Bulletin ID
DLB - 99 - 41
SFA Information for Financial Aid Professionals
U.S. Department of Education
| PublicationDate: 6/1/99 BulletinID: DLB - 99 - 41 June 1999 DLB 99-41 SUBJECT: Interest rates for Direct Loan Program Loans for the Period July 1, 1999 through June 30, 2000 Dear Partner: The variable interest rates for Direct Loan Program loans will be adjusted on July 1, 1999. The tables below show the interest rates for student, parent, and consolidation loans for the period July 1, 1999 through June 30, 2000. The tables are followed by an explanation of how these interest rates were determined. JULY 1, 1999 THROUGH JUNE 30, 2000
JULY 1, 1999 THROUGH JUNE 30, 2000 Direct PLUS Loans
JULY 1, 1999 THROUGH JUNE 30, 2000 Direct Subsidized Consolidation Loans Direct Unsubsidized Consolidation Loans Direct PLUS Consolidation Loans
For all student loans, the basis for the interest rates is the bond equivalent rate of 91-day Treasury bills sold at the final auction before June 1 of each year; the interest rate may not exceed 8.25%. The bond equivalent rate for 91-day Treasury bills auctioned on May 24, 1999 was 4.62 percent. Student loans first disbursed before July 1, 1995: during all periods the interest rate equals the bond equivalent rate plus 3.1 percentage points (4.62% + 3.1% = 7.72%). Student loans first disbursed on or after July 1, 1995 and before July 1, 1998: during an in-school, grace, or deferment period, the interest rate equals the bond equivalent rate plus 2.5 percentage points (4.62% + 2.5% = 7.12%) during all other periods, the interest rate equals the bond equivalent rate plus 3.1 percentage points (4.62% + 3.1% = 7.72%). Student loans first disbursed on or after July 1, 1998: during an in-school, grace, or deferment period, the interest rate equals the bond equivalent rate plus 1.7 percentage points (4.62% + 1.7% = 6.32%). during all other periods, the interest rate equals the bond equivalent rate plus 2.3 percentage points (4.62% + 2.3% = 6.92%). For parent loans first disbursedbefore July 1, 1998, the basis for the interest rate is the bond equivalent rate of 52-week Treasury bills sold at the final auction prior to June 1 of each year; the interest rate may not exceed 9 percent. The rate for 52-week bills auctioned on May 25, 1999 was 4.88 percent. Parent loans first disbursed before July 1, 1998: the interest rate equals the bond equivalent rate plus 3.1 percentage points (4.88% + 3.1% = 7.98%). For parent loans first disbursedon or after July 1, 1998, the basis for the interest rate is the bond equivalent rate of 91-day Treasury bills sold at the final auction prior to June 1 of each year; the interest rate may not exceed 9 percent. The rate for 91-day bills auctioned on May 24, 1999 was 4.62 percent. Parent loans first disbursed on or after July 1, 1998: the interest rate equals the bond equivalent rate plus 3.1 percentage points (4.62% + 3.1% = 7.72%). For student consolidation loans: first disbursed before July 1, 1998, the interest rate formulas are the same as the formulas for student loans first disbursed during the same period. for which the application was received before October 1, 1998 and the loan was first disbursed on or after July 1, 1998, the interest rate formulas are the same as the formulas for student loans first disbursed on or after July 1, 1998. for which the application was received between October 1, 1998, and January 31, 1999, the interest rate equals the bond equivalent rate (for 91-day Treasury bills) plus 2.3 percentage points (4.62% + 2.3% = 6.92%). for which the application was received on or after February 1, 1999, the interest rate equals the weighted average of the interest rates on the loans being consolidated, rounded to nearest higher one-eighth of one percent, not to exceed 8.25%. For parent consolidation loans: first disbursed before July 1, 1998, the interest rate formulas are the same as the formulas for parent loans made during the same period. for which the application was received before October 1, 1998, and the loan was first disbursed on or after July 1, 1998, the interest rate formulas are the same as the formulas for parent loans first disbursed on or after July 1, 1998. for which the application was received between October 1, 1998, and January 31, 1999, the interest rate equals the bond equivalent rate (for 91-day Treasury bills) plus 2.3 percentage points, not to exceed 8.25% (4.62% + 2.3% = 6.92%). for which the application was received on or after February 1, 1999, the interest rate equals the weighted average of the interest rates on the loans being consolidated, rounded to nearest higher one-eighth of one percent, not to exceed 8.25%. FOR INTEREST RATE FORMULAS The interest rate formulas for all student and parent loans and for consolidation loans for which the application was received on or after October 1, 1998, are defined in Section 455(b) of the Higher Education Act of 1965, as amended (the HEA). Amendments to the HEA were enacted in 1998 under both the Temporary Student Loan Provision (Section 8301 of the Transportation Equity Act for the 21st Century) and the Higher Education Amendments of 1998. The interest rate formulas for student and parent loans first disbursed before July 1, 1998, are codified in current regulations at 34 CFR 685.202(a). The interest rate formulas for consolidation loans for which the application was received before October 1, 1998, are codified in current regulations at 34 CFR 685.215(g). Additional regulations covering loans first disbursed on or after July 1, 1998, are being developed and will be published later this year. 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@ed.gov Please be sure to include your name, the name of your institution, and your phone number. Sincerely, Margaret E. White Acting Chair Direct Loan Task Force |