$57.203

Date upon which a student ceases to be a full-time student means the first day of the month which is nearest to the date upon which an individual ceases to be a full-time student as defined in this section.

Default means the failure of a borrower of a loan made under this subpart to make an installment payment when due, or comply with any other term of the promissory note for such loan, except that a loan made under this subpart shall not be considered to be in default if the loan is discharged in bankruptcy, the borrower's repayment schedule has been renegotiated and the borrower is complying with the renegotiated schedule, or the loan is in forbearance.

Federal capital loan means a loan made by the Secretary to a school under section 744(a) of the Act, as in effect prior to October 1, 1977, the proceeds of which are to be returned to the Secretary.

Full-time student means a student who is enrolled in a health professions school and pursuing a course of study which is a full-time academic workload, as determined by the school, leading to a degree specified in section 741(b) of the Act.

Grace period means the period of 1 year beginning on the date upon which a student ceases to be a full-time student at a school of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine.

Health professions school or school, for purposes of this subpart, means a public or private nonprofit school of medicine, school of dentistry, school of osteopathic medicine, school of podiatric medicine, school of optometry, or school of veterinary medicine as defined in section 701(4) of the Act, or a school of pharmacy as defined in section 747 of the Act.

Health professions student loan means the amount of money advanced to a student by a school from a health professions student loan fund under a properly executed promissory note.

Institutional capital contribution means the money provided by a school, in an amount not less than one-ninth of the federal capital contribution and

42 CFR Ch. I (10-1-95 Edi

deposited in a health professions dent loan fund.

National of the United States (1) A citizen of the United States. a person who, though not a citize the United States, owes permanen legiance to the United States, a fined in the Immigration and Natio ity Act, at 8 U.S.C. section 1101(2 School year means the tradition proximately 9-month September June annual session. For the purp computing school year equivalent students who, during a 12-month riod, attend for a longer period the traditional school year, the sch year will be considered to be 9 m in length.

i

Secretary means the Secretary Health and Human Services and other officer or employee of the partment of Health and Human ices to whom the authority in has been delegated.

State means a State, the Com wealth of Puerto Rico, the Distri Columbia, Guam, American Samo Virgin Islands, the Commonwealt the Northern Mariana Islands Trust Territory of the Pacific (the Republic of Palau), the Repub the Marshall Islands, and the erated States of Micronesia.

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[44 FR 29055, May 18, 1979, as amended FR 20987, June 3, 1987; 53 FR 46549, No 1988; 56 FR 19293, Apr. 26, 1991; 56 FR June 4, 1991]

$57.203 Application by school.

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(a) Each school seeking a Fe capital contribution must submit application at the time and in thei and manner that the Secretary may quire. The application must be s by an individual authorized to act the applicant and to assume on bel of the applicant the obligations posed by the statute, the regulation this subpart, and the terms and co tions of the award.

(b) Each application will be revie to determine eligibility and the rea ableness of the amount of Federal port requested. The Secretary may quire the applicant to submit tional data for this purpose. (c) An application will not be proved unless agreement bet the Secretar e applicant s

er section 740 of the Act is reached.

R 29055, May 18, 1979, as amended at 49 38112, Sept. 27, 1984; 56 FR 19293, Apr. 26, 57 FR 45734, Oct. 5, 1992]

204 Payment of Federal capital
contributions and reallocation of
funds remitted to the Secretary.
́) Annual payment. The Secretary

make payments to each school 1 which he or she has entered into agreement under the Act at a time rmined by him or her. If the total he amounts requested for any fiscal r by all schools for Federal capital tributions exceeds the amount of eral funds determined by the Secry at the time of payment to be ilable for this purpose, the payment each school will be reduced to chever is smaller:

4) The amount requested in the apation, or

) An amount which bears the same o to the total amount of Federal ds determined by the Secretary at time of payment to be available for t fiscal year for the Health Profesis Student Loan Program as the aber of full-time students estimated the Secretary to be enrolled in that Pool bears to the estimated total

nber of full-time students in all parpating schools during that year. ounts remaining after these paynts are made will be distributed in ordance with this paragraph among ools whose applications requested

tion be than the amount paid to them,

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with whatever adjustments that y be necessary to prevent the total d to any school from exceeding the al requested by it.

b) Method of payment. The payment Federal capital contributions to a ool will be paid in a manner that pids unnecessary accumulations of ney in any health professions stuit loan fund.

c) Reallocation of funds remitted to the retary. All funds from a student loan id established under this subpart ich are remitted to the Secretary in y fiscal year shall be available for alment under this subpart, in the me fiscal year and the succeeding fisyear, to schools which, during the riod beginning on July 1, 1972, and

ending on September 30, 1985, established student loan funds with Federal capital contributions under this subpart. The Secretary will from time to time set dates by which the schools must file applications to receive a portion of these funds. If the total of the amounts requested for any fiscal year by eligible schools exceeds the amount of funds determined by the Secretary at the time of payment to be available for this purpose, the payment to each school will be reduced to whichever is smaller:

(1) The amount requested in the application, or

(2) An amount which bears the same ratio to the total amount of returned funds determined by the Secretary at the time of payment to be available for that fiscal year for the Health Professions Student Loan program as the number of full-time students estimated by the Secretary to be enrolled in that school bears to the estimated total number of full-time students in all eligible schools during that year. Amounts remaining after these payments are made will be distributed in accordance with this paragraph among schools whose applications requested more than the amount paid to them, with whatever adjustments may be necessary to prevent the total paid to any school from exceeding the total requested by it.

[44 FR 29055, May 18, 1979, as amended at 53 FR 46549, Nov. 17, 1988; 56 FR 19293, Apr. 26, 1991]

(a) Funds established with Federal capital contributions. Any fund established by a school with Federal capital contributions will be accounted for separately from other funds, providing a clear audit trail for all transactions. At all times the fund must contain monies representing the institutional capital contribution. The school must at all times maintain all monies relating to the fund in one or more interestbearing accounts or investment instruments which meet OMB requirements established for Federal monies held by third parties. The school must place all earnings into the fund but may first deduct from total earnings any reason

(ii) Capital distribution as provided in section 743 of the Act or as agreed to by the school and the Secretary; and

(iii) Costs of litigation, costs associated with membership in credit bureaus, and to the extent specifically approved by the Secretary, other collection costs that exceed the usual expenses incurred in the collection of health professions student loans.

(2) A school must review the balance in the fund on at least a semi-annual basis to determine whether the fund balance compared with projected levels of expenditures and collections exceeds its needs. A school in closing status must review the balance in the fund on a quarterly basis. Monies identified as in excess of the school's needs must be reported, and the Federal share returned to the Federal Government, by the due date of the required report which identifies the excess monies. The school's determination is subject to the review and approval of the Secretary.

(b) Funds established with Federal capital loans. (1) Each Federal capital loan is subject to the terms of the promissory note executed by an authorized of ficial on behalf of the borrowing school.

(2) The Federal capital loans must be carried in a special account of the school, to be used by the school only for (i) repayments of principal and interest on Federal capital loans; and (ii) costs of litigation; costs associated with membership in credit bureaus; and, to the extent specifically approved by the Secretary, other collection costs that exceed the usual expenses incurred in the collection of health professions student loans.

(c) Failure to comply with ** quirements of this section wi

for a health professions student refu they are:

(iv) of exceptional financial ne the case of students of medicine teopathic medicine. A student wi considered to demonstrate excepti financial need if the school determ that his or her resources, as descr in paragraph (b)(1) of this section not exceed the lesser of $6,700 or half of the costs of attendance at school. Summer earnings, educatica loans, veterans (G.I.) benefits and eat ings during the school year will not considered as resources in determin whether an applicant meets the e bility criteria for exceptional financ need, but will be considered in det mining the amount of funds a stude may receive; and

(v) In compliance with the requi ment to register for the draft, if quired to do so under section 3 of Military Selective Service Act.

(2) The school must provide writ notification to each applicant of provisions of section 741(f) of the under which the Secretary may re all or part of a loan.

32

An applicant who has previously led an institution of higher edu1 must submit a financial aid ript which includes at least the ing data:

Applicant's name and social secuumber;

Amounts and sources of loans and 3 previously received by the applifor study at an institution of r education;

Whether the applicant is in deon any of these loans, or owes a Ad on any grants;

Certification from each institupreviously attended by the applithat the applicant has received no cial aid, if applicable; and

From each institution previously

Padded, the signature of an official

orized by the institution to sign transcripts on behalf of the insti

other information which the

sol has regarding the student's fiial status. The school must take account, regardless of the tax staof the student, the expected conation from parents, spouse, self or or family members; and

The costs reasonably necessary the student's attendance at the >ol, including any special needs and gations which directly affect the lent's ability to attend the school a full-time basis. The school must ument the criteria used for detering these costs.

) Selection of medical (M.D. and D.O.) lent applicants. In addition to the tors in §57.206(b), the school must Ject medical (M.D. and D.O.) students duating after June 30, 1979, based on order of greatest need, taking into Isideration the other resources Lilable to the student through the 100l. For purposes of establishing ority for selecting medical (M.D. 2d D.O.) student applicants to receive

health professions student loans, summer earnings, educational loans, veterans (G.I.) benefits, and earnings during the school year will be considered as financial resources.

(d) Verification of loan information. The school must verify, to the best of its ability, the information provided by the student on the loan application. To comply with this requirement, a school may require that a student provide, for example: Photocopies of the parents', student's, and spouse's Federal income tax forms with original signatures for the most recent tax year (or certification that no Federal income tax return was filed); tax returns that are certified as having been received by the Internal Revenue Service; or other documentation that the school considers necessary to help assure that information on the loan application is correct. (Approved by the Office of Management and Budget under control number 0915-0047)

[44 FR 32698, June 7, 1979, as amended at 48 FR 25069, June 3, 1983; 49 FR 38112, Sept. 27, 1984; 52 FR 20987, June 3, 1987; 53 FR 46549, Nov. 17, 1988; 56 FR 19293, Apr. 26, 1991]

$57.207 Maximum amount of health professions student loans.

The total of the health professions student loans made from the fund to any student for a school year may not exceed $2,500 and the cost of tuition. The maximum amount loaned during a 12-month period to any student enrolled in a school which provides a course of study longer than the 9month school year may be proportionately increased.

§ 57.208 Health

professions student loan promissory note and disclosure requirements.

(a) Promissory note form. Each health professions student loan must be evidenced by a properly executed promissory note in a form approved by the Secretary. The school must safeguard the promissory note against fire, theft, and tampering.

(1) Each promissory note must state that the loan will bear interest on the unpaid balance computed only for periods during which repayment of the loan is required, at the rate of 5 percent per year.

(2) Each promissory note must contain an acceleration clause provided by the Secretary, which will permit the acceleration of delinquent loans at the school's option.

(3) A copy of each executed note must be supplied by the school to the student borrower.

(b) Security. A school must require security or endorsement if the borrower is a minor and if, under the applicable State law, the note signed by him or her would not create a binding obligation. The school may not require security or endorsement in any other circumstances.

(c) Disclosure requirements. (1) For any loan made after June 30, 1986, the school shall, at the time the loan is made, provide the following loan information to the student:

(i) The yearly and cumulative maximum amounts that may be borrowed by the student;

(ii) The terms under which repayment of the loan will begin;

(iii) The maximum number of years in which the loan must be repaid;

(iv) The interest rate that will be paid by the borrower and the minimum amount of the required monthly payment;

(v) The amount of any other fees charged to the borrower by the lender;

(vi) Any options the borrower may have for deferral, cancellation, prepayment, consolidation, or other refinancing of the loan;

(vii) A definition of default on the loan and a specification of the consequences which will result to the borrower if the borrower defaults, including a description of any arrangements which may be made with credit bureau organizations;

(viii) To the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance; and

(ix) A description of the actions that may be taken by the Federal Government to collect the loan, including a description of the type of information concerning the borrower that the Federal Government may disclose to:

(A) Officers, employees, or agents of the Department of Health and Human Services,

(a) Health professions student from any fund may be paid to or half of student borrowers in ments considered appropriate b school except that a school ma pay to or on behalf of any bo more during any given installme riod (e.g., semester, term, or quar than the school determines the stat needs for that period.

(b) No payment may be made fro fund to or on behalf of any student rower if at the time of the payment borrower is not a full-time student.

§ 57.210 Repayment and collection health professions student loans (a) Each health professions st loan, including accrued interests. be repayable in equal or gradus periodic installments in amounts culated on the basis of a 10-year re ment period. Except as otherwise vided in this paragraph, repayment

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