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AGENCY:
Federal Student Aid, Department of Education.
ACTION:
Notice.
SUMMARY:
The Secretary announces the annual updates to the ICR plan formula for 2019 to give notice to borrowers and the public regarding how monthly ICR payment amounts will be calculated for the 20192020 year under the William D. Ford Federal Direct Loan (Direct Loan) Program, Catalog of Federal Domestic Assistance number 84.063.
DATES:
The adjustments to the income percentage factors for the ICR plan formula contained in this notice are applicable from July 1, 2019, to June 30, 2020, for any borrower who enters the ICR plan or has his or her monthly payment amount recalculated under the ICR plan during that period.
Start Further Info
FOR FURTHER INFORMATION CONTACT:
Ian Foss, U.S. Department of Education, 830 First Street NE, Room 113H2, Washington, DC 20202. Telephone: (202) 3773681. Email: ian.foss@ed.gov.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service, toll free, at 18008778339.
End Further Info
End Preamble
Start Supplemental Information
SUPPLEMENTARY INFORMATION:
Under the Direct Loan Program, borrowers may choose to repay their nondefaulted loans (Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans) under the ICR plan. The ICR plan bases the borrower's repayment amount on the borrower's income, family size, loan amount, and the interest rate applicable to each of the borrower's loans.
ICR is one of several incomedriven repayment plans. Other incomedriven repayment plans include the IncomeBased Repayment (IBR) plan, the Pay As You Earn Repayment (PAYE) plan, and the Revised Pay As You Earn Repayment (REPAYE) plan. The IBR, PAYE, and REPAYE plans provide lower payment amounts than the ICR plan for most borrowers.
A Direct Loan borrower who repays his or her loans under the ICR plan pays the lesser of: (1) The amount that he or she would pay over 12 years with fixed payments multiplied by an income percentage factor; or (2) 20 percent of discretionary income.
Each year, to reflect changes in inflation, we adjust the income percentage factor used to calculate a borrower's ICR payment, as required by 34 CFR 685.209(b)(1)(ii)(A). We use the adjusted income percentage factors to calculate a borrower's monthly ICR payment amount when the borrower initially applies for the ICR plan or when the borrower submits his or her annual income documentation, as required under the ICR plan. This notice contains the adjusted income percentage factors for 2019, examples of how the monthly payment amount in ICR is calculated, and charts showing sample repayment amounts based on the adjusted ICR plan formula. This information is included in the following three attachments:

Attachment 1—Income Percentage Factors for 2019

Attachment 2—Examples of the Calculations of Monthly Repayment Amounts

Attachment 3—Charts Showing Sample Repayment Amounts for Single and Married Borrowers
In Attachment 1, to reflect changes in inflation, we updated the income percentage factors that were published in the Federal Register on August 2, 2018 (83 FR 37802). Specifically, we have revised the table of income percentage factors by changing the dollar amounts of the incomes shown by a percentage equal to the estimated percentage change between the notseasonallyadjusted Consumer Price Index for all urban consumers for December 2018 and December 2019.
The income percentage factors reflected in Attachment 1 may cause a borrower's payments to be lower than they were in prior years, even if the borrower's income is the same as in the prior year. The revised repayment amount more accurately reflects the impact of inflation on the borrower's current ability to repay.
Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.
Electronic Access to This Document: The official version of this document is Start Printed Page 23540the document published in the Federal Register. You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site, you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF, you must have Adobe Acrobat Reader, which is available free at this site.
You may also access documents of the Department published in the Federal Register by using the article search feature at www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.
Start Authority
20 U.S.C. 1087 et seq.
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Start Signature
Mark A. Brown,
Chief Operating Officer, Federal Student Aid.
End Signature
Attachment 1—Income Percentage Factors for 2019
Income Percentage Factors for 2019
Single  Married/head of household 

Income  % Factor  Income  % Factor 

$12,147  55.00  $12,147  50.52 
$16,714  57.79  $19,165  56.68 
$21,506  60.57  $22,839  59.56 
$26,407  66.23  $29,858  67.79 
$31,087  71.89  $36,989  75.22 
$36,989  80.33  $46,460  87.61 
$46,460  88.77  $58,268  100.00 
$58,269  100.00  $70,081  100.00 
$70,081  100.00  $87,800  109.40 
$84,229  111.80  $117,322  125.00 
$107,852  123.50  $158,657  140.60 
$152,755  141.20  $221,889  150.00 
$175,147  150.00  $362,583  200.00 
$311,967  200.00   
Attachment 2—Examples of the Calculations of Monthly Repayment Amounts
General notes about the examples in this attachment:
 We have a calculator that borrowers can use to estimate what their payment amounts would be under the ICR plan. The calculator is called the “Repayment Estimator” and is available at StudentAid.gov/repaymentestimator. Based on information inputted into the calculator by the borrower (for example, income, family size, and tax filing status), this calculator provides a detailed, individualized assessment of a borrower's loans and repayment plan options, including the ICR plan.
 The interest rates used in the examples are for illustration only. The actual interest rates on an individual borrower's Direct Loans depend on the loan type and when the postsecondary institution first disbursed the Direct Loan to the borrower.
 The Poverty Guideline amounts used in the examples are from the 2019 U.S. Department of Health and Human Services (HHS) Poverty Guidelines for the 48 contiguous States and the District of Columbia. Different Poverty Guidelines apply to residents of Alaska and Hawaii. The Poverty Guidelines for 2019 were published in the Federal Register on February 1, 2019 (84 FR 1167).
 All of the examples use an income percentage factor corresponding to an adjusted gross income (AGI) in the table in Attachment 1. If an AGI is not listed in the income percentage factors table in Attachment 1, the applicable income percentage can be calculated by following the instructions under the “Interpolation” heading later in this attachment.
 Married borrowers may repay their Direct Loans jointly under the ICR plan. If a married couple elects this option, we add the outstanding balance on the Direct Loans of each borrower and we add together both borrowers' AGIs to determine a joint ICR payment amount. We then prorate the joint payment amount for each borrower based on the proportion of that borrower's debt to the total outstanding balance. We bill each borrower separately.
 For example, if a married couple, John and Sally, has a total outstanding Direct Loan debt of $60,000, of which $40,000 belongs to John and $20,000 to Sally, we would apportion 67 percent of the monthly ICR payment to John and the remaining 33 percent to Sally. To take advantage of a joint ICR payment, married couples need not file taxes jointly; they may file separately and subsequently provide the other spouse's tax information to the borrower's Federal loan servicer.
Calculating the monthly payment amount using a standard amortization and a 12year repayment period.
The formula to amortize a loan with a standard schedule (in which each payment is the same over the course of the repayment period) is as follows:
M = P × <(I ÷ 12) ÷ [1−{1 + (I ÷ 12)} ^−N]>
In the formula—
 M is the monthly payment amount;
 P is the outstanding principal balance of the loan at the time the calculation is performed;
 I is the annual interest rate on the loan, expressed as a decimal (for example, for a loan with an interest rate of 6 percent, 0.06); and
 N is the total number of months in the repayment period (for example, for a loan with a 12year repayment period, 144 months).
For example, assume that Billy has a $10,000 Direct Unsubsidized Loan with an interest rate of 6 percent.
Step 1: To solve for M, first simplify the numerator of the fraction by which we multiply P, the outstanding principal balance. To do this divide I, the interest rate, as a decimal, by 12. In this example, Billy's interest rate is 6 percent. As a decimal, 6 percent is 0.06.
Step 2: Next, simplify the denominator of the fraction by which we multiply P. To do this divide I, the interest rate, as a decimal, by 12. Then, add one. Next, raise the sum of the two figures to the negative power that corresponds to the length of the repayment period in months. In this example, because we are amortizing a loan to calculate the monthly payment Start Printed Page 23541amount under the ICR plan, the applicable figure is 12 years, which is 144 months. Finally, subtract the result from one.
 0.06 ÷ 12 = 0.005
 1 + 0.005 = 1.005
 1.005 ^ −144 = 0.48762628
 1−0.48762628 = 0.51237372
Step 3: Next, resolve the fraction by dividing the result from Step 1 by the result from Step 2.
 0.005 ÷ 0.51237372 = 0.0097585
Step 4: Finally, solve for M, the monthly payment amount, by multiplying the outstanding principal balance of the loan by the result of Step 3.
 $10,000 × 0.0097585 = $97.59
The remainder of the examples in this attachment will only show the results of the formula.
Example 1. Brenda is single with no dependents and has $15,000 in Direct Subsidized and Unsubsidized Loans. The interest rate on Brenda's loans is 6 percent, and she has an AGI of $31,087.
Step 1: Determine the total monthly payment amount based on what Brenda would pay over 12 years using standard amortization. To do this, use the formula that precedes Example 1. In this example, the monthly payment amount would be $146.38.
Step 2: Multiply the result of Step 1 by the income percentage factor shown in the income percentage factors table (see Attachment 1 to this notice) that corresponds to Brenda's AGI. In this example, an AGI of $31,087 corresponds to an income percentage factor of 71.89 percent.
 0.7189 × $146.38 = $105.23
Step 3: Determine 20 percent of Brenda's discretionary income and divide by 12 (discretionary income is AGI minus the HHS Poverty Guideline amount for a borrower's family size and State of residence). For Brenda, subtract the Poverty Guideline amount for a family of one from her AGI, multiply the result by 20 percent, and then divide by 12:
 $31,087−$12,490 = $18,597
 $18,597 × 0.20 = $3,719.40
 $3,719.40 ÷ 12 = $309.95
Step 4: Compare the amount from Step 2 with the amount from Step 3. The lower of the two will be the monthly ICR payment amount. In this example, Brenda will be paying the amount calculated under Step 2 ($105.23).
Note:
Brenda would have a lower payment under other incomedriven repayment plans. Specifically, Brenda's payment would be $102.93 under the PAYE and REPAYE plans. However, Brenda's payment would be $154.40 under the IBR plan, which is higher than the payment she would have under the ICR plan.
Example 2. Joseph is married to Susan and has no dependents. They file their Federal income tax return jointly. Joseph has a Direct Loan balance of $10,000, and Susan has a Direct Loan balance of $15,000. The interest rate on all of the loans is 6 percent.
Joseph and Susan have a combined AGI of $87,800 and are repaying their loans jointly under the ICR plan (for general information regarding joint ICR payments for married couples, see the fifth and sixth bullets under the heading “General notes about the examples in this attachment”).
Step 1: Add Joseph's and Susan's Direct Loan balances to determine their combined aggregate loan balance:
 $10,000 + $15,000 = $25,000
Step 2: Determine the combined monthly payment amount for Joseph and Susan based on what both borrowers would pay over 12 years using standard amortization. To do this, use the formula that precedes Example 1. In this example, the combined monthly payment amount would be $243.96.
Step 3: Multiply the result of Step 2 by the income percentage factor shown in the income percentage factors table (see Attachment 1 to this notice) that corresponds to Joseph and Susan's combined AGI. In this example, the combined AGI of $87,800 corresponds to an income percentage factor of 109.40 percent.
 1.094 × $243.96 = $266.90
Step 4: Determine 20 percent of Joseph and Susan's combined discretionary income (discretionary income is AGI minus the HHS Poverty Guideline amount for a borrower's family size and State of residence). To do this, subtract the Poverty Guideline amount for a family of two from the combined AGI, multiply the result by 20 percent, and then divide by 12:
 $87,800−$16,910 = $70,890
 $70,890 × 0.20 = $14,178.00
 $14,178.00 ÷ 12 = $1,181.50
Step 5: Compare the amount from Step 3 with the amount from Step 4. The lower of the two will be Joseph and Susan's joint monthly payment amount. Joseph and Susan will jointly pay the amount calculated under Step 3 ($266.90).
Note:
For Joseph and Susan, the ICR plan provides the lowest monthly payment of all of the incomedriven repayment plans. Joseph and Susan would not be eligible for the IBR or PAYE plans, and would have a combined monthly payment under the REPAYE plan of $520.29.
Step 6: Because Joseph and Susan are jointly repaying their Direct Loans under the ICR plan, the monthly payment amount calculated under Step 5 applies to both Joseph's and Susan's loans. To determine the amount for which each borrower will be responsible, prorate the amount calculated under Step 4 by each spouse's share of the combined Direct Loan debt. Joseph has a Direct Loan debt of $10,000 and Susan has a Direct Loan debt of $15,000. For Joseph, the monthly payment amount will be:
 $10,000 ÷ ($10,000 + $15,000) = 40 percent
 0.40 × $266.90 = $106.76
For Susan, the monthly payment amount will be:
 $15,000 ÷ ($10,000 + $15,000) = 60 percent
 0.60 × $266.90 = $160.14
Example 3. David is single with no dependents and has $60,000 in Direct Subsidized and Unsubsidized Loans. The interest rate on all of the loans is 6 percent, and David's AGI is $36,989.
Step 1: Determine the total monthly payment amount based on what David would pay over 12 years using standard amortization. To do this, use the formula that precedes Example 1. In this example, the monthly payment amount would be $585.51.
Step 2: Multiply the result of Step 1 by the income percentage factor shown in the income percentage factors table (see Attachment 1 to this notice) that corresponds to David's AGI. In this example, an AGI of $36,989 corresponds to an income percentage factor of 80.33 percent.
 0.8033 × $585.51 = $470.34
Step 3: Determine 20 percent of David's discretionary income and divide by 12 (discretionary income is AGI minus the HHS Poverty Guideline amount for a borrower's family size and State of residence). To do this, subtract the Poverty Guideline amount for a family of one from David's AGI, multiply the result by 20 percent, and then divide by 12:
 $36,989 − $12,490 = $24,499.00
 $24,499 × 0.20 = $4,899.80
 $4,899.90 ÷ 12 = $408.32
Step 4: Compare the amount from Step 2 with the amount from Step 3. The lower of the two will be David's monthly payment amount. In this example, David will be paying the amount calculated under Step 3 ($408.32).
Note:
David would have a lower payment under each of the other incomedriven plans. Specifically, David's payment would be $152.12 under the PAYE and REPAYE plans and $228.18 under the IBR plan.
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Interpolation. If an income is not included on the income percentage factor table, calculate the income percentage factor through linear interpolation. For example, assume that Joan is single with an income of $50,000.
Step 1: Find the closest income listed that is less than Joan's income of $50,000 ($46,460) and the closest income listed that is greater than Joan's income of $50,000 ($58,269).
Step 2: Subtract the lower amount from the higher amount (for this discussion we will call the result the “income interval”):
 $58,269−$46,460 = $11,809
Step 3: Determine the difference between the two income percentage factors that correspond to the incomes used in Step 2 (for this discussion, we will call the result the “income percentage factor interval”):
 100.00 percent−88.77 percent = 11.23 percent
Step 4: Subtract from Joan's income the closest income shown on the chart that is less than Joan's income of $50,000:
Step 5: Divide the result of Step 4 by the income interval determined in Step 2:
 $3,540 ÷ $11,809 = 29.98 percent
Step 6: Multiply the result of Step 5 by the income percentage factor interval:
 11.23 percent × 29.98 percent = 3.37 percent
Step 7: Add the result of Step 6 to the lower of the two income percentage factors used in Step 3 to calculate the income percentage factor interval for $50,000 in income:
 3.37 percent + 88.77 percent = 92.14 percent (rounded to the nearest hundredth)
The result is the income percentage factor that we will use to calculate Joan's monthly repayment amount under the ICR plan.
Attachment 3—Charts Showing Sample IncomeDriven Repayment Amounts for Single and Married Borrowers
Below are two charts that provide firstyear payment amount estimates for a variety of loan debt sizes and incomes under all of the incomedriven repayment plans and the 10Year Standard Repayment Plan. The first chart is for single borrowers who have a family size of one. The second chart is for a borrower who is married or a head of household and who has a family size of three. The calculations in Attachment 3 assume that the loan debt has an interest rate of 6 percent. For married borrowers, the calculations assume that the borrower files a joint Federal income tax return with his or her spouse and that the borrower's spouse does not have Federal student loans. A field with a “” character indicates that the borrower in the example would not be eligible to enter the applicable incomedriven repayment plan based on the borrower's income, loan debt, and family size.
Sample FirstYear Monthly Repayment Amounts for a Single Borrower
Family Size = 1 

 Income  Plan  $20,000  $40,000  $60,000  $80,000  $100,000 

Initial Debt  $20,000  ICR  $117  $162  $195  $211  $233 
  IBR  16     
  PAYE  11  177    
  REPAYE  11  177  344  511  677 
  10Year Standard  222  222  222  222  222 
 40,000  ICR  125  324  344  423  472 
  IBR  16  266    
  PAYE  11  177  344   
  REPAYE  11  177  344  511  682 
  10Year Standard  444  444  444  444  444 
 60,000  ICR  125  459  586  634  700 
  IBR  16  266  516   
  PAYE  11  177  344  511  
  REPAYE  11  177  344  511  677 
  10Year Standard  666  666  666  666  666 
 80,000  ICR  125  459  781  845  934 
  IBR  16  266  516  766  
  PAYE  11  177  344  511  677 
  REPAYE  11  177  344  511  677 
  10Year Standard  888  888  888  888  888 
 100,000  ICR  125  459  792  1,057  1,167 
  IBR  16  266  516  766  1,016 
  PAYE  11  177  344  511  677 
  REPAYE  11  177  344  511  677 
  10Year Standard  1,110  1,110  1,110  1,110  1,110 
Sample FirstYear Monthly Repayment Amounts for a Married or HeadofHousehold Borrower
Family Size = 3 

 Income  Plan  $20,000  $40,000  $60,000  $80,000  $100,000 

Initial Debt  $20,000  ICR  $0  $154  $195  $205  $226 
  IBR  0  100    
  PAYE  0  67    
  REPAYE  0  67  233  400  567 
  10Year Standard  222  222  222  222  222 
 40,000  ICR  0  309  390  15  457 
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  IBR  0  100  350   
  PAYE  0  67  233  400  
  REPAYE  0  67  233  400  574 
  10Year Standard  444  444  444  444  444 
 60,000  ICR  0  320  586  622  686 
  IBR  0  100  350  600  
  PAYE  0  67  233  400  574 
  REPAYE  0  67  233  400  574 
  10Year Standard  666  666  666  666  666 
 80,000  ICR  0  311  645  822  904 
  IBR  0  100  350  600  850 
  PAYE  0  67  233  400  567 
  REPAYE  0  67  233  400  567 
  10Year Standard  888  888  888  888  888 
 100,000  ICR  0  311  645  978  1,131 
  IBR  0  100  350  600  850 
  PAYE  0  67  233  400  567 
  REPAYE  0  67  233  400  567 
  10Year Standard  1,110  1,110  1,110  1,110  1,110 
End Supplemental Information
[FR Doc. 201910623 Filed 52119; 8:45 am]
BILLING CODE 400001P