Institutions must make sure that students meet the eligibility criteria for receipt of HPSL funds. In addition, schools must take certain other administrative steps such as:
The remainder of this chapter provides more information as well as references to other books and sections within the Student Financial Aid Guidelines and to statute and regulations.
Institutions must be sure that students who receive HPSL funds meet the set eligibility requirements specified in statute and in regulations. A description of the eligibility requirements follows.
A student applicant must be a citizen or national of the United States, or a lawful permanent resident of the United States, the Commonwealth of Puerto Rico, the Northern Mariana Islands, the Virgin Islands, Guam, American Samoa or the Trust Territory of the Pacific. A student who remains in this country on a student or visitor's visa is not eligible.
[42 CFR Part 57.206]
The student must be enrolled or accepted for enrollment as a full-time student in a health professions school participating in the HPSL program. The student must be in good standing, as defined by the school, and capable in the opinion of the school of maintaining good standing in the course of study. Schools may choose to apply the satisfactory academic progress guidelines for programs under Title IV of the Higher Education Act, as amended, although statute and regulations specific to the HPSL program do not require it.
Should an HPSL recipient cease to be a student in good standing because of academic failure, then the school is obligated to discontinue disbursement of HPSL funds.
[Section 722 of the Public Health Service Act; 42 CFR Part 57.206]
Students must be enrolled full-time in programs leading to the following degrees in order to be eligible for HPSL funds:
Note: With the enactment of the Health Professions Education Extension Amendments of 1992, schools of allopathic medicine and osteopathic medicine will be phasing their HPSL funds into Primary Care Loan (PCL) funds. Effective July 1, 1993, new borrowers must train and practice as primary health care physicians. Only borrowers who obtained HPSLs prior to July 1, 1993 will be eligible to receive HPSLs without meeting the requirements under the PCL program. Information on the PCL program appears in Primary Care Loan.
[Section 722(b)(1) of the Public Health Service Act; 42 CFR Part 57.206]
The student must be in need of financial assistance in order to pursue the full-time course of study at the health professions school in which he or she is enrolled or accepted for enrollment. In determining financial need, the school must take into consideration the:
[Section 722 of the Public Health Service Act; 42 CFR Part 57.206]
All schools participating in the HPSL program must:
[42 CFR Part 57.206]
Beginning with the 1993-94 academic year, all graduate students will be considered independent according to the need analysis formula in Title IV of the Higher Education Act. Nonetheless, institutions still must take parents' information into account for the purpose of awarding HPSL funds. This requirement cannot be waived. In cases where the parents refuse to provide income information, an affidavit documenting such a refusal cannot be accepted in lieu of the required information. Unless the parents are deceased, a student who does not provide parental income information may not be considered for HPSL funds.
The amount of HPSL funds awarded to a student plus the amount of the student's expected family contribution--including parents' contribution--may not exceed the student's cost of attendance. Note that Department of Education programs authorized under Title IV of the Higher Education Act, such as Federal Stafford Loans, Federal Perkins Loans and Federal College Work-Study, do not require parents' contribution to determine eligibility for independent students. HPSL, however, requires parents' contribution for all students without regard to age, tax, marital or independent status. It is possible, therefore, that an independent student's expected family contribution figure will be lower for determining the amount of a student's need for these Department of Education Title IV programs than for the HPSL program, because parents' financial information is not taken into account. For the purpose of awarding HPSL, the Department of Education funds may replace the parents' contribution for students who meet the Higher Education Act's independent student definition for Title IV programs. An overaward will not result as long as the total of the independent student's contribution plus financial aid from all sources and actual other resources does not exceed the cost of attendance.
[42 CFR Part 57.206]
Developing student budgets requires careful identification of reasonable costs necessary for the student's attendance at the school, including any special needs or obligations of each student or costs common to particular groups of students. The school must develop student budgets which treat students within groups consistently, but are sensitive to individual circumstances. Schools must be able to document the various student budgets used in determining financial need. Using the Title IV requirements for developing costs of attendance is an appropriate approach for administering HPSL funds.
The Department of Health and Human Services recognizes that from time to time an individual student's budget may deviate from the standard cost of attendance because of unusual circumstances. Financial aid administrators should use their authority to make changes to the standard student budget judiciously. Further, the school must carefully document all such changes.
[42 CFR Part 57.206]
Schools may not provide HPSL funds to students who are not in compliance with requirements to register for the draft if required to do so under section 3 of the Military Selective Service Act.
[Section 722(b)(3) of the Public Health Service Act; 42 CFR Part 57.206]
Students must provide health professions schools with financial aid transcripts from any other previously attended institution of higher education. The financial aid transcript must include:
The financial aid transcript must be signed by an authorized official of the institution preparing the document.
[42 CFR Part 57.206]
The HPSL program does not prohibit awarding HPSL funds to students who are in default on other student loans. However, good practice suggests that the school may choose to establish an institutional policy which would prevent students who are in default from receiving HPSLs. If the school does not have such a policy in place, it should carefully consider awarding HPSL funds to any student who has failed to honor a previous loan commitment by discerning:
HPSL regulations require verification of student information. Methods for verification are suggested--not mandated--and include:
Institutions may wish to consider using the Department of Education verification requirements for the HPSL program. Note that the Department of Education does not use its verification edits on parental information for applicants who are independent according to the definition in the Higher Education Act, as amended. As a result, schools may use their own criteria for selecting HPSL applicants for verification in conjunction with applying Department of Education verification procedures.
[42 CFR Part 57.206]
Schools are responsible for making an HPSL financial aid application form available to students. The application for HPSL funds does not need to be separate or a different form from the one used for other financial aid programs administered by the institution. However, it must be able to collect the information necessary for the school to determine whether the student meets the eligibility criteria described on the previous pages. The school also must request information helpful in the collections process after the student leaves the school, such as names and addresses of parents, relatives or other individuals who are likely to know the whereabouts of HPSL borrowers after they leave school. (See both Chapter 3, Section 5C in this book and Fiscal Management, Collections, Chapter 2 for information on entrance interviews.)
In awarding HPSLs, the school must coordinate available funds with the demonstrated financial need of student applicants. Awarding HPSL funds should be governed by written policies and procedures that have been adopted by the school to:
After the school has determined individual HPSL awards, it should prepare an award letter to be forwarded directly to each applicant. The award letter should provide a space for the student to accept or reject the HPSL award. Duplicate copies should be provided so that the student can retain one copy and return the original copy to the school.
The student has an obligation to report changes in financial circumstances, including receipt of additional funds. Based upon information received by the institution, the student's award should be adjusted to reflect the change as follows:
Adjustments are determined by the financial aid administrator based on the facts available about the student's situation and the judgment of the financial aid administrator. All adjustments must be adequately documented. In addition, the institution should have a written refund policy that fairly allocates refunds to financial aid programs authorized under Titles VII and VIII of the Public Health Service Act.
Each HPSL must be documented by a promissory note approved by the Secretary of Health and Human Services. (See Exhibit A, http://www.hrsa.dhhs.gov/bhpr/dsa/promdown.htm.) It is made available to schools through the Division of Student Assistance. The note describes the loan conditions and benefits set forth in the Public Health Service Act and in the regulations.
The school has the option of designing its own promissory note rather than using the form provided by the Division. However, the school must receive approval from the Division to use any proposed promissory note that differs from the note provided by the Division.
Because the promissory note is the legal document which binds the student to his/her repayment obligations, and thus represents a major asset of the school's loan fund, it must be properly completed and adequately safeguarded against fire, theft, and tampering. The particular method of insuring this protection is the school's responsibility.
Each promissory note must:
The promissory note must be signed by the borrower prior to disbursement of funds. It is not necessary to have a separate promissory note signed each time a student receives an advance of funds. A copy of the note must be supplied by the school to the student borrower.
Any change in the Act or regulations which affects the terms of the promissory note requires that a new promissory note be signed for future loans.
An HPSL shall be made without collateral or cosignature unless the borrower is a minor and the promissory note signed by the student borrower would not, under the State law, create a binding obligation. In addition, HPSL promissory notes or any other evidence of an HPSL may not be sold by the school, unless the borrower transfers to another institution participating in the HPSL program. In this case, the school from which the borrower originally obtained an HPSL may sell that loan to the school the borrower is now attending.
[Section 722 of the Public Health Service Act; 42 CFR Part 57.208]
Schools are required to disclose certain information to students at the time the promissory note is signed, or during the entrance interview if it occurs prior to the student signing the note. Some of the information that schools must disclose to students appears on the promissory note. Other information does not appear on the promissory, and so it must be provided on a separate document. The disclosure requirements are listed below.
For any HPSL made after June 30, 1986 and for LDS and PCL loans, the regulations require a school, prior to the borrower's completion or termination of studies at the school to provide the following loan information to the student:
In addition to the requirements set forth above, the school must comply with the applicable requirements of Truth-in-Lending Regulation Z, which consist of the following:
Exhibit B includes a sample format for a Truth-in-Lending statement. Schools are urged to consult with institutional legal counsel to determine the actual format and wording appropriate to the school's particular situation. Although the Department of Health and Human Services can provide general guidance relative to the Truth-in-Lending requirements, responsibility for compliance with the law rests with the school.
[Section 726 of the Public Health Service Act; 42 CFR Part 57.208]
Regulations require schools to conduct entrance interviews with its HPSL borrowers. The school must conduct and document an entrance interview for each academic year during which the student receives HPSL funds. The school also must obtain entrance interview documentation before it disburses loan funds to a borrower in any academic year. Please see Exhibit C.
The regulations do not require the school to conduct an entrance interview each time it makes a disbursement within a single academic year; however, many schools have indicated it is beneficial to the collections process to require a borrower to complete a new "borrower information" form at the time of each disbursement.
[42 CFR Part 57.210]
No matter what format or method a school uses to conduct an entrance interview, it must obtain documentation which includes the following:
For a borrower who receives loan funds in more than one academic year, the school may use a separate form or statement for each year during which funds are disbursed. As an alternative, the school may permit the borrower to sign and date the original rights and responsibilities form or statement for each academic year in which he or she obtains additional HPSL funds. In this case, the information on the original document must continue to be applicable to the additional loan funds. Exhibit G shows a statement of borrower's rights and responsibilities.
Personal borrower information can change between the time of application and loan disbursement; therefore, it must be collected during the entrance interview even if the borrower provided similar information on the financial aid application. A school may use any format it finds most effective to collect this information.
For a borrower who receives loans funds in more than one academic year, the school must require the borrower to:
[42 CFR Part 57.210]
A school must complete the entrance interview requirement by conducting an individual or group meeting with the borrower, or through an exchange of mail if a face-to-face meeting is not practical. Each school has latitude in deciding whether to conduct the entrance interview in person or by mail. However, schools are strongly encouraged to make individual or group entrance interviews a priority in the financial aid awarding process, as this will help prevent problems in the collections process. The school also has discretion in determining the specific format of the entrance interview, and may use innovative methods such as films or computer software programs that "test" the borrower's understanding of his/her rights and responsibilities. Finally, the school has discretion in deciding which office(s) (e.g., financial aid, fiscal, loan collection, dean's) will be responsible for entrance interviews.
[42 CFR Part 57.210]
Institutions must document the entrance interviews by maintaining the papers signed by the borrower in his/her file. Documentation consists of evidence that the borrower:
Exhibits C and D show an entrance interview checklist and questionnaire. Fiscal Management, Collections, Chapters 1 and 2 also address entrance interview requirements.
[42 CFR Part 57.210]
Institutions determine the amount of installments paid to the student. However, installments may not exceed what the institution determines is necessary for the student to pay for any installment period (e.g., semester, term, quarter). Note that students enrolled less than full-time or are no longer in good standing are not eligible to receive HPSL proceeds.
The school may advance payments directly to the student or it may credit the disbursement to the student's tuition account. In either case, payments must be clearly documented.
[42 CFR Part 57.209]
The school must maintain an individual file for each student applying for financial aid and maintain these records for at least five years after the borrower ceases to be a full-time student. This file should contain clear evidence of how the school evaluated each application for financial assistance. Even if no funds were awarded, documentation of rejection, cancellation, or declination must be retained and safeguarded against fire, theft and tampering.
The student file should contain documents relating to each academic year application so that each application cycle is complete and auditable. The contents of the file must include:
The types of documents that support this information include:
The Department of Health and Human Services permits institutions to maintain their records in a variety of formats at the option of the school. Record keeping formats include:
For information on maintenance of records see Fiscal Management, Accounting Procedures, Chapter 1.
[42 CFR Part 57.215]
