Inside This Issue...
| Loan News |
ISAC has been notified by ED that the bond equivalent rate of the 91-day Treasury Bill (T-bill), which was auctioned on May 28, 2003, and used to calculate the variable interest rates for Federal Stafford and PLUS loans was 1.12%.
The charts on the following page are designed to help lenders identify the new rates for loans on their systems that have variable interest rates. The charts indicate the variable rates in effect for borrowers through June 30, 2003 and the rates that will take effect on July 1, 2003, as well as descriptions for each category. To provide you with a quick, streamlined reference of the new variable rates, we have attached to this Update a chart that shows only the new variable interest rates and interest rate caps for FFELP loans.
Federal Stafford Loan Variable Interest Rates
The chart below identifies Federal Stafford loans that have a variable interest rate, and the new rates effective for the period of July 1, 2003 through June 30, 2004. These rates are based on the 91-day T-bill rate of 1.12%.
|
Variable Interest Rates in Effect through 6/30/2003 |
Variable Interest Rates in Effect 7/1/2003 - 6/30/2004 |
Loans With a Variable Interest Rate |
|
3.46%
4.06% |
2.82%
3.42% |
The borrower variable rate for all loans with a first disbursement on or after 7/1/98 is based on T-bill plus 1.70%, with a cap of 8.25%, while the borrower is in interim, grace, and deferment status.
The borrower variable rate while the borrower is in repayment or forbearance status is based on T-bill plus 2.30%, with a cap of 8.25%. |
|
4.26%
4.86% |
3.62%
4.22% |
All loans with a first disbursement on or after 7/1/95 through 6/30/98 are at a variable rate based on T-bill plus 2.50%, with a cap of 8.25% while the borrower is in interim, grace, and deferment status. While the borrower is in repayment or forbearance status, the interest rate is based on T-bill plus 3.10%, with a cap of 8.25%. |
|
4.86% |
4.22% |
All loans with a first disbursement on or after 7/1/94 through 6/30/95 are at a variable rate based on T-bill plus 3.10%, with a cap of 8.25%. |
|
4.86% |
4.22% |
Loans to new borrowers with a first disbursement on or after 10/1/92 through 6/30/94 are at a variable rate based on T-bill plus 3.10%, with a cap of 9%. |
The following chart identifies Federal Stafford loans that were originally affected by either the new or old Windfall Profit Provision and, as a result, were required to be converted to a variable interest rate as of January 1, 1995. The only exceptions to this conversion requirement are those 8%/10% loans subject to the old Windfall Profit Provision that have not reached the 49th month of repayment. These loans remain at the fixed 8% rate until the 49th month of repayment, at which time they must be converted to the variable interest rate.
|
Variable Interest Rates in Effect through 6/30/2003 |
Variable Interest Rates in Effect 7/1/2003 - 6/30/2004 |
Loans Subject to Windfall Profits and |
|
4.86% |
4.22% |
Loans to renewal 7% borrowers that had a first disbursement on or after 7/23/92 through 6/30/94. The variable rate is based on T-bill plus 3.10%, with a cap of 7%. |
|
Subject to the New Windfall Provision* | ||
|
4.86% |
4.22% |
Loans to renewal 8% borrowers that had a first disbursement on or after 7/23/92 through 6/30/94. The variable rate is based on T-bill plus 3.10%, with a cap of 8%. |
|
Subject to the New Windfall Provision* |
Loans to renewal 8%/10% borrowers that had a first disbursement on or after 7/23/92 through 6/30/94, and have been in repayment for less than 49 months. The variable rate is based on T-bill plus 3.10%, with a cap of 8% during the first 48 months of repayment. | |
|
4.86% |
4.22% |
Loans to renewal 9% borrowers that had a first disbursement on or after 7/23/92 through 6/30/94. The variable rate is based on T-bill plus 3.10%, with a cap of 9% |
|
Subject to the New Windfall Provision* |
Loans to renewal 8%/10% borrowers that had a first disbursement on or after 7/23/92 through 6/30/94, and have been in repayment for more than 48 months. The variable interest rate is based on T-bill plus 3.10%, with a cap of 10%. | |
|
5.01% |
4.37% |
Loans to new 8%/10% borrowers that had a first disbursement on or after 7/1/88 through 9/30/92, and have been in repayment for more than 48 months. The variable rate is based on T-bill plus 3.25% with a cap of 10%. |
|
Subject to the Old Windfall Provision** | ||
* The new Windfall Provision is applicable to subsequent (renewal) loans disbursed on or after 7/23/92 through 6/30/94 to existing borrowers with outstanding 7%, 8%, 9%, or 8%/10% subsidized or unsubsidized Federal Stafford loans. These loans should have been converted to a variable interest rate as of 1/1/95, but have an interest rate cap equal to the original fixed rate.
** The old Windfall Provision is applicable to all 8%/10% Federal Stafford loans disbursed on or after 7/1/88 through 6/30/94, and new 8%/10% loans disbursed to new borrowers on or after 7/23/92 through 9/30/92. The provision takes effect when the applicable interest rate is 10%, which is after the 48th month of repayment.
Federal PLUS and SLS Variable Interest Rates
The following chart identifies the variable interest rates for Federal PLUS loans disbursed on or after July 1, 1998, for the period of July 1, 2003 through June 30, 2004. In addition, the variable interest rates for PLUS and SLS loans disbursed prior to July 1, 1998, for the period of July 1, 2003 through June 30, 2004 are also provided. Rates for PLUS and SLS loans disbursed prior to July 1, 1998 are based on the weekly average constant maturity treasury yield as published by the Board of Governors of the Federal Reserve System for the last calendar week ending on or before June 26th, which was 0.95%
|
Variable Interest Rate in Effect through 6/30/2003 |
Variable Interest Rate in Effect 7/1/2003 - 6/30/2004 |
Loans Subject to the Variable Rate |
|
4.86% |
4.22%* |
All Federal PLUS loans with a first disbursement on or after 7/1/98 are at a variable rate based on the 91-day T-bill plus 3.10%, with a cap of 9%. |
|
5.23% |
4.05% |
All Federal PLUS loans with a first disbursement on or after 7/1/94 through 6/1/98 |
|
5.35% |
4.05% |
Federal PLUS and SLS loans with a first disbursement on or after 10/1/92 through 6/30/94 |
|
5.38% |
4.20% |
Federal PLUS and SLS loans with a first disbursement prior to 10/1/92 |
* These loans will not receive special allowance payments for the four quarters ending September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004 based on the interest rates in effect.
Disclosure Reminder
Please keep in mind that any loan guaranteed by ISAC prior to July 1, 2003 will reflect the previous interest rate. For loans disbursed on or after July 1, 2003, the lender is required to disclose the new July 1st rate to borrowers and how it is calculated. ED has provided lenders flexibility in notifying borrowers as long as the disclosure language includes the new variable interest rate and an explanation of how it is calculated. Lenders must:
The variable interest rates that became effective on July 1, 2003 will be reflected in results files for loans guaranteed by ISAC on or after July 1, 2003.
ED announced the average bond equivalent rates for 91-day Treasury Bills (T-bills) during the quarter ending June 30, 2003 as 1.06%. Further, the average of the bond equivalent rates for the quotes of the 3-month commercial paper (financial) rates in effect for each of the days in the quarter ending June 30, 2003 was 1.17%.
For more detailed information regarding computed special allowance rates for the quarter, please visit ED's Financial Partners Web site at www.fp.ed.gov and click on the Interest Rates link on the right-hand side.
Since early June, ISAC has been accepting and processing both electronic and paper Federal PLUS Loan Application and Promissory Note (PLUS MPN) records submitted via CommonLine version 4 or 5, through the blanket guaranty process or submitted on the school certification form.
To order a supply of paper PLUS MPN’s, go to isac-online.org and click on the Lenders/Servicers button. From here, click on Downloadable Publications and Presentations. The Order Form for Lenders is located at the bottom of the listing. Print out the order form, indicate your desired supply of PLUS MPN’s and mail or fax the completed form to ISAC’s Deerfield office as the form indicates.
We’d like to remind you of the following in regard to the PLUS MPN.
Transition Period
ED is providing for a one-year transition period for the new form. The PLUS MPN is available for loan periods beginning on or after July 1, 2003, but must be used for all Federal PLUS loans for loan periods beginning on or after July 1, 2004, or for any loan certified on or after July 1, 2004, regardless of the loan period.
Multi-Year Feature
The PLUS MPN is designed to be used as a multi-year note by a parent borrower for one dependent student. The parent may sign a PLUS MPN only once, at the time the parent first borrows for that dependent student. The parent may then obtain additional loans for that same dependent student based on the original signed MPN, during the same or subsequent years, for up to ten years after the date the parent first signed the PLUS MPN.
The multi-year feature of the PLUS MPN is available to parent borrowers whose dependent students attend any domestic school that participates in FFELP. A parent whose dependent student is attending a foreign school can use the multi-year feature only if the school has been approved by ED to allow its student and parent borrowers to do so. Otherwise, a parent borrower whose dependent is attending a foreign school must sign a new PLUS MPN for each new loan.
Requested Loan Amount
With the PLUS MPN, the parent borrower is required to indicate the amount (s)he wants to borrow under the Federal PLUS Loan Program to either the school, lender, or guaranty agency. Regardless of the maximum amount a parent borrower is eligible to borrow (based on cost of attendance minus estimated financial aid), a lender may not make a loan that is more than the amount requested by the parent borrower.
The Federal PLUS Loan Information and School Certification form is designed to allow the school to collect the requested loan amount. Other methods for collecting this are a separate Federal PLUS loan amount request form, a parent response section on the institution’s financial aid award letter, or documented telephone or electronic requests.
MPN Expiration and Conditions
As with the Federal Stafford Loan MPN, a lender may not make any subsequent loans under a PLUS MPN after the earliest of:
Effective July 1, 2003, ISAC has removed the "Illinois connection" policy that was previously required for Federal Consolidation loans. Specifically, we no longer require a Federal Consolidation loan borrower to have at least one of the loans being consolidated to be an ISAC-guaranteed loan. In addition, for Federal Consolidation loan borrowers who are consolidating only Federal Direct loans, ISAC will no longer require these borrowers to be residents of Illinois, attend an Illinois institution, or have obtained the Direct loan(s) through and Illinois institution.
The following requirements do, however, remain in effect:
The following policy change will be reflected in the July 2003 version of the Common Manual…Unified Student Loan Policy.
Effective July 1, 2003, lenders/servicers are no longer able to process (submit or receive) changes to loan guarantee data or request loan cancellations through the StarBase software. As a result, requests to adjust or cancel a loan will need to be processed in a different manner, as will the receipt of loan changes from ISAC. Our ultimate goal is to utilize the following Common Account Maintenance (CAM) records to process loan maintenance requests.
As we noted in a previous Update article, ISAC will be in a position to both receive and process the records indicated above at a future date, currently anticipated for the fourth quarter of 2003. Lenders and servicers will then be able to electronically transmit changes to ISAC that are received from a school. Until that time, however, the exchange of these CAM records will be limited to one-way, with ISAC creating and transmitting the information.
CAM Readiness
For those clients that may be in a position now or in the near future to implement the CAM records referenced above, we would like to establish a test schedule with you as soon as possible. Please contact David Perry of ISAC’s Lender Services Department at dperry@isac.org or 800-899-4722, ext. 2707.
We understand, however, that some partners are not in the position to implement or test these records with us at this time. Therefore to accommodate loan data changes and cancellation requests, ISAC offers the following method beginning on July 1st. Please keep in mind that this method is temporary and we would encourage clients to consider implementing the aforementioned CAM records as soon as possible to allow for a more efficient electronic process.
Loan Changes
Partners can communicate loan changes by fax to ISAC’s Data Quality Control Department at 847- 831-8549 or by mail to:
ISAC
Attn: Data Quality Control Dept.
1755 Lake Cook Road
Deerfield, IL 60015
When doing so, please provide the following information:
Full Loan Cancellations
If you need to request a full loan cancellation (all disbursements), we ask that you utilize the Lender Manifest reporting process rather than the manual option.
Retrieving Changes Processed by ISAC
In addition to submitting loan data changes, ISAC has also developed a temporary procedure to allow lenders/servicers to retrieve loan modifications, revisions and cancellations once they have been processed by ISAC. Again, this process has been temporarily put in place until clients implement the above-mentioned CAM records.
ISAC will provide loan change information to lenders/servicers in a downloadable, printable report that will be retrievable from a secure Internet location. The report will list information such as:
The report will be available on a daily basis and will be easily downloadable. The Web site address and individual lender/servicer user ID’s and passwords were mailed on June 24, 2003. If you did not receive your ID and/or password, please contact Sharon Bankston of ISAC’s Lender Services Department at 800-899-4722, ext. 2826 or via e-mail at lenderservices@isac.org.
| Mark Your Calendars |
Mark your calendar now to attend one of the annual fall seminars! Planning is currently underway and we’re looking forward to seeing you at one of the sites listed on the schedule attached to this Update. These seminars are a great opportunity to learn about the changes to financial aid programs, information and ideas to assist your students, and new ISAC initiatives.
Fall Seminars for All Partner Groups
This year’s fall seminar series has been restructured to include all partner groups. For the first time in a number of years, all of ISAC’s business partners – lenders/services, high school counselors and financial aid administrators – will participate in the 2003 Fall Seminars for Partners. General sessions will provide information that is common to all partners, and separate breakout sessions will then be offered for each group. Participants will not only receive the information they need to assist students through the financial aid process but, with the new seminar structure, will also be able to network with their colleagues while making new contacts from other partner groups. To accommodate busy schedules and restricted budgets, each seminar will conclude at 1 p.m., and there will be no registration fee. For these reasons and more, this year’s series is a "must attend."
Introduction to College Zone
This year, we’re excited about introducing you to College Zone, our new Web presence that will be launched later this summer. As a preview, College Zone will have a fresh dynamic design and increased functionality and capabilities. Five different Zones – Student, Parent, Counselor, FAA, and Lender – will offer information specifically for the user, depending on their reason for visiting College Zone. The Lender Zone, especially for you, will give you fingertip access to all the latest information. You’ll have the ability to order materials online and to subscribe to an e-mail service that will notify you when we’ve posted new items to the site. These methods of providing information will eventually replace our printed communications materials.
Dates and Locations
Attached to this Update is a listing of the dates and locations for this year’s seminar series. Registration materials, including a complete listing of agenda items, will be available later this summer.
Mapping Your Future Chat Events
Following is the schedule for the upcoming regularly scheduled Mapping Your Future Chat Events. Be sure to mark these Chat Events on your calendars and pass the details to your students so they can take advantage of the information that will be provided.
| DATE | TIME * | TOPIC |
|
August 5, 2003 |
Evening |
College Admissions and Standardized Tests |
|
September 9, 2003 |
Daytime |
Deferments, Forbearances and Default Prevention |
* Daytime chats are scheduled from 2 p.m. to 3 p.m. (Central), and Evening chats are scheduled from 6 p.m. to 7 p.m. (Central).
Anyone with Internet access who is interested in participating may do so by visiting the Mapping Your Future Web site at the appropriate time on the date of the event. Students will find a link to Mapping Your Future at the ISAC OnLine homepage, and financial aid professionals can access the site via the FAA Reference Center.
If you have not participated in previous Chat Events, but would like to see the topics discussed, you can review the archived "Questions and Answers" from earlier chats by visiting the section entitled "Previous Chat Events" at mapping-your-future.org/services/chatnight.htm.
A group of guaranty agencies, including ISAC, along with supporting Friends - members that participate in the Federal Family Education Loan Program (FFELP) - sponsor Mapping Your Future and are committed to providing information about higher education and career opportunities.
ISAC offices and the ELM NDN both will be closed on all of the following days in 2003.
Labor Day
Monday, September 1, 2003
Veterans Day*
Tuesday, November 11, 2003
Thanksgiving Day
Thursday, November 27, 2003
Day after Thanksgiving
Friday, November 28, 2003
Christmas Day
Thursday, December 25, 2003
* Note that some previously published holiday schedules indicated ISAC would commemorate Veterans Day on November 10th. We have since received clarification that ISAC will be closed for Veterans Day on Tuesday, November 11, 2003.
Loans will not be processed or disbursed on the previously listed holidays. Schools and lenders/servicers can transmit CommonLine or Common Account Maintenance (CAM) files on dates when ISAC is closed, but those files will be processed on the following business day and results will be available the second business day. For example, if files are transmitted to ISAC on Labor Day, September 1st, those files will be processed by ISAC on September 2nd and results will be available on September 3rd.
If you have disbursements scheduled on a holiday and would like to reschedule them, please call the ELM NDN Hotline at 800-285-3708. Remember that the ELM NDN requests at least a 10-day notice to honor such a request.
| General News |
The most recent meeting of the Illinois Student Assistance Commission was held on Monday, June 23rd, on the campus of North Park University in Chicago.
Topics of interest to our lender clients included:
All items on the agenda of interest to lenders and servicers were approved by the Commission as they were presented in the Agenda Book, which can be viewed at the ISAC’s Agenda Book section of ISAC OnLine at isac-online.org. Also available online are the proposed rules and amendments for 2003-04, the text of which was not modified in any substantive way as a result of the required review periods. Highlights of the proposed rules are located in the Agenda Book section of ISAC OnLine, in the Agenda Book for the January 31st meeting. Once published and adopted as final, the rules will be made available for viewing and downloading from our Web site. The anticipated effective date of the rules and amendments is July 1, 2003.
Next Commission Meeting
The next Commission meeting is scheduled for Friday September 19th, at the College of Lake County in Grayslake.
We would like to take this opportunity to recognize the sponsorship provided by lenders for various training events in Illinois throughout the year.
Bank of America
Bank One
Charter One Bank
Citibank
Commerce Bank
Corus Student Loan Center/National Education
EducaidFifth Third Bank
Fleet Bank
Metrobank
MOHELA
National City Bank
TCF Bank
US Bank
Wells Fargo
Providing a combined total of over $17,500, the generous support of these partners has helped to fund materials, refreshments and meals at training events, as well as scholarships for event participants to award to students at their schools.
We would like to express our gratitude for these contributions to the financial aid community in Illinois.
2003 Version of Common Manual
The July 2003 version of the Common Manual…Unified Student Loan Policy is now available. This year, ISAC will provide the manual on our Web site and as part of the Common Manual e-Collection CD-ROM.
Web-based Versions
To access the Web-based versions of the manual, simply click on the "Lenders/Servicers" button from ISAC OnLine at isac-online.org. From there, click on the Common Manual link, which is located in the middle set of boxes. This will link you to the NCHELP Web site that houses the electronic versions of the Common Manual.
There are two electronic versions, the Electronic Common Manual (ECM) and the Integrated Common Manual (ICM). The ECM has been updated to reflect the July 2003 version that was recently released by the Common Manual guarantors. The ICM is used to reflect policy proposals that are approved by the Common Manual Governing Board each month, making it the most up-to-date source of FFELP policy. At this point, there are no changes to the July 2003 version, therefore, the ICM has not yet been updated.
CD-ROM
The Common Manual e-Collection contains the July 2003 version of the manual, as well as a number of resources essential for the financial aid professional. From the Higher Education Act (HEA) to common forms, the CD-ROM has it all. The following items are included:
To order the e-Collection CD-ROM, complete the attached form and mail or fax it as the directions indicate.
Recent Changes
Recent Common Manual changes are included on the e-Collection CD-ROM and in the July 2003 Electronic Common Manual located on NCHELP’s Web site, which can be accessed via the "Links" section of the "Lenders/Services" area at ISAC OnLine. The changes deal with a variety of topics, including:
A compilation of the above changes that were made to the 2002 Common Manual…Unified Student Loan Policy is attached to this ISAC Update. We encourage you to review the changes and place them in the appropriate section of your paper manual.
Future Changes
With the move to providing the Common Manual in electronic formats, we will no longer be attaching paper copies of the Common Manual changes to ISAC Updates. Rather, they will be made available via the "Lenders/Servicers" section of ISAC OnLine as a downloadable file.
ISAC disclaims all responsibility and liability for the reader's reliance on information contained in this publication as it may represent only part of the complete guidance on a topic or have been superseded by subsequent publication(s) or changes in State or Federal law.