awards will be made after consideration of such factors as the grantee's progress and management practices, and the availability of funds. In all cases, continuation awards require a determination by HHS that continued funding is in the best interest of the government.

(3) Neither the approval of any application nor the award of any grant commits or obligates the United States in any way to make any additional, supplemental, continuation, or other award for any approved application or portion of an approved application.

§ 59a.36 Other HHS regulations that apply.

Several other regulations apply to grants under this subpart. These include, but are not limited to:

42 CFR Part 50-PHS grant appeals procedure.

45 CFR Part 16-Department grant appeals process. 45 CFR grants.

Part

74-Administration

of

45 CFR Part 75-Informal grant appeals procedure (indirect cost rates and other cost allocations).

45 CFR Part 80-Nondiscrimination under programs receiving Federal assistance through the Department of Health and Human Services-Effectuation of Title VI of the Civil Rights Act of 1964.

45 CFR Part 81-Practice and procedure for hearings under Part 80.

45 CFR Part 84-Nondiscrimination on the basis of handicap in federally assisted programs.

45 CFR Part 86-Nondiscrimination on the basis of sex in education programs and activities receiving or benefiting from federal financial assistance.

[45 FR 12250, Feb. 25, 1980; 45 FR 20097, Mar. 27, 1980]

§ 59a.37 Terms, conditions, and assur

ances.

In addition to any other terms, conditions, and assurances required by law or imposed by the Secretary, each grant shall be subject to the following terms, conditions, and assurances to be furnished by the applicant. The Secretary may at any time approve exceptions where the Secretary finds that such exceptions are not inconsistent with the Act and the purposes of the program.

(a) Use of funds. Any funds granted pursuant to this part shall be expended solely for the purposes for which the funds were granted in accordance with the approved application and budget, the regulations of this subpart, the terms and conditions of the award, and the applicable cost principles prescribed in Subpart Q of 45 CFR Part 74.

(b) Service undertakings. (1) The grantee will agree to modify and increase its library resources so as to be able to provide supportive services to other health sciences informational activities.

(2) Qualified persons and organizations shall be entitled to free loan services, and to the extent grant funds are used to provide photo duplicated or facsimile copies of biomedical materials, the copies shall be made available without charge to such persons or organizations. The qualification of persons and organizations for the services provided hereunder shall be determined in accordance with the policies or principles of operation of the grantee, subject to such review and approval as the Secretary may require.

(c) Inventions or discoveries. Any grant award hereunder is subject to the regulations of the Department of Health and Human Services relating to inventions and patents (45 CFR Parts 6 and 8, as amended). Such regulations shall apply to any activity for which grant funds are in fact used whether within the scope of the program as approved or otherwise. Appropriate measures shall be taken by the grantee and by the Secretary to assure that no contracts, assignments, or other arrangements, inconsistent with the grant obligation are continued or entered into and that all personnel involved in the supported activity are aware of and comply with such obligation.

[45 FR 12250, Feb. 25, 1980; 45 FR 20097, Mar. 27, 1980]

§ 59a.38 Termination. [Reserved]

§ 59a.39 Publications.

Grantees may publish materials relating to their regional medical library without prior review, providing such publications carry a footnote acknowl

Sec.

60.52 The student's loan check. 60.53 Notification to lender of change in enrollment status.

60.54 Payment of refunds by schools. 60.55 Administrative and fiscal procedures. 60.56 Records. 60.57 Reports.

60.58 Federal access to school records. 60.59 Records and Federal access after a school is no longer a HEAL school. 60.60 School audits.

AUTHORITY: Title VII, part C, subpart I of the Public Health Service Act, as amended, 90 Stat. 2243 (42 U.S.C. 294-2947), unless otherwise noted.

SOURCE: 43 FR 34324, Aug. 3, 1978, unless otherwise noted. Redesignated at 46 FR 8519, Jan. 27, 1981.

Subpart A-General Program Description

§ 60.1 What is the HEAL program?

(a) The health education assistance loan (HEAL) program is a program of Federal insurance of educational loans designed for students in the fields of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, podiatry, pharmacy, and public health. The basic purpose of the program is to encourage lenders to make loans to students in these fields who desire to borrow money to pay for their educational costs. In addition, certain nonstudents (such as doctors serving as interns or residents) can borrow in order to pay the current interest charges accruing on earlier HEAL loans.

(b) Schools, State agencies, pension funds, banks and other financial institutions having an insurance contract with the Commissioner of Education can be lenders under the HEAL program. HEAL lender eligibility is described in § 60.30. HEAL school eligiblility is described in § 60.50.

(c) By taking a HEAL loan, the student obligates himself or herself to repay the lender the full amount of the money borrowed, plus all interest which accrues on the loan. Depending upon the specific agreement between the borrower and the lender, the borrower may have to pay the lender while in school for the interest that accrues on the loan during that

period. Other lenders may permit the borrower to defer all payments towards interest until the borrower is out of school.

(d) Generally, repayment of principal is not required until the first day of the tenth month after the month the student has left school or completed a period of internship or residency or both. After the repayment period has commenced, a borrower may defer repayment of principal for a limited period while serving in the Armed Forces, the Peace Corps, VISTA, the National Health Service Corps, or an internship or residency program, or during a period in which the borrower has returned to school as a fulltime student.

(e) The Commissioner of Education insures each lender for the losses it may incur in the event that a borrower dies, becomes disabled, files bankruptcy, or defaults on his or her loan. If a borrower defaults on a loan and the Commissioner pays the amount of loss to the lender, the borrower's loan is then assigned to the Commissioner. At that time, the U.S. Government becomes the borrower's direct creditor and will actively pursue the borrower for repayment of the debt.

(f) The law also provides that a borrower's loan may not be discharged in bankruptcy until after the first 5 years of the repayment period. A defaulted borrower practicing his or her profession is subject to having medicare or medicaid payments withheld up to the amount of the loan.

(g) The Commissioner of Education may enter into a special contract with a borrower who has obtained a degree from a HEAL school. Under the contract, the borrower agrees to serve for at least 2 years in a health manpower shortage area as a member of the National Health Service Corps or as a private practitioner. In return, the Commissioner agrees to pay an amount, not to exceed $10,000 per year, to the holder of the borrower's HEAL loan to be applied toward interest and principal.

(h) The determination of health manpower shortage areas will be made by the Secretary. The availability of any contracts for any year is not assured and is limited by the size of the

nation's health manpower shortages in the various health disciplines, and the appropriation of funds for this purpose. An individual may receive a contract only at the Commissioner's discretion. In addition, and except in cases of impossibility or extreme hardship, severe penalties are provided in the law for any borrower who does not comply with the terms of the contract. (42 U.S.C. 294-2947)

Subpart B-The Borrower

§ 60.5 Who is an eligible student borrower?

In order to receive a HEAL loan, a student must satisfy the following requirements:

(a) He or she must be:

(1) A citizen, national or permanent resident of the United States; or

(2) A permanent resident of the Trust Territory of the Pacific Islands or the Northern Mariana Islands; or

(3) In the United States for other than a temporary purpose and intend to become a permanent resident.

(b) He or she must be enrolled or accepted for enrollment at a HEAL school in a course of study that leads to one of the following degrees:

Doctor of Podiatry or equivalent degree. Bachelor or Master of Science in Pharmacy or equivalent degree.

Graduate or equivalent degree in Public Health.

(c) He or she must be carrying or plan to carry, during the period for which the loan is intended, the normal workload of a full-time student, as determined by the school. The student's work load may include any combination of courses, work experience, research or special studies that the school considers sufficient to classify the student as full-time.

(d) If currently enrolled in school, he or she must be in good standing, as determined by the school.

(e) In the case of a pharmacy student, he or she must have satisfactorily completed 3 years of training

toward the pharmacy degree. These 3 years of training may have been taken at the pharmacy school or at a different school whose credits are fully accepted on transfer by the pharmacy school.

(f) In the case of a medical, dental or osteopathic student enrolled in a 6year program that the student enters directly from secondary school, the student must be enrolled in the last 4 years of the program.

(g) [Reserved]

(h) He or she must agree that all funds received under the proposed loan will be used solely for tuition and other reasonable educational expenses, including room and board, fees, books, supplies and equipment, laboratory expenses, transportation and commuting costs, personal expenses, the HEAL insurance premium, and interest on HEAL loans.

(42 U.S.C. 294b, 294d, 294h, 294j)

[43 FR 34324, Aug. 3, 1978. Redesignated and amended at 46 FR 8519, Jan. 27, 1981]

§ 60.6 Who is an eligible nonstudent borrower?

In order to receive a HEAL loan, a person who is not a student must satisfy all of the following requirements:

(a) He or she must have previously received a HEAL loan for which he or she is required to make payments of interest, but not principal, during the period for which the new loan is intended. This may be the grace period or a period of internship, residency or deferment.

(b) He or she must continue to meet the citizen, national, or residency qualifications required of student bor

out the loan application form provided by the lender. In the case of a student borrower, the student borrower must complete a portion of the application form and must have his or her school complete another portion. The school provides information relating to the student's eligibility, the student's estimated cost of attendance, and other financial aid (exclusive of family contributions) which the school is aware will be awarded the student during the academic period covered by the proposed HEAL loan.

(b) A special requirement exists for students enrolled or accepted for enrollment in courses of study leading to a degree in medicine, osteopathic medicine, or dentistry. For these students, the school must additionally state on the loan application that it authorizes the loan applicant to reIceive a HEAL loan. Schools of medicine, osteopathic medicine and dentistry are responsible for making sure that no more than 50 percent of their students in each class are authorized to receive new HEAL loans each academic year.

(c) If the lender agrees to make the loan to the applicant, and if the Commissioner of Education approves the loan for HEAL insurance, the applicant then must sign a promissory note. The promissory note sets out the rights and responsibilities of the borrower and lender. Subpart C of these regulations describes the terms of the loan in detail.

(42 U.S.C. 294d, 294h, 2947)

[43 FR 34324, Aug. 3, 1978. Redesignated and amended at 46 FR 8519, Jan. 27, 1981] § 60.8 What are the borrower's major rights and responsibilities?

(a) The borrower's rights. (1) Once the terms of the HEAL loan have been established, the lender may not change them without the borrower's consent.

(2) The lender must provide the borrower with a copy of the completed promissory note when the loan is made. The lender must return the original note to the borrower when the loan is paid in full.

(3) The lender must make the HEAL loan disbursement check or draft pay

able to the borrower or, if authorized by the borrower in writing, jointly to the borrower and the school. The loan disbursement check or draft must require the personal endorsement of the borrower.

(4) The lender must provide the borrower with a copy of the repayment schedule before repayment begins.

(5) If the loan is sold from one lender to another lender, or if the loan is serviced by a party other than the lender, the holder must notify the borrower if the borrower is required to send installment payments or direct other matters connected with the loan to a new address.

(6) The borrower does not have to begin repayment until nine full months after leaving school or an accredited internship or residency program as more fully described in § 60.11.

(7) The borrower is entitled to deferment from repayment of the principal amount of his or her loans during certain periods as more fully described in § 60.12.

(8) The borrower may prepay the whole or any portion of the loan at any time without penalty.

(9) The borrower's total loan obligation is cancelled in the event of death or total and permanent disability.

(10) In order to assist the borrower in avoiding default, the lender may grant the borrower forbearance. However, whether or not to grant forbearance is wholly within the lender's discretion. Forbearance is more fully described in § 60.37.

(11) At the option of the Federal Government, the borrower may apply for a special contract to have his or her loan fully or partially repaid by serving for at least 2 years in a health manpower shortage area determined by the Secretary. A contract may be granted depending on the availability of the various health manpower positions in shortage areas at the time repayment is due and the availability of funds appropriated for this purpose.

(b) The borrower's responsibilities. (1) The borrower must become familiar with the terms of the loan, including the manner in which interest is payable over the life of the loan.

(2) The borrower must pay any insurance premium that the lender may require as more fully described in § 60.14.

(3) The borrower must pay all interest charges on the loan as required by the lender.

(4) The borrower must immediately notify the lender if any of the following occurs:

(i) Change of address; (ii) Change of name;

(iii) Failure to enroll in a HEAL school for the period for which the loan is intended;

(iv) Transfer to another school;

(v) Withdrawal from a HEAL school or change in status to less than fulltime attendance at a HEAL school;

(vi) Graduation;

(vii) Cessation of participation in an internship or residency program;

(viii) Change of status that entitles a borrower to deferments; and

(ix) Change of status that authorized deferment of loan.

(5) The borrower must repay the loan in accordance with the repayment schedule. A borrower may not have a HEAL loan discharged in bankruptcy until after the first 5 years of the repayment period.

(6) If the borrower fails to make payments on the loan on time, the total amount to be repaid by the borrower may be increased by additional interest, late charges, attorney's fees, court costs, and other collection charges. In addition, the United States may offset amounts attributable to an unpaid loan from Federal reimbursements for medicaid or medicare to a defaulted borrower practicing his or her profession.

(42 U.S.C. 294d, 294e, 294f, 294h, 294k)

Subpart C-The Loan

§ 60.10 How much can be borrowed?

(a) Student borrower. An eligible student borrower may borrow an amount for an academic year equal to the difference between: (1) The student's cost of education for that period as defined in § 60.5(h); and (2) the amount of other student aid he or she will receive for that period within the following limitations: