HHS Glossary

GLOSSARY

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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Bankruptcy: The legal condition of an insolvent person who has sought and obtained relief under the bankruptcy laws. The remedy sought under these laws is the elimination or reorganization of the debtor's obligation to pay existing debts. Under P.L. 105-244, educational loans funded whole or in part by a governmental unit are non dischargeable, regardless of how long they have been in repayment, unless the debtor demonstrates undue hardship.
Billing: Process of notifying borrowers of amounts due by the sending of advance, due, or past-due notices.
Billing Services: A business that services loan accounts for a lending institution on a fee basis.
Cancellation: Forgiveness of his or her obligation to repay a portion or the total principal and interest of the obligation upon the death of an individual or upon approval of HHS of permanent and total disability.
CFR: Code of Federal Regulations.
Chapter 7 Bankruptcy: Liquidation or straight bankruptcy that releases the debtor from liability for dischargeable debts. Under Chapter 7, federal educational loans are considered nondischargeable unless the debtor demonstrates undue hardship.
Chapter 11 Bankruptcy: A type of bankruptcy commonly referred to as a "business reorganization." However, it is available to individual debtors and can include personal debts. It is often used by debtors who have unsecured debts exceeding $100,000 and thus are ineligible for Chapter 13.
Chapter 13 Bankruptcy: A type of bankruptcy known as "Wage-earners Plan", in which creditors are repaid a percentage of the debt.
Collection Agency/Firm: A business that collects delinquent or defaulted loan accounts for a school.
Collections: The money returned to a fund from repayment of disbursed loans.
Credit Bureau Reporting: HHS regulations require a school to report any loans more than 120 days past due to one or more credit bureaus.
default: A student loan is considered in default when the borrower has failed to make payments within a time frame prescribed in law or regulation or when the borrower has failed to comply with other terms of the promissory note or written payment agreement.
Default Rate (HPSL/NSL): The ratio (states as a percentage) between the defaulted principal amount outstanding and the institution's matured loans. For the purpose of this definition, defaulted principal is the principal balance - amount borrowed minus principal paid or canceled -on loans in default for more than 120 days; a matured loan is the total principal amount of loans made by an institution under the program minus the principal amount of loans to borrowers that are either enrolled in a full-time course of study (or half-time for the nursing program) at the institution or in a grace period.
Deferment: A period in which repayment of principal, interest and penalty charges of a loan are suspended because the borrower meets certain requirements. During deferment interest does not accrue and the loan is not considered past due.
Delinquency: The failure of a borrower to make an installment payment when due.
Disbursement: The process by which financial aid funds are made available to students.
Discharge thru bankruptcy: The final action in bankruptcy that releases a debtor from any legal obligation to repay a debt. Discharged debts may be submitted to HHS for write-off approval.
Disclosure Statement: A written notice directed to the borrower stating the date the first payment installment on a loan will be due, the total amount due, the frequency and number of required payments, and the borrower's responsibility to repay the debt.
Documentation: Records that verify that certain actions were taken. For student aid purposes, documentation should include a description of all steps taken in decisions made concerning awards, disbursement, and notification.
Due Diligence: The procedures followed by a lending institution in exercising its responsibilities to inform a borrower of his or her rights under a loan program, to notify the borrower, and to conduct and complete collection efforts.
Entrance Interview: An information session the institution must conduct with the borrower each academic year in which the student receives loan funds. The institution must inform the borrower of his or her rights and responsibilities in incurring the debt and provide details regarding such matters as the amount of the loan, the date repayment must begin, deferment and cancellation provisions, default and its consequences, and the charges connected with making and collecting the loan. Personal borrower information must be collected which will assist in skip-tracing should it be necessary during the collection process. Counseling may be conducted by correspondence if a personal or group interview is not possible.
Exit Interview: An information session that institutional must offer to borrowers before they leave the institution. If a student does not receive exit counseling, the institution must send him or her exit counseling information at his or her last known address. The interview must encompass an explanation of the borrower's rights and responsibilities; a discussion of repayment, including a schedule projecting average installment amounts at the borrower's interest rate and a review of options for repayment; and updated personal information provided by the borrower.
Federal Capital Contribution (FCC): Federal funds contributed to maintain educational loan funds.
Forbearance: The opportunity to suspend repayment of the principal when the borrower is unable to meet loan repayment obligations for reasons of hardship not covered by deferment. Interest continues to accrue on the unpaid principal balance of the loan. A minimum payment must be made on all accrued interest during the period in which the borrower is in forbearance.
Grace Period: The defined length of time allowed before repayment of a loan begins after the borrower has terminated student status or ceases to qualify for a loan. Interest does not accrue during a grace period. The grace period for a HPSL loan is one year. The grace period for a NSL loan is 9 months and begins on the 1st day of the month nearest to the date the borrower is no longer a student.
Health Professions Student Loans (HPSL): A loan program established in 1963 under Title VII of the Public Health Service Act to assist students pursuing a course of study leading to a degree of doctor of medicine, doctor of dental surgery or the equivalent, doctor of osteopathy, doctor of optometry or the equivalent, bachelor or doctor of science in pharmacy or the equivalent, doctor of podiatry or the equivalent, or doctor of veterinary medicine or the equivalent.
HHS: U.S. Department of Health and Human Services
Institutional Capital Contribution (ICC): Institutional funds contributed to establish or maintain a revolving loan fund. In the HPSL and NSL programs, ICC must be equal to at least one-ninth of the Federal Capital Contribution (FCC).
Late Charge: A fee assessed a borrower for failing to make all or part of an installment when the loan is more than 60 days past due.
Litigation: A procedure used in student loan collection in which a plaintiff sues a defendant.
Loan: An advance of funds requiring a recipient to repay a specified amount under prescribed conditions.
Loans for Disadvantaged Students (LDS) Program: An HPSL program which provides funding for long-term, low-interest loans to eligible individuals from disadvantaged backgrounds who are enrolled full-time at eligible health professions schools.
Nursing Student Loan (NSL) Program: A loan program established in 1964 by Title VIII of the Public Health Service Act of 1963 to assist students pursuing a course of study leading to an associate degree in nursing, a diploma in nursing, a baccalaureate degree or the equivalent in nursing, or a graduate degree in nursing.
Penalty Charge: A charge assessed when a borrower's installment payment is more than 60 days past due.
Primary Care Loan (PCL) Program: The HPSL program requiring medical allopathic and osteopathic students to practice in primary health care until the loan balance is paid in full.
Principal: The loan amount borrowed.
Promissory Note: The written document (contract) that creates the loan agreement when signed by the borrower. The note must state that the loan will bear interest on the unpaid balance computed only for periods during which repayment of the loan is required, and contain an acceleration clause provided by the Secretary of HHS, which will permit the acceleration of delinquent loans at the school's option.
Renegotiation: Process by which the school and borrower agree to a new repayment schedule. The school must maintain documentation of the agreement in the borrower's file.
Repayment Schedule: A listing of the principal and interest due on each installment payment of a loan, number of payments required to repay a loan, interest rate, due date of the first payment, and frequency of payments.
Semi-Annual Collection Effort: Once it has been determined that the prospect of future collections from a defaulted borrower are promising enough to justify periodic review of the debt and the repayment period has not expired, a school may retain the account for continued collections, provided that it makes an attempt at least semi-annually to collect from the borrower. The collection methods should be consistent with those normally used by the school and must be documented and become a part of the borrower's record.
Skip-Trace: The process of locating the current address of a borrower. The loan collector may contact family members and personal references or faculty and staff references listed on loan applications, exit interviews, or other documents. HHS has skip-trace provisions with the Internal Revenue Service.
Statement of Rights and Responsibilities: A statement that institutions are required to provide when disbursing a loan that informs the borrower of his or her rights and responsibilities regarding a loan.
Totally and Permanently Disabled: A condition which is defined as being unable to engage in gainful employment of any kind because of a medically determinable impairment which is expected to continue for a long and indefinite period of time or to result in death. The review and final determination shall be made by the Secretary of HHS on the recommendation of the school, supported by required medical certification relating to the borrower's disability.
Truth-in-Lending Statement: A document that must be provided to a borrower that states the interest rate and other information relative to a consumer credit action.
Uncollectible Loan: A loan that an institution is unable to collect despite application of due diligence procedures. Lenders of HPSL, PCL, LDS and NSL loans may "write off" an uncollectible loan if the schools has exercised due diligence, subject to approval by the Secretary of HHS. The exception is if the unpaid balance of principal, interest, and penalty charges is $3,000 or less, then a school may write off the amount providing due diligence was exercised.
Write-off: A procedure for removing an uncollectible account from an institution's portfolio subject to HHS' loan program regulations.