Subpart E-The School

60.50 Which schools are eligible to be HEAL schools?

60.51 The student loan application. 60.52 The student's loan check.

60.53 Notification to lender or holder 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 Limitation, suspension, or termination of the eligibility of a HEAL school.

60.61 Responsibilities of a HEAL school.

AUTHORITY: Sec. 215, of the Public Health Service Act, 58 Stat. 690, as amended, 63 Stat. 35 (42 U.S.C. 216); secs. 727-739A of the Public Health Service Act, 90 Stat. 2243, as amended, 93 Stat. 582, 99 Stat. 529-532, 102 Stat. 3122-3125 (42 U.S.C. 294-2941-1); renumbered as secs. 701-720, as amended by 106 Stat. 1994-2011 (42 U.S.C. 292–292p).

SOURCE: 48 FR 38988, Aug. 26, 1983, unless otherwise noted.

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 to graduate students in the fields of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, podiatric medicine, pharmacy, public health, chiropractic, health administration and clinical psychology. 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. By taking a HEAL loan, the borrower is obligated to repay the lender or holder the full amount of the money borrowed, plus all interest which accrues on the loan.

(b) HEAL loans may be made by schools, banks, credit unions, State agencies, and other institutions eligible as lenders under $60.30. HEAL school eligibility is described in §60.50.

(c) The Secretary insures each lender or holder for the losses of principal and interest it may incur in the event that a borrower dies; becomes totally and permanently disabled; files for bankruptcy under chapter 11 or 13 of the Bankruptcy Act; files for bankruptcy under chapter 7 of the Bankruptcy Act and files a compliant to determine the dischargeability of the HEAL loan; or defaults on his or her loan. In these instances, if the lender or holder has complied with all HEAL statutes and regulations, and with the lender's or holder's insurance contract, and the Secretary pays the amount of the loss to the lender or holder, the borrower's loan is then assigned to the Secretary. Only at that time, the United States Government becomes the borrower's direct creditor and will actively pursue the borrower for repayment of the debt, including reporting the borrower's default on the loan to consumer credit reporting agencies or to the Internal Revenue Service for purposes of locating such taxpayer or for income tax refund offset, and referral to the Department of Justice for litigation.

(d) Any person who knowingly makes a false statement or misrepresentation in a HEAL loan transaction, bribes or attempts to bribe a Federal official, fraudulently obtains a HEAL loan, or commits any other illegal action in connection with a HEAL loan is subject to possible fine and imprisonment under Federal statute.

(e) Calculating time periods. In counting the number of days allowed to comply with any provisions of these regulations, Saturdays, Sundays, and holidays are to be included. However, if a due date falls on a Saturday, Sunday, or Federal holiday, the due date is the next Federal work day.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 745, Jan. 8, 1987; 56 FR 42700, Aug. 29, 1991; 57 FR 28793, June 29, 1992]

Subpart B-The Borrower

§ 60.5 Who is an eligible student borrower?

To receive a HEAL loan, a student must satisfy the following requirements:

(a) He or she must be a citizen, national, or lawful permanent resident of the United States, permanent resident of the Trust Territory of the Pacific Islands (the Republic of Palau), the Republic of the Marshall Islands, the Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, or American Samoa, or lawful permanent resident of the Commonwealth of Puerto Rico, the Virgin Islands or Guam;

(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 Medicine

Doctor of Osteopathic Medicine

Doctor of Dentistry or equivalent degree Doctor of Veterinary Medicine or equivalent degree

Doctor of Optometry or equivalent degree Doctor of Podiatric Medicine or equivalent degree

Bachelor or Master of Science in Pharmacy or equivalent degree

Graduate or equivalent degree in Public Health

Doctor of Chiropractic or equivalent degree Doctoral degree in Clinical Psychology Masters or doctoral degree in Health Administration

(c) He or she must be carrying or plan to carry, during the period for which the loan is intended, the normal work load 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)(1) 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 accepted on transfer by the pharmacy school.

(2) The Doctor of Pharmacy degree is considered to be an equivalent degree if it is taken in a school that does not require the Bachelor or Master of Science in pharmacy as a prerequisite for the Doctor of Pharmacy degree.

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

(g) He or she must agree that all funds received under the proposed loan will be used solely for tuition, other reasonable educational expenses, including fees, books, supplies and equipment, and laboratory expenses, reasonable living expenses, reasonable transportation costs (only to the extent that they are directly related to the borrower's education), and the HEAL insurance premium.

(h) He or she must require the loan to pursue the course of study at the school. This determination of the maximum amount of the loan will be made by the school, applying the considerations in § 60.51(f).

(i) If required under section 3 of the Military Selective Service Act to present himself for and submit to registration under such section, he must have presented himself and submitted to registration under such section.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 52 FR 745, Jan. 8, 1987; 57 FR 28793, June 29, 1992]

$60.6 Who is an eligible nonstudent borrower?

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 received a HEAL loan prior to August 13, 1981, 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 citizenship, nationality, or residency qualifications required of student borrowers.

(c) He or she must agree that all funds received under the proposed loan will be used solely for payment of currently accruing interest on HEAL loans and the HEAL insurance premium.

(d) If required under section 3 of the Military Selective Service Act to

present himself for and submit to registration under such section, he must have presented himself and submitted to registration under such section.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986]

$60.7 The loan application process.

(a)(1)(i) A student seeking a HEAL loan applies to a participating lender for a HEAL loan by submitting an application form supplied by the school.

(ii) The applicant must fill out the applicant sections of the form completely and accurately.

(2) The student applicant must be informed of the Federal debt collection policies and procedures in accordance with the Department's Claims Collection Regulation (45 CFR part 30) prior to the student receiving the loan. The applicant must sign a certification statement attesting that the applicant has been notified of the actions the Federal Government can take in the event that the applicant fails to meet the scheduled payments. This signed statement must be maintained by the school and the lender or holder as part of the borrower's official record.

(3) A student applicant must have his or her school complete a portion of the application providing information relating to:

(i) The applicant's eligibility for the loan.

(ii) The cost of his or her education; and

(iii) The total financial resources that are actually available to the applicant for his or her costs of education for the period covered by the proposed HEAL loan, as determined in accordance with §60.51(f), and other student aid that the applicant has received or will receive for the period covered by the proposed HEAL loan.

(4) The student applicant must certify on the application that the information provided reflects the applicant's total financial resources actually available for his or her costs of education for the period covered by the proposed HEAL loan and the applicant's total indebtedness, and that the applicant has no other financial resources that are available to the applicant or that the applicant will receive

for the period covered by the proposed HEAL loan.

(5) A student applicant must certify on the application that if required under section 3 of the Military Selective Service Act to present himself for and submit to registration under such section, he has presented himself and submitted to registration under such section.

(b) The applicant pursuing a fulltime course of study at an institution of higher education that is a "participating school" in the Guaranteed Student Loan Program but is not pursuing a course of study listed in §60.5(b), applies for a HEAL loan as a nonstudent under paragraph (c) of this section.

(c)(1)(i) A nonstudent seeking a HEAL loan applies to a participating lender for a HEAL loan by submitting an application form supplied by the lender.

(ii) The applicant must fill out the applicant sections of the form completely and accurately.

(2) The nonstudent applicant must be informed of the Federal debt collection policies and procedures in accordance with the Department's Claims Collection Regulation (45 CFR part 30) prior to the nonstudent receiving the loan. The applicant must sign a certification statement attesting that the applicant has been notified of the actions the Federal Government can take in the event that the applicant fails to meet the scheduled payments. This signed statement will be maintained by the lender or holder as part of the borrower's official record.

(3) A nonstudent applicant must have his or her employer or institution, whichever is relevant, certify on the application that the applicant is:

(i) Enrolled as a full-time student in an eligible school, as described in § 60.12;

(ii) A participant in an accredited internship or residency program, as described in § 60.11(a);

(iii) A member of the Armed Forces of the United States;

(iv) A Peace Corps volunteer;

(v) A member of the National Health Service Corps; or

(vi) A full-time VISTA volunteer under Title I of the Domestic Volunteer Service Act of 1973.

(4) The nonstudent applicant seeking a HEAL loan during the grace period applies to the lender directly.

(5) A nonstudent applicant must certify on the application that if required under section 3 of the Military Selective Service Act to present himself for and submit to registration under such section, he has presented himself and submitted to registration under such section.

(6) The nonstudent applicant must certify on the application that the information provided reflects the applicant's total financial resources and indebtedness.

(Approved by the Office of Management and Budget under control numbers 0915-0038 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 52 FR 746, Jan. 8, 1987; 57 FR 28794, June 29, 1992]

§ 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 or holder 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 or holder must return the original note to the borrower when the loan is paid in full.

(3) A lender must disburse HEAL loan proceeds as described in § 60.33(f).

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

(5) If the loan is sold from one lender or holder to another lender or holder, or if the loan is serviced by a party other than the lender or holder, the buyer must notify the borrower within 30 days of the transaction.

(6) The borrower does not have to begin repayment until 9 full months after leaving school or an accredited internship or residency program as described in § 60.11.

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

(9) The lender or holder must allow the borrower to repay a HEAL loan according to a graduated repayment schedule.

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

(11) To assist the borrower in avoiding default, the lender or holder may grant the borrower forbearance. Forbearance, including circumstances in which the lender or holder must grant forbearance, is more fully described in $60.37.

(12) Any borrower who received a fixed interest rate HEAL loan in excess of 12 percent per year may enter into an agreement with the lender which made this loan for the reissuance of the loan in accordance with section 739A of the Public Health Service Act.

(b) The borrower's responsibilities. (1) The borrower must pay any insurance premium that the lender may require as more fully described in §60.14.

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

(3) The borrower must immediately notify the lender or holder in writing in the event of:

(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) Failure to enter into or interruption in an internship or residency program; or

(viii) Change of status that authorizes deferment.

(4) The borrower must repay the loan in accordance with the repayment schedule.

(5) A borrower may not have a HEAL loan discharged in bankruptcy during the first 5 years of the repayment period. This prohibition against the discharge of a HEAL loan applies to bankruptcy under any chapter of the Bankruptcy Act, including Chapter 13. A

borrower may have a HEAL loan discharged in bankruptcy after the first 5 years of the repayment period only upon a finding by the Bankruptcy Court that the non-discharge of such debt would be unconscionable and upon the condition that the Secretary shall not have waived his or her rights to reduce any Federal reimbursements or Federal payments for health services under any Federal law in amounts up to the balance of the loan.

(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 Secretary may offset amounts attributable to an unpaid loan from reimbursements or payment for health services provided under any Federal law to a defaulted borrower practicing his or her profession.

(Approved by the Office of Management and Budget under control number 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 746, Jan. 8, 1987; 57 FR 28794, June 29, 1992]

Subpart C-The Loan

§ 60.10 How much can be borrowed?

(a) Student borrower. An eligible student may borrow an amount to be used solely for expenses, as described in §60.5(g), incurred or to be incurred over a period of up to an academic year and disbursed in accordance with §60.33(f). The maximum amount he or she may receive for that period shall be determined by the school in accordance with §60.51(f) within the following limitations:

(1) A student enrolled in a school of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry or podiatric medicine may borrow up to $80,000 under this part. The amount received may not exceed $20,000 in any academic year.

(2) A student enrolled in a school of public health, pharmacy, chiropractic, or a graduate program in health administration, clinical psychology, or allied health may borrow up to $50,000 under this part. The amount received may not exceed $12,500 per academic year.

(3) For purposes of this paragraph, an academic year means the traditional approximately 9-month September-toJune 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 9 months in length.

(4) The student's estimated cost of attendance shall not exceed the estimated cost of attendance of all students in like circumstances pursuing a similar curriculum at that school.

(b) Non-student borrower. An eligible nonstudent may borrow amounts under this authority with the following restrictions:

(1) In no case may an eligible nonstudent borrower receive a loan that is greater than the sum of the HEAL insurance premium plus the interest that is expected to accrue and must be paid on the borrower's HEAL loans during the period for which the new loan is intended.

(2) An eligible nonstudent in the field of medicine, ostepathic medicine, dentistry, veterinary medicine, optometry, or podiatric medicine may borrow up to $80,000 under this part including loans obtained while the borrower was a student. The loan amount may not exceed $20,000 in any 12-month period.

(3) An eligible nonstudent in the field of pharmacy, public health, chiropractic, health administration, or clinical psychology may borrow up to $50,000 under this part including loans obtained while the borrower was a student. The loan amount received under this part may not exceed $12,500 in any 12-month period.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 52 FR 746, Jan. 8, 1987; 57 FR 28794, June 29, 1992]

§ 60.11 Terms of repayment.

(a) Commencement of repayment. (1) The borrower's repayment period must begin the first day of the 10th month after the month he or she ceases to be a full-time student at a HEAL school. The 9-month period before the repayment period begins is popularly called the "grace period."