Publication Date: June 2002
Bulletin ID: DLB-02-19
Summary: Interest Rates for Direct Loan Program Loans for the period July 1, 2002 through June 30, 2003
June 2002
DLB-02-19
Dear Partner,
This bulletin discusses the new interest rates, which will be in effect for the Direct Loan Program from July 1, 2002 through June 30, 2003.
Attached is a set of charts that show the new interest rates for Direct Subsidized Loans, Direct Unsubsidized Loans, Direct Subsidized Consolidation Loans, and Direct Unsubsidized Consolidation Loans, as well as Direct PLUS Loans and Direct PLUS Consolidation Loans that were disbursed on or after July 1, 1998. The charts also show how the new interest rates were determined using the 91-day Treasury bill rate and the appropriate add-on percentages.
The interest rates are based on the interest rate formulas given by statutory and regulatory authority. The interest rate formulas are defined in Section 455(b) of the Higher Education Act of 1965, as amended (HEA). You can find the regulations for interest rate formulas for student, parent, and consolidation loans at 34 CFR 685.202(a).
The interest rates on all subsidized and unsubsidized loans, and on PLUS loans first disbursed on or after July 1, 1998, are the bond equivalent rate of 91-day Treasury bills sold at the final auction before June 1 plus an add on percentage. The rate for 91-day Treasury bills auctioned on May 28, 2002 was 1.760 percent, which rounds to 1.76 percent. The interest rates that are effective for the period July 1, 2002 through June 30, 2003 are shown in the attached charts.
Please note that the interest rates for the PLUS loans disbursed before July 1, 1998 are not included in this bulletin or in the attached charts because the U.S. Treasury no longer auctions the 52-week Treasury bill. Section 455(b) of the HEA was amended in the Labor-Health and Human Services Appropriations Act to reflect this change. Before this change, we used the 52-week Treasury bill auctioned at the final auction before June 1. Now, we must use the weekly average of a 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before June 26. In the next few weeks, we will send you a similar bulletin detailing the interest rates for PLUS loans disbursed before July 1, 1998.
Thank you for your continued partnership in the Direct Loan Program.
Sincerely,
Jane Holman
Acting Director, Title IV Delivery
Schools Channel
Attachments/Enclosures:
Direct Loan Program's Interest Rates from July 1, 2002 to June 30, 2003 in PDF format, pages 3