Loans Receivable and Guaranty Programs
During 1997, the Department made approximately 2.8 million direct loans resulting in a $10 billion increase in loans outstanding, and approximately $22 billion total outstanding loans. The Department borrows at the Treasury rate from U.S. Treasury. In fiscal year 1997, the Department borrowed approximately $10 billion at approximately 6.7% interest. Subsidy expense is calculated based on the present value of the interest cost (income) on the loans (the difference between interest earned and interest paid to the U.S. Treasury), and the expected defaults net of collections. Estimated Liabilities for Loan Guarantees represents the present value of cash flows associated with guarantees under the programs including provisions for payment of loan defaults, interest subsidies, lender compensation, as well as cash receipts such as estimated future collections on defaulted loans, loan origination fees paid by borrowers and fees paid by lenders. Guaranteed loans outstanding increased from $92 billion to $101 billion in fiscal year 1997.
Interest revenue on direct loans increased approximately $714 million due to the increase in loan volume. Interest expense increased approximately $705 million. The change in subsidy expense relates to an increase in the allowance for subsidy cost and the liability for loan guarantees.
The Department received appropriations of approximately $33 billion which were expended on Departmental programs as follows: