Student Loans An annual report of the University of Washington includes information about its receivables from student loans in a footnote to the financial statements ($ in thousands):

Year 1 Year 2 Student loans Federal programs Less allowances University funds Less-allowances Total, net $30,905 $33,109 2,793 $ 4,748 $28,112 2,378 $ 30,731 $ 4,999 337 4,411 $32,523 271 4,728 $ 35,459 1. Compare the quality of the loans under federal programs with the quality of those using university funds. Compare the quality of the loans outstanding at the end of year 2 with the quality of those outstanding at the end of year 1. 2. By using the allowance method, which accounts would be affected by an allowance for bad debts of an appropriate percentage of $200,000 of additional new loans in year 2 from university funds? Choose a percentage.