[Code of Federal Regulations]

[Title 42, Volume 1]

[Revised as of October 1, 2006]

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

[CITE: 42CFR57.205]



[Page 266-267]

 

                         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.  57.205  Health professions 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. The 

school must place all earnings into the fund but may first deduct from 

total earnings any reasonable and 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) Health professions student loans to full-time students;

    (ii) Capital distribution as provided in section 728 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 health professions 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



[[Page 267]]



that exceed the usual expenses incurred in the collection of health 

professions student loans.

    (c) Failure to comply with the requirements of this section will 

subject a school to the noncompliance provisions of Sec.  57.218 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)



[44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 56 

FR 40725, Aug. 15, 1991; 61 FR 6123, Feb. 16, 1996]