Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Notice of the annual updates to the income contingent repayment (ICR)n plan formula.

FR part
IV

Publication Date: June 29, 2001
FRPart: IV

RegPartsAffected:

682.100
682.101
682.202
682.204
682.206
682.302
682.401
682.402
682.405
682.410

Page Numbers: 34767-34772

Summary: Notice of the annual updates to the income contingent repayment (ICR) plan formula.

[Federal Register: June 29, 2001 (Volume 66, Number 126)]
[Notices]               
[Page 34767-34772]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jn01-155]                         


[[Page 34767]]

-----------------------------------------------------------------------

Part IV



Department of Education



-----------------------------------------------------------------------


William D. Ford Federal Direct Loan Program; Notice


[[Page 34768]]


-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

SUMMARY: The Secretary announces the annual updates to the ICR plan 
formula for 2001. Under the William D. Ford Federal Direct Loan (Direct 
Loan) Program, borrowers may choose to repay 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 required updates 
based on inflation, 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. These 
updates are effective from July 1, 2001 to June 30, 2002.

FOR FURTHER INFORMATION CONTACT: Don Watson, U.S. Department of 
Education, room 3045, ROB-3, 400 Maryland Avenue, SW., Washington, DC 
20202-5400. Telephone: (202) 708-8242. 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 four sources of information: 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 2000 to December 2001. 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: 
http://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
. (Catalog of Federal Domestic Assistance Number 84.268 William D. Ford Federal Direct Loan Program) Program Authority: 20 U.S.C. 1087 et seq. Dated: June 27, 2001. Greg Woods, Chief Operating Officer. 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 $31,455. 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 16, 2001 (66 FR 10695), from your income and multiply the result by 20 percent: $31,455-$8,590 = $22,865 $22,865 x 0.20 = $4,573 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 $59,440 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 2, as published in the Federal Register on February 16, 2001 (66 FR 10695), from your aggregate income and multiply the result by 20 percent: $59,440 - $11,610 = $47,830 $47,830 x 0.20 = $9,566 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 [[Page 34769]] 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''): $25,042 - $21,046 = $3,996 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 - $21,046 = $3,954 Step 5: Divide the result of Step 4 by the income interval determined in Step 2: $3,954 $3,996 = 0.98949 Step 6: Multiply the result of Step 5 by the income percentage factor interval: 8.44% x 0.98949% = 8.35% 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: 8.35% + 71.89% = 80.24% (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 [[Page 34770]] [GRAPHIC] [TIFF OMITTED] TN29JN01.029 [[Page 34771]] [GRAPHIC] [TIFF OMITTED] TN29JN01.030 [[Page 34772]] [GRAPHIC] [TIFF OMITTED] TN29JN01.031 [FR Doc. 01-16573 Filed 6-28-01; 8:45 am] BILLING CODE 4000-01-C

 

Last Modified: 07/11/2001