Institutions must make sure that students meet the eligibility criteria for receipt of NSL 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 NSL funds meet the set eligibility requirements specified in statute and in regulations. A description of the eligibility requirements follow.
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 57.306]
The student must be enrolled or accepted for enrollment as a full-time or half-time student in a nursing school participating in the NSL 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 NSL program do not require it.
Should an NSL recipient cease to be a student in good standing because of academic failure, then the school is obligated to discontinue disbursement of NSL funds.
[Section 836(b)(1) of the Public Health Service Act; 42 CFR Part 57.306]
Students must be enrolled full-time or half-time in programs leading to the following degrees in order to be eligible for NSL funds:
[Sections 835(a)(4) and 853 of the Public Health Service Act; 42 CFR Part 57.306]
The student must be in need of financial assistance in order to pursue the full-time or half-time course of study at the nursing school in which he or she is enrolled or accepted for enrollment. In determining financial need, the school must take into consideration the:
[Section 836(b)(1) of the Public Health Service Act; 42 CFR Part 57.306]
All schools participating in the NSL program must:
[42 CFR Part 57.306]
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 NSL 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 57.306]
Students must provide nursing 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 57.306]
The NSL program does not prohibit awarding NSL 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 NSL loans. If the school does not have such a policy in place, it should carefully consider awarding NSL funds to any student who has failed to honor a previous loan commitment by discerning:
Section 2 VERIFICATION OF STUDENT INFORMATION
NSL 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 NSL program.
[42 CFR Part 57.306]
Schools are responsible for making an NSL financial aid application form available to students. The application for NSL 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 NSL borrowers after they leave school. (See both Chapter 3, Section 5, Subsection C below and Fiscal Management, Collections, Chapter 2 for information on entrance interviews.)
In awarding NSLs, the school must coordinate available funds with the demonstrated financial need of student applicants. The awarding of NSL funds should be governed by written policies and procedures that have been adopted by the school to:
After the school has determined individual NSL 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 NSL 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 NSL 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) which 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, any proposed promissory note that differs from the note provided by the Division must be approved by the Department before it may be used.
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 each note must be supplied by the school to the 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 NSL must 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, NSL promissory notes or any other evidence of an NSL may not be sold by the school, unless the borrower transfers to another institution participating in the NSL program. In this case, the school from which the borrower originally obtained an NSL may sell that loan to the school the borrower is now attending.
[Section 836 of the Public Health Service Act; 42 CFR Part 57.308]
A statement of disclosure regarding the financial charges on NSLs must be made and signed by the borrower each time a loan award is made and at the time a repayment schedule is signed. The current disclosure requirements are set forth in Regulation Z under the Truth-in-Lending Act.
The school must provide the borrower with the disclosure information at the time the loan is made and at the time the repayment schedule is signed. It includes the following items:
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.
Regulations require schools to conduct entrance interviews with NSL borrowers. The school must conduct and document an entrance interview for each academic year during which the student receives NSL funds. The school also must obtain entrance interview documentation before it disburses loan funds to a borrower in any academic year.
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 57.310]
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 NSL funds. In this case, the information on the original document must continue to be applicable to the additional loan funds. Exhibit I shows a statement of borrower's rights and responsibilities.
For a borrower who receives loan funds in more than one academic year, the school must require the borrower to:
[42 CFR Part 57.310]
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 57.310]
Institutions must document entrance interviews by maintaining the papers signed by the borrower in his/her file. Documentation consists of evidence that the borrower:
Exhibit C shows the entrance interview checklist and questionnaire. Fiscal Management, Collections, Chapters 1 and 2 also address entrance interview requirements.
[42 CFR Part 57.310]
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 half-time or no longer in good standing are not eligible to receive NSL 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.
[Section 836(d) of the Public Health Service Act; 42 CFR Part 57.309]
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 or half-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 57.315]
