January 16, 2009

SUBJECT: Federal Family Education Loan Program Special Allowance Rates
for the Quarter Ending December 31, 2008

**[Background]{.underline}**

In calculating quarterly Special Allowance rates, the Department is
required, under section 438(b)(2)(I)(i)(I) of the Higher Education Act
(HEA), to determine "the average of the bond equivalent rates of the
quotes of the 3-month commercial paper (financial) rates in effect for
each of the days in such quarter as reported by the Federal Reserve in
Publication H-15 (or its successor) for such 3-month period."

Since October 1, 2008 (the beginning of the quarter ending December 31,
2008), there have been 33 business days (out of 62 business days) when
no daily commercial paper (CP) rate was printed in Publication H-15.
Given market conditions, the Federal Reserve instituted the Commercial
Paper Funding Facility (CPFF) on October 27, 2008. On January 5, 2009,
the Federal Reserve announced and included in Publication H-15
Commercial Paper Funding Facility (CPFF) rates. The Federal Reserve
provided this data back to October 27, 2008, the date of the inception
of the CPFF.

**[Calculation of Special Allowance Rates]{.underline}**

To address the lack of a CP rate for 33 business days during the fourth
quarter of 2008 and to meet its obligations under section 438 of the HEA
for the quarter, the Department used, in its calculations, the "3-month
nonfinancial or financial \[rate\] posted by CPFF . . . with surcharge"
which is found under the "Commercial Paper" heading of Publication H-15.
This CPFF rate was used for those business days during the fourth
quarter of 2008, on or after October 27, when no "3-month financial" CP
rate was published (as indicated by "n.a." in Publication H-15). For
days prior to October 27 when no 3-month financial commercial paper rate
was published, the Department carried forward the previous business
day's CP rate (consistent with Department practice).

For example, on November 25, 2008, the published CP rate was 1.7
percent; the CPFF rate for that day was 2.48 percent. In that case, the
Department used 1.7 percent as the applicable rate for November 25 in
its Special Allowance rate calculation. However, on November 26, there
was no CP rate published ("n.a."); the CPFF rate was 2.42 percent. Thus,
for November 26, the Department used 2.42 percent in its Special
Allowance rate calculation.

Accordingly, using the above approach for the quarter ending December
31, 2008, the "average of the bond equivalent rates of the quotes of the
3-month commercial paper (financial) rates in effect for each of the
days in such quarter" is 2.58 percent.

**[Calculations Under the Master Participation Agreement(s) for
2008-2009 Loans]{.underline}**

Pursuant to the Master Participation Agreement(s) under the Department's
loan participation purchase program for 2008-2009 loans, the 2.58
percent rate is also used to determine the Participant Yield (i.e.,
yield owed the Department). The calculated Participation Yield rate will
be formally communicated to program participants via an Electronic
Announcement on the Department's Ensuring Continued Access to Student
Loans website (<http://www.federalstudentaid.ed.gov/ffelp>).

**[Treasury Bill Rate]{.underline}**

For some loans, pursuant to section 438, the Special Allowance rate is
calculated by using the average of the bond equivalent rates of the
ninety-one day Treasury bills as published by the Department of the
Treasury. For the quarter ending December 31, 2008, the average of the
rates is 0.35 percent.

**[Attachments]{.underline}**

**Attachments A, B & C** contain the quarterly special allowance rates
computed pursuant to section 438. **Attachment D** contains the bond
equivalent rates of the 91-day Treasury Bills auctioned during the
quarter.

> Accounting Division
>
> Office of the Chief Financial Officer
>
> **Attachment A Includes**: Stafford loans (subsidized and
> unsubsidized), PLUS loans, SLS loans, and Consolidation loans made or
> purchased with taxable funds.

I. \-- Stafford (subsidized and unsubsidized), PLUS (fixed-rate;
includes student-borrower component of the PLUS Program), and
Consolidation loans:

made prior to 10/1/81.

> **Formula:** **(.35%)** plus (3.5%) less (applicable interest rate),
> rounded up to the nearest 1/8th of 1% = annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | R                      | Period              |
|                      | ate^\*^]{.smallcaps}** | ^\*^]{.smallcaps}** |
+----------------------+------------------------+---------------------+

7% .00 .000000

9% .00 .000000

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

^\*^ The Special Allowance at Annual Rate and Special Allowance for
3-month Period figures are shown as decimals throughout this memo, e.g.,
0.5% (one-half of one percent) is shown as .005\", 1.5% (one and
one-half percent) is shown as .015\", etc.

II\. \-- Stafford (subsidized only) and PLUS (fixed-rate, includes
student borrower component of the PLUS program) loans:

> made on/after 10/1/81, but prior to 10/17/86.
>
> made on/after 10/17/86, but prior to 11/16/86, for periods of
> enrollment beginning prior to 11/16/86.
>
> \-- Consolidation loans:
>
> made on/after 10/1/81, but prior to 11/16/86.
>
> \-- *Also*, certain taxable obligations of South Carolina and Maine.
>
> **Formula:** (**.35%**) plus (3.5%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

7% .00 .000000

8% .00 .000000

9% .00 .000000

12% .00 .000000

14% .00 .000000

III\. \-- Stafford loans:

> (subsidized) made on/after 10/17/86, but prior to 11/16/86, for
> periods of enrollment beginning on/after 11/16/86.
>
> (subsidized) made on/after 11/16/86, but prior to 10/1/92.
>
> (unsubsidized, made pursuant to 428H of the Act) made prior to 10/1/92
> for periods of enrollment beginning on/after 10/1/92.
>
> \-- PLUS/SLS loans:
>
> (fixed-rate) made on/after 10/17/86, but prior to 11/16/86, for
> periods of enrollment beginning on/after 11/16/86.
>
> (fixed-rate) made on/after 11/16/86, but prior to 7/1/87.
>
> (variable-rate) made on/after 7/1/87, but prior to 10/1/92, *only* if
> the variable-rate for each July 1 - June 30 period reaches the
> statutory maximum of 12%.
>
> \-- Consolidation loans:
>
> made on/after 11/16/86, but prior to 10/1/92.
>
> **Formula:** (**.35%**) plus (3.25%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

5.01% ^1,\ 2,\ 3^ .00 .000000

5.16% ^4^ .00 .000000

7% .00 .000000

8% .00 .000000

9% .00 .000000

10% .00 .000000

11% .00 .000000

12% .00 .000000

13% .00 .000000

14% .00 .000000

***Also included for the period 7/1/08 - 6/30/09 (Fixed-rate Stafford
loans that were subject to the \"windfall profits\" provisions of
427A(i)(3) or 427A(i)(1) of the Act and that have been converted to a
variable rate):***

^1^ Fixed-rate 7% Stafford loans (1992 Amendments).

^2^ (a) Fixed-rate 8% Stafford loans, and (b) 8/10% Stafford loans
(prior to the 49*th* month of repayment) (1992 Amendments).

> ^3^ (a) Fixed-rate 9% Stafford loans, and (b) 8/10% Stafford loans
> (on/after the 49*th* month of repayment) (1992 Amendments).

^4^ Fixed-rate 8/10% Stafford loans (on/after the 49*th* month of
repayment) (1986 Amendments).

***See 427A(i)(7)(D) of the Act*.**

IV\. \-- Stafford loans:

> (subsidized) made on/after 10/1/92, but prior to 7/1/95.
>
> (unsubsidized) made on/after 10/1/92, but prior to 7/1/95, for periods
> of enrollment beginning on/after 10/1/92.
>
> (subsidized and unsubsidized) made on/after 7/1/95 but prior to
> 7/1/98, *except* during the in-school, grace, and deferment periods.
>
> \-- PLUS/SLS loans:
>
> (variable-rate) made on/after 10/1/92 but prior to 7/1/94, *only* if
> the variable-rate for each July 1 - June 30 period reaches the
> statutory maximum of 11% (SLS) or 10% (PLUS).
>
> \-- PLUS loans:
>
> (variable-rate) made on/after 7/1/94 but prior to 7/1/98.
>
> (variable-rate) made on/after 7/1/98 but prior to 1/1/00 (special
> allowance shall not be paid unless the calculated interest rate
> exceeds the 9% cap).
>
> \-- Consolidation loans:
>
> made on/after 10/1/92 but prior to 10/1/98.
>
> **Formula:** (**.35%**) plus (3.1%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

5.01% ^5,\ 6,\ 7,\ 8^ .0000 .000000

\[continued\...\]

^5^ Fixed-rate 7% Stafford Loans (1992 Amendments).

6.  \(a\) Fixed-rate 8% Stafford loans, and (b) 8/10% Stafford loans
    (prior to the 49*th* month of repayment) that were subject to the
    "windfall profits" provisions of 427A(i)(3) of the Act and that have
    been converted to a variable rate (1992 Amendments).

7.  \(a\) *All* Stafford loans made for periods of enrollment that
    either begin on/after 7/1/94 or include that date for which the
    first disbursement is made on/after 7/1/94 but prior to 7/1/95, (b)
    Stafford loans for which the first disbursement is made on/after
    7/1/95 and before 7/1/98, *except during the in-school, grace, and
    deferment periods,* and (c) consolidation loans for which the loan
    application was received on/after 11/13/97 and prior to 10/1/98.

8.  \(a\) Stafford loans, made to new borrowers, for which the first
    disbursement is made on/after 10/1/92 but prior to 7/1/94, (b)
    fixed-rate 9% Stafford loans that were subject to the \"windfall
    profits\" provisions of 427A(i)(3) of the Act and that have been
    converted to a variable rate; *see* 427A(i)(7)(D) of the Act and (c)
    8/10% Stafford loans (on/after the 49*th* month of repayment) that
    were subject to the "windfall profits" provisions of 427A(i)(3) of
    the Act and that have been converted to a variable rate (1992
    Amendments).

IV\. \[\...*continued*\]

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

5.67% ^9^ .00 .000000

6% ^10^ .00 .000000

7% .00 .000000

8% .00 .000000

9% .00 .000000

10% .00 .000000

11% .00 .000000

12% .00 .000000

13% .00 .000000

14% .00 .000000

> ***Also included for the period 7/1/08 - 6/30/09 (Fixed-rate Stafford
> loans that were subject to the \"windfall profits\" provisions of
> 427A(i)(3) of the Act and that have been converted to a variable
> rate):***

***See 427A(i)(7)(D) of the Act.***

^9^ PLUS loans made on/after 7/1/94 but prior to 7/1/98.

^10^ The 6% interest and special allowance rates *only* apply to
Consolidation loans made on/after 7/1/94 with tax-exempt funds; the 10%,
11%. 13% and 14% interest and special allowance rates *only* apply to
Consolidation loans made with tax-exempt funds.

V. \-- Stafford loans (subsidized and unsubsidized):

> made on/after 7/1/95 but prior to 7/1/98, *only* during the in-school,
> grace, and deferment periods.
>
> **Formula:** (**.35%**) plus (2.5%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

4.41% .0000 .000000

VI\. \--Stafford loans (subsidized and unsubsidized):

> made on/after 7/1/98 but prior to 1/1/00 *only* during the in-school,
> grace, and deferment periods.

**Formula:** (**.35%**) plus (2.2%) less (applicable interest rate) =
special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

3.61% .0000 .000000

VII\. \--Stafford loans (subsidized and unsubsidized):

> made on/after 7/1/98 but prior to 1/1/00, *except* during the
> in-school, grace, and deferment periods.

**Formula:** (**.35%**) plus (2.8%) less (applicable interest rate) =
special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

4.21% .0000 .000000

VIII. \--Consolidation loans

made on/after 10/1/98 but prior to 1/1/00

**Formula:** (**.35%**) plus (3.1%) less (applicable interest rate) =
special allowance rate.

> Note: The interest rate for these consolidation loans is determined by
> taking the weighted average of the interest rates on the loans being
> consolidated, rounded to the nearest higher 1/8^th^ of one percent.
> Therefore, due to the wide range of possible applicable interest
> rates, no further calculations are shown here.
>
> **Attachment B Includes**: Loans made or purchased with (a) funds
> obtained by the holder from the issuance, or refinancing of
> obligations originally issued prior to 10/1/93, or (b) funds derived
> from default reimbursements, collections, interest, or other income
> resulting from loans made or purchased with such tax-exempt funds.

I. \-- Tax-exempt loans, otherwise eligible for special allowance, made
on/after 10/1/80, but prior to 10/1/81.

> **Formula:** (**.35%**) plus (3.5%) less (applicable interest rate),
> rounded up to the nearest 1/8th of 1%, divided by two = annual special
> allowance rate, *however* the annual special allowance rate is *not
> less than* 2.5% (for 7% loans) and 0.5% (for 9% loans).

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

7% .025 .00625

9% .005 .00125

II\. \-- Tax-exempt loans, otherwise eligible for special allowance,
made on/after 10/1/81.

> **Formula:** (**.35**%) plus (3.5%) less (applicable interest rate),
> divided by two = annual special allowance rate, *however* the annual
> special allowance rate is *not less than*:
>
> For loans made prior to 10/1/92, 2.5% (for 7% loans), 1.5% (for 8%
> loans), and 0.5% (for 9% loans).
>
> For loans made on/after 10/1/92, 9.5% less the applicable interest
> rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

3.61% ^11^ .0589 .014725

4.21% ^12^ .0529 .013225

4.41% ^13^ .0509 .012725

5.01% ^14,\ 15,\ 16^ .0449 .011225

\[continued\...\]

> ***For the period 7/1/08 -- 6/30/09:***
>
> ^11^ Stafford loans made on/after 7/1/98 but prior to 7/1/06, *only*
> during the in-school, grace, and deferment periods.

^12^ Stafford loans made on/after 7/1/98 but prior to 7/1/06, *except*
during the in-school, grace and deferment periods.

> ^13^ Stafford loans for which the first disbursement is made on/after
> 7/1/95 and before 7/1/98, *only* during the in-school, grace, and
> deferment periods.

^14^ Fixed-rate 7% Stafford loans that were subject to the "windfall
profits" provisions of 427A(i)(3) of the Act and that have been
converted to a variable rate

> ^15^ Fixed-rate 8% Stafford loans, and 8/10% Stafford loans (prior to
> the 49*th* month of repayment) that were subject to the \"windfall
> profits\" provisions of 427A(i)(3) of the Act and that have been
> converted to a variable rate. Also, see 427A(i)(7)(D) of the Act.
> (1992 Amendments)
>
> ^16^ (a) Fixed-rate 9% Stafford loans that were subject to the
> "windfall profits" provisions of 427A(i)(3) of the Act and that have
> been converted to a variable rate; *see* 427A(I)(7)(D) of the Act, (b)
> 8/10% Stafford loans (on/after the 49*th* month of repayment) that
> were subject to the \"windfall profits\" provisions of 427A(i)(3) of
> the Act and that have been converted to a variable rate, and (c)
> Stafford loans, made to new borrowers, for which the first
> disbursement is made on/after 10/1/92 but prior to 7/1/94. (1992
> Amendments).

II\. \[\...continued\]

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

5.01% ^17^ .0449 .011225

5.16% ^18^ .0434 .010850

5.67% ^19^ .0383 .009575

6% ^20^ .035 .008750

6.80% ^21^ .027 .006750

7% .025 .006250

8% .015 .003750

8.50% ^22^ .01 .002500

9% .005 .001250

10% .00 .000000

11% .00 .000000

12% .00 .000000

13% .00 .000000

14% .00 .000000

***For the period 7/1/08 - 6/30/09:***

> ^17^ (a) *All* Stafford loans made for periods of enrollment that
> either begin on/after 7/1/94 or include that date for which the first
> disbursement is made on/after 7/1/94 but prior to 7/1/95, (b) Stafford
> loans for which the first disbursement is made on/after 7/1/95 and
> before 7/1/98, *except during the in-school, grace, and deferment
> periods*, and (c) all PLUS loans made on/after 1/1/00 but prior to
> 7/1/06.
>
> ^18^ Fixed-rate 8/10% Stafford loans that were subject to the
> "windfall profits" provisions of 427A(i)(1) of the Act and that have
> been converted to a variable rate; see 427A(i)(7)(D) of the Act (1986
> Amendments).
>
> ^19^ PLUS loans made on/after 7/1/94 but prior to 7/1/98.
>
> ^20^ (a)The 6% interest rates and special allowance rates apply to
> Consolidation loans made on/after 7/1/94 with tax-exempt funds; the
> 10%, 11%, 13% and 14% interest and special allowance rates *only*
> apply to Consolidation loans made with tax-exempt funds, and (b)
> Undergraduate subsidized Stafford loans made on/after 7/1/08 and
> before 7/1/09.
>
> ^21^ Fixed-rate Stafford loans made on/after 7/1/06.

^22^ Fixed-rate PLUS loans made on/after 7/1/06.

**Attachment C** Includes: Loans made on or after January 1, 2000 for
which the special allowance is calculated.

I.  --Stafford loans (subsidized and unsubsidized):

> made on/after 1/1/00 but prior to 4/1/06, *only* during the in-school,
> grace and deferment periods;
>
> made on/after 4/1/06 and prior to 10/1/07, *only* during the
> in-school, grace and deferment periods, and *which* *are subject to
> the repayment of excess interest as required under the Higher
> Education Reconciliation Act (HERA)*.
>
> **Formula: (2.58%)** plus (1.74%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 3.61% ^23^ .0071 .001775
>
> 6.80% ^24^ -.0248 -.0062
>
> ^23^ Stafford loans made on or after 1/1/00 but prior to 7/1/06.
>
> ^24^ Stafford loans made on or after 7/1/06 but prior to 10/1/07.
> Because this formula resulted in an amount less than zero, these loans
> will not receive special allowance. The rate shown is for the
> recapture of excess interest.

II. --Stafford loans (subsidized and unsubsidized):

> made on/after 1/1/00 but prior to 4/1/06, *except* during the
> in-school, grace and deferment periods;
>
> made on/after 4/1/06 and prior to 10/1/07, *except* during the
> in-school, grace and deferment periods, and *which are subject to the
> repayment of excess interest as required under the Higher Education
> Reconciliation Act (HERA).*
>
> **Formula: (2.58%)** plus (2.34%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 4.21% ^25^ .0071 .001775
>
> 6.80% ^26^ -.0188 -.0047
>
> ^25^ Stafford loans made on or after 1/1/00 but prior to 7/1/06.
>
> ^26^ Stafford loans made on or after 7/1/06 but prior to 10/1/07.
> Because this formula resulted in an amount less than zero, these loans
> will not receive special allowance. The rate shown is for the
> recapture of excess interest.

III. --PLUS loans

> made on/after 1/1/00 but prior to 4/1/06;
>
> made on/after 4/1/06 and prior to 10/1/07, and *which are subject to
> the repayment of excess interest as required under the Higher
> Education Reconciliation Act (HERA).*
>
> **Formula:** (**2.58**%) plus (2.64%) less (applicable interest rate)
> = annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 5.01% ^27^ .0021 .000525
>
> 8.50% ^28^ -.0328 -.0082

IV. -Consolidation loans

> for applications received on/after 1/1/00;
>
> made on/after 4/1/06 and prior to 10/1/07, and *which are subject to
> the repayment of excess interest as required under the Higher
> Education Reconciliation Act (HERA).*
>
> **Formula:** (**2.58**%) plus (2.64%) less (applicable interest rate)
> = annual special allowance rate.
>
> Note: The interest rate for these consolidation loans is determined by
> taking the weighted average of the interest rates on the loans being
> consolidated, rounded to the nearest higher 1/8^th^ of one percent.
> Therefore, due to the wide range of possible applicable interest
> rates, no further calculations are shown here.
>
> ^27^ PLUS loans made on or after 1/1/00 but prior to 7/1/06.
>
> ^28^ PLUS loans made on or after 7/1/06 but prior to 10/1/07. Because
> this formula resulted in an amount less than zero, these loans will
> not receive special allowance. The rate shown is for the recapture of
> excess interest.

V.  --Stafford loans (subsidized and unsubsidized):

> made on/after 10/1/07, *only* during the in-school, grace and
> deferment periods, and *which* *are subject to the repayment of excess
> interest as required under the Higher Education Reconciliation Act
> (HERA)*.
>
> **Formula: (2.58%)** plus (1.19%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 6.0% ^29^ -.0223 -.005575
>
> 6.80% ^30^ -.0303 -.007575

VI. --Stafford loans (subsidized and unsubsidized):

> made on/after 10/1/07, *except* during the in-school, grace and
> deferment periods, and *which are subject to the repayment of excess
> interest as required under the Higher Education Reconciliation Act
> (HERA).*
>
> **Formula: (2.58%)** plus (1.79%) less (applicable interest rate) =
> annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 6.0% ^29^ -.0163 -.004075
>
> 6.80% ^30^ -.0243 -.006075
>
> ^29^ Undergraduate subsidized Stafford loans made on/after 7/1/08 and
> before 7/1/09. Because this formula resulted in an amount less than
> zero, these loans will not receive special allowance. The rate shown
> is for the recapture of excess interest.
>
> ^30^ Stafford loans made on/after 10/1/07, *except* undergraduate
> subsidized Stafford loans made on/after 7/1/08. Because this formula
> resulted in an amount less than zero, these loans will not receive
> special allowance. The rate shown is for the recapture of excess
> interest.

VII. --PLUS loans

> made on/after 10/1/07, and *which are subject to the repayment of
> excess interest as required under the Higher Education Reconciliation
> Act (HERA).*
>
> **Formula:** (**2.58**%) plus (1.79%) less (applicable interest rate)
> = annual special allowance rate.

+----------------------+------------------------+---------------------+
| **[Applicable        | **[Special             | **[Special          |
| A                    | Al                     | Allow               |
| nnual]{.smallcaps}** | lowance]{.smallcaps}** | ance]{.smallcaps}** |
|                      |                        |                     |
| **[Interest          | **[At Annual           | **[For 3-month      |
| Rate]{.smallcaps}**  | Rate]{.smallcaps}**    | Pe                  |
|                      |                        | riod]{.smallcaps}** |
+----------------------+------------------------+---------------------+

> 8.50% ^31^ -.0413 -.010325
>
> ^31^ Because this formula resulted in an amount less than zero, these
> loans will not receive special allowance. The rate shown is for the
> recapture of excess interest.

VIII. -Consolidation loans

> made on or after 10/1/07, and *which are subject to the repayment of
> excess interest as required under the Higher Education Reconciliation
> Act (HERA).*
>
> **Formula:** (**2.58**%) plus (2.09%) less (applicable interest rate)
> = annual special allowance rate.
>
> Note: The interest rate for these consolidation loans is determined by
> taking the weighted average of the interest rates on the loans being
> consolidated, rounded to the nearest higher 1/8^th^ of one percent.
> Therefore, due to the wide range of possible applicable interest
> rates, no further calculations are shown here.

+--------------------------+--------------------------------------------+
| # AUCTION DATE           | # BOND EQUIVALENT RATE                     |
+--------------------------+--------------------------------------------+
| 10/06/08                 | .467%                                      |
+--------------------------+--------------------------------------------+
| 10/14/08                 | .508%                                      |
+--------------------------+--------------------------------------------+
| 10/20/08                 | 1.271%                                     |
+--------------------------+--------------------------------------------+
| 10/27/08                 | .915%                                      |
+--------------------------+--------------------------------------------+
| 11/03/08                 | .538%                                      |
+--------------------------+--------------------------------------------+
| 11/10/08                 | .360%                                      |
+--------------------------+--------------------------------------------+
| 11/17/08                 | .152%                                      |
+--------------------------+--------------------------------------------+
| 11/24/08                 | .152%                                      |
+--------------------------+--------------------------------------------+
| 12/01/08                 | .051%                                      |
+--------------------------+--------------------------------------------+
| 12/08/08                 | .005%                                      |
+--------------------------+--------------------------------------------+
| 12/15/08                 | .051%                                      |
+--------------------------+--------------------------------------------+
| 12/22/08                 | .041%                                      |
+--------------------------+--------------------------------------------+
| 12/29/08                 | .051%                                      |
+--------------------------+--------------------------------------------+
|                          |                                            |
+--------------------------+--------------------------------------------+
|                          | 4.562%                                     |
+--------------------------+--------------------------------------------+
| **AVERAGE =.35%**        |                                            |
+--------------------------+--------------------------------------------+