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

DEPARTMENT OF EDUCATION

34 CFR Part 685

William D. Ford Federal Direct Loan

Program

AGENCY: Office of Postsecondary

Education, Department of Education.

ACTION: Final regulations.

SUMMARY: These regulations contain

revised income percentage factors for

the income contingent repayment plan,

a repayment plan available in the

William D. Ford Federal Direct Loan

(Direct Loan) Program. The regulations

also contain updated sample income

contingent repayment amounts for

single and married or head-ofhousehold borrowers at various income

and debt levels.

EFFECTIVE DATE: These regulations take

effect on July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Mr.

Donald Watson, Management Analyst,

Direct Loan Policy, Policy Development

Division, U.S. Department of Education,

Room 3045, ROB–3, 600 Independence

Avenue, SW., Washington, DC 20202–

5400. Telephone number: (202) 708–

8242. Individuals who use a

telecommunications device for the deaf

(TDD) may call the Federal Information

Relay Service (FIRS) at 1–800–877–

8339, between 8 a.m. and 8 p.m.,

Eastern Time, Monday through Friday.

Individuals with disabilities may

obtain this document in an alternate

format (e.g., Braille, large print,

audiotape, or computer diskette) on

request to the contact person listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION: The Direct

Loan income contingent repayment plan

regulations are amended to revise the

four sources of information contained in

Appendix A to 34 CFR Part 685,

published on July 1, 1997 (62 FR

35602): examples of how the calculation

of the monthly ICR repayment amount

is performed, the income percentage

factors, the constant multiplier chart,

and charts showing sample repayment

amounts.

The income percentage factors have

been updated to reflect changes based

on inflation. The revised income

percentage factor table was developed

by changing the dollar amounts of the

incomes shown by a percentage equal to

the estimated percentage change in the

Consumer Price Index for all Urban

Consumers from December 1997 to

December 1998. Further, the examples

of the calculations of the monthly

repayment amounts and the two charts

showing sample repayment amounts for

single and married or head of household

borrowers at various income and debt

levels have been amended to reflect the

updated income percentage factors.

The updated income percentage

factors, at any given income, may cause

a borrower’s payments to be slightly

lower than under the income percentage

factors published in the July 1, 1997

regulations. These updated income

percentage factors more accurately

reflect a borrower’s current ability to

repay than those previously published

because the revised factors are based on

more recent economic data.

Waiver of Proposed Rulemaking

In accordance with the

Administrative Procedure Act, 5 U.S.C.

553, it is customary for the Secretary to

offer interested parties the opportunity

to comment on proposed regulations.

However, the changes in this document

do not establish any new substantive

rules, but simply update the income

percentage factors used in the income

contingent repayment plan, as required

under 34 CFR 685.209(a)(8), and revise

sample repayment information

accordingly. Therefore, the Secretary

has determined that publication of a

notice of proposed rulemaking is

unnecessary and contrary to the public

interest under 5 U.S.C. 553(b)(B). For

the same reasons, the Secretary waives

the 30-day delayed effective date under

5 U.S.C. 553(d).

Paperwork Reduction Act of 1995

These regulations have been

examined under the Paperwork

Reduction Act of 1995 and have been

found to contain no information

collection requirements.

Regulatory Flexibility Act Certification

The Secretary certifies that these

regulations will not have significant

economic impact on a substantial

number of small entities. The

regulations will affect borrowers who

are in repayment and will not affect

institutions participating in the Direct

Loan Program. The Regulatory

Flexibility Act does not include

individuals in its definition of ‘‘small

entities.’’ Thus, the changes will not

have a significant economic impact on

any small entities under the Regulatory

Flexibility Act.

Assessment of Educational Impact

The Secretary has determined that the

regulations in this document would not

require transmission of information that

is being gathered by or is available from

any other agency or authority of the

United States.

Electronic Access to this Document

Anyone may view this document, as

well as all other Department of

Education documents published in the

Federal Register, in the text or portable

document format (pdf) on the World

Wide Web at either of the following

sites:

http://ocfo.ed.gov/fedreg.htm

http://www.ed.gov/news.html

To use the pdf you must have the Adobe

Acrobat Reader Program with Search,

which is available free at either of the

previous sites. If you have questions

about using the pdf, call the U.S.

Government Printing Office at (202)

512–1530 or, toll free, at 1–888–293–

6498.

Anyone may also view these

documents in text copy only on an

electronic bulletin board of the

Department. Telephone: (202) 219–1511

or, toll free, 1–800–222–4922. The

documents are located under Option

G—Files/Announcements, Bulletins and

Press Releases.

Note: The official version of this document

is the document published in the Federal

Register.

List of Subjects in 34 CFR Part 685

Administrative practice and

procedure, Colleges and universities,

Education, Loan programs-education,

Reporting and recordkeeping

requirements, Student aid, Vocational

education.

Dated: July 13, 1998.

Richard W. Riley,

Secretary of Education.

(Catalog of Federal Domestic Assistance

Number 84.268 William D. Ford Federal

Direct Loan Program)

The Secretary amends Part 685 of title

34 of the Code of Federal Regulations as

follows:

PART 685—WILLIAM D. FORD

FEDERAL DIRECT LOAN PROGRAM

1. The authority citation for Part 685

continues to read as follows:

Authority: 20 U.S.C. 1087a et seq., unless

otherwise noted.

2. Appendix A to part 685 is revised

to read as follows:

Appendix A to part 685—Income Contingent

Repayment

Examples of the Calculations of Monthly

Repayment Amounts

Example 1. A single borrower with $15,000

of Direct Loans, 8.25 percent interest rate,

and an adjusted gross income (AGI) of

$23,356.

Step 1: Determine annual payments based

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

this, multiply the principal balance by the

constant multiplier for 8.25 percent interest

(0.1315452). The constant multiplier is a

factor used to calculate amortized payments

at a given interest rate over a fixed period of

time. (See the constant multiplier chart

below to determine the constant multiplier

you should use for the interest rate on the

loan. If the exact interest rate is not listed,

use the next highest for estimation purposes.)

• 0.1315452 × $15,000 = $1,973.18

Step 2: Multiply the result by the income

percentage factor shown in the income

percentage factor table that corresponds to

the borrower’s income (if the income is not

listed, you can calculate the applicable

income percentage factor by following the

instructions under the interpolation heading

below):

• 80.33% (0.8033) × $1,973.18 = $1,585.06

Step 3: Determine 20 percent of

discretionary income. For a single borrower,

subtract the poverty level for a family of one,

as published in the Federal Register on

February 24, 1998 (63 FR 9235), from the

borrower’s income and multiply the result by

20%:

• $23,356¥$8,050 = $15,306

• $15,306 × 0.20 = $3,061.20

Step 4: Compare the amount from step 2

with the amount from step 3. The lower of

the two will be the borrower’s annual

payment amount. This borrower will be

paying the amount calculated under step 2.

To determine the monthly repayment

amount, divide the annual amount by 12.

• $1,585.05 ÷ 12 = $132.09

Example 2. Married borrowers repaying

jointly under the income contingent

repayment plan with a combined AGI of

$29,337. The husband has a Direct Loan

balance of $10,000, and the wife has a Direct

Loan balance of $15,000. The interest rate is

8.25 percent. This couple has no children.

Step 1: Add the Direct Loan balances of the

husband and wife together to determine the

aggregate loan balance.

• $10,000 + $15,000 = $25,000

Step 2: Determine the annual payment

based on what the couple would pay over 12

years using standard amortization. To do

this, multiply the aggregate principal balance

by the constant multiplier for 8.25 percent

interest (0.1315452). (See the constant

multiplier chart to determine the constant

multiplier you should use for the interest rate

on the loan. If the exact interest rate is not

listed, choose the next highest rate for

estimation purposes.)

• 0.1315452 × $25,000 = $3,288.63

Step 3: Multiply the result by the income

percentage factor shown in the income

percentage factor table that corresponds to

the couple’s income (if the income is not

listed, you can calculate the applicable

income percentage factor by following the

instructions under the interpolation heading

below):

• 87.61% (0.8761) × $3,288.63 = $2881.17

Step 4: Determine 20 percent of the

couple’s discretionary income. To do this,

subtract the poverty level for a family of 2,

as published in the Federal Register on

February 24, 1998 (63 FR 9235), from the

couple’s income and multiply the result by

20 percent:

• $29,337–$10,850 = $18,487

• $18,487 × 0.20 = $3,397.40

Step 5: Compare the amount from step 3

with the amount from step 4. The lower of

the two will be the annual payment amount.

The married borrowers will be paying the

amount calculated under step 3. To

determine the monthly repayment amount,

divide the annual amount by 12.

• $2,881.17 ÷ 12 = $240.10

Interpolation: If your income does not

appear on the income percentage factor table,

you will have to calculate the income

percentage factor through interpolation. For

example, assume you are single and your

income is $30,000.

Step 1: To interpolate, you must first find

the interval between the closest income listed

that is less than $30,000 and the closest

income listed that is greater than $30,000.

Afterwards, you must subtract these numbers

(for this discussion, we will call the result

‘‘the income interval’’):

• $36,793–$29,337 = $7,456

Step 2: Next, find the interval between the

two income percentage factors that are given

for these incomes (for this discussion, we

will call the result, the ‘‘income percentage

factor interval’’):

• 100.00%–88.77 = 11.23%

Step 3: Subtract the income shown on the

chart that is immediately less than $30,000

from $30,000:

• $30,000–$29,337 = $663

Step 4: Divide the result by the number

representing the income interval:

• $663 ÷ $7,456 = 0.0889

Step 5: Multiply the result by the income

percentage factor interval:

• 0.0889 × 11.23 = 0.9983

Step 6: Add the result to the lower income

percentage factor used to calculate the

income percentage factor interval for $30,000

in income:

• .9983% + 88.77% = 89.77%

The result is the income percentage factor

that will be used to calculate the monthly

repayment amount under the income

contingent repayment plan.

INCOME PERCENTAGE FACTORS

[Based on annual income]

Single Married/head of

household

Income Percent

factor Income Percent

factor

7,669 ..... 55.00 7,669 50.52

10,552 ... 57.79 12,101 56.68

13,578 ... 60.57 14,422 59.56

16,673 ... 66.23 18,853 67.79

19,629 ... 71.89 23,356 75.22

23,356 ... 80.33 29,337 87.61

29,337 ... 88.77 36,793 100.00

36,793 ... 100.00 44,251 100.00

44,251 ... 100.00 55,438 109.40

53,185 ... 111.80 74,080 125.00

68,101 ... 123.50 100,180 140.60

96,452 ... 141.20 140,106 150.00

110,592 150.00 228,943 200.00

196,984 200.00

CONSTANT MULTIPLIER CHART FOR 12-

YEAR AMORTIZATION

Interest rate

(percent)

Annual constant multiplier

7.00 ........................................... 0.123406

7.25 ........................................... 0.125011

7.46 ........................................... 0.126368

7.50 ........................................... 0.126627

7.75 ........................................... 0.128255

8.00 ........................................... 0.129894

8.25 ........................................... 0.131545

8.38 ........................................... 0.132408

8.50 ........................................... 0.133207

8.75 ........................................... 0.134880

9.00 ........................................... 0.136564

BILLING CODE 4000–01–P
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