30, 1969, the school may fix a charge for failure of the borrower to pay all or any part of an installment when it is due, and in the case of a borrower who is entitled to a deferment under section 741(c) of the Act, or cancellation or repayment under section 741(f) of the Act for any failure to file timely and satisfactory evidence of the entitlement. The amount of the charge may not exceed $1 for the first month or part of a month by which the installment or evidence is late and $2 for each succeeding month or part of a month. The school may elect to add the amount of this charge to the principal amount of the loan as of the day after the day on which the installment or evidence was due, or to make the amount of the charge payable to the school no later than the due date of the next installment following receipt of the notice of the charge by the borrower.

(3) With respect to any health professions student loan made after June 30, 1969, the school may require the borrower to make payments of at least $15 per month on all outstanding health professions student loans during the repayment period.

§ 57.211 Cancellation of health professions students loans for disability or death.

(a) Permanent and total disability. The Secretary will cancel a student borrower's indebtedness in accordance with section 741(d) of the Act if the borrower is found to be permanently and totally disabled on recommendation of the school and as supported by whatever medical certification the Secretary may require. A borrower is totally and permanently disabled if he or she is unable to engage in any substantial gainful activity because of a medically determinable impairment, which the Secretary expects to continue for a long time or to result in death.

(b) Death. The Secretary will cancel a student borrower's indebtedness in accordance with section 741(d) of the Act upon the death of the borrower. The school to which the borrower was indebted must secure a certification of death or whatever official proof is conclusive under State law.

§ 57.212 Repayment or cancellation of loans for practice in a health manpower shortage area.

(a) Practicing in a health manpower shortage area. A person who:

(1) Has obtained a degree as specified in section 741(f)(1)(A) of the Act; (2) Has obtained one or more health professions student loans or, under a written loan agreement entered before October 12, 1976, any other loans necessary for costs (including tuition, books, fees, equipment, living and other expenses which the Secretary determines were necessary) of attending a health professions school; and

(3) Enters into an agreement to practice his or her profession for at least 2 consecutive years in a health manpower shortage area designated under section 332 of the Act, is entitled to have a portion of these loans repaid by the Secretary in accordance with paragraph (b) below. Prior to entering an agreement for repayment of loans, other than health professions student loans, the Secretary will require an individual to provide evidence satisfactory to the Secretary of the existence and reasonableness of the education loans, including a copy of the written loan agreement establishing the loan, and a notarized statement that the copy is a true copy of the loan agreement.

(b) Repayment. Loan repayment will be made to persons who meet the conditions set forth in paragraph (a) as follows:

(1) Upon completion by the borrower of the first year of practice as specified in the agreement, the Secretary will pay 30 percent of the principal of, and the interest on, each loan which was unpaid as of the date the borrower began his or her practice.

(2) Upon completion by the borrower of the second year of practice the Secretary will pay another 30 percent of the principal of, and the interest on, each loan which was unpaid as of the date the borrower began his or her practice.

(3) Upon completion by the borrower of a third year of practice, the Secretary will pay another 25 percent of the principal of, and interest on, each loan which was unpaid as of the date

the borrower began his or her practice except that, the amount of loan repayments that may be made on behalf of a borrower in any year under paragraph (a) of this section may not exceed $10,000, and the total amount of payment which can be made under this section with respect to any loan may not exceed $50,000.

(c) National Health Service Corps (NHSC) Scholarship recipients. A recipient of an NHSC Scholarship under 42 CFR Part 62 may not enter into an agreement with the Secretary under this section until either (1) the participant has completed the NHSC Scholarship service obligation; (2) the Secretary has recovered from the participant an amount determined under 42 CFR 62.10, or (3) any service or payment obligation has been waived under 42 CFR 62.12. An NHSC Scholarship is not an educational loan for purposes of an agreement under this section.

§ 57.213 Continuation of provisions for cancellation of loans made prior to November 18, 1971.

Individuals who received health professions student loans as students of medicine, osteopathy, dentistry or optometry prior to November 18, 1971, may still receive cancellation of these loans for practicing in a shortage area or for practicing in a rural shortage area characterized by low family income. The regulations set forth in 42 CFR 57.216(b) (1976), as adopted on February 7, 1974 remain applicable to cancellation on this basis. The provisions can be found at 39 FR 4774 (February 7, 1974) and a copy can be obtained by writing to the Division of Manpower Training Support, Bureau of Health Manpower, Center Building, 3700 East-West Highway, Hyattsville, Maryland 20782.

§ 57.214 Repayment of loans made after November 17, 1971, for failure to complete a program of study.

In the event that the Secretary undertakes to repay educational loans under section 741(1) of the Act, he or she will use the following criteria to make a determination as to each applicant's eligibility:

(a) An applicant will be considered to have failed to complete the course of study leading to the first professional degree for which an eligible education loan was made upon certification by a health professions school that the individual ceased to be enrolled in the school subsequent to November 17, 1971;

(b) An applicant will be considered to be in exceptionally needy circumstances if, upon comparison of the income and other financial resources of the applicant with his or her expenses and financial obligations, the Secretary determines that repayment of the loan would constitute a serious economic burden on the applicant. In making this determination, the Secretary will take into consideration the applicant's net financial assets, his or her potential earning capacity, and the relationship of the income available to the applicant to the low-income levels published annually by the Secretary under paragraph (c) of this section;

(c) An applicant will be considered to be from a low-income family if the applicant comes from a family with an annual income below a level based on low-income thresholds according to family size published by the U.S. Bureau of the Census, adjusted annually for changes in the Consumer Price Index, and adjusted by the Secretary for use in this program, and the family has no substantial net financial assets. Income levels as adjusted will be published annually by the Secretary in the FEDERAL REGISTER.

(d) An applicant will be considered to be from a disadvantaged family if the individual comes from a family in which the annual income minus unusual expenses which contribute to the economic burdens borne by the family does not exceed the low-income levels published by the Secretary under paragraph (c) of this section and the family has no substantial net financial assets;

(e) An applicant will be considered as not having resumed his or her health professions studies within two years following the date the individual ceased to be a student upon a certification so stating from the applicant; and

(f) An applicant will be considered as not reasonably expected to resume his or her health professions studies within two years following the date upon which he or she terminated these studies, based upon consideration of the reasons for the applicant's failure to complete these studies, taking into account such factors as academic, medical, or financial difficulties.

The Secretary will only repay education loans made subsequent to November 17, 1971.

§ 57.215 Records, reports, inspection, and audit.

(a) Each Federal capital contribution and Federal capital loan is subject to the condition that the school must maintain those records and file with the Secretary those reports relating to the operation of its health professions student loan fund that the Secretary may find necessary to carry out the purposes of the Act and these regulations. The school also must comply with the requirements of 45 CFR Part 74 and section 705 of the Act concerning recordkeeping, audit, and inspection.

(b) The following student records must be retained by the school for five years after an individual student ceases to be a full-time student:

(1) Approved student applications for health professions student loans;

(2) Documentation of the financial need of applicants;

(3) Reasons for approval or disapproval of applications and;

(4) Other records as the Secretary may prescribe. Individual student records may be destroyed at the end of the five-year period, except that in all cases where questions have arisen as a result of a Federal audit, the records must be retained until resolution of all the questions.

nation on the basis of sex in the admission of individuals to training programs).

(2) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) and its implementing regulation, 45 CFR Part 80 (prohibiting discrimination in Federally assisted programs on the grounds of race, color, or national origin).

(3) Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.) and its implementing regulation, 45 CFR Part 86 (prohibiting discrimination on the basis of sex in Federally assisted education programs).

(4) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and its implementing regulation, 45 CFR Part 84 (prohibiting discrimination in Federally assisted programs on the basis of handicap).

(b) The recipient may not discriminate on the basis of religion in the admission of individuals to its training programs.

§ 57.217 Additional conditions.

The Secretary may with respect to any agreement entered into with any school under § 57.205, impose additional conditions prior to or at the time of any award when in his or her judgment these conditions are necessary to assure or protect the advancement of the purposes of the agreement, the interest of the public health, or the conservation of funds awarded.

§ 57.218 Noncompliance.

Wherever the Secretary finds that a participating school has failed to comply with the applicable provisions of the Act or the regulations of this subpart, he or she may, on reasonable notice to the school, withhold further payment of Federal capital contributions, and take such other action, including the termination of any agreement, as he or she finds necessary to enforce the Act and regulations. In this case no further expenditures shall be made from the health professions student loan fund or funds involved until the Secretary determines that there is no longer any failure of compliance.

All terms not defined herein shall have the same meaning as given them under title VIII of the Act. As used in this subpart, the following terms shall have the following meanings:

(a) "Act" means the Public Health Service Act, as amended.

(b) “Secretary” means the Secretary of Health and Human Services, and any other officer or employee to whom the authority involved has been delegated.

(c) "School" means a public or other nonprofit school of nursing as defined in section 843 of the Act.

(d) "Nursing Student Loan Fund or Funds" means a Fund established at a school pursuant to part B of title VIII of the Act, either with Federal Capital Contributions together with Institutional Capital Contributions, or with Federal Capital Loans. Where a school received monies from both sources of payment, reference is made to Funds.

(e) "Federal Capital Contribution" means the capital portion allotted by the Secretary to a school for deposit in a Nursing Student Loan Fund pursuant to section 824 of the Act.

(f) "Institutional Capital Contribution" means the money provided by a school, in an amount not less than one-ninth of the Federal Capital Contribution, and deposited in a Nursing Student Loan Fund.

(g) "Federal Capital Loan" means a loan made by the Secretary to a school pursuant to section 827(a) of the Act: the proceeds of which are to be deposited in a Nursing Student Loan Fund.

(h) "Nursing student loan” means the amount of money advanced to a student by a school from a Nursing Student Loan Fund as defined in paragraph (d) of this section, under a properly executed promissory note.

(i) "Educational loan" means a nursing student loan as defined in paragraph (h) of this section or the amount of money provided to a student under any other bona fide loan which the Secretary determines was reasonably necessary for meeting the student's costs of attending a school of nursing, taking into account the tuition, fees, books, equipment, living expenses, and such other expenses as the Secretary determines were reasonably necessary to enable an individual to attend such school.

(j) "Full-time student" means a student who is enrolled in a school and pursuing a course of study which constitutes a full-time academic workload, as determined by the school, leading to a diploma in nursing, an associate degree in nursing or an equivalent degree, a baccalaureate degree in nursing or an equivalent degree, or a graduate degree in nursing.

(k) "Half-time student" means a stuIdent who is enrolled in a school and pursuing a course of study which constitutes at least one-half of a full-time academic workload but less than a full-time academic workload, as determined by the school, leading to a diploma in nursing, an associate degree in nursing, a baccalaureate degree in nursing or an equivalent degree, or a graduate degree in nursing.

(1) "Good standing" means the eligibility of a student to continue in attendance at the school where he is enrolled as a student in accordance with the school's standards and practices.

(m) "Date upon which a student ceases to be a full-time or half-time student" means the first day of the month which is nearest to the date upon which he ceases to be a full-time or half-time student as defined in paragraphs (j) and (k) of this section, respectively.

(n) "Academic year" means the traditional, approximately 9-month September to June annual session. For the purpose of computing academic year equivalents for students who,

during a 12-month period, attend for a longer period than the traditional academic year, the academic year will be considered to be of 9 months' duration.

(0) "Fiscal year" means the Federal fiscal year commencing on the first day of July and ending on the 30th day of June.

(p) "Permanently and totally disabled" means the inability to engage in any substantial gainful activity because of medically determinable impairment, which impairment is expected to continue for a long and indefinite period of time, or to result in death.

(q) "Uniformed service" means the Army, Navy, Air Force, Marine Corps, Coast Guard, National Ocean Survey, and the U.S. Public Health Service.

(r) "National of the United States" means (1) a citizen of the United States or (2) a person who, though not a citizen of the United States, owes permanent allegiance to the United States (8 U.S.C. 1101(a)(22)).

(s) "State health authority" means the Director of the agency responsible for administering or supervising the administration of the State plan for health services under section 314(d) of the Act.

(t) "Registered nurse" means an individual who has been licensed by a State Board of Nursing to practice professional nursing pursuant to State licensing laws requiring as a minimum one of the degrees or diplomas specified in paragraph (j) of this section.

§ 57.303 Eligibility of schools.

To be eligible for a Federal Capital Contribution or a Federal Capital Loan under this subpart, the applicant shall meet the applicable requirements of sections 822(a) and 827(a) of the Act.

§ 57.304 Application by school.

(a) Each school desiring a Federal Capital Contribution or a Federal Capital Loan under Title VIII of the Act shall submit an application in such form and at such time as the Secretary may require.1 The application

'Applications and instructions are available from the Regional Health Manpower Di

shall be executed by an official authorized to act for the applicant school and to assume on behalf of the applicant school the obligations imposed by the terms and conditions of any Federal Capital Contribution or Federal Capital Loan, including the regulations of this subpart.

(b) Each application shall be reviewed to determine institutional eligibility and the reasonableness of the amount requested. When necessary to these ends, the Secretary may require the submission of additional data.

§ 57.305 Agreements for Federal Capital Contributions and Federal Capital Loans.

(a) Federal Capital Contribution agreements. No application for a Federal Capital Contribution shall be approved unless there is in effect an Agreement between the Secretary and the applicant school for Federal Capital Contributions pursuant to section 822 of the Act.

(b) Federal Capital Loan agreements. No application for a Federal Capital Loan shall be approved unless there is in effect an Agreement between the Secretary and the applicant school for Federal Capital Loans containing the terms required by section 827(b) of the Act and such additional terms and conditions, consistent with the applicable provisions of section 822 of the Act, as the Secretary deems appropriate.

§ 57.306 Allotment and payment of Federal Capital Contributions and Federal Capital Loans.

(a) Annual allotment. At a time determined by him, the Secretary shall make allotments to each school with which he has entered into an agreement pursuant to § 57.305. The allotment to each school, whether in the form of Federal Capital Contributions or Federal Capital Loans or a combination of both, shall be an amount which bears the same ratio to the total amount of Federal funds determined by the Secretary at the time of such

rector at the Regional Office of the Department of Health and Human Services for the region in which the applicant is located.

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