| 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%). |