Sallie Mae 2006 Annual Report Download - page 209

Interest. The borrower’s interest rate on a Stafford Loan can be fixed or variable. Variable rates are reset
annually each July 1 based on the bond equivalent rate of 91-day Treasury bills auctioned at the final auction
held before the preceding June 1. Stafford Loan interest rates are presented below.
Trigger Date Borrower Rate
Maximum
Borrower Rate Interest Rate Margin
Before 01/01/81 ........ 7% 7% N/A
From 01/01/81 through
09/12/83............ 9% 9% N/A
From 09/13/83 through
06/30/88............ 8% 8% N/A
From 07/01/88 through
09/30/92............ 8%for48months; thereafter,
91-day Treasury +
Interest Rate Margin
8% for 48 months,
then 10%
3.25% for loans made
before 7/23/92 and for
loans made on or before
10/1/92 to new student
borrowers; 3.10% for
loans made after 7/23/92
and before 7/1/94 to
borrowers with
outstanding FFELP loans
From 10/01/92 through
06/30/94............ 91-day Treasury +
Interest Rate Margin
9% 3.10%
From 07/01/94 through
06/30/95............ 91-day Treasury +
Interest Rate Margin
8.25% 3.10%
From 07/01/95 through
06/30/98............ 91-day Treasury +
Interest Rate Margin
8.25% 2.50% (In-School, Grace
or Deferment); 3.10%
(Repayment)
From 07/01/98 through
06/30/06............ 91-day Treasury +
Interest Rate Margin
8.25% 1.70% (In-School, Grace
or Deferment); 2.30%
(Repayment)
From 07/01/06 ......... 6.8% 6.8% N/A
The trigger date for Stafford Loans made before October 1, 1992 is the first day of the enrollment period
for which the borrower’s first Stafford Loan is made. The trigger date for Stafford Loans made on or after
October 1, 1992 is the date of the disbursement of the borrower’s Stafford Loan.
Interest Subsidy Payments. The Department of Education is responsible for paying interest on Subsi-
dized Stafford Loans:
• while the borrower is a qualified student,
• during the grace period, and
• during prescribed deferral periods.
The Department of Education makes quarterly interest subsidy payments to the owner of a Subsidized
Stafford Loan in an amount equal to the interest that accrues on the unpaid balance of that loan before
repayment begins or during any deferral periods. The Higher Education Act provides that the owner of an
eligible Subsidized Stafford Loan has a contractual right against the United States to receive interest subsidy
and special allowance payments.
However, receipt of interest subsidy and special allowance payments is conditioned on compliance with
the requirements of the Higher Education Act.
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