Source: https://www.ecfr.gov/cgi-bin/text-idx?mc=true&node=pt34.4.681&rgn=div5
Timestamp: 2020-08-14 23:55:58
Document Index: 613060319

Matched Legal Cases: ['art 681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', 'art 682', '§682', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§682', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§681', '§685', '§681', '§681', '§681', '§681', '§681']

Title 34 → Subtitle B → Chapter VI → Part 681
§681.1 What is the HEAL program?
§681.5 Who is an eligible student borrower?
§681.6 Who is an eligible nonstudent borrower?
§681.7 The loan application process.
§681.8 What are the borrower's major rights and responsibilities?
§681.10 How much can be borrowed?
§681.11 Terms of repayment.
§681.12 Deferment.
§681.13 Interest.
§681.14 The insurance premium.
§681.15 Other charges to the borrower.
§681.16 Power of attorney.
§681.17 Security and endorsement.
§681.18 Consolidation of HEAL loans.
§681.19 Forms.
§681.20 The Secretary's collection efforts after payment of a default claim.
§681.21 Refunds.
§681.30 Which organizations are eligible to apply to be HEAL lenders and holders?
§681.31 The application to be a HEAL lender or holder.
§681.32 The HEAL lender or holder insurance contract.
§681.33 Making a HEAL loan.
§681.34 HEAL loan account servicing.
§681.35 HEAL loan collection.
§681.36 Consequence of using an agent.
§681.37 Forbearance.
§681.38 Assignment of a HEAL loan.
§681.39 Death and disability claims.
§681.40 Procedures for filing claims.
§681.41 Determination of amount of loss on claims.
§681.42 Records, reports, inspection, and audit requirements for HEAL lenders and holders.
§681.43 Limitation, suspension, or termination of the eligibility of a HEAL lender or holder.
§681.50 Which schools are eligible to be HEAL schools?
§681.51 The student loan application.
§681.52 The student's loan check.
§681.53 Notification to lender or holder of change in enrollment status.
§681.54 Payment of refunds by schools.
§681.55 Administrative and fiscal procedures.
§681.56 Records.
§681.57 Reports.
§681.58 Federal access to school records.
§681.59 Records and Federal access after a school is no longer a HEAL school.
§681.60 Limitation, suspension, or termination of the eligibility of a HEAL school.
§681.61 Responsibilities of a HEAL school.
Source: 82 FR 53378, Nov. 15, 2017, unless otherwise noted.
(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 presented 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);
(6) The nonstudent applicant must have certified on the application that the information provided reflects the applicant's total financial resources and indebtedness.
(Approved by the Office of Management and Budget under control numbers 0915-0038 and 1845-0125).
(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.
(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:
(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 HEAL 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.
(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 lender 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) 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 repayment 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 must 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 include 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.
(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 HEAL 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 endorser 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) 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.
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 full 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.
(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 participation 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.
(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 transcripts 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.