In 2004 the United States Department of the Treasury and the Internal Revenue Service issued final regulations relating to the deduction for interest paid on student loans. Student loan lenders are required to report paid interest to borrowers. The definition of interest includes certain prepaid fees such as origination fees and guarantee fees, and capitalized interest. The final regulations consider prepaid fees and capitalized interest Original Issue Discount (OID).

The Carleton Calculation Module assists Student Lenders in tracking the amount to be reported to borrowers as the total yield (OID + QSI) in Box 1 on form 1098E according to the IRS regulations.

Our work in 2005 with 8 separate student lenders created a remarkably efficient and flexible tool that helps lenders properly deal with re-yielding events such as the assessment of prepaid fees during the interim and repayment periods, frequent capitalization of interest, and introduction of borrower benefits programs during the life of the loan. These are only a few of the many contingent situations and events that the Carleton module will properly take into account while tracking the total yield.

• SLSA Presentation

• SLSA Presentation Slides

• Carleton IRS Student Loan Reporting Module Implementation

• Student Loan Yield (SLOID) FAQ

• Carleton OID Input Examples