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###### Department of Education

# 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                           ( print 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. § 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                           ( print 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. 

      ( print page 62036)          ( print page 62037)          ( print page 62038)          ( print page 62039)          ( print page 62040)    

BILLING CODE 4001-01-P

[FR Doc. 04-23720 Filed 10-21-04; 8:45 am] 

BILLING CODE 4000-01-C