Sallie Mae 2005 Annual Report Download - page 203
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A-5
If the result is negative, the special allowance payment is zero.
Date of First Disbursement Special Allowance Margin
Before 10/17/86.......................... 3.50%
From 10/17/86 through09/30/92............ 3.25%
From 10/01/92 through06/30/95............ 3.10%
From 07/01/95 through06/30/98............ 2.50% for Stafford Loans that are inIn-School, Grace or
Deferment 3.10% for Stafford Loans that are in
Repayment and all other loans
From 07/01/98 through12/31/99............ 2.20% for Stafford Loans that are inIn-School, Grace or
Deferment 2.80% for Stafford Loans that are in
Repayment 3.10% for PLUS, SLS and Consolidation
loans
For student loans disbursed on or after January 1, 2000, the special allowance percentage is computed
by:
(1) determining the average of the bond equivalent rates of 3-month commercial paper (financial)
rates quoted for that quarter;
(2) subtracting the applicable borrower interest rate;
(3) adding the applicable special allowance margin described in the table below; and
(4) dividing the resultant percentage by 4.
If the result is negative, the special allowance payment is zero.
Date of First Disbursement Special Allowance Margin
From 01/01/00 ........................... 1.74% for Stafford Loans that are inIn-School, Grace or
Deferment
2.34% for Stafford Loans that are in Repayment
2.64% for PLUS and Consolidation loans
•Special allowance payments are available on variable rate PLUS Loans and SLS Loans only if the
variable rate, which is reset annually, exceeds the applicable maximum borrower rate. Effective
July 1, 2006, this limitation on special allowance for PLUS loans made on and after January 1, 2000
is repealed. The variable rate is based on the weekly average one-year constant maturity Treasury
yield for loans made before July 1, 1998 and based on the 91-day Treasury bill for loans made on or
after July 1, 1998. The maximum borrower rate for these loans is between 9 percent and 12 percent.
Stafford Loan Program
For Stafford Loans, the Higher Education Act provides for:
•federal reinsurance of Stafford Loans made by eligible lenders to qualified students;
•federal interest subsidy payments on Subsidized Stafford Loans paid by the Department of
Education to holders of the loans in lieu of the borrowers’ making interest payments during in-
school, grace and deferment periods; and
•special allowance payments representing an additional subsidy paid by the Department to the
holders of eligible Stafford Loans.
We refer to all three types of assistance as “federal assistance.”