Cornell University 2011-2012 Annual Report - DFA Home - Cornell ...

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands)C. Student Loans ReceivableIn keeping with Ezra Cornell’s vision, the University has a “need-blind” policy of admission. Many students receive financialaid that consists of scholarship/fellowship grants, work-study opportunities and, when appropriate, student loans. TheUniversity participates in various federal revolving loan programs, in addition to administering institutional loan programs.Student loan programs are funded by donor contributions, other institutional sources, and governmental programs,primarily the Federal Perkins Loan Program. The amounts received from the federal government’s portion of the Perkinsprogram are ultimately refundable to the federal government and are reported as a liability on the University’s consolidatedstatement of financial position as government advances for student loans.Credit worthiness is not a factor when granting a student a loan from institutional or federal resources; it is based on financialneed. However, once the loan is in repayment status, the University monitors, no less than quarterly, the aging of thestudent loans receivable. If a loan is 75 days past due, the University generally will not release a transcript and/or diploma.If the loan is 180 days past due, the University evaluates whether to assign the account to an external agency for collection.The University Bursar is required to authorize any write-off of a student loan receivable; such write-offs are based primarilyon the aging report and an evaluation of any recent activity in the account. Overall default rates and an evaluation of generaleconomic conditions are reviewed at least annually. The University, because of its close and continuing relationship withits students and graduates, seeks to work closely with the students to help ensure repayment. At June 30, 2012, the averagedefault rate approximates 6.5 percent, with a rate of approximately 1.8 percent on the federal revolving loan portfolio.The average rate includes both the federal loans and the institutional loans. Institutional loans are generally provided tostudents with unusual financial needs.Student loans are often subject to unique restrictions and conditions and, therefore, it is not practical to determine theirfair values. The allowance for doubtful accounts is for all loans, whether in repayment status or not.The two tables below provide additional information about the student loan receivables and the allowances associated withfederal and institutional loan programs.SUMMARY OF STUDENT LOANS RECEIVABLEReceivable2012 2011AllowanceNetreceivable Receivable AllowanceNetreceivableFederal revolving loans $ 42,142 $ (2,233) $ 39,909 $ 43,472 $ (2,156) $ 41,316Institutional loans 32,061 (2,529) 29,532 30,813 (3,036) 27,777Total student loans receivable $ 74,203 $ (4,762) $ 69,441 $ 74,285 $ (5,192) $ 69,093CHANGE IN STUDENT LOAN ALLOWANCEFederalrevolving2012InstitutionalTotalallowanceAllowance at beginning of year $ (2,156) $ (3,036) $ (5,192)Current year provisions (77) 507 430Current year write-offs - - -Current year recoveries - - -Allowance at end of year $ (2,233) $ (2,529) $ (4,762)18