Federal Register - June 14, 2021
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Source: Federal Register
Federal Register / Vol. 86, No. 112 / Monday, June 14, 2021 / Rules and Regulations borrowers will face a reduced financial burden associated with their student loans as they will be able to obtain additional subsidized loans or have their interest benefits restored. This difference may allow students to afford
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limitation, as shown in Table 1. Of these, approximately 316,350 loans with an outstanding balance of $1.1 billion are eligible for reinstatement of subsidy benefits.
additional courses they need to complete an educational program. The Department estimates that approximately 354,000 loans with a total of $1.2 billion in disbursements were subject to the subsidized usage
Table 1: Swnmary of Subsidized Loans Subject to Loss of Subsidy Program School Control
Balance Status
2-year
Public
No Balance Positive Balance No Balance Positive Balance No Balance Positive Balance
Private, Non-profit Proprietary 2-year
4-year
Total
Foreign Public
Proprietary Total
lotter on DSK11XQN23PROD with RULES1
The benefit of restoring subsidized loan interest benefits to individual students will depend on the outstanding balances and interest rates on the affected loans. For example, on a $5,500
Direct Subsidized Loan with a 2.75%
interest rate, the amount of interest that accrues per day is $0.41. If a borrower is in a deferment for 1 year and does not pay off the interest as it accrues, the loan would accrue interest totaling $149.64. At the end of the deferment period, the interest would capitalize and then the amount of interest that accrues per day would be $0.42. Across multiple loans and years, the amount can be significant.
Future students will also benefit from not having to consider the potential loss of subsidized interest benefits when making decisions about course choices or the timing for completing their programs, simplifying their decision making. Restoring the interest rate
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16:08 Jun 11, 2021
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Total Balance
22,999,441
327,171,269
2,406,114
19,569,896
12,254,723
102,503,049
16,260
37,660,278
Positive Balance
152,071
449,244,214
476,702,509
189
18,056
175,554
11,025
83,184
7,999
57,613
707,948
51,257,358
596,184,854
31,910,596
286,680,366
16,309,764
169,756,237
704,415
No Balance Positive Balance No Balance Positive Balance No Balance Positive Balance No Balance
Note: Asterisk refers to split by balance status being suppressed due to small cell sizes.
Total Disbursed
9,266
107,545
1,145
6,924
5,849
37,602
No Balance
Private, Non-profit
4-year
Loan Count
347,774,140
20,717,606
108,210,763
623,642,932
299,756,647
180,970,825
37,080
99,477,718
Positive Balance
316,351
1,052,621,457
1,104,370,404
Overall includes Foreign
353,620
1,152,807,123
1,105,074,819
subsidy may help with completion, which is a key factor in achieving the economic benefits associated with postsecondary education. As noted in the Paperwork Reduction Act section of this preamble, these students will also have a reduced burden from the elimination of entrance and exit counseling material associated with the subsidized loan usage limit. This is estimated to save students 175,175
hours annually for a savings of $3.5
million at an assumed wage rate of $20.17 1 for students time.
Institutions will also be affected by the removal of the subsidized loan usage limitation. The ability of some borrowers to obtain additional subsidized loans may lead them to enroll in extra courses or to complete programs, which may provide some 1 Students
hourly rate estimated using national median hourly wage for all occupations. Bureau of Labor Statistics, May 2020 Occupational Employment Statistics Data. Available at www.bls.gov/oes/current/oes_nat.htm000000.
Last accessed March 31, 2021.
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additional revenue to institutions. As indicated in the Paperwork Reduction Act section of this preamble, institutions will no longer have to include information about subsidized loan limits in entrance and exit counseling for affected borrowers. This is estimated to reduce paperwork burden by 12,904 hours for estimated savings of $1.2 million at a wage rate of $$93.74, representing the $46.87 median hourly wage for postsecondary administrators doubled to capture benefits and overhead.2
The Federal Government will be making increased transfers to subsidized loan borrowers as noted in the Net Budget Impact section. This change will also require the Department to pay for system changes to implement the repeal 2 Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2020
National Occupational Employment and Wage Estimates Management Occupations Postsecondary Administrators, 2020 median hourly wage. Available at www.bls.gov/oes/current/oes_
nat.htm110000.
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