Bulletin ID
DLB - 97 - 22
| PublicationDate: 7/1/97 BulletinID: DLB - 97 - 22 DLB-97-22 July 1997 SUBJECT: Interest Rates for Direct Loan Program Loans for the Period July 1, 1997 through June 30, 1998 Dear Colleague: The variable interest rate for Direct Loan Program loans was adjusted on July 1, 1997. The tables below show the interest rates for student and parent loans for the period July 1, 1997 through June 30, 1998, and the changes (if any) from the previous interest rates. The tables are followed by an explanation of how the interest rates were determined. Attached to this letter is a copy of the Direct Loan Program interest rate notice that was published in the Federal Register on June 30, 1997 (62 FR 35164-35165). STUDENT LOAN INTEREST RATES Direct Subsidized Loans, Direct Unsubsidized Loans, Direct Subsidized Consolidation Loans, Direct Unsubsidized Consolidation Loans Current interest rate (July 1, 1997 through June 30, 1998): Loans first disbursed ON OR AFTER JULY 1, 1995 that are currently IN AN IN-SCHOOL, GRACE, OR DEFERMENT PERIOD 7.66% Change from the previous interest rate (July 1, 1996 through June 30, 1997): no change Current interest rate (July 1, 1997 through June 30, 1998): Loans first disbursed ON OR AFTER JULY 1, 1995 that are currently NOT IN AN IN-SCHOOL, GRACE OR DEFERMENT PERIOD 8.25% Change from the previous interest rate (July 1, 1996 through June 30, 1997): no change Current interest rate (July 1, 1997 through June 30, 1998): Loans first disb5rsed BEFORE JULY 1, 1995 that are currently IN ANY PERIOD 8.25% Change from the previous interest rate (July 1, 1996 through June 30, 1997): no change PARENT LOAN INTEREST RATE Direct PLUS Loans, Direct PLUS Consolidation Loans Current interest rate (July 1, 1997 through June 30, 1998): All loans, in any period 8.98% Change from the previous interest rate (July 1, 1996 through June 30, 1997): All loans, in any period + 0.26% BASIS FOR DETERMINING INTEREST RATES The basis for determining the interest rate differs for stude.t and parent loans; in addition, different interest rate formulas are used for student loans depending on when a loan was first disbursed, and whether or not the loan is in an in-school, grace, or deferment period. For all STUDENT LOANS, the interest rate is based on the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to June 1 of each year; the interest rate may not exceed 8.25 percent. The bond equivalent rate for 91-day Treasury bills auctioned on May 27, 1997 was 5.16 percent. For student loans first disbursed ON OR AFTER JULY 1, 1995 that are currently IN AN IN-SCHOOL, GRACE, OR DEFERMENT PERIOD, the interest rate equal3 the bond equivalent rate plus 2.5 percentage points (5.16% + 2.5% = 7.66%). For student loans first disbursed ON OR AFTER JULY 1, 1995 that are currently NOT IN AN IN-SCHOOL, GRACE OR DEFERMENT PERIOD, and for all loans disbursed BEFORE JULY 1, 1995 that are currently IN ANY PERIOD, the interest rate equals the bond equivalent rate plus 3.1 percentage points. For these loans, the calculated interest rate would have exceeded 8.25 percent and was capped at the maximum (5.16% + 3.1% = 8.26%, capped at 8.25%). For all PARENT LOANS, the interest rate equals the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to June 1 of each year, plus 3.1 percentage points; the interest rate may not exceed 9 percent. The bond equivalent rate for 52-week Treasury bills auctioned on May 22, 1997 was 5.88 percent (5.88% + 3.1% = 8.98%). The formulas given above for calculating the interest rates may be found in the Direct Loan Program regulations under 34 C.F.R. 685.202(a) and 685.215(g). If you have any questions, please call the Customer Support Branch for Student Financial Assistance Programs at 1-800-4ED-SFAP (1-800-433-7327) from 9 am to 5 pm, Eastern Time, Monday through Friday. You may also fax your questions to the Customer Support Branch at 202-260-4199, or send them via electronic mail to: csb@sfa.ope.ed.gov Please be sure to include your name, the name of your institution, and your phone number. Sincerely, Joe L. McCormick, Chair Direct Loan Task Force Enclosure: [[The Direct Loan Program interest rate notice that was published in the Federal Register on June 30, 1997 (62 FR 35164-35165) is currently unavailable for viewing. Please reference your paper copy for additional information.]] Enclosure |