A r c h i v e d I n f o r m a t i o n

Biennial Evaluation Report - FY 93-94

Chapter 506

Income Contingent Loan Demonstration Program

(CFDA No. 84.226)

I. Program Profile

Legislation: Higher Education Act (HEA) of 1965, Title IV-D, as amended (20 U.S.C. 1087a-1087e) (expires September 30, 1997).

Purpose: To demonstrate the feasibility of an unsubsidized student loan program with income contingent repayments. That is, the monthly payment due by the borrower for loan repayment was a function of the borrower's income. The size and number of payments varied by borrower.

Funding History

Fiscal Year	Appropriation*
1987	$5,000,000
1988	4,308,000
1989	4,940,000
1990	4,931,500
1991	4,880,000
1993	4,880,000
1993	0
1994	0

*The authority for the Income Contingent Loan (ICL) Program was repealed by the Higher Education Amendments of 1992. Institutions were given the authority to convert all outstanding ICL to Federal Perkins Loans. As of March 31, 1993, institutions were required to distribute any remaining ICL funds to the Campus-Based Programs.

II. Program Information and Analysis

Population Targeting and Services

Income Contingent Loans were available to undergraduate students who were enrolled at least half-time at one of the10 postsecondary institutions participating in the ICL demonstration program and who met certain other criteria (e.g., had a high school diploma or its equivalent or demonstrated ability to benefit from the education). Priority was given to students who demonstrate financial need based on the cost of education and the ability of the student and/or the student's family to pay this cost. The calculation of need was based on a Congressionally specified formula applied to the financial data of the student and/or the student's family. If any ICL funds remained after financially needy students were offered these loans, other students were offered these loans. Final eligibility and award amounts were determined by the postsecondary institution based on the amount of funds available at the institution and the institution's aid-packaging policy.

The following 10 institutions received allocations ranging from $105,344 to $1,119,003 during FY 1992:

Abraham Baldwin Agricultural College
Brown University
Hampton University
Loyola University of Chicago
Marquette University
Metropolitan State College
Rochester Institute of Technology
Rutgers University
University of Missouri at Rolla
Wheeling College

Participating institutions had different packaging policies with respect to income-contingent loans.

Program Administration

ICLs were made directly by the institutions to the students. Loan repayments received by the institution went back into that institution's revolving fund to be made available for future aid. The maximum amount of an ICL varied according to the borrower's level in school. First-or second-year students could borrow a maximum of $2,500, third-year students could borrow a maximum of $3,500, and fourth- and fifth- year students could borrow a maximum of $4,500. The aggregate total a student may borrow through the ICL program is $17,500.

Outcomes

III. Sources of Information

Program data.

IV. Planned Studies

None.

V. Contacts for Further Information

Program Analysis:: Blanca Rosa Rodriguez, (202) 708-8963
Program Policy:: Harold McCullough (202) 708-4690
Program Studies:: Steven Zwillinger, (202) 401-0182

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[Federal Work-Study Program]

[State Student Incentive Grants]