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Annual Updates to the Income Contingent Repayment (ICR) Plan Formula for 2011; William D. Ford Federal Direct Loan Program
Apr 06, 2012 (Education Department Documents and Publications/ContentWorks via COMTEX) --
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, 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............ Income............ Factor
.................. (percent)............................ (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
Interest.............................. Annual
rate.................................. constant
(percent)..............................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 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
--This is a summary of a Federal Register article originally published on the page number listed below--
Notice.
Citation: "77 FR 20796"
Federal Register Page Number: "20796"
"Notices"
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