[Federal Register Volume 67, Number 129 (Friday, July 5, 2002)]
[Notices]
[Pages 44817-44822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16879]


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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 for 2002.

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SUMMARY: The Secretary announces the annual updates to the ICR plan 
formula for 2002. Under the William D. Ford Federal Direct Loan (Direct 
Loan) Program, borrowers may choose to repay

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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, we adjust the formula for calculating a borrower's 
payment to reflect changes due to inflation. This notice contains the 
constant multiplier chart and the required updates based on inflation 
for examples of how the calculation of the monthly ICR amount is 
performed, the income percentage factors, and charts showing sample 
repayment amounts. These updates are effective from July 1, 2002 to 
June 30, 2003.

FOR FURTHER INFORMATION CONTACT: Don Watson, U.S. Department of 
Education, Room 092B1, UCP, 400 Maryland Avenue, SW., Washington, DC 
20202-5400. Telephone: (202) 377-4008. 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 
alternative 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 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 2001 to December 2002. 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 site: 
www.ed.gov/legislation/FedRegister.
    To use PDF, you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using 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.


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

    Dated: July 1, 2002.
Candace M. Kane,
Acting Chief Operating Officer, Federal Student Aid.

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 $32,345.
    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 at the end of this notice 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 factors table that corresponds 
to your income and then divide the result by 100. (If your income is 
not listed in the income percentage factors table, calculate the 
applicable income percentage factor by following the instructions 
under the ``Interpolation'' heading later in this notice.):
     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 14, 
2002 (67 FR 6931), from your income and multiply the result by 20 
percent:
     $32,345 - $8,860 = $23,485
     $23,485 x 0.20 = $4,697
    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 $61,121 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 at the end of this 
notice 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 of Step 2 by the income percentage 
factor shown in the income percentage factors table that corresponds 
to your and your spouse's income and then divide the result by 100. 
(If your and your spouse's aggregate income is not listed in the 
income percentage factors table, calculate the applicable income 
percentage factor by following the instructions under the 
``Interpolation'' heading later in this notice.):
     109.40 x $3,288.62/ 100 = $3,597.75
    Step 4: Determine 20 percent of your discretionary income. To do 
this, subtract the poverty level for a family of two, as published 
in the Federal Register on February 14, 2002 (67 FR 6931), from your 
aggregate income and multiply the result by 20 percent:
     $61,121-$11,940 = $49,181
     $49,181 x 0.20 = $9,836.20
    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 factors 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''):

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     $25,751 - $21,641 = $4,110
    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''):
     80.33% - 71.89% = 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 - $21,641 = $3,359
    Step 5: Divide the result of Step 4 by the income interval 
determined in Step 2:
     $3,359 / $4,110 = 0.81727
    Step 6: Multiply the result of Step 5 by the income percentage 
factor interval:
     8.44% x 0.81727 = 6.89776%
    Step 7: Add the result of Step 6 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:
     6.89776% + 71.89% = 78.79% (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.
BILLING CODE 4000-01-P
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[FR Doc. 02-16879 Filed 7-3-02; 8:45 am]
BILLING CODE 4000-01-C