible students during qualified periods and special allowance on eligible qualifying loans disbursed before April 1, 2006. The Special Allowance Payment formula, or SAP rate, is determined by the DOE, based upon an average of all of the applicable floating rates (91-day Treasury bill, commercial paper, and 52-week Treasury bill) in a calendar quarter, plus a spread between 1.74% and 3.50%, depending on the underlying loan status and origination date. These rates are then applied to the quarterly average daily balance for loans eligible to receive SAP.For loans first disbursed prior to April 1, 2006, the Companies earn interest at the higher of the borrowers rate or the SAP rate. If the SAP rate exceeds the borrowers rate, the DOE makes a payment directly to the Companies. For loans first disbursed after April 1, 2006, the Companies earn interest at the SAP rate. If the SAP rate is less than the borrowers rate, the Companies rebate the difference between the borrowers rate and the lower SAP rate to the DOE. If the SAP rate is greater than the borrowers rate, the DOE makes SAP payments to the Companies for the difference between the two rates.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The following represents the accrued federal interest and subsidies receivable for the year ended June 30, 2022 was $896,086. See table in the notes to the schedule of expenditures of federal awards.
Title: Outstanding Student Loan Balances
Accounting Policies: Basis of Presentation - The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the Companies under programs of the federal government for the year ended June 30, 2022. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Companies, it is not intended to and does not present the financial position, changes in net assets or cash flows of the Companies. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Indirect Cost Rate - The Companies have elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Federal Financial Assistance - The Companies receive interest subsidies on behalf of eligible students during qualified periods and special allowance on eligible qualifying loans disbursed before April 1, 2006. The Special Allowance Payment formula, or SAP rate, is determined by the DOE, based upon an average of all of the applicable floating rates (91-day Treasury bill, commercial paper, and 52-week Treasury bill) in a calendar quarter, plus a spread between 1.74% and 3.50%, depending on the underlying loan status and origination date. These rates are then applied to the quarterly average daily balance for loans eligible to receive SAP.For loans first disbursed prior to April 1, 2006, the Companies earn interest at the higher of the borrowers rate or the SAP rate. If the SAP rate exceeds the borrowers rate, the DOE makes a payment directly to the Companies. For loans first disbursed after April 1, 2006, the Companies earn interest at the SAP rate. If the SAP rate is less than the borrowers rate, the Companies rebate the difference between the borrowers rate and the lower SAP rate to the DOE. If the SAP rate is greater than the borrowers rate, the DOE makes SAP payments to the Companies for the difference between the two rates.
De Minimis Rate Used: N
Rate Explanation: The auditee did not use the de minimis cost rate.
The federal loan program listed subsequently are administered directly by the Companies, and balances and transactions relating to this program are included in the Companies basic financial statements. Loans outstanding at the beginning of the year, loans made during the year, if any, interest subsidies and special allowance subsidies (payments) are included in the federal expenditures presented in the Schedule. The balance of loans outstanding at June 30, 2022 were $2,267,840,016 (see table in the notes to the schedule of expenditures of federal awards).