Summary: INCREASED LOAN LIMITS FOR CERTAIN HEALTH PROFESSIONS STUDENTS - This letter clarifies eligibility issues related to increased loan limits for certain health professions students affected by the "phaseout" of the HEAL Program.
Summary: INCREASED LOAN LIMITS FOR CERTAIN HEALTH
PROFESSIONS STUDENTS - This letter clarifies
eligibility issues related to increased loan limits for
certain health professions students affected by the
"phaseout" of the HEAL Program.
This letter responds to a number of questions we have received
related to our decision to increase unsubsidized loan limits for certain
health professions students. It provides clarification on both school
eligibility and student eligibility for the increased amounts. It also
includes a review of other issues related to the increased amounts
that previously had been provided to guaranty agencies and to Direct
In the Department's August 1996 Dear Colleague Letter (DCL) on
this subject (GEN-96-14), we announced that we were increasing
loan limits for unsubsidized Stafford loans in the Federal Family
Education Loan Program (FFELP) and the William D. Ford Federal
Direct Loan (Direct Loan) Program for certain health professions
students.*1* The purpose of this increase, as explained in the
DCL, was to ". . . assist health professions students who cannot
borrow under the HEAL Program BECAUSE OF THE
BUDGETARY RESTRICTIONS placed on that program, . . ."
(emphasis added). In the DCL and in advisory letters sent to
guaranty agencies and Direct Loan schools, we provided additional
guidance regarding both school and student eligibility for the
increased loan amounts. The following includes a clarification of
two eligibility issues, as well as a repeat of the other guidance
provided in the advisory letters.
SCHOOL ELIGIBILITY - CONTINUED PARTICIPATION IN
The August DCL indicated (1) that only schools that had disbursed
HEAL Program loans during Federal Fiscal Year 1995 (FY 95) could
certify unsubsidized Federal Stafford loans or originate Direct
Unsubsidized loans for the increased amounts, and (2) that the
increased amounts would only be available to those students who
were not able to borrow under HEAL because of the phaseout.
If a school did not make any HEAL Program loans during FY 95,
this indicated that the school was not actively participating in the
HEAL Program. Thus, students at that school would be ineligible
for HEAL Program loans not because of the phaseout, but rather
because the school did not participate in the HEAL Program.
In an advisory letter sent to guaranty agencies in December and in a
January Direct Loan Bulletin, we stated that if a school disbursed
HEAL Program loans during FY 95, but has since withdrawn from
the HEAL Program, its students are not eligible for the increased
unsubsidized loan limits. This guidance has raised concerns from a
number of schools that have ceased participating in the HEAL
Program since FY 95.
Because the August DCL did not specifically state that schools must
continue to participate in the HEAL Program in order to award the
increased unsubsidized loan limits, we have decided to modify the
guidance provided in the December and January letters. A SCHOOL
WILL BE ALLOWED TO AWARD UNSUBSIDIZED LOANS AT
THE INCREASED LIMITS FOR ANY LOAN PERIOD THAT
BEGINS PRIOR TO JULY 1, 1998, EVEN IF THE SCHOOL HAS
STOPPED MAKING HEAL PROGRAM LOANS OR
WITHDRAWN FROM THE HEAL PROGRAM SUBSEQUENT
TO FY 95. Of course (as stated in the August DCL), the school must
have made HEAL Program loans during FY 95, and may only certify
or originate loans at the increased limits for those borrowers who are
ineligible for HEAL Program loans because of the statutory
phaseout of the HEAL Program. Students who had borrowed under
the HEAL Program prior to October 1, 1995, are ineligible for the
increased loan limits because they remain eligible for HEAL
Program loans under the phaseout provisions. This applies even if
those students may no longer receive HEAL Program loans because
of a school's decision to stop participating in the HEAL Program.
Consideration of school eligibility for continued participation after
July 1, 1998, will await the upcoming Congressional budget process
and its effect upon the HEAL Program.
STUDENT ELIGIBILITY - ENROLLMENT STATUS
The letters sent to guaranty agencies and Direct Loan schools in
December and January stated that students must be enrolled full-time
in order to receive the increased unsubsidized loan limits, since
full-time enrollment is a requirement under the HEAL Program.
That guidance is consistent with our stated intent to provide the
increased loan amounts only to students who would have been
eligible for assistance under the HEAL Program if not for the
elimination of HEAL Program loans for new borrowers. However,
since the August DCL did not explicitly state that full-time
enrollment was required, the Department will permit a school to
certify unsubsidized Federal Stafford loans or originate Direct
Unsubsidized loans at the increased loan limits for students who are
not enrolled full-time (but who are enrolled at least half-time) until
the date the school receives a copy of this letter, or June 1, 1997,
whichever is earlier. Beyond that date, only those students who are
enrolled full-time may receive the increased amounts.
INCREASE IN UNSUBSIDIZED AGGREGATE LOAN LIMITS
We are in the process of analyzing available data and consulting with
representatives of the health professions postsecondary community
before we finalize a decision on what the appropriate aggregate loan
limits should be for those students who are eligible to receive the
increased amounts of unsubsidized loans. We expect to make an
announcement on this issue by June 1, 1997.
SUMMARY OF OTHER REQUIREMENTS COVERED IN THE
DECEMBER AND JANUARY LETTERS
- Dependent student eligibility. Consistent with Title IV
requirements, a dependent undergraduate health professions
student may receive the increased unsubsidized loan amounts
only if the student's parent is unable to borrow a PLUS loan.
- Borrowing limited to cost of attendance minus other aid.
Although need analysis is not required (as it is under the HEAL
Program), students may not borrow increased unsubsidized
Federal Stafford or Direct Unsubsidized amounts in excess of the
cost of attendance, minus other aid received. This is consistent
with Title IV requirements.
- Periods of enrollment that began prior to July 1, 1996. The
increased unsubsidized loan limits for students affected by the
HEAL restrictions were authorized in the law for loans made for
periods of enrollment beginning on or after July 1, 1996.
Therefore, the law does not permit a school to certify
unsubsidized Federal Stafford loans or originate Direct
Unsubsidized loans for the increased loan limits for enrollment
periods beginning earlier than July 1, 1996.
In order to provide access to the increased amounts for those few
borrowers whose enrollment periods started prior to, but include
July 1, 1996, the Department will permit a school to certify
or originate a loan with a loan period start date of July 1, 1996,
even if that date does not correspond to the beginning of one of
the school's academic terms. However, consistent with Title IV
policy, costs of attendance--other than tuition, fees, books, and
supplies--must be for the loan period only.
The Department appreciates your patience and cooperation as we
implement policies to help health professions students who are
affected by the HEAL phaseout. If you have questions about the
guidance provided in this letter, please contact the Customer Support
Branch for Student Financial Assistance Programs. You may phone
the Customer Support Branch at 1-800-4ED-SFAP (1-800-433-7327)
from 9 am to 5 pm, Eastern Time, Monday through Friday. After
hours you may leave a message and we will return your call the next
You may also fax your questions to 202-260-4199, or send them via
electronic mail to: firstname.lastname@example.org. Please be sure to include
your name, the name of your institution, and your phone number.
Elizabeth M. Hicks
Deputy Assistant Secretary
Student Financial Assistance Programs
[[*1* As authorized by section 428H(d)(2) of the Higher Education
Act of 1965, as amended.]]