Bulletin ID
DLB - 96 - 12
| PublicationDate: 8/1/96 BulletinID: DLB - 96 - 12 August 1996 DLB-96-12 SUBJECT: INTEREST RATES FOR DIRECT LOAN PROGRAM LOANS FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1997. Dear Colleague: The variable interest rate for Direct Loan Program loans changed on July 1, 1996. Attached is a copy of the notice of the new interest rates for the period July 1, 1996 through June 30, 1997 that was published in the Federal Register on July 8, 1996 (61 FR 35728-35729). STUDENT LOANS - THE INTEREST RATE FOR DIRECT LOAN PROGRAM STUDENT LOANS FIRST DISBURSED ON OR AFTER JULY 1, 1995 THAT ARE IN AN IN-SCHOOL GRACE, OR DEFERMENT PERIOD IS 7.66 PERCENT. - THE INTEREST RATE FOR DIRECT LOAN PROGRAM STUDENT LOANS FIRST DISBURSED BEFORE JULY 1, 1995 (IN ANY PERIOD) AND FOR LOANS FIRST DISBURSED ON OR AFTER JULY 1, 1995 THAT ARE NOT IN AN IN-SCHOOL, GRACE OR DEFERMENT PERIOD IS 8.25 PERCENT. The interest rate for all Direct Subsidized, Direct Unsubsidized, Direct Subsidized Consolidation, and Direct Unsubsidized Consolidation Loans is based on the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to June 1, not to exceed 8.25percent. The rate for 91-day Treasury bills auctioned on May 28, 1996 was 5.16 percent. For student loans first disbursed on or after July 1, 1995 that are in an in-school, grace, or deferment period, the interest rate equals the bond equivalent rate plus 2.5 percentage points (5.16% + 2.5% = 7.66%). For student loans first disbursed before July 1, 1995 (in any period) and for loans first disbursed on or after July 1, 1995 that are not in an in-school, grace or deferment 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%). PARENT LOANS - THE INTEREST RATE FOR ALL DIRECT LOAN PROGRAM PARENT LOANS IS 8.72 PERCENT. The interest rate for all Direct PLUS and Direct PLUS Consolidation Loans equals the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to June 1 plus 3.1 percentage points, not to exceed percent. The rate for 52-week Treasury bills auctioned on May 23, May 23, 1996 was 5.62 percent (5.62% + 3.1% = 8.72%). The formulas for calculating the interest rates are given in [Section] 685.202(a) and [Section] 685.215(g) of the final regulations published in the Federal Register on December 1, 1994 (59 FR 61693 and 61704, respectively). If you have any questions, please call the Direct Loan Task Force at (202) 708-9951. Sincerely, Diane Voigt, Chair Direct LoanTask Force Attachment |