Source: https://www.federalregister.gov/documents/2017/11/15/2017-24636/health-education-assistance-loan-heal-program
Timestamp: 2019-10-20 16:35:18
Document Index: 792589725

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Federal Register :: Health Education Assistance Loan (HEAL) Program
A Rule by the Education Department on 11/15/2017
These final regulations are effective November 15, 2017.
82 FR 53374
53374-53395 (22 pages)
34 CFR 681
1840-AD21
ED-2017-OPE-0031
PART 681—HEALTH EDUCATION ASSISTANCE LOAN PROGRAM
Subpart A—General Program Description
Subpart B—The Borrower
Subpart C—The Loan
Subpart D—The Lender and Holder
Subpart E—The School
https://www.federalregister.gov/d/2017-24636 https://www.federalregister.gov/d/2017-24636
Start Preamble Start Printed Page 53374
On July 1, 2014, the HEAL Program was transferred from the U.S. Department of Health and Human Services (HHS) to the U.S. Department of Education (the Department). To reflect this transfer and to facilitate the servicing of all HEAL loans that are currently held by the Department, the Secretary adds the HEAL Program regulations to the Department's chapter in the Code of Federal Regulations (CFR).
Ms. Vanessa Freeman, U.S. Department of Education, 400 Maryland Avenue SW., Room 6W236, Washington, DC 20202. Telephone: (202) 453-7378 or by email: Vanessa.Freeman@ed.gov.
Background: The HEAL Program is authorized by sections 701-720 of the Public Health Service Act (the Act), 42 U.S.C. 292-292o. The HEAL Program was first administered by the Office of Education in the former Department of Health, Education, and Welfare. On May 21, 1980, the HEAL Program was transferred from the Office of Education to HHS until July 1, 2014, when Congress transferred the program to the Department pursuant to Division H, title V, section 525 of the Consolidated Appropriations Act, 2014 (Pub. L. 113-76) (Consolidated Appropriations Act, 2014). From fiscal year (FY) 1978 through FY 1998 the HEAL Program insured loans made by participating lenders to eligible graduate students in schools of medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, public health, pharmacy, and chiropractic, and in programs in health administration and clinical psychology.
Revising § 681.1(c) to specifically note that administrative wage garnishment (AWG) may be used as a method of loan collection for HEAL loans, in accordance with the Consolidated Appropriations Act, 2014;
Deleting outdated references in § 681.8(b)(3) to reflect the phaseout of the HEAL program and that no new HEAL loans have been issued since September 30, 1998;
Revising § 681.11(f)(6) by adding a cross-reference to include title IV repayment plans available for FFELP borrowers for eligible HEAL loans, in accordance with the Consolidated Appropriations Act, 2014;
Revising § 681.18 to reflect that HEAL loans may be consolidated in accordance with section 525 of the Consolidated Appropriations Act, 2014;
Revising § 681.20(a) by deleting the reference to the statute of limitations on collection of HEAL loans in accordance with 42 U.S.C 292f(i);
Revising § 681.20(d) by adding a cross-reference to update the procedures and standards to determine if a borrower is totally and permanently disabled in accordance with section 525(d) of the Consolidated Appropriations Act, 2014;
Revising § 681.34(c) by deleting outdated information and modernizing the language to reflect current practices related to how a lender may contact HEAL loan borrowers to obtain updated information;
Revising § 681.34(d) to reflect current practices related to skip tracing procedures for HEAL loans as outlined in § 682.411 and in accordance with section 525 of the Consolidated Appropriations Act, 2014;
Revising § 681.35(a)(2) by deleting obsolete information related to actions a lender may take to contact a delinquent HEAL loan borrower;
Revising § 681.35(g)(2) to reflect current practices for lenders that obtain public records electronically rather than requiring submission of paperwork from a HEAL loan borrower;
Revising § 681.38(a)(3) by deleting obsolete information and to reflect that all HEAL loans are currently in repayment;
Revising § 681.39(a) by adding a cross-reference to update the death discharge procedures for HEAL loan borrowers in accordance with section 525 of the Consolidated Appropriations Act, 2014;
Revising § 681.39(b) to reference the Department's total and permanent disability discharge procedures in accordance with the Consolidated Appropriations Act, 2014;
Updating references related to publication of HEAL loan data to reflect the Department's student aid Web site as an online resource;Start Printed Page 53375
Section 525 of the Consolidated Appropriations Act, 2014 establishes the need for regulatory action. This legislation authorizes, and the final regulations reflect, the transfer of the collection of HEAL loans from HHS to the Department effective July 1, 2014. As part of this transfer, the Department also received information collections from HHS required to operate the program. As of December 31, 2016, there were 22,265 HEAL loans outstanding; 11,390 unique borrowers; and a total value of $187,029,585.[1] The mean loan balance is $8,400 with a range of $1 to $341,907. At that date, 99.5 percent of outstanding HEAL loans were in repayment.
The final regulations are not expected to have a significant economic impact Start Printed Page 53376either by imposing additional costs or providing additional benefits.
Would the regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, § 681.39.)
Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the Department generally offers interested parties the opportunity to comment on proposed regulations. However, the APA provides that an agency is not required to conduct notice and comment rulemaking when the agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Rulemaking is “unnecessary” when the agency is issuing a minor rule in which the public is not particularly interested. It applies in those situations in which “the administrative rule is a routine determination, insignificant in nature and impact, and inconsequential to the industry and to the public.” Utility Solid Waste Activities Group v. EPA, 236 F.3d 749, 755 (D.C. Cir. 2001), quoting U.S. Department of Justice, Attorney General's Manual on the Administrative Procedure Act 31 (1947) and South Carolina v. Block, 558 F. Supp. 1004, 1016 (D.S.C. 1983).
As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are Start Printed Page 53377clearly understood, and the Department can properly assess the impact of collection requirements on respondents.
This is a summary of the reporting, notification, and recordkeeping burden associated with the information collection in the supporting statement. The estimate for this information collection burden is based on 14 HEAL loan holders in the program; and a current cumulative total of 11,390 individuals with outstanding loans requiring a variety of servicing transactions depending on loan status, i.e., internship/residency, repayment, or delinquent.
Loan Holders 14 56 × .20 Hrs. 11
Loan Holders * 91,000 × .17 Hrs. 15,470
Individuals 11,390 11,390 × .17 Hrs. 1,936
Loan Holders * 36,400 × .23 Hrs. 8,372
Loan Holders 14 127,456 23,853
Individuals 11,390 11,390 1,936
Total 11,404 138,846 25,789
Current Totals 25,650 144,930 26,409
Revised Totals 11,404 138,846 25,789
Difference −14,246 −6,084 −620
(The * represents the universe of 14 HEAL loan holders participating in the program and is done to avoid double counting the number of respondents.)
Topic and form No.
Burden hours by affected entity
1845-0124 Physician's Certification of Total Permanent Disability #539 Individual 15 hrs.; State 3 hrs.
Start Printed Page 53378
1845-0126 HEAL Repayment Schedules Form #502-1, #502-2, #502-1 & #502-2 Private Not-for Profit 175 hrs.
Holder's Report on HEAL Form #512 Private Not-for-Profit 30 hrs.
Total 205 hours.
1845-0127 Lender Application for Insurance Claim #510 #510 Private For-Profit 182 hrs.
Request for Collection Assistance Form #513 Private For-Profit 983 hrs.
Total 1,165 hours.
1845-0128 HEAL Forms—Application for Contract for Federal Loan Insurance #504, Private For-Profit 2 hrs.
Borrower Deferment Request #508 Individual 11 hrs.
Borrower Loan Status Record Layout Private For-Profit 10 hrs.
Loan Purchase Consolidation Electronic submission Private For-Profit 1 hr.
Total 24 hours.
The official version of this document is the document published in the Federal Register. Free internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.gpo.gov/​fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.
What is the HEAL program?
Who is an eligible student borrower?
Who is an eligible nonstudent borrower?
What are the borrower's major rights and responsibilities?
Other charges to the borrower.
Security and endorsement.
Consolidation of HEAL loans.
The Secretary's collection efforts after payment of a default claim.
Which organizations are eligible to apply to be HEAL lenders and holders?
The application to be a HEAL lender or holder.
The HEAL lender or holder insurance contract.
Making a HEAL loan.
HEAL loan account servicing.
HEAL loan collection.
Consequence of using an agent.
Assignment of a HEAL loan.
Death and disability claims.
Procedures for filing claims.
Determination of amount of loss on claims.
Records, reports, inspection, and audit requirements for HEAL lenders and holders.
Limitation, suspension, or termination of the eligibility of a HEAL lender or holder.
Which schools are eligible to be HEAL schools?
The student loan application.
The student's loan check.
Notification to lender or holder of change in enrollment status.
Payment of refunds by schools.
Administrative and fiscal procedures.
Federal access to school records.
Records and Federal access after a school is no longer a HEAL school.
Limitation, suspension, or termination of the eligibility of a HEAL school.
Responsibilities of a HEAL school.
Authority: Sec. 215, Pub. L. 78-410, 58 Stat. 690, as amended, 63 Stat. 35 (42 U.S.C. 216); secs. 727-739A, Pub. L. 78-410, 90 Stat. 2243, as amended, 93 Stat. 582, 99 Stat. 529-532, 102 Stat. 3122-3125 (42 U.S.C. 294-294 l-1); renumbered as secs. 701-720, as amended by 106 Stat. 1994-2011 (42 U.S.C. 292-292p); sec. 525, Pub. L. 113-76, Division H, title V, transferred HEAL to the Secretary of Education effective July 1, 2014.
End Authority Start Printed Page 53379
(b) HEAL loans were made by schools, banks, credit unions, State agencies, and other institutions eligible as lenders under § 681.30. HEAL school eligibility is described in § 681.50.
(h) He or she must require the loan to pursue the course of study at the school. This determination of the maximum amount of the loan will be made by the school, applying the considerations in § 681.51(f).
(d) If required under section 3 of the Military Selective Service Act to present himself for and submit to registration under such section, he must have Start Printed Page 53380presented himself and submitted to registration under such section.
(iii) The total financial resources that are actually available to the applicant for his or her costs of education for the period covered by the proposed HEAL loan, as determined in accordance with § 681.51(f), and other student aid that the applicant has received or will receive for the period covered by the proposed HEAL loan.
(b) The applicant pursuing a full-time course of study at an institution of higher education that is a “participating school” in the Guaranteed Student Loan Program but is not pursuing a course of study listed in § 681.5(b), applies for a HEAL loan as a nonstudent under paragraph (c) of this section.
(i) Enrolled as a full-time student in an eligible school, as described in § 681.12;
(ii) A participant in an accredited internship or residency program, as described in § 681.11(a);
(3) A lender must disburse HEAL loan proceeds as described in § 681.33(f).
(6) The borrower does not have to begin repayment until 9 full months after leaving school or an accredited internship or residency program as described in § 681.11.
(7) The borrower is entitled to deferment from repayment of the principal and interest installments during periods described in § 681.12.
(11) To assist the borrower in avoiding default, the lender or holder may grant the borrower forbearance. Forbearance, including circumstances in which the lender or holder must grant forbearance, is more fully described in § 681.37.
(b) The borrower's responsibilities. (1) The borrower must pay any insurance premium that the lender may require as more fully described in § 681.14.
(4) The borrower must repay the loan in accordance with the repayment schedule.Start Printed Page 53381
(a) Student borrower. An eligible student may borrow an amount to be used solely for expenses, as described in § 681.5(g), incurred or to be incurred over a period of up to an academic year and disbursed in accordance with § 681.33(f). The maximum amount he or she may receive for that period shall be determined by the school in accordance with § 681.51(f) within the following limitations:
(a) Commencement of repayment. (1) The borrower's repayment period begins the first day of the 10th month after the month he or she ceases to be a full-time student at a HEAL school. The 9-month period before the repayment period begins is popularly called the “grace period.”
(ii) Postponement for fellowship training or educational activity. For any HEAL loan received on or after October 22, 1985, if the borrower becomes an intern or resident in an accredited program within 9 full months after leaving school, and subsequently enters into a fellowship training program or an educational activity, as described in § 681.12(b)(1) and (2), within 9 months after the completion of the accredited internship or residency program or prior to the completion of such program, the borrower's repayment period begins on the first day of the 10th month after the month he or she ceases to be a participant in the fellowship training program or educational activity. Postponement of the commencement of the repayment period for either activity is limited to 2 years.
(iii) Non-student borrower. If a nonstudent borrower obtains another HEAL loan during the grace period or period of internship, residency, or deferment (as defined in § 681.12), the repayment period on this loan begins when repayment on the borrower's other HEAL loans begins or resumes.
(1) For a HEAL borrower who received any HEAL loan prior to October 22, 1985, periods of deferment (as described in § 681.12) are not included when calculating the 10 to 25 or 33 year limitations.
(2) For a borrower who receives his or her first HEAL loan on or after October 22, 1985, periods of deferment (as described in § 681.12) are included when calculating the 33 year limitation, but are not included when calculating the 10 to 25 year limitation.
(d) Minimum annual payment. During each year of repayment, a borrower's payments to all holders of his or her Start Printed Page 53382HEAL loans must total the interest that accrues during the year on all of the loans, unless the borrower, in the promissory note or other written agreement, agrees to make payments during any year or any repayment period in a lesser amount.
(6) As authorized by section 525 of the Consolidated Appropriations Act, 2014, any repayment plan available under part B of title IV of the HEA (the Federal Family Education Loan Program (FFELP)) is available for servicing, collecting, or enforcing HEAL loans. Such repayment plans are set forth in 34 CFR part 682, and in particular in §§ 682.102, 682.209, and 682.215.
(1) During which the borrower is pursuing a full-time course of study at a HEAL school or at an institution of higher education that is a “participating school” in the William D. Ford Federal Direct Loan Program;
(2) Up to 4 years during which the borrower is a participant in an accredited internship or residency program, as described in § 681.11(a)(2). For a borrower who receives his or her first HEAL loan on or after October 22, 1985, this total of 4 years for an internship or residency program includes any period of postponement of the repayment period, as described in § 681.11(a)(1);
(ii) Begins within 12 months after the borrower ceases to be a participant in an accredited internship or residency program, as described in § 681.11(a)(2), or prior to the completion of the borrower's participation in such program;
(iv) Is not a part of, an extension of, or associated with an internship or residency program, as described in § 681.11(a)(2);
(iii) Is not a part of, an extension of, or associated with an internship or residency program, as described in § 681.11(a)(2); and
(c)(1) To receive a deferment, including a deferral of the onset of the repayment period (see § 681.11(a)), a borrower must at least 30 days prior to, but not more than 60 days prior to, the onset of the activity and annually thereafter, submit to the lender or holder evidence of his or her status in the deferment activity and evidence that verifies deferment eligibility of the activity (with the full expectation that the borrower will begin the activity). It is the responsibility of the borrower to provide the lender or holder with all required information or other information regarding the requested deferment. If written evidence that verifies eligibility of the activity and the borrower for the deferment, including a certification from an authorized official (e.g., the director of the fellowship activity, the dean of the school, etc.), is received by the lender or holder within the required time limit, the lender or holder must approve the deferment. The Start Printed Page 53383lender or holder may rely in good faith upon statements of the borrower and the authorized official, except where those statements or other information conflict with information available to the lender or holder. When those verification statements or other information conflict with information available to the lender or holder, to indicate that the applicant fails to meet the requirements for deferment, the lender or holder may not approve the deferment until those conflicts are resolved.
(c) Method of calculation—(1) Student borrowers. For loans disbursed prior to July 22, 1986, the lender must calculate the insurance premium on the basis of the number of months beginning with the month following the month in which the loan proceeds are disbursed to the student borrower and ending 9 full months after the month of the student's anticipated date of graduation. For loans disbursed on or after July 22, 1986, the insurance premium shall be calculated as a one-time flat rate on the principal of the loan at the time of disbursement.
Start Printed Page 53384
(b) With one exception, it must also be made without endorsement. If a borrower is a minor and cannot under State law create a legally binding obligation by his or her own signature, a lender may require an endorsement by another person on the borrower's HEAL note. For purposes of this paragraph, an “endorsement” means a signature of anyone other than the borrower who is to assume either primary or secondary liability on the note.
(c) The following types of organizations are eligible to apply to the Secretary to be HEAL holders:Start Printed Page 53385
(2) Navient (formerly known as the Student Loan Marketing Association, or “Sallie Mae”); and
(c) The applicant must develop and follow written procedures for servicing and collecting HEAL loans. These procedures must be reviewed during the biennial audit required by § 681.42(d). If the applicant uses procedures more stringent than those required by §§ 681.34 and 681.35 for its other loans of comparable dollar value, on which it has no Federal, State, or other third party guarantee, it must include those more stringent procedures in its written procedures for servicing and collecting its HEAL loans.
(2) HEAL insurance, however, is not unconditional. The Secretary issues HEAL insurance on the implied representations of the lender that all the requirements for the initial insurability of the loan have been met. HEAL insurance is further conditioned upon compliance by the holder of the loan with the HEAL statute and regulations, the lender's or holder's insurance contract, and its own loan management procedures set forth in writing pursuant to § 681.31(c). The contract may contain a limit on the duration of the contract and the number or amount of HEAL loans a lender may make or hold. Each HEAL lender has either a standard insurance contract or a comprehensive insurance contract with the Secretary, as described below.
(2) The Secretary will revoke the comprehensive contract of any lender who utilizes procedures which are inconsistent with the HEAL statute and regulations, the lender's insurance contract, or its own loan management procedures set forth in writing pursuant to § 681.31(c), and require that such lenders disburse HEAL loans only under a standard contract. When the Secretary determines that the lender is in compliance with the HEAL statute and regulations and its own loan management procedures set forth in writing pursuant to § 681.31(c), the lender may reapply for a comprehensive contract.
(c) Lender determination of the borrower's creditworthiness. The lender may make HEAL loans only to an applicant that the lender has determined to be creditworthy. This determination must be made at least once for each academic year during which the applicant applies for a HEAL loan. An applicant will be determined to be “creditworthy” if he or she has a Start Printed Page 53386repayment history that has been satisfactory on any loans on which payments have become due. The lender may not determine that an applicant is creditworthy if the applicant is currently in default on any loan (commercial, consumer, or educational) until the delinquent account is made current or satisfactory arrangements are made between the affected lender(s) and the HEAL applicant. The lender must obtain documentation, such as a letter from the authorized official(s) of the affected lender(s) or a corrected credit report indicating that the HEAL applicant has taken satisfactory actions to bring the account into good standing. It is the responsibility of the HEAL loan applicant to assure that the lender receives each such documentation. No loan may be made to an applicant who is delinquent on any Federal debt until the delinquent account is made current or satisfactory arrangements are made between the affected agency and the HEAL applicant. The lender must receive a letter from the authorized Federal official of the affected Federal agency stating that the borrower has taken satisfactory actions to bring the account into good standing. It is the responsibility of the loan applicant to assure that the lender has received each such letter. The absence of any previous credit, however, is not an indication that the applicant is not creditworthy and is not to be used as a reason to deny the status of creditworthy to an applicant. The lender must determine the creditworthiness of the applicant using, at a minimum, the following:
(2) For student applicants only, the certification made by the applicant's school under § 681.51(e).
(d) Determination of loan amount. A lender may not make a HEAL loan in an amount that exceeds the permissible annual and aggregate maximums described in § 681.10.
(d) Skip-tracing. If, at any time, the lender or holder is unable to locate a borrower, the lender or holder must initiate skip-tracing procedures as described in § 682.411.
(a) When a borrower is delinquent in making a payment, the lender or holder Start Printed Page 53387must remind the borrower within 15 days of the date the payment was due by means of a written contact. If payments do not resume, the lender or holder must contact both the borrower and any endorser at least 3 more times at regular intervals during the 120-day delinquent period following the first missed payment of that 120-day period. The second demand notice for a delinquent account must inform the borrower that the continued delinquent status of the account will be reported to consumer credit reporting agencies if payment is not made. Each of the required four contacts must consist of at least a written contact which has an address correction request on the envelope. The last contact must consist of a telephone contact, in addition to the required letter, unless the borrower cannot be contacted by telephone. The lender or holder may choose to substitute a personal contact for a telephone contact. A record must be made of each attempt to contact and each actual contact, and that record must be placed in the borrower's file. Each contact must become progressively firmer in tone. If the lender or holder is unable to locate the borrower and any endorser at any time during the period when the borrower is delinquent, the lender or holder must initiate the skip-tracing procedures described in § 681.34(d).
(d) If the Secretary's preclaim assistance locates the borrower, the lender or holder must implement the loan collection procedures described in this section. When the Secretary's preclaim assistance is unable to locate the borrower, a default claim may be filed by the lender as described in § 681.40. The Secretary does not pay a default claim if the lender or holder has not complied with the HEAL statute and regulations or the lender's or holder's insurance contract.
(i) For any loan for which the lender or holder had not begun to litigate against the borrower prior to the imposition of the automatic stay, the period of the automatic stay is to be considered as an extended forbearance authorized by the Secretary, in addition to the 2-year period of forbearance which lenders and holders are authorized to grant without prior approval from the Secretary. Only periods of delinquency following the date of receipt (as documented by a date stamp) of the discharge of debtor notice (or other written notification from the court or the borrower's attorney of the end of the automatic stay imposed by the Bankruptcy Court) can be included in determining default, as described in § 681.40(c)(1)(i). The lender or holder must attempt to reestablish repayment terms with the borrower in writing no more than 30 days after receipt of the discharge of debtor notice (or other written notification from the court or the borrower's attorney of the end of the automatic stay imposed by the Bankruptcy Court), in accordance with the procedures followed at the end of a forbearance period. If the borrower fails to make a payment as scheduled, the lender or holder must attempt to obtain repayment through written and telephone contacts in accordance with the intervals established in paragraph (a)(1) of this section, and must perform the other HEAL loan collection activities required in this section, before filing a default claim.
(3) If, despite the lender or holder's compliance with required procedures, a loan subject to the requirements of paragraph (g)(1) of this section is discharged, the lender or holder must file a claim with the Secretary within 10 days of the initial date of receipt (as documented by a date stamp) of written notification of the discharge from the court or the borrower's attorney, in accordance with the procedures set forth in § 681.40(c)(4). The lender or holder also must file with the bankruptcy court an objection to the discharge of the HEAL loan, and must Start Printed Page 53388include with the claim documentation showing that the bankruptcy proceedings were handled properly and expeditiously (e.g., all documents sent to or received from the bankruptcy court, including evidence which shows the period of the bankruptcy proceedings).
(b) A lender or holder must exercise forbearance in accordance with terms that are consistent with the 25- and 33-year limitations on the length of repayment (described in § 681.11) if the lender or holder and borrower agree in writing to the new terms. Each forbearance period may not exceed 6 months.
A HEAL note may not be assigned except to another HEAL lender or organization as specified in § 681.30 and except as provided in § 681.40. In this section “seller” means any kind of assignor and “buyer” means any kind of assignee.
(b) Risks assumed by the buyer. Upon acquiring a HEAL loan, a new holder assumes responsibility for the consequences of any previous violations of applicable statutes, regulations, or the terms of the note except for defects under § 681.41(d). A HEAL note is not a negotiable instrument, and a subsequent holder is not a holder in due course. If the borrower has a valid legal defense that could be asserted against the previous holder, the borrower can also assert the defense against the new holder. In this situation, if the new holder files a default claim on a loan, the Secretary denies the default claim to the extent of the borrower's defense. Furthermore, when a new holder files a claim on a HEAL loan, it must provide the Secretary with the same documentation that would have been required of the original lender.
Start Printed Page 53389
(a) Death. The Secretary will discharge a borrower's liability on the loan in accordance with section 738 of the Act upon the death of the borrower. The holder of the loan may not attempt to collect on the loan from the borrower's estate or any endorser. The holder must secure a certification of death or whatever official proof is conclusive under State law. The holder must return to the sender any payments in accordance with § 685.212(a) received from the estate of the borrower or paid on behalf of the borrower after the date of death.
(5) A Borrower Status Form (HEAL-508), documenting each deferment granted under § 681.12 or a written statement from an appropriate official stating that the borrower was engaged in an activity for which he or she was entitled to receive a deferment at the time the deferment was granted.
(i) If a lender or holder determines that it is not appropriate to commence and prosecute an action against a default borrower pursuant to § 681.35(c)(3), it must file a default claim with the Secretary within 30 days after a loan has been determined to be in default.
(4) Bankruptcy claims. For a bankruptcy under chapter 11 or 13 of the Bankruptcy Act, or a bankruptcy under chapter 7 of the Bankruptcy Act when the borrower files a complaint to determine the dischargeability of the Start Printed Page 53390HEAL loan, the current holder must file a claim with the Secretary within 10 days of the initial date of receipt of court notice or written notice from the borrower's attorney that the borrower has filed for bankruptcy under chapter 11 or chapter 13, or has filed a complaint to determine the dischargeability of the HEAL loan under chapter 7. The initial date of receipt of the written notice must be documented by a date stamp. The lender or holder must file with the bankruptcy court a proof of claim, if applicable, and an objection to the discharge or compromise of the HEAL loan. In addition to the documentation required for all claims, with its claim the lender or holder must submit to the Secretary at least the following:
(2) The lender or holder must maintain for each borrower a payment history showing the date and amount of each payment received on the borrower's behalf, and the amounts of each payment attributable to principal and interest. A lender or holder must also maintain for each loan a collection history showing the date and subject of each communication with a borrower or Start Printed Page 53391endorser for collection of a delinquent loan. Furthermore, a lender or holder must keep any additional records which are necessary to make any reports required by the Secretary.
(c) This section does not apply to a determination that a HEAL lender fails to meet the statutory definition of an “eligible lender.”
§ 681.50
(ii) For the purposes of this section, the term “State” includes, in addition to the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, the Trust Territory of the Pacific Islands (the Republic of Palau), the Republic of the Marshall Islands, and the Federated States of Micronesia.
(ii) The approved accrediting agencies are:Start Printed Page 53392
§ 681.51
(c) Certify that the student is eligible to receive a HEAL loan, according to the requirements of § 681.5;
(g) Comply with the requirements of § 681.61.
§ 681.52
§ 681.53
Each school must notify the holder of a HEAL loan of any change in the student's enrollment status within 30 days following the change in status. Each notice must contain the student's Start Printed Page 53393full name under which the loan was received, the student's current name (if different), the student's Social Security number, the date of the change in the enrollment status, or failure to enroll as scheduled for any academic period as a full-time student, the student's latest known permanent and temporary addresses, and other information which the school may decide is necessary to identify or locate the student. If the school does not know the identity of the current holder of the HEAL loan, it must notify the HEAL Program Office of a change in the student's enrollment status. This notification is not required for vacation periods and leaves of absence or other temporary interruptions which do not exceed one academic term.
§ 681.54
§ 681.55
§ 681.56
§ 681.57
§ 681.58
§ 681.59
§ 681.60
(a) The Secretary may limit, suspend, or terminate the eligibility under the HEAL program of an otherwise eligible school that violates or fails to comply with any provision of the Act, these regulations, or agreements with the Secretary concerning the HEAL program. Prior to terminating a school's Start Printed Page 53394participation in the program, the Secretary will provide the school an opportunity for a hearing in accordance with the procedures under paragraph (b) of this section.
(c) This section does not apply to a determination that a HEAL school fails to meet the statutory definition of an “eligible school.”
§ 681.61
(6) Maintain documentation of the criteria used to develop the school's standard student budgets in the school's general records, readily available for audit purposes, and maintain in each HEAL borrower's record a copy of the standard budget which was actually used in the determination of the maximum loan amount approvable for the student, as described in § 681.51.
(d) A school is authorized to withhold services from a HEAL borrower who is in default on a HEAL loan received while enrolled in that school, except in instances where the borrower has filed for bankruptcy. Such services may include, but are not limited to academic Start Printed Page 53395transcripts and alumni services. Defaulted HEAL borrowers who have filed for bankruptcy shall provide court documentation that verifies the filing for bankruptcy upon the request of the school. Schools will also supply this information to the Secretary upon request. All academic and financial aid transcripts that are released on a defaulted HEAL borrower must indicate on the transcript that the borrower is in default on a HEAL loan. It is the responsibility of the borrower to provide the school with documentation from the lender, holder, or Department when a default has been satisfactorily resolved, in order to obtain access to services that are being withheld, or to have the reference to default removed from the academic and financial aid transcripts.
1. Federal Student Aid (FSA), HEAL Online Processing System (HOPS) (December 2016). Data extracted from an internal system by FSA in April 2017.
[FR Doc. 2017-24636 Filed 11-14-17; 8:45 am]