[Federal Register Volume 63, Number 138 (Monday, July 20, 1998)]
[Rules and Regulations]
[Pages 39010-39013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19158]
[[Page 39009]]
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Part III
Department of Education
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34 CFR Part 685
William D. Ford Federal Direct Loan Program; Final Rule
Federal Register / Vol. 63, No. 138 / Monday, July 20, 1998 / Rules
and Regulations
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DEPARTMENT OF EDUCATION
34 CFR Part 685
William D. Ford Federal Direct Loan Program
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final regulations.
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SUMMARY: These regulations contain revised income percentage factors
for the income contingent repayment plan, a repayment plan available in
the William D. Ford Federal Direct Loan (Direct Loan) Program. The
regulations also contain updated sample income contingent repayment
amounts for single and married or head-of-household borrowers at
various income and debt levels.
EFFECTIVE DATE: These regulations take effect on July 1, 1998.
FOR FURTHER INFORMATION CONTACT: Mr. Donald Watson, Management Analyst,
Direct Loan Policy, Policy Development Division, U.S. Department of
Education, Room 3045, ROB-3, 600 Independence Avenue, SW., Washington,
DC 20202-5400. Telephone number: (202) 708-8242. Individuals who use a
telecommunications device for the deaf (TDD) may call the Federal
Information Relay Service (FIRS) at 1-800-877-8339, between 8 a.m. and
8 p.m., Eastern Time, Monday through Friday.
Individuals with disabilities may obtain this document in an
alternate format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed in the preceding
paragraph.
SUPPLEMENTARY INFORMATION: The Direct Loan income contingent repayment
plan regulations are amended to revise the four sources of information
contained in Appendix A to 34 CFR Part 685, published on July 1, 1997
(62 FR 35602): examples of how the calculation of the monthly ICR
repayment amount is performed, the income percentage factors, the
constant multiplier chart, and charts showing sample repayment amounts.
The income percentage factors have been updated to reflect changes
based on inflation. The revised income percentage factor table was
developed by changing the dollar amounts of the incomes shown by a
percentage equal to the estimated percentage change in the Consumer
Price Index for all Urban Consumers from December 1997 to December
1998. Further, the examples of the calculations of the monthly
repayment amounts and the two charts showing sample repayment amounts
for single and married or head of household borrowers at various income
and debt levels have been amended to reflect the updated income
percentage factors.
The updated income percentage factors, at any given income, may
cause a borrower's payments to be slightly lower than under the income
percentage factors published in the July 1, 1997 regulations. These
updated income percentage factors more accurately reflect a borrower's
current ability to repay than those previously published because the
revised factors are based on more recent economic data.
Waiver of Proposed Rulemaking
In accordance with the Administrative Procedure Act, 5 U.S.C. 553,
it is customary for the Secretary to offer interested parties the
opportunity to comment on proposed regulations. However, the changes in
this document do not establish any new substantive rules, but simply
update the income percentage factors used in the income contingent
repayment plan, as required under 34 CFR 685.209(a)(8), and revise
sample repayment information accordingly. Therefore, the Secretary has
determined that publication of a notice of proposed rulemaking is
unnecessary and contrary to the public interest under 5 U.S.C.
553(b)(B). For the same reasons, the Secretary waives the 30-day
delayed effective date under 5 U.S.C. 553(d).
Paperwork Reduction Act of 1995
These regulations have been examined under the Paperwork Reduction
Act of 1995 and have been found to contain no information collection
requirements.
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have
significant economic impact on a substantial number of small entities.
The regulations will affect borrowers who are in repayment and will not
affect institutions participating in the Direct Loan Program. The
Regulatory Flexibility Act does not include individuals in its
definition of ``small entities.'' Thus, the changes will not have a
significant economic impact on any small entities under the Regulatory
Flexibility Act.
Assessment of Educational Impact
The Secretary has determined that the regulations in this document
would not require transmission of information that is being gathered by
or is available from any other agency or authority of the United
States.
Electronic Access to this Document
Anyone may view this document, as well as all other Department of
Education documents published in the Federal Register, in the text or
portable document format (pdf) on the World Wide Web at either of the
following sites:
http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html
To use the pdf you must have the Adobe Acrobat Reader Program with
Search, which is available free at either of the previous sites. If you
have questions about using the pdf, call the U.S. Government Printing
Office at (202) 512-1530 or, toll free, at 1-888-293-6498.
Anyone may also view these documents in text copy only on an
electronic bulletin board of the Department. Telephone: (202) 219-1511
or, toll free, 1-800-222-4922. The documents are located under Option
G--Files/Announcements, Bulletins and Press Releases.
Note: The official version of this document is the document
published in the Federal Register.
List of Subjects in 34 CFR Part 685
Administrative practice and procedure, Colleges and universities,
Education, Loan programs-education, Reporting and recordkeeping
requirements, Student aid, Vocational education.
Dated: July 13, 1998.
Richard W. Riley,
Secretary of Education.
(Catalog of Federal Domestic Assistance Number 84.268 William D.
Ford Federal Direct Loan Program)
The Secretary amends Part 685 of title 34 of the Code of Federal
Regulations as follows:
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM
1. The authority citation for Part 685 continues to read as
follows:
Authority: 20 U.S.C. 1087a et seq., unless otherwise noted.
2. Appendix A to part 685 is revised to read as follows:
Appendix A to part 685--Income Contingent Repayment
Examples of the Calculations of Monthly Repayment Amounts
Example 1. A single borrower with $15,000 of Direct Loans, 8.25
percent interest rate, and an adjusted gross income (AGI) of
$23,356.
Step 1: Determine annual payments based on what the borrower
would pay over 12
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years using standard amortization. To do this, multiply the
principal balance by the constant multiplier for 8.25 percent
interest (0.1315452). The constant multiplier is a factor used to
calculate amortized payments at a given interest rate over a fixed
period of time. (See the constant multiplier chart below to
determine the constant multiplier you should use for the interest
rate on the loan. If the exact interest rate is not listed, use the
next highest for estimation purposes.)
0.1315452 x $15,000 = $1,973.18
Step 2: Multiply the result by the income percentage factor
shown in the income percentage factor table that corresponds to the
borrower's income (if the income is not listed, you can calculate
the applicable income percentage factor by following the
instructions under the interpolation heading below):
80.33% (0.8033) x $1,973.18 = $1,585.06
Step 3: Determine 20 percent of discretionary income. For a
single borrower, subtract the poverty level for a family of one, as
published in the Federal Register on February 24, 1998 (63 FR 9235),
from the borrower's income and multiply the result by 20%:
$23,356-$8,050 = $15,306
$15,306 x 0.20 = $3,061.20
Step 4: Compare the amount from step 2 with the amount from step
3. The lower of the two will be the borrower's annual payment
amount. This borrower will be paying the amount calculated under
step 2. To determine the monthly repayment amount, divide the annual
amount by 12.
$1,585.05 12 = $132.09
Example 2. Married borrowers repaying jointly under the income
contingent repayment plan with a combined AGI of $29,337. The
husband has a Direct Loan balance of $10,000, and the wife has a
Direct Loan balance of $15,000. The interest rate is 8.25 percent.
This couple has no children.
Step 1: Add the Direct Loan balances of the husband and wife
together to determine the aggregate loan balance.
$10,000 + $15,000 = $25,000
Step 2: Determine the annual payment based on what the couple
would pay over 12 years using standard amortization. To do this,
multiply the aggregate principal balance by the constant multiplier
for 8.25 percent interest (0.1315452). (See the constant multiplier
chart to determine the constant multiplier you should use for the
interest rate on the loan. If the exact interest rate is not listed,
choose the next highest rate for estimation purposes.)
0.1315452 x $25,000 = $3,288.63
Step 3: Multiply the result by the income percentage factor
shown in the income percentage factor table that corresponds to the
couple's income (if the income is not listed, you can calculate the
applicable income percentage factor by following the instructions
under the interpolation heading below):
87.61% (0.8761) x $3,288.63 = $2881.17
Step 4: Determine 20 percent of the couple's discretionary
income. To do this, subtract the poverty level for a family of 2, as
published in the Federal Register on February 24, 1998 (63 FR 9235),
from the couple's income and multiply the result by 20 percent:
$29,337-$10,850 = $18,487
$18,487 x 0.20 = $3,397.40
Step 5: Compare the amount from step 3 with the amount from step
4. The lower of the two will be the annual payment amount. The
married borrowers will be paying the amount calculated under step 3.
To determine the monthly repayment amount, divide the annual amount
by 12.
$2,881.17 12 = $240.10
Interpolation: If your income does not appear on the income
percentage factor table, you will have to calculate the income
percentage factor through interpolation. For example, assume you are
single and your income is $30,000.
Step 1: To interpolate, you must first find the interval between
the closest income listed that is less than $30,000 and the closest
income listed that is greater than $30,000. Afterwards, you must
subtract these numbers (for this discussion, we will call the result
``the income interval''):
$36,793-$29,337 = $7,456
Step 2: Next, find the interval between the two income
percentage factors that are given for these incomes (for this
discussion, we will call the result, the ``income percentage factor
interval''):
100.00%-88.77 = 11.23%
Step 3: Subtract the income shown on the chart that is
immediately less than $30,000 from $30,000:
$30,000-$29,337 = $663
Step 4: Divide the result by the number representing the income
interval:
$663 $7,456 = 0.0889
Step 5: Multiply the result by the income percentage factor
interval:
0.0889 x 11.23 = 0.9983
Step 6: Add the result to the lower income percentage factor
used to calculate the income percentage factor interval for $30,000
in income:
.9983% + 88.77% = 89.77%
The result is the income percentage factor that will be used to
calculate the monthly repayment amount under the income contingent
repayment plan.
Income Percentage Factors
[Based on annual income]
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Single Married/head of
--------------------------------------------------- household
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Income Percent Percent
factor Income factor
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7,669.................................. 55.00 7,669 50.52
10,552................................. 57.79 12,101 56.68
13,578................................. 60.57 14,422 59.56
16,673................................. 66.23 18,853 67.79
19,629................................. 71.89 23,356 75.22
23,356................................. 80.33 29,337 87.61
29,337................................. 88.77 36,793 100.00
36,793................................. 100.00 44,251 100.00
44,251................................. 100.00 55,438 109.40
53,185................................. 111.80 74,080 125.00
68,101................................. 123.50 100,180 140.60
96,452................................. 141.20 140,106 150.00
110,592................................ 150.00 228,943 200.00
196,984................................ 200.00
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Constant Multiplier Chart for 12-Year Amortization
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Annual
Interest rate (percent) constant
multiplier
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7.00....................................................... 0.123406
7.25....................................................... 0.125011
7.46....................................................... 0.126368
7.50....................................................... 0.126627
7.75....................................................... 0.128255
8.00....................................................... 0.129894
8.25....................................................... 0.131545
8.38....................................................... 0.132408
8.50....................................................... 0.133207
8.75....................................................... 0.134880
9.00....................................................... 0.136564
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BILLING CODE 4000-01-P
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[FR Doc. 98-19158 Filed 7-17-98; 8:45 am]
BILLING CODE 4000-01-C
