[Code of Federal Regulations]
[Title 42, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR57.208]

[Page 262-263]
 
                         TITLE 42--PUBLIC HEALTH
 
    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 
                                SERVICES
 
PART 57--GRANTS FOR CONSTRUCTION OF TEACHING FACILITIES, EDUCATIONAL IMPROVEMENTS, SCHOLARSHIPS AND STUDENT LOANS--Table of Contents
 
               Subpart C--Health Professions Student Loans
 
Sec. 57.208  Health professions student loan promissory note and disclosure requirements.

    (a) Promissory note form. Each health professions student loan must 
be evidenced by a properly executed promissory note in a form approved 
by the Secretary. The school must safeguard the promissory note against 
fire, theft, and tampering.
    (1) Each promissory note must state that the loan will bear interest 
on the unpaid balance computed only for periods during which repayment 
of the loan is required, at the rate of 5 percent per year.
    (2) Each promissory note must contain an acceleration clause 
provided by the Secretary, which will permit the acceleration of 
delinquent loans at the school's option.
    (3) A copy of each executed note must be supplied by the school to 
the student borrower.
    (b) Security. A school must require security or endorsement if the 
borrower is a minor and if, under the applicable State law, the note 
signed by him or her would not create a binding obligation. The school 
may not require security or endorsement in any other circumstances.
    (c) Disclosure requirements. (1) For any loan made after June 30, 
1986, the school shall, at the time the loan is made, provide the 
following loan information to the student:
    (i) The yearly and cumulative maximum amounts that may be borrowed 
by the student;
    (ii) The terms under which repayment of the loan will begin;
    (iii) The maximum number of years in which the loan must be repaid;
    (iv) The interest rate that will be paid by the borrower and the 
minimum amount of the required monthly payment;
    (v) The amount of any other fees charged to the borrower by the 
lender;
    (vi) Any options the borrower may have for deferral, cancellation, 
prepayment, consolidation, or other refinancing of the loan;
    (vii) A definition of default on the loan and a specification of the 
consequences which will result to the borrower if the borrower defaults, 
including a description of any arrangements which may be made with 
credit bureau organizations;
    (viii) To the extent practicable, the effect of accepting the loan 
on the eligibility of the borrower for other forms of student 
assistance; and
    (ix) A description of the actions that may be taken by the Federal 
Government to collect the loan, including a description of the type of 
information concerning the borrower that the Federal Government may 
disclose to:
    (A) Officers, employees, or agents of the Department of Health and 
Human Services,
    (B) Officers, employees, or agents of schools with which the 
Secretary has an agreement under this subpart, or
    (C) Any other person involved in the collection of a loan under this 
subpart.
    (2) For any loan made after June 30, 1986, the school shall, prior 
to the borrower's completion or termination of studies at the school, 
provide the following loan information to the student:
    (i) Each amount borrowed by the student under this subpart;
    (ii) The total amount borrowed by the student under this subpart; 
and
    (iii) A schedule for the repayment of the amounts borrowed under 
this subpart, including the number, amount, and frequency of payments to 
be made.

[[Page 263]]

    (3) In addition to the requirements set forth in paragraphs (c)(1) 
and (c)(2) of this section, the school must comply with the applicable 
requirements of Truth in Lending Regulation Z (12 CFR part 226).

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 50 
FR 34420, Aug. 23, 1985; 52 FR 20987, June 3, 1987; 56 FR 19293, Apr. 
26, 1991; 57 FR 45734, Oct. 5, 1992]