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rower.

case

1985, the school may fix a charge for enough to justify periodic review of the failure of the borrower to pay all or debt, and neither the statute of limitaany part of an installment when it is tions nor the 10-year repayment period due and, in the case of a borrower who has expired, the school may retain the is entitled to deferment under section account for continued collections, pro722(c) of the Act for any failure to file vided that it makes an attempt at least timely and satisfactory evidence of the semi-annually to collect from the borentitlement. The amount of the charge rower. When the due diligence procemay not exceed $1 for the first month

dures required by paragraph (b)(1) of or part of a month by which the in

this section have been exhausted, the stallment or evidence is late and $2 for

school is responsible for determining each succeeding month or part of a the collection methods it will use for month. The school may elect to add

the semi-annual collection effort rethe amount of this charge to the prin

quired on these loans. If the school decipal amount of the loan as of the day

termines that the prospects of future after the day on which the installment

collection are not promising, or when or evidence was due, or to make the

the statute of limitations or the 10amount of the charge payable to the

year repayment period has expired, the school no later than the due date of the

loan must be considered uncollectible. next installment following receipt of

A school may determine a loan to be the notice of the charge by the bor

uncollectible sooner than 3 years past

due when it has evidence that the loan (ii) For any health professions stu

cannot be collected, but in no dent loan made on or after October 22,

should a school consider a loan as 1985, the school shall assess a charge for failure of the borrower to pay all or

uncollectible if it has not been in deany part of an installment when the

fault for a least 120 days. A school is loan is more than 60 days past due and,

not subject to the requirements in in the case of a borrower who is enti

paragraphs (b)(4) (i) and (iii) of this

section for tled to deferment under section 722(c)

loans that became of the Act, for any failure to file satis

uncollectible, as determined by the factory evidence of the entitlement

school, before August 1, 1985. within 60 days of the date payment

(i) A school must request permission would otherwise be due. No charge may

to write off an uncollectible loan withbe made if the loan is less than 61 days in 30 days of the determination that it past due. The amount of this charge

is uncollectible or reimburse the fund may not exceed an amount equal to 6

in the full amount of the loan, pursupercent of the amount due at the time ant to $57.210(b)(4)(iii). The 30-day pethe charge is calculated. The school riod for submitting the loan for writemay elect to add the amount of this

off review begins on the date that the charge to the principal amount of the determination of uncollectibility is loan as of the day on which the charge

made, in accordance with paragraph is calculated, or to make the amount of (b)(4) of this section. In any instance the charge payable to the school no where the Secretary determines that a later than the due date of the next in- school has failed to exercise due dilistallment following receipt of the no- gence in the collection of a loan, in actice of the charge by the borrower.

cordance with the applicable regu(3) With respect to any health profes- latory requirements, the school will be sions student loan made after June 30, required to place in the fund the full 1969, the school may require the bor- amount of principal, interest, and penrower to make payments of at least $15 alty charges that remains uncollected per month on all outstanding health on the loan. Reimbursement must be professions student loans during the re- made by the following June 30 or Depayment period.

cember 31, whichever is sooner, except (4) A school must, on an annual basis, that in no case will a school be rereview and assess the collectibility of quired to reimburse the fund in less any loan more than 3 years past due. If than 30 days following the Secretary's the school determines that the pros- disapproval of the request for write-off pects of future collection are promising approval.

garding the safeguarding and proper handling of this information. (Approved by the Office of Management and Budget under control number 0915_0047) [44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 49 FR 38112, Sept. 27, 1984; 50 FR 34420, Aug. 23, 1985; 52 FR 20988, June 3, 1987; 53 FR 6092, Feb. 29, 1988; 56 FR 19293, Apr. 26, 1991; 56 FR 40726, Aug. 15, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16. 1996)

(ii) If the Secretary determines that a school has exercised due diligence in the collection of a loan, in accordance with the applicable regulatory requirements, or if the school determines that the loan was uncollectible prior to August 1, 1985, the school will be permitted to reduce its accounts receivable for the HPSL fund by the full amount of principal, interest, and penalty charges that remains uncollected on that loan and will not be required to return the Federal share of the loss to the Secretary.

(iii) If a school does not request permission to write off an uncollectible loan within the required timeframe, it must reimburse the fund for the full amount of principal, interest, and penalty charges that remains uncollected on that loan. This reimbursement must be made by the following June 30 or December 31, whichever is sooner, except that in no case will a school be required to reimburse the fund in less than 30 days following its determination that a loan is uncollectible.

(iv) Failure to comply with the requirement of this section will subject a school to the noncompliance provisions of $57.218 and the Department's Claims Collection regulations (45 CFR part 30), as appropriate.

(5) Disclosure of taxpayer identity information. Upon written request by the Secretary, the Secretary of the Internal Revenue Service (IRS) may disclose the address of any taxpayer who has defaulted on a health professions student loan, for use only by officers, employees, or agents of the Department, to locate the defaulted borrower to collect the loan. Any such mailing address may be disclosed by the Secretary to any school from which the defaulted borrower received a health professions student loan, for use only by officers, employees, or agents of the school whose duties relate to the collection of health professions student loan funds, to locate the defaulted borrower to collect the loan. Any school which requests and obtains this address information must comply with the requirements of the Secretary and the IRS re

857.211 Cancellation of health profes

sions students loans for disability

or death. (a) Permanent and total disability. The Secretary will cancel a student borrower's indebtedness in accordance with section 722(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 722(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. (Approved by the Office of Management and Budget under control number 0915-0047) [44 FR 29055, May 18, 1979, as amended at 56 FR 19293, Apr. 26, 1991; 61 FR 6123, Feb. 16, 1996]

$57.212 (Reserved]

$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, osteopathic medicine, 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 count, but is required to maintain separate accountability. (53 FR 46549, Nov. 17, 1988, as amended at 56 FR 19294, Apr. 26, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996)

forth in 42 CFR 57.215(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 Student Assistance, Bureau of Health Professions, Room 8-34, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857. (49 FR 38112, Sept. 27, 1984, as amended at 56 FR 19294, Apr. 26, 1991)

857.213a Loan cancellation reimburse

ment. (a) For loans made prior to October 22, 1985, in the event that insufficient funds are available to the Secretary in any fiscal year to enable him or her to pay to all schools their proportionate shares of all loans and interest canceled under this subpart for practice in a shortage area, death, or disability:

(1) Each school will be paid an amount bearing the same ratio to the total of the funds available for that purpose as the principal of loans canceled by that school in that fiscal year bears to the total principal of loans canceled by all schools in that year; and

(2) Any additional amounts to which a school is entitled will be paid by the Secretary at the time of distribution of the assets of the school's Fund under section 728 of the Act.

(b) For loans made on or after October 22, 1985, a school may assess the borrower a charge to insure against the loss of the institutional share of a loan canceled due to the borrower's death or permanent and total disability. The school must develop annually a rate which reflects its cancellation experience. This charge shall not exceed .6 percent of the loan amount. Funds collected under this provision must be maintained by the school in an insured, interest-bearing account (with any earned interest credited to this insurance fund), and used only to reimburse the school for the institutional share of any HPSL loan made on or after October 22, 1985, that is canceled due to the borrower's death or permanent and total disability. A school is not required to establish a separate bank ac

$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 722(k) 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. (44 FR 29055, May 18, 1979, as amended at 61 FR 6123, Feb. 16, 1996; 61 FR 9532, Mar. 8, 1996)

857.215 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 funds as the Secretary may find necessary to carry out the purposes of the Act and these regualtions. A school must submit required reports to the Secretary within 45 days of the close of the reporting period.

(1) A school which fails to submit a required report for its Federal capital contribution fund within 45 days of the close of the reporting period:

(i) Shall be prohibited from receiving new Federal capital contributions;

(ii) Must place the revolving fund and all subsequent collections in an insured interest-bearing account; and

(iii) May make no loan disbursements. The above restrictions apply until the Secretary determines that the school is in compliance with the reporting requirement.

(2) A school that fails to submit a complete report within 6 months of the close of the reporting period will be subject to termination. The Secretary will provide the school with a written notice specifying his or her intention to terminate the school's participation in the program and stating that the school may request, within 30 days of the receipt of this notice, a formal hearing. If the school requests a hearing, it must within 90 days of the receipt of the notice, submit material, factual issues in dispute to demonstrate that there is cause for a hearing. These issues must be both substantive and relevant. The hearing will be held in the Washington, DC metropolitan area. The Secretary will deny a hearing if:

(i) The request for a hearing is untimely (i.e., fails to meet the 30-day requirement);

(ii) The school does not provide a statement of material, factual issues in dispute within the 90-day required period; or

(iii) The statement of factual issues in dispute is frivolous or inconsequential. In the event that the Secretary denies a hearing, the Secretary will send a written denial to the school setting forth the reasons for denial. If a hearing is denied, or if as a result of the hearing, termination is still determined to be necessary, the school will be terminated from participation in the program and will be required to return the Federal share of the revolving fund to the Department. A school terminated for failure to submit a complete report within 6 months of the close of the reporting period must continue to pursue collections and may reapply for participation in the program once it has submitted the overdue report.

(3) The school must also comply with the requirements of 45 CFR part 74 and section 798(e) of the Act concerning recordkeeping, audit, and inspection.

(b) The following student records must be retained by the school for 5 years after individual student ceases to be a full-time student:

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

an

(2) Documentation of the financial need of applicants; and

(3) Copy of financial aid transcript(s).

(c) The following repayment records for each individual borrower must be retained for at least 5 years from the date of retirement of a loan:

(1) The amount and date of each loan;

(2) The amount and date of each payment or cancellation;

(3) Records of periods of deferment;

(4) Date, nature and result of each contact with the borrower or proper endorser in the collection of an overdue loan;

(5) Copies of all correspondence to or from the borrower and endorser;

(6) Copies of all correspondence with collection agents related to the individual borrower;

(7) Copies of all correspondence with a credit bureau related to an individual borrower; and

(8) Copies of all correspondence relating to uncollectible loans which have been written off by the Federal Government or repaid by the school.

(d) The school must also retain other records as the Secretary may prescribe. In all cases where questions have arisen as a result of a Federal audit, the records must be retained until resolution of all questions.

(e) Institutional officials who have information which indicates the potential or actual commission of fraud or other offenses against the United States, involving these loan funds, should promptly provide this information to the appropriate Regional Office of Inspector General for Investigations. (Approved by the Office of Management and Budget under control number 0915-0047) (48 FR 25070, June 3, 1983, as amended at 50 FR 34421, Aug. 23, 1985; 53 FR 46549, Nov. 17, 1988; 56 FR 19294, Apr. 26, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996)

ernmentwide Requirements for Drug-Free

Workplace (Grants) 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 83—Regulation for the adminis

tration and enforcement of sections 794 and

855 of the Public Health Service Act 45 CFR part 84-Nondiscrimination on the

basis of handicap in programs and activities receiving or benefiting from Federal

financial assistance 45 CFR part 86—Nondiscrimination on the

basis of sex in education programs and activities receiving or benefiting from Fed

eral financial assistance 45 CFR part 91-Nondiscrimination on the

basis of age in Health and Human Services programs or activities receiving Federal fi

nancial assistance 45 CFR part 93—New Restrictions on Lob

bying

(b) The recipient may not discriminate on the basis of religion in the admission of individuals to its training programs. (44 FR 29055, May 18, 1979, as amended at 56 FR 19294, Apr. 26, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996)

857.216a Performance standard.

On June 30, 1984, and on each June 30 thereafter, except as provided in paragraph (b) of this section, each school must have a default rate (as calculated under paragraph (a) of this section) of not more than 5 percent.

(a) The default rate for each school shall be the ratio (stated as a percentage) that the defaulted principal amount outstanding of the school bears to the matured loans of the school. For this purpose:

(1) The term defaulted principal amount outstanding means the total amount borrowed from the loan fund of a school that has reached the repayment stage (minus any principal amount repaid or canceled) on loans in default for more than 120 days; and

(2) The term matured loans means the total principal amount of all loans made by a school under this subpart minus the total principal amount of loans made by the school to students who are:

(i) Enrolled in a full-time course of study at the school; or

(ii) In their grace period.

$57.216 What additional Department

regulations apply to schools? (a) Participating schools are advised that in addition to complying with the terms and conditions of these regulations, several other regulations apply under this subpart. These include, but are not limited to: 45 CFR part 76-Governmentwide Debarment

and Suspension (nonprocurement) and Gov

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