Chapter 2 INSTITUTIONAL PARTICIPATION IN THE NSL PROGRAM
The Nursing Student Loan (NSL) program is similar to the campus-based programs authorized under Title IV of the Higher Education Act, particularly the Federal Perkins Loan, because:
The source of funding for NSL consists of four components:
Chapter 2 INSTITUTIONAL PARTICIPATION IN THE NSL PROGRAM
This chapter provides an overview of the criteria for institutional participation, the mechanisms which the Department of Health and Human Services uses to award Federal dollars for the NSL program, and an introduction to the fund management requirements that schools must follow. Readers are directed to Fiscal Management for details on institutional management of NSL funds.
Institutions must meet certain criteria in order to be eligible to participate in the NSL program, which fall into the following categories:
Public and private nonprofit schools are eligible to apply for NSL funds if they offer nursing programs that lead to the following degrees for full-time or half-time students:
[Section 853 of the Public Health Service Act]
The nursing school must be located in a State, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, the Virgin Islands, Guam, American Samoa or the Trust Territory of the Pacific.
[Section 853 of the Public Health Service Act]
A nursing school that is interested in participating in the NSL program must be accredited by an appropriate accrediting body that is recognized by the Secretary of Education. If a new school has not been operating for a sufficient time to be accredited, the Department of Health and Human Services will consider the school accredited if the Secretary of Education finds, after consultation with the appropriate accreditation body or bodies, that there is reasonable assurance that the school will meet the specified accreditation standards prior to the beginning of the academic year following the normal graduation date of the first entering class in such school or program.
The approved accrediting bodies for nursing programs are the:
[Section 853(6) of the Public Health Service Act]
Nursing schools must enter into an agreement with the Secretary of Health and Human Services as a criterion for participation. The agreement is incorporated into the application for Federal funds and requires the institution to:
[Section 835 of the Public Health Service Act]
Each June 30, a school must have an NSL default rate that does not exceed five percent. Schools that exceed the five percent performance standard are subject to probation, suspension or termination.
Refer to Fiscal Management, Program Monitoring, Chapter 2 for additional information on the default rate performance standard.
[Section 835(c)(1) of the Public Health Service Act; 42 CFR Part 57.316a]
Participating nursing schools must adhere to statutes and regulations addressing non-discrimination. These include:
In addition, institutions may not discriminate on the basis of religion in the admissions process.
[42 CFR Part 57.316]
Participating schools must comply with the requirements in 45 CFR Part 76, Subpart F. This section of the regulations stipulates that institutions must certify that they will provide and maintain a drug-free workplace. The Drug-Free Schools and Communities Act Amendments of 1989 and its implementing regulations 34 CFR Part 86 apply to any public or private institution of higher education (including independent hospitals conducting training programs for health care personnel), State educational agency, or local educational agency. As a condition of funding from Federal financial assistance programs, the statute requires these entities to certify to the Secretary of Education that they have adopted and implemented a drug prevention program. These provisions also apply to subgrantees of Federal funds whether or not the primary grantee is an institution of higher education, a State educational agency, or a local educational agency.
Participating institutions must comply with non-delinquency on Federal debt requirements. Examples of Federal debt or possible sources include delinquent taxes, audit disallowances, FHA loans, and other unpaid administrative debts. Specific examples include:
Institutions must adhere to restrictions on lobbying and provide a disclosure statement about lobbying activities for each Federal award to the institution in excess of $100,000. The Office of Management and Budget published guidance for restrictions on lobbying in the Federal Register.
According to regulations in 45 CFR Part 76, an institution must certify that neither it nor any of its principals are debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by any Federal dependent or agency. Subawardees (e.g., other corporations, partnerships, or other legal entities) also must provide the same certification to the institution.
Most of the money to finance Federal Capital Contributions (FCC) to the NSL program was provided through appropriations from Congress. Congress appropriated funds to capitalize the NSL revolving fund through 1983.
In 1986, Congress gave the Secretary of Health and Human Services the authority to redistribute FCC funds returned from institutions to the Department. FCC funds returned to the Department are available, until expended, for awards to schools eligible to receive NSL funds.
[Section 838(a)(3) of the Public Health Service Act]
Applications and instructions for schools seeking to establish an FCC fund for the NSL program are available from the Division of Student Assistance, 5600 Fishers Lane, Room 8-34, Rockville, MD 20857.
The Division reviews the eligibility of the school and determines the amount of Federal support an institution will receive. The Division may require the applicant to submit additional data for these purposes.
[Section 838(a)(1) of the Public Health Service Act; 42 CFR Part 57.303]
A written agreement between the institution and the Secretary of Health and Human Services, specifies the terms and conditions for institutional participation. The agreement specifies:
[Section 835 of the Public Health Service Act]
The program contact person is the individual who will be responsible for distributing DSA program mailings to the appropriate offices and individuals within the institution and will be responsible for ensuring the return of material. Any changes to the contact person refer to Appendix I.
By statute and regulations, the amount of NSL funds a school may receive must be the lesser of the amount requested or the amount determined by a formula for allocating FCC for the NSL program that is based upon the ratio of:
For example, if a school has one-tenth of the total number of full-time students in the schools applying for funds, that school would be entitled to receive one-tenth of the available funds.
The Department will determine each school's allotment of loan funds using the statutory formula described above.
Note: The Department of Health and Human Services will not allocate funds to schools that have not used prior year allocations or have excess cash. Therefore, it is very important for the financial aid office and fiscal office to work together in identifying eligible students and funding requests. For example, every school should calculate its need for NSL funds by determining all resources available to the school's eligible students. In addition, prior to requesting monies for an academic year, the school should carefully evaluate its cash needs by reviewing the cash balance (including monies drawn down from the prior year award) and projected collections and disbursements to determine the unmet need for the academic year.
The Division of Student Assistance will carefully review each institution's estimated need in conjunction with the projections given on the June 30 Annual Operating Report (AOR). If a school's available funds meet or exceed its needs for the academic year, a new award will not be issued..
Fiscal Management, Collections, Chapter 4 addresses drawing down funds, returning unrequested funds, and excess cash.
[Section 838 of the Public Health Service Act; 42 CFR Part 57.304]
The Department sends a Notice of Award to the designated school official notifying the school of the amount of Federal funds awarded for the NSL program.
This section offers a brief introduction to the institutional management of NSL funds. It is intended to give financial aid personnel a brief summary of responsibilities associated with administering the NSL program. Readers are also directed to Fiscal Management, Collections, Chapter 4 for additional information.
The school must maintain an institutional contribution in the NSL fund equal to at least one-ninth of the total FCC. The institution also has the option of contributing a larger share to the NSL fund. A school that matches more than one-ninth may withdraw any of the institutional contribution which exceeds its required one-ninth matching amount at any time. However, the school must maintain at least the one-ninth matching amount in the fund at all times.
[Section 835(b)(2) of the Public Health Service Act; 42 CFR Part 57.305]
Refer to Fiscal Management, Collections, Chapter 4 for information about drawing down Federal funds.
Refer to Fiscal Management, Collections, Chapters 4 and 5 for information about cash balances and excess cash.
Institutions must return the Federal share of NSL funds upon termination or withdrawal from the program. Upon withdrawal or termination of institutional participation in the program the balance in the FCC fund will be distributed between the Department of Health and Human Services and the school in proportion to the amounts contributed by each. The school will then be required to remit the Federal Government's proportionate share of amounts received thereafter in payment of loan collections and any other earnings on a quarterly basis. Checks must be made payable to the Public Health Service, HRSA. At the time of each quarterly remittance, the school should withdraw its proportionate share of the quarterly cash accumulation from the fund.
Fiscal Management, Collections, Chapter 5 describes procedures for remittance of collections.
[Section 839(c) of the Public Health Service Act]
