Addition guidance on increased unsubsidized loan limits due to elimination of Heath Education Assistance Loan (HEAL) Program loans for new borrowers

To assure that your Common Manual remains current, please record this document on your LPM/LPB index, and retain it in Appendix E of your manual.

LOSFA's LPB of September 5, 1996, contained information from Dear Colleague Letter GEN-96-14, increasing unsubsidized loan limits for certain health professions students affected by restrictions placed on the HEAL Program. The U. S. Department of Education (the Department) has released information that clarifies some of the previous guidance and addresses questions received since the September Dear Colleague was issued.

Students must be enrolled full-time in order to qualify for the increased unsubsidized Federal Stafford loan limits. This policy is consistent with the Department’s intent to increase unsubsidized loan limits only for health professions students who otherwise would have borrowed under the HEAL Program, but who have lost access to HEAL Program loans because of the budgetary restrictions placed on that program. Since only full-time students would have had HEAL Program eligibility, students must meet this same standard to qualify for the increased unsubsidized Federal Stafford loan limits.

If a school disbursed HEAL Program loans during Federal Fiscal Year 1995 (October 1, 1994 through September 30, 1995), but has since withdrawn from the HEAL Program, students at that school are not eligible for increased unsubsidized Federal Stafford amounts. The increased unsubsidized loan limits are intended to assist health professions students who are ineligible for HEAL Program loans solely because of the budgetary restrictions placed on that program by current law. A school’s withdrawal from the HEAL Program would preclude all students attending that institution from borrowing HEAL loans.

Consistent with Title IV requirements, a dependent undergraduate health professions student may receive the increased unsubsidized Federal Stafford amounts only if the student’s parent is unable to borrow a Federal PLUS Loan or Direct PLUS Loan.

Although need analysis is not required (as it is under the HEAL Program), students may not borrow increased unsubsidized Federal Stafford amounts in excess of the cost of attendance minus other aid received. This is consistent with Title IV requirements.

Increased unsubsidized Stafford Loan amounts are intended to provide students with the same level of access to loan funds that they would have had under the HEAL Program. Therefore, these amounts may not exceed what students would have been eligible to borrow according to HEAL Program requirements.

The increased unsubsidized loan limits for students affected by the HEAL restrictions were authorized in the law for loans made for periods of enrollment beginning on or after July 1, 1996. Therefore, the law does not permit a school to certify unsubsidized Federal Stafford Loan applications for the increased loan limits for enrollment periods beginning earlier than July 1, 1996.

In order to provide access to the increased unsubsidized Federal Stafford Loan amounts for those few borrowers whose enrollment periods started prior to, but include July 1, 1996, the Department will permit a school to certify a loan with a loan period start date of July 1, 1996, even if that date does not correspond to the beginning of one of the school’s academic terms. However, consistent with Title IV policy, costs of attendance—other than tuition, fees, books, and supplies— must be for the loan period only.

At this time, the policy stated in GEN-96-14 has not changed. The Department is not increasing aggregate unsubsidized loan limits during the 1996-97 academic year.

For the 1997-98 academic year, the Department’s policy related to increased unsubsidized annual loan limits due to elimination of HEAL Program loans for new borrowers will remain the same as outlined above and in GEN-96-14. In addition, the Department is actively reviewing the best approach for increasing aggregate unsubsidized loan limits for the 1997-98 academic year for health professions students affected by the budgetary restrictions placed on the HEAL Program. Information concerning the Department’s policy on increased aggregate loan limits will be made available to agencies and schools as soon as possible.