Publication Date: June 25, 2001
Author: Program Development/AS
Summary: Interest rates for Consolidation Loans to be disbursed on or after July 1, 2001 where lender certification was received prior to July 1, 2001
Posted on June 25, 2001
To: FFEL and Financial Aid Community
From: Student Financial Assistance
RE: Interest rates for Consolidation Loans to be disbursed on or after July 1, 2001 where lender certification was received prior to July 1, 2001
To provide borrowers with the advantage of the upcoming reduction in the variable interest rate that applies to most loans that can be consolidated, we are issuing the following guidance.
This guidance applies to the calculation of the weighted average interest rate for a consolidation loan when the interest rates on loans being consolidated are certified by a holder prior to July 1, 2001 and the Consolidation Loan will be disbursed on or after July 1, 2001. FFEL lenders may, when determining the weighted average interest rate for such loans, calculate that rate by using the interest rates that become effective on July 1 for the loans being consolidated, regardless of when the interest rate verification certificate was received.
If a borrower specifically requests that his or her loan be disbursed prior to July 1 the lender should, if possible, honor the borrower’s request. In such cases, lenders must determine the weighted average interest rate using the interest rates certified by the holders.
This guidance is consistent with the way the Department will treat consolidation loans under the Direct Loan Program.