Annual Updates to the Income Contingent Repayment (ICR) Plan Formula for 2016-William D. Ford Federal Direct Loan Program, 19153-19157 [2016-07517]
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Federal Register / Vol. 81, No. 64 / Monday, April 4, 2016 / Notices
proposed information collection; (c)
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Number of Respondents: 14,550.
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Dated: March 29, 2016.
Aaron Siegel,
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Officer, Department of Defense.
[FR Doc. 2016–07525 Filed 4–1–16; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF EDUCATION
Annual Updates to the Income
Contingent Repayment (ICR) Plan
Formula for 2016—William D. Ford
Federal Direct Loan Program
Federal Student Aid,
Department of Education.
ACTION: Notice.
AGENCY:
Catalog of Federal Domestic Assistance
(CFDA) Number: 84.063.
The Secretary announces the
annual updates to the ICR plan formula
for 2016, as required by 34 CFR
685.209(b)(1)(ii)(A), to give notice to
Direct Loan borrowers and the public
regarding how monthly ICR payment
amounts will be calculated for the
2016–2017 year.
DATES: The adjustments to the income
percentage factors for the ICR plan
formula contained in this notice are
SUMMARY:
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19153
effective from July 1, 2016, to June 30,
2017, for any borrower who enters the
ICR plan or has his or her monthly
payment amount recalculated under the
ICR plan during that period.
FOR FURTHER INFORMATION CONTACT: Ian
Foss, U.S. Department of Education, 830
First Street NE., Room 113H2,
Washington, DC 20202. Telephone:
(202) 377–3681 or by email: ian.foss@
ed.gov.
If you use a telecommunications
device for the deaf or a text telephone,
call the Federal Relay Service, toll free,
at 1–800–877–8339.
SUPPLEMENTARY INFORMATION: Under the
William D. Ford Federal Direct Loan
(Direct Loan) Program, borrowers may
choose to repay their non-defaulted
loans (Direct Subsidized Loans, Direct
Unsubsidized Loans, Direct PLUS Loans
made to graduate or professional
students, and Direct Consolidation
Loans) under the ICR plan. The ICR plan
bases the borrower’s repayment amount
on the borrower’s income, family size,
loan amount, and the interest rate
applicable to each of the borrower’s
loans.
ICR is one of the income-driven
repayment plans. Other income-driven
repayment plans include the IncomeBased Repayment (IBR) plan, the Pay As
You Earn (PAYE) Repayment plan, and
the Revised Pay As You Earn (REPAYE)
Repayment plan. The IBR, PAYE, and
REPAYE plans provide lower payment
amounts than the ICR plan for most
borrowers.
A Direct Loan borrower who repays
his or her loans under the ICR plan pays
the lesser of: (1) The amount that he or
she would pay over 12 years with fixed
payments multiplied by an income
percentage factor; or (2) 20 percent of
discretionary income.
Each year, to reflect changes in
inflation, we adjust the income
percentage factor used to calculate a
borrower’s ICR payment. We use the
adjusted income percentage factors to
calculate a borrower’s monthly ICR
payment amount when the borrower
initially applies for the ICR plan or
when the borrower submits his or her
annual income documentation, as
required under the ICR plan. This notice
contains the adjusted income percentage
factors for 2016, examples of how the
monthly payment amount in ICR is
calculated, and charts showing sample
repayment amounts based on the
adjusted ICR plan formula. This
information is included in the following
three attachments:
• Attachment 1—Income Percentage
Factors for 2016
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• Attachment 2—Examples of the
Calculations of Monthly Repayment
Amounts
• Attachment 3—Charts Showing
Sample Repayment Amounts for
Single and Married Borrowers
In Attachment 1, to reflect changes in
inflation, we have updated the income
percentage factors that were published
in the Federal Register on March 25,
2015 (80 FR 15757). Specifically, we
have revised the table of income
percentage factors by changing the
dollar amounts of the incomes shown by
a percentage equal to the estimated
percentage change between the notseasonally-adjusted Consumer Price
Index for all urban consumers for
December 2015 and December 2016.
The income percentage factors
reflected in Attachment 1 may cause a
borrower’s payments to be lower than
they were in prior years, even if the
borrower’s income is the same as in the
prior year. However, the revised
repayment amount more accurately
reflects the impact of inflation on the
borrower’s current ability to repay.
Accessible Format: Individuals with
disabilities can obtain this document in
an accessible format (e.g., braille, large
print, audiotape, or compact disc) on
request to the contact person listed
under FOR FURTHER INFORMATION
CONTACT in this section of the notice.
Electronic Access to This Document:
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
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Attachment 1—Income Percentage
Factors for 2016
INCOME PERCENTAGE FACTORS FOR
2016
Single
Married/head
of household
Income
Factor
%
$11,382 ......
$15,662 ......
$20,152 ......
$24,745 ......
$29,131 ......
$34,661 ......
$43,536 ......
$54,602 ......
$65,671 ......
$78,929 ......
$101,065 ....
$143,142 ....
$164,125 ....
$292,335 ....
55.00
57.79
60.57
66.23
71.89
80.33
88.77
100.00
100.00
111.80
123.50
141.20
150.00
200.00
Income
Factor
%
$11,382
$17,959
$21,402
$27,979
$34,661
$43,536
$54,601
$65,671
$82,275
$109,938
$148,672
$207,925
$339,766
50.52
56.68
59.56
67.79
75.22
87.61
100.00
100.00
109.40
125.00
140.60
150.00
200.00
Attachment 2—Examples of the
Calculations of Monthly Repayment
Amounts
General notes about the examples in
this attachment:
• We have a calculator that borrowers
can use to estimate what their payment
amount would be under the ICR plan.
The calculator is called the ‘‘Repayment
Estimator’’ and is available at
StudentAid.gov/repayment-estimator.
This calculator provides a detailed,
individualized assessment of a
borrower’s loans and repayment plan
options, including the ICR plan.
• The interest rates used in the
examples are for illustration only. The
actual interest rates on an individual
borrower’s Direct Loans depend on the
loan type and when the postsecondary
institution first disbursed the Direct
Loan to the borrower.
• The Poverty Guideline amounts
used in the examples are from the 2016
U.S. Department of Health and Human
Services (HHS) Poverty Guidelines for
the 48 contiguous States and the District
of Columbia. Different Poverty
Guidelines apply to residents of Alaska
and Hawaii. The Poverty Guidelines for
2016 were published in the Federal
Register on January 25, 2016 (81 FR
4036).
• All of the examples use an income
percentage factor corresponding to an
adjusted gross income (AGI) in the table
in Attachment 1. If your AGI is not
listed in the income percentage factors
table in Attachment 1, calculate the
applicable income percentage by
following the instructions under the
‘‘Interpolation’’ heading later in this
attachment.
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• Married borrowers may repay their
Direct Loans jointly under the ICR plan.
If a married couple elects this option,
we add the outstanding balance on the
Direct Loans of each borrower and we
add together both borrowers’ AGIs to
determine a joint ICR payment amount.
We then prorate the joint payment
amount for each borrower based on the
proportion of that borrower’s debt to the
total outstanding balance. We bill each
borrower separately.
• For example, if a married couple,
John and Sally, has a total outstanding
Direct Loan debt of $60,000, of which
$40,000 belongs to John and $20,000 to
Sally, we would apportion 67 percent of
the monthly ICR payment to John and
the remaining 33 percent to Sally. To
take advantage of a joint ICR payment,
married couples need not file taxes
jointly; they may file separately and
subsequently provide the other spouse’s
tax information to the borrower’s
Federal loan servicer.
Calculating the Monthly Payment
Amount Using a Standard Amortization
and a 12-Year Repayment Period
The formula to amortize a loan with
a standard schedule (in which each
payment is the same over the course of
the repayment period) is as follows:
M = P × < (I ÷ 12) ÷ [1 ¥ {1 + (I ÷ 12)}
∧–N] >
In the formula—
• M is the monthly payment amount;
• P is the outstanding principal balance of
the loan at the time the calculation is
performed;
• I is the annual interest rate on the loan,
expressed as a decimal (for example, for a
loan with an interest rate of 6 percent,
0.06); and
• N is the total number of months in the
repayment period (for example, for a loan
with a 12-year repayment period, 144
months).
For example, assume that Billy has a
$10,000 Direct Unsubsidized Loan with
an interest rate of 6 percent.
Step 1: To solve for M, first simplify
the numerator of the fraction by which
we multiply P, the outstanding
principal balance. To do this divide I,
the interest rate, as a decimal, by 12. In
this example, Billy’s interest rate is 6
percent. As a decimal, 6 percent is 0.06.
• 0.06 ÷ 12 = 0.005
Step 2: Next, simplify the
denominator of the fraction by which
we multiply P. To do this divide I, the
interest rate, as a decimal, by 12. Then,
add one. Next, raise the sum of the two
figures to the negative power that
corresponds to the length of the
repayment period in months. In this
example, because we are amortizing a
loan to calculate the monthly payment
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amount under the ICR plan, the
applicable figure is 12 years, which is
144 months. Finally, subtract the result
from one.
• 0.06 ÷ 12 = 0.005
• 1 + 0.005 = 1.005
• 1.005 ∧ ¥144 = 0.48762628
• 1 ¥ 0.48762628 = 0.51237372
Step 3: Next, resolve the fraction by
dividing the result from step one by the
result from step two.
• 0.005 ÷ 0.51237372 = 0.0097585
Step 4: Finally, solve for M, the
monthly payment amount, by
multiplying the outstanding principal
balance of the loan by the result of step
3.
• $10,000 × 0.0097585 = $97.59
The remainder of the examples in this
attachment will only show the results of
the formula.
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Example 1. Brenda is single with no
dependents and has $15,000 in Direct
Subsidized and Unsubsidized Loans. The
interest rate on Brenda’s loans is 6 percent,
and she has an AGI of $29,131.
Step 1: Determine the total monthly
payment amount based on what Brenda
would pay over 12 years using standard
amortization. To do this, use the formula that
precedes Example 1. In this example, the
monthly payment amount would be $146.38.
Step 2: Multiply the result of Step 1 by the
income percentage factor shown in the
income percentage factors table (see
Attachment 1 to this notice) that corresponds
to Brenda’s AGI. In this example, an AGI of
$29,131 corresponds to an income percentage
factor of 71.89 percent.
• 0.7189 × $146.38 = $105.23
Step 3: Determine 20 percent of Brenda’s
discretionary income and divide by 12
(discretionary income is AGI minus the HHS
Poverty Guideline amount for a borrower’s
family size and State of residence). For
Brenda, subtract the Poverty Guideline
amount for a family of one from her AGI,
multiply the result by 20 percent, and then
divide by 12:
• $29,131¥$11,880 = $17,251
• $17,251 × 0.20 = $3,450.20
• $3,450.20 ÷ 12 = $287.52
Step 4: Compare the amount from Step 2
with the amount from Step 3. The lower of
the two will be the monthly ICR payment
amount. In this example, Brenda will be
paying the amount calculated under Step 2
($105.23).
Note: Brenda would have a lower payment
under other income-driven repayment plans.
Specifically, Brenda’s payment would be
$89.31 under the PAYE and REPAYE
repayment plans. However, Brenda’s
payment would be $133.96 under the IBR
plan, which is higher than the payment she
would have under the ICR plan.
Example 2. Joseph is married to Susan and
has no dependents. They file their Federal
income tax return jointly. Joseph has a Direct
Loan balance of $10,000, and Susan has a
Direct Loan balance of $15,000. The interest
rate on all of the loans is 6 percent.
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Joseph and Susan have a combined AGI of
$82,275 and are repaying their loans jointly
under the ICR plan (for general information
regarding joint ICR payments for married
couples, see the fifth and sixth bullets under
the heading ‘‘General notes about the
examples in this attachment’’).
Step 1: Add Joseph’s and Susan’s Direct
Loan balances to determine their combined
aggregate loan balance:
• $10,000 + $15,000 = $25,000
Step 2: Determine the combined monthly
payment amount for Joseph and Susan based
on what both borrowers would pay over 12
years using standard amortization. To do
this, use the formula that precedes Example
1. In this example, the combined monthly
payment amount would be $243.96.
Step 3: Multiply the result of Step 2 by the
income percentage factor shown in the
income percentage factors table (see
Attachment 1 to this notice) that corresponds
to Joseph and Susan’s combined AGI. In this
example, the combined AGI of $82,275
corresponds to an income percentage factor
of 109.40 percent.
• 1.094 × $243.96 = $266.90
Step 4: Determine 20 percent of Joseph and
Susan’s combined discretionary income
(discretionary income is AGI minus the HHS
Poverty Guideline amount for a borrower’s
family size and State of residence). To do this
subtract the Poverty Guideline amount for a
family of two from the combined AGI,
multiply the result by 20 percent, and divide
by 12:
• $82,275¥$ 16,020 = $66,225
• $66,225 × 0.20 = $13,251
• $13,251 ÷ 12 = $1,104.25
Step 5: Compare the amount from Step 3
with the amount from Step 4. The lower of
the two will be Joseph and Susan’s joint
monthly payment amount. Joseph and Susan
will jointly pay the amount calculated under
Step 3 ($266.90).
19155
interest rate on all of the loans is 6 percent,
and David’s AGI is $34,661.
Step 1: Determine the total monthly
payment amount based on what David would
pay over 12 years using standard
amortization. To do this, use the formula that
precedes Example 1. In this example, the
monthly payment amount would be $585.51.
Step 2: Multiply the result of Step 1 by the
income percentage factor shown in the
income percentage factors table (see
Attachment 1 to this notice) that corresponds
to David’s AGI. In this example, an AGI of
$34,661 corresponds to an income percentage
factor of 80.33 percent.
• 0.8033 × $585.51 = $470.34
Step 3: Determine 20 percent of David’s
discretionary income and divide by 12
(discretionary income is AGI minus the HHS
Poverty Guideline amount for a borrower’s
family size and State of residence). To do this
subtract the Poverty Guideline amount for a
family of one from David’s AGI, multiply the
result by 20 percent, then divide by 12:
• $34,661¥$11,880 = $22,781
• $22,781 × 0.20 = $4,556.20
• $4,556.20 ÷ 12 = $379.68
Step 4: Compare the amount from Step 2
with the amount from Step 3. The lower of
the two will be David’s monthly payment
amount. In this example, David will be
paying the amount calculated under Step 3
($379.68).
Note: David would have a lower payment
under each of the other income-driven plans.
Specifically, David’s payment would be
$140.34 under the PAYE and REPAYE
repayment plans and $210.51 under the IBR
plan.
Interpolation. If an income is not
included on the income percentage
factor table, calculate the income
percentage factor through linear
interpolation. For example, assume that
Joan is single with an income of
Note: For Joseph and Susan, the IncomeContingent Repayment plan provides the
$50,000.
lowest monthly payment of all of the incomeStep 1: Find the closest income listed
driven repayment plans. Joseph and Susan
that is less than Joan’s income ($50,000)
would not be eligible for the IBR or Pay As
and the closest income listed that is
You Earn Repayment plans, and would have
greater than Joan’s income ($50,000).
a combined monthly payment under the
Step 2: Subtract the lower amount
REPAYE Repayment plan of $485.38.
from the higher amount (for this
Step 6: Because Joseph and Susan are
discussion we will call the result the
jointly repaying their Direct Loans under the
‘‘income interval’’):
ICR plan, the monthly payment amount
• $54,602¥$43,536 = $11,066
calculated under Step 5 applies to both
Step 3: Determine the difference
Joseph’s and Susan’s loans. To determine the
between the two income percentage
amount for which each borrower will be
responsible, prorate the amount calculated
factors that correspond to the incomes
under Step 4 by each spouse’s share of the
used in Step 2 (for this discussion, we
combined Direct Loan debt. Joseph has a
will call the result the ‘‘income
Direct Loan debt of $10,000 and Susan has
percentage factor interval’’):
a Direct Loan Debt of $15,000. For Joseph, the
• 100.00 percent¥88.77 percent = 11.23
monthly payment amount will be: • $10,000
percent
÷ ($10,000 + $15,000) = 40 percent
Step 4: Subtract from Joan’s income
• 0.40 × $266.90 = $106.76
For Susan, the monthly payment amount
the closest income shown on the chart
will be:
that is less than Joan’s income of
• $15,000 ÷ ($10,000 + $15,000) = 60
$50,000:
percent
• $50,000¥$43,536 = $6,464
• 0.60 × $266.90 = $160.14
Step 5: Divide the result of Step 4 by
Example 3. David is single with no
the income interval determined in Step
dependents and has $60,000 in Direct
2:
Subsidized and Unsubsidized Loans. The
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• $6,464 ÷ $11,066 = 58.41 percent
Step 6: Multiply the result of Step 5
by the income percentage factor
interval:
• 11.23 percent × 58.41 percent = 6.56
percent
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
$50,000 in income:
• 6.56 percent + 88.77 percent = 95.33
percent (rounded to the nearest
hundredth)
The result is the income percentage
factor that we will use to calculate
Joan’s monthly repayment amount
under the ICR plan.
Attachment 3—Charts Showing Sample
Income-Driven Repayment Amounts for
Single and Married Borrowers
Below are two charts that provide
first-year payment amount estimates for
a variety of loan debt sizes and incomes
under all of the income-driven
repayment plans. The first chart is for
single borrowers who have a family size
of one. The second chart is for a
borrower who is married or a head of
household and who has a family size of
three. The ICR plan calculations assume
that the loan debt has an interest rate of
6 percent. For married borrowers, the
calculations assume that the borrower
files a joint Federal income tax return
with his or her spouse. A field with a
‘‘–’’ character indicates that the
borrower in the example would not be
eligible to enter the applicable
repayment based plan based on the
borrower’s income, loan debt, and
family size.
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A SINGLE BORROWER
Family size = 1
Income
Plan
Initial debt
$20,000
$20,000 ...................................
$40,000 ...................................
$60,000 ...................................
$80,000 ...................................
$100,000 .................................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
$40,000
$118
27
18
18
135
27
18
18
135
27
18
18
135
27
18
18
135
27
18
18
$60,000
$167
—
185
185
333
277
185
185
469
277
185
185
469
277
185
185
469
277
185
185
$195
—
—
352
390
—
352
352
586
527
352
352
781
527
352
352
802
527
352
352
$80,000
$100,000
$219
—
—
518
439
—
—
518
658
—
518
518
877
777
518
518
1,097
777
518
518
$240
—
—
685
480
—
—
685
720
—
—
685
960
—
685
685
1,200
1,027
685
685
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A MARRIED OR HEAD-OF-HOUSEHOLD BORROWER
Family size = 3
Income
Plan
Initial debt
$20,000
$20,000 ...................................
$40,000 ...................................
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$60,000 ...................................
$80,000 ...................................
$100,000 .................................
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ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
ICR .................................
IBR ..................................
PAYE ..............................
REPAYE .........................
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Federal Register / Vol. 81, No. 64 / Monday, April 4, 2016 / Notices
Program Authority: 20 U.S.C. 1087 et seq.
Dated: March 29, 2016.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2016–07517 Filed 4–1–16; 8:45 am]
BILLING CODE 4000–01–P
DEPARTMENT OF EDUCATION
Deadline Dates for Reports and Other
Records Associated With the Free
Application for Federal Student Aid
(FAFSA®), the Federal Pell Grant
Program, the William D. Ford Federal
Direct Loan Program, the Teacher
Education Assistance for College and
Higher Education Grant Program, and
the Iraq and Afghanistan Service Grant
Program for the 2016–2017 Award Year
Federal Student Aid,
Department of Education.
ACTION: Notice.
AGENCY:
Catalog Federal Domestic Assistance (CFDA)
Numbers: 84.007 Federal Supplemental
Educational Opportunity Grant (FSEOG)
Program; 84.033 Federal Work Study (FWS)
Program; 84.038 Federal Perkins Loan
(Perkins Loan) Program; 84.063 Federal Pell
Grant (Pell Grant) Program; 84.268 William
D. Ford Federal Direct Loan (Direct Loan)
Program; 84.379 Teacher Education
Assistance for College and Higher Education
(TEACH) Grant Program; 84.408 Iraq and
Afghanistan Service Grant Program.
The Secretary announces
deadline dates for the receipt of
documents and other information from
applicants and institutions participating
in certain Federal student aid programs
authorized under title IV of the Higher
Education Act of 1965, as amended
(HEA), for the 2016–2017 award year.
The Federal student aid programs
covered by this deadline date notice are
the Pell Grant, Direct Loan, TEACH
Grant, and Iraq and Afghanistan Service
Grant programs. The FSEOG, FWS, and
Perkins Loan programs are only covered
by this deadline date notice to the
extent that a student receiving FSOEG,
FWS, or Perkins Loan funds must
submit a FAFSA, to the extent that the
institution must receive the student’s
Institutional Student Information
Record (ISIR) or Student Aid Report
(SAR) for students requesting those
funds, or to the extent that the
institution must submit verification
outcomes for students requesting those
funds.
These programs, administered by the
U.S. Department of Education
(Department), provide financial
assistance to students attending eligible
postsecondary educational institutions
to help them pay their educational
costs.
mstockstill on DSK4VPTVN1PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
19:03 Apr 01, 2016
Jkt 238001
Deadline and Submission Dates:
See Tables A and B at the end of this
notice.
DATES:
Table A—Deadline Dates by Which a
Student Must Submit the FAFSA, by
Which the Institution Must Receive the
Student’s Institutional Student
Information Record (ISIR) or Student
Aid Report (SAR), and by Which the
Institution Must Submit Verification
Outcomes for Certain Students for the
2016–2017 Award Year
Table A provides information and
deadline dates for receipt of the FAFSA,
corrections to and signatures for the
FAFSA, ISIRs, and SARs, and
verification documents.
The deadline date for the receipt of a
FAFSA by the Department’s Central
Processing System is June 30, 2017,
regardless of the method that the
applicant uses to submit the FAFSA.
The deadline date for the receipt of a
signature page for the FAFSA (if
required), correction, notice of change of
address or school, or request for a
duplicate SAR is September 9, 2017.
For all Federal student aid programs,
an ISIR or SAR for the student must be
received by the institution no later than
the student’s last date of enrollment for
the 2016–2017 award year or September
23, 2017, whichever is earlier. As a
reminder, a FAFSA must be submitted
for the dependent student for whom a
parent is applying for a Direct PLUS
Loan.
Verification documents must be
received by the institution no later than
120 days after the student’s last date of
enrollment for the 2016–2017 award
year or September 23, 2017, whichever
is earlier.
For all Federal student aid programs
except for (1) Direct PLUS Loans that
will be made to parent borrowers, and
(2) Direct Unsubsidized Loans that will
be made to dependent students who
have been determined by the institution,
pursuant to section 479A(a) of the HEA,
to be eligible for such a loan without
providing parental information on the
FAFSA, the ISIR or SAR must have an
official expected family contribution
(EFC) and must be received by the
institution no later than the earlier of
the student’s last date of enrollment for
the 2016–2017 award year or September
23, 2017.
For a student who is requesting aid
through the Pell Grant, FSEOG, FWS,
and Federal Perkins Loan programs or
for a student requesting Direct
Subsidized Loans, who does not meet
the conditions for a late disbursement
under 34 CFR 668.164(g), a valid ISIR or
valid SAR must be received by the
student’s last date of enrollment for the
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19157
2016–2017 award year or September 23,
2017, whichever is earlier.
In accordance with 34 CFR
668.164(g)(4)(i), an institution may not
make a late disbursement of title IV
student assistance funds later than 180
days after the date of the institution’s
determination that the student was no
longer enrolled. Table A provides that,
to make a late disbursement of title IV
student assistance funds, an institution
must receive a valid ISIR or valid SAR
no later than 180 days after its
determination that the student was no
longer enrolled, but not later than
September 23, 2017.
Table B—Pell Grant, Iraq and
Afghanistan Service Grant, Direct Loan,
and TEACH Grant Programs’ Deadline
Dates for Disbursement Information by
Institutions for the 2016–2017 Award
Year or Processing Year
Table B provides the earliest and
latest dates for institutions to submit
Pell Grant, Iraq and Afghanistan Service
Grant, Direct Loan, and TEACH Grant
disbursement records to the
Department’s Common Origination and
Disbursement (COD) System and
deadline dates for such records if an
institution requests and receives
approval to submit such records after
the established deadline.
An institution must submit Pell Grant,
Iraq and Afghanistan Service Grant,
Direct Loan, and TEACH Grant
disbursement records to COD, as
applicable, no later than 15 days after
making the disbursement or becoming
aware of the need to adjust a previously
reported disbursement. In accordance
with 34 CFR 668.164(a), title IV funds
are disbursed on the date that the
institution: (a) Credits those funds to a
student’s account in the institution’s
general ledger or any subledger of the
general ledger; or (b) pays those funds
to a student directly. Title IV funds are
disbursed even if an institution uses its
own funds in advance of receiving
program funds from the Secretary.
An institution’s failure to submit
disbursement records within the
required timeframe may result in the
Secretary rejecting all or part of the
reported disbursement. Such failure
may also result in an audit or program
review finding or the initiation of an
adverse action, such as a fine or other
penalty for such failure, in accordance
with subpart G of the General Provisions
regulations in 34 CFR part 668.
Other Sources for Detailed Information
We publish a detailed discussion of
the Federal student aid application
process in the 2016–2017 Federal
E:\FR\FM\04APN1.SGM
04APN1
]]>Agencies
[Federal Register Volume 81, Number 64 (Monday, April 4, 2016)]
[Notices]
[Pages 19153-19157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07517]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
Annual Updates to the Income Contingent Repayment (ICR) Plan
Formula for 2016--William D. Ford Federal Direct Loan Program
AGENCY: Federal Student Aid, Department of Education.
ACTION: Notice.
-----------------------------------------------------------------------
Catalog of Federal Domestic Assistance (CFDA) Number: 84.063.
SUMMARY: The Secretary announces the annual updates to the ICR plan
formula for 2016, as required by 34 CFR 685.209(b)(1)(ii)(A), to give
notice to Direct Loan borrowers and the public regarding how monthly
ICR payment amounts will be calculated for the 2016-2017 year.
DATES: The adjustments to the income percentage factors for the ICR
plan formula contained in this notice are effective from July 1, 2016,
to June 30, 2017, for any borrower who enters the ICR plan or has his
or her monthly payment amount recalculated under the ICR plan during
that period.
FOR FURTHER INFORMATION CONTACT: Ian Foss, U.S. Department of
Education, 830 First Street NE., Room 113H2, Washington, DC 20202.
Telephone: (202) 377-3681 or by email: ian.foss@ed.gov.
If you use a telecommunications device for the deaf or a text
telephone, call the Federal Relay Service, toll free, at 1-800-877-
8339.
SUPPLEMENTARY INFORMATION: Under the William D. Ford Federal Direct
Loan (Direct Loan) Program, borrowers may choose to repay their non-
defaulted loans (Direct Subsidized Loans, Direct Unsubsidized Loans,
Direct PLUS Loans made to graduate or professional students, and Direct
Consolidation Loans) under the ICR plan. The ICR plan bases the
borrower's repayment amount on the borrower's income, family size, loan
amount, and the interest rate applicable to each of the borrower's
loans.
ICR is one of the income-driven repayment plans. Other income-
driven repayment plans include the Income-Based Repayment (IBR) plan,
the Pay As You Earn (PAYE) Repayment plan, and the Revised Pay As You
Earn (REPAYE) Repayment plan. The IBR, PAYE, and REPAYE plans provide
lower payment amounts than the ICR plan for most borrowers.
A Direct Loan borrower who repays his or her loans under the ICR
plan pays the lesser of: (1) The amount that he or she would pay over
12 years with fixed payments multiplied by an income percentage factor;
or (2) 20 percent of discretionary income.
Each year, to reflect changes in inflation, we adjust the income
percentage factor used to calculate a borrower's ICR payment. We use
the adjusted income percentage factors to calculate a borrower's
monthly ICR payment amount when the borrower initially applies for the
ICR plan or when the borrower submits his or her annual income
documentation, as required under the ICR plan. This notice contains the
adjusted income percentage factors for 2016, examples of how the
monthly payment amount in ICR is calculated, and charts showing sample
repayment amounts based on the adjusted ICR plan formula. This
information is included in the following three attachments:
Attachment 1--Income Percentage Factors for 2016
[[Page 19154]]
Attachment 2--Examples of the Calculations of Monthly
Repayment Amounts
Attachment 3--Charts Showing Sample Repayment Amounts for
Single and Married Borrowers
In Attachment 1, to reflect changes in inflation, we have updated
the income percentage factors that were published in the Federal
Register on March 25, 2015 (80 FR 15757). Specifically, we have revised
the table of income percentage factors by changing the dollar amounts
of the incomes shown by a percentage equal to the estimated percentage
change between the not-seasonally-adjusted Consumer Price Index for all
urban consumers for December 2015 and December 2016.
The income percentage factors reflected in Attachment 1 may cause a
borrower's payments to be lower than they were in prior years, even if
the borrower's income is the same as in the prior year. However, the
revised repayment amount more accurately reflects the impact of
inflation on the borrower's current ability to repay.
Accessible Format: Individuals with disabilities can obtain this
document in an accessible format (e.g., braille, large print,
audiotape, or compact disc) on request to the contact person listed
under FOR FURTHER INFORMATION CONTACT in this section of the notice.
Electronic Access to This Document: 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 via the Federal Digital System
at: www.gpo.gov/fdsys. At this site, you can view this document, as
well as all other documents of this Department published in the Federal
Register, in text or Portable Document Format (PDF). To use PDF you
must have Adobe Acrobat Reader, which is available free at the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at:
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
Attachment 1--Income Percentage Factors for 2016
Income Percentage Factors for 2016
------------------------------------------------------------------------
Single Married/head of
---------------------------------------------------- household
--------------------
Income Factor Factor
% Income %
------------------------------------------------------------------------
$11,382.................................. 55.00 $11,382 50.52
$15,662.................................. 57.79 $17,959 56.68
$20,152.................................. 60.57 $21,402 59.56
$24,745.................................. 66.23 $27,979 67.79
$29,131.................................. 71.89 $34,661 75.22
$34,661.................................. 80.33 $43,536 87.61
$43,536.................................. 88.77 $54,601 100.00
$54,602.................................. 100.00 $65,671 100.00
$65,671.................................. 100.00 $82,275 109.40
$78,929.................................. 111.80 $109,938 125.00
$101,065................................. 123.50 $148,672 140.60
$143,142................................. 141.20 $207,925 150.00
$164,125................................. 150.00 $339,766 200.00
$292,335................................. 200.00
------------------------------------------------------------------------
Attachment 2--Examples of the Calculations of Monthly Repayment Amounts
General notes about the examples in this attachment:
We have a calculator that borrowers can use to estimate
what their payment amount would be under the ICR plan. The calculator
is called the ``Repayment Estimator'' and is available at
StudentAid.gov/repayment-estimator. This calculator provides a
detailed, individualized assessment of a borrower's loans and repayment
plan options, including the ICR plan.
The interest rates used in the examples are for
illustration only. The actual interest rates on an individual
borrower's Direct Loans depend on the loan type and when the
postsecondary institution first disbursed the Direct Loan to the
borrower.
The Poverty Guideline amounts used in the examples are
from the 2016 U.S. Department of Health and Human Services (HHS)
Poverty Guidelines for the 48 contiguous States and the District of
Columbia. Different Poverty Guidelines apply to residents of Alaska and
Hawaii. The Poverty Guidelines for 2016 were published in the Federal
Register on January 25, 2016 (81 FR 4036).
All of the examples use an income percentage factor
corresponding to an adjusted gross income (AGI) in the table in
Attachment 1. If your AGI is not listed in the income percentage
factors table in Attachment 1, calculate the applicable income
percentage by following the instructions under the ``Interpolation''
heading later in this attachment.
Married borrowers may repay their Direct Loans jointly
under the ICR plan. If a married couple elects this option, we add the
outstanding balance on the Direct Loans of each borrower and we add
together both borrowers' AGIs to determine a joint ICR payment amount.
We then prorate the joint payment amount for each borrower based on the
proportion of that borrower's debt to the total outstanding balance. We
bill each borrower separately.
For example, if a married couple, John and Sally, has a
total outstanding Direct Loan debt of $60,000, of which $40,000 belongs
to John and $20,000 to Sally, we would apportion 67 percent of the
monthly ICR payment to John and the remaining 33 percent to Sally. To
take advantage of a joint ICR payment, married couples need not file
taxes jointly; they may file separately and subsequently provide the
other spouse's tax information to the borrower's Federal loan servicer.
Calculating the Monthly Payment Amount Using a Standard Amortization
and a 12-Year Repayment Period
The formula to amortize a loan with a standard schedule (in which
each payment is the same over the course of the repayment period) is as
follows:
M = P x < (I / 12) / [1 - {1 + (I / 12){time} [supcaret]-N] >
In the formula--
M is the monthly payment amount;
P is the outstanding principal balance of the loan at the
time the calculation is performed;
I is the annual interest rate on the loan, expressed as a
decimal (for example, for a loan with an interest rate of 6 percent,
0.06); and
N is the total number of months in the repayment period
(for example, for a loan with a 12-year repayment period, 144
months).
For example, assume that Billy has a $10,000 Direct Unsubsidized
Loan with an interest rate of 6 percent.
Step 1: To solve for M, first simplify the numerator of the
fraction by which we multiply P, the outstanding principal balance. To
do this divide I, the interest rate, as a decimal, by 12. In this
example, Billy's interest rate is 6 percent. As a decimal, 6 percent is
0.06.
0.06 / 12 = 0.005
Step 2: Next, simplify the denominator of the fraction by which we
multiply P. To do this divide I, the interest rate, as a decimal, by
12. Then, add one. Next, raise the sum of the two figures to the
negative power that corresponds to the length of the repayment period
in months. In this example, because we are amortizing a loan to
calculate the monthly payment
[[Page 19155]]
amount under the ICR plan, the applicable figure is 12 years, which is
144 months. Finally, subtract the result from one.
0.06 / 12 = 0.005
1 + 0.005 = 1.005
1.005 [caret] -144 = 0.48762628
1 - 0.48762628 = 0.51237372
Step 3: Next, resolve the fraction by dividing the result from step
one by the result from step two.
0.005 / 0.51237372 = 0.0097585
Step 4: Finally, solve for M, the monthly payment amount, by
multiplying the outstanding principal balance of the loan by the result
of step 3.
$10,000 x 0.0097585 = $97.59
The remainder of the examples in this attachment will only show the
results of the formula.
Example 1. Brenda is single with no dependents and has $15,000
in Direct Subsidized and Unsubsidized Loans. The interest rate on
Brenda's loans is 6 percent, and she has an AGI of $29,131.
Step 1: Determine the total monthly payment amount based on what
Brenda would pay over 12 years using standard amortization. To do
this, use the formula that precedes Example 1. In this example, the
monthly payment amount would be $146.38.
Step 2: Multiply the result of Step 1 by the income percentage
factor shown in the income percentage factors table (see Attachment
1 to this notice) that corresponds to Brenda's AGI. In this example,
an AGI of $29,131 corresponds to an income percentage factor of
71.89 percent.
0.7189 x $146.38 = $105.23
Step 3: Determine 20 percent of Brenda's discretionary income
and divide by 12 (discretionary income is AGI minus the HHS Poverty
Guideline amount for a borrower's family size and State of
residence). For Brenda, subtract the Poverty Guideline amount for a
family of one from her AGI, multiply the result by 20 percent, and
then divide by 12:
$29,131-$11,880 = $17,251
$17,251 x 0.20 = $3,450.20
$3,450.20 / 12 = $287.52
Step 4: Compare the amount from Step 2 with the amount from Step
3. The lower of the two will be the monthly ICR payment amount. In
this example, Brenda will be paying the amount calculated under Step
2 ($105.23).
Note: Brenda would have a lower payment under other income-
driven repayment plans. Specifically, Brenda's payment would be
$89.31 under the PAYE and REPAYE repayment plans. However, Brenda's
payment would be $133.96 under the IBR plan, which is higher than
the payment she would have under the ICR plan.
Example 2. Joseph is married to Susan and has no dependents.
They file their Federal income tax return jointly. Joseph has a
Direct Loan balance of $10,000, and Susan has a Direct Loan balance
of $15,000. The interest rate on all of the loans is 6 percent.
Joseph and Susan have a combined AGI of $82,275 and are repaying
their loans jointly under the ICR plan (for general information
regarding joint ICR payments for married couples, see the fifth and
sixth bullets under the heading ``General notes about the examples
in this attachment'').
Step 1: Add Joseph's and Susan's Direct Loan balances to
determine their combined aggregate loan balance:
$10,000 + $15,000 = $25,000
Step 2: Determine the combined monthly payment amount for Joseph
and Susan based on what both borrowers would pay over 12 years using
standard amortization. To do this, use the formula that precedes
Example 1. In this example, the combined monthly payment amount
would be $243.96.
Step 3: Multiply the result of Step 2 by the income percentage
factor shown in the income percentage factors table (see Attachment
1 to this notice) that corresponds to Joseph and Susan's combined
AGI. In this example, the combined AGI of $82,275 corresponds to an
income percentage factor of 109.40 percent.
1.094 x $243.96 = $266.90
Step 4: Determine 20 percent of Joseph and Susan's combined
discretionary income (discretionary income is AGI minus the HHS
Poverty Guideline amount for a borrower's family size and State of
residence). To do this subtract the Poverty Guideline amount for a
family of two from the combined AGI, multiply the result by 20
percent, and divide by 12:
$82,275-$ 16,020 = $66,225
$66,225 x 0.20 = $13,251
$13,251 / 12 = $1,104.25
Step 5: Compare the amount from Step 3 with the amount from Step
4. The lower of the two will be Joseph and Susan's joint monthly
payment amount. Joseph and Susan will jointly pay the amount
calculated under Step 3 ($266.90).
Note: For Joseph and Susan, the Income-Contingent Repayment plan
provides the lowest monthly payment of all of the income-driven
repayment plans. Joseph and Susan would not be eligible for the IBR
or Pay As You Earn Repayment plans, and would have a combined
monthly payment under the REPAYE Repayment plan of $485.38.
Step 6: Because Joseph and Susan are jointly repaying their
Direct Loans under the ICR plan, the monthly payment amount
calculated under Step 5 applies to both Joseph's and Susan's loans.
To determine the amount for which each borrower will be responsible,
prorate the amount calculated under Step 4 by each spouse's share of
the combined Direct Loan debt. Joseph has a Direct Loan debt of
$10,000 and Susan has a Direct Loan Debt of $15,000. For Joseph, the
monthly payment amount will be: $10,000 / ($10,000 +
$15,000) = 40 percent
0.40 x $266.90 = $106.76
For Susan, the monthly payment amount will be:
$15,000 / ($10,000 + $15,000) = 60 percent
0.60 x $266.90 = $160.14
Example 3. David is single with no dependents and has $60,000 in
Direct Subsidized and Unsubsidized Loans. The interest rate on all
of the loans is 6 percent, and David's AGI is $34,661.
Step 1: Determine the total monthly payment amount based on what
David would pay over 12 years using standard amortization. To do
this, use the formula that precedes Example 1. In this example, the
monthly payment amount would be $585.51.
Step 2: Multiply the result of Step 1 by the income percentage
factor shown in the income percentage factors table (see Attachment
1 to this notice) that corresponds to David's AGI. In this example,
an AGI of $34,661 corresponds to an income percentage factor of
80.33 percent.
0.8033 x $585.51 = $470.34
Step 3: Determine 20 percent of David's discretionary income and
divide by 12 (discretionary income is AGI minus the HHS Poverty
Guideline amount for a borrower's family size and State of
residence). To do this subtract the Poverty Guideline amount for a
family of one from David's AGI, multiply the result by 20 percent,
then divide by 12:
$34,661-$11,880 = $22,781
$22,781 x 0.20 = $4,556.20
$4,556.20 / 12 = $379.68
Step 4: Compare the amount from Step 2 with the amount from Step
3. The lower of the two will be David's monthly payment amount. In
this example, David will be paying the amount calculated under Step
3 ($379.68).
Note: David would have a lower payment under each of the other
income-driven plans. Specifically, David's payment would be $140.34
under the PAYE and REPAYE repayment plans and $210.51 under the IBR
plan.
Interpolation. If an income is not included on the income
percentage factor table, calculate the income percentage factor through
linear interpolation. For example, assume that Joan is single with an
income of $50,000.
Step 1: Find the closest income listed that is less than Joan's
income ($50,000) and the closest income listed that is greater than
Joan's income ($50,000).
Step 2: Subtract the lower amount from the higher amount (for this
discussion we will call the result the ``income interval''):
$54,602-$43,536 = $11,066
Step 3: Determine the difference between the two income percentage
factors that correspond to the incomes used in Step 2 (for this
discussion, we will call the result the ``income percentage factor
interval''):
100.00 percent-88.77 percent = 11.23 percent
Step 4: Subtract from Joan's income the closest income shown on the
chart that is less than Joan's income of $50,000:
$50,000-$43,536 = $6,464
Step 5: Divide the result of Step 4 by the income interval
determined in Step 2:
[[Page 19156]]
$6,464 / $11,066 = 58.41 percent
Step 6: Multiply the result of Step 5 by the income percentage
factor interval:
11.23 percent x 58.41 percent = 6.56 percent
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 $50,000 in income:
6.56 percent + 88.77 percent = 95.33 percent (rounded to the
nearest hundredth)
The result is the income percentage factor that we will use to
calculate Joan's monthly repayment amount under the ICR plan.
Attachment 3--Charts Showing Sample Income-Driven Repayment Amounts for
Single and Married Borrowers
Below are two charts that provide first-year payment amount
estimates for a variety of loan debt sizes and incomes under all of the
income-driven repayment plans. The first chart is for single borrowers
who have a family size of one. The second chart is for a borrower who
is married or a head of household and who has a family size of three.
The ICR plan calculations assume that the loan debt has an interest
rate of 6 percent. For married borrowers, the calculations assume that
the borrower files a joint Federal income tax return with his or her
spouse. A field with a ``-'' character indicates that the borrower in
the example would not be eligible to enter the applicable repayment
based plan based on the borrower's income, loan debt, and family size.
Sample First-Year Monthly Repayment Amounts for a Single Borrower
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family size = 1
-------------------------------------------------------------------------------
Income Plan Initial debt
-------------------------------------------------------------------------------
$20,000 $40,000 $60,000 $80,000 $100,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
$20,000................................... ICR......................... $118 $167 $195 $219 $240
IBR......................... 27 -- -- -- --
PAYE........................ 18 185 -- -- --
REPAYE...................... 18 185 352 518 685
$40,000................................... ICR......................... 135 333 390 439 480
IBR......................... 27 277 -- -- --
PAYE........................ 18 185 352 -- --
REPAYE...................... 18 185 352 518 685
$60,000................................... ICR......................... 135 469 586 658 720
IBR......................... 27 277 527 -- --
PAYE........................ 18 185 352 518 --
REPAYE...................... 18 185 352 518 685
$80,000................................... ICR......................... 135 469 781 877 960
IBR......................... 27 277 527 777 --
PAYE........................ 18 185 352 518 685
REPAYE...................... 18 185 352 518 685
$100,000.................................. ICR......................... 135 469 802 1,097 1,200
IBR......................... 27 277 527 777 1,027
PAYE........................ 18 185 352 518 685
REPAYE...................... 18 185 352 518 685
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Sample First-Year Monthly Repayment Amounts for a Married or Head-of-Household Borrower
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Family size = 3
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Income Plan Initial debt
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$20,000 $40,000 $60,000 $80,000 $100,000
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$20,000................................... ICR......................... $0 $161 $195 $211 $233
IBR......................... 0 122 -- -- --
PAYE........................ 0 81 -- -- --
REPAYE...................... 0 81 248 415 581
$40,000................................... ICR......................... 0 323 390 422 466
IBR......................... 0 122 372 -- --
PAYE........................ 0 81 248 415 --
REPAYE...................... 0 81 248 415 581
$60,000................................... ICR......................... 0 331 586 633 699
IBR......................... 0 122 372 622 --
PAYE........................ 0 81 248 415 581
REPAYE...................... 0 81 248 415 581
$80,000................................... ICR......................... 0 331 664 844 932
IBR......................... 0 122 372 622 872
PAYE........................ 0 81 248 415 581
REPAYE...................... 0 81 278 415 581
$100,000.................................. ICR......................... 0 469 664 997 1,165
IBR......................... 0 277 372 622 872
PAYE........................ 0 185 248 415 581
REPAYE...................... 0 185 248 415 581
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[[Page 19157]]
Program Authority: 20 U.S.C. 1087 et seq.
Dated: March 29, 2016.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
[FR Doc. 2016-07517 Filed 4-1-16; 8:45 am]
BILLING CODE 4000-01-P
