Sallie Mae 2006 Annual Report Download - page 212

Trigger Date Borrower Rate
Maximum
Borrower Rate
Interest
Rate
Margin
Before 10/01/81 . . . . . . . . . . . . . . . . . 9% 9% N/A
From 10/01/81 through 10/30/82 . . . . . 14% 14% N/A
From 11/01/82 through 06/30/87 . . . . . 12% 12% N/A
From 07/01/87 through 09/30/92 . . . . . 1-year Index + Interest Rate Margin 12% 3.25%
From 10/01/92 through 06/30/94 . . . . . 1-year Index + Interest Rate Margin PLUS 10%, SLS 11% 3.10%
From 07/01/94 through 06/30/98 . . . . . 1-year Index + Interest Rate Margin 9% 3.10%
From 6/30/98 through 06/30/06 . . . . . . 91-day Treasury + Interest Rate Margin 9% 3.10%
From 07/01/06 . . . . . . . . . . . . . . . . . . 8.5% 8.5% N/A
For PLUS and SLS Loans made before October 1, 1992, the trigger date is the first day of the enrollment
period for which the loan was made. For PLUS and SLS Loans made on or after October 1, 1992, the trigger
date is the date of the disbursement of the loan.
A holder of a PLUS or SLS Loan is eligible to receive special allowance payments during any quarter if:
• the borrower rate is set at the maximum borrower rate and
• the sum of the average of the bond equivalent rates of 3-month Treasury bills auctioned during that
quarter and the applicable interest rate margin exceeds the maximum borrower rate.
Effective July 1, 2006, this limitation on special allowance for PLUS loans made on and after January 1, 2000
is repealed.
Repayment, Deferments. Borrowers begin to repay principal of their PLUS and SLS Loans no later than
60 days after the final disbursement. Deferment and forbearance provisions, maximum loan repayment periods
and minimum payment amounts for PLUS and SLS Loans are the same as those for Stafford Loans.
Consolidation Loan Program
The Higher Education Act also authorizes a program under which borrowers may consolidate one or more
of their student loans into a single FFELP Consolidation Loan that is insured and reinsured on a basis similar
to Stafford and PLUS Loans. FFELP Consolidation Loans are made in an amount sufficient to pay outstanding
principal, unpaid interest, late charges and collection costs on all federally reinsured student loans incurred
under the FFELP that the borrower selects for consolidation, as well as loans made under various other federal
student loan programs and loans made by different lenders. In general, a borrower’s eligibility to consolidate
FFELP student loans ends upon receipt of a FFELP Consolidation Loan. Under certain circumstances, a
FFELP borrower may obtain a FFELP Consolidation Loan under the FDLP.
FFELP Consolidation Loans made on or after July 1, 1994 have no minimum loan amount, although
FFELP Consolidation Loans for less than $7,500 do not enjoy an extended repayment period. Applications for
FFELP Consolidation Loans received on or after January 1, 1993 but before July 1, 1994 were available only
to borrowers who had aggregate outstanding student loan balances of at least $7,500. For applications received
before January 1, 1993, FFELP Consolidation Loans were available only to borrowers who had aggregate
outstanding student loan balances of at least $5,000.
To obtain a FFELP Consolidation Loan, the borrower must be either in repayment status or in a grace
period before repayment begins. In addition, for applications received before January 1, 1993, the borrower
must not have been delinquent by more than 90 days on any student loan payment. Prior to July 1, 2006,
married couples who were eligible to consolidate agreed to be jointly and severally liable and were treated as
one borrower for purposes of loan consolidation eligibility.
FFELP Consolidation Loans bear interest at a fixed rate equal to the greater of the weighted average of
the interest rates on the unpaid principal balances of the consolidated loans and 9 percent for loans originated
before July 1, 1994. For FFELP Consolidation Loans made on or after July 1, 1994 and for which applications
A-9