| DCLPublicationDate: 8/1/96 DCLID: GEN-96-14 AwardYear: Summary: Increased Unsubsidized Loan Limits for Certain Health Professions Students August, 1996 GEN-96-14 SUBJECT: Increased Unsubsidized Loan Limits for Certain Health Professions Students Dear Colleague: Section 514 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub.L. 104-134, amended section 428H(d)(2) of the Higher Education Act of 1965, as amended (HEA), to authorize the Secretary of Education to increase loan limits for unsubsidized loans to students made under the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. This authority authorizes such increases "in cases where the Secretary determines that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education. . . ." The new authority is effective for loans made for periods of enrollment that begin on or after July 1, 1996. The Department understands that this change to the HEA was included to address the needs of students who would otherwise borrow under the Health Education Assistance Loan (HEAL) Program. Under present law, borrowers who received a HEAL loan prior to October 1, 1995, may continue to participate in the HEAL Program until they complete their program. Students who had not borrowed a HEAL loan prior to October 1, 1995, are not eligible to borrow under that program. In order to assist health professions students who cannot borrow under the HEAL Program because of the budgetary restrictions placed on that program, the Secretary is increasing annual loan limits under the Unsubsidized Stafford Loan and Direct Unsubsidized Loan programs for those students only, as long as they would have been eligible and are now not eligible for assistance under the HEAL program and attend certain schools that actively participate in the HEAL Program. This authority is effective for loan periods beginning on or after July 1, 1996. The Department will later consider whether to extend this authority to subsequent loan periods. For purposes of determining if a school can award unsubsidized loans in excess of current maximums to these students,, a school must have made disbursements of HEAL Program loans during Federal Fiscal Year 1995 (October 1, 1994 through September 30, 1995). Increased Unsubsidized Loan Limits for Certain Health Professions Students page 2 For purposes of implementing this authority, a HEAL school is defined on a discipline-specific basis, in accordance with the HEAL statute. For example, if University A School of Medicine had students who received HEAL disbursements in FY 1995, but University A School of Dentistry did not have any students who received HEAL disbursements in FY 1995, University A School of Medicine could increase the amount of its Unsubsidized Stafford or Direct Loans under this authority, but University A School of Dentistry could not. Also, if a school has more than one campus (e.g., University A East and University A West), only those campuses with students who received HEAL disbursements in FY 1995 would be authorized to use the increased loan limits. When determining the amount of supplementary unsubsidized loans an eligible student may receive, participating schools must use the current HEAL Program and Discipline loan limits as provided for in Section 703(a) of the Public Health Act and as described in the Department of Health and Human Services Student Financial Aid Guidelines Notebook at Section 104.3.2. However, unlike in HEAL, there is no need analysis test required for these extra loan amounts. Regular unsubsidized loan eligibility rules will apply to these extra funds up to the HEAL limits. Finally, the Secretary is not, at this time, increasing aggregate loan limits in either the FFEL or Direct Loan programs. Please note, students that remain eligible to receive a HEAL Program loan (those that had borrowed under the HEAL program prior to October 1, 1995) may not receive Unsubsidized Stafford or Direct Unsubsidized loans above the current annual maximum of $18,500 less any subsidized amounts borrowed. Schools may use the current Direct Loan Promissory note and the current FFELP Application/Promissory Note for these increased loan amounts. Schools that participate in the Direct Loan program will soon receive instructions on how to originate loans with the higher limits. Schools participating in the FFEL Program will be contacted by their guaranty agency(ies) with advice as to procedures they will implement to process loans with the increased amounts. If you have any questions about the guidance provided in this letter please contact Jeff Baker, Director of Policy Development. Jeff can be reached by phone at (202) 708-9261 or by email at jeff_baker@ed.gov. Increased Unsubsidized Loan Limits for Certain Health Professions Students page 3 Thank you for your cooperation as we work to provide health professions students with continued access to Federal student assistance. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Assistance Programs |