BOOK ONE: PART IV HEALTH EDUCATION ASSISTANCE LOAN
The Health Education Assistance Loan (HEAL) has been in operation since 1978. Unlike the other health professions financial aid programs sponsored by the U.S. Department of Education, HEAL is not a campus-based program. That is, funds are not apportioned to the institutions, which in turn distribute awards to individuals students. Instead, the HEAL program operates more like the Federal Stafford Loan and Federal Supplemental Loans for Students Program under Title IV of the Higher Education Act, as amended. Legislation that enables the program to guarantee new loans to student borrowers expired September 30, 1998. All other provisions of the legislation are continued.
There are five primary players in the operation of the HEAL loan program: the Department of Health and Human Services, students, institutions, lenders and holders. Brief descriptions of each player's role follows.
The Department of Health and Human Services directs the administration of the program by assuring that the other players comply with statutory and regulatory requirements. In addition, the Department of Health and Human Services reimburses lenders/holders for loans that are not repaid due to defaults, bankruptcy, death, or total and permanent disability of the borrower. The Department also is responsible for collecting on HEAL loans that have gone into default.
Students are the beneficiaries of the HEAL program, because it provides funding to pay for the cost of attendance for their health professions education. Students are also responsible for repaying these loans according to the terms and conditions specified in the law. To obtain a HEAL loan, students must complete an application and meet eligibility requirements.
The institutions certify that the student meets the eligibility requirements for the loan (e.g., enrollment status, citizenship status, financial need). They must then forward the application to the lender. Once the loan has been processed and approved, the institution is responsible for properly disbursing the HEAL proceeds.
The lenders are comprised primarily of financial and credit institutions, and state agencies. (Note: Schools that became HEAL lenders prior to September 15, 1992 may continue to serve as lenders. No other schools are eligible to become lenders.) Lenders provide the capital for the loans. Lenders process the HEAL applications that students complete and schools certify. This includes determining borrower creditworthiness, executing promissory notes, and obtaining approval for insurance from the Department of Health and Human Services. Lenders also forward loan proceeds to institutions for applications that have been approved.
The holders of HEAL loans are the entities that own the promissory note. The holder may be the original lender or the organization to which the original lender sells its notes. For example, the Student Loan Marketing Association (SALLIE MAE) holds the majority of HEAL loans,although it is not the original lender. The holder is responsible for servicing HEAL loans and conducting due diligence when loans become delinquent.
Part IV of this book addresses the institution's role in the administration of the HEAL program in more detail by identifying:
Part IV does not provide a detailed account of lender responsibilities.
