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Special Allowance Rates

Special Allowance Rates for Stafford and PLUS loans for the Quarter ending December 31, 2008

The applicable Special Allowance Rates for Consolidation loans and for loans made or purchased with tax-exempt funds are available at

The Treasury Bill (T-bill) rate for the quarter ending December 31, 2008 averaged .35%. No loans, made or purchased with taxable funds, in the categories of SA, SB, SD, SE, SG, SJ, and SK, will receive Special Allowance payments.

In the absence of a daily Commercial Paper (CP) Rate during 33 business days in the fourth quarter, the U.S. Department of Education (ED) used the 3-month rate published, beginning on October 27, 2008, by the Federal Reserve in the Commercial Paper Funding Facility. Prior to October 27, 2008, ED used the previous day's CP Rate when a daily CP Rate was not available.

The CP Rate for the same quarter averaged 2.58%. When the special allowance formula results in a negative rate on a loan first disbursed on or after April 1, 2006, the lender must remit the excess interest to the U.S. Department of Education.

Loan Interest Rate Special Allowance Annual Rate Special Allowance Quarterly Rate LaRS (Lender Reporting System) Part III: Special Allowance Category Column E*
3.61% .71% .1775% CA
4.21% .71% .1775% CB
5.01% (PLUS) .21% .0525% CD
5.01% (PLUS)
8.50% (PLUS)
8.50% (PLUS) (4.13%) (1.0325%) CM

* For a detailed explanation of the Special Allowance codes, please view the Common Manual. The Special Allowance codes are located in Appendix A, figure A-5.

+ For entities approved as not-for-profit holders, Special Allowance payments will be based on another code that ED sets in the respective demographic profiles. Please see the March/April 2008 issue of Loan Notes for more information.