[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: 42CFR57.210]

[Page 263-267]
 
                         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. 57.210  Repayment and collection of health professions student loans.

    (a) Each health professions student loan, including accrued 
interests, will be repayable in equal or graduated periodic installments 
in amounts calculated on the basis of a 10-year repayment period. Except 
as otherwise provided in this paragraph, repayment of a loan must begin 
one year after the student ceases to be a full-time student.
    (1) If a borrower reenters the same or another school as a full-time 
student within the 1-year period, the date upon which interest will 
accrue and the repayment period will begin will be determined by the 
date on which the student last ceases to be a full-time student at that 
school.
    (2) The following periods will be excluded from the 10-year 
repayment period:
    (i) All periods for up to a total of 3 years of active duty 
performed by the borrower as a member of the Army, Navy, Air Force, 
Marine Corps, Coast Guard, National Oceanic and Atmospheric 
Administration Corps or the U.S. Public Health Service Corps;
    (ii) All periods for up to a total of 3 years of service as a 
volunteer under the Peace Corps Act;
    (iii) All periods of advanced professional training including 
internships and residencies, except as specified in paragraph (a)(2)(vi) 
of this section;
    (iv) All periods during which the borrower is pursuing a full-time 
course of study at an eligible health professions school;
    (v) A period not in excess of 2 years during which a borrower who is 
a full-time student in a health professions school leaves the school, 
with the intent to return to such school as a full-time student, to 
engage in a full-time educational activity which is directly related to 
the health profession for which the individual is preparing. To qualify 
for such deferment, the full-time educational activity must be one 
which:
    (A) Is part of a joint-degree program or a formal program of joint 
study in conjunction with the health profession for which the borrower 
is preparing at the school; or
    (B) Is an activity which will enhance the borrower's knowledge and 
skills in the health profession for which the borrower is preparing at 
the school, as determined by the school.

The borrower must request such deferment from the school in which he or 
she is enrolled no later than 60 days prior to leaving such school to 
engage in the full-time educational activity. The school must then 
determine, no later than 30 days prior to the borrower's leaving such 
school, whether the borrower qualifies for such deferment. A borrower 
who qualifies for this type of deferment receives the grace period upon 
completion or termination of his or her studies leading to the first 
professional degree in the health discipline being pursued. If the 
borrower fails to return to school, the school retroactively must begin 
the borrower's grace period based on the date the borrower terminated 
his or her studies at the school, and must begin the repayment period 
immediately following the end of the grace period; and

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    (vi) A period not in excess of 2 years during which a borrower who 
is a graduate of a health professions school participates in:
    (A) A fellowship training program which is directly related to the 
health profession for which the borrower prepared at the school, as 
determined by the school from which the borrower received his or her 
loan, and is engaged in by the borrower no later than 12 months after 
the completion of the borrower's participation in advanced professional 
training as described in paragraph (a)(2)(iii) of this section, or prior 
to the completion of such borrower's participation in such training. To 
qualify for such deferment, the fellowship training program must be one 
which:
    (1) Is a full-time activity in research or research training or in 
health care policy; and
    (2) Is a formally established fellowship program which was not 
created for a specific individual; or
    (B) A full-time educational activity which is directly related to 
the health profession for which the borrower prepared at the school, as 
determined by the school from which the borrower received his or her 
loan, and is engaged in by the borrower no later than 12 months after 
the completion of the borrower's participation in advanced professional 
training as described in paragraph (a)(2)(iii) of this section, or prior 
to the completion of the borrower's participation in such training. To 
qualify for such deferment, the full-time educational activity must be 
one which:
    (1) Is part of a joint-degree program in conjunction with the health 
profession for which the borrower prepared at the school; or
    (2) Is required for licensure, registration, or certification in the 
health profession for which the borrower received the HPSL loan; or
    (3) Is a full-time educational program in public health, health 
administration, or a health care discipline directly related to the 
health profession for which the borrower received the loan.
    (3) To receive a deferment, a borrower must, no later than 30 days 
prior to the onset of the activity (or no later than 30 days prior to 
the due date of the first payment if the borrower begins the activity 
during the grace period), and annually thereafter, provide the lending 
school with evidence of his or her status in the deferrable activity, 
and evidence that verifies deferment eligibility of the activity. This 
evidence must include certification by the Program Director or other 
authorized official that the borrower's activity meets the deferment 
requirements. The borrower must also notify the school upon completion 
or termination of the activity. It is the responsibility of the borrower 
to provide the lending school with all required information or other 
information regarding the requested deferment. The school may deny a 
request for deferment if it is not filed in accordance with the 
requirements of this section.
    (4) Subject to the provisions of paragraph (b)(3) of this section, a 
borrower must establish a repayment schedule with the school providing 
for payments not less often than quarterly. Any borrower whose repayment 
is delinquent more than 60 days must establish a monthly repayment 
schedule with the school. However, a borrower may at his or her option 
and without penalty, prepay all or part of the principal and accrued 
interest at any time.
    (5) A school may grant forbearance whenever extraordinary 
circumstances such as unemployment, poor health or other personal 
problems temporarily affect the borrower's ability to make scheduled 
loan repayments.
    (b)(1) Each school at which a fund is established must exercise due 
diligence in the collection of health professions student loans due the 
fund. In the exercise of due diligence, a school must follow procedures 
which are at least as extensive and effective as those used in the 
collection of other student loan accounts due the school, and must use 
the steps outlined below in accordance with collection practices which 
are generally accepted among institutions of higher education:
    (i) Conduct and document an entrance interview (individually or in 
groups) with the borrower prior to disbursing HPSL funds in an academic 
year. During the entrance interview the school must obtain documentation

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which indicates that the borrower is aware of the rights and 
responsibilities associated with HPSL funds and personal information 
which would assist in locating the borrower if he or she fails to keep 
the school informed of his or her current address. The requirements of 
this subparagraph may be met by correspondence, if the school determines 
that a face-to-face meeting (individually or in groups) is 
impracticable.
    (ii) Conduct and document an exit interview (individually or in 
groups) with the borrower. During the exit interview, the school must 
provide each borrower with information necessary to carry out the terms 
of repayment, remind the borrower of the rights and responsibilities 
associated with HPSL funds, and update the personal information 
collected prior to disbursing HPSL funds which would assist in locating 
the borrower if he or she fails to keep the school informed of his or 
her current address. If the borrower terminates studies without advance 
notice, the school must document attempts to inform the borrower of the 
substance of the exit interview and to secure exit interview information 
from the borrower by mail.
    (iii) Notify the borrower in writing of the impending repayment 
obligation at least twice during the grace period;
    (iv) Notify a borrower who is in deferment status in writing of the 
impending repayment obligation 1 to 3 months prior to the expiration of 
the approved period of deferment;
    (v) Perform regular billing;
    (vi) Follow up past due payments with a series of at least four 
documented and reasonably spaced attempts to contact the borrower, at 
least three of which must be in writing at not more than 30-day 
intervals, prior to the loan becoming 120 days past due, provided that 
the school has a current address for the borrower;
    (vii) Perform address searches when necessary;
    (viii) Use collection agents, which may include the use of an 
internal collection agent;
    (ix) Institute legal proceedings against borrowers after all other 
attempts at collection have failed, unless the school determines, 
subject to the approval of the Secretary, that such litigation would not 
be cost-effective; and
    (x) Become a member of a credit bureau and notify the credit bureau 
of accounts past due by more than 120 days.

In place of one or more of the procedures outlined above schools may 
substitute collection techniques that are equally or more effective, but 
only after they have demonstrated the effectiveness of the techniques 
and obtained written approval from the Secretary.
    (2) Late charge. (i) For any health professions student loan made 
after June 30, 1969, but prior to October 22, 1985, the school may fix a 
charge for failure of the borrower to pay all or any part of an 
installment when it is due and, in the case of a borrower who is 
entitled to deferment under section 722(c) of the Act for any failure to 
file timely and satisfactory evidence of the entitlement. The amount of 
the charge may not exceed $1 for the first month or part of a month by 
which the installment or evidence is late and $2 for each succeeding 
month or part of a month. The school may elect to add the amount of this 
charge to the principal amount of the loan as of the day after the day 
on which the installment or evidence was due, or to make the amount of 
the charge payable to the school no later than the due date of the next 
installment following receipt of the notice of the charge by the 
borrower.
    (ii) For any health professions student loan made on or after 
October 22, 1985, the school shall assess a charge for failure of the 
borrower to pay all or any part of an installment when the loan is more 
than 60 days past due and, in the case of a borrower who is entitled to 
deferment under section 722(c) of the Act, for any failure to file 
satisfactory evidence of the entitlement within 60 days of the date 
payment would otherwise be due. No charge may be made if the loan is 
less than 61 days past due. The amount of this charge may not exceed an 
amount equal to 6 percent of the amount due at the time the charge is 
calculated. The school may elect to add the amount of this charge to the 
principal amount of the loan as of the day on which the charge is 
calculated, or to make the amount of

[[Page 266]]

the charge payable to the school no later than the due date of the next 
installment following receipt of the notice of the charge by the 
borrower.
    (3) With respect to any health professions student loan made after 
June 30, 1969, the school may require the borrower to make payments of 
at least $15 per month on all outstanding health professions student 
loans during the repayment period.
    (4) A school must, on an annual basis, review and assess the 
collectibility of any loan more than 3 years past due. If the school 
determines that the prospects of future collection are promising enough 
to justify periodic review of the debt, and neither the statute of 
limitations nor the 10-year repayment period has expired, the school may 
retain the account for continued collections, provided that it makes an 
attempt at least semi-annually to collect from the borrower. When the 
due diligence procedures required by paragraph (b)(1) of this section 
have been exhausted, the school is responsible for determining the 
collection methods it will use for the semi-annual collection effort 
required on these loans. If the school determines that the prospects of 
future collection are not promising, or when the statute of limitations 
or the 10-year repayment period has expired, the loan must be considered 
uncollectible. A school may determine a loan to be uncollectible sooner 
than 3 years past due when it has evidence that the loan cannot be 
collected, but in no case should a school consider a loan as 
uncollectible if it has not been in default for a least 120 days. A 
school is not subject to the requirements in paragraphs (b)(4) (i) and 
(iii) of this section for loans that became uncollectible, as determined 
by the school, before August 1, 1985.
    (i) A school must request permission to write off an uncollectible 
loan within 30 days of the determination that it is uncollectible or 
reimburse the fund in the full amount of the loan, pursuant to 
Sec. 57.210(b)(4)(iii). The 30-day period for submitting the loan for 
write-off review begins on the date that the determination of 
uncollectibility is made, in accordance with paragraph (b)(4) of this 
section. In any instance where the Secretary determines that a school 
has failed to exercise due diligence in the collection of a loan, in 
accordance with the applicable regulatory requirements, the school will 
be required to place in the fund the full amount of principal, interest, 
and penalty charges that remains uncollected on the loan. Reimbursement 
must be made by the following June 30 or December 31, whichever is 
sooner, except that in no case will a school be required to reimburse 
the fund in less than 30 days following the Secretary's disapproval of 
the request for write-off approval.
    (ii) If the Secretary determines that a school has exercised due 
diligence in the collection of a loan, in accordance with the applicable 
regulatory requirements, or if the school determines that the loan was 
uncollectible prior to August 1, 1985, the school will be permitted to 
reduce its accounts receivable for the HPSL fund by the full amount of 
principal, interest, and penalty charges that remains uncollected on 
that loan and will not be required to return the Federal share of the 
loss to the Secretary.
    (iii) If a school does not request permission to write off an 
uncollectible loan within the required timeframe, it must reimburse the 
fund for the full amount of principal, interest, and penalty charges 
that remains uncollected on that loan. This reimbursement must be made 
by the following June 30 or December 31, whichever is sooner, except 
that in no case will a school be required to reimburse the fund in less 
than 30 days following its determination that a loan is uncollectible.
    (iv) Failure to comply with the requirement of this section will 
subject a school to the noncompliance provisions of Sec. 57.218 and the 
Department's Claims Collection regulations (45 CFR part 30), as 
appropriate.
    (5) Disclosure of taxpayer identity information. Upon written 
request by the Secretary, the Secretary of the Internal Revenue Service 
(IRS) may disclose the address of any taxpayer who has defaulted on a 
health professions student loan, for use only by officers, employees, or 
agents of the Department, to locate the defaulted borrower to collect 
the loan. Any such mailing address may be disclosed by the Secretary to

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any school from which the defaulted borrower received a health 
professions student loan, for use only by officers, employees, or agents 
of the school whose duties relate to the collection of health 
professions student loan funds, to locate the defaulted borrower to 
collect the loan. Any school which requests and obtains this address 
information must comply with the requirements of the Secretary and the 
IRS regarding the safeguarding and proper handling of this information.

(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; 49 
FR 38112, Sept. 27, 1984; 50 FR 34420, Aug. 23, 1985; 52 FR 20988, June 
3, 1987; 53 FR 6092, Feb. 29, 1988; 56 FR 19293, Apr. 26, 1991; 56 FR 
40726, Aug. 15, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 
1996]