Chapter 4 INSTITUTIONAL RESPONSIBILITY IN THE REPAYMENT PROCESS
Chapter 4 INSTITUTIONAL RESPONSIBILITY IN THE REPAYMENT PROCESS
HEAL regulations provide that schools comply with audit requirements set forth by the Department of Health and Human Services. General information on audit requirements for the Title VII and Title VIII programs appears in Fiscal Management: Audits.
[Section 715(a)(1) of the Public Health Service Act; 42 CFR Part 60.56]
The school is responsible for conducting and documenting exit interviews with HEAL borrowers. The exit interview, which can be conducted either individually or in groups, must take place within the final academic term of the loan recipient's enrollment prior to his or her graduation date or other departure date from the school.
During the exit interview, the school must:
Institutions must forward a copy of the exit interview documentation to the borrower's current HEAL holders within 30 days of the exit interview. The copy must include the personal information collected to perform skiptracing.
If the borrower leaves the school without an exit interview, the school must mail the exit interview to the borrower within 30 days of the date that the school learns that the borrower departed or the anticipated date of the borrower's departure, whichever is earlier. In the exit interview materials sent to the borrower, the school must instruct him or her to forward the completed information to his or her lender(s). Alternately, the school may instruct the borrower to return the completed information back to the school, which would then forward the material to the lender. The school must notify the lender of the borrower's departure at the same time it mails the exit interview material to the loan recipient. In addition, the school must forward the borrower's entrance interview.
The school is not responsible if the exit interview documentation gets lost in the mail. However, the school is responsible for maintaining documentation of the exit interview or documentation of the date that the school forwarded exit interview materials to the borrower, if the borrower failed to report for the interview as part of its HEAL records. In effect, the school should have copies of the signed exit interview for each borrower on file, should a lender need a duplicate.
A sample set of an exit interview form appears in Exhibit C. Note that some lenders provide standard exit interview information. Schools should check with individual lenders to find out the specific information each one provides.
[42 CFR Part 60.61]
HEAL statute requires institutions to record and make available upon request to the lender and the Department of Health and Human Services the name, address, postgraduate destination and other reasonable identifying information for each HEAL borrower who attended or is in attendance at the institution. In addition, statute permits schools and postgraduate training programs to assist lenders and the Department of Health and Human Services in the collections process when borrowers are in danger of defaulting (i.e., delinquent). Assistance includes providing information concerning the borrower to the Department and to past and present lenders and holders of the borrower's loans.
When a HEAL borrower is 90 days delinquent, the lender is required to submit a request for collection assistance to the HEAL Branch. Three preclaim assistance letters are then sent 30 days apart to the borrower by the HEAL Branch. The letters encourage the borrower to contact his or her lender to make satisfactory repayment arrangements. The letters also remind the borrower of the consequences of default. A copy of the second preclaim assistance letter is forwarded to the school that the borrower attended while receiving the HEAL loan. The purpose of forwarding the letter to the school is to notify the school of the borrower's delinquent status and to give the school an opportunity to assist in encouraging the borrower to repay. Because a school's activities in this situation involve a debt which is not owed to the school, concerns have been expressed regarding the applicability of Section 809 of the Fair Debt Collection Practices Act. This section requires a debt collector to provide a borrower with written notice of the amount of the debt, along with other information regarding disputes over the validity of the debt, within five days after the initial communication with the borrower. The question is whether a school is considered a debt collector acting as an agent of the lender in this situation and, thus, subject to penalties in the Act if procedures are not in compliance.
With the passage of the National Institutes of Health Revitalization Act of 1993, which was signed into law on June 10, 1993, schools and postgraduate training programs attended by HEAL borrowers are authorized to assist in the collection of any HEAL loan which becomes delinquent. The statute even permits contact with delinquent borrowers to encourage repayment.
This provision makes clear that for purposes of these contacts--or any other efforts to assist in the collection of a HEAL loan--the school or postgraduate training program is not subject to Section 809 the Fair Debt Collections Practices Act. As a result, a school may now contact a delinquent and defaulted borrower in writing, by telephone, or in person regarding the HEAL loan and provide the borrower with full information on the consequences of default and the importance of timely repayment. A description of some of the consequences of default appears in Chapter 3, Section 9 above.
[Sections 705(a)(2)(H) and 707 of the Public Health Service Act]
The Department of Health and Human Services has the authority to direct schools to withhold certain services from borrowers who have defaulted on their HEAL loans, with the exception of borrowers who have filed for bankruptcy. Such services may include--but are not limited to--academic transcripts and alumni services. All academic and financial aid transcripts that schools release on defaulted borrowers must indicate that the borrower is in default.
[Section 715(a)(7) of the Public Health Service Act]
The Department of Health and Human Service retains the right to limit, suspend or terminate any institution that does not comply with statutory and regulatory provisions of the HEAL program. In addition, such actions can also be taken against schools that transgress agreements made with the Department concerning HEAL. The procedures that the Department uses to limit, suspend and terminate institutions follow the Department of Education's procedures as contained in the General Provisions regulations.
[42 CFR Section 60.60]
