01-23040. Student Financial Assistance; Federal Family Education Loan Program

AGENCY:

Department of Education.

ACTION:

Notice of interest rates for the Federal Family Education Loan Program for the period July 1, 2001, through June 30, 2002.

SUMMARY:

The Chief Operating Officer for the Office of Student Financial Assistance announces the interest rates for variable-rate loans made under the Federal Family Education Loan (FFEL) Program for the period July 1, 2001, through June 30, 2002.

FOR FURTHER INFORMATION CONTACT:

Brian Smith, Program Specialist. Mailing address: Program Development Division, Student Financial Assistance, U.S. Department of Education, Room 3045, ROB-3, 400 Maryland Avenue, SW, Washington, DC 20202-5345. Telephone: [phone]. Individuals who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339.

Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape, or computer diskette) on request to the contact person listed in the preceding paragraph.

SUPPLEMENTARY INFORMATION:

General

Under title IV, part B of the Higher Education Act of 1965, as amended, (HEA), 20 U.S.C. Section 1071, et seq., most loans made to student and parent borrowers under the FFEL Program have variable interest rates.

The formulas for determining the interest on variable rate FFEL Program loans are established in section 427A of the HEA (20 U.S.C. 1077a).

The interest rates on variable-rate loans are determined annually and apply to the following 12-month period beginning July 1 and ending June 30.

As described below, interest rate caps apply to most FFEL Program loans.

FFEL interest rate formulas use the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held before June 1 of each year plus a statutorily established add-on to determine the variable interest rate for—

• FFEL fixed-rate Stafford loans first disbursed before October 1, 1992 that have been converted to variable-rate loans;
• All FFEL Subsidized and Unsubsidized Stafford Loans first disbursed after October 1, 1992;
• FFEL PLUS loans first disbursed on or after July 1, 1998; and
• FFEL Consolidation Loans for which the Consolidation Loan application was received by the lender on or after November 13, 1997 and before October 1, 1998.

The bond equivalent rate of the 91-day Treasury bills auctioned on May 29, 2001, which is used to calculate the interest rates for the one year period beginning on July 1, 2001, is 3.688 percent (rounded to 3.69 percent).

For FFEL PLUS loans first disbursed before July 1, 1998, interest rates are calculated based on the weekly average of a 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before June 26.

On June 22, 2001, the Board of Governors of the Federal Reserve System published the 1-year constant maturity Treasury yield average as 3.46 percent.

Interest Rates for “Converted” Variable-Rate FFEL Stafford Loans

1. Under section 427A(i)(7) of the HEA, loans that were originally made with a fixed interest rate of eight percent with an increase to ten percent four years after commencement of the repayment period were converted to a variable interest rate that may not exceed 10 percent: The interest rate for these loans for the period from July 1, 2001, through June 30, 2002, is 6.94 percent (3.69 percent plus 3.25 percent equals 6.94 percent).

2. Loans with fixed interest rates of seven percent, eight percent, nine percent, or eight percent with an increase to ten percent four years after commencement of the repayment period, that were subject to the provisions of section 427A(i)(3) of the HEA and were converted to variable-rate loans—the interest rate may not exceed seven percent, eight percent, nine percent, or ten percent, respectively: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

Interest Rates for Variable-Rate FFEL Stafford Loans

1. FFEL Stafford loans made to “new” borrowers for which the first disbursement was made (a) on or after October 1, 1992, but before July 1, 1994, or (b) on or after July 1, 1994, for a period of enrollment ending before July 1, 1994—the interest rate may not exceed 9 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

2. FFEL Stafford loans made to all borrowers, regardless of prior borrowing, for periods of enrollment that include or begin on or after July 1, 1994, for which the first disbursement was made on or after July 1, 1994, but before July 1, 1995—the interest rate may not exceed 8.25 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

3. FFEL Stafford loans made to all borrowers, regardless of prior borrowing, on or after July 1, 1995, but before July 1, 1998—the interest rate may not exceed 8.25 percent:

(a) During the in-school, grace, or deferment period: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.19 percent (3.69 percent plus 2.5 percent equals 6.19 percent); and

(b) During all other periods: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

4. FFEL Stafford loans, first disbursed on or after July 1, 1998, but before July 1, 2003—the interest rate may not exceed 8.25 percent:

(a) During the in-school, grace, and deferment periods: The interest rate for the period from July 1, 2001, through June 30, 2002, is 5.39 percent (3.69 percent plus 1.7 percent equals 5.39 percent); and

(b) During all other periods: The interest rate for the period from July 1, 2001, through June 30, 2002, is 5.99 percent (3.69 percent plus 2.3 percent equals 5.99 percent).

Interest Rates for FFEL PLUS and FFEL Supplemental Loans for Students (SLS) Loans

1. Variable-rate FFEL PLUS and FFEL SLS loans first disbursed before October 1, 1992—the interest rate may not exceed 12 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.71 percent (3.46 percent plus 3.25 percent equals 6.71 percent).

2. FFEL SLS loans first disbursed on or after October 1, 1992, for a period of enrollment beginning before July 1, 1994—the interest rate may not exceed 11 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.56 percent (3.46 percent plus 3.1 percent equals 6.56 percent).

3. FFEL PLUS loans first disbursed on or after October 1, 1992, but before July 1, 1994—the interest rate may not exceed 10 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.56 percent (3.46 percent plus 3.1 percent equals 6.56 percent).

4. FFEL PLUS loans first disbursed on or after July 1, 1994, but prior to July 1, 1998—the interest rate may not exceed 9 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.56 percent (3.46 percent plus 3.1 percent equals 6.56 percent).

5. FFEL PLUS loans first disbursed on or after July 1, 1998, and before July 1, 2003—the interest rate may not exceed 9 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

Interest Rates for FFEL Consolidation Loans

1. FFEL Consolidation loans for which the consolidation loan application was received by the lender on or after November 13, 1997, and before October 1, 1998—the interest rate may not exceed 8.25 percent: The interest rate for the period from July 1, 2001, through June 30, 2002, is 6.79 percent (3.69 percent plus 3.1 percent equals 6.79 percent).

2. If a portion of a Consolidation loan is attributable to a loan made under subpart I of part A of title VII of the Public Health Service Act, the maximum interest rate for that portion of a Consolidation loan is determined annually, for each 12-month period beginning on July 1 and ending on June 30. The interest rate equals the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending prior to July 1, plus 3 percent. For the quarter ending prior to July 1, 2001, the average 91-day Treasury bill rate was 3.77 percent. The maximum interest rate for the period from July 1, 2001, through June 30, 2002, is 6.77 percent (3.77 percent plus 3.0 percent equals 6.77 percent).

Electronic Access to This Document

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Note:

The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available on GPO Access at: http://www.access.gpo.gov/​nara/​index.html

Program Authority: 20 U.S.C. 1077a and 20 U.S.C. 1087e.

Dated: September 10, 2001.

Greg Woods,

Chief Operating Officer, Student Financial Assistance.