| DCLPublicationDate: 5/1/97 DCLID: 97-L-196 AwardYear: 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. May 1997 GEN-97-4 97-L-196 97-G-299 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. Dear Colleague: 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 Loan schools. 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 HEAL 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 day. You may also fax your questions to 202-260-4199, or send them via electronic mail to: csb@sfa.ope.ed.gov. Please be sure to include your name, the name of your institution, and your phone number. Sincerely, 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.]] |