Bulletin ID
DLB - 95 - 6
| PublicationDate: 3/1/95 BulletinID: DLB - 95 - 6 DLB-6 MARCH 1995 WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM Dear Year One Direct Loan School: If you are a school that plans to disburse loans based on the 1994-95 need analysis calculated on or after July 1, 1995, the information in this letter affects you! It has come to our attention that some schools will disburse loans based on the 1994-95 need analysis calculation on or after July 1, 1995. These schools include the summer session(s) as a "trailer" to their academic year. In these cases, the loans must be originated using the Year One software, which reflects the 1994-95 need analysis calculation and prints the borrowerÂ’s information on the 1994-95 promissory note. The 1994-95 promissory notes do not reflect changes in the conditions for loans disbursed on or after July 1, 1995. Therefore, a borrower receiving one of these loans must read and sign an addendum to his promissory note that explains the new benefits. The following paragraphs explain the two changes: Effective July 1, 1995, the interest rate for Federal Direct Stafford/Ford Loans (subsidized and unsubsidized) is lower during any in-school, grace, or deferment period. Prior to July 1, 1995, the interest rate for these loans during any 12-month period beginning July 1 and ending June 30 is equal to the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to the preceding June 1 plus 3.1 percentage points, up to a limit of 8.23 percent. As of July 1, 1995, the 3.1 percentage point adjustment is reduced to 2.5 percentage points during in-school, grace, and deferment periods. Effective July 1, 1995, a late charge may be assessed if the borrower fails to pay all or a portion of a required installment payment within 30 days after it is due. Prior to July 1, 1995, the Department may assess a late charge if the borrower fails to pay all or a portion of a required installment payment within 10 days after it is due. However, under the regulations effective July 1, 1995, the Department may assess a late charge if the borrower fails to pay all or a portion of a required installment payment within 30 days after it is due. Please note, that despite the authority in the regulations, the Department does not currently assess late charges and does not intend to assess late charges during the 1995-96 academic year. There is one addendum for Federal Direct Stafford/Ford Loans (subsidized and unsubsidized) and one for Federal Direct PLUS Loans. If you will need to use either of these addenda, you may reproduce the attached copies. Once the addendum is complete with the borrowerÂ’s name, the date, and the loan identification number, it must be attached to the promissory note before it is sent to the Direct Loan Servicing Center. (Please note that approval of the use of the 1994-95 promissory notes beyond June 30, 1995 for these loans.) If you have any questions regarding the use of these addenda, please call School Relations at 1-800-848-0978. Sincerely, Diane Sedicum, Chair Direct Loan Task Force DLB-6 |