Annual Updates to the Income Contingent Repayment (ICR) Plan Formula for 2013-William D. Ford Federal Direct Loan Program, 33395-33398 [2013-13193]
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Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices
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[FR Doc. 2013–13179 Filed 6–3–13; 8:45 am]
BILLING CODE 5001–06–P
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DEPARTMENT OF EDUCATION
Annual Updates to the Income
Contingent Repayment (ICR) Plan
Formula for 2013—William D. Ford
Federal Direct Loan Program
Catalog of Federal Domestic Assistance
(CFDA) Number: 84.063
Federal Student Aid,
Department of Education.
ACTION: Notice.
AGENCY:
SUMMARY: The Secretary announces the
annual updates to the ICR plan formula
for 2013, as provided in 34 CFR
685.209(a)(8), to give notice to Direct
Loan borrowers and the public
regarding how monthly ICR payment
amounts will be calculated for the
2013–2014 year.
DATES: The adjustments to the income
percentage factors for the ICR plan
formula contained in this notice are
effective from July 1, 2013, to June 30,
2014, 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 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.
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. 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.
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
SUPPLEMENTARY INFORMATION:
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33395
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 2013, 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 2013
• 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 a Federal Register on May 22, 2012
(77 FR 30266). 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 not-seasonally-adjusted
Consumer Price Index for all urban
consumers from December 2012 to
December 2013.
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
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Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices
Program Authority: 20 U.S.C. 1087 et seq.
Dated: May 30, 2013.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
Attachment 1—Income Percentage
Factors for 2013
INCOME PERCENTAGE FACTORS FOR
2013
Single
Income
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$10,690 .......
14,708 .........
18,926 .........
23,239 .........
27,359 .........
32,552 .........
40,888 .........
51,280 .........
61,676 .........
74,126 .........
94,916 .........
134,433 .......
154,139 .......
274,549 .......
Married/head of
household
% Factor
Income
% Factor
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
$10,690
16,867
20,100
26,276
32,552
40,888
51,279
61,676
77,269
103,250
139,627
195,275
319,093
..............
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 two calculators that
borrowers can use to estimate what their
payment amount would be under the
ICR plan. The first is available on
StudentAid.gov/ICR. The second, a
‘‘Repayment Estimator’’ available at
StudentLoans.gov, provides more
detailed, individualized information
about 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 2013
U.S. Department of Health and Human
Services (HHS) Poverty Guidelines for
the 48 contiguous States and the District
of Columbia, as published in the
Federal Register on January 24, 2013
(78 FR 5182). Different Poverty
Guidelines apply to residents of Alaska
and Hawaii.
• All of the examples use an income
percentage factor corresponding to an
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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
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:
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 6.8
percent, 0.068); 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 6.8 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 6.8
percent. As a decimal, 6.8 percent is
0.068.
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• 0.068 ÷ 12 = 0.005667
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
amount under the ICR plan, the
applicable figure is 12 years, which is
144 months. Finally, subtract one from
the result.
• 0.068 ÷ 12 = 0.005667
• 1 + 0.005667 = 1.005667
• 1.005667 ∧ -144 = 0.44319544
• 1¥0.44319554 = 0.55680456
Step 3: Next, resolve the fraction by
dividing the result from step one by the
result from step two.
• 0.005667 ÷ 0.55680456 =
0.01017772
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 × 0.01017772 = $101.78
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 6.80
percent, and she has an AGI of $27,359.
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 $152.67.
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 $27,359 corresponds
to an income percentage factor of 71.89
percent.
• 0.7189 × $152.66 = $109.75
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:
• $27,359¥$11,490 = $15,869
• $15,869 × 0.20 = $3,173.80
• $3,173.80 ÷ 12 = $264.48
Step 4: Compare the amount from
Step 2 with the amount from Step 3.
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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
($109.75).
Example 2. Joseph is married to Susan and
has no dependents. 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 6.80 percent.
tkelley on DSK3SPTVN1PROD with NOTICES
Joseph and Susan have a combined
AGI of $77,269 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
$254.44.
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 $77,269 corresponds
to an income percentage factor of 109.40
percent.
• 1.094 × $254.44 = $278.36
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:
• $77,269¥$15,510 = $61,759
• $61,759 × 0.20 = $12,351.80
• $12,351.80 ÷ 12 = $1,029.32
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
($278.36).
Step 6: Because Joseph and Susan are
jointly repaying their Direct Loans
under the ICR plan, the monthly
payment amount calculated under Step
4 applies to both Joseph 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 × $278.36 = $111.34
For Susan, the monthly payment
amount will be:
• $15,000 ÷ ($10,000 + $15,000) = 60
percent
• 0.60 × $278.36 = $167.02
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
6.80 percent, and David’s AGI is
$32,552.
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 $610.66.
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 $32,552 corresponds
to an income percentage factor of 80.33
percent.
• 0.8033 × $610.66 = $490.54
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:
• $32,552 ¥ $11,490 = $21,062
• $21,062 × 0.20 = $4,212.40
• $4,212.40 ÷ 12 = $351.03
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
($351.03).
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’’):
• $51,280 ¥ $40,888 = $10,392
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 ¥ $40,888 = $9,112
Step 5: Divide the result of Step 4 by
the income interval determined in Step
2:
• $9,112 ÷ $10,392 = 0.8768
Step 6: Multiply the result of Step 5
by the income percentage factor
interval:
• 11.23 percent × 0.8768 = 9.846
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:
• 9.846 percent + 88.77 percent =
98.62 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
Repayment Amounts for Single and
Married Borrowers
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A SINGLE BORROWER AT VARIOUS INCOME AND DEBT LEVELS
Family Size = 1
Income
Direct Loan Debt
$10,000
$10,000 ....................
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$20,000
$0
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$30,000
$0
PO 00000
$40,000
$0
Frm 00073
$0
Fmt 4703
$50,000
$0
Sfmt 4703
$60,000
$70,000
$0
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$80,000
$0
04JNN1
$0
$90,000
$0
$100,000
$0
33398
Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A SINGLE BORROWER AT VARIOUS INCOME AND DEBT
LEVELS—Continued
Family Size = 1
Income
Direct Loan Debt
$10,000
12,500 ......................
15,000 ......................
17,500 ......................
20,000 ......................
22,500 ......................
25,000 ......................
30,000 ......................
35,000 ......................
40,000 ......................
45,000 ......................
50,000 ......................
60,000 ......................
70,000 ......................
80,000 ......................
90,000 ......................
100,000 ....................
$20,000
17
59
61
63
66
70
78
84
89
95
100
102
110
117
123
128
$30,000
17
59
100
126
133
140
155
169
179
190
201
204
220
234
246
256
$40,000
17
59
100
142
184
210
233
253
268
285
301
305
329
351
369
384
17
59
100
142
184
225
309
337
358
379
401
407
439
469
492
512
$50,000
$60,000
17
59
100
142
184
225
309
392
447
474
502
509
549
586
614
640
$70,000
17
59
100
142
184
225
309
392
475
559
602
611
659
703
737
768
$80,000
17
59
100
142
184
225
309
392
475
559
642
712
769
820
860
896
17
59
100
142
184
225
309
392
475
559
642
809
878
937
983
1,024
$90,000
17
59
100
142
184
225
309
392
475
559
642
809
975
1,054
1,106
1,152
$100,000
17
59
100
142
184
225
309
392
475
559
642
809
975
1,142
1,229
1,280
Sample repayment amounts are based on an interest rate of 6.80%
SAMPLE FIRST-YEAR MONTHLY REPAYMENT AMOUNTS FOR A MARRIED OR HEAD-OF-HOUSEHOLD BORROWER AT VARIOUS
INCOME AND DEBT LEVELS
Family Size = 3
Income
Direct Loan Debt
$10,000
$10,000 ....................
12,500 ......................
15,000 ......................
17,500 ......................
20,000 ......................
22,500 ......................
25,000 ......................
30,000 ......................
35,000 ......................
40,000 ......................
45,000 ......................
50,000 ......................
60,000 ......................
70,000 ......................
80,000 ......................
90,000 ......................
100,000 ....................
$20,000
$0
0
0
0
8
50
67
73
80
88
94
100
102
107
113
119
125
$30,000
$0
0
0
0
8
50
91
147
161
176
188
200
204
214
226
238
250
$40,000
$0
0
0
0
8
50
91
175
241
263
282
301
305
321
339
357
376
$0
0
0
0
8
50
91
175
258
341
377
401
407
428
452
476
501
$50,000
$0
0
0
0
8
50
91
175
258
341
425
501
509
534
565
596
626
$60,000
$70,000
$0
0
0
0
8
50
91
175
258
341
425
508
611
641
678
715
751
$80,000
$0
0
0
0
8
50
91
175
258
341
425
508
675
748
791
834
877
$0
0
0
0
8
50
91
175
258
341
425
508
675
841
904
953
1,002
$90,000
$0
0
0
0
8
50
91
175
258
341
425
508
675
841
1,008
1,072
1,127
$100,000
$0
0
0
0
8
50
91
175
258
341
425
508
675
841
1,008
1,175
1,252
Sample repayment amounts are based on an interest rate of 6.80%
[FR Doc. 2013–13193 Filed 6–3–13; 8:45 am]
BILLING CODE 4000–01–P
DEPARTMENT OF EDUCATION
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Applications for New Awards; School
Leadership Program (CFDA Number
84.363A); Correction
Office of Innovation and
Improvement, Department of Education.
ACTION: Notice; correction.
AGENCY:
On May 8, 2013, we
published in the Federal Register (78
FR 26758) a notice inviting applications
SUMMARY:
VerDate Mar<15>2010
18:33 Jun 03, 2013
Jkt 229001
for new awards under the School
Leadership Program. This notice
corrects a typographical error in the
applicant eligibility information for
partnership applicants. Eligible
applicants are high-need LEAs;
consortia of high-need LEAs; and
partnerships of high-need LEAs and
either nonprofit organizations (which
may be community- or faith-based
organizations), or institutions of higher
education.
DATES:
Effective June 4, 2013.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00074
Fmt 4703
Sfmt 4703
Correction
In the Federal Register of May 8,
2013, on page 26760, (78 FR 26760), in
the middle column under the heading
III. Eligibility Information, we correct
the first paragraph to read:
‘‘1. Eligible Applicants: High-need
LEAs; consortia of high-need LEAs; and
partnerships of high-need LEAs,
nonprofit organizations (which may be
community- or faith-based
organizations), or institutions of higher
education.’’
Program Authority: 20 U.S.C. 6651(b).
E:\FR\FM\04JNN1.SGM
04JNN1
]]>Agencies
[Federal Register Volume 78, Number 107 (Tuesday, June 4, 2013)]
[Notices]
[Pages 33395-33398]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13193]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
Annual Updates to the Income Contingent Repayment (ICR) Plan
Formula for 2013--William D. Ford Federal Direct Loan Program
Catalog of Federal Domestic Assistance (CFDA) Number: 84.063
AGENCY: Federal Student Aid, Department of Education.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Secretary announces the annual updates to the ICR plan
formula for 2013, as provided in 34 CFR 685.209(a)(8), to give notice
to Direct Loan borrowers and the public regarding how monthly ICR
payment amounts will be calculated for the 2013-2014 year.
DATES: The adjustments to the income percentage factors for the ICR
plan formula contained in this notice are effective from July 1, 2013,
to June 30, 2014, 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 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.
SUPPLEMENTARY INFORMATION: 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. 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.
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 2013, 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 2013
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 a Federal Register
on May 22, 2012 (77 FR 30266). 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 not-seasonally-adjusted Consumer Price Index for all urban
consumers from December 2012 to December 2013.
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 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.
[[Page 33396]]
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.
Dated: May 30, 2013.
James W. Runcie,
Chief Operating Officer, Federal Student Aid.
Attachment 1--Income Percentage Factors for 2013
Income Percentage Factors for 2013
------------------------------------------------------------------------
Single Married/head of
----------------------------------------------------- household
-------------------
Income % Factor Income % Factor
------------------------------------------------------------------------
$10,690................................... 55.00 $10,690 50.52
14,708.................................... 57.79 16,867 56.68
18,926.................................... 60.57 20,100 59.56
23,239.................................... 66.23 26,276 67.79
27,359.................................... 71.89 32,552 75.22
32,552.................................... 80.33 40,888 87.61
40,888.................................... 88.77 51,279 100.00
51,280.................................... 100.00 61,676 100.00
61,676.................................... 100.00 77,269 109.40
74,126.................................... 111.80 103,250 125.00
94,916.................................... 123.50 139,627 140.60
134,433................................... 141.20 195,275 150.00
154,139................................... 150.00 319,093 200.00
274,549................................... 200.00 ........ ........
------------------------------------------------------------------------
Attachment 2--Examples of the Calculations of Monthly Repayment Amounts
General notes about the examples in this attachment:
We have two calculators that borrowers can use to estimate
what their payment amount would be under the ICR plan. The first is
available on StudentAid.gov/ICR. The second, a ``Repayment Estimator''
available at StudentLoans.gov, provides more detailed, individualized
information about 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 2013 U.S. Department of Health and Human Services (HHS)
Poverty Guidelines for the 48 contiguous States and the District of
Columbia, as published in the Federal Register on January 24, 2013 (78
FR 5182). Different Poverty Guidelines apply to residents of Alaska and
Hawaii.
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 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:
[GRAPHIC] [TIFF OMITTED] TN04JN13.004
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 6.8
percent, 0.068); 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 6.8 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 6.8 percent. As a decimal, 6.8
percent is 0.068.
0.068 / 12 = 0.005667
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 amount under the ICR plan, the applicable
figure is 12 years, which is 144 months. Finally, subtract one from the
result.
0.068 / 12 = 0.005667
1 + 0.005667 = 1.005667
1.005667 [caret] -144 = 0.44319544
1-0.44319554 = 0.55680456
Step 3: Next, resolve the fraction by dividing the result from step
one by the result from step two.
0.005667 / 0.55680456 = 0.01017772
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 0.01017772 = $101.78
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 6.80 percent, and she has an AGI of $27,359.
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 $152.67.
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 $27,359 corresponds to an income percentage factor of 71.89
percent.
0.7189 x $152.66 = $109.75
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:
$27,359-$11,490 = $15,869
$15,869 x 0.20 = $3,173.80
$3,173.80 / 12 = $264.48
Step 4: Compare the amount from Step 2 with the amount from Step 3.
[[Page 33397]]
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
($109.75).
Example 2. Joseph is married to Susan and has no dependents.
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
6.80 percent.
Joseph and Susan have a combined AGI of $77,269 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
$254.44.
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 $77,269 corresponds to an income
percentage factor of 109.40 percent.
1.094 x $254.44 = $278.36
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:
$77,269-$15,510 = $61,759
$61,759 x 0.20 = $12,351.80
$12,351.80 / 12 = $1,029.32
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 ($278.36).
Step 6: Because Joseph and Susan are jointly repaying their Direct
Loans under the ICR plan, the monthly payment amount calculated under
Step 4 applies to both Joseph 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 $278.36 = $111.34
For Susan, the monthly payment amount will be:
$15,000 / ($10,000 + $15,000) = 60 percent
0.60 x $278.36 = $167.02
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 6.80 percent, and David's AGI is $32,552.
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 $610.66.
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 $32,552 corresponds to an income percentage factor of 80.33
percent.
0.8033 x $610.66 = $490.54
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:
$32,552 - $11,490 = $21,062
$21,062 x 0.20 = $4,212.40
$4,212.40 / 12 = $351.03
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
($351.03).
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''):
$51,280 - $40,888 = $10,392
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 - $40,888 = $9,112
Step 5: Divide the result of Step 4 by the income interval
determined in Step 2:
$9,112 / $10,392 = 0.8768
Step 6: Multiply the result of Step 5 by the income percentage
factor interval:
11.23 percent x 0.8768 = 9.846 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:
9.846 percent + 88.77 percent = 98.62 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 Repayment Amounts for Single and
Married Borrowers
Sample First-Year Monthly Repayment Amounts for a Single Borrower at Various Income and Debt Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Size = 1
-------------------------------------------------------------------------------------------------------------
Income Direct Loan Debt
-------------------------------------------------------------------------------------------------------------
$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
$10,000................................... $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
[[Page 33398]]
12,500.................................... 17 17 17 17 17 17 17 17 17 17
15,000.................................... 59 59 59 59 59 59 59 59 59 59
17,500.................................... 61 100 100 100 100 100 100 100 100 100
20,000.................................... 63 126 142 142 142 142 142 142 142 142
22,500.................................... 66 133 184 184 184 184 184 184 184 184
25,000.................................... 70 140 210 225 225 225 225 225 225 225
30,000.................................... 78 155 233 309 309 309 309 309 309 309
35,000.................................... 84 169 253 337 392 392 392 392 392 392
40,000.................................... 89 179 268 358 447 475 475 475 475 475
45,000.................................... 95 190 285 379 474 559 559 559 559 559
50,000.................................... 100 201 301 401 502 602 642 642 642 642
60,000.................................... 102 204 305 407 509 611 712 809 809 809
70,000.................................... 110 220 329 439 549 659 769 878 975 975
80,000.................................... 117 234 351 469 586 703 820 937 1,054 1,142
90,000.................................... 123 246 369 492 614 737 860 983 1,106 1,229
100,000................................... 128 256 384 512 640 768 896 1,024 1,152 1,280
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sample repayment amounts are based on an interest rate of 6.80%
Sample First-Year Monthly Repayment Amounts for a Married or Head-of-Household Borrower at Various Income and Debt Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Family Size = 3
-------------------------------------------------------------------------------------------------------------
Income Direct Loan Debt
-------------------------------------------------------------------------------------------------------------
$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
$10,000................................... $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
12,500.................................... 0 0 0 0 0 0 0 0 0 0
15,000.................................... 0 0 0 0 0 0 0 0 0 0
17,500.................................... 0 0 0 0 0 0 0 0 0 0
20,000.................................... 8 8 8 8 8 8 8 8 8 8
22,500.................................... 50 50 50 50 50 50 50 50 50 50
25,000.................................... 67 91 91 91 91 91 91 91 91 91
30,000.................................... 73 147 175 175 175 175 175 175 175 175
35,000.................................... 80 161 241 258 258 258 258 258 258 258
40,000.................................... 88 176 263 341 341 341 341 341 341 341
45,000.................................... 94 188 282 377 425 425 425 425 425 425
50,000.................................... 100 200 301 401 501 508 508 508 508 508
60,000.................................... 102 204 305 407 509 611 675 675 675 675
70,000.................................... 107 214 321 428 534 641 748 841 841 841
80,000.................................... 113 226 339 452 565 678 791 904 1,008 1,008
90,000.................................... 119 238 357 476 596 715 834 953 1,072 1,175
100,000................................... 125 250 376 501 626 751 877 1,002 1,127 1,252
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sample repayment amounts are based on an interest rate of 6.80%
[FR Doc. 2013-13193 Filed 6-3-13; 8:45 am]
BILLING CODE 4000-01-P
