Summary: Clarification of the Department of Educations method of payment for special allowance granted in the court decision Bank of America NT & SEA. v. Riley.
SUBJECT: Clarification of the Department of Educations method of payment for special allowance granted in the court decision Bank of America NT & SEA. v. Riley.
PUBLICATION REFERENCE: March 1998 Dear Colleague Letter 98-L-202
This letter is to clarify the Department of Educations use of the annual interest rate versus the quarterly variable interest rate to calculate special allowance payments for the supplemental billings resulting from the court decision in Bank of America NT & SEA. v. Riley. Due to the constraints of the Interest Payment Subsystem, the Department has been processing the supplemental ED Form 799s using the annual interest rate to calculate the additional special allowance.
Once the documents are processed, the Department will manually apply a special formula to determine the difference between the payment made and amount due using the quarterly interest rate. The difference, if applicable, will be included with the subsequent penalty interest payment and could result in monies due to or from the lenders. The Department will make every effort to ensure that these payments are processed promptly. Of course, all supplemental reports and payments may be subject to further review during a regular lender review or audit.
If you have any questions, please contact Angela Baker at
Maureen S. Harris, Director
Loans Financial Management Division