[Federal Register Volume 65, Number 102 (Thursday, May 25, 2000)]
[Notices]
[Pages 34006-34007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13101]



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Part VII





Department of Education





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William D. Ford Federal Loan Program; Notice

  Federal Register / Vol. 65, No. 102 / Thursday, May 25, 2000 / 
Notices  

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DEPARTMENT OF EDUCATION


William D. Ford Federal Direct Loan Program

AGENCY: Department of Education.

ACTION: Notice of the annual updates to the income contingent repayment 
(ICR) plan formula.

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SUMMARY: The Secretary announces the annual updates to the ICR Plan 
formula for 2000. Under the William D. Ford Federal Direct Loan (Direct 
Loan) Program, borrowers may choose to repay their student loans under 
the ICR plan, which bases the repayment amount on the borrower's 
income, family size, loan amount, and interest rate. Each year, the 
formula for calculating a borrower's payment is adjusted to reflect 
changes due to inflation. This notice contains the required updates 
based on inflation, which are examples of how the calculation of the 
monthly ICR amount is performed, the income percentage factors, the 
constant multiplier chart, and charts showing sample repayment amounts. 
These updates are effective from July 1, 2000 to June 30, 2001.

FOR FURTHER INFORMATION CONTACT: Don Watson, U.S. Department of 
Education, Room 3045, ROB-3, 400 Maryland Avenue, SW., Washington, DC 
20202-5400. Telephone: (202) 708-8242. If you use a telecommunications 
device for the deaf (TDD), you 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 listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: Direct Loan Program borrowers may choose to 
repay their Direct Loans under the ICR Plan. The attachment to this 
Notice provides updates to four sources of information: examples of how 
the calculation of the monthly ICR amount is performed, the income 
percentage factors, the constant multiplier chart, and charts showing 
sample repayment amounts.
    We have updated the income percentage factors to reflect changes 
based on inflation. We have revised the income percentage factor table 
by changing the dollar amounts of the incomes shown by a percentage 
equal to the estimated percentage change in the Consumer Price Index 
for all Urban Consumers from December 1999 to December 2000. Further, 
we provide examples of monthly repayment amount calculations and two 
charts that show sample repayment amounts for single, and married or 
head of household borrowers at various income and debt levels based on 
the updated income percentage factors.
    The updated income percentage factors, at any given income, may 
cause a borrower's payments to be slightly lower than they were in 
prior years. This updated amount more accurately reflects the impact of 
inflation on a borrower's current ability to repay.

Electronic Access to This Document

    You may review this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at 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, 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 (GPO), 
toll free at 1-888-293-6498 or in the Washington DC, area at (202) 512-
1530.


    Note: The official version of this document is the document 
published in the Federal Register. Free internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO access at: http://www.access.gpo.gov/nara/index.html


(Catalog of Federal Domestic Assistance Number 84.268, William D. 
Ford Federal Direct Loan Program)

    Program Authority: 20 U.S.C. 1087 et seq.

    Dated: May 19, 2000.
Greg Woods,
Chief Operating Officer.

Attachment: Examples of the Calculations of Monthly Repayment 
Amounts

    Example 1. This example assumes you are a single borrower with 
$15,000 in Direct Loans, the interest rate being charged is 8.25 
percent, and you have an adjusted gross income (AGI) of $30,713.
    Step 1: Determine your annual payments based on what you would 
pay over 12 years using standard amortization. To do this, multiply 
your loan balance by the constant multiplier for 8.25 percent 
interest (0.1315449). The constant multiplier is a factor used to 
calculate amortized payments at a given interest rate over a fixed 
period of time. (The 8.25 percent interest rate used in this example 
is the maximum interest rate charged for all Direct Loans excluding 
Direct PLUS Loans and may not be your actual interest rate. You can 
view the constant multiplier chart below to determine the constant 
multiplier that you should use for the interest rate on your loan. 
If your exact interest rate is not listed, use the next highest for 
estimation purposes.)

 0.1315449  x  $15,000 = $1,973.17

    Step 2: Multiply the result of Step 1 by the income percentage 
factor shown in the income percentage factor table that corresponds 
to your income and the divide the result by 100. (If your income is 
not listed in the income percentage factor table, calculate the 
applicable income percentage factor by following the instructions 
under ``Interpolation'' below.):

 88.77  x  $1,973.17  100 = $1,751.58

    Step 3: Determine 20 percent of your discretionary income. 
Because you are a single borrower, subtract the poverty level for a 
family of one, as published in the Federal Register on February 15, 
2000 (65 FR 7555), from your income and multiply the result by 20%:

 $30,713 - $8,350 = $22,363
 $22,363  x  0.20 = $4,472.60

    Step 4: Compare the amount from Step 2 with the amount from Step 
3. The lower of the two will be your annual payment amount. In this 
example, you will be paying the amount calculated under Step 2. To 
determine your monthly repayment amount, divide the annual amount by 
12.

 $1,751.58  12 = $145.97
    Example 2. In this example, you are married. You and your spouse 
have a combined AGI of $58,040 and are repaying your loans jointly 
under the ICR plan. You have no children. You have a Direct Loan 
balance of $10,000, and your spouse has a Direct Loan balance of 
$15,000. Your interest rate is 8.25 percent.
    Step 1: Add your and your spouse's Direct Loan balances together 
to determine your aggregate loan balance:
 $10,000 + $15,000 = $25,000

    Step 2: Determine the annual payment based on what you would pay 
over 12 years using standard amortization. To do this, multiply your 
aggregate loan balance by the constant multiplier for 8.25 percent 
interest (0.1315449). (The 8.25 percent interest rate used in this 
example is the maximum interest rate charged for all Direct Loans 
excluding Direct PLUS Loans and may not be your actual interest 
rate. You can view the constant multiplier chart below to determine 
the constant multiplier that you should use for the interest rate on 
your loan. If your exact interest rate is not listed, use the next 
highest for estimation purposes.)

 0.1315449 x $25,000 = $3,288.62
    Step 3: Multiply the result by the income percentage factor 
shown in the income percentage factor table that corresponds to your 
and your spouse's income and divide the result by 100. (If your and 
your spouse's aggregate income is not listed in the income 
percentage factor table, calculate the applicable income percentage 
factor by following the instructions under ``Interpolation'' 
below.):
 109.40 x $3,288.62  100 = $3,597.75
    Step 4: Determine 20 percent of your aggregate income. To do 
this, subtract the poverty level for a family of 2, as published in 
the Federal Register on February 15, 2000 (65 FR 7555), from your 
aggregate income and multiply the result by 20 percent:

 $58,040 - $11,250 = $46,790
 $46,790 x 0.20 = $9,358


[[Page 34007]]


    Step 5: Compare the amount from Step 3 with the amount from Step 
4. The lower of the two will be your annual payment amount. You and 
your spouse will pay the amount calculated under Step 3. To 
determine your monthly repayment amount, divide the annual amount by 
12.

 $3,597.75  12 = $299.81

    Interpolation: If your income does not appear on the income 
percentage factor table, you will have to calculate the income 
percentage factor through interpolation. For example, assume you are 
single and your income is $25,000.
    Step 1: Find the closest income listed that is less than your 
income of $25,000 and the closest income listed that is greater than 
your income of $25,000.
    Step 2: Subtract the lower amount from the higher amount (for 
this discussion, we will call the result the ``income interval''):

 $30,713 - $24,452 = $6,261

    Step 3: Determine the difference between the two income 
percentage factors that are given for these incomes (for this 
discussion, we will call the result, the ``income percentage factor 
interval''):

 88.77% - 80.33% = 8.44%

    Step 4: Subtract from your income the closest income shown on 
the chart that is less than your income of $25,000:

 $25,000 - $24,452 = $548

    Step 5: Divide the result by the income interval determined in 
Step 2:

 $548  $6,261 = 0.08753

    Step 6: Multiply the result by the income percentage factor 
interval:

 0.08753 x 8.44% = .73875%

    Step 7: Add the result to the lower of the two income percentage 
factors used in Step 3 to calculate the income percentage factor 
interval for $25,000 in income:

 .73878% + 80.33% = 81.07% (rounded to the nearest 
hundredth)
    The result is the income percentage factor that will be used to 
calculate the monthly repayment amount under the ICR Plan.

                        Income Percentage Factors
                        [Based on annual income]
------------------------------------------------------------------------
                 Single                       Married/head of household
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                                  Percent                        Percent
             Income                factor         Income         factor
------------------------------------------------------------------------
8,028..........................     55.00   8,028.............     50.52
11,047.........................     57.79   12,669............     56.68
14,215.........................     60.57   15,098............     59.56
17,455.........................     66.23   19,738............     67.79
20,550.........................     71.89   24,452............     75.22
24,452.........................     80.33   30,713............     87.61
30,713.........................     88.77   38,518............    100.00
38,520.........................    100.00   46,327............    100.00
46,327.........................    100.00   58,040............    109.40
55,679.........................    111.80   77,555............    125.00
71,295.........................    123.50   104,879...........    140.60
100,977........................    141.20   146,678...........    150.00
115,780........................    150.00   239,683...........    200.00
206,224........................    200.00
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           Constant Multiplier Chart for 12-Year Amortization
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                                                                Annual
                  Interest rate  (percent)                     constant
                                                              multiplier
------------------------------------------------------------------------
7.00.......................................................    0.1234057
7.25.......................................................    0.1250107
7.46.......................................................    0.1263678
7.50.......................................................    0.1266272
7.75.......................................................    0.1282550
8.00.......................................................    0.1298943
8.25.......................................................    0.1315449
8.38.......................................................    0.1324076
8.50.......................................................    0.1332067
8.75.......................................................    0.1348796
9.00.......................................................    0.1365637
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[FR Doc. 00-13101 Filed 5-24-00; 8:45 am]
BILLING CODE 4000-01-P