Maintained for Historical Purposes

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

For the Period: July 01, 1998 to June 30, 1999

PeriodBegin: 7/1/98
PeriodEnd: 6/30/99


June 10, 1998


TO : FFEL Program Section Staff
Regional Office Staff

FROM : Chief, FFEL Program Section
Division of Policy Development
Policy, Training, and Analysis Service

SUBJECT: Federal Stafford, Federal PLUS, Federal SLS, and Federal Consolidation Variable Interest Rate Calculations for the Period July 1, 1998 - June 30, 1999

Attached are the variable interest rates applicable to the Federal Stafford, Federal SLS, Federal PLUS, and Federal Consolidation programs for the period July 1, 1998 - June 30, 1999.



Patricia Newcombe

Attachment - Variable Interest Rates (July 1, 1998 - June 30, 1999)
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I. Federal Stafford Variable Interest Rates

The final auction of 91-day Treasury Bills held prior to June 1 occurred on May 26, 1998. The bond equivalent rate was 5.155 percent which rounds to 5.16 percent.

A. “Converted" Variable-rate Federal Stafford loans.

1. 8/10% loans that were subject to the “windfall profits” provisions of §427A(I)(1) of the Higher Education Act of 1965, as amended (the Act) and that have been converted to a variable interest rate (the variable interest rate for these loans is capped at 10%):

Pursuant to §427A(I)(7)(A) of the Act, 5.16 percent plus 3.25 percent equals
8.41 percent for the period July 1, 1998 - June 30, 1999.

2. 7%, 8%, 9% and 8/10% loans that were subject to the “windfall profits” provisions of §427A(I)(3) of the Act and that have been converted to a variable interest rate:

Pursuant to §427A(I)(7)(A) of the Act, 5.16 percent plus 3.1 percent equals 8.26 percent. Because the variable interest rate for these loans is capped at the original fixed interest rate of 7%, 8%, 9%, or 10% (converted 8/10% loans which have reached the 49th month of the repayment period), the following rates apply for the period July 1, 1998 - June 30, 1999 -

Original Interest Rate Variable Interest Rate

7 percent
7 percent
8 percent
8 percent
9 percent
8.26 percent
10 percent
8.26 percent


I. Federal Stafford Variable Interest Rates (continued)

B. Regular Variable-rate Federal Stafford loans:

1. Federal Stafford loans made to “new” borrowers for which the first disbursement was made (a) on/after 10/1/92 but prior to 7/1/94 or (b) on/after 7/1/94 for a period of enrollment ending prior to 7/1/94 (i.e., a late disbursement) [the variable interest rate for these loans is capped at 9%]:

Pursuant to §427A(e)(1) of the Act, 5.16 percent plus 3.1 percent equals
8.26 percent for the period July 1, 1998 - June 30, 1999.

2. Federal Stafford loans made to all borrowers, regardless of prior borrowing, for periods of enrollment that include or begin on/after 7/1/94 for which the first disbursement is made on/after 7/1/94 but prior to 7/1/95:

Pursuant to §427A(e)(1) of the Act, 5.16 percent plus 3.1 percent equals 8.26 percent. Because the variable interest rate for these loans is capped at 8.25 percent, the variable interest rate is
8.25 percent for the period July 1, 1998 - June 30, 1999.

3. Federal Stafford loans made to all borrowers, regardless of prior borrowing, on/after 7/1/95 but prior to 7/1/98 (the variable interest for these loans is capped at 8.25%) -

(a) during the in-school, grace, and deferment periods:


Pursuant to §427A(g)(2) of the Act, 5.16 percent plus 2.5 percent equals
7.66 percent for the period July 1, 1998 - June 30, 1999.

(b) during the repayment period (except deferment periods):

Pursuant to §427A(f)(1) of the Act, 5.16 percent plus 3.1 percent equals 8.26 percent. Because the variable interest rate for these loans is capped at 8.25 percent, the variable interest rate is
8.25 percent for the period July 1, 1998 - June 30, 1999.


I. Federal Stafford Variable Interest Rates (continued)

4. Federal Stafford loans made to all borrowers, regardless of prior borrowing, on/after 7/1/98 and before 10/1/98 (variable interest rate for these loans is capped at 8.25 %) -

(a) during the in-school, grace and deferment periods:


Pursuant to section 427A(j) (2) of the Act, 5.16 percent plus 1.7 percent equals
6.86 percentfor the period July 1, 1998 - June 30, 1999.

(b) during the repayment period (except deferment periods)

Pursuant to section 427A(j)(1) of the Act, 5.16 percent plus 2.3 percent equals
7.46 percent for the period July 1, 1998 - June 30, 1999.

Note: The interest rate formula for Federal Stafford loans made on or after 7/1/98 and before 10/1/98 is provided in §7501 (Temporary Student Loan Provision) of the Transportation Equity Act for the 21st Century which amends §427A of the Higher Education Act of 1965, as amended. The formula remains in effect for the life of the loan, and the variable interest rate is calculated annually. The interest rate formula for Federal Stafford loans made on or after 10/1/98 is provided under current law in section 427A(h)(1) of the Act. Barring additional Congressional action, this interest rate formula will go into effect on 10/1/98.


II. Federal PLUS and Federal SLS Variable Interest Rates

The final auction of 52-week Treasury Bills held prior to June 1 occurred on May 28, 1998. The bond equivalent rate was 5.434 percent which rounds to 5.43 percent.

A. Variable-rate Federal PLUS and Federal SLS loans made prior to October 1, 1992 (the variable interest rate for these loans is capped at 12%):

Pursuant to §427A(c)(4)(B) of the Act, 5.43 percent plus 3.25 percent equals
8.68 percent, for the period July 1, 1998 - June 30, 1999.

Note: Because the variable interest rate formula (§427A(c)(4)(B) of the Act) produces a figure that is less than 12 percent, variable-rate PLUS/SLS loans will not be subject to special allowance payments during the four quarters ending 9/30/98, 12/31/98, 3/31/99 and 6/30/99. See §438(b)(2)(C)(I) of the Act.

B. Federal PLUS loans made on/after October 1, 1992 but prior to July 1, 1994 (the variable interest rate for these loans is capped at 10%); (ii) Federal PLUS loans made on/after July 1, 1994 but prior to July 1, 1998 (the variable interest rate for these loans is capped at 9%); and (iii) Federal SLS loans made on/after October 1, 1992 for a period of enrollment beginning prior to July 1, 1994 (the variable interest rate for these loans is capped at 11%):

Pursuant to §427A(c)(4)(D) and (E) of the Act, 5.43 percent plus 3.1 percent equals
8.53 percent, for the period July 1, 1998 - June 30, 1999.

Note: Because the variable interest rate formula (§427A(c)(4)(D) of the Act) produces a figure that is less than 10 percent (Federal PLUS) and 11 percent (Federal SLS), variable-rate PLUS loans made on/after 10/1/92 but prior to 7/1/94 and all SLS loans made on/after 10/1/92 will not be subject to special allowance payments during the four quarters ending 9/30/98, 12/31/98, 3/31/99 and 6/30/99. See §438(b)(2)(C)(ii) of the Act.


C. Federal PLUS loans made on/after July 1, 1998, but prior to October 1, 1998 (the variable interest rate for these loans is based on the 91-day Treasury Bills, and is capped at 9.0 %):

Pursuant to §427A(j)(3) of the Act, 5.16 percent plus 3.1 percent equals
8.26 percent, for the period July 1, 1998 - June 30, 1999.

Note: Because the variable interest rate formula (§ 427A(j)(3) of the Act) produces a figure that is less than 9 percent, variable-rate PLUS loans made on or after 7/1/98 but before 10/1/98 will not be subject to special allowance payments during the four quarters ending 9/30/98, 12/31/98, 3/31/99 and 6/30/99. See § 438(b)(2)(G)(v) of the Act.

Note: The interest rate formula for Federal PLUS loans made on or after 7/1/98 and before 10/1/98 is provided in §7501 (Temporary Student Loan Provision) of the Transportation Equity Act for the 21st Century, which amends §427A of the Higher Education Act of 1965, as amended. The formula remains in effect for the life of the loan, and the variable interest rate is calculated annually The interest rate formula for Federal PLUS loans made on or after 10/1/98 is provided under current law in §427A(h)(2) of the Act. Barring additional Congressional action, this interest rate formula will go into effect on 10/1/98.


III. Federal Consolidation Loan Interest Rates

A.
Federal Consolidation loans made on or after November 13, 1997, but before October 1, 1998 (the variable rate for these loans is based on the 91-day Treasury Bills and is capped at 8.25%):

Pursuant to section 428C(c)(1)(D) of the Act, 5.16 plus 3.1 percent equals 8.26 percent. Because the variable interest rate for these loans is capped at 8.25 percent, the variable interest rate is
8.25percent for the period July 1, 1998 - June 30, 1999.

Note: The interest rate formula for Federal Consolidation loans made on or after 11/13/97 and before 10/1/98 is provided in §609 (Emergency Student Loan Consolidation) of the Department of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act of 1998, which amends §427A of the Higher Education Act of 1965, as amended. The formula remains in effect for the life of the loan, and the variable interest rate is calculated annually The interest rate formula for Federal Consolidation loans made on or after 10/1/98 is provided under current law in §428C(c)(1)(C) of the Act. Barring additional Congressional action, this interest rate formula will go into effect on 10/1/98.

Last Modified: 06/09/1998