[Federal Register Volume 64, Number 140 (Thursday, July 22, 1999)]
[Notices]
[Pages 39495-39497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18726]


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DEPARTMENT OF EDUCATION


Office of Student Financial Assistance; William D. Ford Federal 
Direct Loan Program and Federal Family Education Loan Program

AGENCY: Department of Education.


[[Page 39496]]


ACTION: Notice of interest rates for the period October 1, 1998, 
through June 30, 1999, for new loans made under the William D. Ford 
Federal Direct Loan (Direct Loan) Program and the Federal Family 
Education Loan (FFEL) Program; Correction.

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SUMMARY: The Chief Operating Officer for the Office of Student 
Financial Assistance Programs announces the interest rates for the 
period October 1, 1998, through June 30, 1999, for loans first 
disbursed on or after October 1, 1998, under the William D. Ford 
Federal Direct Loan (Direct Loan) Program and the Federal Family 
Education Loan (FFEL) Program. This notice corrects the notice 
published in the Federal Register on April 30, 1999 (64 FR 23287).

FOR FURTHER INFORMATION CONTACT: For the Federal Family Education Loan 
Program: Brian Smith, Program Specialist. For the William D. Ford 
Federal Direct Loan Program: Barbara F. Grayson, Program Specialist. 
Mailing address: Policy Development Division, Office of Student 
Financial Assistance, U.S. Department of Education, Room 3045, ROB-3, 
400 Maryland 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.
    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 person.

SUPPLEMENTARY INFORMATION:

General

    The formulas for determining the interest rates for Direct Loan and 
FFEL Program loans are provided in sections 455(b), 427A, and 428C of 
the Higher Education Act of 1965, as amended (HEA). These provisions 
are amended by sections 452 and 416 of the Higher Education Amendments 
of 1998 (Pub. L.105-244), which were enacted on October 7, 1998. The 
1998 Amendments extend to July 1, 2003, the interest rate formulas for 
student and parent loans that have been in effect since July 1, 1998.
    The interest rate calculations for all student and parent loans in 
the Direct Loan and FFEL programs for which the first disbursement is 
made on or after 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 Amendments change the formulas for setting interest rates on 
Consolidation loans under both the Direct Loan and the FFEL programs. 
However, the bill sets different effective dates for each program. The 
interest rate for new Consolidation loans is calculated by taking the 
weighted average of the loans being consolidated, and rounding up to 
the nearest higher \1/8\th of 1 percent. Except as noted below under 
Federal Family Education Loan Program, it is a fixed rate and may not 
exceed 8.25 percent. This interest rate formula applies to FFEL 
Consolidation loans for which the application is received by an 
eligible lender on or after October 1, 1998, and before July 1, 2003. 
The same formula applies to Direct Loan Consolidation loans for which 
the application is received on or after February 1, 1999, and before 
July 1, 2003. The 1998 Amendments establish temporary rules for 
calculating the interest rate for Direct Loan Consolidation loans (both 
student and parent) for which the application is received on or after 
October 1, 1998, and before February 1, 1999. For these loans, the 
interest rate is determined annually and equals the bond equivalent 
rate of 91-day Treasury bills auctioned at the final auction held 
before June 1st plus 2.3 percent. The interest rate is capped at 8.25 
percent.
    The bond equivalent rate of 91-day Treasury bills auctioned on May 
26, 1998, is 5.155 percent, which rounds to 5.16 percent.

William D. Ford Federal Direct Loan Program

    1. Direct Subsidized and Direct Unsubsidized loans, first disbursed 
on or after October 1, 1998:
    (a) During the in-school, grace, and deferment periods:
    The interest rate for the period October 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:
    The interest rate for the period October 1, 1998, through June 30, 
1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46 
percent).
    2. Direct PLUS loans first disbursed on or after October 1, 1998:
    The interest rate for the period October 1, 1998, through June 30, 
1999, is 8.26 percent (5.16 percent plus 3.1 percent equals 8.26 
percent).
    3. Direct Consolidation loans for which the application is received 
on or after October 1, 1998, and before February 1, 1999:
    The interest rate for the period October 1, 1998, through June 30, 
1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46 
percent).
    4. Direct Consolidation loans for which the application is received 
on or after February 1, 1999:
    The interest rate is the weighted average of the interest rates on 
the loans being consolidated, rounded to the nearest higher \1/8\th of 
1 percent, but may not exceed 8.25 percent. The rate does not vary 
annually; it is established for the life of the loan.

Federal Family Education Loan Program

    1. FFEL Stafford loans, first disbursed on or after October 1, 
1998:
    (a) During the in-school, grace, and deferment periods:
    The interest rate for the period October 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:
    The interest rate for the period October 1, 1998, through June 30, 
1999, is 7.46 percent (5.16 percent plus 2.3 percent equals 7.46 
percent).
    2. FFEL PLUS loans first disbursed on or after October 1, 1998:
    The interest rate for the period October 1, 1998, through June 30, 
1999, is 8.26 percent (5.16 percent plus 3.1 percent equals 8.26 
percent).
    3. FFEL Consolidation loans for which the consolidation loan 
application was received by the lender on or after October 1, 1998:
    The interest rate is the weighted average of the interest rates on 
the loans being consolidated, rounded to the nearest higher \1/8\th of 
one percent, but may not exceed 8.25 percent. This rate does not vary 
annually. It is established for the life of the loan, unless a portion 
of the Consolidation loan is attributable to a loan made under subpart 
I of part A of title VII of the Public Health Service Act. The interest 
rate on that portion of a Consolidation loan is determined annually, 
and equals the average of the bond equivalent rates of the 91-day 
Treasury bills auctioned for the quarter prior to July 1st plus 3 
percent. For the period October 1, 1998, through June 30, 1998, the 
interest rate for that portion of a Consolidation loan is 8.13 percent 
(5.13 percent plus 3.0 percent equals 8.13 percent)

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.hmt
http://www.ed.gov/news.html


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To use the pdf you must have the Adobe Acrobat Reader Program with 
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    Note: The official version of this document is the document 
published in the Federal Register.

    Program Authority: 20 U.S.C. 1077a, 20 U.S.C. 1087e, and Pub. L. 
105-244.

    Dated: July 16, 1999.
Candace M. Kane,
Acting Chief Operating Officer, Office of Student Financial Assistance.
[FR Doc. 99-18726 Filed 7-21-99; 8:45 am]
BILLING CODE 4000-01-U