November 5, 2009

Special Allowance Rates

The Department of Education (ED) has released the special allowance rates for the quarter ending Sept. 30, 2009.

In calculating quarterly special allowance rates, ED is required to determine the average of the bond equivalent rates of the quotes of the three-month commercial paper (financial) rates in effect for each of the days in such quarter as reported by the Federal Reserve in Publication H-15 (or its successor) for such three-month period. For days when a rate is unavailable, ED has used the rate previously available.

Therefore, for the quarter ending Sept. 30, 2009, the average rate used to compute special allowance will be 0.29 percent.

Pursuant to the Master Participation Agreement(s) under ED's loan participation purchase program, the 0.29 percent rate is also used to determine the Participation Yield (i.e., yield owed to ED). The calculated Participation Yield rate is available in an Ensuring Continued Access to Student Loans (ECASLA) announcement.

For some loans, the special allowance rate is calculated by using the average of the bond equivalent rates of the 91-day Treasury bills as published by the Department of the Treasury. For the quarter ending Sept. 30, 2009, the average of these rates is 0.16 percent.

For more information, view ED’s announcement about the new rates. If you have questions, contact OGSLP's Policy, Compliance and Training department at 405.234.4432, 800.247.0420 (toll-free) or pct@ogslp.org.