Annual Updates to the Income Contingent Repayment (ICR) Plan Formula for 2011; William D. Ford Federal Direct Loan Program, 20796-20802 [2012-8225]
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20796
Federal Register / Vol. 77, No. 67 / Friday, April 6, 2012 / Notices
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Dated: April 2, 2012.
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[FR Doc. 2012–8251 Filed 4–5–12; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF EDUCATION
Annual Updates to the Income
Contingent Repayment (ICR) Plan
Formula for 2011; 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 2011. Under the William D. Ford
Federal Direct Loan (Direct Loan)
Program, borrowers may choose to repay
their loans (Direct Subsidized Loans,
Direct Unsubsidized Loans, Direct PLUS
Loans made to graduate or professional
students, and Direct Consolidation
Loans) under the ICR plan, which bases
the repayment amount on the
borrower’s income, family size, loan
amount, and the interest rate applicable
to each loan. Each year, we adjust the
formula for calculating a borrower’s ICR
payment to reflect changes due to
inflation. This notice contains the
adjusted income percentage factors for
2011, examples of how the calculation
of the monthly ICR amount is
performed, a constant multiplier chart
for use in performing the calculations,
and charts showing sample repayment
amounts based on the adjusted ICR plan
formula. The adjustments for the ICR
plan formula contained in this notice
are effective for the period from July 1,
2011 to June 30, 2012.
FOR FURTHER INFORMATION CONTACT: Ian
Foss, U.S. Department of Education, 830
1st St. NE., Room 114I1, Washington,
DC 20202. Telephone: (202) 377–3681
or by email: ian.foss@ed.gov.
If you use a telecommunications
device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay
Service (FRS), toll free, at 1–800–877–
8339.
Individuals with disabilities can
obtain this document in an accessible
format (e.g., braille, large print,
SUMMARY:
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audiotape, or compact diskette) on
request to the contact person listed
under FOR FURTHER INFORMATION
CONTACT in this section of the notice.
SUPPLEMENTARY INFORMATION: Direct
Loan Program borrowers may choose to
repay their Direct Subsidized Loans,
Direct Unsubsidized Loans, Direct PLUS
Loans made to graduate or professional
students, and Direct Consolidation
Loans under the ICR plan. This notice
contains the following four attachments:
• Attachment 1—Income Percentage
Factors for 2011
• Attachment 2—Constant Multiplier
Chart for Use in Calculating the
Monthly ICR Amount
• Attachment 3—Examples of the
Calculations of Monthly Repayment
Amounts
• Attachment 4—Charts Showing
Sample Repayment Amounts for Single
and Married Borrowers
In Attachment 1, we have updated the
income percentage factors to reflect
changes based on inflation. 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 in the Consumer
Price Index for all urban consumers
from December 2010 to December 2011.
In Attachment 2, we provide a constant
multiplier chart for a 12-year loan
amortization. Further, in Attachment 3,
we provide examples of monthly
repayment amount calculations. Finally,
in Attachment 4, we provide two charts
that show sample repayment amounts
for single and married or head-ofhousehold borrowers at various income
and debt levels based on the updated
income percentage factors.
The updated 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 remains the same
as the prior year). However, the revised
repayment amount more accurately
reflects the impact of inflation on a
borrower’s current ability to repay.
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 Adobe 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.
Program Authority: 20 U.S.C. 1087 et seq.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
Attachment 1—Income Percentage
Factors for 2011
INCOME PERCENTAGE FACTORS FOR 2011
[Based on annual income]
Single
Factor
(percent)
Income
Married, filing
jointly or
separately/head
of household
Income
$10,249 ................................................................................................................................................................
14,102 ..................................................................................................................................................................
18,146 ..................................................................................................................................................................
22,280 ..................................................................................................................................................................
26,230 ..................................................................................................................................................................
31,210 ..................................................................................................................................................................
39,201 ..................................................................................................................................................................
49,165 ..................................................................................................................................................................
59,132 ..................................................................................................................................................................
71,069 ..................................................................................................................................................................
91,001 ..................................................................................................................................................................
128,887 ................................................................................................................................................................
147,781 ................................................................................................................................................................
263,224 ................................................................................................................................................................
Attachment 2—Constant Multiplier
Chart for Use in Calculating the
Monthly ICR Amount
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3.500
4.000
4.500
5.000
5.500
.........................................
.........................................
.........................................
.........................................
.........................................
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Annual
constant
multiplier
0.102174
0.105063
0.108001
0.110987
0.114021
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$10,249
16,171
19,271
25,192
31,210
39,201
49,164
59,132
74,082
98,991
133,867
187,220
305,931
................
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
................
CONSTANT MULTIPLIER CHART FOR 12- Attachment 3—Examples of the
Calculations of Monthly Repayment
YEAR AMORTIZATION—Continued
Interest
rate
(percent)
CONSTANT MULTIPLIER CHART FOR 12YEAR AMORTIZATION
Interest
rate
(percent)
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
Factor
(percent)
6.000
6.800
7.000
7.900
8.000
8.250
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Annual
constant
multiplier
.........................................
.........................................
.........................................
.........................................
.........................................
.........................................
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0.117102
0.122130
0.123406
0.129237
0.129894
0.131545
Amounts
General notes about the examples in
this attachment:
• The interest rates used in the
examples are for illustration only.
Actual interest rates vary depending on
loan type and when a loan was first
disbursed.
• In the examples, the Poverty
Guideline amounts used are from the
2011 U.S. Department of Health and
Human Services (HHS) Poverty
Guidelines for the 48 contiguous States
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and the District of Columbia, as
published in the Federal Register on
January 20, 2011 (76 FR 3637). Different
Poverty Guidelines apply to residents of
Alaska and Hawaii.
• The ‘‘constant multiplier’’ included
in each example is a factor used to
calculate amortized payments at a given
interest rate over a fixed period of time.
Refer to the constant multiplier chart
provided in Attachment 2 to this notice
to determine the constant multiplier
that should be used for a specific
interest rate. If an interest rate is not
listed in the constant multiplier chart in
Attachment 2, use the next highest rate
for estimation purposes.
• All examples use an income
percentage factor corresponding to the
borrower’s adjusted gross income (AGI).
If the AGI is not listed in the income
percentage factors table in Attachment
1, calculate the applicable income
percentage factor for the AGI by
following the instructions under the
Interpolation heading later in this
attachment.
• For married borrowers, the
outstanding balance on the loans of each
borrower and both borrowers’ AGIs are
added together to determine the ICR
payment amount. The amount of each
payment applied to each borrower’s
Direct Loan debt is the proportion of the
payments that equals the same
proportion as that borrower’s debt to the
total outstanding balance. Each
borrower is billed separately. For
example, if a married couple has a total
outstanding Direct Loan debt of $60,000,
$40,000 of which belongs to one spouse,
and $20,000 of which belongs to the
other spouse, 67 percent of the monthly
ICR payment would be apportioned to
the spouse with the outstanding debt of
$40,000, with the remaining 33 percent
of the monthly ICR payment being
apportioned to the spouse with $20,000
of debt. 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.
Example 1. This example assumes that the
borrower is a single with no dependents, and
has $15,000 in Direct Subsidized and
Unsubsidized Loans. The interest rate on
these loans is 6.80 percent, and the borrower
has an AGI of $39,201.
Step 1: Determine the total annual payment
amount based on what the borrower would
pay over 12 years using standard
amortization. To do this, multiply the loan
balance by the constant multiplier for the
applicable interest rate. In this example, the
interest rate is 6.80 percent, for which the
constant multiplier is 0.122130.
• 0.122130 × $15,000 = $1,831.95
Step 2: Multiply the result of Step 1 by the
income percentage factor shown in the
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income percentage factors table (see
Attachment 1 to this notice) that corresponds
to the AGI and then divide the result by 100:
• 88.77 × $1,831.95 ÷ 100 = $1,626.22
Step 3: Determine 20 percent of the
borrower’s discretionary income
(discretionary income is AGI minus the U.S.
Department of Health and Human Services
(HHS) Poverty Guideline amount for the
borrower’s family size and state of residence).
To do this, subtract the Poverty Guideline
amount for a family of one, for this example,
from the borrower’s AGI and multiply the
result by 20 percent:
• $39,201 ¥ $10,890 = $28,311
• $28,311 × 0.20 = $5,662.20
Step 4: Compare the amount from Step 2
with the amount from Step 3. The lower of
the two will be the annual payment amount.
In this example, the borrower will be paying
the amount calculated under Step 2
($1,626.22). To determine the monthly
repayment amount, divide the annual
amount by 12.
• $1,626.22 ÷ 12 = $135.52
Example 2. In this example, the borrower
is married and has no dependents, other than
a spouse. The borrower has a Direct Loan
balance of $10,000, and the spouse has a
Direct Loan balance of $15,000. The interest
rate on all of the loans is 6.80 percent.
The borrower and spouse have a combined
AGI of $74,082 and are repaying their loans
jointly under the ICR plan (for general
information regarding joint ICR payments for
married couples, see the fifth bullet under
the heading entitled ‘‘General notes about the
examples’’ in this attachment).
Step 1: Add the borrower’s and the
borrower’s spouse’s Direct Loan balances
together to determine their combined
aggregate loan balance:
• $10,000 + $15,000 = $25,000
Step 2: Determine the combined total
annual payment amount for these borrowers
based on what the both borrowers would pay
over 12 years using standard amortization. To
do this, multiply the combined loan balance
by the constant multiplier for the applicable
interest rate. In this example, the interest rate
is 6.80 percent, for which the constant
multiplier is 0.122130.
• 0.122130 × $25,000 = $3,053.25
Step 3: Multiply the result of Step 2 by the
income percentage factor shown in the
income percentage factors table in
Attachment 1 that corresponds to the
borrower’s and the borrower’s spouse’s AGI
and then divide the result by 100:
• 109.40 × $3,053.25 ÷ 100 = $3,340.26
Step 4: Determine 20 percent of
discretionary income. To do this, subtract the
Poverty Guideline amount for a family of
two, in this example, from the combined AGI
and multiply the result by 20 percent:
• $74,082 ¥ $14,710 = $59,372
• $59,372 × 0.20 = $11,874.40
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
for the borrower and the borrower’s spouse.
The borrower and the borrower’s spouse will
jointly pay the amount calculated under Step
3 ($3,340.26). To determine the monthly
repayment amount, divide the annual
amount by 12.
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• $3,340.26 ÷ 12 = $278.36
Example 3. This example assumes that the
borrower is single with no dependents and
has $15,000 in Direct Subsidized and
Unsubsidized Loans. The interest rate on all
of the loans is 6.80 percent, and the
borrower’s AGI is $31,210.
Step 1: Determine the total annual payment
amount based on what the borrower would
pay over 12 years using standard
amortization. To do this, multiply the loan
balance by the constant multiplier for the
applicable interest rate. In this example, the
interest rate is 6.80 percent, for which the
constant multiplier is 0.122130.
• 0.122130 × $15,000 = $1,831.95
Step 2: Multiply the result of Step 1 by the
income percentage factor shown in the
income percentage factors table in
Attachment 1 that corresponds to the
borrower’s income and then divide the result
by 100:
• 80.33 × $1,831.95 ÷ 100 = $1,471.61
Step 3: Determine 20 percent of
discretionary income (discretionary income
is the borrower’s AGI minus the HHS Poverty
Guideline amount for the borrower’s family
size). To do this, subtract the Poverty
Guideline amount for a family of one, in this
example, from AGI and multiply the result by
20 percent:
• $31,210 ¥ $10,890 = $20,320
• $20,320 × 0.20 = $4,064
Step 4: Compare the amount from Step 2
with the amount from Step 3. The lower of
the two will be the annual payment amount.
In this example, the borrower will be paying
the amount calculated under Step 2
($1,471.61). To determine the monthly
repayment amount, divide the annual
amount by 12.
• $1,471.61 ÷ 12 = $122.63
Example 4. In this example, the borrower
is married and has no dependents, other than
the spouse. The borrower and spouse have a
combined AGI of $39,201 and are repaying
their loans under the ICR plan (for general
information regarding joint ICR payments for
married couples, see the fifth bullet under
the heading entitled ‘‘General notes about the
examples’’ in this attachment). The borrower
has a Direct Loan balance of $10,000, $5,000
of which is at an interest rate of 6.80 percent
and $5,000 of which is at an interest rate of
7.0 percent, and the spouse has a Direct Loan
balance of $5,000 at an interest rate of 6.80
percent and $10,000 of which is at an interest
rate of 7.0 percent.
Step 1: Add the borrower’s and the
borrower’s spouse’s Direct Loan balances that
have the same interest rate together to
determine combined aggregate loan balances
by interest rate:
• 6.8 percent: $5,000 + $5,000 = $10,000
• 7.0 percent: $5,000 + $10,000 = $15,000
Step 2: Determine the annual payment
based on what would be paid over 12 years
using standard amortization for each interest
rate-based group of combined aggregate loan
balances. To do this, multiply each group of
combined aggregate loan balances by the
constant multiplier for the applicable interest
rate. For 6.80 percent, the constant multiplier
is 0.122130. For 7.0 percent, the constant
multiplier is 0.123406.
• 0.122130 × $10,000 = $1,221.30
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• 0.123406 × $15,000 = $1,851.09
Step 3: Add the products of Step 2
together, multiply that total by the income
percentage factor shown in the income
percentage factors table in Attachment 1 that
corresponds to the borrower’s and the
borrower’s spouse’s combined AGI, and then
divide the result by 100:
• 87.61 × $3,072.39 ÷ 100 = $2,691.72
Step 4: Determine 20 percent of
discretionary income. To do this, subtract the
Poverty Guideline amount for a family of
two, in this example, from the combined AGI
and multiply the result by 20 percent:
• $39,201 ¥ $14,710 = $24,491
• $24,491 × 0.20 = $4,898.20
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.
In this example, the borrower and the
borrower’s spouse will jointly pay the
amount calculated under Step 3 ($2,691.72).
To determine the monthly repayment
amount, divide the annual amount by 12.
• $2,691.72 ÷ 12 = $224.31
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Interpolation. If the borrower’s income is
not included on the income percentage factor
table, calculate the income percentage factor
through interpolation. For example, assume
that the borrower is single with income of
$30,000.
Step 1: Find the closest income listed that
is less than $30,000 and the closest income
listed that is greater than $30,000.
Step 2: Subtract the lower amount from the
higher amount (for this discussion, we will
call the result the ‘‘income interval’’):
• $31,210 ¥ $26,230 = $4,980
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’’):
• 80.33 percent ¥ 71.89 percent = 8.44
percent
Step 4: Subtract from the borrower’s
income the closest income shown on the
chart that is less than the borrower’s income
of $30,000:
• $30,000 ¥ $26,230 = $3,770
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Step 5: Divide the result of Step 4 by the
income interval determined in Step 2:
• $3,770 ÷ $4,980 = 0.757
Step 6: Multiply the result of Step 5 by the
income percentage factor interval:
• 8.44 percent × 0.757 = 6.389 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 $30,000 in
income:
• 6.389 percent + 71.89 percent = 78.28
percent (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.
Attachment 4—Charts Showing Sample
Repayment Amounts for Single and
Married Borrowers
BILLING CODE 4000–01–P
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[FR Doc. 2012–8225 Filed 4–5–12; 8:45 am]
BILLING CODE 4000–01–C
DEPARTMENT OF EDUCATION
Applications for New Awards;
Education Research and Special
Education Research Grant Programs;
Correction
Institute of Education Sciences,
Department of Education.
ACTION: Notice; correction.
AGENCY:
Overview Information
Education Research and Special
Education Research Grant Programs.
Applications for New Awards. CFDA
Nos: 84.305A, 84.305B, 84.305D,
84.305E, 84.305H, 84.324A, 84.324B,
and 84.324D.
SUMMARY: On March 6, 2012, the
Institute of Education Sciences in the
U.S. Department of Education published
in the Federal Register (77 FR 13297) a
notice inviting applications for new
awards for fiscal year 2013 for the
Education Research and Special
Education Research Grant Programs.
This notice makes several corrections to
the March 6, 2012, notice inviting
applications (March 6 NIA).
SUPPLEMENTARY INFORMATION: In the
March 6 NIA, the Department
announced 13 competitions to be held
under the Education Research and
Special Education Research Grant
Programs. The chart at the end of the
March 6 NIA (see 77 FR 13297, 13302–
13303) provided competition-specific
information, including the dates
application packages would be available
as well as the deadline dates for
applications. The entries in the chart
corresponding to the following three
competitions contained errors: Research
on Statistical and Research
Methodology in Education (CFDA
84.305D), Evaluation of State and Local
Education Programs and Policies (CFDA
84.305E), and Researcher-Practitioner
Partnerships in Education Research
(CFDA 84.305H). Following is a
description of the errors along with the
correct information:
For the CFDA 84.305D competition:
We indicated that the application
package would be available on July 19,
2012; however, the correct date the
application package will be available is
April 19, 2012.
We also indicated that that the
deadline for transmittal of applications
would be September 20, 2012; however,
the correct deadline is June 21, 2012.
For the CFDA 84.305E competition:
We indicated that the application
package would be available on April 19,
2012; however, the correct date the
application package will be available is
July 19, 2012.
We also indicated that that the
deadline for transmittal of applications
would be June 21, 2012; however, the
correct deadline is September 20, 2012.
For the CFDA 84.305H competition:
We indicated that the estimated range
of awards was $100,000 to $400,000;
however, the correct range is $50,000 to
$200,000.
We also incorrectly indicated that the
project period for this grant would be up
to 3 years; the corrected project period
is up to 2 years.
For these reasons, we correct the chart
containing this information. On pages
13302–13303 of the March 6 NIA, the
chart is corrected to appear as follows:
INSTITUTE OF EDUCATION SCIENCES
[FY 2013 Grant Competitions To Support Education Research and Special Education Research]
CFDA number and name
Application package available
Deadline for
transmittal of
applications
Estimated range of
awards*
Project period
For further information
contact
Up to 5 years
Emily Doolittle
Emily.Doolittle@ed.gov
mstockstill on DSK4VPTVN1PROD with NOTICES
National Center for Education Research (NCER)
84.305A–1 Education Research:
D Reading and Writing
D Mathematics and
Science Education
D Cognition and Student
Learning
D Effective Teachers and
Effective Teaching
D Social and Behavioral
Context for Academic
Learning
D Improving Education
Systems: Policies, Organization, Management, and Leadership.
D Early Learning Programs and Policies
D English Learners
D Postsecondary and
Adult Education
D Education Technology
84.305A–2 Education Research:
VerDate Mar<15>2010
16:17 Apr 05, 2012
April 19, 2012 .....
June 21, 2012 ....
$100,000 to $1,000,000 ....
Jkt 226001
Frm 00024
Sfmt 4703
PO 00000
Fmt 4703
E:\FR\FM\06APN1.SGM
06APN1
]]>Agencies
[Federal Register Volume 77, Number 67 (Friday, April 6, 2012)]
[Notices]
[Pages 20796-20802]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8225]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
Annual Updates to the Income Contingent Repayment (ICR) Plan
Formula for 2011; 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 2011. Under the William D. Ford Federal Direct Loan (Direct
Loan) Program, borrowers may choose to repay their loans (Direct
Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to
graduate or professional students, and Direct Consolidation Loans)
under the ICR plan, which bases the repayment amount on the borrower's
income, family size, loan amount, and the interest rate applicable to
each loan. Each year, we adjust the formula for calculating a
borrower's ICR payment to reflect changes due to inflation. This notice
contains the adjusted income percentage factors for 2011, examples of
how the calculation of the monthly ICR amount is performed, a constant
multiplier chart for use in performing the calculations, and charts
showing sample repayment amounts based on the adjusted ICR plan
formula. The adjustments for the ICR plan formula contained in this
notice are effective for the period from July 1, 2011 to June 30, 2012.
FOR FURTHER INFORMATION CONTACT: Ian Foss, U.S. Department of
Education, 830 1st St. NE., Room 114I1, Washington, DC 20202.
Telephone: (202) 377-3681 or by email: ian.foss@ed.gov.
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print,
[[Page 20797]]
audiotape, or compact diskette) on request to the contact person listed
under FOR FURTHER INFORMATION CONTACT in this section of the notice.
SUPPLEMENTARY INFORMATION: Direct Loan Program borrowers may choose to
repay their Direct Subsidized Loans, Direct Unsubsidized Loans, Direct
PLUS Loans made to graduate or professional students, and Direct
Consolidation Loans under the ICR plan. This notice contains the
following four attachments:
Attachment 1--Income Percentage Factors for 2011
Attachment 2--Constant Multiplier Chart for Use in
Calculating the Monthly ICR Amount
Attachment 3--Examples of the Calculations of Monthly
Repayment Amounts
Attachment 4--Charts Showing Sample Repayment Amounts for
Single and Married Borrowers
In Attachment 1, we have updated the income percentage factors to
reflect changes based on inflation. 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 in the Consumer Price Index for all urban consumers from
December 2010 to December 2011. In Attachment 2, we provide a constant
multiplier chart for a 12-year loan amortization. Further, in
Attachment 3, we provide examples of monthly repayment amount
calculations. Finally, in Attachment 4, we provide 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 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 remains the same as the prior year).
However, the revised repayment amount more accurately reflects the
impact of inflation on a borrower's current ability to repay.
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 Adobe 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.
Program Authority: 20 U.S.C. 1087 et seq.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
Attachment 1--Income Percentage Factors for 2011
Income Percentage Factors for 2011
[Based on annual income]
------------------------------------------------------------------------
Single Married, filing
--------------------------------------------------- jointly or
separately/head of
household
Income Factor ---------------------
(percent) Factor
Income (percent)
------------------------------------------------------------------------
$10,249................................ 55.00 $10,249 50.52
14,102................................. 57.79 16,171 56.68
18,146................................. 60.57 19,271 59.56
22,280................................. 66.23 25,192 67.79
26,230................................. 71.89 31,210 75.22
31,210................................. 80.33 39,201 87.61
39,201................................. 88.77 49,164 100.00
49,165................................. 100.00 59,132 100.00
59,132................................. 100.00 74,082 109.40
71,069................................. 111.80 98,991 125.00
91,001................................. 123.50 133,867 140.60
128,887................................ 141.20 187,220 150.00
147,781................................ 150.00 305,931 200.00
263,224................................ 200.00 ......... .........
------------------------------------------------------------------------
Attachment 2--Constant Multiplier Chart for Use in Calculating the
Monthly ICR Amount
Constant Multiplier Chart for 12-Year Amortization
------------------------------------------------------------------------
Annual
Interest rate (percent) constant
multiplier
------------------------------------------------------------------------
3.500...................................................... 0.102174
4.000...................................................... 0.105063
4.500...................................................... 0.108001
5.000...................................................... 0.110987
5.500...................................................... 0.114021
6.000...................................................... 0.117102
6.800...................................................... 0.122130
7.000...................................................... 0.123406
7.900...................................................... 0.129237
8.000...................................................... 0.129894
8.250...................................................... 0.131545
------------------------------------------------------------------------
Attachment 3--Examples of the Calculations of Monthly Repayment Amounts
General notes about the examples in this attachment:
The interest rates used in the examples are for
illustration only. Actual interest rates vary depending on loan type
and when a loan was first disbursed.
In the examples, the Poverty Guideline amounts used are
from the 2011 U.S. Department of Health and Human Services (HHS)
Poverty Guidelines for the 48 contiguous States
[[Page 20798]]
and the District of Columbia, as published in the Federal Register on
January 20, 2011 (76 FR 3637). Different Poverty Guidelines apply to
residents of Alaska and Hawaii.
The ``constant multiplier'' included in each example is a
factor used to calculate amortized payments at a given interest rate
over a fixed period of time. Refer to the constant multiplier chart
provided in Attachment 2 to this notice to determine the constant
multiplier that should be used for a specific interest rate. If an
interest rate is not listed in the constant multiplier chart in
Attachment 2, use the next highest rate for estimation purposes.
All examples use an income percentage factor corresponding
to the borrower's adjusted gross income (AGI). If the AGI is not listed
in the income percentage factors table in Attachment 1, calculate the
applicable income percentage factor for the AGI by following the
instructions under the Interpolation heading later in this attachment.
For married borrowers, the outstanding balance on the
loans of each borrower and both borrowers' AGIs are added together to
determine the ICR payment amount. The amount of each payment applied to
each borrower's Direct Loan debt is the proportion of the payments that
equals the same proportion as that borrower's debt to the total
outstanding balance. Each borrower is billed separately. For example,
if a married couple has a total outstanding Direct Loan debt of
$60,000, $40,000 of which belongs to one spouse, and $20,000 of which
belongs to the other spouse, 67 percent of the monthly ICR payment
would be apportioned to the spouse with the outstanding debt of
$40,000, with the remaining 33 percent of the monthly ICR payment being
apportioned to the spouse with $20,000 of debt. 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.
Example 1. This example assumes that the borrower is a single
with no dependents, and has $15,000 in Direct Subsidized and
Unsubsidized Loans. The interest rate on these loans is 6.80
percent, and the borrower has an AGI of $39,201.
Step 1: Determine the total annual payment amount based on what
the borrower would pay over 12 years using standard amortization. To
do this, multiply the loan balance by the constant multiplier for
the applicable interest rate. In this example, the interest rate is
6.80 percent, for which the constant multiplier is 0.122130.
0.122130 x $15,000 = $1,831.95
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 the AGI and then divide the
result by 100:
88.77 x $1,831.95 / 100 = $1,626.22
Step 3: Determine 20 percent of the borrower's discretionary
income (discretionary income is AGI minus the U.S. Department of
Health and Human Services (HHS) Poverty Guideline amount for the
borrower's family size and state of residence). To do this, subtract
the Poverty Guideline amount for a family of one, for this example,
from the borrower's AGI and multiply the result by 20 percent:
$39,201 - $10,890 = $28,311
$28,311 x 0.20 = $5,662.20
Step 4: Compare the amount from Step 2 with the amount from Step
3. The lower of the two will be the annual payment amount. In this
example, the borrower will be paying the amount calculated under
Step 2 ($1,626.22). To determine the monthly repayment amount,
divide the annual amount by 12.
$1,626.22 / 12 = $135.52
Example 2. In this example, the borrower is married and has no
dependents, other than a spouse. The borrower has a Direct Loan
balance of $10,000, and the spouse has a Direct Loan balance of
$15,000. The interest rate on all of the loans is 6.80 percent.
The borrower and spouse have a combined AGI of $74,082 and are
repaying their loans jointly under the ICR plan (for general
information regarding joint ICR payments for married couples, see
the fifth bullet under the heading entitled ``General notes about
the examples'' in this attachment).
Step 1: Add the borrower's and the borrower's spouse's Direct
Loan balances together to determine their combined aggregate loan
balance:
$10,000 + $15,000 = $25,000
Step 2: Determine the combined total annual payment amount for
these borrowers based on what the both borrowers would pay over 12
years using standard amortization. To do this, multiply the combined
loan balance by the constant multiplier for the applicable interest
rate. In this example, the interest rate is 6.80 percent, for which
the constant multiplier is 0.122130.
0.122130 x $25,000 = $3,053.25
Step 3: Multiply the result of Step 2 by the income percentage
factor shown in the income percentage factors table in Attachment 1
that corresponds to the borrower's and the borrower's spouse's AGI
and then divide the result by 100:
109.40 x $3,053.25 / 100 = $3,340.26
Step 4: Determine 20 percent of discretionary income. To do
this, subtract the Poverty Guideline amount for a family of two, in
this example, from the combined AGI and multiply the result by 20
percent:
$74,082 - $14,710 = $59,372
$59,372 x 0.20 = $11,874.40
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 for the
borrower and the borrower's spouse. The borrower and the borrower's
spouse will jointly pay the amount calculated under Step 3
($3,340.26). To determine the monthly repayment amount, divide the
annual amount by 12.
$3,340.26 / 12 = $278.36
Example 3. This example assumes that the borrower is single with
no dependents and has $15,000 in Direct Subsidized and Unsubsidized
Loans. The interest rate on all of the loans is 6.80 percent, and
the borrower's AGI is $31,210.
Step 1: Determine the total annual payment amount based on what
the borrower would pay over 12 years using standard amortization. To
do this, multiply the loan balance by the constant multiplier for
the applicable interest rate. In this example, the interest rate is
6.80 percent, for which the constant multiplier is 0.122130.
0.122130 x $15,000 = $1,831.95
Step 2: Multiply the result of Step 1 by the income percentage
factor shown in the income percentage factors table in Attachment 1
that corresponds to the borrower's income and then divide the result
by 100:
80.33 x $1,831.95 / 100 = $1,471.61
Step 3: Determine 20 percent of discretionary income
(discretionary income is the borrower's AGI minus the HHS Poverty
Guideline amount for the borrower's family size). To do this,
subtract the Poverty Guideline amount for a family of one, in this
example, from AGI and multiply the result by 20 percent:
$31,210 - $10,890 = $20,320
$20,320 x 0.20 = $4,064
Step 4: Compare the amount from Step 2 with the amount from Step
3. The lower of the two will be the annual payment amount. In this
example, the borrower will be paying the amount calculated under
Step 2 ($1,471.61). To determine the monthly repayment amount,
divide the annual amount by 12.
$1,471.61 / 12 = $122.63
Example 4. In this example, the borrower is married and has no
dependents, other than the spouse. The borrower and spouse have a
combined AGI of $39,201 and are repaying their loans under the ICR
plan (for general information regarding joint ICR payments for
married couples, see the fifth bullet under the heading entitled
``General notes about the examples'' in this attachment). The
borrower has a Direct Loan balance of $10,000, $5,000 of which is at
an interest rate of 6.80 percent and $5,000 of which is at an
interest rate of 7.0 percent, and the spouse has a Direct Loan
balance of $5,000 at an interest rate of 6.80 percent and $10,000 of
which is at an interest rate of 7.0 percent.
Step 1: Add the borrower's and the borrower's spouse's Direct
Loan balances that have the same interest rate together to determine
combined aggregate loan balances by interest rate:
6.8 percent: $5,000 + $5,000 = $10,000
7.0 percent: $5,000 + $10,000 = $15,000
Step 2: Determine the annual payment based on what would be paid
over 12 years using standard amortization for each interest rate-
based group of combined aggregate loan balances. To do this,
multiply each group of combined aggregate loan balances by the
constant multiplier for the applicable interest rate. For 6.80
percent, the constant multiplier is 0.122130. For 7.0 percent, the
constant multiplier is 0.123406.
0.122130 x $10,000 = $1,221.30
[[Page 20799]]
0.123406 x $15,000 = $1,851.09
Step 3: Add the products of Step 2 together, multiply that total
by the income percentage factor shown in the income percentage
factors table in Attachment 1 that corresponds to the borrower's and
the borrower's spouse's combined AGI, and then divide the result by
100:
87.61 x $3,072.39 / 100 = $2,691.72
Step 4: Determine 20 percent of discretionary income. To do
this, subtract the Poverty Guideline amount for a family of two, in
this example, from the combined AGI and multiply the result by 20
percent:
$39,201 - $14,710 = $24,491
$24,491 x 0.20 = $4,898.20
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. In this
example, the borrower and the borrower's spouse will jointly pay the
amount calculated under Step 3 ($2,691.72). To determine the monthly
repayment amount, divide the annual amount by 12.
$2,691.72 / 12 = $224.31
Interpolation. If the borrower's income is not included on the
income percentage factor table, calculate the income percentage
factor through interpolation. For example, assume that the borrower
is single with income of $30,000.
Step 1: Find the closest income listed that is less than $30,000
and the closest income listed that is greater than $30,000.
Step 2: Subtract the lower amount from the higher amount (for
this discussion, we will call the result the ``income interval''):
$31,210 - $26,230 = $4,980
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''):
80.33 percent - 71.89 percent = 8.44 percent
Step 4: Subtract from the borrower's income the closest income
shown on the chart that is less than the borrower's income of
$30,000:
$30,000 - $26,230 = $3,770
Step 5: Divide the result of Step 4 by the income interval
determined in Step 2:
$3,770 / $4,980 = 0.757
Step 6: Multiply the result of Step 5 by the income percentage
factor interval:
8.44 percent x 0.757 = 6.389 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 $30,000 in income:
6.389 percent + 71.89 percent = 78.28 percent (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.
Attachment 4--Charts Showing Sample Repayment Amounts for Single and
Married Borrowers
BILLING CODE 4000-01-P
[[Page 20800]]
[GRAPHIC] [TIFF OMITTED] TN06AP12.001
[[Page 20801]]
[GRAPHIC] [TIFF OMITTED] TN06AP12.002
[[Page 20802]]
[FR Doc. 2012-8225 Filed 4-5-12; 8:45 am]
BILLING CODE 4000-01-C
