Federal Student Aid - IFAP
   
DCLPublicationDate: 8/1/96
DCLID: GEN-96-14
AwardYear:
Summary: Increased Unsubsidized Loan Limits for Certain Health Professions Students


August, 1996

GEN-96-14



SUBJECT: Increased Unsubsidized Loan Limits for Certain Health
Professions Students

Dear Colleague:

Section 514 of the Omnibus Consolidated Rescissions and
Appropriations Act of 1996, Pub.L. 104-134, amended section
428H(d)(2) of the Higher Education Act of 1965, as amended
(HEA), to authorize the Secretary of Education to increase loan
limits for unsubsidized loans to students made under the Federal
Family Education Loan (FFEL) Program and the William D. Ford
Federal Direct Loan (Direct Loan) Program. This authority
authorizes such increases "in cases where the Secretary determines
that a higher amount is warranted in order to carry out the purpose of
this part with respect to students engaged in specialized training
requiring exceptionally high costs of education. . . ." The new
authority is effective for loans made for periods of enrollment that
begin on or after July 1, 1996.

The Department understands that this change to the HEA was
included to address the needs of students who would otherwise
borrow under the Health Education Assistance Loan (HEAL)
Program. Under present law, borrowers who received a HEAL loan
prior to October 1, 1995, may continue to participate in the HEAL
Program until they complete their program. Students who had not
borrowed a HEAL loan prior to October 1, 1995, are not eligible to
borrow under that program.

In order to assist health professions students who cannot borrow
under the HEAL Program because of the budgetary restrictions
placed on that program, the Secretary is increasing annual loan limits
under the Unsubsidized Stafford Loan and Direct Unsubsidized Loan
programs for those students only, as long as they would have been
eligible and are now not eligible for assistance under the HEAL
program and attend certain schools that actively participate in the
HEAL Program. This authority is effective for loan periods
beginning on or after July 1, 1996. The Department will later
consider whether to extend this authority to subsequent loan periods.
For purposes of determining if a school can award unsubsidized
loans in excess of current maximums to these students,, a school
must have made disbursements of HEAL Program loans during
Federal Fiscal Year 1995 (October 1, 1994 through
September 30, 1995).

Increased Unsubsidized Loan Limits for Certain Health Professions
Students
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For purposes of implementing this authority, a HEAL school is
defined on a discipline-specific basis, in accordance with the HEAL
statute. For example, if University A School of Medicine had
students who received HEAL disbursements in FY 1995, but
University A School of Dentistry did not have any students who
received HEAL disbursements in FY 1995, University A School of
Medicine could increase the amount of its Unsubsidized Stafford or
Direct Loans under this authority, but University A School of
Dentistry could not. Also, if a school has more than one campus
(e.g., University A East and University A West), only those
campuses with students who received HEAL disbursements in
FY 1995 would be authorized to use the increased loan limits.

When determining the amount of supplementary unsubsidized loans
an eligible student may receive, participating schools must use the
current HEAL Program and Discipline loan limits as provided for in
Section 703(a) of the Public Health Act and as described in the
Department of Health and Human Services Student Financial Aid
Guidelines Notebook at Section 104.3.2. However, unlike in HEAL,
there is no need analysis test required for these extra loan amounts.
Regular unsubsidized loan eligibility rules will apply to these extra
funds up to the HEAL limits. Finally, the Secretary is not, at this
time, increasing aggregate loan limits in either the FFEL or Direct
Loan programs.

Please note, students that remain eligible to receive a HEAL Program
loan (those that had borrowed under the HEAL program prior to
October 1, 1995) may not receive Unsubsidized Stafford or Direct
Unsubsidized loans above the current annual maximum of $18,500
less any subsidized amounts borrowed.

Schools may use the current Direct Loan Promissory note and the
current FFELP Application/Promissory Note for these increased loan
amounts. Schools that participate in the Direct Loan program will
soon receive instructions on how to originate loans with the higher
limits. Schools participating in the FFEL Program will be contacted
by their guaranty agency(ies) with advice as to procedures they will
implement to process loans with the increased amounts.

If you have any questions about the guidance provided in this letter
please contact Jeff Baker, Director of Policy Development. Jeff can
be reached by phone at (202) 708-9261 or by email at
jeff_baker@ed.gov.



Increased Unsubsidized Loan Limits for Certain Health Professions
Students
page 3


Thank you for your cooperation as we work to provide health
professions students with continued access to Federal student
assistance.

Sincerely,


Elizabeth M. Hicks
Deputy Assistant Secretary for
Student Financial Assistance Programs