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# The new interest rates for the Direct Loan Program for the period July 1, 1996, through June 30, 1997

PublicationDate: 6/20/96
Summary: The new interest rates for the Direct Loan Program for the period
July 1, 1996, through June 30, 1997
Author: DLTF - Direct Loan Task Force

June 20, 1996

NOTICE: INTEREST RATES FOR DIRECT LOAN PROGRAM LOANS
FOR THE PERIOD JULY 1, 1996, THROUGH JUNE 30, 1997

The new interest rates for the Direct Loan Program for the period
July 1, 1996, through June 30, 1997, have been determined
according to the formulas given in the Final Regulation dated
December 1, 1994, and are outlined below.

New interest rates for Direct Loan Program loans

For all Student Loans first disbursed before July 1, 1995, the
interest rate for all periods will be 8.25 percent.

For all Student Loans first disbursed on or after July 1, 1995,
the interest rate for in-school, grace, and deferment periods
will be 7.66 percent. The rate for all other periods will be
8.25 percent.

For all Parent Loans, the interest rate for all periods will be
8.72 percent.

Basis for calculation of new rates for Direct Loan Program loans

Student Loans

The basis for the interest rate on student loans is the bond
equivalent rate of 91-day Treasury bills sold at the final
auction before June 1, 1996. The rate for 91-day bills auctioned
on May 28, 1996, was 5.16 percent.

For student loans first disbursed before July 1, 1995, the
formula for calculating the interest rate for all periods is the
Treasury-bill rate plus 3.1 percent, capped at 8.25 percent (
5.16% + 3.1% = 8.26%, capped at 8.25%).

For student loans first disbursed on or after July 1, 1995,

the formula for calculating the interest rate for in-school,
grace, and deferment periods is the Treasury-bill rate plus 2.5
percent, capped at 8.25 percent (5.16% + 2.5% = 7.66%), and

the formula for calculating the interest rate for all other
periods is the Treasury-bill rate plus 3.1 percent, capped at
8.25 percent (5.16% + 3.1% = 8.26%, capped at 8.25%).

Parent Loans

The basis for the interest rate on parent loans is the bond
equivalent rate of 52-week Treasury bills sold at the final
auction prior to June 1, 1996. The rate for 52-week bills
auctioned on May 23, 1996, was 5.62 percent.

The formula for calculating the interest rate for parent loans is
the Treasury-bill rate plus 3.1 percent, capped at 9 percent
(5.62% + 3.1% = 8.72%).

Last Modified: 08/16/1999