Clarification of the Recalculated Special Allowance Payments

The Department of Education (ED) recently issued a Dear Colleague Letter (DCL), dated July, 1998, clarifying ED's use of the annual interest rate versus the quarterly variable interest rate to calculate the special allowance payments for supplemental billings resulting from the United States Court of Appeals decision in the case Bank of America N.T. v. Riley. Due to constraints of the Interest Payment Subsystem, ED has been processing the 799 Forms using the annual interest rate and applying a special formula to determine the difference between the payment made and the amount due using the quarterly interest rate. Any difference will be included with the applicable penalty interest payment and could result in money due to or from lenders.

A copy of this DCL may be obtained from ED's web-site at http://ifap.ed.gov.  A copy of the DCL describing the case Bank of America N.T. v. Riley was included with UHEAA Bulletin, Vol. 98 - Issue 26. Any questions concerning this clarification should be directed to Angela Baker at (202) 401-3255.