[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: 42CFR57.305]

[Page 274-275]
 
                         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 D--Nursing Student Loans
 
Sec. 57.305  Nursing student loan funds.

    (a) Funds established with Federal capital contributions. Any fund 
established by a school with Federal capital contributions will be 
accounted for separately from other funds, providing a clear audit trail 
for all transactions. At all times the fund must contain monies 
representing the institutional capital contribution. The school must at 
all times maintain all monies relating to the fund in one or more 
interest-bearing accounts or investment instruments which meet OMB 
requirements established for Federal monies held by third parties, 
except that if the school documents that the costs associated with the 
use of an interest-bearing account would exceed expected earnings, the 
school is not required to maintain these monies in an interest-bearing 
account. The school must place all earnings into the fund but may first 
deduct from total earnings any reasonable and

[[Page 275]]

customary charges incurred through the use of an interest-bearing 
account. An institution shall exercise the level of care required of a 
fiduciary with regard to these deposits and investments, and shall be 
responsible for reimbursing the fund for any losses that occur due to 
the use of investments that are not federally insured.
    (1) The Federal capital contribution fund is to be used by the 
school only for:
    (i) Nursing student loans to full-time or half-time students;
    (ii) Capital distribution as provided in section 839 of the Act or 
as agreed to by the school and the Secretary; and
    (iii) Costs of litigation, costs associated with membership in 
credit bureaus, and to the extent specifically approved by the 
Secretary, other collection costs that exceed the usual expenses 
incurred in the collection of nursing student loans.
    (2) A school must review the balance in the fund on at least a semi-
annual basis to determine whether the fund balance compared with 
projected levels of expenditures and collections exceeds its needs. A 
school in closing status must review the balance in the fund on a 
quarterly basis. Monies identified as in excess of the school's needs 
must be reported, and the Federal share returned to the Federal 
Government, by the due date of the required report which identifies the 
excess monies. The school's determination is subject to the review and 
approval of the Secretary.
    (b) Funds established with Federal capital loans. (1) Each Federal 
capital loan is subject to the terms of the promissory note executed by 
an authorized official on behalf of the borrowing school.
    (2) The Federal capital loans must be carried in a special account 
of the school, to be used by the school only for: (i) Repayments of 
principal and interest on Federal capital loans; and (ii) costs of 
litigation, costs associated with membership in credit bureaus, and, to 
the extent specifically approved by the Secretary, other collection 
costs that exceed the usual expenses incurred in the collection of 
nursing student loans.
    (c) Failure to comply with the requirements of this section will 
subject a school to the noncompliance provisions of Sec. 57.318 and the 
Department's Claims Collections regulations (45 CFR part 30), as 
appropriate.

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

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 40734, Aug. 15, 1991; 
61 FR 6123, Feb. 16, 1996]