[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.''.
