[Notices]
[Page 37025-37028]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jy98-171]
[[Page 37025]]
_______________________________________________________________________
Part V
Department of Education
_______________________________________________________________________
William D. Ford Federal Direct Loan Program; Federal Family Education
Loan Program; Notice
[[Page 37026]]
DEPARTMENT OF EDUCATION
William D. Ford Federal Direct Loan Program; Federal Family
Education Loan Program
AGENCY: Office of Postsecondary Education, Department of Education
ACTION: Notice of interest rates for the William D. Ford Federal Direct
Loan Program and the Federal Family Education Loan Program for the
period July 1, 1998, through June 30, 1999.
-----------------------------------------------------------------------
SUMMARY: The Assistant Secretary for Postsecondary Education announces
the interest rates for variable-rate loans made under the William D.
Ford Federal Direct Loan (Direct Loan) Program and the Federal Family
Education Loan (FFEL) Program for the period July 1, 1998-June 30,
1999.
FOR FURTHER INFORMATION CONTACT: For the FFEL Program: Brian Smith,
Program Specialist. For the Direct Loan Program: Barbara F. Grayson,
Program Specialist. Mailing address: Policy Development Division,
Office of Postsecondary Education, U.S. Department of Education, Room
3045, ROB-3, 600 Independence Avenue, SW, Washington, DC 20202-5345.
Telephone: (202) 708-8242. Individuals who use a telecommunications
device for the deaf (TDD) may call the Federal Information Relay
Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern
Daylight time, Monday through Friday.
Individuals with disabilities may obtain this document in an
alternate format (e.g., Braille, large print, audiotape or computer
diskette) on request to the contact persons listed in the preceding
paragraph.
SUPPLEMENTARY INFORMATION:
General
Section 455(b) of the Higher Education Act of 1965, as amended (the
HEA), 20 U.S.C. 1087e(b), provides that variable interest rates apply
to loans made under the Direct Loan Program. Section 427A of the HEA,
20 U.S.C. 1077a, provides that variable interest rates apply to certain
loans made under the FFEL Program. The variable rates for Direct Loan
Program loans and FFEL Program loans are determined annually and apply
for each 12-month period beginning July 1 and ending June 30.
The formulas for determining the interest rates charged to
borrowers for Direct Loan Program and FFEL Program loans, except for
Consolidation loans in both programs, are provided in the following
legislation:
* For Direct Loan Program loans for which the first
disbursement is made before July 1, 1998, section 455 of the HEA (20
U.S.C. 1087e).
* For FFEL Program loans for which the first disbursement is
made before July 1, 1998, section 427A of the HEA (20 U.S.C. 1077a).
* For FFEL Program loans and Direct Loan Program loans for
which the first disbursement is made on or after July 1, 1998, and
before October 1, 1998, section 8301 of Pub.L. 105-178 (the
Transportation Equity Act for the 21st Century).
The interest rate calculations for all parent and student loans in
the Direct Loan and FFEL programs for which the first disbursement is
made on or after July 1, 1998, and before October 1, 1998, are based on
the bond equivalent rate of the 91-day Treasury bills auctioned at the
final auction held before June 1.
The formulas for determining the interest rates charged to
borrowers of Direct Consolidation loans and FFEL Consolidation loans
are provided in the following legislation and regulation:
* For Direct Consolidation loans, 34 CFR 685.215(g).
* For FFEL Consolidation loans for which the consolidation
loan application was received by an eligible lender before November 13,
1997, section 428C(c)(1) of the HEA (20 U.S.C. 1078-3(c)(1)).
* For FFEL Consolidation loans for which the consolidation
loan application was received by an eligible lender on or after
November 13, 1997, and before October 1, 1998, section 428C(c)(1)(D) of
the HEA, 20 U.S.C. 1078-3(c)(1)(D) (as added by the Emergency Student
Loan Consolidation Act of 1997).
Section 455(g) of the HEA, 20 U.S.C. 1087e(g), gives the Secretary
discretion to establish the interest rates for Direct Consolidation
loans. Under 34 CFR 685.215(g), for consolidation loans, the interest
rate is the same as the interest rate for student and parent loans made
during that time.
As described later in this notice, the interest rate for FFEL
Consolidation Loans is set by statute.
The bond equivalent rate of the 91-day Treasury bills auctioned at
the final auction held before June 1 of each year is used as the index
to calculate annual interest rates charged to borrowers with the
following loans:
Federal Direct Stafford/Ford loans (Direct Subsidized).
Federal Direct Unsubsidized Stafford/Ford loans (Direct
Unsubsidized).
Federal Direct Subsidized Consolidation loans.
Federal Direct Unsubsidized Consolidation loans.
FFEL Stafford loans (subsidized and unsubsidized).
FFEL Consolidation loans for applications received on or after
November 13, 1997.
Federal Direct PLUS loans for which the first disbursement is made
on or after July 1, 1998.
Federal Direct PLUS Consolidation loans made on or after July 1,
1998.
FFEL PLUS loans for which the first disbursement was made on or
after July 1, 1998.
The bond equivalent rate of the 52-week Treasury bills auctioned in
the final auction held before June 1 of each year is used to calculate
annual interest rates charged to borrowers with the following loans:
Federal Direct PLUS loans for which the first disbursement was made
before July 1, 1998.
Federal Direct PLUS Consolidation loans for which the first
disbursement was made before July 1, 1998.
FFEL PLUS loans for which the first disbursement was made before
July 1, 1998.
FFEL Supplemental Loans for Students (SLS).
The bond equivalent rate of the 91-day Treasury bills auctioned on
May 26, 1998, is 5.155 percent, which rounds to 5.16 percent.
The bond equivalent rate of 52-week Treasury bills auctioned on May
21, 1998, is 5.434 percent, which rounds to 5.43 percent.
William D. Ford Federal Direct Loan Program
Interest Rates for Direct Subsidized, Direct Unsubsidized, Direct
Subsidized Consolidation, and Direct Unsubsidized Consolidation Loans
1. Direct Subsidized, Direct Unsubsidized, Direct Subsidized
Consolidation, and Direct Unsubsidized Consolidation Loans for which
the first disbursement was made prior to July 1, 1995--the interest
rate may not exceed 8.25 percent: Pursuant to section 455(b)(1) of the
HEA, 20 U.S.C. 1087e(b)(1), the interest rate for the period July 1,
1998, through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1
percent equals 8.26 percent, which exceeds the 8.25 percent cap).
2. Direct Subsidized, Direct Unsubsidized, Direct Subsidized
Consolidation, and Direct Unsubsidized Consolidation Loans for which
the first disbursement was made on or after July 1, 1995, and before
July 1, 1998--the interest rate may not exceed 8.25 percent:
(a) During the in-school, grace, and deferment periods: Pursuant to
section
[[Page 37027]]
455(b)(2) of the HEA, 20 U.S.C. 1087e(b)(2), the interest rate for the
period July 1, 1998, through June 30, 1999, is 7.66 percent (5.16
percent plus 2.5 percent equals 7.66 percent).
(b) During all other periods: Pursuant to section 455(b)(1) of the
HEA, 20 U.S.C. 1087e(b)(1), the interest rate for the period July 1,
1998, through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1
percent equals 8.26 percent, which exceeds the 8.25 percent cap).
3. Direct Subsidized and Direct Unsubsidized Loans for which the
first disbursement is made on or after July 1, 1998, and before October
1, 1998--the interest rate may not exceed 8.25 percent:
(a) During the in-school, grace, and deferment periods: Pursuant to
section 8301 of Pub. L. 105-178, the interest rate for the period July
1, 1998, through June 30, 1999, is 6.86 percent (5.16 percent plus 1.7
percent equals 6.86 percent).
(b) During all other periods: Pursuant to section 8301 of Pub.L.
105-178, the interest rate for the period July 1, 1998, through June
30, 1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46
percent).
4. Direct Subsidized Consolidation and Direct Unsubsidized
Consolidation Loans for which the first disbursement is made on or
after July 1, 1998, or for which the consolidation loan application is
received by the Secretary on or after July 1, 1998--the interest rate
may not exceed 8.25 percent:
(a) During the in-school, grace, and deferment periods: Pursuant to
section 455(g) of the HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g),
the interest rate for the period July 1, 1998, through June 30, 1999,
is 6.86 percent (5.16 percent plus 1.7 percent equals 6.86 percent).
(b) During all other periods: Pursuant to section 455(g) of the
HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g), the interest rate for
the period July 1, 1998, through June 30, 1999, is 7.46 percent (5.16
percent plus 2.3 percent equals 7.46 percent).
Interest Rates for Direct PLUS and Direct PLUS Consolidation Loans
1. Direct PLUS loans and Direct PLUS Consolidation loans for which
the first disbursement was made before July 1, 1998: Pursuant to
section 455(b)(4) of the HEA, 20 U.S.C. 1087(e)(b)(4), the interest
rate for the period July 1, 1998, through June 30, 1999, is 8.53
percent (5.43 percent plus 3.1 percent equals 8.53 percent).
2. Direct PLUS loans for which the first disbursement is made on or
after July 1, 1998, and before October 1, 1998--the interest rate may
not exceed 9 percent: Pursuant to section 8301 of Pub.L. 105-178, the
interest rate for the period July 1, 1998, through June 30, 1999, is
8.26 percent (5.16 percent plus 3.1 percent equals 8.26 percent).
3. Direct PLUS Consolidation loans for which the first disbursement
is made on or after July 1, 1998, or for which the consolidation loan
application is received by the Secretary on or after July 1, 1998--the
interest rate may not exceed 9 percent: Pursuant to section 455(g) of
the HEA, 20 U.S.C. 1087e(g) and 34 CFR 685.215(g), the interest rate
for the period July 1, 1998, through June 30, 1999, is 8.26 percent
(5.16 percent plus 3.1 percent equals 8.26 percent).
Federal Family Education Loan Program
Interest Rates for ``Converted'' Variable-rate FFEL Stafford Loans
1. FFEL Stafford loans which were made with an interest rate of
eight percent with an increase to ten percent and that were subject to
the ``windfall profits'' provisions of section 427A(i)(1) of the Act,
20 U.S.C. 1077a(i)(7), and that have been converted to a variable
interest rate--the interest rate may not exceed 10 percent: Pursuant to
section 427A(i)(7)(A) of the HEA, 20 U.S.C. 1077a(i)(7)(A), the
interest rate for the period July 1, 1998, through June 30, 1999, is
8.41 percent (5.16 percent plus 3.25 percent equals 8.41 percent).
2. Seven percent, eight percent, nine percent and eight/ten percent
loans that were subject to the ``windfall profits'' provisions of
section 427A(i)(3) of the HEA, 20 U.S.C. 1077a(i)(3), and that have
been converted to a variable interest rate--the interest rate may not
exceed seven percent, eight percent, nine percent, or ten percent,
respectively: Pursuant to section 427A(i)(7)(A) of the Act, 20 U.S.C.
1077a(i)(7)(A), the interest rate for the period July 1, 1998, through
June 30, 1999, is 7 percent for 7 percent loans, 8 percent for 8
percent loans, 8.26 percent for 9 percent loans, and 8.26 percent for
10 percent loans (5.16 percent plus 3.1 percent equals 8.26 percent,
which exceeds the cap for 7 percent loans and 8 percent loans).
Interest Rates for Regular Variable-rate FFEL Stafford Loans
1. FFEL Stafford loans made to ``new'' borrowers for which the
first disbursement was made (a) on or after October 1, 1992, but before
July 1, 1994, or (b) on or after July 1, 1994, for a period of
enrollment ending before July 1, 1994, (i.e., a late disbursement)--the
interest rate may not exceed 9 percent: Pursuant to section 427A(e)(1)
of the HEA, 20 U.S.C. 1077a(e)(1), the interest rate for the period
July 1, 1998, through June 30, 1999, is 8.26 percent (5.16 percent plus
3.1 percent equals 8.26 percent).
2. FFEL Stafford loans made to all borrowers, regardless of prior
borrowing, for a period of enrollment that includes or begins on or
after July 1, 1994, for which the first disbursement was made on or
after July 1, 1994, but before July 1, 1995--the interest rate may not
exceed 8.25 percent: Pursuant to section 427A(f)(1) of the HEA, 20
U.S.C. 1077a(e)(1), the interest rate for the period July 1, 1998,
through June 30, 1999, is 8.25 percent (5.16 percent plus 3.1 percent
equals 8.26 percent which exceeds the 8.25 percent cap).
3. FFEL Stafford loans made to all borrowers, regardless of prior
borrowing, for which the first disbursement was made on or after July
1, 1995, but before July 1, 1998--the interest rate may not exceed 8.25
percent:
(a) During the in-school, grace, or deferment period: Pursuant to
section 427A(g)(2) of the HEA, 20 U.S.C. 1077a(g)(2), the interest rate
for the period July 1, 1998, through June 30, 1999, is 7.66 (5.16
percent plus 2.5 percent equals 7.66 percent).
(b) During the repayment period (except deferment periods):
Pursuant to section 427A(f)(1) of the HEA, 20 U.S.C. 1077a(f)(1), the
interest rate for the period July 1, 1998, through June 30, 1999, is
8.25 percent (5.16 percent plus 3.1 percent equals 8.26 percent, which
exceeds the 8.25 percent cap).
4. FFEL Stafford loans, for which the first disbursement is made on
or after July 1, 1998, but before October 1, 1998--the interest rate
may not exceed 8.25 percent:
(a) During the in-school, grace, and deferment periods: Pursuant to
section 8301 of Pub.L. 105-178, the interest rate for the period July
1, 1998, through June 30, 1999, is 6.86 percent (5.16 percent plus 1.7
percent equals 6.86 percent).
(b) During all other periods: Pursuant to section 8301 of Pub.L.
105-178, the interest rate for the period July 1, 1998, through June
30, 1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46
percent).
Interest Rates for FFEL PLUS and FFEL Supplemental Loans for Students
Loans
1. Variable-rate FFEL PLUS loans and FFEL SLS loans made before
October 1, 1992--the interest rate may not exceed 12 percent: Pursuant
to section 427A(c)(4)(B) of the HEA, 20 U.S.C. 1077a(c)(4)(B), the
interest rate for the period July 1, 1998, through June 30,
[[Page 37028]]
1999, is 8.68 percent (5.43 percent plus 3.25 percent equals 8.68
percent).
2. FFEL SLS loans for which the first disbursement was made on or
after October 1, 1992, for a period of enrollment beginning before July
1, 1994--the interest rate may not exceed 11 percent: Pursuant to
section 427(c)(4) of the HEA, 20 U.S.C. 1077a(c)(4), the interest rate
for the period July 1, 1998, through June 30, 1999, is 8.53 percent
(5.43 percent plus 3.1 percent equals 8.53 percent).
3. FFEL PLUS loans for which the first disbursement was made on or
after October 1, 1992, but before July 1, 1994--the interest rate may
not exceed 10 percent: Pursuant to section 427A(c)(4)(D) of the HEA, 20
U.S.C. 1077a(c)(4)(D), the interest rate for the period July 1, 1998,
through June 30, 1999, is 8.53 percent (5.43 percent plus 3.1 percent
equals 8.53 percent).
4. FFEL PLUS loans for which the first disbursement was made on or
after July 1, 1994 but prior to July 1, 1998--the interest rate may not
exceed 9 percent: Pursuant to section 427(c)(4)(E) of the HEA, 20
U.S.C. 1077a(c)(4)(E),the interest rate for the period July 1, 1998,
through June 30, 1999, is 8.53 percent (5.43 percent plus 3.1 percent
equals 8.53 percent).
5. FFEL PLUS loans for which the first disbursement is made on or
after July 1, 1998, and before October 1, 1998--the interest rate may
not exceed 9 percent: Pursuant to section 8301 of Pub.L. 105-178, the
interest rate for the period July 1, 1998, through June 30, 1999, is
8.26 percent (5.16 percent plus 3.1 percent equals 8.26 percent).
Interest Rates for FFEL Consolidation Loans
1. FFEL Consolidation loans made before July 1, 1994--the interest
rate may not exceed 9 percent: Pursuant to section 428C(c)(1)(B) of the
HEA, 20 U.S.C. 1078-3(c)(1)(B), the interest rate is the weighted
average of the interest rates on the loans consolidated, rounded to the
nearest whole percent.
2. FFEL Consolidation loans made on or after July 1, 1994, for
which the consolidation loan application was received by an eligible
lender before November 13, 1997: Pursuant to section 428C(c)(1)(C) of
the HEA, 20 U.S.C. 1078-3(c)(1)(C), the interest rate is the weighted
average of the interest rates on the loans consolidated, rounded upward
to the nearest whole percent.
3. FFEL Consolidation loans for which the consolidation loan
application is received by an eligible lender on or after November 13,
1997--the interest rate may not exceed 8.25 percent: Pursuant to
section 428C(c)(1)(D) of the HEA, 20 U.S.C. 1078-3(c)(1)(D), the
interest rate for the period July 1, 1998, through June 30, 1999, is
8.25 percent (5.16 percent plus 3.1 percent equals 8.26 percent which
exceeds the 8.25 percent cap).
Electronic Access to This Document
Anyone may view this document as well as all other Department of
Education documents published in the Federal Register, in text or
portable document format (pdf) on the World Wide Web at either of the
following sites:
http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html
To use the pdf you must have the Adobe Acrobat Reader Program with
Search, which is available free at either of the previous sites. If you
have questions about using the pdf, call the U.S. Government Printing
Office toll free at 1-888-293-6498. Anyone may also view these
documents in text copy only on an electronic bulletin board of the
Department. Telephone: (202) 219-1511 or, toll free, 1-800-222-4922.
The documents are located under Option G-- Files/Announcements,
Bulletins and Press Releases.
Note: The official version of this document is the document
published in the Federal Register.
(Authority: 20 U.S.C. 1077a and 20 U.S.C. 1087e).
Dated: July 6, 1998.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
[FR Doc. 98-18267 Filed 7-6-98; 2:40 pm]
BILLING CODE 4000-01-P