[Code of Federal Regulations]

[Title 42, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR57.208]



[Page 268-269]

 

                         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:



[[Page 269]]



    (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.

    (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]