[Federal Register: May 16, 2003 (Volume 68, Number 95)]
[Notices]               
[Page 26581-26586]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16my03-56]                         

Download: PDF Version 

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

DEPARTMENT OF EDUCATION

 
William D. Ford Federal Direct Loan Program

AGENCY: Department of Education.

ACTION: Notice of the annual updates to the Income Contingent Repayment 
(ICR) plan formula for 2003.

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

SUMMARY: The Secretary announces the annual updates to the ICR plan 
formula for 2003. Under the William D. Ford Federal Direct Loan (Direct 
Loan) Program, borrowers may choose to repay their student loans under 
the ICR plan, which bases the repayment amount on the borrower's 
income, family size, loan amount, and interest rate. Each year, we 
adjust the formula for calculating a borrower's payment to reflect 
changes due to inflation. This notice contains the adjusted income 
percentage factors for 2003 and charts showing sample repayment amounts 
based on the adjusted ICR plan formula. It also contains examples of 
how the calculation of the monthly ICR amount is performed and a 
constant multiplier chart for use in performing the calculations. The 
adjustments for the ICR plan formula contained in this notice are 
effective from July 1, 2003 to June 30, 2004.

FOR FURTHER INFORMATION CONTACT: Don Watson, U.S. Department of 
Education, Room 092B1, 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 in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: Direct Loan Program borrowers may choose to 
repay their Direct Loans under the ICR plan. The attachment to this 
notice provides updates to examples of how the calculation of the 
monthly ICR amount is performed, the income percentage factors, the 
constant multiplier chart, and charts showing sample repayment amounts.
    We have updated the income percentage factors to reflect changes 
based on inflation. We have revised the income percentage factors table 
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 2002 to December 2003. Further, 
we provide examples of monthly repayment amount calculations and two 
charts that show sample repayment amounts for single and married or 
head-of-household borrowers at various income and debt levels based on 
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 they were in 
prior years. This updated amount more accurately reflects the impact of 
inflation on a borrower's current ability to repay.

Electronic Access to This Document

    You may review this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.ed.gov/legislation/FedRegister.
    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.access.gpo.gov/nara/index.html
.


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

    Dated: May 13, 2003.
Theresa S. Shaw,
Chief Operating Officer, Federal Student Aid.

Attachment--Examples of the Calculations of Monthly Repayment Amounts

    Example 1. This example assumes you are a single borrower with 
$15,000 in Direct Loans, the interest rate being charged is 8.25 
percent, and you have an adjusted gross income (AGI) of $33,042.
    Step 1: Determine your annual payments based on what you would pay 
over 12 years using standard amortization. To do this, multiply your 
loan balance by the constant multiplier for 8.25 percent interest 
(0.131545). The constant multiplier is a factor used to calculate 
amortized payments at a given interest rate over a fixed period of 
time. (The 8.25 percent interest rate used in this example is the 
maximum interest rate that may be charged for all Direct Loans 
excluding Direct PLUS Loans and certain Direct PLUS Consolidation 
Loans; your actual interest rate may be lower. You can view the 
constant multiplier chart at the end of this notice to determine the 
constant multiplier that you should use for the interest rate on your 
loan. If your exact interest rate is not listed, use the next highest 
for estimation purposes.)

[sbull] 0.131545 x $15,000 = $1,973.18

    Step 2: Multiply the result of Step 1 by the income percentage 
factor shown in the income percentage factors table that corresponds to 
your income and then divide the result by 100. (If your income is not 
listed in the income percentage factors table, calculate the applicable 
income percentage factor by following the instructions under the 
``Interpolation'' heading later in this notice.):

[sbull] 88.77 x $1,973.18 / 100 = $1,751.59


[[Page 26582]]


    Step 3: Determine 20 percent of your discretionary income (your 
discretionary income is your AGI minus the HHS Poverty Guideline amount 
for your family size). Because you are a single borrower, subtract the 
poverty level for a family of one, as published in the Federal Register 
on February 7, 2003 (68 FR 6456), from your AGI and multiply the result 
by 20 percent:

[sbull] $33,042 - $8,980 = $24,062
[sbull] $24,062 x 0.20 = $4,812.40

    Step 4: Compare the amount from Step 2 with the amount from Step 3. 
The lower of the two will be your annual payment amount. In this 
example, you will be paying the amount calculated under Step 2. To 
determine your monthly repayment amount, divide the annual amount by 
12.

[sbull] $1,751.59 / 12 = $145.97

    Example 2. In this example, you are married. You and your spouse 
have a combined AGI of $62,439 and are repaying your loans jointly 
under the ICR plan. You have no children. You have a Direct Loan 
balance of $10,000, and your spouse has a Direct Loan balance of 
$15,000. Your interest rate is 8.25 percent.
    Step 1: Add your and your spouse's Direct Loan balances together to 
determine your aggregate loan balance:

[sbull] $10,000 + $15,000 = $25,000

    Step 2: Determine the annual payment based on what you would pay 
over 12 years using standard amortization. To do this, multiply your 
aggregate loan balance by the constant multiplier for 8.25 percent 
interest (0.131545). (The 8.25 percent interest rate used in this 
example is the maximum interest rate that may be charged for all Direct 
Loans excluding Direct PLUS Loans and certain Direct PLUS Consolidation 
Loans; your actual interest rate may be lower. You can view the 
constant multiplier chart at the end of this notice to determine the 
constant multiplier that you should use for the interest rate on your 
loan. If your exact interest rate is not listed, use the next highest 
for estimation purposes.)

[sbull] 0.131545 x $25,000 = $3,288.63

    Step 3: Multiply the result of Step 2 by the income percentage 
factor shown in the income percentage factors table that corresponds to 
your and your spouse's income and then divide the result by 100. (If 
your and your spouse's aggregate income is not listed in the income 
percentage factors table, calculate the applicable income percentage 
factor by following the instructions under the ``Interpolation'' 
heading later in this notice.):

[sbull] 109.40 x $3,288.63 / 100 = $3,597.76

    Step 4: Determine 20 percent of your discretionary income. To do 
this, subtract the poverty level for a family of two, as published in 
the Federal Register on February 7, 2003 (68 FR 6456), from your 
combined AGI and multiply the result by 20 percent:

[sbull] $62,439 - $12,120 = $50,319
[sbull] $50,319 x 0.20 = $10,063.80

    Step 5: Compare the amount from Step 3 with the amount from Step 4. 
The lower of the two will be your annual payment amount. You and your 
spouse will pay the amount calculated under Step 3. To determine your 
monthly repayment amount, divide the annual amount by 12.

[sbull] $3,597.76 / 12 = $299.81

    Interpolation: If your income does not appear on the income 
percentage factors table, you will have to calculate the income 
percentage factor through interpolation. For example, assume you are 
single and your income is $25,000.
    Step 1: Find the closest income listed that is less than your 
income of $25,000 and the closest income listed that is greater than 
your income of $25,000.
    Step 2: Subtract the lower amount from the higher amount (for this 
discussion, we will call the result the ``income interval''):

[sbull] $26,306 - $22,108 = $4,198

    Step 3: Determine the difference 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''):

[sbull] 80.33% - 71.89% = 8.44%

    Step 4: Subtract from your income the closest income shown on the 
chart that is less than your income of $25,000:

[sbull] $25,000 - $22,108 = $2,892

    Step 5: Divide the result of Step 4 by the income interval 
determined in Step 2:

[sbull] $2,892 / $4,198 = 0.6889

    Step 6: Multiply the result of Step 5 by the income percentage 
factor interval:

[sbull] 8.44% x 0.6889 = 5.8143%

    Step 7: Add the result of Step 6 to the lower of the two income 
percentage factors used in Step 3 to calculate the income percentage 
factor interval for $25,000 in income:

[sbull] 5.8143% + 71.89% = 77.70% (rounded to the nearest hundredth)

    The result is the income percentage factor that will be used to 
calculate the monthly repayment amount under the ICR plan.

                     2003 Income Percentage Factors
                        [Based on Annual Income]
------------------------------------------------------------------------
                  Single                      Married/head of household
------------------------------------------------------------------------
           Income               % Factor         Income        % Factor
------------------------------------------------------------------------
8,637.......................        55.00   8,637..........        50.52
11,885......................        57.79   13,629.........        56.68
15,293......................        60.57   16,243.........        59.56
18,779......................        66.23   21,234.........        67.79
22,108......................        71.89   26,306.........        75.22
26,306......................        80.33   33,042.........        87.61
33,042......................        88.77   41,439.........       100.00
41,440......................       100.00   49,840.........       100.00
49,840......................       100.00   62,439.........       109.40
59,901......................       111.80   83,435.........       125.00
76,701......................       123.50   112,831........       140.60
108,633.....................       141.20   157,799........       150.00
124,558.....................       150.00   257,856........       200.00
221,860.....................       200.00
------------------------------------------------------------------------


[[Page 26583]]


           Constant Multiplier Chart for 12-Year Amortization
------------------------------------------------------------------------
                                                               Annual
                  Interest rate  percent                      constant
                                                             multiplier
------------------------------------------------------------------------
4.06......................................................      0.105413
4.86......................................................      0.110146
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
8.50......................................................      0.133207
8.75......................................................      0.134880
9.00......................................................      0.136564
------------------------------------------------------------------------


BILLING CODE 4000-01-P

[[Page 26584]]

[GRAPHIC] [TIFF OMITTED] TN16MY03.032


[[Page 26585]]


[GRAPHIC] [TIFF OMITTED] TN16MY03.033


[[Page 26586]]


[FR Doc. 03-12283 Filed 5-15-03; 8:45 am]

BILLING CODE 4000-01-C