[Federal Register Volume 69, Number 204 (Friday, October 22, 2004)]
[Notices]
[Pages 62033-62040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-23720]


-----------------------------------------------------------------------

DEPARTMENT OF EDUCATION


William D. Ford Federal Direct Loan Program

AGENCY: Federal Student Aid, Department of Education.

ACTION: Notice of interest rates for the William D. Ford Federal Direct 
Loan Program for the period July 1, 2004 through June 30, 2005.

-----------------------------------------------------------------------

SUMMARY: The Chief Operating Officer for Federal Student Aid announces 
the interest rates for loans made under the William D. Ford Federal 
Direct Loan (Direct Loan) Program for the period July 1, 2004 through 
June 30, 2005.

FOR FURTHER INFORMATION CONTACT: Don Watson, U.S. Department of 
Education, room 114I2, UCP, 400 Maryland Avenue, SW., Washington, DC 
20202-5400. Telephone: (202) 377-4008.
    If you use a telecommunications device for the deaf (TDD), you 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 under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:
    Section 455(b) of the Higher Education Act of 1965, as amended 
(HEA), 20 U.S.C. 1087e(b), provides

[[Page 62034]]

formulas for determining the interest rates charged to borrowers for 
loans made under the Direct Loan Program including Federal Direct 
Stafford Loans (Direct Subsidized Loans), Federal Direct Unsubsidized 
Stafford Loans (Direct Unsubsidized Loans), Federal Direct PLUS Loans 
(Direct PLUS Loans) and Federal Direct Consolidation Loans (Direct 
Consolidation Loans).
    The Direct Loan Program includes loans with variable interest rates 
and loans with fixed interest rates. Most loans made under the Direct 
Loan Program have variable interest rates that change each year. The 
variable interest rate formula that applies to a particular loan 
depends on the date of the first disbursement of the loan. The variable 
rates are determined annually and are effective for each 12-month 
period beginning July 1 of one-year and ending June 30 of the following 
year.
    In the case of some Direct Consolidation Loans, the interest rate 
is determined by the date on which the Direct Consolidation Loan 
application was received. Direct Consolidation Loans for which the 
application was received on or after February 1, 1999 have a fixed 
interest rate based on the weighted average of the loans that are 
consolidated rounded up to the nearest higher \1/8\ of one percent.
    Pursuant to section 455(b) of the HEA, 20 U.S.C. Sec.  1087e(b), 
the Direct Loan interest rate formulas use the bond equivalent rates of 
the 91-day Treasury bills at the final auction held before June 1 of 
each year plus a statutory add-on percentage to determine the variable 
interest rate for all Direct Subsidized Loans and Direct Unsubsidized 
Loans; Direct Consolidation Loans for which the application was 
received on or after July 1, 1998 and before February 1, 1999; and 
Direct PLUS Loans disbursed on or after July 1, 1998.
    The bond equivalent rate of the 91-day Treasury bills auctioned on 
May 24, 2004, which is used to calculate the interest rates on these 
loans, is 1.066 percent, which is rounded to 1.07 percent.
    In addition, pursuant to section 455(b) of the HEA, 20 U.S.C. 
1087e(b), as amended by Public Law 106-554, the Consolidated 
Appropriations Act 2001, the interest rate for Direct PLUS Loans that 
were disbursed on or after July 1, 1994 and on or before July 1, 1998, 
is 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 
plus a statutory add-on percentage.
    The last calendar week ending on or before June 26 2004, began on 
June 20, 2004 and ended on June 26, 2004. On June 25, 2004, the Board 
of Governors of the Federal Reserve System published the 1-year 
constant maturity Treasury yield average as 2.16 percent.
    Below is specific information on the calculation of the interest 
rates for the Direct Loan Program. This information is listed in order 
by the date a loan was first disbursed or by the date that the 
Consolidation Application was received.
    In addition, a summary of the interest rates that are effective for 
the period July 1, 2004 through June 30, 2005, is included on charts at 
the end of this notice. These charts are organized by loan type. In 
each chart, the interest rates are arranged by the date a loan was 
first disbursed or by the date that the consolidation application was 
received.

For Direct Loan Program Loans First Disbursed on or After July 1, 1994, 
and Before July 1, 1995

    The interest rate for Direct Subsidized Loans, Direct Unsubsidized 
Loans, and Direct Subsidized and Unsubsidized Consolidation Loans is 
the bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1 plus 3.1 percent. These interest rates 
may not exceed 8.25 percent during any period. From July 1, 2004, to 
June 30, 2005, the interest rate for Direct Subsidized Loans, Direct 
Unsubsidized Loans and Direct Subsidized and Unsubsidized Consolidation 
Loans that were first disbursed on or after July 1, 1994, and before 
July 1, 1995, is 4.17 percent during all periods.
    The interest rate for Direct PLUS Loans and Direct PLUS 
Consolidation Loans is 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 
plus 3.1 percent. These interest rates may not exceed 9.0 percent 
during any period. From July 1, 2004, to June 30, 2005, the interest 
rate for Direct PLUS Loans and Direct PLUS Consolidation Loans that 
were first disbursed on or after July 1, 1994 and before July 1, 1995, 
is 5.26 percent for all periods.

For Direct Loan Program Loans First Disbursed on or After July 1, 1995, 
and Before July 1, 1998

    The interest rate for Direct Subsidized Loans, Direct Unsubsidized 
Loans, and Direct Subsidized and Unsubsidized Consolidation Loans is 
the bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1 plus 3.1 percent. However, during in-
school, grace, and deferment periods, the interest rate formula is the 
bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1 plus 2.5 percent. These interest rates 
may not exceed 8.25 percent during any period. From July 1, 2004, to 
June 30, 2005, the interest rate for Direct Subsidized Loans, Direct 
Unsubsidized Loans and Direct Subsidized and Unsubsidized Consolidation 
Loans that were first disbursed on or after July 1, 1995, and before 
July 1, 1998, is 3.57 percent during in-school, grace, and deferment 
periods and 4.17 percent during all other periods.
    The interest rate for Direct PLUS Loans and Direct PLUS 
Consolidation Loans is 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 
plus 3.1 percent. These interest rates may not exceed 9.0 percent 
during any period. From July 1, 2004, to June 30, 2005, the interest 
rate for Direct PLUS Loans and Direct PLUS Consolidation Loans that 
were first disbursed on or after July 1, 1995 and before July 1, 1998, 
is 5.26 percent during all periods.

For Direct Loans First Disbursed on or After July 1, 1998, and Before 
October 1, 1998

    The interest rate for Direct Subsidized Loans, Direct Unsubsidized 
Loans, and Direct Subsidized and Unsubsidized Consolidation Loans is 
the bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1 plus 2.3 percent. However, during in-
school, grace, and deferment periods, the interest rate formula is the 
bond equivalent rate of the 91-day Treasury bills auctioned at the 
final auction held before June 1 plus 1.7 percent. These interest rates 
may not exceed 8.25 percent during any period. From July 1, 2004, to 
June 30, 2005, the interest rate for Direct Subsidized Loans, Direct 
Unsubsidized Loans, and Direct Subsidized and Unsubsidized 
Consolidation Loans that were first disbursed on or after July 1, 1998 
and before October 1, 1998, is 2.77 percent during in-school, grace, 
and deferment periods and 3.37 percent during all other periods.
    The interest rate for Direct PLUS Loans and Direct PLUS 
Consolidation Loans is the bond equivalent rate of the 91-day Treasury 
bills auctioned at the final auction held before June 1 plus 3.1 
percent. These interest rates may not exceed 9.0 percent during any 
period. From July 1, 2004, to June 30, 2005, the

[[Page 62035]]

interest rate for Direct PLUS Loans and Direct PLUS Consolidation Loans 
that were disbursed on or after July 1, 1998, and before October 1, 
1998, is 4.17 percent during all periods.

For Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS 
Loans First Disbursed on or After October 1, 1998, and Before July 1, 
2005

    The interest rate for Direct Subsidized Loans and Direct 
Unsubsidized Loans is the bond equivalent rate of the 91-day Treasury 
bills auctioned at the final auction held before June 1 plus 2.3 
percent. However, during in-school, grace, and deferment periods, the 
interest rate formula is the bond equivalent rate of the 91-day 
Treasury bills plus 1.7 percent. These interest rates may not exceed 
8.25 percent during any period. From July 1, 2004, to June 30, 2005, 
the interest rate for Direct Subsidized Loans and Direct Unsubsidized 
Loans that were disbursed after July 1, 1998, and before July 1, 2005, 
is 2.77 percent during in-school, grace, and deferment periods and 3.37 
percent during all other periods.
    The interest rate for Direct PLUS Loans is the bond equivalent rate 
of the 91-day Treasury bills auctioned at the final auction held before 
June 1 plus 3.1 percent. These interest rates may not exceed 9.0 
percent during any period. From July 1, 2004, to June 30, 2005, the 
interest rate for Direct PLUS Loans that were disbursed after July 1, 
1998, and before July 1, 2005, is 4.17 percent during all periods.

For Direct Consolidation Loans First Disbursed on or After October 1, 
1998 and for Which the Application was Received Before October 1, 1998

    The interest rate for Direct Subsidized and Unsubsidized 
Consolidation Loans is the bond equivalent rate of the 91-day Treasury 
bills auctioned at the final auction held before June 1 plus 2.3 
percent. However, during in-school, grace, and deferment periods, the 
interest rate formula is the bond equivalent rate of the 91-day 
Treasury bills auctioned at the final auction held before June 1 plus 
1.7 percent. These interest rates may not exceed 8.25 percent during 
any period. From July 1, 2004, to June 30, 2005, the interest rate for 
Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct 
Subsidized and Unsubsidized Consolidation Loans that were first 
disbursed on or after July 1, 1998 and before October 1, 1998, is 2.77 
percent during in-school, grace, and deferment periods and 3.37 percent 
during all other periods.
    The interest rate for Direct PLUS Consolidation Loans is the bond 
equivalent rate of the 91-day Treasury bills auctioned at the final 
auction held before June 1 plus 3.1 percent. These interest rates may 
not exceed 9.0 percent during any period. From July 1, 2004, to June 
30, 2005, the interest rate for Direct PLUS Loans and Direct PLUS 
Consolidation Loans that were disbursed on or after July 1, 1998, and 
before October 1, 1998, is 4.17 percent during all periods.

For Direct Consolidation Loans for Which the Application was Received 
on or After October 1, 1998, and Before February 1, 1999

    The interest rate for Direct Consolidation Loans for which the 
application was received on or after October 1, 1998 and before 
February 1, 1999 is the bond equivalent rate of the 91-day Treasury 
bills auctioned at the final auction held before June 1 plus 2.3 
percent. These interest rates may not exceed 8.25 percent during any 
period. From July 1, 2004, to June 30, 2005, the interest rate for 
Direct Consolidation Loans for which the application was received on or 
after October 1, 1998 and before February 1, 1999, is 3.37 percent 
during all periods.

For Direct Consolidation Loans for Which the Application was Received 
on or After February 1, 1999, and Before July 1, 2005

    The interest rate for Direct Consolidation Loans for which the 
application was received on or after February 1, 1999, and before July 
1, 2005, is the lesser of 8.25 percent, or the weighted average of the 
loans consolidated, rounded to the nearest higher 1/8 of one percent.

Electronic Access to This Document

    You may review this document, as well as all other documents of 
this Department published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/federegister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free at 1-888-293-6498; or in 
the Washington, DC area at (202) 512-1530.

    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.gpoaccess.gov/nara/index.html.

    Program Authority: 20 U.S.C. 1087 et seq.


    Dated: October 19, 2004.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.
BILLING CODE 4001-01-P

[[Page 62036]]

[GRAPHIC] [TIFF OMITTED] TN22OC04.000


[[Page 62037]]


[GRAPHIC] [TIFF OMITTED] TN22OC04.001


[[Page 62038]]


[GRAPHIC] [TIFF OMITTED] TN22OC04.002


[[Page 62039]]


[GRAPHIC] [TIFF OMITTED] TN22OC04.003


[[Page 62040]]


[FR Doc. 04-23720 Filed 10-21-04; 8:45 am]
BILLING CODE 4000-01-C