Clarification
of U.S. Department of Education's method of payment for special allowance granted in the
court decision
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LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
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TO: |
Lenders |
DATE: |
July 23, 1998 |
TOPIC: |
Clarification of U.S. Department of Education's method of payment
for special allowance granted in the court decision Bank of America NT & SEA. v. Riley. |
To assure that your Common Manual remains current, please record this document on your LPM/LPB index, and retain it in Appendix E of your manual.
The U.S. Department of Education has clarified its use of the annual interest rate versus the quarterly variable interest rate to calculate special allowance payments for the supplemental billings resulting from the court decision in Bank of America NT & SEA. v. Riley. Due to the constraints of the Interest Payment Subsystem, the Department has been processing the supplemental ED Form 799s using the annual interest rate to calculate the additional special allowance.
Once the documents are processed, the Department will manually apply a special formula to determine the difference between the payment made and the amount due using the quarterly interest rate. The difference, if applicable, will be included with the subsequent penalty interest payment and could result in monies due to or from the lenders. The Department indicates that it will make every effort to ensure that these payments are processed promptly and that all supplemental reports and payments may be subject to further review during a regular lender review or audit.
Lenders and servicers who have any questions about this issue are requested to contact Angela Baker, (202) 401-3255.