Lender and Servicer Due Diligence Measures Required by LOSFA Regarding the Office of the Ombudsman

LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
OFFICE OF STUDENT FINANCIAL ASSISTANCE

LOAN PROGRAM BULLETIN

TO:

Lenders and Schools

DATE:

July 23, 2001

TOPIC:

New Variable Interest Rates - July 1, 2001 - June 30, 2002

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 final auction of 91-day Treasury Bills held prior to June 1 occurred on May 29, 2001, and the bond equivalent rate was 3.688% which rounds to 3.69%. The weekly average of the one-year constant maturity Treasury yield for the last calendar week ending on or before June 26th is 3.46%. The average of the bond equivalent rates of the 91-day Treasury Bills auctioned for the quarter ending June 30 is 3.769%, which rounds to 3.77%.

Federal Stafford Variable Interest Rates

For converted variable-rate 8/10% loans that were subject to "windfall profits" and have been converted to a variable interest rate capped at 10%:

3.69% + 3.25% = 6.94%

For converted variable-rate 7%, 8%, 9%, or 10% (converted 8/10% loans which have reached the 49th month of the repayment period), that were subject to "windfall profits" and have been converted to a variable interest rate capped at the original fixed interest rate, the following rates apply:

3.69%+ 3.1% = 6.79%

Original Interest Rate
7%, 8%, 9%, and 10%

Variable Interest Rate
6.79%

For regular variable-rate loans made to "new" borrowers for which the first disbursement is on/after October 1, 1992 but prior to July 1, 1994 or on/after July 1, 1994 for a period of enrollment ending prior to July 1, 1994, capped at 9%:

3.69% + 3.1% = 6.79%

For loans made to all borrowers, regardless of prior borrowing, for periods of enrollment that include or begin on/after July 1, 1994 for which the first disbursement is made on/after July 1, 1994, but prior to July 1, 1995, capped at 8.25%:

3.69% + 3.1% = 6.79%: the rate is 6.79%

For loans made to all borrowers, regardless of prior borrowing, on/after July 1, 1995, but prior to July 1, 1998, capped at 8.25%:

during the in-school, grace, and deferment periods

3.69% + 2.5% = 6.19%: the rate is 6.19%

during all other periods,

3.69% + 3.1% = 6.79%: the rate is 6.79%

For loans made to all borrowers, regardless of prior borrowing, on/after 7/1/98 and before 7/1/2003 capped at 8.25%:

during the in-school, grace, and deferment periods

3.69% + 1.7% = 5.39%

during all other periods, 3.69% + 2.3% = 5.99%

 

Federal PLUS and Federal SLS Variable Interest Rates

*For variable rate PLUS and SLS loans made prior to October 1, 1992, capped at 12%:

3.46% + 3.25% = 6.71%

*For PLUS loans made on/after October 1, 1992 but prior to July 1, 1994, capped at 10%; and for SLS loans made on/after October 1, 1992 for a period of enrollment beginning prior to July 1, 1994, capped at 11%:

3.46% + 3.1% = 6.56%

*For PLUS loans made on/after July 1, 1994, but prior to July 1, 1998, capped at 9%;

3.46% + 3.1% = 6.56%: the rate is 6.56%

*For PLUS loans made on/after July 1, 1998, but prior to July 1, 2003, capped at 9%

3.69% + 3.1% = 6.79%

*These loans will not be subject to special allowance payments during the four quarters ending 9/30/00, 12/31/00, 3/31/01, and 6/30/01.

 

Federal Consolidation Variable and Fixed Interest Rates

For Consolidation loans made before July 1, 1994, the interest rate is the weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent, or 9%, whichever is greater.

For Consolidation loans made on/after July 1, 1994 and for which the loan application was received by an eligible lender before November 13, 1997, the interest rate is the weighted average of the interest rates on the loans consolidated, rounded upward to the nearest whole percent.

For Consolidation loans for which the loan application was received by an eligible lender on/after November 13, 1997, but before October 1, 1998, the interest rate is determined annually, and equals the bond equivalent rate of 91-day Treasury bills auctioned on the final auction held before June 1 of each year, plus 3.10 percent, capped at 8.25%:

3.69% + 3.10% = 6.79%: The interest rate is 8.25%

For Consolidation loans for which the loan application was received by an eligible lender on/after October 1, 1998, but before July 1, 2003, the interest rate is the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher 1/8 of one percent, capped at 8.25.

For the Heal portion of the Consolidation loan, the interest rate is determined annually, and is equal to the average of the bond equivalent rate of the 91-day Treasury Bills auctioned for the quarter ending June 30, plus 3.0 percent, with no maximum rate:

3.77% + 3.00% = 6.77%