Notes to SEFA
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Pennsylvania Higher Education Assistance Agency (PHEAA) under programs of the federal government for the year ended June 30, 2025. 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 PHEAA, it is not intended to and does not present the financial position, changes in net position, or cash flows of PHEAA. The schedule includes expenditures of federal awards received directly from federal agencies and federal awards passed through the Commonwealth of Pennsylvania. There were no federal funds passed through to subrecipients for the year ended June 30, 2025.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized using the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
PHEAA has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
The federal student loan programs listed below are administered directly by PHEAA and balances andtransactions relating to these programs are included in PHEAA’s basic financial statements. The beginning balance of loans outstanding are included in the federal expenditures presented in the Schedule. Federal Family Education Loans Guaranty Agencies • The Schedule includes loans outstanding at the beginning of the year, for which the federal government imposes continuing compliance requirements related to the Federal Family Education Loan (FFEL) program. The balance of FFEL loans outstanding at June 30, 2025 is approximately $5.7 billion. • The Schedule includes approximately $79 million of fees related to retention of collections on defaulted loans, account maintenance fees, and fresh start program fees for the loan program. These fees were deposited in the Guaranty Agency Operating Fund. • As part of the guaranty operations, PHEAA manages the Federal Student Loan Reserve Fund (the Federal Fund) for the Department of Education. The Federal Fund is used to pay claims on defaulted loans and belongs to the federal government. Additional information regarding the Federal Fund may be found in Note 3 to PHEAA’s financial statements. Federal Family Education Loans Lenders • The Schedule includes loans outstanding at the beginning of the year, for which the federal government imposes continuing compliance requirements related to the Federal Family Education Loan (FFEL) program. The balance of FFEL loans outstanding at June 30, 2025 is approximately $1.3 billion. • The Schedule includes approximately $59 million of payments for insurance related to defaults of FFEL program loans. • The Schedule includes approximately $21 million for interest subsidy and special allowance. Health Education Assistance Loans (HEAL) • The Schedule includes loans outstanding at the beginning of the year, for which the federal government imposes continuing compliance requirements related to the HEAL program. The HEAL program was terminated September 30, 1997 and the HEAL Consolidation program, allowing borrowers to consolidate individual HEAL loans into one loan, terminated September 30, 2004. The balance of HEAL loans outstanding at June 30, 2025 is approximately $721 thousand. • The Schedule includes approximately $3 thousand of payments for insurance related to defaults of HEAL program loans.