[Federal Register Volume 85, Number 10 (Wednesday, January 15, 2020)]
[Notices]
[Pages 2413-2414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00572]


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DEPARTMENT OF EDUCATION


Annual Notice of Interest Rates for Variable-Rate Federal Student 
Loans Made Under the William D. Ford Federal Direct Loan Program

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice.

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SUMMARY: The Chief Operating Officer for Federal Student Aid announces 
the interest rates for Federal Direct Stafford/Ford Loans (Direct 
Subsidized Loans), Federal Direct Unsubsidized Stafford/Ford Loans 
(Direct Unsubsidized Loans), and Federal Direct PLUS Loans (Direct PLUS 
Loan) with first disbursement dates before July 1, 2006, and for 
Federal Direct Consolidation Loans (Direct Consolidation Loans) for 
which the application was received before February 1, 1999. The rates 
announced in this notice are in effect for the period July 1, 2019, 
through June 30, 2020. Catalog of Federal Domestic Assistance (CFDA) 
Number: 84.268.

FOR FURTHER INFORMATION CONTACT: Jon Utz, U.S. Department of Education, 
830 First Street NE, 11th Floor, Washington, DC 20202. Telephone: (202) 
377-4040 or by email: [email protected].
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION: Direct Subsidized Loans, Direct Unsubsidized 
Loans, Direct PLUS Loans, and Direct Consolidation Loans (collectively 
referred to as ``Direct Loans'') may have either fixed or variable 
interest rates, depending on when the loan was first disbursed or, in 
the case of a Direct Consolidation Loan, when the application for the 
loan was received. Direct Subsidized Loans, Direct Unsubsidized Loans, 
and Direct PLUS Loans first disbursed before July 1, 2006, and Direct 
Consolidation Loans for which the application was received before 
February 1, 1999, have variable interest rates. For these loans, a new 
rate is determined annually and is in effect during the period from 
July 1 of one year through June 30 of the following year.
    Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS 
Loans first disbursed on or after July 1, 2006, and Direct 
Consolidation Loans for which the application was received on or after 
February 1, 1999, have fixed interest rates that apply for the life of 
the loan.
    This notice announces the interest rates for variable-rate Direct 
Loans that will apply during the period from July 1, 2019, through June 
30, 2020. Interest rate information for fixed-rate Direct Loans is 
announced in a separate notice published in the Federal Register.
    Interest rates for variable-rate Direct Loans are determined in 
accordance with formulas specified in section 455(b) of the Higher 
Education Act of 1965, as amended (HEA) (20 U.S.C. 1087e(b)). The 
formulas vary depending on loan type and when the loan was first 
disbursed or, for certain Direct Consolidation Loans, when the 
application for the loan was received. The HEA specifies a maximum 
interest rate for these loan types. If the interest rate formula 
results in a rate that exceeds the statutory maximum rate, the rate is 
the statutory maximum rate.

Variable-Rate Direct Subsidized Loans, Direct Unsubsidized Loans, and 
Direct PLUS Loans

    For Direct Subsidized Loans and Direct Unsubsidized Loans with 
first disbursement dates before July 1, 2006, and for Direct PLUS Loans 
with first disbursement dates on or after July 1, 1998, and before July 
1, 2006, the interest rate is equal to the lesser of--
    (1) The bond equivalent rate of 91-day Treasury bills auctioned at 
the final auction held before the June 1 immediately preceding the 12-
month period to which the interest rate applies, plus a statutory add-
on percentage; or
    (2) 8.25 percent (for Direct Subsidized Loans and Direct 
Unsubsidized Loans) or 9.00 percent (for Direct PLUS Loans).
    For Direct Subsidized Loans and Direct Unsubsidized Loans with 
first disbursement dates on or after July 1, 1995, and before July 1, 
2006, the statutory add-on percentage varies depending on whether the 
loan is in an in-school, grace, or deferment status, or in any other 
status. For all other loans, the statutory add-on percentage is the 
same during any status.
    The bond equivalent rate of 91-day Treasury bills auctioned on May 
28, 2019, is 2.362 percent, rounded to 2.36 percent.
    For Direct PLUS Loans with first disbursement dates before July 1, 
1998, the interest rate is equal to the lesser of--
    (1) The weekly average 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 the June 26 preceding the 
12-month period to which the interest rate applies, plus a statutory 
add-on percentage; or
    (2) 9.00 percent.
    The weekly average of the one-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, 2019, 
is 1.98 percent.

Variable-Rate Direct Consolidation Loans

    A Direct Consolidation Loan may have up to three components, 
depending on the types of loans that were repaid by the consolidation 
loan and when the application for the consolidation loan was received. 
The three components are called Direct Subsidized Consolidation Loans, 
Direct Unsubsidized Consolidation Loans, and (only for Direct 
Consolidation Loans made based on applications received before July 1, 
2006) Direct PLUS

[[Page 2414]]

Consolidation Loans. In most cases the interest rates for variable-rate 
Direct Subsidized Consolidation Loans, Direct Unsubsidized 
Consolidation Loans, and Direct PLUS Consolidation Loans are determined 
in accordance with the same formulas that apply to Direct Subsidized 
Loans, Direct Unsubsidized Loans, and Direct PLUS Loans, respectively.

Interest Rate Charts

    Charts 1 and 2 show the interest rate formulas used to determine 
the interest rates for all variable-rate Direct Loans and the rates 
that are in effect during the 12-month period from July 1, 2019, 
through June 30, 2020.
    Chart 1 shows the interest rates for loans with rates based on the 
91-day Treasury bill rate. Chart 2 shows the interest rates for loans 
with rates based on the weekly average of the one-year constant 
maturity Treasury yield.

Chart 1--Direct Subsidized Loans, Direct Unsubsidized Loans, Direct Subsidized Consolidation Loans, Direct Unsubsidized Consolidation Loans, Direct PLUS
                                                       Loans, and Direct PLUS Consolidation Loans
                                                     [Interest rates based on 91-day Treasury bill]
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Loan type                                 Cohort....................   91-Day T-bill           Add-on             Maximum rate   Interest rate 07/01/19
                                                                       rate 05/28/19             (%)                       (%)      through 06/30/20
                                                                                 (%)                                                       (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subsidized, Unsubsidized................  First disbursed on/after              2.36       * 1.70     [dagger]            8.25       * 4.06     [dagger]
                                           07/01/98 and before 07/01/                                     2.30                                      4.66
                                           06.
Subsidized Consolidation, Unsubsidized    First disbursed on/after
 Consolidation.                            07/01/98 and before 10/01/
                                           98; or Application
                                           received before 10/01/98
                                           and first disbursed on/
                                           after 10/01/98.
                                                                     -----------------------------------------------------------------------------------
PLUS....................................  First disbursed on/after              2.36            3.10                      9.00            5.46
                                           07/01/98 and before 07/01/
                                           06.
                                                                     -----------------------------------------------------------------------------------
PLUS Consolidation......................  First disbursed on/after    ..............  ...........  ...........  ..............  ...........  ...........
                                           07/01/1998 and before 10/
                                           01/1998; or Application
                                           received before 10/01/98
                                           and first disbursed on/
                                           after 10/01/98.
                                                                     -----------------------------------------------------------------------------------
Subsidized, Unsubsidized, Subsidized      First disbursed on/after              2.36       * 2.50     [dagger]            8.25       * 4.86     [dagger]
 Consolidation, Unsubsidized               07/01/95 and before 07/01/                                     3.10                                      5.46
 Consolidation.                            98.
                                                                     -----------------------------------------------------------------------------------
Subsidized, Unsubsidized, Subsidized      First disbursed before 07/            2.36            3.10                      8.25            5.46
 Consolidation, Unsubsidized               01/95.
 Consolidation.
                                                                     -----------------------------------------------------------------------------------
Subsidized Consolidation, Unsubsidized    Application received on/              2.36            2.30                      8.25            4.66
 Consolidation, PLUS Consolidation.        after 10/01/98 and before
                                           02/01/99.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                             Chart 2--Direct PLUS Loans and Direct PLUS Consolidation Loans
                                  [Interest rates based on weekly average of one-year constant maturity Treasury yield]
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                                                                                    Weekly average of
                                                                                     1-year constant
                                                                                    maturity treasury
                                                                                      yield for last                    Maximum rate   Interest rate 07/
                   Loan type                                   Cohort                 calendar week      Add-on (%)          (%)       01/19 through 06/
                                                                                       ending on or                                        30/20 (%)
                                                                                     before 06/26/19
                                                                                           (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PLUS, PLUS Consolidation.......................  First disbursed before 07/01/98..               1.98            3.10            9.00               5.08
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., Braille, large print, 
audiotape, or compact disc) on request to the contact person listed 
under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Portable Document Format (PDF). To 
use PDF you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
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by the Department.

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

    Dated: January 9, 2020.
Mark A. Brown,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2020-00572 Filed 1-14-20; 8:45 am]
 BILLING CODE 4000-01-P