[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: 42CFR60.14]



[Page 327-328]

 

                         TITLE 42--PUBLIC HEALTH

 

    CHAPTER I--PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN 

                                SERVICES

 

PART 60_HEALTH EDUCATION ASSISTANCE LOAN PROGRAM--Table of Contents

 

                           Subpart C_The Loan

 

Sec. 60.14  The insurance premium.



    (a) General. (1) The Secretary insures each lender or holder for the 

losses of principal and interest it may incur in the event that a 

borrower dies; becomes totally and permanently disabled; files for 

bankruptcy under chapter 11 or 13 of the Bankruptcy Act; files for 

bankruptcy under chapter 7 of the Bankruptcy Act and files a complaint 

to determine the dischargeability of the HEAL loan; or defaults on his 

or her loan. For this insurance, the Secretary charges the lender an 

insurance premium. The insurance premium is due to the Secretary on the 

date of disbursement of the HEAL loan.

    (2) The lender may charge the borrower an amount equal to the cost 

of the insurance premium. The cost of the insurance premium may be 

charged to the borrower by the lender in the form of a one-time special 

charge with no subsequent adjustments required. The lender may bill the 

borrower separately for the insurance premium or may deduct an amount 

attributable to it from the loan proceeds before the loan is disbursed. 

In either case, the lender must clearly identify to the borrower the 

amount of the insurance premium and the method of calculation.

    (3) If the lender does not pay the insurance premium on or before 30 

days after disbursement of the loan, a late fee will be charged on a 

daily basis at the same rate as the interest rate that the lender 

charges for the HEAL loan for which the insurance premium is past due. 

The lender may not pass on this late fee to the borrower.

    (4) HEAL insurance coverage ceases to be effective if the insurance 

premium is not paid within 60 days of the disbursement of the loan.

    (5) Except in cases of error, premiums are not refundable by the 

Secretary, and need not be refunded by the lender to the borrower, even 

if the borrower graduates or withdraws from the school, defaults, dies 

or becomes totally and permanently disabled.

    (b) Rate. The rate of the insurance premium shall not exceed the 

statutory maximum. The Secretary announces changes in the rate of the 

insurance premium through a notice published in the Federal Register.

    (c) Method of calculation--(1) Student borrowers. For loans 

disbursed prior to July 22, 1986, the lender must calculate the 

insurance premium on the basis of the number of months beginning with 

the month following the month in which the loan proceeds are disbursed 

to the student borrower and ending 9 full months after the month of the 

student's anticipated date of graduation. For loans disbursed on or 

after July 22, 1986, the insurance premium shall be calculated as a one-

time flat rate on the principal of the loan at the time of disbursement.



[[Page 328]]



    (2) Non-student borrowers. For loans disbursed prior to July 22, 

1986, the lender must calculate the insurance premium for nonstudent 

borrowers on the basis of the number of months beginning with the month 

following the month in which the loan proceeds are disbursed to the 

borrower and ending at the conclusion of the month preceding the month 

in which repayment of principal is expected to begin or resume on the 

borrower's previous HEAL loans. For loans disbursed on or after July 22, 

1986, the insurance premium shall be calculated as a one-time flat rate 

on the principal of the loan at the time of disbursement.

    (3) Multiple installments. In cases where the lender disburses the 

loan in multiple installments, the insurance premium is calculated for 

each disbursement.



[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644 Aug. 28, 1986; 52 

FR 746, Jan. 8, 1987; 56 FR 42700, Aug. 29, 1991; 57 FR 28795, June 29, 

1992]