    [Appendix]
    [Detailed Budget Estimates by Agency]
    [Department of Education]
    [From the U.S. Government Printing Office, www.gpo.gov]

                         THE BUDGET FOR FISCAL YEAR 2004

    [[Page 323]]

                             DEPARTMENT OF EDUCATION

                  OFFICE OF ELEMENTARY AND SECONDARY EDUCATION

                                  Federal Funds

    General and special funds:

                         Education for the Disadvantaged

        For carrying out title I of the Elementary and Secondary Education
    Act of 1965 (``ESEA'') and section 418A of the Higher Education Act of
    1965, $14,184,000,000, of which $6,632,199,000 shall become available on
    July 1, 2004, and shall remain available through September 30, 2005, and
    of which $7,383,301,000 shall become available on October 1, 2004, and
    shall remain available through September 30, 2005, for academic year
    2004-2005: Provided, That $7,172,971,000 shall be for basic grants under
    section 1124, of which up to $3,500,000 shall be available to the
    Secretary of Education on October 1, 2003, to obtain updated
    educational-agency-level census poverty data from the Bureau of the
    Census: Provided further, That $1,365,031,000 shall be for concentration
    grants under section 1124A: Provided further, That $3,018,499,000 shall
    be for targeted grants under section 1125: Provided further, That
    $793,499,000 shall be for education finance incentive grants under
    section 1125A: Provided further, That $9,500,000 shall be to carry out
    part E of Title I, of which up to $1,000,000 shall be available to the
    Secretary of Education to provide technical assistance to State and
    local educational agencies concerning part A of Title I.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0900-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Direct program:

            Grants to local educational
                agencies:
              Local educational agency
                  formulas:
    00.01       Basic grants................       8,655       7,211       7,173
    00.02       Concentration grants........       1,350       1,365       1,365
    00.03       Targeted grants.............                   2,018       3,018
    00.04     Education finance incentive
                grants formula..............                     794         794
            Reading first:
    00.05     Reading first State grants....         366       1,340       1,050
    00.06     Early reading first...........           1         149         100
    00.07   Even start......................         249         220         175
    00.08   Literacy through school
              libraries.....................          13          12          28
    00.09   State agency programs...........         444         452         444
    00.10   Comprehensive school reform.....         226         245
    00.11   Evaluation......................           9           9           9
    00.12   Close up fellowships............           2
    00.13   Advanced placement..............          22          22
    00.14   Dropout prevention programs.....          10
    00.16   Migrant education projects......          38          38          28
                                               ---------   ---------  ----------
    10.00   Total new obligations...........      11,385      13,875      14,184
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........         163         490
    22.00 New budget authority (gross)......      11,722      13,385      14,184
    22.10 Resources available from
            recoveries of prior year
            obligations.....................           2
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      11,887      13,875      14,184
    23.95 Total new obligations.............     -11,385     -13,875     -14,184
    23.98 Unobligated balance expiring or
            withdrawn.......................         -12
    24.40 Unobligated balance carried
            forward, end of year............         490
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       4,964       6,002       6,801
    55.00   Advance appropriation...........       6,758       7,383       7,383
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      11,722      13,385      14,184
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       3,972       6,082       8,051
    73.10 Total new obligations.............      11,385      13,875      14,184
    73.20 Total outlays (gross).............      -9,247     -11,906     -13,201
    73.40 Adjustments in expired accounts
            (net)...........................         -25
    73.45 Recoveries of prior year
            obligations.....................          -2
    74.40 Obligated balance, end of year....       6,082       8,051       9,034
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................       5,890       6,576       6,616
    86.93 Outlays from discretionary
            balances........................       3,357       5,330       6,585
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       9,247      11,906      13,201
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      11,722      13,385      14,184
    90.00 Outlays...........................       9,248      11,906      13,201
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................           3           3           3
    99.01 Outlays...........................           3           3           3
    ---------------------------------------------------------------------------
        Note.--Excludes $22 million in budget authority in 2004 for
    activities transferred to Department of Education:
                                                           2004 est.
     Office of Innovation and Improvement, Innovation
      and Improvement.................................                  22

        Comparable amounts for 2002 ($22 million) and 2003 ($22 million) are
    included above.

                            SUMMARY OF PROGRAM LEVEL

                            (in millions of dollars)

                                         2002-2003
                                          academic
                                            year      2003-2004
                                                    academic year 2004-2005
                                                                academic year
    New Budget Authority................       4,964       6,002       6,801
    Advance appropriation...............       7,383       7,383       7,383
                                        ------------------------------------
          Total program level...........      12,347      13,385      14,184
                                        ====================================
    Change in advance appropriation from
    the previous year...................        +625

        Grants to local educational agencies.--Funds are allocated through
    four formulas--Basic Grants, Concentration Grants, Targeted Grants and
    Education Finance Incentive Grants--for local programs that provide
    extra academic support to help raise the achievement of eligible
    students in high-poverty communities, or, in the case of schoolwide
    programs, help all students in high-poverty schools to meet challenging
    State academic standards. States must annually assess participating
    students in at least reading and mathematics, and school districts must
    identify for improvement, and provide assistance to, schools that for
    two consecutive years fail to make adequate yearly progress toward
    helping all groups of students reach the proficient level on the State
    assessments. Districts must provide students attending such schools the
    choice of attending another public school that is not identified for
    improvement. After three years of failure, students who remain in the
    school would be permitted to use Title I funds to obtain supplemental
    educational services from a public- or private-sector provider. Schools
    that continue to fail to meet State standards would be subject to
    progressively stonger corrective actions and, after six years of
    failure, reconstitution under a restructing plan.

        Reading first State grants.--Funds provide assistance to State and
    local educational agencies in establishing reading programs for students
    in grades K-3 that are grounded in scientifically based reading
    research, in order to ensure that every student can read at grade level
    or above by the end of third grade.

        Early reading first.--Funds provide assistance to support local
    efforts, through competitive grants, to enhance the school readiness of
    young children, particularly those from

    [[Page 324]]

    low-income families, through scientific, research-based strategies and
    professional development that are designed to enhance the verbal skills,
    phonological awareness, letter knowledge, pre-reading skills, and early
    language development of children ages three through five.

        Even start.--Funds support formula grants to States, which award
    grants for local projects to partnerships of local educational agencies
    and other organizations to operate projects integrating early childhood
    education, adult literacy, parenting education, and interactive literacy
    activities between parents and their children into ``family literacy''
    programs for low-income families with children under age eight.

        Literacy through school libraries.--Funds support competitive grants
    to local educational agencies to provide students with increased access
    to up-to-date school library materials and professional certified
    library media specialists.

        State agency migrant program.--Funds support formula grants to
    States for educational services to children of migratory farmworkers and
    fishers, with resources and services focused on children who have moved
    within the past 36 months.

        State agency neglected and delinquent program.--Funds support
    formula grants to States for educational services to children and youth
    under age 21 in State neglected, delinquent, or adult correction
    facilities.

        Evaluation.--Funds support national activities to evaluate Title I
    programs and a national assessment of Title I's effectiveness in helping
    States, school districts, and schools raise the overall achievement of
    disadvantaged students and narrow the achievement gap. A portion of
    funds would support technical assistance to help States and local
    educational agencies carry out Part A of Title I.

        Migrant education projects.--Funds support grants to institutions of
    higher education and other nonprofit agencies that assist migrant
    students to earn a high school equivalency certificate or to complete
    their first year of college.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0900-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    24.0  Printing and reproduction.........           1           1           1
    25.1  Advisory and assistance services..           8          40          40
    25.2  Other services....................          20          25          25
    25.3  Other purchases of goods and
            services from Government
            accounts........................           3           3           3
    41.0  Grants, subsidies, and
            contributions...................      11,353      13,806      14,115
                                               ---------   ---------  ----------
    99.9    Total new obligations...........      11,385      13,875      14,184
    ---------------------------------------------------------------------------

                                   Impact Aid

        For carrying out programs of financial assistance to federally
    affected schools authorized by title VIII of the Elementary and
    Secondary Education Act of 1965, $1,015,500,000, of which $867,500,000
    shall be for basic support payments under section 8003(b), $40,000,000
    shall be for payments for children with disabilities under section
    8003(d), $45,000,000 shall be for construction under section 8007 and
    shall remain available through September 30, 2005, $55,000,000 shall be
    for Federal property payments under section 8002, and $8,000,000, to
    remain available until expended, shall be for facilities maintenance
    under section 8008: Provided, That children described in section
    8003(a)(1)(D)-(G) shall not be considered in determining the eligibility
    of a local educational agency for a payment, or the amount of such a
    payment, under section 8003(b) or (d).

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0102-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Payments for federally connected children:

    00.01   Basic support payments..........         983         983         868
    00.02   Supplemental payments for
              children with disabilities....          50          50          40
    00.03   Payments for heavily impacted
              districts.....................           4
                                               ---------   ---------  ----------
    00.91   Subtotal, payments for federally
              connected children............       1,037       1,033         908
    01.01 Facilities maintenance............          12          12           8
    02.01 Construction......................          15          52          45
    03.01 Payments for Federal property.....          55          55          55
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       1,119       1,152       1,016
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........          14          38          27
    22.00 New budget authority (gross)......       1,144       1,141       1,016
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       1,158       1,179       1,043
    23.95 Total new obligations.............      -1,119      -1,152      -1,016
    24.40 Unobligated balance carried
            forward, end of year............          38          27          27
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       1,144       1,141       1,016
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         215         202         162
    73.10 Total new obligations.............       1,119       1,152       1,016
    73.20 Total outlays (gross).............      -1,125      -1,191      -1,036
    73.40 Adjustments in expired accounts
            (net)...........................          -7
    74.40 Obligated balance, end of year....         202         162         142
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................         981         999         886
    86.93 Outlays from discretionary
            balances........................         144         192         150
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       1,125       1,191       1,036
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       1,144       1,141       1,016
    90.00 Outlays...........................       1,125       1,191       1,036
    ---------------------------------------------------------------------------

        Impact Aid helps to replace the lost local revenue that would
    otherwise be available to educate federally connected children. The
    presence of certain students living on Federal property, such as
    students who are military dependents or who reside on Indian lands, can
    place a financial burden on local educational agencies that educate
    them. The property on which the children live and their parents work is
    exempt from local property taxes, denying local educational agencies
    access to the primary source of revenue used by most communities to
    finance education.

        Basic support payments.--Payments will be made on behalf of
    approximately 270,000 federally connected students enrolled in about 750
    local educational agencies to assist them in meeting their operation and
    maintenance costs. Average per-student payments will be approximately
    $3,200.

        Payments for Children with Disabilities.--Payments in addition to
    those provided under the Individuals with Disabilities Education Act
    will be provided on behalf of approximately 35,000 federally connected
    students with disabilities in about 740 local educational agencies.
    Average per-student payments will be approximately $1,140.

        Facilities maintenance.--Funds are used to provide emergency repairs
    for school facilities that serve military dependents and are owned by
    the Department of Education. Funds are also used to transfer the
    facilities to local educational agencies.

        Construction.--Formula payments will be provided to approximately
    170 local educational agencies with large proportions of federally
    connected students. Payments will be made on behalf of about 140,000
    students who are military dependents or who reside on Indian lands. In
    addition, approxi

    [[Page 325]]

    mately 25 construction grants will be awarded competitively to local
    educational agencies.

        Payments for Federal Property.--Payments are made to approximately
    250 local educational agencies in which real property owned by the
    Federal Government represents 10 percent or more of the assessed value
    of real property in the local educational agency.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0102-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    21.0  Travel and transportation of
            persons.........................           1           1           1
    25.3  Other purchases of goods and
            services from Government
            accounts........................           1           1           1
    41.0  Grants, subsidies, and
            contributions...................       1,117       1,150       1,014
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       1,119       1,152       1,016
    ---------------------------------------------------------------------------

                           School Improvement Programs

        For carrying out school improvement activities authorized by titles
    II, part B of title IV, part A of title V, subpart 1 of part A of title
    VI, and parts B and C of title VII of the Elementary and Secondary
    Education Act of 1965 (``ESEA''); the McKinney-Vento Homeless Assistance
    Act; and the Civil Rights Act of 1964, $5,042,834,000, of which
    $3,540,500,000 shall become available on July 1, 2004, and remain
    available through September 30, 2005, and of which $1,435,000,000 shall
    become available on October 1, 2004, and shall remain available through
    September 30, 2005, for academic year 2004-2005: Provided, That
    $390,000,000 shall be for subpart 1 of part A of title VI of the ESEA.
        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this acocunt is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1000-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct program:
          Obligations by program activity:

            Improving teacher quality:
    00.01     Improving teacher quality
                State grants................       1,672       2,878       2,850
    00.02     National activities...........          35          15          15
    00.03     Mathematics and science
                partnerships................          13          13          13
    00.04     Troops-to-teachers............          18          20
    00.05     Transition to teaching........          35          39
    00.06     National writing project......          14
    00.07     Civic education...............          27
    00.08     Teaching of traditional
                American history............         100          50
            Educational technology:
    00.09     Educational technology State
                grants......................         682         716         701
    00.10     Ready-to-learn television.....          22          22
    00.11     Preparing tomorrow's teachers
                to use technology...........          63
    00.12   21st Century community learning
              centers.......................         984       1,016         600
            School choice and innovation:
    00.13     State grants for innovative
                programs....................         384         388         385
    00.14     Charter schools grants........         200         200
    00.15     Credit enhancement for charter
                school facilities...........                     100
    00.16     Voluntary public school choice          25          25
    00.17     Magnet schools assistance.....         110         110
    00.18     Choice demonstration fund.....                      50
    00.19   Fund for the Improvement of
              Education.....................         618         224
            Safe and drug-free schools and
                communities:
    00.20     State grants..................         470         478         330
    00.21     National programs.............         255         192
    00.22   State assessments...............         368         406         390
    00.23   Education for homeless children
              and youth.....................          50          51          50
    00.24   Education for Native Hawaiians..          31          18          18
    00.26   Alaska Native education equity..          24          14          14
    00.27   Training and advisory services..           7           7           7
    00.28   Rural education.................         162
    00.29   Class size reduction............       1,154
    00.30   School renovation grants........         375
    00.31   Eisenhower professional
              development State grants......           1
    00.32   Charter schools financing
              demonstrations................          25
    00.33   Consolidated technical
              assistance centers............           9
    00.34   Comprehensive school reform.....          74           1
                                               ---------   ---------  ----------
    01.00 Total direct program..............       8,007       7,033       5,373
    09.01 Reimbursable program..............          61
                                               ---------   ---------  ----------
    10.00 Total new obligations.............       8,068       7,033       5,373
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........         414         249
    22.00 New budget authority (gross)......       7,907       6,784       5,373
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       8,321       7,033       5,373
    23.95 Total new obligations.............      -8,068      -7,033      -5,373
    23.98 Unobligated balance expiring or
            withdrawn.......................          -4
    24.40 Unobligated balance carried
            forward, end of year............         249
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       6,072       5,019       3,608
    42.00   Transferred from other accounts.           9
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............       6,081       5,019       3,608
    55.00   Advance appropriation...........       1,765       1,765       1,765
    68.10 Spending authority from offsetting
            collections: Change in
            uncollected customer payments
            from Federal sources (unexpired)          61
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................       7,907       6,784       5,373
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       3,771       8,142       7,422
    73.10 Total new obligations.............       8,068       7,033       5,373
    73.20 Total outlays (gross).............      -3,609      -7,753      -7,070
    73.40 Adjustments in expired accounts
            (net)...........................         -27
    74.00 Change in uncollected customer
            payments from Federal sources
            (unexpired).....................         -61
    74.40 Obligated balance, end of year....       8,142       7,422       5,725
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................       1,261       1,575       1,488
    86.93 Outlays from discretionary
            balances........................       2,348       6,178       5,582
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       3,609       7,753       7,070
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority only:

    88.95   Change in uncollected customer
              payments from Federal sources
              (unexpired)...................         -61
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       7,846       6,784       5,373
    90.00 Outlays...........................       3,609       7,753       7,070
    ---------------------------------------------------------------------------

        Note.--Excludes $1,201 million in budget authority in 2004 for
    activities transferred to Department of Education:
                                                        (in millions of
                                                            dollars)
                                                           2004 est
    Office of Innovation and Improvement, Innovation
     and Improvement..................................                 785
    Office of Safe and Drug-Free Schools, Safe Schools
     and Citizenship Education........................                 416
        Comparable amounts for 2002 ($1,642 million) and 2003 ($1,345
    million) are included above.

                            SUMMARY OF PROGRAM LEVEL

                            (in millions of dollars)

                                         2002-2003
                                          Academic
                                            Year      2003-2004
                                                    Academic Year 2004-2005
                                                                Academic Year
    New Budget Authority................       6,072       5,019       3,608
    Advance Appropriation...............       1,765       1,765       1,435
                                        ------------------------------------
          Total program level...........       7,837       6,784       5,043
                                        ====================================
    Change in advance appropriation over
    previous year.......................                                -330

        Improving teacher quality.--
                Improving teacher quality State grants.--Funds support State
            and school district activities to prepare, train, and recruit
            high-quality teachers to improve student achievement.
                National activities.--Funds support competitive grants to
            improve the knowledge and skills of early childhood educators
            who work in communities that have high concentrations of
            children living in poverty.
                Mathematics and science partnerships.--Funds support State
            and local efforts to improve students' academic achievement in
            mathematics and science by promoting strong teaching skills for
            elementary and secondary

    [[Page 326]]

            school teachers, including integrating teaching methods based on
            scientifically-based research and technology into the
            curriculum.

        Educational technology State grants.--Funds support formula grants
    to States, which target funds to high-poverty school districts, to
    acquire computers, connections, software, and teacher training to enable
    schools to integrate technology effectively into curricula.

        21st Century community learning centers.--Funds support formula
    grants to States, which award subgrants to communities to provide
    academic enrichment opportunities and related services to students,
    primarily students who attend high-poverty schools, and their families
    during before-school, after-school, weekend, and summer hours.

        State grants for innovative programs.--Funds support formula grants
    to States and local educational agencies to help implement innovative
    strategies for improving student achievement.

        State assessments.--Funds support formula grants to States to
    develop and implement the new assessments, and related accountability
    efforts, that States would use to test all children annually in grades
    3-8 in reading and mathematics.

        Education for homeless children and youth.--Funds support formula
    grants to States to provide educational and support services that enable
    homeless children and youth to attend and achieve success in school.

        Education for Native Hawaiians.--Funds provide supplemental
    education services to Native Hawaiians in areas such as family-based
    education, special education, gifted and talented education, higher
    education, curriculum development, teacher training and recruitment, and
    community-based learning.

        Alaska Native education equity.--Funds provide supplemental
    education services to Alaska Natives in areas such as educational
    planning, curriculum development, teacher training, teacher recruitment,
    student enrichment, and home-based instruction for pre-school children.
    Grants also go to organizations specified in the law.

        Training and advisory services.--Funds support grants to regional
    equity assistance centers that provide technical assistance to school
    districts in addressing equity in education related to issues of race,
    gender, and national origin.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1000-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

    24.0    Printing and reproduction.......           1           1           1
    25.1    Advisory and assistance services           9          49          20
    25.2    Other services..................          50          75          21
    25.3    Other purchases of goods and
              services from Government
              accounts......................           4
    41.0    Grants, subsidies, and
              contributions.................       7,943       6,908       5,331
                                               ---------   ---------  ----------
    99.0      Direct obligations............       8,007       7,033       5,373
    99.0  Reimbursable obligations..........          61
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       8,068       7,033       5,373
    ---------------------------------------------------------------------------

                                Indian Education

        For expenses necessary to carry out, to the extent not otherwise
    provided, title VII, part A of the Elementary and Secondary Education
    Act of 1965, $122,368,000.
        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0101-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Grants to local educational
            agencies........................          97          97          97
    00.02 Special programs for Indian
            children........................          20          20          20
    00.03 National activities...............           3           5           5
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         120         122         122
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......         120         122         122
    23.95 Total new obligations.............        -120        -122        -122
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         120         122         122
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         132         145         143
    73.10 Total new obligations.............         120         122         122
    73.20 Total outlays (gross).............        -104        -124        -122
    73.40 Adjustments in expired accounts
            (net)...........................          -3
    74.40 Obligated balance, end of year....         145         143         143
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                       6           6
    86.93 Outlays from discretionary
            balances........................         104         118         116
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         104         124         122
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         120         122         122
    90.00 Outlays...........................         104         124         122
    ---------------------------------------------------------------------------

        The Indian Education program supports the efforts of local
    educational agencies and tribal schools to improve teaching and learning
    for the Nation's American Indian and Alaska Native Children.

        Grants to local educational agencies.--Formula grants support local
    educational agencies in their efforts to reform elementary and secondary
    school programs that serve Indian students, with the goal of ensuring
    that such programs assist participating students in meeting the same
    academic standards as all other students. In 2002, the Department made
    1,189 formula grants to local educational agencies and tribal schools
    serving more than 465,000 students.

        Special programs for Indian Children.--The Department makes
    competitive awards for demonstration projects in early childhood
    education, professional development grants, American Indian Teacher
    Corps grants, and grants for the American Indian Administrator Corps.
    The professional development awards in this activity are designed to
    improve the quality of teachers and administrators in school districts
    with concentrations of Indian students.

        National activities.--Funds support research, evaluation, data
    collection, and related activities.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0101-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    25.2  Other services....................           2           4           5
    41.0  Grants, subsidies, and
            contributions...................         118         118         117
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         120         122         122
    ---------------------------------------------------------------------------

                               Reading Excellence

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0011-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Reading Excellence................         201
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         201
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           6

    [[Page 327]]

    22.00 New budget authority (gross)......         195
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         201
    23.95 Total new obligations.............        -201
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    55.00   Advance appropriation...........         195
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         449         447         137
    73.10 Total new obligations.............         201
    73.20 Total outlays (gross).............        -200        -310        -105
    73.40 Adjustments in expired accounts
            (net)...........................          -4
    74.40 Obligated balance, end of year....         447         137          31
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................           1
    86.93 Outlays from discretionary
            balances........................         199         310         105
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         200         310         105
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         195
    90.00 Outlays...........................         200         310         105
    ---------------------------------------------------------------------------

        Reading Excellence.--This program has been replaced by the Reading
    First program in the Education for the Disadvantaged account. Amounts in
    these schedules reflect balances that are spending out from prior-year
    appropriations.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0011-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    24.0  Printing and reproduction.........           2
    25.2  Other services....................           6
    25.3  Other purchases of goods and
            services from Government
            accounts........................           1
    41.0  Grants, subsidies, and
            contributions...................         192
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         201
    ---------------------------------------------------------------------------

                                Education Reform

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0500-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    01.01 Small learning communities........         103
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         103
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........         103
    23.95 Total new obligations.............        -103
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       2,464         781          80
    73.10 Total new obligations.............         103
    73.20 Total outlays (gross).............      -1,768        -701         -80
    73.40 Adjustments in expired accounts
            (net)...........................         -18
    74.40 Obligated balance, end of year....         781          80
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.93 Outlays from discretionary
            balances........................       1,768         701          80
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................       1,768         701          80
    ---------------------------------------------------------------------------

        Programs in this account have been transferred to the School
    Improvement account or discontinued. Amounts in these schedules reflect
    balances that are spending out from prior-year appropriations.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0500-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    25.1  Advisory and assistance services..           2
    25.2  Other services....................           5
    41.0  Grants, subsidies, and
            contributions...................          96
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         103
    ---------------------------------------------------------------------------

                          Chicago Litigation Settlement

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0220-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct program activity...........                       1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................                       1
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           1           1
    23.95 Total new obligations.............                      -1
    24.40 Unobligated balance carried
            forward, end of year............           1
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..           2           1
    73.10 Total new obligations.............                       1
    73.20 Total outlays (gross).............          -1          -2
    74.40 Obligated balance, end of year....           1
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.93 Outlays from discretionary
            balances........................           1           2
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................           1           2
    ---------------------------------------------------------------------------

        Funds made available under this account were reappropriated by the
    Supplemental Appropriations Act, 1987 (Public Law 100-71) from funds
    enjoined in United States of America v. Board of Education of the City
    of Chicago. The funds were reappropriated for the specific purpose of
    settling this case. The funds are used by the Chicago Board of Education
    to implement Project CANAL (Creating A New Approach to Learning), the
    project approved by the court to support the Board's desegregation
    efforts.

                      OFFICE OF INNOVATION AND IMPROVEMENT

                                  Federal Funds

    General and special funds:

                           Innovation and Improvement

        For carrying out activities authorized by part G of title I, parts C
    and D of title II, and parts B, C, and D of title V of the Elementary
    and Secondary Education Act of 1965, $807,400,000.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0204-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Innovation for teacher quality:

    00.01   Troops-to-teachers..............                                  25
    00.02   Transition to teaching..........                                  49
    00.03   Teaching of traditional American
              history.......................                                 100
          School choice and flexibility:

    00.04   Charter schools grants..........                                 220
    00.05   Credit enhancement for charter
              school facilities.............                                 100
    00.06   Voluntary public school choice..                                  25
    00.07   Magnet schools assistance.......                                 110
    00.08   Choice incentive fund...........                                  75
    00.09 FIE programs of national
            significance....................                                  35
    00.10 Reading is fundamental/inexpensive
            book distribution...............                                  24
    00.11 Ready-to-learn television.........                                  22
    00.12 Advanced placement................                                  22
                                               ---------   ---------  ----------
    10.00   Total new obligations...........                                 807
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                 807

    [[Page 328]]

    23.95 Total new obligations.............                                -807
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................                                 807
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                 807
    73.20 Total outlays (gross).............                                 -40
    74.40 Obligated balance, end of year....                                 767
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                                  40
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                 807
    90.00 Outlays...........................                                  40
    ---------------------------------------------------------------------------

        Improving teacher quality.--
            Troops-to-teacher.--Funds assist eligible members of the armed
        forces to obtain certification as teachers and to become highly
        qualified teachers.
            Transition to teaching.--Funds support competitive grants to
        establish programs to recruit and retain highly qualified mid-career
        professionals and recent college graduates as teachers in high-need
        schools.
            Teaching of traditional American history.--Funds support
        competitive grants to school districts for activities to improve
        history instruction and provide professional development for
        teachers in American history.

        School choice and flexibility.--
            Charter school grants.--Funds support competitive grants to
        State educational agencies and charter schools to support the
        planning, design, initial implementation, and dissemination of
        information regarding charter schools. These schools are created by
        teachers, parents, and members of the community, and are exempt from
        certain local, State, and Federal regulations.
            Credit enhancement for charter school facilities.--Funds support
        competitive grants to State and local governments, nonprofit
        entities, and public and nonprofit consortia, to assist charter
        schools in acquiring, leasing, and renovating school facilities.
            Voluntary public school choice.--Funds support competitive
        grants to State educational agencies and local educational agencies
        to implement programs that provide students, particularly students
        who attend low-performing schools, with expanded school choice
        options.
            Magnet schools assistance.--Funds support competitive grants to
        local educational agencies to establish and operate magnet school
        programs that are part of an approved desegregation plan.
            Choice incentive fund.--Funds will support grants to States,
        local educational agencies, and community-based nonprofit
        organizations with a proven record for securing educational
        opportunities for children. These grants will support efforts to
        increase the capacity of high-quality public and private schools to
        serve additional students through activities such as creating
        partnerships to fund private school choice programs; and designing
        incentives to provide tax benefits to individuals and organizations
        that donate funds to help low-income parents meet the costs of
        private school tuition.

        FIE programs of national significance.--Funds support nationally
    significant projects to improve the quality of elementary and secondary
    education in order to help all children meet challenging State content
    and student achievement standards.

        Reading is fundamental/inexpensive book distribution.--Funds support
    reading motivation activities, including the distribution of free books
    to children.

        Ready-to-learn television.--Funds support the development,
    distribution, and production of educational video and accompanying
    materials and services for preschool children, elementary school
    children, and their parents to facilitate student academic achievement.

        Advanced placement.--Funds support grants to States to pay test fees
    for low-income students if they are enrolled in an Advanced Placement
    course and competitive grants to State educational agencies, local
    educational agencies, and national nonprofit educational entities to
    expand access for low-income individuals to Advanced Placement classes.

        Note.--Includes $807 million in budget authority in 2004 for
    activities previously financed from Department of Education:

                           (in millions of dollars)
                                              2002 actual      2003 est.
    Office of Elementary and Secondary
     Education, School improvement programs.           918             675
    Office of Elementary and Secondary
     Education, Education for the
     disadvantaged..........................            22              22

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0204-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    25.1  Advisory and assistance services..                                   2
    25.2  Other services....................                                  25
    25.3  Other purchases of goods and
            services from Government
            accounts........................                                   1
    41.0  Grants, subsidies, and
            contributions...................                                 779
                                               ---------   ---------  ----------
    99.9    Total new obligations...........                                 807
    ---------------------------------------------------------------------------

                      OFFICE OF SAFE AND DRUG-FREE SCHOOLS

                                  Federal Funds

    General and special funds:

                     Safe Schools and Citizenship Education

        For carrying out civic and physical education activities, safe and
    drug-free schools and communities programs, and partnerships in
    character education programs authorized by subpart 3 of part C of title
    II, part A of title IV, and subparts 1 and 3 of part D of title V of the
    Elementary and Secondary Education Act of 1965, $756,250,000, of which
    $92,017,000 shall become available on July 1, 2004 and remain available
    through September 30, 2005, and of which $330,000,000 shall become
    available on October 1, 2004 and shall remain available through
    September 20, 2005 for academic year 2004-2005: Provided, That of the
    funds available to carry out subpart 3 of part C of title II, up to
    $11,500,000 may be used to carry out section 2345: Provided further,
    That $422,017,000 shall be available for subpart 1 of part A of title IV
    and $272,233,000 shall be available for subpart 2 of part A of title IV,
    of which $10,000,000, to remain available until expended, shall be for
    the Project School Emergency Response to Violence program to provide
    education-related services to local educational agencies in which the
    learning environment has been disrupted due to a violent or traumatic
    crisis.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0203-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Safe and drug-free schools and communities:

    00.01   State grants....................                                  92
            National programs:
    00.02     Mentoring program.............                                 100
    00.03     Other national programs.......                                 172
                                               ---------   ---------  ----------
    00.91   Subtotal, Safe and drug-free
              schools and communities.......                                 364
    01.01 Character education...............                                  25
    02.01 Civic education...................                                  27
    03.01 Physical education initiative.....                                  10
                                               ---------   ---------  ----------

    [[Page 329]]

    10.00   Total new obligations...........                                 426
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                 426
    23.95 Total new obligations.............                                -426
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................                                 426
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                 426
    73.20 Total outlays (gross).............                                 -38
    74.40 Obligated balance, end of year....                                 388
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                                  38
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                 426
    90.00 Outlays...........................                                  38
    ---------------------------------------------------------------------------

        Note.--Includes $416 million in budget authority in 2004 for
    activities previously financed from Department of Education:

                           (in millions of dollars)
                                              2002 actual      2003 est.
    Office of Elementary and Secondary
     Education, School Improvement Programs.           724             669

                            SUMMARY OF PROGRAM LEVEL

                            (in millions of dollars)

                                         2002-2003
                                          Academic
                                            Year      2003-2004
                                                    Academic Year 2004-2005
                                                                Academic Year
    New budget authority................                       0         426
    Advance appropriation...............                       0         330
                                        ------------------------------------
          Total program level...........           0           0         756
                                        ====================================
    Change in advance appropriation over
    previous year.......................           0           0        +330

        Safe and drug-free schools and communities.--
            State Grants.--Funds provide formula grants to States to support
        research-based drug and violence-prevention programs and to
        implement strategies to improve school safety.

        National Programs.--Funds support national activities to prevent
    violence and the illegal use of drugs among, and to promote safety and
    discipline for, students.
            Mentoring program.--Funds provide grants to local education
        agencies and community-based organizations for mentoring programs
        serving at-risk youth in conjunction with the efforts of the USA
        Freedom Corps.

        Character Education.--Funds provide grants to support the design and
    implementation of character education programs in the Nation's
    elementary and secondary schools.

        Civic Education.--Funds support a grant to the nonprofit Center for
    Civic Education to promote civic competence and responsibility and
    improve the quality of civics and government education through
    coursework and curricula on the history and principles of the
    Constitution of the United States; and grants to eligible organizations
    for cooperative education exchange programs to improve the quality of
    civic and economic education in emerging democracies through exemplary
    curriculum and teacher training programs for educators. These activities
    complement civics programs coordinated by the USA Freedom Corps.

        Physical Education Initiative.--Funds will support activities to
    promote increased physical fitness among youth.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0203-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    24.0  Printing and reproduction.........                                   1
    25.1  Advisory and assistance services..                                   3
    25.2  Other services....................                                  12
    41.0  Grants, subsidies, and
            contributions...................                                 410
                                               ---------   ---------  ----------
    99.9    Total new obligations...........                                 426
    ---------------------------------------------------------------------------

                     OFFICE OF ENGLISH LANGUAGE ACQUISITION

                                  Federal Funds

    General and special funds:

                          English Language Acquisition

        For carrying out title III, part A of the Elementary and Secondary
    Education Act of 1965, $665,000,000, of which $541,000,000 shall become
    available on July 1, 2004, and shall remain available through September
    30, 2005.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1300-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Language acquisition State grants.         403         482         541
    00.02 Bilingual education instructional
            services........................         120          91          54
    00.04 Bilingual education professional
            development.....................         129         104          70
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         652         677         665
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........                      12
    22.00 New budget authority (gross)......         664         665         665
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         664         677         665
    23.95 Total new obligations.............        -652        -677        -665
    24.40 Unobligated balance carried
            forward, end of year............          12
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         665         665         665
    41.00   Transferred to other accounts...          -1
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............         664         665         665
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         603         833       1,003
    73.10 Total new obligations.............         652         677         665
    73.20 Total outlays (gross).............        -414        -507        -803
    73.40 Adjustments in expired accounts
            (net)...........................          -9
    74.40 Obligated balance, end of year....         833       1,003         865
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................           4          33          33
    86.93 Outlays from discretionary
            balances........................         410         474         770
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         414         507         803
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         664         665         665
    90.00 Outlays...........................         414         507         803
    ---------------------------------------------------------------------------

        Language acquisition State grants.--This program provides formula
    grants to States and discretionary professional development grants to
    improve services for limited English proficient and immigrant students.
    States are accountable for demonstrating that limited English proficient
    students are learning English and meeting the same high State standards
    as all other students. The statute also authorizes evaluation, and
    requires funding for a national information clearinghouse on English
    language acquisition. The statute also continues discretionary grants
    for bilingual instructional services and bilingual professional
    development grants made under the antecedent statute.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1300-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    25.2  Other services....................           2           5           5
    41.0  Grants, subsidies, and
            contributions...................         650         672         660
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         652         677         665
    ---------------------------------------------------------------------------

    [[Page 330]]

             OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE SERVICES

                                  Federal Funds

    General and special funds:

                                Special Education

        For carrying out parts B, C, and D of the Individuals with
    Disabilities Education Act, $10,690,104,000, of which $5,337,533,000
    shall become available for obligation on July 1, 2004, and shall remain
    available through September 30, 2005, and of which $5,072,000,000 shall
    become available on October 1, 2004, and shall remain available through
    September 30, 2005, for academic year 2004-2005: Provided, That the
    amount for section 611(c) of the Act shall be equal to the amount
    available for that section during fiscal year 2003, increased by the
    amount of inflation as specified in section 611(f)(1)(B)(ii) of the Act.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0300-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct program:
          Obligations by program activity:

            State grants:
    00.01     Grants to States..............       7,530       8,546       9,529
    00.02     Preschool grants..............         390         390         390
    00.03     Grants for infants and
                families....................         435         474         447
                                               ---------   ---------  ----------
    00.91       Subtotal, State grants......       8,355       9,410      10,366
            National activities:
    01.01     State improvement.............          52          97          44
    01.02     Research and innovation.......          78          78          78
    01.03     Technical assistance and
                dissemination...............          53          53          53
    01.04     Personnel preparation.........          90          90          90
    01.05     Parent information centers....          26          26          26
    01.06     Technology and media services.          37          33          33
                                               ---------   ---------  ----------
    01.91       Subtotal, National
                  activities................         336         377         324
                                               ---------   ---------  ----------
    02.00 Total Direct Program..............       8,691       9,787      10,690
                                               ---------   ---------  ----------
    10.00 Total new obligations.............       8,691       9,787      10,690
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........         116          99
    22.00 New budget authority (gross)......       8,673       9,688      10,690
    22.10 Resources available from
            recoveries of prior year
            obligations.....................           3
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       8,792       9,787      10,690
    23.95 Total new obligations.............      -8,691      -9,787     -10,690
    23.98 Unobligated balance expiring or
            withdrawn.......................          -1
    24.40 Unobligated balance carried
            forward, end of year............          99
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       3,601       4,616       5,618
    55.00   Advance appropriation...........       5,072       5,072       5,072
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................       8,673       9,688      10,690
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       4,469       6,137       8,194
    73.10 Total new obligations.............       8,691       9,787      10,690
    73.20 Total outlays (gross).............      -7,000      -7,730      -9,657
    73.40 Adjustments in expired accounts
            (net)...........................         -20
    73.45 Recoveries of prior year
            obligations.....................          -3
    74.40 Obligated balance, end of year....       6,137       8,194       9,227
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................       3,269       3,491       3,511
    86.93 Outlays from discretionary
            balances........................       3,731       4,239       6,146
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       7,000       7,730       9,657
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       8,673       9,688      10,690
    90.00 Outlays...........................       7,000       7,730       9,657
    ---------------------------------------------------------------------------

                            SUMMARY OF PROGRAM LEVEL

                            [In millions of dollars]

                                         2002-2003
                                          academic
                                            year      2003-2004
                                                    academic year 2004-2005
                                                                academic year
    Current Budget Authority............       3,601       4,616       5,618
    Advance appropriation...............       5,072       5,072       5,072
                                        ------------------------------------
        Total program level.............       8,673       9,688      10,690
                                        ====================================
    Change in advance appropriation from
    the previous year...................

        State Grants:
            Grants to States.--Formula grants are provided to States to
        assist them in providing special education and related services to
        children with disabilities ages 3 through 21.
            Preschool grants.--Formula grants provide additional funds to
        States to further assist them in providing special education and
        related services to children with disabilities ages 3 through 5
        served under the Grants to States program.
            The goal of both of these programs is to improve results for
        children with disabilities by assisting State and local educational
        agencies to provide children with disabilities with access to high
        quality education that will help them meet challenging standards and
        prepare them for employment and independent living.
            Grants for infants and families.--Formula grants are provided to
        assist States to implement statewide systems of coordinated,
        comprehensive, multi-disciplinary interagency programs to provide
        early intervention services to children with disabilities, birth
        through age 2, and their families.
            The goal of this program is to help States provide a
        comprehensive system of early intervention services that will
        enhance child and family outcomes.

        National activities:
            These activities include research, demonstration, personnel
        preparation, technical assistance, grants to States to promote
        systems change, and other activities to support State efforts to
        improve results for children with disabilities under the State
        Grants programs.
            The goal of National Activities is to link States, school
        systems, and families to best practices to improve results for
        infants, toddlers, and children with disabilities.
            The General Education Provisions Act extension for Grants for
        Infants and Families and National Activities programs applies
        through September 30, 2003; authorizing legislation is required.
            Performance data related to program goals include:

                                             2002 actual   2003 est.   2004 est.
    Number of children served in first
        quarter of fiscal year (in
        thousands):
      Ages 3 through 21.....................       6,483       6,580       6,672
      Ages 3 through 5......................         617         633         648
      Birth through 2.......................         247         260         273

                                        1998-1999 ac1999-2000 actual  2000-2001
                                                                          actual
        Educational Environment
    Percent of children ages 6 through 21
        provided special education in:
      Regular classrooms....................        47.4        47.3        46.5
      Resource rooms........................        28.4        28.3        29.8
      Separate classes......................        20.1        20.3        19.5
      Separate schools......................         2.9         2.9         3.0
      Residential facilities................          .7          .7          .7
      Home or hospital......................          .5          .5          .5
        Status of Exiting Students
    Percent of students with disabilities
        aged 14-21 leaving school:
      Graduated with a diploma..............        57.4        56.2        57.0
      Graduated through certification.......        11.2        11.4        11.0
      Dropped out of school.................        28.9        29.4        29.4
      Reached maximum age and other.........         2.5         3.0         2.5

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0300-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

    25.2    Other services..................          23          21          21

    [[Page 331]]

    25.3    Other purchases of goods and
              services from Government
              accounts......................           1
    41.0    Grants, subsidies, and
              contributions.................       8,666       9,766      10,669
                                               ---------   ---------  ----------
    99.0      Direct obligations............       8,690       9,787      10,690
    99.5  Below reporting threshold.........           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       8,691       9,787      10,690
    ---------------------------------------------------------------------------

                 Rehabilitation Services and Disability Research

        For carrying out, to the extent not otherwise provided, the
    Rehabilitation Act of 1973 and the Helen Keller National Center Act,
    $3,002,913,000: Provided, That funds available under the Vocational
    Rehabilitation State Grants program may be used by State Vocational
    Rehabilitation agencies to pay for the fiscal year 2004 continuation
    costs of projects funded in fiscal year 2002 under title VI, Part A of
    the Rehabilitation Act.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0301-0-1-506      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Direct program:

    00.01   Vocational rehabilitation State
              grants........................       2,481       2,616       2,669
    00.02   Vocational rehabilitation
              incentive grants..............                      30
    00.03   Client assistance State grants..          12          12          12
    00.04   Training........................          40          42          43
    00.05   Demonstration and training
              programs......................          21          17          24
    00.06   Migrant and seasonal farmworkers           2
    00.07   Recreational programs...........           3
    00.08   Protection and advocacy of
              individual rights.............          15          15          18
    00.09   Projects with industry..........          22
    00.10   Supported employment State
              grants........................          38
    00.11   Independent living..............         110         117         117
    00.12   Program improvement.............           1           1           1
    00.13   Evaluation......................           1           1           1
    00.14   Helen Keller National Center....           9           9           9
    00.15   National Institute on Disability
              and Rehabilitation Research...         110         110         110
    00.16   Assistive technology............          24          52          15
    00.17   Access to Telework Fund.........                      20
                                               ---------   ---------  ----------
    01.00   Total direct program............       2,889       3,042       3,019
    09.01 Reimbursable program..............           2           2           2
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       2,891       3,044       3,021
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
          Unobligated balance carried forward, start of
              year:

    21.40   Unobligated balance carried
              forward, start of year........                      56          16
    21.40   Unobligated balance carried
              forward, start of year........
    22.00 New budget authority (gross)......       2,948       3,004       3,005
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       2,948       3,060       3,021
    23.95 Total new obligations.............      -2,891      -3,044      -3,021
    24.40 Unobligated balance carried
            forward, end of year............          56          16
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         464         386         334
          Mandatory:

    60.00   Appropriation...................       2,482       2,616       2,669
          Discretionary:

    68.00   Spending authority from
              offsetting collections:
              Offsetting collections (cash).           2           2           2
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................       2,948       3,004       3,005
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       1,043       1,070         971
    73.10 Total new obligations.............       2,891       3,044       3,021
    73.20 Total outlays (gross).............      -2,853      -3,143      -3,003
    73.40 Adjustments in expired accounts
            (net)...........................         -11
    74.40 Obligated balance, end of year....       1,070         971         989
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          77         271         235
    86.93 Outlays from discretionary
            balances........................         324         499         119
    86.97 Outlays from new mandatory
            authority.......................       1,927       1,831       1,868
    86.98 Outlays from mandatory balances...         525         542         781
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       2,853       3,143       3,003
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........          -2          -2          -2
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       2,946       3,002       3,003
    90.00 Outlays...........................       2,852       3,141       3,001
    ---------------------------------------------------------------------------

        Vocational rehabilitation State grants.--The basic State grants
    program provides Federal matching funds to State vocational
    rehabilitation (VR) agencies to assist individuals with physical or
    mental impairments to become gainfully employed. Services are tailored
    to the specific needs of the individual. Priority is given to serving
    those with the most significant disabilities. Current law requires that
    between 1.0 percent and 1.5 percent of the funds appropriated for the VR
    State grants program be set aside for Grants for Indians in 2004.

        The table below presents national data on selected performance
    measures for the VR State grants program. The data are based on the
    number of individuals whose service records were closed in fiscal years
    2000 (377,170) and 2001 (385,235).

                       CONSUMER OUTCOMES (CASES CLOSED)

                                              2000 actual     2001 actual
    Individuals achieving employment
     outcomes...............................       236,137         233,692
     Percent with significant disabilities..         87.0%           88.0%
    Employment outcomes as a percent all of
     individuals receiving services.........         62.6%           60.7%

        The 2004 budget request reflects a multi-year Administration effort
    to reform job training programs, target resources to programs with
    documented effectiveness, and eliminate funding for duplicative and
    overlapping programs. Consistent with this crosscutting reform, the
    budget consolidates funding for three programs in this account
    (Supported Employment State Grants, Projects with Industry, and the
    Migrant and Seasonal Farmworkers program) within the Vocational
    Rehabilitation State Grants program.

        Vocational rehabilitation incentive grants.--Incentive grants will
    be used to encourage State VR agencies to improve their performance in
    helping individuals with disabilities obtain competitive employment.
    Grants will be awarded to State VR agencies based on program
    performance. The Administration plans to carry out 2004 activities with
    any remaining 2003 funds.

        Client assistance State grants.--Formula grants are made to States
    to provide assistance in informing and advising clients and applicants
    of benefits available under the Rehabilitation Act and, if requested, to
    pursue legal or administrative remedies to ensure the protection of the
    rights of individuals with disabilities.

        Training.--Grants are made to States and public or nonprofit
    agencies and organizations, including institutions of higher education,
    to increase the number of skilled personnel available for employment in
    the field of rehabilitation and to upgrade the skills of those already
    employed.

        Demonstration and training programs.--Grants are made for programs
    that expand and improve the provision of rehabilitation services or that
    further the purposes of the Rehabilitation Act.

        Protection and advocacy of individual rights.--Formula grants are
    made to State protection and advocacy systems to protect the legal and
    human rights of individuals with disabilities.

        Independent living.--Grants are awarded to States and nonprofit
    agencies to assist individuals with significant disabilities in their
    achievement of self-determined independent living goals. Grants are also
    awarded to provide support services

    [[Page 332]]

    to older blind individuals to increase their ability to care for their
    own needs.

        Program improvement.--Funds are used to promote broad-based planning
    and coordination, improve accountability, and enhance the Department's
    ability to address critical areas of national significance in achieving
    the goals of the Rehabilitation Act. Examples of program improvement
    activities include technical assistance, dissemination, and performance
    measurement activities.

        Evaluation.--Studies are conducted to evaluate the impact and
    effectiveness of various programs authorized under the Rehabilitation
    Act.

        Helen Keller National Center for Deaf-Blind Youths and Adults.--The
    Center provides services to deaf-blind youths and adults and provides
    training and technical assistance to professional and allied personnel
    at its national headquarters center and through its regional
    representatives and affiliate agencies.

        National Institute on Disability and Rehabilitation Research.--The
    Institute carries out a comprehensive and coordinated program of
    rehabilitation research and related activities. Through grants and
    contracts, it supports the conduct and dissemination of research aimed
    at improving the lives of individuals with disabilities. The Institute
    also promotes the development and utilization of new technologies to
    assist these individuals in achieving greater independence and
    integration into society.

        Assistive technology loan program.--Grants are made to States to
    establish alternative financing programs to increase access to assistive
    technology for individuals with disabilities. The Administration plans
    to carry out 2004 activities with the remaining fiscal year 2003 funds.

        Access to telework fund.--Federal matching funds are awarded to
    States to provide loans for individuals with disabilities to purchase
    computers and other equipment so that they can telework from home.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0301-0-1-506      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

    25.1    Advisory and assistance services           8           8           8
    25.2    Other services..................           2           2           2
    25.5    Research and development
              contracts.....................           2           1
    41.0    Grants, subsidies, and
              contributions.................       2,876       3,031       3,009
                                               ---------   ---------  ----------
    99.0      Direct obligations............       2,888       3,042       3,019
    99.0  Reimbursable obligations..........           2           2           2
    99.5  Below reporting threshold.........           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       2,891       3,044       3,021
    ---------------------------------------------------------------------------

               Special Institutions for Persons With Disabilities

                      american printing house for the blind

        For carrying out the Act of March 3, 1879, as amended (20 U.S.C. 101
    et seq.), $14,000,000.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0600-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct program activity...........          14          14          14
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................          14          14          14
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......          14          14          14
    23.95 Total new obligations.............         -14         -14         -14
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          14          14          14
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..           5           6           1
    73.10 Total new obligations.............          14          14          14
    73.20 Total outlays (gross).............         -13         -19         -14
    74.40 Obligated balance, end of year....           6           1           1
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................           9          13          13
    86.93 Outlays from discretionary
            balances........................           4           6           1
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          13          19          14
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          14          14          14
    90.00 Outlays...........................          13          19          14
    ---------------------------------------------------------------------------

        The Federal appropriation supports the production of free
    educational materials for students below the college level who are
    blind, research related to developing and improving products, and
    advisory services to consumer organizations on the availability and use
    of materials. In 2002, the portion of the Federal appropriation
    allocated to educational materials represented approximately 62.6
    percent of the Printing House's total sales. The full appropriation
    represented approximately 60.9 percent of the Printing House's total
    budget.

                    national technical institute for the deaf

        For the National Technical Institute for the Deaf under titles I and
    II of the Education of the Deaf Act of 1986 (20 U.S.C. 4301 et seq.),
    $50,781,000, of which $367,000 shall be for construction and shall
    remain available until expended, and of which not less than $1,000,000,
    to remain available until expended, shall be used for the endowment
    program as authorized under section 207.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0601-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Operations........................          50          49          50
    00.02 Construction......................           5           2
    00.03 Endowment.........................                       1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................          55          52          51
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......          55          52          51
    23.95 Total new obligations.............         -55         -52         -51
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          55          52          51
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..                                   4
    73.10 Total new obligations.............          55          52          51
    73.20 Total outlays (gross).............         -55         -47         -51
    74.40 Obligated balance, end of year....                       4           4
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          55          47          48
    86.93 Outlays from discretionary
            balances........................                                   3
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          55          47          51
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          55          52          51

    [[Page 333]]

    90.00 Outlays...........................          55          47          51
    ---------------------------------------------------------------------------

        This residential program provides postsecondary technical and
    professional education for people who are deaf to prepare them for
    employment, provides training, and conducts applied research into
    employment related aspects of deafness. In 2002, Federal appropriations
    represented 81 percent of the Institute's operating budget. The request
    includes funds for the Endowment Grant program. The request also
    includes funds for a construction project to upgrade academic facilities
    and enhance dormitory facilities.

                              gallaudet university

        For the Kendall Demonstration Elementary School, the Model Secondary
    School for the Deaf, and the partial support of Gallaudet University
    under titles I and II of the Education of the Deaf Act of 1986 (20
    U.S.C. 4301 et seq.), $94,446,000, of which not less than $1,000,000
    shall be used for the endowment program as authorized under section 207:
    Provided, That such $1,000,000 is available until expended.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0602-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Operations........................          97          93          93
    00.02 Endowment.........................                       1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................          97          94          94
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......          97          94          94
    23.95 Total new obligations.............         -97         -94         -94
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          97          94          94
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..                                   6
    73.10 Total new obligations.............          97          94          94
    73.20 Total outlays (gross).............         -97         -88         -94
    74.40 Obligated balance, end of year....                       6           6
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          97          88          88
    86.93 Outlays from discretionary
            balances........................                                   6
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          97          88          94
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          97          94          94
    90.00 Outlays...........................          97          88          94
    ---------------------------------------------------------------------------

        This institution provides undergraduate and continuing education
    programs for persons who are deaf, and graduate programs related to
    deafness for students who are deaf and students who are hearing. The
    University also conducts basic and applied research and provides public
    service programs for persons who are deaf and persons who work with
    them.

        Gallaudet operates two elementary and secondary education programs
    on the main campus of the University. The Kendall Demonstration
    Elementary School serves students who are deaf from infancy through age
    15, and the Model Secondary School for the Deaf serves high school age
    students who are deaf. Both schools also develop and disseminate
    information on effective educational techniques and strategies for
    teachers and professionals working with students who are deaf or hard of
    hearing.

        In 2002, the Federal appropriation represented 65.6 percent of the
    University's total revenue, which also includes Federal financial aid,
    vocational rehabilitation, Endowment Grant income, and competitive
    grants and contracts, and 97.3 percent of the revenue related to the
    elementary and secondary schools. The request also includes funds for
    the Endowment Grant program.

                    OFFICE OF VOCATIONAL AND ADULT EDUCATION

                                  Federal Funds

    General and special funds:

                         Vocational and Adult Education

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0400-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Vocational education:

            Annual appropriations:
              Vocational education:
    00.01       State grants................       1,179       1,182         791
    00.02       National programs...........          18          12          12
    00.03       Occupational and employment
                  information...............           9           2
    00.04       Tribally controlled
                  postsecondary vocational
                  institutions..............           6           7
    00.05       Tech-prep education State
                  grants....................         108         108
    00.06     Tech-prep demonstration.......           5           5
                                               ---------   ---------  ----------
    00.91       Total, Vocational education.       1,325       1,316         803
              Adult education:
    01.01       State grants................         571         589
    01.02       National Institute for
                  Literacy..................           6           7           6
    01.03       National leadership
                  activities................          14           9           9
                                               ---------   ---------  ----------
    01.91       Total, adult education......         591         605          15
    02.01     State grants for incarcerated
                youth offenders.............          20
    03.01     Literacy programs for
                prisoners...................           5           5
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       1,941       1,926         818
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........          65          56          27
    22.00 New budget authority (gross)......       1,934       1,898         791
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       1,999       1,954         818
    23.95 Total new obligations.............      -1,941      -1,926        -818
    23.98 Unobligated balance expiring or
            withdrawn.......................          -1
    24.40 Unobligated balance carried
            forward, end of year............          56          27
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       1,143       1,107
    55.00   Advance appropriation...........         791         791         791
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................       1,934       1,898         791
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       1,496       1,652       1,650
    73.10 Total new obligations.............       1,941       1,926         818
    73.20 Total outlays (gross).............      -1,778      -1,929      -1,803
    73.40 Adjustments in expired accounts
            (net)...........................          -7
    74.40 Obligated balance, end of year....       1,652       1,650         666
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................         814         651         554
    86.93 Outlays from discretionary
            balances........................         964       1,278       1,249
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       1,778       1,929       1,803
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       1,934       1,898         791
    90.00 Outlays...........................       1,778       1,929       1,803
    ---------------------------------------------------------------------------

                     Summary of Budget Authority and Outlays

                            (in millions of dollars)

                                         2002 actual  2003 est.   2004 est.
    Enacted/requested:
      Budget Authority..................       1,934       1,898         791

    [[Page 334]]

      Outlays...........................       1,778       1,929       1,803
    Legislative proposal, not subject to
        PAYGO:
      Budget Authority..................                                 800
      Outlays...........................                                  82
                                        ------------------------------------
    Total:
      Budget Authority..................       1,934       1,898       1,591
      Outlays...........................       1,778       1,929       1,885
                                        ====================================

                            SUMMARY OF PROGRAM LEVEL

                            (in millions of dollars)

                                         2002-2003
                                          academic
                                            year      2003-2004
                                                    academic year 2004-2005
                                                                academic year
    New Budget Authority................       1,143       1,107         800
    Advance appropriation...............         791         791         791
                                        ------------------------------------
        Total program level.............       1,934       1,898       1,591
                                        ====================================
    Change in advance appropriation from
    the previous year...................

        Vocational and adult education.--The Administration is working with
    Congress to develop legislation reauthorizing programs included in the
    Carl D. Perkins Vocational and Technical Education Act of 1998 and the
    Adult Education and Family Literacy Act. When new authorizing
    legislation is enacted resources for the affected programs will be
    requested.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0400-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

    11.3    Personnel compensation: Other
              than full-time permanent......           1           1           1
    25.1    Advisory and assistance services           3           3           3
    25.2    Other services..................           4           3           3
    25.3    Other purchases of goods and
              services from Government
              accounts......................          16          14           9
    25.5    Research and development
              contracts.....................          18          17          10
    41.0    Grants, subsidies, and
              contributions.................       1,898       1,887         791
                                               ---------   ---------  ----------
    99.0      Direct obligations............       1,940       1,925         817
    99.5  Below reporting threshold.........           1           1           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       1,941       1,926         818
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0400-0-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................          16          20          18
    ---------------------------------------------------------------------------

                         Vocational and Adult Education

                  (Legislative proposal, not subject to PAYGO)

        The resources in this schedule are proposed for later transmittal
    under proposed legislation to reform the Carl D. Perkins Vocational and
    Technical Education Act of 1998 (Perkins) and the Adult Education and
    Family Literacy Act (AEFLA). The reforms would promote stronger
    accountability for results by linking grantee funding to success in
    achieving student outcomes.

        Secondary and technical education.--The proposed reforms to Perkins
    would create a coordinated high school and technical education
    improvement program. The program would support and extend the goals of
    Title I of the Elementary and Secondary Education Act (ESEA) by
    requiring States and LEAs to focus more intensively on improving student
    outcomes, such as academic achievement, and ensuring that students are
    being taught the necessary skills to make successful transitions from
    high school to college and college to the workforce. States would
    reserve a portion of their formula allocations to, among other things,
    implement assessments consistent with ESEA Title I accountability
    requirements to track academic performance and ensure that high school
    students are graduating with the necessary proficiency in core academic
    areas. States would have the flexibility to transfer funds to support
    education-related activities under ESEA Title I. States wouild also make
    competitive grants to community and technical colleges to help raise
    student academic achievement and provide students with high-quality
    training leading to successful employment outcomes.

        Adult literacy.--The proposal would amend the current statute to
    increase the focus on building stronger skills in basic reading, math,
    and English acquisition for adults who need to strengthen weak literacy
    skills or want to earn their high school diploma or its recognized
    equivalent (the GED). Proposed amendments would revise current
    accountability provisions to create specific local accountability
    requirements for demonstrating student gains in reading, math, and
    English language acquisition, with rewards for high performing programs.
    Each State would develop and implement educational standards to guide
    local programs in creating a clear sequence of adult literacy activities
    leading to high school-level proficiency. The proposal would require
    that teachers be trained in the use of research-validated instructional
    practices in reading, math and English fluency, and that programs
    integrate the use of technology-facilitated learing to accelerate
    student learning. In addition, the proposal would strengthen employer
    partnerships and the participation of community- and faith-based
    organizations to expand availabilty of essential reading, math, and
    English acquisition instruction, particularly for low-wage working
    adults.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0400-2-1-501      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Secondary and technical education
            State grants....................                                 209
    00.02 Adult basic and literacy education
            State grants....................                                 584
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................                                 793
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                 800
    23.95 Total new obligations.............                                -793
    24.40 Unobligated balance carried
            forward, end of year............                                   7
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................                                 800
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                 793
    73.20 Total outlays (gross).............                                 -82
    74.40 Obligated balance, end of year....                                 712
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                                  82
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                 800
    90.00 Outlays...........................                                  82
    ---------------------------------------------------------------------------

                        OFFICE OF POSTSECONDARY EDUCATION

                                  Federal Funds

    General and special funds:

                                Higher Education

        For carrying out, to the extent not otherwise provided, section 121
    and titles II, III, IV, V, VI, and VII of the Higher Education Act of
    1965, as amended (``HEA''), section 117 of the Carl D. Perkins

    [[Page 335]]

    Vocational and Technical Education Act, and the Mutual Educational and
    Cultural Exchange Act of 1961, $1,904,438,000, of which $2,000,000 for
    interest subsidies authorized by section 121 of the HEA shall remain
    available until expended: Provided, That $10,000,000, to remain
    available through September 30, 2005, shall be available to fund
    fellowships for academic year 2005-2006 under part A, subpart 1 of title
    VII of said Act, under the terms and conditions of part A, subpart 1:
    Provided further, That $1,000,000 is for data collection and evaluation
    activities for programs under the HEA, including such activities needed
    to comply with the Government Performance and Results Act of 1993:
    Provided further, That notwithstanding any other provision of law, funds
    made available in this Act to carry out title VI of the HEA and section
    102(b)(6) of the Mutual Educational and Cultural Exchange Act of 1961
    may be used to support visits and study in foreign countries by
    individuals who are participating in advanced foreign language training
    and international studies in areas that are vital to United States
    national security and who plan to apply their language skills and
    knowledge of these countries in the fields of government, the
    professions, or international development: Provided further, That up to
    one percent of the funds referred to in the preceding proviso may be
    used for program evaluation, national outreach, and information
    dissemination activities: Provided further, That the funds provided for
    title II of the HEA shall be allocated notwithstanding section 210 of
    said Act: Provided further, That the funds provided for part B of title
    VII of the HEA may be used, at the discretion of the Secretary of
    Education, to fund continuation awards under title VII, part D of said
    Act.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0201-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Aid for institutional development:

    00.01   Strengthening institutions......          74          76          76
    00.02   Strengthening tribally
              controlled colleges and
              universities..................          18          18          19
    00.03   Strengthening Alaska Native and
              Native Hawaiian-serving
              institutions..................           6           7           4
    00.04   Strengthening historically black
              colleges and universities.....         206         213         224
    00.05   Strengthening historically black
              graduate institutions.........          49          51          53
    00.06   Minority science and engineering
              improvement...................           9           8           8
                                               ---------   ---------  ----------
    00.91     Subtotal, aid for
                institutional development...         362         373         384
          Other aid for institutions:

    01.01   Developing Hispanic-serving
              institutions..................          86          89          94
    01.02   International education and
              foreign language studies......          98         103         103
    01.03   Fund for the Improvement of
              Postsecondary Education.......         181          39          39
    01.04   Demonstration projects to ensure
              quality higher education for
              students with disabilities....           7
    01.05   Interest subsidy grants.........           7          10           2
    01.06   Tribally controlled
              postsecondary vocational and
              technical institutions........                                   6
                                               ---------   ---------  ----------
    01.91     Subtotal, other aid for
                institutions................         379         241         244
          Assistance for students:

    02.01   Federal TRIO programs...........         803         803         803
    02.02   Gaining early awareness and
              readiness for undergraduate
              programs (GEAR UP)............         285         285         285
    02.03   Byrd honors scholarships........          41          41          41
    02.04   Javits fellowships..............          10          10          10
    02.05   Graduate assistance in areas of
              national need.................          31          31          31
    02.06   Thurgood Marshall legal
              educational opportunity
              program.......................           4
    02.07   B. J. Stupak Olympic
              scholarships..................           1
    02.08   Child care access means parents
              in school.....................          22          15          15
                                               ---------   ---------  ----------
    02.91     Subtotal, assistance for
                students....................       1,197       1,185       1,185
    03.01 Teacher quality enhancement.......          88          90          90
    04.01 GPRA data/HEA program evaluation..           1           1           1
    05.01 Underground railroad program......           2
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       2,029       1,890       1,904
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........          19          17          10
    22.00 New budget authority (gross)......       2,028       1,883       1,904
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       2,047       1,900       1,914
    23.95 Total new obligations.............      -2,029      -1,890      -1,904
    23.98 Unobligated balance expiring or
            withdrawn.......................          -2
    24.40 Unobligated balance carried
            forward, end of year............          17          10          10
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................       2,031       1,883       1,904
    41.00   Transferred to other accounts...          -3
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............       2,028       1,883       1,904
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       2,396       2,702       2,491
    73.10 Total new obligations.............       2,029       1,890       1,904
    73.20 Total outlays (gross).............      -1,687      -2,100      -1,905
    73.40 Adjustments in expired accounts
            (net)...........................         -34
    74.40 Obligated balance, end of year....       2,702       2,491       2,491
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          68          97          97
    86.93 Outlays from discretionary
            balances........................       1,619       2,003       1,808
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       1,687       2,100       1,905
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       2,028       1,883       1,904
    90.00 Outlays...........................       1,687       2,100       1,905
    ---------------------------------------------------------------------------
        Note.--Includes $6 million in budget authority in 2004 for
    activities previously financed from the Department of Education:

                           (in millions of dollars)
                                              2002 actual      2003 est.
    Office of Vocational and Adult Education             6               6

        Aid for institutional development.--

        Strengthening institutions.--Funds support planning and development
    grants for improving academic programs and financial management at
    schools that enroll high proportions of disadvantaged students and have
    low per-student expenditures.

        Strengthening tribally controlled colleges and universities.--Funds
    support grants to American Indian tribally controlled colleges and
    universities with scarce resources to enable them to improve and expand
    their capacity to serve Indian students.

        Strengthening Alaska Native and Native Hawaiian-serving
    institutions.--Funds support Alaska Native and Native Hawaiian-serving
    institutions to enable them to improve and expand their capacity to
    serve Alaska Native and Native Hawaiian students.

        Strengthening historically black colleges and universities.--Funds
    support grants to help historically black undergraduate institutions to
    improve and expand their capacity to serve students, and to strengthen
    management and fiscal operations.

        Strengthening historically black graduate institutions.--Funds
    support grants to help historically black graduate institutions to
    improve and expand their capacity to serve students, and to strengthen
    management and fiscal operations.

        Minority science and engineering improvement.--Funds support grants
    to predominantly minority institutions to help them make long-range
    improvements in science and engineering education and to increase the
    participation of minorities in scientific and technological careers.

        Other aid for institutions.--

        Developing Hispanic-serving institutions.--Funds support Hispanic-
    serving institutions to enable them to improve and expand their capacity
    to serve students.

        International education and foreign language studies programs.--
    Funds promote the development and improvement of international and
    foreign language programs.

        Fund for the improvement of postsecondary education.--Funds support
    a broad range of postsecondary reform and improvement projects, as well
    as international consortia pro

    [[Page 336]]

    grams and projects previously funded under HEA Title VII, Part D to
    improve education for students with disabilities.

        Interest subsidy grants.--Funds meet mandatory interest subsidy
    costs of construction loan commitments made prior to 1974.

        Tribally controlled postsecondary vocational and technical
    institutions.--Funds support the operation and improvement of tribally
    controlled postsecondary vocational institutions, to ensure continued
    and expanded educational opportunities for Indian students.

        Assistance for students.--

        Federal TRIO programs.--Funds support postsecondary education
    outreach and student support services through 5 major programs designed
    to help individuals from disadvantaged backgrounds enter and complete
    college and graduate studies.

        Gaining early awareness and readiness for undergraduate programs.--
    Funds support early college preparation and awareness activities at the
    State and local levels to ensure that low-income elementary and
    secondary school students are prepared for and pursue postsecondary
    education.

        Byrd honors scholarships.--Funds support merit-based scholarships to
    students who have demonstrated outstanding academic achievement and who
    show promise of continued academic excellence for study at an
    institution of higher education.

        Javits fellowships.--Funds support fellowships to students of
    superior ability who have financial need and who are pursuing doctoral
    degrees in the arts, humanities, and social sciences.

        Graduate assistance in areas of national need.--Funds support
    fellowships to graduate students of superior ability who have financial
    need and who are from traditionally under-represented backgrounds for
    study in areas of national need.

        Child care access means parents in school.--Funds support a program
    designed to bolster the participation of low-income parents in
    postsecondary education through the provision of campus-based child care
    services.

        Other aid.--

        Teacher quality enhancement.--Funds support programs that seek to
    make lasting changes in the ways our Nation recruits, prepares,
    licenses, and supports teachers.

        GPRA data/HEA program evaluation.--Funds support data collection and
    evaluation activities for programs under the Higher Education Act of
    1965, including such activities needed to comply with the Government
    Performance and Results Act of 1993.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0201-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

    25.1    Advisory and assistance services           3           4           4
    25.2    Other services..................           5           5           5
    25.3    Other purchases of goods and
              services from Government
              accounts......................           2           2           2
    41.0    Grants, subsidies, and
              contributions.................       2,018       1,879       1,893
                                               ---------   ---------  ----------
    99.0      Direct obligations............       2,028       1,890       1,904
    99.5  Below reporting threshold.........           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       2,029       1,890       1,904
    ---------------------------------------------------------------------------

                                Howard University

        For partial support of Howard University (20 U.S.C. 121 et seq.),
    $237,474,000, of which not less than $3,600,000 shall be for a matching
    endowment grant pursuant to the Howard University Endowment Act (Public
    Law 98-480) and shall remain available until expended.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0603-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 General support...................         207         211         207
    00.02 Howard University Hospital........          30          30          30
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................         237         241         237
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           4           4
    22.00 New budget authority (gross)......         237         237         237
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         241         241         237
    23.95 Total new obligations.............        -237        -241        -237
    24.40 Unobligated balance carried
            forward, end of year............           4
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         237         237         237
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..                       4          15
    73.10 Total new obligations.............         237         241         237
    73.20 Total outlays (gross).............        -234        -230        -237
    74.40 Obligated balance, end of year....           4          15          15
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................         234         223         223
    86.93 Outlays from discretionary
            balances........................                       7          14
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         234         230         237
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         237         237         237
    90.00 Outlays...........................         234         230         237
    ---------------------------------------------------------------------------

        Howard University is a private, nonprofit educational institution
    consisting of 12 schools and colleges. Federal funds are used to provide
    partial support for university programs as well as for the teaching
    hospital facilities. In 2002, direct Federal appropriations for general
    support represented approximately 59 percent of the university's
    revenue.

          College Housing and Academic Facilities Loans Program Account

        For Federal administrative expenses authorized under section 121 of
    the Higher Education Act of 1965, $774,000 to carry out activities
    related to existing facility loans entered into under the Higher
    Education Act of 1965.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

      Historically Black College and University Capital Financing Program
                                     Account

        The aggregate principal amount of outstanding bonds insured pursuant
    to section 344 of title III, part D of the Higher Education Act of 1965
    shall not exceed $355,000,000, and the cost, as defined in section 502
    of the Congressional Budget Act of 1974, of such bonds shall not exceed
    zero.
        For administrative expenses to carry out the Historically Black
    College and University Capital Financing Program entered into pursuant
    to title III, part D of the Higher Education Act of 1965, as amended,
    $210,000.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

    [[Page 337]]

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0241-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.09 Federal administration............           1           1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 99.5)...................           1           1           1
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......           1           1           1
    23.95 Total new obligations.............          -1          -1          -1
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................           1           1           1
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..                       1
    73.10 Total new obligations.............           1           1           1
    73.20 Total outlays (gross).............          -1          -1          -1
    74.40 Obligated balance, end of year....           1
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................           1           1           1
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................           1           1           1
    90.00 Outlays...........................           1           1           1
    ---------------------------------------------------------------------------

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0241-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    115001Historically Black Colleges and
            Universities....................          44         268         227
                                               ---------   ---------  ----------
    115901Total direct loan levels..........          44         268         227
        Direct loan subsidy (in percent):
    132001Historically Black Colleges and
            Universities....................        0.00        0.00        0.00
                                               ---------   ---------  ----------
    132901Weighted average subsidy rate.....        0.00        0.00        0.00
        Direct loan subsidy budget authority:
    133001Historically Black Colleges and
            Universities....................
                                               ---------   ---------  ----------
    133901Total subsidy budget authority....
        Direct loan subsidy outlays:
    134001Historically Black Colleges and
            Universities....................
                                               ---------   ---------  ----------
    134901Total subsidy outlays.............
        Direct loan downward reestimate subsidy budget
                    authority:
    137001Downward reestimates subsidy
            budget authority................
                                               ---------   ---------  ----------
    137901Total downward reestimate budget
            authority.......................
        Direct loan downward reestimate subsidy
                    outlays:
    138001Downward reestimates subsidy
            outlays.........................
                                               ---------   ---------  ----------
    138901Total downward reestimate subsidy
            outlays.........................
    ----------------------------------------------------------------------------

        Administrative expense data:
    351001Budget authority..................           1           1
    358001Outlays from balances.............
    359001Outlays from new authority........           1
    ---------------------------------------------------------------------------

        The College Housing and Academic Facilities Loans Program and the
    Historically Black College and University Capital Financing Program are
    administered separately, but are consolidated for presentation purposes.

        College Housing and Academic Facilities Loans Program.--Funds for
    this activity pay the Federal costs for administering the College
    Housing and Academic Facilities Loans (CHAFL), College Housing Loans
    (CHL), and Higher Education Facilities Loans (HEFL) programs. Prior to
    1994, these programs provided financing for the construction,
    reconstruction, and renovation of housing, academic, and other
    educational facilities. Although no new loans have been awarded since
    fiscal year 1993, costs for administering the outstanding loans will
    remain through 2030.

        Historically Black College and University Capital Financing
    Program.--The Historically Black College and University (HBCU) Capital
    Financing Program provides HBCUs with access to capital financing for
    the repair, renovation, and construction of classrooms, libraries,
    laboratories, dormitories, instructional equipment, and research
    instrumentation. The Higher Education Amendments of 1992 granted the
    Department authority to enter into insurance agreements with a private
    for-profit Designated Bonding Authority to guarantee no more than
    $375,000,000 in outstanding principal and unpaid accrued interest
    combined. The bonding authority issues the loans and maintains an escrow
    account in which 5 percent of each institution's principal is deposited.
    This amount is estimated to be sufficient to cover all potential
    delinquencies and defaults. No subsidy appropriations are required. The
    2004 budget provides funds for continuing Federal administrative
    activities only.

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0241-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................           7           7           7
    ---------------------------------------------------------------------------

         College Housing and Academic Facilities Loans Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4252-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.02 Interest paid to Treasury.........           2           1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 43.0)...................           2           1           1
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...           2           1           1
    23.95 Total new obligations.............          -2          -1          -1
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    69.00   Offsetting collections (cash)...           3           2           2
    69.47   Portion applied to repay debt...          -1          -1          -1
                                               ---------   ---------  ----------
    69.90     Spending authority from
                offsetting collections
                (total mandatory)...........           2           1           1
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............           2           1           1
    73.20 Total financing disbursements
            (gross).........................          -2          -1          -1
    87.00 Total financing disbursements
            (gross).........................           2           1           1
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
    88.00     Federal sources...............          -1
              Non-Federal sources:
    88.40       Interest repayments.........          -1          -1          -1
    88.40       Principal repayments........          -1          -1          -1
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........          -3          -2          -2
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............          -1          -1          -1
    90.00 Financing disbursements...........          -1          -1          -1
    ---------------------------------------------------------------------------

        The College Housing and Academic Facilities Loans Financing Account
    records all cash flows to and from the Government resulting from direct
    loans made in fiscal years 1992 and 1993.

    [[Page 338]]

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4252-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........          25          25          24
    1251  Repayments: Repayments and
            prepayments.....................                      -1
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........          25          24          24
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4252-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Net value of assets related to
              post-1991 direct loans
              receivable:

    1401    Direct loans receivable, gross..          25             25            24             24
    1405    Allowance for subsidy cost (-)..          -2             -2            -2             -2
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....          23             23            22             22
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................          23             23            22             22
        LIABILITIES:
    2103  Federal liabilities: Debt.........          23             23            22             22
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............          23             23            22             22
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position          23             23            22             22
    -----------------------------------------------------------------------------------------------

        College Housing and Academic Facilities Loans Liquidating Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0242-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.02 Interest paid to Treasury.........          14          14          13
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 43.0)...................          14          14          13
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           3           5
    22.00 New budget authority (gross)......          13           7          13
    22.10 Resources available from
            recoveries of prior year
            obligations.....................           3          11
    22.40 Capital transfer to general fund..                      -1
    22.60 Portion applied to repay debt.....                      -8
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          19          14          13
    23.95 Total new obligations.............         -14         -14         -13
    24.40 Unobligated balance carried
            forward, end of year............           5
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Mandatory:

    60.00   Appropriation...................           2           7           5
    69.00 Offsetting collections (cash).....          56          43          40
    69.27 Capital transfer to general fund..          -2          -3          -1
    69.47 Portion applied to repay debt.....         -43         -40         -31
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................          11                       8
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................          13           7          13
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..          21          12
    73.10 Total new obligations.............          14          14          13
    73.20 Total outlays (gross).............         -20         -14         -13
    73.45 Recoveries of prior year
            obligations.....................          -3         -11
    74.40 Obligated balance, end of year....          12
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new mandatory
            authority.......................          13           7          13
    86.98 Outlays from mandatory balances...           7           7
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          20          14          13
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
              Non-Federal sources:
    88.40       Repayments of principal.....         -41         -29         -27
    88.40       Interest received on loans..         -15         -14         -13
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........         -56         -43         -40
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         -43         -36         -27
    90.00 Outlays...........................         -36         -29         -27
    ---------------------------------------------------------------------------

        The College Housing and Academic Facilities Loans Liquidating
    Account records all cash flows to and from the Government resulting from
    direct loans made prior to 1992. This account includes loans made under
    the College Housing and Academic Facilities Loans, College Housing
    Loans, and Higher Education Facilities Loans programs, which continue to
    be administered separately.

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0242-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
              CHAFL LIQUIDATING
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........         117         109         106
    1231  Disbursements: Direct loan
            disbursements...................           1
    1251  Repayments: Repayments and
            prepayments.....................          -9          -3          -3
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........         109         106         103
    ----------------------------------------------------------------------------

              HIGHER EDUCATION FACILITIES
                  LOANS
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........          24          22          21
    1251  Repayments: Repayments and
            prepayments.....................          -2          -1          -2
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........          22          21          19
    ----------------------------------------------------------------------------

              COLLEGE HOUSING LOANS
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........         284         254         230
    1251  Repayments: Repayments and
            prepayments.....................         -30         -24         -22
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........         254         230         208
    ---------------------------------------------------------------------------

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-0242-0-1-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        CHAFL LIQUIDATING:
    0111  Revenue...........................           9             15             9              9
    0112  Expense...........................         -35            -17           -21            -14
                                            ------------ --------------  ------------  -------------
    0115    Net income or loss (-)..........         -26             -2           -12             -5
        HIGHER EDUCATION FACILITIES LOANS:
    0121  Revenue...........................           3              3             3              2
    0122  Expense...........................          -2             -1            -1             -1
                                            ------------ --------------  ------------  -------------
    0125    Net income or loss (-)..........           1              2             2              1
        COLLEGE HOUSING LOANS:
    0131  Revenue...........................          40             38            31             29
    0132  Expense...........................         -91            -39           -40            -29
                                            ------------ --------------  ------------  -------------
    0135    Net income or loss (-)..........         -51             -1            -9
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................          52             56            43             40
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................        -128            -57           -62            -44
                                            ------------ --------------  ------------  -------------
    0195  Total income or loss (-)..........         -76             -1           -19             -4
                                            ------------ --------------  ------------  -------------
    0199  Total comprehensive income........         -76             -1           -19             -4
    -----------------------------------------------------------------------------------------------

    [[Page 339]]

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-0242-0-1-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Net value of assets related to
              pre-1992 direct loans
              receivable and acquired
              defaulted guaranteed loans
              receivable:

    1601    Direct loans, gross.............         425            385           357            330
    1602    Interest receivable.............           6              6             6              5
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................         431            391           363            335
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................         431            391           363            335
        LIABILITIES:
          Federal liabilities:

    2103    Debt............................         236            192           143            112
    2104    Resources payable to Treasury...         195            199           220            223
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............         431            391           363            335
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position         431            391           363            335
    -----------------------------------------------------------------------------------------------

    Historically Black College and University Capital Financing Direct Loan
                                Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4255-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Direct Loan Awards................          44          40          40
    00.02 Interest paid to Treasury.........           2           2           5
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 43.0)...................          46          42          45
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...          54          42          45
    22.10 Resources available from
            recoveries of prior year
            obligations.....................          14
    22.60 Portion applied to repay debt.....          -2
    22.70 Balance of authority to borrow
            withdrawn.......................         -20
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          46          42          45
    23.95 Total new obligations.............         -46         -42         -45
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    67.10   Authority to borrow.............          50          40          40
    69.00 Offsetting collections (cash).....           4           3           6
    69.47 Portion applied to repay debt.....                      -1          -1
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................           4           2           5
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................          54          42          45
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..          30          20          39
    73.10 Total new obligations.............          46          42          45
    73.20 Total financing disbursements
            (gross).........................         -42         -23         -46
    73.45 Recoveries of prior year
            obligations.....................         -14
    74.40 Obligated balance, end of year....          20          39          38
    87.00 Total financing disbursements
            (gross).........................          42          23          46
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Non-Federal sources:
    88.40       Interest repayments.........          -2          -2          -5
    88.40       Principal repayments........          -2          -1          -1
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........          -4          -3          -6
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............          50          39          39
    90.00 Financing disbursements...........          37          20          40
    ---------------------------------------------------------------------------

        The Federal Financing Bank (FFB) purchases bonds issued by the HBCU
    Designated Bonding Authority. Under the policies governing Federal
    credit programs, bonds purchased by the FFB and supported by the
    Department of Education with a letter of credit create the equivalent of
    a Federal direct loan. HBCU bonds are also available for purchase by the
    private sector, and these will be treated as loan guarantees. However,
    the Department anticipates that all HBCU loans will be financed by the
    FFB.

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4255-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........         296         268         227
    1142  Unobligated direct loan limitation
            (-).............................        -252        -228
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...          44          40         227
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........          31          69          89
    1231  Disbursements: Direct loan
            disbursements...................          40          21          41
    1251  Repayments: Repayments and
            prepayments.....................          -2          -1          -1
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........          69          89         129
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4255-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................          30             20            39             38
          Net value of assets related to
              post-1991 direct loans
              receivable:

    1401    Direct loans receivable, gross..          31             69            89            129
    1402    Interest receivable.............                          3             3              4
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....          31             72            92            133
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................          61             92           131            171
        LIABILITIES:
          Federal liabilities:

    2102    Interest payable................                          3             3              4
    2103    Debt............................          61             89           128            167
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............          61             92           131            171
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position          61             92           131            171
    -----------------------------------------------------------------------------------------------

                                   Trust Funds

                     National Security Education Trust Fund

                  (Legislative proposal, not subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-8261-2-7-054      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 National Security Education Trust
            Fund............................                                   8
                                               ---------   ---------  ----------
    10.00   Total new obligations...........                                   8
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                   8
    23.95 Total new obligations.............                                  -8
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.26   Appropriation (trust fund)......                                   8
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                   8
    73.20 Total outlays (gross).............                                  -2
    74.40 Obligated balance, end of year....                                   6
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                                   2
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                   8

    [[Page 340]]

    90.00 Outlays...........................                                   2
    ---------------------------------------------------------------------------

        The budget proposes moving this program from the Department of
    Defense.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-8261-2-7-054      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Full-time
            permanent.......................                                   1
    25.2  Other services....................                                   1
    41.0  Grants, subsidies, and
            contributions...................                                   6
                                               ---------   ---------  ----------
    99.9    Total new obligations...........                                   8
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-8261-2-7-054      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................                                   7
    ---------------------------------------------------------------------------

                     OFFICE OF STUDENT FINANCIAL ASSISTANCE

                                  Federal Funds

    General and special funds:

                          Student Financial Assistance

        For carrying out subparts 1, and 3 of part A, part C and part E of
    title IV of the Higher Education Act of 1965, as amended,
    $14,518,500,000, which shall remain available through September 30,
    2005.
        The maximum Pell Grant for which a student shall be eligible during
    award year 2004-2005 shall be $4,000: Provided, That notwithstanding
    section 401(g) of the Act, if the Secretary determines, prior to
    publication of the payment schedule for such award year, that the amount
    included within this appropriation for Pell Grant awards in such award
    year, and any funds available from the fiscal year 2003 appropriation
    for Pell Grant awards, are insufficient to satisfy obligations, the
    Secretary may reduce the amount paid for each such award by either a
    fixed or variable percentage, or by a fixed dollar amount, as determined
    in accordance with a schedule of reductions established by the Secretary
    for this purpose.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0200-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Federal Pell grants:

    01.01   Federal Pell grants.............      11,639       9,980      10,805
          Campus-based aid:

    02.01   Federal supplemental educational
              opportunity grants (SEOG).....         727         726         725
    02.02   Federal work-study..............       1,024       1,012       1,011
    02.03   Federal Perkins loans: Federal
              capital contributions.........         102         100
    02.05   Federal Perkins loans: Loan
              cancellations.................          68          68          68
                                               ---------   ---------  ----------
    02.91     Subtotal, Campus-based
                activities..................       1,921       1,906       1,804
    03.01 Leveraging educational assistance
            partnership.....................          67
    04.01 Loan forgiveness for child care
            providers.......................           1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................      13,628      11,887      12,609
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........       1,288       1,026       1,906
    22.00 New budget authority (gross)......      13,286      12,768      14,519
    22.10 Resources available from
            recoveries of prior year
            obligations.....................          81
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      14,655      13,794      16,425
    23.95 Total new obligations.............     -13,628     -11,887     -12,609
    23.98 Unobligated balance expiring or
            withdrawn.......................          -1
    24.40 Unobligated balance carried
            forward, end of year............       1,026       1,906       3,816
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................      13,286      12,768      14,519
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       7,153       8,226       6,761
    73.10 Total new obligations.............      13,628      11,887      12,609
    73.20 Total outlays (gross).............     -12,369     -13,352     -13,366
    73.40 Adjustments in expired accounts
            (net)...........................        -103
    73.45 Recoveries of prior year
            obligations.....................         -81
    74.40 Obligated balance, end of year....       8,226       6,761       6,004
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................       4,250       4,389       4,985
    86.93 Outlays from discretionary
            balances........................       8,119       8,963       8,381
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........      12,369      13,352      13,366
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      13,286      12,768      14,519
    90.00 Outlays...........................      12,369      13,352      13,366
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0200-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........         384         321         284
    1251  Repayments: Repayments and
            prepayments.....................         -78         -39         -42
          Write-offs for default:

    1263    Direct loans....................         -20         -22         -23
    1264    Other adjustments, net..........          35          24          24
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........         321         284         243
    ---------------------------------------------------------------------------
        \1\ Includes in all years institutional matching share of defaulted
    notes assigned from institutions to the Education Department.

        The Administration's 2004 budget for the SFA account is $14.519
    billion. Together with matching funds (less allowable administrative
    costs), this level of funding would provide nearly 7.5 million awards
    totalling more than $17 billion in available aid.

        Federal Pell Grants.--Undergraduate students establish eligibility
    for these grants under award and need determination rules set out in the
    authorizing statute and the annual appropriations act.

        The Administration proposes $12.715 billion for Pell Grants in the
    2004 Budget.

        In recent years, the number of Pell Grant recipients has grown much
    faster than historical trends would predict (as has college enrollment
    overall). Specifically, from 2000 to 2002, the number of Pell recipients
    increased by nearly 25 percent, compared with a 5 percent growth rate
    from 1997 to 1999. Much of this unanticipated increase was due to more
    independent students receiving Pell Grants (generally, independent
    students are older students who do not depend on their parent or
    guardian to pay for college). Many of these students attend community
    colleges and career training institutions and predominantly use Pell
    Grants and other student aid to help pay for job training or retraining.
    So, while Pell Grants remain the single largest source of grant aid for
    traditional college students, they are also the single largest source of
    federal support for persons in need of training or retraining for new
    careers.

        As a result of this unexpected growth, as well as a $700 increase in
    the maximum grant from 2000 to 2002, Pell Grant appropriations for the
    past few years have been insufficient to fully cover annual program
    costs. This budget provides $12.7 billion for Pell Grants to retire the
    shortfall related to the 2002-2003 award year and maintain a $4,000
    maximum award for the growing numbers of students eligible for Pell
    Grants.

    [[Page 341]]

        As part of the Administration's efforts to keep the Pell Grant
    program on a solid financial foundation, the budget also proposes to
    allow the Internal Revenue Service to match income data on student aid
    applications with the applicant's tax data to ensure that students do
    not receive awards in excess of the amount for which they are eligible.
    This is one component of the Administration's effort to reduce erroneous
    payments government-wide. This proposal is projected to save $638
    million in Pell Grant costs over 2003-2004, significantly reducing
    existing funding shortfalls.

        Campus-based programs.--The Federal Supplemental Educational
    Opportunity Grants, Federal Work-Study, and Federal Perkins Loan
    programs are called the ``campus-based'' programs because participating
    institutions are responsible for administering the programs on their own
    campuses. These programs provide aid administrators with considerable
    flexibility in the packaging of financial aid awards to best meet the
    needs of students.

        Federal Supplemental Educational Opportunity Grants (SEOG).--Federal
    funds are awarded by formula to qualifying institutions, which use these
    funds to award grants to undergraduate students. While institutions have
    discretion in awarding these funds, they are required to give priority
    to Pell Grant recipients and other students with exceptional need. The
    Federal share of such grants may not exceed 75 percent of the total
    grant. The Administration proposes $725 million for the SEOG program in
    2004. This level of funding would provide approximately $918 million in
    available aid to an estimated 1.2 million needy students.

        Federal Work-Study.--Federal funds are awarded by formula to
    qualifying institutions, which develop and provide part-time jobs for
    eligible undergraduate and graduate students with demonstrated need.
    Hourly earnings under the program must be at least equal to the Federal
    minimum wage. Federal funding in most cases pays 75 percent of a
    student's hourly wages, with the remaining 25 percent paid by the
    employer. The Administration proposes $1.011 billion for the Work-Study
    program, which will provide $1.2 billion in aid to over one million
    students.

        Perkins Loan Program.--Institutions award low-interest loans from
    institutional revolving funds, which are comprised of Federal Capital
    Contributions, institutional matching funds, and student repayments on
    outstanding loans. The Administration proposes no new budget authority
    for the Perkins loan program in 2004. Repayments of existing Perkins
    Loans into Federal revolving funds held at institutions will continue to
    support more than $1 billion in new Perkins Loans in 2004. In addition,
    given the existence of the Federal Family Education Loan and Ford Direct
    Student Loan programs, as well as the current interest rate environment,
    including the statutory shift to a fixed rate of 6.8 percent for most
    student loans beginning in 2006, additional Federal capital
    contributions are not necessary to assure the availability of affordable
    aid for students.

        Perkins Loan Program--Cancellations.--Under the Perkins Loan
    cancellation program, institutional revolving funds are reimbursed for
    indebtedness canceled as a result of a borrower engaging in certain
    public service activities, as specified in the Higher Education Act.
    Amendments to the Higher Education Act in 1992 and 1998 greatly expanded
    the number of borrowers with loans eligible for cancellation. The
    Administration's budget proposal for Perkins Loan cancellations is $67.5
    million.

        Funding Tables.--The following tables display student aid funds
    available, the number of aid awards, average awards, and the
    unduplicated count of recipients from any Federal student aid program.
    The tables include the aid from programs in the Student Financial
    Assistance account, as well as aid from the Federal Family Education
    Loan (FFEL) program, and the William D. Ford Federal Direct Loan
    program. Loan amounts reflect the capital actually loaned, not the
    Federal cost of those loans. The data in these tables include the
    effects of matching funds wherever applicable.

          AID FUNDS AVAILABLE FOR POSTSECONDARY EDUCATION AND TRAINING

                                 [in thousands]

                                            2002         2003        2004
    Pell grants.........................  11,619,188  11,479,134  11,405,127
    Student loans:
      Guaranteed student loans:
        Stafford loans..................  13,441,179  14,559,712  15,340,294
        Unsubsidized Stafford loans.....  11,975,791  13,440,125  14,673,794
        PLUS............................   3,188,637   3,536,521   3,930,767
      Direct student loans:
        Stafford loans..................   5,764,737   6,177,087   6,476,364
        Unsubsidized Stafford loans.....   4,480,553   4,988,117   5,394,484
        PLUS............................   1,443,527   1,598,059   1,765,358
      Consolidation:
        FFEL............................  22,693,425  16,985,715  12,998,927
        Direct Loans....................   8,844,598   7,425,136   6,097,974
                                        ------------------------------------
            Student loans, subtotal.....  71,832,446  68,710,471  66,677,961
    Work-study..........................   1,212,993   1,212,993   1,212,993
    Supplemental educational opportunity
    grants..............................     917,722     917,722     917,722
    Perkins loans.......................   1,264,889   1,264,889   1,136,684
    Leveraging educational assistance
    partnership.........................     171,000
    Loan forgiveness for child care
    providers...........................       1,000       1,000
                                        ------------------------------------
            Total aid available.........  87,019,237  83,586,208  81,350,486
                                        ====================================

                              NUMBER OF AID AWARDS

                                 [In thousands]

                                            2002         2003        2004
    Pell grants.........................       4,639       4,740       4,814
    Guaranteed student loans:
      Stafford loans....................       3,084       3,269       3,269
      Unsubsidized Stafford loans.......       2,199       2,330       2,330
      PLUS..............................         334         353         353
      Consolidation.....................         308         222         222
    Direct student loans:
      Stafford loans....................       1,324       1,399       1,399
      Unsubsidized Stafford loans.......         878         929         929
      PLUS..............................         153         161         161
      Consolidation.....................         357         256         256
    Work-study..........................       1,073       1,073       1,073
    Supplemental educational opportunity
    grants..............................       1,189       1,189       1,189
    Perkins loans.......................         707         707         635
    Leveraging Educational Assistance
    Partnership.........................         171           0           0
                                        ------------------------------------
          Total awards..................      16,416      16,626      16,628
        Note: Detail may not add to totals due to rounding.
        *Fewer than 500 recipients

                               AVERAGE AID AWARDS

                               [In whole dollars]

                                            2002         2003        2004
    Pell grants.........................       2,505       2,422       2,369
    Guaranteed student loans:
      Stafford loans....................       3,391       3,402       3,414
      Unsubsidized Stafford loans.......       4,120       4,180       4,219
      PLUS..............................       7,894       8,359       8,854
      SLS...............................           0           0           0
      Consolidation.....................      31,246      29,712      29,845
    Direct student loans:
      Stafford loans....................       3,603       3,680       3,693
      Unsubsidized Stafford loans.......       3,999       4,114       4,144
      PLUS..............................       7,692       8,181       8,659
      Consolidation.....................      24,286      21,926      21,996
    Work-study..........................       1,135       1,135       1,135
    Supplemental educational opportunity
    grants..............................         772         772         772
    Perkins loans.......................       1,790       1,790       1,790
    Leveraging Educational Assistance
    Partnership.........................       1,000           0           0
                                        ====================================

                            NUMBER OF STUDENTS AIDED

                                 (In thousands)

    Unduplicated student count..........       8,385       8,855       9,241

        The following table displays institutional administrative costs paid
    from program funds.

    [[Page 342]]

                     ADMINISTRATIVE PAYMENTS TO INSTITUTIONS

                            [In thousands of dollars]

                                            2002         2003        2004
    Pell grants.........................      23,195      23,700      24,070
    Work-study..........................      75,815      75,815      75,815
    Supplemental educational opportunity
    grants..............................      36,709      36,709      36,709
    Perkins loans.......................      50,596      50,596      45,467

        The following table displays the status of defaulted Perkins loans
    held by the Department and by institutions.

                             DEFAULTED PERKINS LOANS

                            (In millions of dollars)

                                         2002 actual  2003 est.   2004 est.
    Outstanding defaulted loans,
        beginning of year:
      Assigned defaulted loans \1\......         384         321         284
      Unassigned defaulted loans \2\....         956         960         963
    New defaulted loans.................         155         149         155
    Collections on assigned loans.......         -78         -39         -42
    Collections on unassigned loans.....        -107        -112        -117
    Write-offs for assigned loans.......         -20         -22         -23
    Write-offs for unassigned loans.....         -10         -10          -9
                                        ------------------------------------
    Outstanding defaulted loans, end of
    year................................       1,280       1,247       1,210
                                        ====================================
        \1\ Permanently assigned to the Federal Government for collection.
        \2\ Unassigned loans at institutions.

                           Student Aid Administration

        For Federal administrative expenses to carry out part D of title I;
    subparts 1, 3, and 4 of part A; and parts B, C, D, and E of title IV of
    the Higher Education Act of 1965, as amended, $947,010,000, which shall
    remain available through September 30, 2005, of which not more than
    $195,000,000 shall be for account maintenance fees for fiscal year 2004
    that are payable to guaranty agencies under part B and are calculated in
    accordance with section 458 of the Act.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0202-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Student aid administration........                     932         947
                                               ---------   ---------  ----------
    10.00   Total new obligations...........                     932         947
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                     932         947
    23.95 Total new obligations.............                    -932        -947
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................                     932         947
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..                                 333
    73.10 Total new obligations.............                     932         947
    73.20 Total outlays (gross).............                    -599        -834
    74.40 Obligated balance, end of year....                     333         446
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                     599         608
    86.93 Outlays from discretionary
            balances........................                                 226
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........                     599         834
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                     932         947
    90.00 Outlays...........................                     599         834
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................                       4           4
    99.01 Outlays...........................                       4           4
    ---------------------------------------------------------------------------

        The Department of Education manages Federal student aid programs
    that will provide over $67 billion in Federal student aid grants and
    loans to over 8 million students and parents in 2004. Primary
    responsibility for administering these programs lies with the Office of
    Postsecondary Education and the performance-based Office of Student
    Financial Assistance (SFA). SFA was created by Congress in 1998 with a
    mandate to improve service to students and other student aid program
    participants, reduce the cost of student aid administration, and improve
    accountability and program integrity.

        The Department's student aid administrative activities are funded
    from four main sources: (1) funds appropriated on a permanent basis
    under section 458 of the Higher Education Act; (2) a portion of the
    Department's general Program Administration funds; (3) a discretionary
    appropriation partially supporting administrative activities associated
    with the Federal Family Education Loan (FFEL) program; and (4) permanent
    funds from the Direct Loan program subsidy account supporting the
    origination of Direct Consolidation Loans. Student aid administrative
    funds totaled $932 million in the 2003 President's Budget, $195 million
    of which supported the payment of account maintenance fees to FFEL
    guaranty agencies.

        The budget for 2004 includes $947 million for student aid
    administration. In order to improve accountability and simplify program
    oversight and operations, the Administration is proposing to consolidate
    funding for student aid administrative activities into a single
    discretionary account. Funding levels for this account will be based on
    a workload-based methodology consistent with the goals of the
    performance-based organization.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0202-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Personnel compensation:

    11.1    Full-time permanent.............                      83          86
    11.5    Other personnel compensation....                       2           3
                                               ---------   ---------  ----------
    11.9      Total personnel compensation..                      85          89
    12.1  Civilian personnel benefits.......                      19          19
    21.0  Travel and transportation of
            persons.........................                       3           4
    23.1  Rental payments to GSA............                      16          16
    23.3  Communications, utilities, and
            miscellaneous charges...........                      53          55
    24.0  Printing and reproduction.........                       9           9
    25.1  Advisory and assistance services..                       7           7
    25.2  Other services....................                      31          39
    25.3  Other purchases of goods and
            services from Government
            accounts........................                       7           9
    25.7  Operation and maintenance of
            equipment.......................                     502         499
    26.0  Supplies and materials............                       1           1
    31.0  Equipment.........................                       3           3
    32.0  Land and structures...............                       1           2
    41.0  Grants, subsidies, and
            contributions...................                     195         195
                                               ---------   ---------  ----------
    99.9    Total new obligations...........                     932         947
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0202-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................                   1,115       1,115
    ---------------------------------------------------------------------------

                        Federal Student Loan Reserve Fund

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4257-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    01.02 Obligations, non-federal..........       4,477       4,911       5,780
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       4,477       4,911       5,780
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........       2,462       1,169       1,071

    [[Page 343]]

    22.00 New budget authority (gross)......       4,269       4,813       5,684
    22.40 Capital transfer to general fund..      -1,085
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       5,646       5,982       6,755
    23.95 Total new obligations.............      -4,477      -4,911      -5,780
    24.40 Unobligated balance carried
            forward, end of year............       1,169       1,071         975
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Mandatory:

    69.00   Offsetting collections (cash)...       4,269       4,813       5,684
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............       4,477       4,911       5,780
    73.20 Total outlays (gross).............      -4,477      -4,911      -5,780
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new mandatory
            authority.......................       4,269       4,813       5,684
    86.98 Outlays from mandatory balances...         208          98          96
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       4,477       4,911       5,780
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
    88.00     Federal sources...............      -3,919      -4,497      -5,300
    88.40     Non-Federal sources...........        -350        -316        -384
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........      -4,269      -4,813      -5,684
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................         209          98          96
    ---------------------------------------------------------------------------

        The Higher Education Amendments of 1998 clarified that reserve funds
    held by public and non-profit guaranty agencies participating in the
    Federal Family Education Loan (FFEL) program are Federal property. These
    reserves are used to pay default claims from FFEL lenders and fees to
    support agency efforts to successfully avert defaults. The Federal
    Government reimburses these reserves for default claim payments. In
    addition, optional borrower guarantee fees are deposited into the
    reserves (agencies may charge borrowers up to 1 percent of loan
    principal as a guarantee fee). The following schedules reflect the
    balances in these guaranty agency funds.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4257-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................       3,826          4,269         4,813          5,684
    0102  Expense...........................      -3,595         -4,477        -4,911         -5,780
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............         231           -208           -98            -96
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4257-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................       2,462          1,169         1,071            975
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       2,462          1,169         1,071            975
        NET POSITION:
    3300  Cumulative results of operations..       2,462          1,169         1,071            975
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       2,462          1,169         1,071            975
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       2,462          1,169         1,071            975
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4257-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    41.0  Grants, subsidies, and
            contributions...................         418         253         271
    42.0  Insurance claims and indemnities..       4,059       4,658       5,509
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       4,477       4,911       5,780
    ---------------------------------------------------------------------------

    Credit accounts:

              Federal Direct Student Loan Program, Program Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0243-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.05 Upward Restimate Principal........                   3,721
    00.06 Interest on Upward Reestimate.....                     870
    00.09 Student Loan Administrative
            Expenses........................         800
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         800       4,591
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........          15          14
    22.00 New budget authority (gross)......         780       4,591
    22.10 Resources available from
            recoveries of prior year
            obligations.....................          19
    22.40 Capital transfer to general fund..                     -14
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         814       4,591
    23.95 Total new obligations.............        -800      -4,591
    24.40 Unobligated balance carried
            forward, end of year............          14
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................                    -795        -795
          Mandatory:

            Appropriation:
    60.00     Appropriation.................         780         795         795
    60.00     Appropriation (indefinite)--
                Upward reestimate...........                   4,591
                                               ---------   ---------  ----------
    62.50     Appropriation (total
                mandatory)..................         780       5,386         795
    69.00 Offsetting collections (cash).....         722         488         919
    69.27 Capital transfer to general fund..        -722        -488        -919
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................         780       4,591
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         340         302          70
    73.10 Total new obligations.............         800       4,591
    73.20 Total outlays (gross).............        -819      -4,822         -80
    73.45 Recoveries of prior year
            obligations.....................         -19
    74.40 Obligated balance, end of year....         302          70         -10
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................                    -510        -511
    86.93 Outlays from discretionary
            balances........................                                -193
    86.97 Outlays from new mandatory
            authority.......................         578       5,100         511
    86.98 Outlays from mandatory balances...         241         232         273
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         819       4,822          80
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........        -722        -488        -919
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          58       4,103        -919
    90.00 Outlays...........................          97       4,334        -839
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................
    99.01 Outlays...........................
    ---------------------------------------------------------------------------

                     Summary of Budget Authority and Outlays

                            (in millions of dollars)

                                         2002 actual  2003 est.   2004 est.
    Enacted/requested:
      Budget Authority..................          58       4,103        -919
      Outlays...........................          97       4,334        -839
    Legislative proposal, subject to
        PAYGO:
      Budget Authority..................                                  53
      Outlays...........................                                  53
                                        ------------------------------------
    Total:
      Budget Authority..................          58       4,103        -866
      Outlays...........................          97       4,334        -786
                                        ====================================

    [[Page 344]]

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0243-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    115001Stafford..........................       5,722       6,613       6,933
    115002Unsubsidized Stafford.............       4,626       5,497       5,946
    115003PLUS..............................       1,491       1,732       1,914
    115004Consolidated......................       9,325       7,497       6,161
                                               ---------   ---------  ----------
    115901Total direct loan levels..........      21,164      21,339      20,954
        Direct loan subsidy (in percent):
    132001Stafford..........................        3.63        0.29       -0.12
    132002Unsubsidized Stafford.............      -12.05      -12.38      -14.91
    132003PLUS..............................       -8.89      -12.83      -14.72
    132004Consolidated......................       -3.78        2.59        1.13
                                               ---------   ---------  ----------
    132901Weighted average subsidy rate.....       -3.95       -3.23       -5.28
        Direct loan subsidy budget authority:
    133001Stafford..........................         208          19          -8
    133002Unsubsidized Stafford.............        -557        -681        -887
    133003PLUS..............................        -133        -222        -282
    133004Consolidated......................        -353         194          70
                                               ---------   ---------  ----------
    133901Total subsidy budget authority....        -835        -690      -1,107
        Direct loan subsidy outlays:
    134001Stafford..........................         247          73
    134002Unsubsidized Stafford.............        -501        -578        -748
    134003PLUS..............................        -119        -175        -241
    134004Consolidated......................        -349         191          70
                                               ---------   ---------  ----------
    134901Total subsidy outlays.............        -722        -489        -919
        Direct loan upward reestimate subsidy budget
                    authority:
    135001Stafford..........................                   1,538
    135002Unsubsidized Stafford.............                   3,141
    135003PLUS..............................                     603
    135004Consolidated......................                      73
                                               ---------   ---------  ----------
    135901Total upward reestimate budget
            authority.......................                   5,355
        Direct loan upward reestimate subsidy outlays:
    136001Stafford..........................                   1,538
    136002Unsubsidized Stafford.............                   3,141
    136003PLUS..............................                     603
    136004Consolidated......................                      73
                                               ---------   ---------  ----------
    136901Total upward reestimate outlays...                   5,355
        Direct loan downward reestimate subsidy budget
                    authority:
    137001Stafford..........................                     -32
    137004Consolidated......................                    -732
                                               ---------   ---------  ----------
    137901Total downward reestimate budget
            authority.......................                    -764
        Direct loan downward reestimate subsidy
                    outlays:
    138001Stafford..........................                     -32
    138004Consolidated......................                    -732
                                               ---------   ---------  ----------
    138901Total downward reestimate subsidy
            outlays.........................                    -764
    ----------------------------------------------------------------------------

        Student loan administrative expense data:
    351001Budget authority..................         804
    359001Outlays...........................         819         232          80
    ---------------------------------------------------------------------------

        The Federal Government operates two major student loan programs: the
    Federal Family Education Loan (FFEL) program--formerly the Guaranteed
    Student Loan (GSL) program--and the William D. Ford Federal Direct Loan
    (Direct Loan) program. For 2004, the President is committed to improving
    the efficiency of both programs and allowing individual institutions to
    choose which of these two programs best meets their needs and the needs
    of their students.

        This summary section outlines the structure of these two programs,
    highlights their differences and similarities, and provides text tables
    displaying program cost data; loan volume, subsidy, default, and
    interest rates; and other descriptive information. As part of his 2004
    budget, the President is proposing a change to the loan forgiveness
    provisions of the Direct Loan and FFEL programs. This proposal is
    discussed as part of this program description.

        From its inception in 1965 through 2001, the FFEL program has
    provided over $347 billion in loans to postsecondary students and their
    parents. Since July 1, 1994, the Direct Loan program has provided $92
    billion in new and consolidation loans to students and parents. Taken
    together, the FFEL and Direct Loan programs will make more than $44
    billion in new loans available in 2003. Because funding for these two
    programs is provided on a permanent indefinite basis, for budget
    purposes they are considered separately from other Federal student
    financial assistance programs. The FFEL and Direct Loan programs should
    be viewed in combination with these other programs, however as part of
    the overall Federal effort to ensure access to higher education.

        Loan capital in the FFEL program is provided by private lenders.
    State and private nonprofit guaranty agencies act as agents of the
    Federal Government, providing a variety of services including collection
    of some defaulted loans, default avoidance activities, and counseling to
    schools, students, and lenders. The Government provides substantial
    payments to these guaranty agencies. The Government also pays interest
    subsidies to lenders for certain borrowers, as well as most costs
    associated with loan defaults and other write-offs.

        The Direct Loan program was created by the Student Loan Reform Act
    of 1993. Under this program, the Federal Government provides loan funds
    to postsecondary institutions directly or through an alternative
    originator. The Direct Loan program began operation in academic year
    1994-1995 with 7 percent of overall loan volume and is expected to
    account for 30 percent in academic year 2002-2003. All eligible
    institutions are free to participate in either the Direct Loan or FFEL
    program.

        The Direct Loan and FFEL programs share many basic elements. Each
    program offers four types of loans: Stafford, Unsubsidized Stafford,
    PLUS for parents, and Consolidation. Evidence of financial need is
    required for a student to receive a subsidized Stafford loan. The other
    three loan programs are available to borrowers at all income levels.
    Loans can be used only to meet qualified educational expenses.

        The borrower interest rate for new Stafford Loans equals the 91-day
    Treasury bill rate plus 1.7 percent during in-school, grace, and
    deferment periods, and the 91-day Treasury bill plus 2.3 percent at all
    other times, with a cap of 8.25 percent, adjusted annually. Interest
    payments for these loans are fully subsidized by the Government while a
    student is in school and during grace and deferment periods.
    Unsubsidized Stafford loans carry the same borrower interest rate as
    Stafford loans, but have no interest subsidy. For new PLUS loans, the
    borrower interest rate equals the 91-day Treasury bill rate plus 3.1
    percent, with a cap of 9 percent and no interest subsidy.

        In the FFEL program, lenders may receive an interest subsidy, called
    a special allowance, from the Government to ensure a guaranteed rate of
    return on their loans. Special allowance payments vary by loan type, are
    determined quarterly, and are based on current borrower interest rates
    and market-yield formulas. For new Stafford and Unsubsidized Stafford
    loans, for example, the Federal Government must pay lenders a special
    allowance if the average 3-month commercial paper rate for a given
    quarter plus 2.34 percent--or 1.74 percent during in-school, grace, or
    deferment periods--is higher than the current interest rate charged
    borrowers.

        Consolidation loans allow borrowers to combine loans made under
    Title IV of the Higher Education Act--FFEL, Direct Loans, and Perkins
    Loans--as well as some loans made under the Public Health Service Act.
    The interest rate for new FFEL and Direct Consolidation loans equals the
    weighted average of the interest rate on the loans consolidated, rounded
    up to the nearest one-eighth of one percent. Lenders may choose to offer
    a lower rate. Interest rates for all new FFEL and Direct Consolidation
    Loans are capped at 8.25 percent.

    [[Page 345]]

        FFEL borrowers pay an origination fee to the Government equal to 3
    percent of principal, and are also liable for a guaranty agency
    insurance premium of up to 1 percent of principal. Guaranty agencies
    have the option of waiving this premium and FFEL lenders have the option
    of paying some or all of a borrower's origination fee for Stafford Loan
    borrowers. Direct Loan borrowers are charged an origination fee equal to
    3 percent of principal, which partially offsets Federal program
    operation costs. Borrowers in both programs may be offered financial
    incentives to encourage prompt repayment.

        Loan limits are also identical across the two programs. In addition,
    loans made under both programs are discharged when borrowers die, are
    totally and permanently disabled, or, under some circumstances, declare
    bankruptcy.

        Under both programs, new borrowers after October 1, 1998, who are
    employed as teachers in schools serving low-income populations for five
    consecutive, complete school years, qualify for up to $5,000 in loan
    forgiveness. The Administration is proposing to increase this benefit to
    a maximum of $17,500 for mathematics, science, and special education
    teachers considered highly qualified under criteria established in the
    No Child Left Behind Act of 2001.

        Borrowers under Direct Loans may choose from among five repayment
    plans including income-contingent repayment (``pay-as-you-can''), under
    which annual repayment amounts vary based on the income of the borrower
    and the amount borrowed, and payments can be made over 25 years.
    Borrowers may switch between repayment plans at any time. (Income-
    contingent repayment is not available to Direct PLUS borrowers).

        FFEL borrowers may choose from among four repayment plans. Repayment
    periods under standard, graduated, and income-sensitive repayment may
    not exceed 10 years. An extended repayment plan of up to 25 years is
    available for new borrowers with outstanding loans totalling more than
    $30,000. FFEL borrowers may change repayment plans annually.

        Student loan program administration activities are supported from a
    variety of sources, including a permanent appropriation authorized under
    Section 458 of the Higher Education Act, a small discretionary
    appropriation partially supporting FFEL program administration, a
    portion of funds appropriated under the Department's discretionary
    Program Administration account, and subsidy funds associated with the
    origination of Direct Consolidation Loans. In order to improve
    accountability and simplify the funding process for these administrative
    activities, the President is proposing to create a unified,
    discretionary Student Aid Administration account.

        The following tables display performance indicators and program
    data; including projected overall Direct Loan and FFEL costs; loan
    volume, number of loans, and average loan amount; descriptive data, and
    program activity under the President's budget and legislative request.

                      Funding Levels (in thousands of dollars)

      --------------------------------------------------------------------------
                                            2002 actual    2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Program Cost
    FFEL
      Liquidating \1\.......................  (527,874)    (673,304)   (548,878)
      Program
        Regular.............................  3,324,164    3,769,228   4,093,939
        Consolidation.......................    987,575    2,632,419   2,075,121
        Reestimate of Prior Year Costs......          0  (2,979,866)           0
        Non-Contractual Modifications \2\...          0            0     103,057
                                            -----------  -----------  ----------
          Subtotal, Program.................  4,311,738    3,421,781   6,272,117
                                            -----------  -----------  ----------
            Total FFEL......................  3,783,864    2,748,477   5,723,239
    Direct Loans
      Program
        Regular.............................  (373,162)    (679,331)   (979,690)
        Consolidation.......................  (348,767)      191,199      69,623
        Reestimate of Prior Year Costs......          0    4,590,922           0
        Non-Contractual Modifications \2\...          0            0      44,167
            Total, Direct Loans.............  (721,929)    4,102,790   (865,900)
    Administration
      FFEL \3\..............................     48,836            0           0
      Student Aid \4\.......................    780,063            0           0
                                            -----------  -----------  ----------
        Subtotal, Administration............    828,899            0           0
            Total, FFEL and Direct Loans....  3,890,834    6,851,267   4,857,339
        Program Cost Outlays
    FFEL
      Liquidating \1\.......................(1,493,940)    (675,015)   (548,878)
        Program:
        Regular.............................  2,806,338    3,161,836   3,505,515
        Consolidation.......................    984,049    2,596,007   2,049,157
        Reestimate of Prior Year Costs......          0  (2,979,866)           0
        Non-Contractual Modifications \2\...          0            0     103,057
                                            -----------  -----------  ----------
          Subtotal, Program.................  3,790,387    2,777,976   5,657,728
            Total, FFEL.....................  2,296,447    2,102,961   5,108,851
    Direct Loans
      Program
        Regular.............................  (373,162)    (679,331)   (979,690)
        Consolidation.......................  (348,767)      191,199      69,623
        Reestimate of Prior Year Costs......               4,590,922
        Non-Contractual Modifications \2\...                              44,167
                                            -----------  -----------  ----------
            Total, Direct Loans.............  (721,929)    4,102,790   (865,900)
    Administration
      FFEL \3\..............................     46,382       12,410       3,403
      Student Aid \4\.......................    819,233      231,602      80,402
                                            -----------  -----------  ----------
        Subtotal, Administration............    865,615      244,012      83,805
            Total, FFEL and Direct Loans....  2,440,133    6,449,764   4,326,755
        \1\ Liquidating account reflects loans made prior to 1992.
        \2\ Reflects the cost or savings associated with policy changes that
    would affect the terms of existing loans.
        \3\ Reflects annual discretionary appropriation.
        \4\ Supports account maintenance fee payments to FFEL guaranty agencies,
    Direct Loan origination and servicing, and a range of administrative
    activities such as application printing, mailing, and processing that are
    common to all Federal student financial assistance programs.

       Summary of Loans Available (net commitments in millions of dollars) \1\

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    FFEL:
      Stafford..............................      13,441      14,560      15,340
      Unsubsidized Stafford.................      11,976      13,440      14,674
      PLUS..................................       3,189       3,537       3,931
                                               ---------   ---------  ----------
        Subtotal............................      28,606      31,536      33,945
      Consolidation.........................      22,693      16,986      12,999
                                               ---------   ---------  ----------
        Total, FFEL.........................      51,299      48,522      46,944
    Direct Loans:
      Stafford..............................       5,765       6,177       6,476
      Unsubsidized Stafford.................       4,481       4,988       5,394
      PLUS..................................       1,444       1,598       1,765
                                               ---------   ---------  ----------
        Subtotal............................      11,689      12,763      13,636
      Consolidation.........................       8,845       7,425       6,098
                                               ---------   ---------  ----------
        Total, Direct Loans.................      20,533      20,188      19,734
        Total, All Loans....................      71,832      68,710      66,678
    ---------------------------------------------------------------------------
        \1\ Net commitments equal gross commitments minus loan cancellations.

                           Number of Loans (In thousands)

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    FFEL:
      Stafford..............................       3,964       4,280       4,493
      Unsubsidized Stafford.................       2,907       3,215       3,478
      PLUS..................................         404         423         444
                                               ---------   ---------  ----------
        Subtotal............................       7,274       7,919       8,415
      Consolidation.........................         726         572         436
                                               ---------   ---------  ----------
        Total, FFEL.........................       8,001       8,490       8,851
    Direct Loans:
      Stafford..............................       1,600       1,678       1,754
      Unsubsidized Stafford.................       1,120       1,213       1,302
      PLUS..................................         188         195         204
                                               ---------   ---------  ----------
        Subtotal............................       2,908       3,086       3,259
      Consolidation.........................         364         339         277
                                               ---------   ---------  ----------
        Total, Direct Loans.................       3,272       3,425       3,537

    [[Page 346]]

        Total, All Loans....................      11,273      11,915      12,387
    ---------------------------------------------------------------------------

                        Average Loan Size (in whole dollars)

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    FFEL:
      Stafford..............................       3,391       3,402       3,414
      Unsubsidized Stafford.................       4,120       4,180       4,219
      PLUS..................................       7,894       8,359       8,854
                                               ---------   ---------  ----------
        Weighted Average, without
          Consolidations....................       3,932       3,982       4,034
                                               ---------   ---------  ----------
      Consolidation.........................      31,246      29,711      29,845
                                               ---------   ---------  ----------
        Weighted Average, FFEL..............       6,412       5,715       5,304
    Direct Loans:
      Stafford..............................       3,603       3,680       3,693
      Unsubsidized Stafford.................       3,999       4,114       4,144
      PLUS..................................       7,692       8,181       8,659
                                               ---------   ---------  ----------
        Weighted Average, Without
          Consolidations....................       4,020       4,135       4,184
                                               ---------   ---------  ----------
      Consolidation.........................      24,286      21,926      21,996
                                               ---------   ---------  ----------
        Weighted Average, Direct Loans......       6,275       5,894       5,580
        Weighted Average, All Loans.........       6,372       5,766       5,383
    ---------------------------------------------------------------------------

                Summary of Subsidy Rates, Default and Interest Rates

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Subsidy Rates (in percent) \1\
    FFEL:
      Stafford..............................      16.41%      16.55%      17.75%
      Unsubsidized Stafford.................       6.21%       5.70%       5.03%
      PLUS..................................       4.72%       3.61%       3.26%
      Consolidation.........................       5.73%      15.30%      15.76%
        Weighted Average, FFEL..............       8.96%      12.00%      11.85%
    Direct Loans:
      Stafford..............................       3.63%       0.29%      -0.02%
      Unsubsidized Stafford.................     -12.05%     -12.38%     -14.79%
      PLUS..................................      -8.89%     -12.83%     -14.72%
      Consolidation.........................      -3.78%       2.59%       1.13%
        Weighted Average, Direct Loans......      -3.94%      -3.23%      -5.22%
        Default Rates (in percent) \2\
    FFEL:
      Stafford..............................       16.26       16.38       16.46
      Unsubsidized Stafford.................       14.31       14.37       14.47
      PLUS..................................        9.52        9.49        9.53
      Consolidated..........................       20.53       20.52       20.51
        Weighted Average, FFEL..............       17.27       16.77       16.38
    Direct Loans:
      Stafford..............................       14.48       14.60       14.66
      Unsubsidized Stafford.................       13.17       13.26       13.36
      PLUS..................................        8.89        8.88        8.89
      Consolidation.........................       31.09       31.98       33.31
        Weighted Average, Direct Loans......       20.95       20.21       19.55
        Borrower Interest Rates (in percent) \3\
    FFEL:
      Stafford..............................        6.62        6.66        6.68
      Unsubsidized Stafford.................        6.62        6.66        6.68
      PLUS..................................        6.31        6.39        6.84
      Consolidation (reflects Sub and Unsub
        Stafford Only)......................        5.50        4.10        4.40
    Direct Loans:
      Stafford..............................        6.62        6.66        6.68
      Unsubsidized Stafford.................        6.62        6.66        6.68
      PLUS..................................        6.31        6.39        6.84
      Consolidation (reflects Sub and Unsub
        Stafford only)......................        5.48        4.10        4.43
    ---------------------------------------------------------------------------
        \1\ Subsidy rates represent the Federal portion of non-administrative
    costs--principally interest subsidies and defaults--associated with each
    borrowed dollar. For example, a $1,000 loan with Federal subsidy costs of
    $100 would have a subsidy rate of 10 percent.
        \2\ Default rates displayed in this table, which reflect projected
    defaults over the life of a loan cohort, are used in developing program cost
    estimates. The Department uses other rates based on defaults occurring in
    the first three years of repayment to determine institutional eligibility to
    participate in Federal loan programs. These three-year rates tend to be
    lower than those included in this table.
        \3\ These represent average borrower interest rates during repayment for
    a typical borrower under standard repayment over the life of the loan.

              Composition of Loan Collections (In thousands of dollars)

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    FFEL:
      Collections by Guaranty Agencies \1\..   2,611,594   1,404,685   1,616,222
      Collections by Department of Education
        \2\.................................     956,991     741,378     723,687
      Internal Revenue Service Tax Refund
        Offsets.............................     723,283     757,509     837,102
            Total, FFEL.....................   4,291,868   2,903,571   3,177,011
    Direct Loans:
      Collections by Department of Education
        \2\.................................     362,890     589,264     768,158
      Internal Revenue Service Tax Refund
        Offsets.............................      42,387     127,483     176,377
            Total, Direct Loans.............     405,278     716,747     944,535
          Total, FFEL and Direct Loan.......   4,697,146   3,620,318   4,121,546
    ---------------------------------------------------------------------------
        \1\ These figures show collections net of the amount agencies are
    allowed to retain under the provisions of the Higher Education Act of 1965.
    Agencies may retain 24 percent of most collections, and 18.5 percent of
    amounts collected through the consolidation of existing defaulted loans.
        \2\ These figures include amounts subsequently paid to Department
    contract collections agencies; contract collection costs total $158 million
    for 2002 ($102 million for FFEL and $56 million for Direct Loans); $211
    million for 2003 ($117 million for FFEL and $94 million for Direct Loans);
    and $237 million for 2004 ($115 million for FFEL and $122 million for Direct
    Loans).

             Projected Participation in Repayment Plans \1\ (in percent)

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Direct Loans \1\
    Standard
        Percent of Loan Volume \2\
          Stafford..........................       73.25       73.25       73.25
          Unsubsidized Stafford.............       69.96       69.96       69.96
          PLUS..............................       73.52       73.52       73.52
          Consolidation.....................       19.81       19.40       18.80
      Subsidy Rate (in percent)
          Stafford..........................        4.21        1.46        1.14
          Unsubsidized Stafford.............      -11.56      -11.11      -13.52
          PLUS..............................       -7.23      -10.33      -12.18
          Consolidation.....................        0.92        4.19        2.70
    Graduated \3\
        Percent of Loan Volume \2\
          Stafford..........................       19.02       19.02       19.02
          Unsubsidized Stafford.............       20.65       20.65       20.65
          PLUS..............................       20.12       20.12       20.12
          Consolidation.....................       17.74       17.40       16.91
      Subsidy Rate (in percent)
          Stafford..........................        2.08       -2.93       -3.27
          Unsubsidized Stafford.............      -14.09      -16.10      -18.64
          PLUS..............................      -14.37      -20.09      -22.08
          Consolidation.....................        2.96       10.44        7.19
    Extended \3\
        Percent of Loan Volume \2\
          Stafford..........................        6.18        6.18        6.18
          Unsubsidized Stafford.............        7.73        7.73        7.73
          PLUS..............................        6.36        6.36        6.36
          Consolidation.....................       20.10       19.62       18.92
      Subsidy Rate (in percent)
          Stafford..........................        2.53       -2.26       -2.59
          Unsubsidized Stafford.............      -13.56      -15.36      -17.88
          PLUS..............................      -12.83      -18.80      -20.79
          Consolidation.....................        2.71        9.97        6.82
    Income-Contingent
        Percent of Loan Volume \2\
          Stafford..........................        1.55        1.55        1.55
          Unsubsidized Stafford.............        1.67        1.67        1.67
          Consolidation.....................       42.35       43.58       45.38
        Subsidy Rate (in percent)
          Stafford..........................        0.15       -5.66       -5.57
          Unsubsidized Stafford.............       -0.13       -5.84       -5.73
          Consolidation.....................      -12.13       -4.58       -4.14
    ---------------------------------------------------------------------------
        \1\ For modeling purposes, all FFEL borrowers are assumed to have chosen
    Standard repayment. For Direct Loans, no data is included for the
    Alternative repayment plan, since borrowers are not expected to participate
    in this plan due to the flexibility available under the other options.
    Income-contingent repayment is not available for Direct PLUS borrowers.
        \2\ Percent of Loan Volume represents aggregate data. Individual
    borrowers may move between plans over time.
        \3\ Maximum terms under the Extended and Graduated repayment plans
    reflect the following ``classes'' based on borrower debt levels.

    ------------------------------------------------------------------------
                                                          Percent of Volume
                                                            Within Direct
             Debt Level             Maximum Term (in        Extended and
                                         years)            Graduated Plans
                                                          (Stafford) FY 03
    ------------------------------------------------------------------------
    Below $10,000...............                    12                 13.00
    $10,000-$20,000.............                    15                 34.97
    $20,000-$40,000.............                    20                 36.81
    $40,000-$60,000.............                    25                 10.65
    Above $60,000...............                    30                  4.57
    ------------------------------------------------------------------------

        The Higher Education Amendments of 1998 broadened the availability
    of alternative repayment plans in the FFEL pro

    [[Page 347]]

    gram. As noted in the table above, data on the extent to which FFEL
    borrowers will take advantage of these plans is not yet available.

        Consistent with the Federal Credit Reform Act of 1990, the Office of
    Management and Budget establishes procedures for the estimation of
    subsidy rates for the Federal student loan programs. Subsidy costs for
    each loan type are estimated separately and, because costs can vary
    widely within a program depending on the characteristics of the
    individual borrower, cost estimates are aggregated from data for
    homogeneous groups within risk categories.

        Risk categories for Stafford and Unsubsidized Stafford Loans are
    based on the type of school attended by the borrower. Since PLUS loan
    borrowers are all parents, they are assumed to share similar risk
    profiles and are grouped together in a single category. For
    Consolidation Loans, risk categories distinguish between standard
    Consolidation Loans--in which borrowers in repayment consolidate a
    number of outstanding loans--and loans consolidated out of default.

        Default rates are a major cause of differences in subsidy between
    risk categories. The default rates in the following tables reflect
    estimates of the percent of borrowers who will default over the lifetime
    of the loans. These estimates are revised annually based on an analysis
    of default trends. Within each risk group, it is assumed that borrowers
    choosing similar repayment plans will have similar default rates,
    regardless of whether they borrow under the FFEL or Direct Loan program.

                      FFEL RISK CATEGORIES: STAFFORD LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........       20.06       21.21       22.63
      Category 2: 4 year college, 3rd
        and 4th year students...........       14.86       15.26       16.56
      Category 3: 2 year college, all
        students........................       17.80       17.75       18.83
      Category 4: Proprietary school,
        all students....................       12.78        9.74       10.47
      Category 5: Graduate students.....       15.89       15.80       16.94

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........       20.35       20.38       20.38
      Category 2: 4 year college, 3rd
        and 4th year students...........       12.63       12.62       12.62
      Category 3: 2 year college, all
        students........................       31.41       31.43       31.48
      Category 4: Proprietary school,
        all students....................       45.51       45.36       45.39
      Category 5: Graduate students.....        8.12        8.11        8.12

                           UNSUBSIDIZED STAFFORD LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........        7.65        7.10        6.59
      Category 2: 4 year college, 3rd
        and 4th year students...........        5.57        5.49        4.97
      Category 3: 2 year college, all
        students........................       10.79        8.16        7.45
      Category 4: Proprietary school,
        all students....................       10.48        5.89        5.17
      Category 5: Graduate students.....        4.63        4.83        4.01

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........       20.30       20.39       20.32
      Category 2: 4 year college, 3rd
        and 4th year students...........       11.70       11.69       11.69
      Category 3: 2 year college, all
        students........................       27.68       27.66       27.68
      Category 4: Proprietary school,
        all students....................       35.56       35.45       35.43
      Category 5: Graduate students.....        8.21        8.20        8.20

                                   PLUS LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
    All PLUS Loans                              4.72        3.61        3.26

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
    All PLUS Loans                              9.52        9.49        9.53

                   DIRECT LOAN RISK CATEGORIES: STAFFORD LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........        6.92        4.28        4.14
      Category 2: 4 year college, 3rd
        and 4th year students...........        2.13       -1.17       -1.41
      Category 3: 2 year college, all
        students........................        5.64        2.88        2.22
      Category 4: Proprietary school,
        all students....................        2.97       -1.97       -3.07
      Category 5: Graduate students.....        3.16       -0.69       -1.05

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........       19.75       19.84       19.85
      Category 2: 4 year college, 3rd
        and 4th year students...........       12.35       12.34       12.34
      Category 3: 2 year college, all
        students........................       31.40       31.37       31.41
      Category 4: Proprietary school,
        all students....................       44.94       44.82       44.84
      Category 5: Graduate students.....        7.95        7.94        7.95

                           UNSUBSIDIZED STAFFORD LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........      -10.58      -11.38      -13.63
      Category 2: 4 year college, 3rd
        and 4th year students...........      -12.58      -12.68      -15.03
      Category 3: 2 year college, all
        students........................       -5.36       -8.33      -11.06
      Category 4: Proprietary school,
        all students....................       -3.24       -8.15      -11.14
      Category 5: Graduate students.....      -13.95      -13.48      -15.95

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
    Risk Categories:
      Category 1: 4 year college, 1st
        and 2nd year students...........       19.56       19.56       19.59
      Category 2: 4 year college, 3rd
        and 4th year students...........       11.44       11.43       11.43
      Category 3: 2 year college, all
        students........................       27.36       27.34       27.36
      Category 4: Proprietary school,
        all students....................       34.93       34.81       34.79
      Category 5: Graduate students.....        8.05        8.05        8.05

                                   PLUS LOANS

               Subsidy Rate (as a percentage of loan commitments)

                                         2002 actual  2003 est.   2004 est.
      All PLUS Loans....................       -8.89      -12.83      -14.72

                        Gross Default Rates (in percent)

                                         2002 actual  2003 est.   2004 est.
      All PLUS Loans....................        8.89        8.88        8.89

          Selected Program Costs and Offsets \1\ (in thousands of dollars)

                                            2002 actual    2003 est.   2004 est.
    ----------------------------------------------------------------------------
    FFEL:
    Interest costs:
    Interest benefits:
      FFEL Liquidating......................     40,896          463           0
      FFEL Program..........................  2,129,956    1,060,641   1,274,592
                                            -----------  -----------  ----------
        Total...............................  2,170,852    1,061,104   1,274,592
    Special allowance
      FFEL Liquidating......................     19,418       12,282       6,065
      FFEL Program..........................    201,410      688,624   2,542,307
                                            -----------  -----------  ----------
        Total...............................    220,827      700,906   2,548,372
    Default costs and offsets:
    Default claims:
      FFEL Liquidating......................     76,997       24,203       4,899
      FFEL Program..........................  2,796,593    4,045,386   4,804,998
                                            -----------  -----------  ----------
        Total...............................  2,873,571    4,069,589   4,809,898
    Net default collections:
      FFEL Liquidating......................  1,796,498      791,883     619,794
      FFEL Program..........................  2,495,370    2,111,688   2,557,217
                                            -----------  -----------  ----------
        Total...............................  4,291,868    2,903,571   3,177,011
    Contract collection costs:
      FFEL Liquidating......................     82,896       57,190      44,185
      FFEL Program..........................     19,345       60,196      71,025
                                            -----------  -----------  ----------
        Total...............................    102,240      117,386     115,210
    Death, disability, and bankruptcy costs:
        FFEL Liquidating....................     24,849       30,793      18,874
        FFEL Program........................    421,474      557,375     659,644
                                            -----------  -----------  ----------
        Total...............................    446,323      588,168     678,518
    Fees:
      Borrower origination fees.............    776,458      917,090     997,342
      Lender origination fee................    210,694      237,915     231,238
      Sallie Mae offset fee.................     41,065       43,400      39,300

    [[Page 348]]

      Consolidation loan holder fees........    382,578      668,261     748,847
    Direct Loans
      Borrower origination fees.............    333,810      388,502     418,860
      Net default Collections...............    405,278      716,747     944,535
      Contact Collection Costs..............     56,202       93,808     122,288
    Administrative Costs \2\
      Federal administration:
      FFEL..................................     48,836            0           0
      Student Aid Management (SAM) \3\......    780,063            0           0
      Guaranty agency administrative
          payments:
      Account Maintenance Fee (included in
        SAM)................................    180,000      195,000     195,000
      Loan Issuance and Processing Fee......    194,206      234,795     155,589
    ----------------------------------------------------------------------------
        Details may not sum to totals due to rounding.
        \1\ This table represents explicit cash flows in the FFEL and Direct
    Loan financing accounts. Examples of these flows would include payments of
    FFEL interest benefits, default claims, and discharge claims, or collections
    on FFEL or Direct Loan defaults, all of which involve explicit events that
    are reflected in the Department's financial systems as they occur. Non-
    events, such as Direct Loan interest benefits, defaults, or discharges,
    involve payments that are not received, and hence not recorded in the
    Department's financial systems in the same way. For that reason, these non-
    events are not included in this table.
        \2\ For 2003, no funds are requested for loan administration, as these
    costs would be part of the proposed discretionary Student Aid Administration
    account.
        \3\ A number of expenses related to the administration of the student
    assistance programs are paid out of Student Aid Management funds. One of
    these expenses, account maintenance fee payments to guaranty agencies, is
    shown as a separate line.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0243-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Personnel compensation:

    11.1    Full-time permanent.............          43
    11.3    Other than full-time permanent..           1
    11.5    Other personnel compensation....           2
                                               ---------   ---------  ----------
    11.9      Total personnel compensation..          46
    12.1  Civilian personnel benefits.......          10
    21.0  Travel and transportation of
            persons.........................           4
    23.1  Rental payments to GSA............          11
    23.3  Communications, utilities, and
            miscellaneous charges...........          46
    24.0  Printing and reproduction.........           7
    25.1  Advisory and assistance services..           4
    25.2  Other services....................          31
    25.3  Other purchases of goods and
            services from Government
            accounts........................           8
    25.6  Training..........................           5
    25.7  Operation and maintenance of
            equipment.......................         445
    26.0  Supplies and materials............           1
    31.0  Equipment.........................           3
    32.0  Land and structures...............           3
    41.0  Grants, subsidies, and
            contributions...................         176       4,591
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         800       4,591
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0243-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................         621
    ---------------------------------------------------------------------------

              Federal Direct Student Loan Program, Program Account

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0243-4-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.03 Modification......................                                  44
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................                                  44
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                  44
    23.95 Total new obligations.............                                 -44
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Mandatory:

    60.00   Appropriation (modification)....                                  44
    69.00 Offsetting collections (cash).....                                  -9
    69.27 Capital transfer to general fund..                                   9
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................                                  44
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                  44
    73.20 Total outlays (gross).............                                 -44
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new mandatory
            authority.......................                                  44
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........                                   9
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                  53
    90.00 Outlays...........................                                  53
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................
    99.01 Outlays...........................
    ---------------------------------------------------------------------------

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0243-4-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct loan levels supportable by subsidy
                    budget authority:
    115001Stafford..........................
    115002Unsubsidized Stafford.............
    115003PLUS..............................
    115004Consolidated......................
                                               ---------   ---------  ----------
    115901Total direct loan levels..........
        Direct loan subsidy (in percent):
    132001Stafford..........................                                0.03
    132002Unsubsidized Stafford.............                                0.03
    132003PLUS..............................                                0.00
    132004Consolidated......................                                0.00
                                               ---------   ---------  ----------
    132901Weighted average subsidy rate.....                                0.06
        Direct loan subsidy budget authority:
    133001Stafford..........................                                   7
    133002Unsubsidized Stafford.............                                   7
    133003PLUS..............................
    133004Consolidated......................
    133005Modification......................                                  44
                                               ---------   ---------  ----------
    133901Total subsidy budget authority....                                  58
        Direct loan subsidy outlays:
    134001Stafford..........................                                   4
    134002Unsubsidized Stafford.............                                   5
    134003PLUS..............................
    134004Consolidated......................
    134005Modification......................                                  44
                                               ---------   ---------  ----------
    134901Total subsidy outlays.............                                  53
    ----------------------------------------------------------------------------

        Student loan administrative expense data:
    351001Budget authority..................
    359001Outlays...........................
    ---------------------------------------------------------------------------

             Federal Direct Student Loan Program, Financing Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4253-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Direct loans:

    01.01   Stafford........................       5,709       6,613       6,933
    01.02   Unsubsidized Stafford...........       4,560       5,497       5,946
    01.03   PLUS............................       1,454       1,732       1,914
    01.04   Consolidated....................       9,195       7,496       6,160
                                               ---------   ---------  ----------
    01.91     Subtotal, direct loans
                obligations.................      20,918      21,338      20,953
          Payment for consolidations:

    02.01   Interest rate rebate, Stafford..          80          91          96

    [[Page 349]]

    02.02   Interest rate rebate,
              Unsubsidized Stafford.........          62          72          79
    02.03   Interest rate rebate, PLUS......          19          23          26
                                               ---------   ---------  ----------
    02.91   Direct Program by Activities--
              Subtotal (1 level)............         161         186         201
    03.01 Consolidation loans-Payment of
            Orig. Services..................          28          24          22
    04.01 Payment of contract collections...          56          94         122
    05.01 Interest payment to Treasury......       5,716       5,297       6,042
          Other obligations:

    08.01   Obligation of negative subsidy..         835         689       1,107
                                               ---------   ---------  ----------
    10.00   Total new obligations...........      27,714      27,628      28,447
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           3         499
    22.00 New financing authority (gross)...      28,210      27,130      28,447
    22.10 Resources available from
            recoveries of prior year
            obligations.....................           8
    22.60 Portion applied to repay debt.....          -8
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      28,213      27,629      28,447
    23.95 Total new obligations.............     -27,714     -27,628     -28,447
    24.40 Unobligated balance carried
            forward, end of year............         499
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    67.10   Authority to borrow.............      21,996      21,529      22,060
    69.00 Offsetting collections (cash).....      14,502      15,538      13,118
    69.47 Portion applied to repay debt.....      -8,288      -9,937      -6,731
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................       6,214       5,601       6,387
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................      28,210      27,130      28,447
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       4,240       5,404       4,532
    73.10 Total new obligations.............      27,714      27,628      28,447
    73.20 Total financing disbursements
            (gross).........................     -26,542     -28,501     -28,191
    73.45 Recoveries of prior year
            obligations.....................          -8
    74.40 Obligated balance, end of year....       5,404       4,532       4,788
    87.00 Total financing disbursements
            (gross).........................      26,542      28,501      28,191
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Federal sources:
                Payments from program
                  account:

    88.00         Upward reestimate.........                  -3,721
    88.00         Upward reestimate,
                    interest................                    -870
    88.25     Interest on uninvested funds..        -972
              Non-Federal sources:
                Stafford loans:

    88.40         Repayment of principal,
                    Stafford................      -4,207      -2,455      -2,945
    88.40         Interest received on
                    loans, Stafford.........        -504      -1,022      -1,226
    88.40         Origination Fees, Stafford        -164        -182        -192
    88.40         Other fees, Stafford......         -14
    88.40         Repayment of principal,
                    Unsubsidized Stafford...      -3,196      -1,681      -2,077
    88.40         Interest received on
                    loans, Unsubsidized
                    Stafford................        -475        -722        -898
    88.40         Origination Fees,
                    Unsubsidized Stafford...        -125        -145        -159
    88.40         Other fees, Unsubsidized
                    Stafford................         -10
    88.40         Repayment of principal,
                    PLUS....................      -1,156        -616        -739
    88.40         Interest received on
                    loans, PLUS.............        -241        -308        -384
    88.40         Origination Fees, PLUS....         -45         -62         -68
    88.40         Other fees, PLUS..........          -4
    88.40         Payment of principal,
                    Consolidation...........      -2,522      -1,616      -2,023
    88.40         Interest received on
                    loans, Consolidation....        -859      -2,138      -2,407
    88.40         Other fees, Consolidation.          -8
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........     -14,502     -15,538     -13,118
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............      13,708      11,592      15,329
    90.00 Financing disbursements...........      12,039      12,963      15,073
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4253-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
              STAFFORD
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................       5,709       6,613       6,933
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...       5,709       6,613       6,933
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      26,488      27,470      31,023
    1231  Disbursements: Direct loan
            disbursements...................       5,059       6,062       6,397
    1251  Repayments: Repayments and
            prepayments.....................      -4,207      -2,455      -2,945
    1261  Adjustments: Capitalized interest.         169
    1264  Write-offs for default: Other
            adjustments, net................         -39         -54         -59
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      27,470      31,023      34,416
    ----------------------------------------------------------------------------

              UNSUBSIDIZED STAFFORD
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................       4,560       5,497       5,946
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...       4,560       5,497       5,946
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      17,170      18,515      22,120
    1231  Disbursements: Direct loan
            disbursements...................       3,951       4,827       5,288
    1251  Repayments: Repayments and
            prepayments.....................      -3,196      -1,682      -2,077
    1261  Adjustments: Capitalized interest.         618         495         445
    1264  Write-offs for default: Other
            adjustments, net................         -28         -35         -40
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      18,515      22,120      25,736
    ----------------------------------------------------------------------------

              PLUS
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................       1,454       1,732       1,914
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...       1,454       1,732       1,914
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........       4,003       4,279       5,175
    1231  Disbursements: Direct loan
            disbursements...................       1,225       1,546       1,708
    1251  Repayments: Repayments and
            prepayments.....................      -1,156        -616        -739
    1261  Adjustments: Capitalized interest.         226
    1264  Write-offs for default: Other
            adjustments, net................         -19         -34         -39
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........       4,279       5,175       6,105
    ----------------------------------------------------------------------------

              CONSOLIDATED
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................       9,195       7,497       6,161
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...       9,195       7,497       6,161
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      22,884      29,807      35,524
    1231  Disbursements: Direct loan
            disbursements...................       9,228       7,436       6,106
    1251  Repayments: Repayments and
            prepayments.....................      -2,522      -1,617      -2,023
    1261  Adjustments: Capitalized interest.         312
    1264  Write-offs for default: Other
            adjustments, net................         -95        -102        -127
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      29,807      35,524      39,480
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4253-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................         603            970         4,532          4,788
          Net value of assets related to
              post-1991 direct loans
              receivable:

    1401    Direct loans receivable, gross..      70,313         80,070        93,842        105,737
    1402    Interest receivable.............       2,616          2,661         6,088          7,047
    1405    Allowance for subsidy cost (-)..       1,739          2,115         2,158          2,119
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....      74,668         84,846       102,088        114,903
    1901  Other Federal assets: Other assets       2,497          3,769
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      77,768         89,585       106,620        119,691
        LIABILITIES:
          Federal liabilities:

    2101    Accounts payable................         579             87         5,531          3,272
    2103    Debt............................      77,189         89,498       101,089        116,419
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      77,768         89,585       106,620        119,691
        NET POSITION:
                                            ------------ --------------  ------------  -------------

    [[Page 350]]

    3999    Total net position..............
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      77,768         89,585       106,620        119,691
    -----------------------------------------------------------------  ----------------------------

        As required by the Federal Credit Reform Act of 1990, this non-
    budgetary account records all cash flows to and from the Government
    resulting from Direct Loans. The amounts in this account are a means of
    financing and are not included in the budget totals.

             Federal Direct Student Loan Program, Financing Account

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4253-4-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    05.01 Interest payment to Treasury......                                  -1
          Other obligations:

    08.01   Obligation of negative subsidy..                                 -14
                                               ---------   ---------  ----------
    10.00   Total new obligations...........                                 -15
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...                                 -18
    23.95 Total new obligations.............                                  15
    24.40 Unobligated balance carried
            forward, end of year............                                  -3
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    67.10   Authority to borrow.............                                 -14
    69.00 Offsetting collections (cash).....                                  44
    69.27 Capital transfer to general fund..                                  -3
    69.47 Portion applied to repay debt.....                                 -45
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................                                  -4
                                               ---------   ---------  ----------
    70.00   Total new financing authority
              (gross).......................                                 -18
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                 -15
    73.20 Total financing disbursements
            (gross).........................                                  15
    87.00 Total financing disbursements
            (gross).........................                                 -15
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Payments from program account:
    88.00     Offsetting collections (cash)
                from: Modification..........                                 -44
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............                                 -62
    90.00 Financing disbursements...........                                 -59
    ---------------------------------------------------------------------------

                  Federal Family Education Loan Program Account

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0231-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.02 Guaranteed Loan Net Subsidy.......       4,312       6,402       6,131
          Administrative expenses:

    00.09   Administrative expenses due to
              limitations...................          49
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       4,361       6,402       6,131
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           2           2
    22.00 New budget authority (gross)......       4,361       6,402       6,131
    22.40 Capital transfer to general fund..                      -2
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       4,363       6,402       6,131
    23.95 Total new obligations.............      -4,361      -6,402      -6,131
    23.98 Unobligated balance expiring or
            withdrawn.......................          -1
    24.40 Unobligated balance carried
            forward, end of year............           2
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          50
    40.71   Reduction pursuant to P.L. XXX-
              XX............................          -1
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............          49
          Mandatory:

    60.00   Appropriation...................       4,312       6,402       6,131
    69.00 Offsetting collections (cash)--
            downward reestimate.............                   2,980
    69.27 Capital transfer to general fund..                  -2,980
                                               ---------   ---------  ----------
    69.90   Spending authority from
              offsetting collections (total
              mandatory)....................
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................       4,361       6,402       6,131
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         870       1,393       2,024
    73.10 Total new obligations.............       4,361       6,402       6,131
    73.20 Total outlays (gross).............      -3,837      -5,770      -5,536
    73.40 Recoveries of prior yr obligations          -1
    74.40 Obligated balance, end of year....       1,393       2,024       2,619
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          38
    86.93 Outlays from discretionary
            balances........................           9          12           3
    86.97 Outlays from new mandatory
            authority.......................       2,935       4,794       4,425
    86.98 Outlays from mandatory balances...         855         964       1,108
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........       3,837       5,770       5,536
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........                  -2,980
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       4,361       3,422       6,131
    90.00 Outlays...........................       3,837       2,790       5,536
    ---------------------------------------------------------------------------

                     Summary of Budget Authority and Outlays

                            (in millions of dollars)

                                         2002 actual  2003 est.   2004 est.
    Enacted/requested:
      Budget Authority..................       4,361       3,422       6,131
      Outlays...........................       3,837       2,790       5,536
    Legislative proposal, subject to
        PAYGO:
      Budget Authority..................                                 141
      Outlays...........................                                 125
                                        ------------------------------------
    Total:
      Budget Authority..................       4,361       3,422       6,272
      Outlays...........................       3,837       2,790       5,661
                                        ====================================

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0231-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Guaranteed loan levels supportable by subsidy
                    budget authority:
    215001Stafford..........................      14,305      16,534      17,423
    215002Unsubsidized Stafford.............      13,092      15,584      17,023
    215003PLUS..............................       3,470       4,004       4,451
    215004Consolidated......................      17,235      17,205      13,167
                                               ---------   ---------  ----------
    215901Total loan guarantee levels.......      48,102      53,327      52,064
        Guaranteed loan subsidy (in percent):
    232001Stafford..........................       16.41       16.55       17.64
    232002Unsubsidized Stafford.............        6.21        5.70        4.92
    232003PLUS..............................        4.72        3.61        3.26
    232004Consolidated......................        5.73       15.30       15.76
                                               ---------   ---------  ----------
    232901Weighted average subsidy rate.....        8.96       12.00       11.78
        Guaranteed loan subsidy budget authority:
    233001Stafford..........................       2,347       2,736       3,073
    233002Unsubsidized Stafford.............         813         888         838
    233003PLUS..............................         164         145         145

    [[Page 351]]

    233004Consolidated......................         988       2,632       2,075
                                               ---------   ---------  ----------
    233901Total subsidy budget authority....       4,312       6,401       6,131
        Guaranteed loan subsidy outlays:
    234001Stafford..........................       2,054       2,287       2,616
    234002Unsubsidized Stafford.............         632         740         740
    234003PLUS..............................         120         135         128
    234004Consolidated......................         984       2,596       2,049
                                               ---------   ---------  ----------
    234901Total subsidy outlays.............       3,790       5,758       5,533
        Guaranteed loan upward reestimate subsidy
                    budget authority:
    235002Unsubsidized Stafford.............                     343
    235003PLUS..............................                      80
    235004Consolidated......................                      32
                                               ---------   ---------  ----------
    235901Total upward reestimate budget
            authority.......................                     455
        Guaranteed loan upward reestimate subsidy
                    outlays:
    236002Unsubsidized Stafford.............                     343
    236003PLUS..............................                      80
    236004Consolidated......................                      32
                                               ---------   ---------  ----------
    236901Total upward reestimate subsidy
            outlays.........................                     455
        Guaranteed loan downward reestimate subsidy
                    budget authority:
    237001Stafford..........................                  -2,643
    237002Unsubsidized Stafford.............                    -207
    237003PLUS..............................                      -5
    237004Consolidated......................                    -509
    237005SLS...............................                     -71
                                               ---------   ---------  ----------
    237901Total downward reestimate subsidy
            budget authority................                  -3,435
        Guaranteed loan downward reestimate subsidy
                    outlays:
    238001Stafford..........................                  -2,643
    238002Unsubsidized Stafford.............                    -207
    238003PLUS..............................                      -5
    238004Consolidated......................                    -509
    238005SLS...............................                     -71
                                               ---------   ---------  ----------
    238901Total downward reestimate subsidy
            outlays.........................                  -3,435
    ----------------------------------------------------------------------------

        Administrative expense data:
    351001Budget authority..................          49
    359001Outlays...........................          46          12           3
    ---------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this program
    account records the subsidy costs associated with Federal Family
    Education Loans (FFEL), formerly guaranteed student loans (GSL),
    committed in 1992 and beyond, as well as certain administrative expenses
    of the program. Administrative expenses include discretionary expenses
    for salaries, expenses and overhead of employees working directly on the
    program. Consistent with the Administration's proposal to consolidate
    student aid administrative activities in a single discretionary account,
    these expenses are not reflected for 2003 and 2004. For a discussion of
    this proposal, see the narrative description above in the Student Aid
    Administration account. Beginning with the 1993 cohort, mandatory
    administrative costs, specifically contract collection costs, are
    included in the FFEL subsidy estimates of each year's cohort. Subsidy
    amounts are estimated on a net present value basis.

        A description of the FFEL program and accompanying tables are
    included under the Federal Direct Student Loan program account.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0231-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Personnel compensation:

    11.1    Full-time permanent.............          23
    11.5    Other personnel compensation....           1
                                               ---------   ---------  ----------
    11.9      Total personnel compensation..          24
    12.1  Civilian personnel benefits.......           5
    23.1  Rental payments to GSA............           3
    23.3  Communications, utilities, and
            miscellaneous charges...........           2
    25.2  Other services....................           1
    25.3  Other purchases of goods and
            services from Government
            accounts........................           1
    25.7  Operation and maintenance of
            equipment.......................          12
    31.0  Equipment.........................           1
    41.0  Grants, subsidies, and
            contributions...................       4,312       6,402       6,131
                                               ---------   ---------  ----------
    99.9    Total new obligations...........       4,361       6,402       6,131
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0231-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................         320
    ---------------------------------------------------------------------------

                  Federal Family Education Loan Program Account

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0231-4-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.02 Guaranteed Loan Net Subsidy.......                                 141
                                               ---------   ---------  ----------
    10.00   Total new obligations (object
              class 41.0)...................                                 141
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......                                 141
    23.95 Total new obligations.............                                -141
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Mandatory:

    60.00   Appropriation...................                                 141
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                 141
    73.20 Total outlays (gross).............                                -125
    74.40 Obligated balance, end of year....                                  16
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new mandatory
            authority.......................                                 125
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                                 141
    90.00 Outlays...........................                                 125
    ---------------------------------------------------------------------------

    Summary of Loan Levels, Subsidy Budget Authority and Outlays by Program (in
                                millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0231-4-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Guaranteed loan levels supportable by subsidy
                    budget authority:
    215001Stafford..........................
    215002Unsubsidized Stafford.............
    215003PLUS..............................
    215004Consolidated......................
                                               ---------   ---------  ----------
    215901Total loan guarantee levels.......
        Guaranteed loan subsidy (in percent):
    232001Stafford..........................                                0.03
    232002Unsubsidized Stafford.............                                0.04
    232003PLUS..............................                                0.00
    232004Consolidated......................                                0.00
                                               ---------   ---------  ----------
    232901Weighted average subsidy rate.....                                0.07
        Guaranteed loan subsidy budget authority:
    233001Stafford..........................                                  19
    233002Unsubsidized Stafford.............                                  19
    233003PLUS..............................
    233004Consolidated......................
    233005Modification......................                                 103
                                               ---------   ---------  ----------
    233901Total subsidy budget authority....                                 141
        Guaranteed loan subsidy outlays:
    234001Stafford..........................                                  11
    234002Unsubsidized Stafford.............                                  11
    234003PLUS..............................
    234004Consolidated......................
    234005Modification......................                                 103
                                               ---------   ---------  ----------
    234901Total subsidy outlays.............                                 125
        Guaranteed loan upward reestimate subsidy
                    budget authority:
    235002Unsubsidized Stafford.............

    [[Page 352]]

    235003PLUS..............................
    235004Consolidated......................
                                               ---------   ---------  ----------
    235901Total upward reestimate budget
            authority.......................
        Guaranteed loan upward reestimate subsidy
                    outlays:
    236002Unsubsidized Stafford.............
    236003PLUS..............................
    236004Consolidated......................
                                               ---------   ---------  ----------
    236901Total upward reestimate subsidy
            outlays.........................
        Guaranteed loan downward reestimate subsidy
                    budget authority:
    237001Stafford..........................
    237002Unsubsidized Stafford.............
    237003PLUS..............................
    237004Consolidated......................
    237005Downward reestimate...............
                                               ---------   ---------  ----------
    237901Total downward reestimate subsidy
            budget authority................
        Guaranteed loan downward reestimate subsidy
                    outlays:
    238001Stafford..........................
    238002Unsubsidized Stafford.............
    238003PLUS..............................
    238004Consolidated......................
    238005Downward reestimate subsidy
            outlays.........................
                                               ---------   ---------  ----------
    238901Total downward reestimate subsidy
            outlays.........................
    ----------------------------------------------------------------------------

        Administrative expense data:
    351001Budget authority..................
    359001Outlays...........................
    ---------------------------------------------------------------------------

            Federal Family Education Loan Program, Financing Account

        Note.--The financing account includes all cash flows to and from the
    Government from guaranteed student loans committed after 1991.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4251-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Stafford loans:

    01.01   Interest benefits...............       2,130       1,061       1,275
    01.02   Special allowance...............          97         344       1,089
    01.03   Default claims..................       1,363       1,525       1,691
    01.04   Death, disability, and
              bankruptcy claims.............         144         148         160
    01.05   Teacher loan forgiveness, other
              write-offs....................                       3           3
    01.07   Contract collection costs.......          11          36          41
    01.08   Loan Processing Fee.............         120         107          70
    01.09   Vol Flex Agree Perf. Fee........          50
                                               ---------   ---------  ----------
    01.91     Subtotal, Stafford loans......       3,915       3,224       4,329
          Unsubsidized Stafford loans:

    02.02   Special allowance...............          66         272         911
    02.03   Default claims..................         752         894       1,104
    02.04   Death, disability, and
              bankruptcy claims.............          88          89         103
    02.05   Teacher loan forgiveness, other
              write-offs....................                       3           3
    02.07   Contract collection costs.......           4           8          11
    02.08   Loan Processing Fee.............          66         101          68
    02.09   Vol Flex Agree Perf. Fee........          25
                                               ---------   ---------  ----------
    02.91     Subtotal, Unsubsidized
                Stafford loans..............       1,001       1,367       2,200
          PLUS loans:

    03.02   Special allowance...............           4          33          33
    03.03   Default claims..................          94         201         225
    03.04   Death, disability, and
              bankruptcy claims.............          53          77          88
    03.07   Contract Collection Costs.......           1           1           1
    03.08   Loan Processing Fee.............           8          26          18
    03.09   Vol Flex Agree Perf. Fee........           8
                                               ---------   ---------  ----------
    03.91     Subtotal, PLUS loans..........         168         338         365
          SLS loans:

    04.02   Special allowance...............                       1
    04.03   Default claims..................          66          15           6
    04.04   Death, disability and bankruptcy
              claims........................          10           6           5
    04.07   Contract collection costs.......           1           6           7
    04.08   Vol Flex Agree Perf. Fee........           2
                                               ---------   ---------  ----------
    04.91     Subtotal, SLS loans...........          79          28          18
          Consolidation loans:

    05.02   Special allowance...............          34          40         509
    05.03   Default claims..................         522       1,410       1,779
    05.04   Death, disability, and
              bankruptcy claims.............         126         237         303
    05.07   Contract collection costs.......           2           9          12
    05.08   Vol Flex Agree Perf. Fee........          50
                                               ---------   ---------  ----------
    05.91     Subtotal, Consolidations loans         734       1,696       2,603
    08.02 Payment of downward reestimate to
            Program accnt...................                   2,206
    08.04 Interest on downward reestimate...                     774
                                               ---------   ---------  ----------
    08.91   Downward Reestimate- Subtotal (1
              level)........................                   2,980
                                               ---------   ---------  ----------
    10.00   Total new obligations...........       5,897       9,633       9,515
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........       5,092       7,305       7,964
    22.00 New financing authority (gross)...       8,110      10,292      10,742
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      13,202      17,597      18,706
    23.95 Total new obligations.............      -5,897      -9,633      -9,515
    24.40 Unobligated balance carried
            forward, end of year............       7,305       7,964       9,191
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    69.00   Offsetting collections (cash)...       8,110      10,292      10,742
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..       1,252       1,382       2,257
    73.10 Total new obligations.............       5,897       9,633       9,515
    73.20 Total financing disbursements
            (gross).........................      -5,767      -8,758      -9,542
    74.40 Obligated balance, end of year....       1,382       2,257       2,230
    87.00 Total financing disbursements
            (gross).........................       5,767       8,758       9,542
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Federal sources:
                Payments from program
                  account:

    88.00         Stafford loans............      -2,054      -2,287      -2,616
    88.00         Unsubsidized Stafford.....        -632        -740        -740
    88.00         PLUS loans................        -120        -135        -128
    88.00         Consolidated loans........        -984      -2,596      -2,049
    88.25     Interest on uninvested funds..        -416        -556        -636
              Non-Federal sources:
                Student Loans: Stafford,
                  Unsubsidized Stafford,
                  PLUS, SLS & Consolidation:

    88.40         Stafford recoveries on
                    defaults................      -1,304      -1,101      -1,245
    88.40         Stafford origination fees.        -420        -498        -529
    88.40         Stafford Sallie Mae offset
                    fees....................         -21         -22         -19
    88.40         Stafford Other Fees.......         -62
    88.40         Unsubsidized Stafford
                    recoveries on defaults..        -488        -397        -508
    88.40         Unsubsidized Stafford
                    origination fees........        -375        -453        -502
    88.40         Unsubsidized Stafford
                    Sallie Mae offset fees..         -13         -16         -15
    88.40         Unsubsidized Stafford
                    Other Fees..............         -24
    88.40         PLUS recoveries on
                    defaults................        -117         -95        -113
    88.40         PLUS origination fees.....        -101        -119        -132
    88.40         PLUS Sallie Mae offset
                    fees....................          -5          -5          -5
    88.40         PLUS Other Fees...........          -5
    88.40         SLS recoveries on defaults        -131        -115        -109
    88.40         SLS Sallie Mae offset fees
    88.40         SLS Other Fees............          -6
    88.40         Consolidation recoveries
                    on defaults.............        -344        -404        -582
    88.40         Consolidation origination
                    fees....................         -91         -85         -65
    88.40         Consolidated loan holders
                    fee.....................        -383        -668        -749
    88.40         Consolidation Other Fees..         -14
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........      -8,110     -10,292     -10,742
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............
    90.00 Financing disbursements...........      -2,343      -1,534      -1,200
    ---------------------------------------------------------------------------

    [[Page 353]]

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4251-0-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
              STAFFORD
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................      14,305      16,534      17,423
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................      14,305      16,534      17,423
    2199  Guaranteed amount of guaranteed
            loan commitments................      14,305      16,534      17,423
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........      69,103      70,862      72,622
    2231  Disbursements of new guaranteed
            loans...........................      11,387      14,217      15,128
    2251  Repayments and prepayments........      -8,110     -10,779     -11,298
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....      -1,374      -1,527      -1,695
    2263    Terminations for default that
              result in claim payments......        -144        -148        -160
    2264    Other adjustments, net..........                      -3          -3
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........      70,862      72,622      74,594
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..      70,862      72,622      74,594
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......       2,497       2,668       3,062
    2331    Disbursements for guaranteed
              loan claims...................       1,374       1,527       1,695
    2351    Repayments of loans receivable..      -1,304      -1,101      -1,245
    2361    Write-offs of loans receivable..         -27         -32         -37
    2364    Other adjustments, net..........         128
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......       2,668       3,062       3,475
    ----------------------------------------------------------------------------

              UNSUBSIDIZED STAFFORD
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................      13,092      15,584      17,023
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................      13,092      15,584      17,023
    2199  Guaranteed amount of guaranteed
            loan commitments................      13,092      15,584      17,023
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........      41,838      47,090      52,902
    2231  Disbursements of new guaranteed
            loans...........................      10,162      12,953      14,332
    2251  Repayments and prepayments........      -4,064      -6,161      -7,358
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....        -758        -888      -1,091
    2263    Terminations for default that
              result in claim payments......         -88         -89        -103
    2264    Other adjustments, net..........                      -3          -3
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........      47,090      52,902      58,679
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..      47,090      52,902      58,679
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......         922       1,264       1,745
    2331    Disbursements for guaranteed
              loan claims...................         758         888       1,091
    2351    Repayments of loans receivable..        -488        -397        -508
    2361    Write-offs of loans receivable..          -7         -10         -13
    2364    Other adjustments, net..........          79
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......       1,264       1,745       2,315
    ----------------------------------------------------------------------------

              PLUS
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................       3,470       4,004       4,451
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................       3,470       4,004       4,451
    2199  Guaranteed amount of guaranteed
            loan commitments................       3,470       4,004       4,451
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........       9,625      10,529      11,663
    2231  Disbursements of new guaranteed
            loans...........................       2,618       3,400       3,785
    2251  Repayments and prepayments........      -1,493      -2,001      -2,180
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....         -95        -188        -225
    2263    Terminations for default that
              result in claim payments......        -126         -77         -88
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........      10,529      11,663      12,955
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..      10,529      11,663      12,955
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......         189         208         291
    2331    Disbursements for guaranteed
              loan claims...................          95         188         225
    2351    Repayments of loans receivable..        -117         -95        -113
    2361    Write-offs of loans receivable..          -6         -10         -13
    2364    Other adjustments, net..........          47
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......         208         291         390
    ----------------------------------------------------------------------------

              SLS
        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........       1,856       1,276         869
    2251  Repayments and prepayments........        -504        -378        -283
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....         -66         -23          -8
    2263    Terminations for default that
              result in claim payments......         -10          -6          -5
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........       1,276         869         573
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..       1,276         869         573
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......         614         554         459
    2331    Disbursements for guaranteed
              loan claims...................          66          23           8
    2351    Repayments of loans receivable..        -131        -115        -109
    2361    Write-offs of loans receivable..          -4          -3          -3
    2364    Other adjustments, net..........           9
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......         554         459         355
    ----------------------------------------------------------------------------

              CONSOLIDATED
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................      17,235      17,205      13,167
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................      17,235      17,205      13,167
    2199  Guaranteed amount of guaranteed
            loan commitments................      17,235      17,205      13,167
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........      32,383      49,434      60,712
    2231  Disbursements of new guaranteed
            loans...........................      20,106      17,013      13,003
    2251  Repayments and prepayments........      -2,476      -4,199      -5,372
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....        -526      -1,299      -1,753
    2263    Terminations for default that
              result in claim payments......         -53        -237        -303
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........      49,434      60,712      66,287
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..      49,434      60,712      66,287
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......       1,116       1,404       2,285
    2331    Disbursements for guaranteed
              loan claims...................         526       1,299       1,753

    [[Page 354]]

    2351    Repayments of loans receivable..        -344        -404        -582
    2361    Write-offs of loans receivable..          -8         -14         -22
    2364    Other adjustments, net..........         114
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......       1,404       2,285       3,434
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4251-0-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................       6,531          8,687         7,964          9,191
          Net value of assets related to
              post-1991 acquired defaulted
              guaranteed loans receivable:

    1501    Defaulted guaranteed loans
              receivable, gross.............       5,339          6,098         7,841          9,969
    1502    Interest receivable.............       1,287          1,732         1,871          2,020
    1505    Allowance for subsidy cost (-)..       1,830         -2,580        -3,147         -3,839
                                            ------------ --------------  ------------  -------------
    1599      Net present value of assets
                related to defaulted
                guaranteed loans............       8,456          5,250         6,565          8,150
    1901  Other Federal assets: Other assets         336            339
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      15,323         14,276        14,529         17,341
        LIABILITIES:
    2101  Federal liabilities: Accounts
            payable.........................       2,827          2,706         3,537          6,899
    2204  Non-Federal liabilities:
            Liabilities for loan guarantees.      12,496         11,570        10,992         10,442
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      15,323         14,276        14,529         17,341
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      15,323         14,276        14,529         17,341
    -----------------------------------------------------------------------------------------------

        As required by the Federal Credit Reform Act of 1990, this
    nonbudgetary account records all cash flows to and from the Government
    resulting from Federal Family Education Loans (FFEL), formerly
    guaranteed student loans (GSL), committed in 1992 and beyond. The
    amounts in this account are a means of financing and are not included in
    the budget totals.

             Federal Family Education Loan Program Financing Account

                    (Legislative proposal, subject to PAYGO)

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-4251-4-3-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Stafford loans:

    01.05   Teacher loan forgiveness, other
              write-offs....................                                   1
                                               ---------   ---------  ----------
    10.00   Total new obligations...........                                   1
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New financing authority (gross)...                                 123
    23.95 Total new obligations.............                                  -1
    24.40 Unobligated balance carried
            forward, end of year............                                 122
    ----------------------------------------------------------------------------

        New financing authority (gross), detail:
          Mandatory:

    69.00   Offsetting collections (cash)...                                 128
    69.27   Capital transfer to general fund                                  -5
                                               ---------   ---------  ----------
    69.90     Spending authority from
                offsetting collections
                (total mandatory)...........                                 123
    ----------------------------------------------------------------------------

        Change in obligated balances:
    73.10 Total new obligations.............                                   1
    73.20 Total financing disbursements
            (gross).........................                                  -1
    87.00 Total financing disbursements
            (gross).........................                                   1
    ----------------------------------------------------------------------------

        Offsets:
          Against gross financing authority and
              financing disbursements:

            Offsetting collections (cash)
                from:
              Payments from program account:
                Federal sources:

    88.00         Stafford loans............                                 -11
    88.00         Unsubsidized Stafford.....                                 -11
    88.00         Modification..............                                -103
    88.25     Interest on uninvested funds..                                  -3
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........                                -128
    ----------------------------------------------------------------------------

        Net financing authority and financing
            disbursements:
    89.00 Financing authority...............                                  -5
    90.00 Financing disbursements...........                                -127
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-4251-4-3-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................                                                     122
          Net value of assets related to
              post-1991 acquired defaulted
              guaranteed loans receivable:

    1501    Defaulted guaranteed loans
              receivable, gross.............
    1502    Interest receivable.............
    1505    Allowance for subsidy cost (-)..
                                            ------------ --------------  ------------  -------------
    1599      Net present value of assets
                related to defaulted
                guaranteed loans............
    1901  Other Federal assets: Other assets
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................                                                     122
        Liabilities:
    2101  Federal liabilities: Accounts
            payable.........................                                                     122
    2204  Non-Federal liabilities:
            Liabilities for loan guarantees.
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............                                                     122
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position                                                     122
    -----------------------------------------------------------------------------------------------

                Federal Family Education Loan Liquidating Account

        Note.--The following tables display the liquidating account, which
    includes all cash flows to and from the Government from guaranteed
    student loan commitments prior to 1992.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0230-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Stafford loans:

    01.01   Interest benefits, net of
              origination fees..............          41           1
    01.02   Special allowance net of
              origination fees..............          16          12           6
    01.03   Default claims..................          14          21           4
    01.04   Death, disability, and
              bankruptcy claims.............          18          22          14
    01.07   Contract collection costs.......          70          48          37
                                               ---------   ---------  ----------
    01.91     Subtotal, Stafford loans......         159         104          61
          PLUS/SLS loans:

    02.01   Default claims..................          63           3           1
    02.02   Death, disability, and
              bankruptcy claims.............           7           9           5
    02.05   Contract collection costs.......          13           9           7
    02.06   Interest benefits, net of
              origination fees..............           3
                                               ---------   ---------  ----------
    02.91     Subtotal, PLUS/SLS loans......          86          21          13
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         245         125          74
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........         146       1,033
    22.00 New budget authority (gross)......       1,277         125          74
    22.40 Capital transfer to general fund..        -146      -1,033
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......       1,277         125          74
    23.95 Total new obligations.............        -245        -125         -74
    24.40 Unobligated balance carried
            forward, end of year............       1,033
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Mandatory:

    69.00   Offsetting collections (cash)...       1,805         798         623
    69.27   Capital transfer to general fund        -528        -673        -549
                                               ---------   ---------  ----------

    [[Page 355]]

    69.90     Spending authority from
                offsetting collections
                (total mandatory)...........       1,277         125          74
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..          65          -2
    73.10 Total new obligations.............         245         125          74
    73.20 Total outlays (gross).............        -312        -123         -74
    74.40 Obligated balance, end of year....          -2
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new mandatory
            authority.......................         247         125          74
    86.98 Outlays from mandatory balances...          65          -2
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         312         123          74
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
              Federal student loans:
                Non-Federal sources:

    88.40         Fed collections on
                    defaulted loans,
                    Stafford................        -568        -303        -231
    88.40         Federal collections on
                    bankruptcies, Stafford..          -5          -5          -3
    88.40         Offsets against Federal
                    tax refunds,Stafford....        -429        -206        -172
    88.40         Reimbursements from
                    guaranty agencies,
                    Stafford................        -465        -131        -101
    88.40         Other Collections/Fees,
                    Stafford................         -53
    88.40         Sallie Mae Offset Fee.....          -2
    88.40         Federal collections on
                    defaulted loans, PLUS/
                    SLS.....................        -133         -60         -45
    88.40         Federal collections on
                    bankruptcies, PLUS/SLS..          -1          -2          -1
    88.40         Offsets against Federal
                    tax refunds, PLUS/SLS...         -32         -55         -42
                  PLUS/SLS loans:
    88.40
      Reimbursements from guaranty agencies,
        PLUS/SLS............................        -117         -36         -28
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........      -1,805        -798        -623
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................        -528        -673        -549
    90.00 Outlays...........................      -1,494        -675        -549
    ---------------------------------------------------------------------------

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0230-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
              STAFFORD LOANS
        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........       3,612       2,052       1,028
    2251  Repayments and prepayments........      -1,512        -973        -573
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....         -27         -20          -6
    2263    Terminations for default that
              result in claim payments......         -21         -31         -19
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........       2,052       1,028         430
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..       2,052       1,028         430
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......      12,095      10,887      10,155
    2331    Disbursements for guaranteed
              loan claims...................          27          21           7
    2351    Repayments of loans receivable..      -1,470        -339        -261
    2361    Write-offs of loans receivable..        -432        -389        -363
    2364    Other adjustments, net..........         667         -25         -16
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......      10,887      10,155       9,522
    ----------------------------------------------------------------------------

              PLUS/SLS LOANS
        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........         881         672         547
    2251  Repayments and prepayments........         -82        -104        -104
          Adjustments:

    2261    Terminations for default that
              result in loans receivable....        -121         -13          -1
    2263    Terminations for default that
              result in claim payments......          -6          -8          -5
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........         672         547         437
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..         672         547         437
    ----------------------------------------------------------------------------

        Addendum:
          Cumulative balance of defaulted guaranteed
              loans that result in loans receivable:

    2310    Outstanding, start of year......       2,026       2,041       1,953
    2331    Disbursements for guaranteed
              loan claims...................         121          12           1
    2351    Repayments of loans receivable..        -282         -66         -49
    2361    Write-offs of loans receivable..         -29         -29         -28
    2364    Other adjustments, net..........         205          -5          -3
                                               ---------   ---------  ----------
    2390      Outstanding, end of year......       2,041       1,953       1,874
    ---------------------------------------------------------------------------

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-0230-0-1-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        Stafford:
    0111  Revenue...........................         868          1,467           645            507
    0112  Expense...........................        -296           -159          -104            -61
                                            ------------ --------------  ------------  -------------
    0115  Net income or loss (-)............         572          1,308           541            446
        PLUS/SLS:
    0121  Revenue...........................         156            282           153            116
    0122  Expense...........................         -45            -86           -21            -13
                                            ------------ --------------  ------------  -------------
    0125  Net income or loss (-)............         111            196           132            103
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................       1,024          1,749           798            623
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................        -341           -245          -125            -74
                                            ------------ --------------  ------------  -------------
    0195  Total income or loss (-)..........         683          1,504           673            549
                                            ------------ --------------  ------------  -------------
    0199  Total comprehensive income........         683          1,504           673            549
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   91-0230-0-1-502    2001 actual    2002 actual     2003 est.      2004 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................         191          1,031           928            835
          Net value of assets related to
              pre-1992 direct loans
              receivable and acquired
              defaulted guaranteed loans
              receivable:

    1701    Defaulted guaranteed loans,
              gross.........................      14,160         12,928        12,108         11,396
    1702    Interest receivable.............       1,740          1,284           948            700
    1703    Allowance for estimated
              uncollectible loans and
              interest (-)..................     -14,533        -13,175       -11,944        -10,828
                                            ------------ --------------  ------------  -------------
    1704      Defaulted guaranteed loans and
                interest receivable, net....       1,367          1,037         1,112          1,268
                                            ------------ --------------  ------------  -------------
    1799      Value of assets related to
                loan guarantees.............       1,367          1,037         1,112          1,268
    1901  Other Federal assets: Other assets          62             62            62             62
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       1,620          2,130         2,102          2,165
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............                      2,007
          Non-Federal liabilities:

    2201    Accounts payable................           8             14            23             38
    2204    Liabilities for loan guarantees.       1,612            109         2,079          2,127
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       1,620          2,130         2,102          2,165
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       1,620          2,130         2,102          2,165
    -----------------------------------------------------------------------------------------------
        \1\ Excludes interest and premium collections on insured loans.

        As required by the Federal Credit Reform Act of 1990, this
    liquidating account records, for this program, all cash flows to and
    from the Government resulting from guaranteed student loans committed
    prior to 1992. This account is shown on a cash basis. All new loan
    activity in this program for 1992 and beyond is recorded in
    corresponding program and financing accounts.

    [[Page 356]]

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0230-0-1-502      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    25.2  Other services....................          83          57          44
    33.0  Investments and loans.............          77          24           5
    41.0  Grants, subsidies, and
            contributions...................          60          13           6
    42.0  Insurance claims and indemnities..          25          31          19
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         245         125          74
    ---------------------------------------------------------------------------

                         INSTITUTE OF EDUCATION SCIENCES

                                  Federal Funds

    General and special funds:

                         Institute of Education Sciences

        For carrying out activities authorized by Public Law 107-279,
    $375,915,000, of which $185,000,000 shall remain available for
    obligation through September 30, 2005.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1100-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Direct program:
          Obligations by program activity:

            Research and statistics:
    00.01     Research, development, and
                dissemination...............         122         175         185
    00.02     Statistics....................          85          95          95
    00.03   Regional educational
              laboratories..................          67          68
    00.04   Assessment......................         111          95          96
    00.06   Fund for the Improvement of
              Education.....................           1
    00.07   Technical assistance providers..          44
    00.08   Eisenhower National
              Clearinghouse for Mathematics
              and Science Education.........           5
                                               ---------   ---------  ----------
    01.00 Total direct program..............         435         433         376
    09.01 Reimbursable program..............           6           6           6
                                               ---------   ---------  ----------
    10.00 Total new obligations.............         441         439         382
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance carried
            forward, start of year..........           1
    22.00 New budget authority (gross)......         441         439         382
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         442         439         382
    23.95 Total new obligations.............        -441        -439        -382
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         444         433         376
    41.00   Transferred to other accounts...          -9
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............         435         433         376
          Spending authority from offsetting
              collections:

    68.00   Offsetting collections (cash)...                      12           6
    68.10   Change in uncollected customer
              payments from Federal sources
              (unexpired)...................           6          -6
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total discretionary).......           6           6           6
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................         441         439         382
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         876         683         429
    73.10 Total new obligations.............         441         439         382
    73.20 Total outlays (gross).............        -625        -699        -439
    73.40 Adjustments in expired accounts
            (net)...........................          -3
    74.00 Change in uncollected customer
            payments from Federal sources
            (unexpired).....................          -6           6
    74.40 Obligated balance, end of year....         683         429         372
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................         132         113          98
    86.93 Outlays from discretionary
            balances........................         493         586         341
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         625         699         439
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........                     -12          -6
          Against gross budget authority only:

    88.95   Change in uncollected customer
              payments from Federal sources
              (unexpired)...................          -6           6
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         435         433         376
    90.00 Outlays...........................         625         687         433
    ---------------------------------------------------------------------------

        Research and Statistics.--
            Research, development, and dissemination.--Funds support the
        National Center for Education Research, which oversees a diverse
        portfolio of directed research, field-initiated studies, research
        and development centers, and interagency initiatives. Funds also
        support dissemination activities that provide parents, teachers, and
        schools with valid information on effective educational practice.
            Statistics.--Funds support the Department's statistical data
        collection activities, which are conducted by the National Center
        for Education Statistics (NCES). NCES collects, analyzes, and
        disseminates statistics on education at all levels, from preschool
        through postsecondary and adult education, including statistics on
        international education activities.

        Assessment.--Funds support the National Assessment of Educational
    Progress (NAEP). NAEP administers assessments to samples of students in
    order to gather reliable information about educational attainment in
    important academic areas. Funds support collection and reporting of
    national, State, and long-term trend information, including the conduct
    of biennial State NAEP in reading and mathematics at grades 4 and 8.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1100-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

            Personnel compensation:
    11.1      Full-time permanent...........           1           1           1
    11.3      Other than full-time permanent           1           1           1
                                               ---------   ---------  ----------
    11.9        Total personnel compensation           2           2           2
    24.0    Printing and reproduction.......           1           1           1
    25.1    Advisory and assistance services           1           3           3
    25.2    Other services..................          95          93          93
    25.3    Other purchases of goods and
              services from Government
              accounts......................          19          17          17
    25.5    Research and development
              contracts.....................         121         105          39
    25.7    Operation and maintenance of
              equipment.....................           2           2           2
    41.0    Grants, subsidies, and
              contributions.................         193         209         218
                                               ---------   ---------  ----------
    99.0      Direct obligations............         434         432         375
    99.0  Reimbursable obligations..........           6           6           6
    99.5  Below reporting threshold.........           1           1           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         441         439         382
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-1100-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................          14          15          15
    ---------------------------------------------------------------------------

    [[Page 357]]

                             DEPARTMENTAL MANAGEMENT

                                  Federal Funds

    General and special funds:

                             Program Administration

        For carrying out, to the extent not otherwise provided, the
    Department of Education Organization Act, including rental of conference
    rooms in the District of Columbia and hire of three passenger motor
    vehicles, $434,494,000, of which $13,644,000, to remain available until
    expended, shall be for building alterations and related expenses for the
    relocation of Department staff to Potomac Center Plaza in Washington,
    D.C.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229), as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0800-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Program administration............         421         412         434
    09.01 Reimbursable program..............           1           1           1
                                               ---------   ---------  ----------
    10.00   Total new obligations...........         423         413         435
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......         423         413         435
    23.95 Total new obligations.............        -423        -413        -435
    23.98 Unobligated balance expiring or
            withdrawn.......................          -2
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................         424         412         434
    40.71   Reduction pursuant to P.L. 107-
              116...........................          -1
    40.73   Reduction pursuant to P.L. 107-
              206...........................          -5
    42.00   Transferred from other accounts.           4
                                               ---------   ---------  ----------
    43.00     Appropriation (total
                discretionary)..............         423         412         434
          Spending authority from offsetting
              collections:

    68.00   Offsetting collections (cash)...                       1           1
    68.10   Change in uncollected customer
              payments from Federal sources
              (unexpired)...................           1
                                               ---------   ---------  ----------
    68.90     Spending authority from
                offsetting collections
                (total discretionary).......           1           1           1
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................         424         413         435
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..         133         122         116
    73.10 Total new obligations.............         423         413         435
    73.20 Total outlays (gross).............        -417        -419        -416
    73.40 Adjustments in expired accounts
            (net)...........................         -16
    74.00 Change in uncollected customer
            payments from Federal sources
            (unexpired).....................          -1
    74.10 Change in uncollected customer
            payments from Federal sources
            (expired).......................           2
    74.40 Obligated balance, end of year....         122         116         135
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................         324         315         329
    86.93 Outlays from discretionary
            balances........................          93         104          87
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         417         419         416
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.00   Offsetting collections (cash)
              from: Federal sources.........          -3          -1          -1
          Against gross budget authority only:

    88.95   Change in uncollected customer
              payments from Federal sources
              (unexpired)...................          -1
    88.96   Portion of offsetting
              collections (cash) credited to
              expired accounts..............           2
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         422         412         434
    90.00 Outlays...........................         415         418         415
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................          11          11          11
    99.01 Outlays...........................          11          11          11
    ---------------------------------------------------------------------------

        The Program Administration account includes the direct Federal costs
    of providing grants and administering elementary and secondary
    education, Indian education, English language acquisition, higher
    education, technical and adult education, and special education
    programs, and programs for persons with disabilities. It also supports
    assessment, statistics, and research activities.

        In addition, this account includes the cost of providing centralized
    support and administrative services, overall policy development, and
    strategic planning for the Department. Included in the centralized
    activities are rent and mail services; telecommunications; contractual
    services; financial management and accounting, including payments to
    schools, education agencies and other grant recipients, and preparation
    of auditable financial statements; information technology services;
    personnel management; personnel security; budget formulation and
    execution; program evaluation; legal services; congressional and public
    relations; and intergovernmental affairs.

        Included in this account is the Department of Education's costs to
    relocate Department staff to Potomac Center Plaza, including costs for
    building alterations, furniture, information technology equipment and
    services, and telecommunications, to remain available until expended.
    This account also provided funds for the renovation of the Department's
    main headquarters building which was completed in 1998.

        Also included in this account are contributions from the public.
    Activities supported include Presidential Scholars, Satellite Town
    Meetings, School Recognition, and the Gifts and Bequests Miscellaneous
    Fund.

        Reimbursable program.--Reimbursements to this account are for
    providing administrative services to other agencies, recycling
    activities, and in-kind travel.
        Note.--Excludes $54 million in budget authority in 2003 and $68
    million in 2004 for activities proposed to be transferred to the Student
    Aid Administration account. The comparable amount for 2002 ($57 million)
    is included above.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0800-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

            Personnel compensation:
    11.1      Full-time permanent...........         173         188         194
    11.3      Other than full-time permanent          25          10          10
    11.5      Other personnel compensation..           5           4           4
                                               ---------   ---------  ----------
    11.9        Total personnel compensation         203         202         208
    12.1    Civilian personnel benefits.....          43          42          44
    21.0    Travel and transportation of
              persons.......................           6           5           5
    23.1    Rental payments to GSA..........          30          32          34
    23.3    Communications, utilities, and
              miscellaneous charges.........          12          11          11
    24.0    Printing and reproduction.......           5           4           3
    25.1    Advisory and assistance services           3           5           5
    25.2    Other services..................          24          22          23
    25.3    Other purchases of goods and
              services from Government
              accounts......................          15          11          12
    25.7    Operation and maintenance of
              equipment.....................          63          58          72
    26.0    Supplies and materials..........           2           2           2
    31.0    Equipment.......................          14          15          10
    32.0    Land and structures.............           1           3           3
                                               ---------   ---------  ----------
    99.0      Direct obligations............         421         412         432
    99.0  Reimbursable obligations..........           1           1           1
    99.5  Below reporting threshold.........           1                       2
                                               ---------   ---------  ----------
    99.9    Total new obligations...........         423         413         435
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0800-0-1-503      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................       2,589       2,464       2,464
    ---------------------------------------------------------------------------

    [[Page 358]]

                             Office for Civil Rights

        For expenses necessary for the Office for Civil Rights, as
    authorized by section 203 of the Department of Education Organization
    Act, $91,275,000.

        Note.--A regular 2003 appropriation for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts included for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0700-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Civil rights......................          79          86          91
                                               ---------   ---------  ----------
    10.00   Total new obligations...........          79          86          91
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......          80          86          91
    23.95 Total new obligations.............         -79         -86         -91
    23.98 Unobligated balance expiring or
            withdrawn.......................          -1
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          80          86          91
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..          17          15          21
    73.10 Total new obligations.............          79          86          91
    73.20 Total outlays (gross).............         -79         -81         -90
    73.40 Adjustments in expired accounts
            (net)...........................          -2
    74.40 Obligated balance, end of year....          15          21          23
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          69          71          75
    86.93 Outlays from discretionary
            balances........................          10          10          15
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          79          81          90
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          80          86          91
    90.00 Outlays...........................          79          81          90
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................           3           3           3
    99.01 Outlays...........................           3           3           3
    ---------------------------------------------------------------------------

        The Office for Civil Rights is responsible for ensuring that no
    person is unlawfully discriminated against on the basis of race, color,
    national origin, sex, disability, or age in the delivery of services or
    the provision of benefits in programs or activities of schools and
    institutions receiving financial assistance from the Department of
    Education. The authorities under which the Office for Civil Rights
    operates are Title VI of the Civil Rights Act of 1964 (racial and ethnic
    discrimination), Title IX of the Education Amendments of 1972 (sex
    discrimination), section 504 of the Rehabilitation Act of 1973
    (discrimination against individuals with a disability), the Age
    Discrimination Act of 1975, and the Americans with Disabilities Act of
    1990.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-0700-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

            Personnel compensation:
    11.1      Full-time permanent...........          46          49          50
    11.3      Other than full-time permanent           2           2           3
                                               ---------   ---------  ----------
    11.9        Total personnel compensation          48          51          53
    12.1    Civilian personnel benefits.....          11          11          11
    21.0    Travel and transportation of
              persons.......................           1           1           1
    23.1    Rental payments to GSA..........           6           7           7
    23.3    Communications, utilities, and
              miscellaneous charges.........           2           2           2
    25.2    Other services..................           1           1           2
    25.3    Other purchases of goods and
              services from Government
              accounts......................           2           1           2
    25.7    Operation and maintenance of
              equipment.....................           6           8           7
    31.0    Equipment.......................           1           2           2
                                               ---------   ---------  ----------
    99.0      Direct obligations............          78          84          87
    99.5  Below reporting threshold.........           1           2           4
                                               ---------   ---------  ----------
    99.9    Total new obligations...........          79          86          91
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-0700-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................         698         714         714
    ---------------------------------------------------------------------------

                         Office of the Inspector General

        For expenses necessary for the Office of the Inspector General, as
    authorized by section 212 of the Department of Education Organization
    Act, $48,137,000.

        Note.--A regular 2003 appropriations for this account had not been
    enacted at the time the budget was prepared; therefore, this account is
    operating under a continuing resolution (P.L. 107-229, as amended). The
    amounts include for 2003 in this budget reflect the Administration's
    2003 policy proposals.

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1400-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Inspector General.................          39          41          48
                                               ---------   ---------  ----------
    10.00   Total new obligations...........          39          41          48
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......          39          41          48
    23.95 Total new obligations.............         -39         -41         -48
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
          Discretionary:

    40.00   Appropriation...................          39          41          48
    ----------------------------------------------------------------------------

        Change in obligated balances:
    72.40 Obligated balance, start of year..           9           9          11
    73.10 Total new obligations.............          39          41          48
    73.20 Total outlays (gross).............         -37         -39         -44
    73.40 Adjustments in expired accounts
            (net)...........................          -1
    74.40 Obligated balance, end of year....           9          11          16
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.90 Outlays from new discretionary
            authority.......................          31          33          37
    86.93 Outlays from discretionary
            balances........................           6           6           7
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........          37          39          44
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................          39          41          48
    90.00 Outlays...........................          37          39          44
    ----------------------------------------------------------------------------

    Additional net budget authority and outlays to cover cost of fully accruing
                                     retirement:
    99.00 Budget authority..................           1           1           1
    99.01 Outlays...........................           1           1           1
    ---------------------------------------------------------------------------

        The Inspector General is responsible for the quality, coverage, and
    coordination of audit and investigation functions relating to Federal
    education activities. The Inspector General has the authority to inquire
    into all activities of the Department including those performed under
    Federal education contracts, grants, or other agreements. Under the
    Chief Financial Officers Act of 1990, the Inspector General is also
    responsible for internal reviews of the Department's financial systems
    and audits of its financial statements.

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 91-1400-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------

          Direct obligations:

            Personnel compensation:
    11.1      Full-time permanent...........          19          22          22

    [[Page 359]]

    11.3      Other than full-time permanent                                   1
    11.5      Other personnel compensation..           1
                                               ---------   ---------  ----------
    11.9        Total personnel compensation          20          22          23
    12.1    Civilian personnel benefits.....           5           6           6
    21.0    Travel and transportation of
              persons.......................           2           2           2
    23.1    Rental payments to GSA..........           3           3           3
    23.3    Communications, utilities, and
              miscellaneous charges.........           1           1           1
    25.1    Advisory and assistance services           2           3           7
    25.2    Other services..................           1                       1
    25.3    Other purchases of goods and
              services from Government
              accounts......................           1           1           1
    25.7    Operation and maintenance of
              equipment.....................           2           2           3
    31.0    Equipment.......................           1                       1
                                               ---------   ---------  ----------
    99.0      Direct obligations............          38          40          48
    99.5  Below reporting threshold.........           1           1
                                               ---------   ---------  ----------
    99.9    Total new obligations...........          39          41          48
    ---------------------------------------------------------------------------

                                  Personnel Summary

    ----------------------------------------------------------------------------
    Identification code 91-1400-0-1-751      2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
        Total compensable workyears:
    1001  Civilian full-time equivalent
            employment......................         276         285         285
    ---------------------------------------------------------------------------

                          GENERAL FUND RECEIPT ACCOUNTS

                               (in millions of dollars)

    ----------------------------------------------------------------------------
                                             2002 actual   2003 est.   2004 est.
    ----------------------------------------------------------------------------
    Offsetting receipts from the public:
      91-291500  Repayment of loans, capital
        contributions, higher education
        activities..........................          39          50          50
                                               ---------   ---------  ----------
    General Fund Offsetting receipts from
     the public.............................          39          50          50
    ---------------------------------------------------------------------------

                               GENERAL PROVISIONS

        Sec. 301. No funds appropriated in this Act may be used for the
    transportation of students or teachers (or for the purchase of equipment
    for such transportation) in order to overcome racial imbalance in any
    school or school system, or for the transportation of students or
    teachers (or for the purchase of equipment for such transportation) in
    order to carry out a plan of racial desegregation of any school or
    school system.
        Sec. 302. None of the funds contained in this Act shall be used to
    require, directly or indirectly, the transportation of any student to a
    school other than the school which is nearest the student's home, except
    for a student requiring special education, to the school offering such
    special education, in order to comply with title VI of the Civil Rights
    Act of 1964. For the purpose of this section an indirect requirement of
    transportation of students includes the transportation of students to
    carry out a plan involving the reorganization of the grade structure of
    schools, the pairing of schools, or the clustering of schools, or any
    combination of grade restructuring, pairing or clustering. The
    prohibition described in this section does not include the establishment
    of magnet schools.
        Sec. 303. No funds appropriated under this Act may be used to
    prevent the implementation of programs of voluntary prayer and
    meditation in the public schools.

                               (transfer of funds)

        Sec. 304. Not to exceed 3 percent of any discretionary funds
    (pursuant to the Balanced Budget and Emergency Deficit Control Act of
    1985, as amended) which are appropriated for the Department of Education
    in this Act may be transferred between appropriations, but no such
    appropriation shall be increased by more than 10 percent by any such
    transfer: Provided, That the Appropriations Committees of both Houses of
    Congress are notified at least 15 days in advance of any transfer.
        Sec. 305. (a) Discretionary Funding.--Section 458(a)(1) of the
    Higher Education Act of 1965 (2 U.S.C. 1087h(a)(1)), is amended--
            (1) in the matter preceding subparagraph (A), by striking
        ``there shall be available to the Secretary, from funds not
        otherwise appropriated, funds to be obligated for--'' and inserting
        in lieu thereof, ``there are authorized to be appropriated to carry
        out this section such sums as may be necessary, for--'';
            (2) in subparagraph (B), by striking the comma at the end
        thereof and inserting in lieu thereof a period; and
            (3) by striking the flush language at the end thereof.
        (b) Effective Date.--The amendments made by subsection (a) shall be
    effective for fiscal year 2004 and succeeding fiscal years.
        Sec. 306. Section 1202 of the Elementary and Secondary Education Act
    of 1965 is amended by inserting the following subsection at the end
    thereof:
        ``(g) Supplement, not Supplant.--State or local educational agency
    shall use funds received under this subpart only to supplement the level
    of non-Federal funds that, in the absence of funds under this subpart,
    would be expended for activities authorized under this subpart, and not
    to supplant those non-Federal funds.''.