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federal register

Monday
July 20, 1998

Part III

Department of
Education
34 CFR Part 685
William D. Ford Federal Direct Loan
Program; Final Rule

39009
39010 Federal Register / Vol. 63, No. 138 / Monday, July 20, 1998 / Rules and Regulations

DEPARTMENT OF EDUCATION borrowers at various income and debt Electronic Access to this Document
levels have been amended to reflect the Anyone may view this document, as
34 CFR Part 685 updated income percentage factors. well as all other Department of
William D. Ford Federal Direct Loan The updated income percentage Education documents published in the
Program factors, at any given income, may cause Federal Register, in the text or portable
a borrower’s payments to be slightly document format (pdf) on the World
AGENCY: Office of Postsecondary lower than under the income percentage Wide Web at either of the following
Education, Department of Education. factors published in the July 1, 1997 sites:
ACTION: Final regulations. regulations. These updated income http://ocfo.ed.gov/fedreg.htm
percentage factors more accurately http://www.ed.gov/news.html
SUMMARY: These regulations contain reflect a borrower’s current ability to
revised income percentage factors for To use the pdf you must have the Adobe
repay than those previously published Acrobat Reader Program with Search,
the income contingent repayment plan, because the revised factors are based on
a repayment plan available in the which is available free at either of the
more recent economic data. previous sites. If you have questions
William D. Ford Federal Direct Loan
(Direct Loan) Program. The regulations Waiver of Proposed Rulemaking about using the pdf, call the U.S.
also contain updated sample income Government Printing Office at (202)
In accordance with the 512–1530 or, toll free, at 1–888–293–
contingent repayment amounts for
Administrative Procedure Act, 5 U.S.C. 6498.
single and married or head-of-
553, it is customary for the Secretary to Anyone may also view these
household borrowers at various income
offer interested parties the opportunity documents in text copy only on an
and debt levels.
to comment on proposed regulations. electronic bulletin board of the
EFFECTIVE DATE: These regulations take
However, the changes in this document Department. Telephone: (202) 219–1511
effect on July 1, 1998. do not establish any new substantive
FOR FURTHER INFORMATION CONTACT: Mr. or, toll free, 1–800–222–4922. The
rules, but simply update the income documents are located under Option
Donald Watson, Management Analyst, percentage factors used in the income
Direct Loan Policy, Policy Development G—Files/Announcements, Bulletins and
contingent repayment plan, as required Press Releases.
Division, U.S. Department of Education, under 34 CFR 685.209(a)(8), and revise
Room 3045, ROB–3, 600 Independence sample repayment information Note: The official version of this document
Avenue, SW., Washington, DC 20202– accordingly. Therefore, the Secretary is the document published in the Federal
5400. Telephone number: (202) 708– Register.
has determined that publication of a
8242. Individuals who use a notice of proposed rulemaking is List of Subjects in 34 CFR Part 685
telecommunications device for the deaf unnecessary and contrary to the public
(TDD) may call the Federal Information Administrative practice and
interest under 5 U.S.C. 553(b)(B). For procedure, Colleges and universities,
Relay Service (FIRS) at 1–800–877– the same reasons, the Secretary waives
8339, between 8 a.m. and 8 p.m., Education, Loan programs-education,
the 30-day delayed effective date under Reporting and recordkeeping
Eastern Time, Monday through Friday. 5 U.S.C. 553(d).
Individuals with disabilities may requirements, Student aid, Vocational
obtain this document in an alternate Paperwork Reduction Act of 1995 education.
format (e.g., Braille, large print, Dated: July 13, 1998.
audiotape, or computer diskette) on These regulations have been
Richard W. Riley,
request to the contact person listed in examined under the Paperwork
Reduction Act of 1995 and have been Secretary of Education.
the preceding paragraph.
found to contain no information (Catalog of Federal Domestic Assistance
SUPPLEMENTARY INFORMATION: The Direct Number 84.268 William D. Ford Federal
collection requirements.
Loan income contingent repayment plan Direct Loan Program)
regulations are amended to revise the Regulatory Flexibility Act Certification
four sources of information contained in The Secretary amends Part 685 of title
Appendix A to 34 CFR Part 685, The Secretary certifies that these 34 of the Code of Federal Regulations as
published on July 1, 1997 (62 FR regulations will not have significant follows:
35602): examples of how the calculation economic impact on a substantial
number of small entities. The PART 685—WILLIAM D. FORD
of the monthly ICR repayment amount
regulations will affect borrowers who FEDERAL DIRECT LOAN PROGRAM
is performed, the income percentage
factors, the constant multiplier chart, are in repayment and will not affect 1. The authority citation for Part 685
and charts showing sample repayment institutions participating in the Direct continues to read as follows:
amounts. Loan Program. The Regulatory
Flexibility Act does not include Authority: 20 U.S.C. 1087a et seq., unless
The income percentage factors have otherwise noted.
been updated to reflect changes based individuals in its definition of ‘‘small
on inflation. The revised income entities.’’ Thus, the changes will not 2. Appendix A to part 685 is revised
percentage factor table was developed have a significant economic impact on to read as follows:
by changing the dollar amounts of the any small entities under the Regulatory Appendix A to part 685—Income Contingent
incomes shown by a percentage equal to Flexibility Act. Repayment
the estimated percentage change in the Assessment of Educational Impact Examples of the Calculations of Monthly
Consumer Price Index for all Urban Repayment Amounts
Consumers from December 1997 to The Secretary has determined that the
Example 1. A single borrower with $15,000
December 1998. Further, the examples regulations in this document would not of Direct Loans, 8.25 percent interest rate,
of the calculations of the monthly require transmission of information that and an adjusted gross income (AGI) of
repayment amounts and the two charts is being gathered by or is available from $23,356.
showing sample repayment amounts for any other agency or authority of the Step 1: Determine annual payments based
single and married or head of household United States. on what the borrower would pay over 12
Federal Register / Vol. 63, No. 138 / Monday, July 20, 1998 / Rules and Regulations 39011

years using standard amortization. To do Step 3: Multiply the result by the income income percentage factor interval for $30,000
this, multiply the principal balance by the percentage factor shown in the income in income:
constant multiplier for 8.25 percent interest percentage factor table that corresponds to • .9983% + 88.77% = 89.77%
(0.1315452). The constant multiplier is a the couple’s income (if the income is not
factor used to calculate amortized payments listed, you can calculate the applicable The result is the income percentage factor
at a given interest rate over a fixed period of income percentage factor by following the that will be used to calculate the monthly
time. (See the constant multiplier chart instructions under the interpolation heading repayment amount under the income
below to determine the constant multiplier below): contingent repayment plan.
you should use for the interest rate on the
loan. If the exact interest rate is not listed, • 87.61% (0.8761) × $3,288.63 = $2881.17
Step 4: Determine 20 percent of the
INCOME PERCENTAGE FACTORS
use the next highest for estimation purposes.)
couple’s discretionary income. To do this, [Based on annual income]
• 0.1315452 × $15,000 = $1,973.18
subtract the poverty level for a family of 2,
Step 2: Multiply the result by the income
as published in the Federal Register on Single Married/head of
percentage factor shown in the income household
percentage factor table that corresponds to February 24, 1998 (63 FR 9235), from the
the borrower’s income (if the income is not couple’s income and multiply the result by Income Percent Percent
20 percent: factor Income
listed, you can calculate the applicable factor
income percentage factor by following the • $29,337–$10,850 = $18,487
instructions under the interpolation heading • $18,487 × 0.20 = $3,397.40 7,669 ..... 55.00 7,669 50.52
below): Step 5: Compare the amount from step 3 10,552 ... 57.79 12,101 56.68
• 80.33% (0.8033) × $1,973.18 = $1,585.06 with the amount from step 4. The lower of 13,578 ... 60.57 14,422 59.56
Step 3: Determine 20 percent of the two will be the annual payment amount. 16,673 ... 66.23 18,853 67.79
discretionary income. For a single borrower, The married borrowers will be paying the 19,629 ... 71.89 23,356 75.22
subtract the poverty level for a family of one, amount calculated under step 3. To 23,356 ... 80.33 29,337 87.61
as published in the Federal Register on determine the monthly repayment amount, 29,337 ... 88.77 36,793 100.00
February 24, 1998 (63 FR 9235), from the divide the annual amount by 12. 36,793 ... 100.00 44,251 100.00
borrower’s income and multiply the result by • $2,881.17 ÷ 12 = $240.10 44,251 ... 100.00 55,438 109.40
20%:
Interpolation: If your income does not 53,185 ... 111.80 74,080 125.00
• $23,356¥$8,050 = $15,306 appear on the income percentage factor table, 68,101 ... 123.50 100,180 140.60
• $15,306 × 0.20 = $3,061.20 you will have to calculate the income 96,452 ... 141.20 140,106 150.00
Step 4: Compare the amount from step 2 percentage factor through interpolation. For 110,592 150.00 228,943 200.00
with the amount from step 3. The lower of example, assume you are single and your 196,984 200.00
the two will be the borrower’s annual income is $30,000.
payment amount. This borrower will be Step 1: To interpolate, you must first find
paying the amount calculated under step 2. the interval between the closest income listed CONSTANT MULTIPLIER CHART FOR 12-
To determine the monthly repayment that is less than $30,000 and the closest
amount, divide the annual amount by 12. YEAR AMORTIZATION
income listed that is greater than $30,000.
• $1,585.05 ÷ 12 = $132.09 Afterwards, you must subtract these numbers Annual con-
Example 2. Married borrowers repaying (for this discussion, we will call the result Interest rate stant multi-
jointly under the income contingent ‘‘the income interval’’): (percent) plier
repayment plan with a combined AGI of • $36,793–$29,337 = $7,456
$29,337. The husband has a Direct Loan 7.00 ........................................... 0.123406
Step 2: Next, find the interval between the
balance of $10,000, and the wife has a Direct 7.25 ........................................... 0.125011
two income percentage factors that are given
Loan balance of $15,000. The interest rate is 7.46 ........................................... 0.126368
for these incomes (for this discussion, we
8.25 percent. This couple has no children. 7.50 ........................................... 0.126627
Step 1: Add the Direct Loan balances of the will call the result, the ‘‘income percentage
factor interval’’): 7.75 ........................................... 0.128255
husband and wife together to determine the
aggregate loan balance. • 100.00%–88.77 = 11.23% 8.00 ........................................... 0.129894
8.25 ........................................... 0.131545
• $10,000 + $15,000 = $25,000 Step 3: Subtract the income shown on the
chart that is immediately less than $30,000 8.38 ........................................... 0.132408
Step 2: Determine the annual payment
from $30,000: 8.50 ........................................... 0.133207
based on what the couple would pay over 12
years using standard amortization. To do • $30,000–$29,337 = $663 8.75 ........................................... 0.134880
this, multiply the aggregate principal balance 9.00 ........................................... 0.136564
Step 4: Divide the result by the number
by the constant multiplier for 8.25 percent representing the income interval:
interest (0.1315452). (See the constant BILLING CODE 4000–01–P
• $663 ÷ $7,456 = 0.0889
multiplier chart to determine the constant
multiplier you should use for the interest rate Step 5: Multiply the result by the income
on the loan. If the exact interest rate is not percentage factor interval:
listed, choose the next highest rate for • 0.0889 × 11.23 = 0.9983
estimation purposes.) Step 6: Add the result to the lower income
• 0.1315452 × $25,000 = $3,288.63 percentage factor used to calculate the
39012 Federal Register / Vol. 63, No. 138 / Monday, July 20, 1998 / Rules and Regulations
Federal Register / Vol. 63, No. 138 / Monday, July 20, 1998 / Rules and Regulations 39013

[FR Doc. 98–19158 Filed 7–17–98; 8:45 am]


BILLING CODE 4000–01–C