Department of Education Response
to AAMC Letter Regarding Increased Unsubsidized Loan Limits
UNITED STATES DEPARTMENT OF EDUCATION THE SECRETARY
October 21, 1998
Jordan J. Cohen, M.D.
President
Association of American Medical Colleges
2450 N Street, NW
Washington, DC 20037-1127
Dear Dr. Cohen:
Thank you for your August 7 letter in which you asked the
Department of Education (the Department) to modify the criteria
that are used to determine whether health professions students
are eligible to receive increased unsubsidized Stafford Loan
amounts. Currently, the only institutions that may award the
increased unsubsidized amounts are those that made disbursements
of Health Education Assistance Loan (HEAL) Program loans during
federal fiscal year (FY) 1995 and did not withdraw from the
HEAL Program subsequent to FY 1995. You requested that the
Department allow all health professions students in the United
States to be eligible for the increased loan amounts.
In response to the phaseout of the HEAL Program, beginning
in FY 1996, the Department increased the unsubsidized loan
limits for certain health professions students with the limited
intent of assisting students who would no longer have access
to HEAL Program loans because of the phaseout. That is, the
increased unsubsidized loan limits in the William D. Ford
Federal Direct Loan (Direct Loan) and Federal Family Education
Loan (FFEL) programs are merely intended to replace loan funds
that otherwise would have been available to students through
the HEAL Program. Health professions students attending schools
that did not make any disbursements of HEAL Program loans
during FY 1995 or that withdrew from the HEAL Program subsequent
to FY 1995 are ineligible for the increased loan amounts because
they would also be ineligible for HEAL loans -- not because
of the phaseout, but because their schools did not participate
in the HEAL Program. The Department believes that this limitation
is appropriate because of the high cost of a broadening of
the eligibility requirements. For this reason, eligibility
for the additional unsubsidized amounts in the Direct Loan
and FFEL programs will continue to be limited to students
attending schools that participated in the HEAL Program during
FY 1995 and that did not withdraw from the HEAL Program after
FY 1995.
For further information, I have attached copies of four Dear
Colleague letters (GEN-96-14,
GEN-97-4,
GEN-97-14,,
and GEN-98-18).
The Department remains committed to providing access to student
loan funding for health professions students. We recognize
that this issue may need further attention as circumstances
change, and we are open to discussing possible options with
the AAMC in the future. Please contact Jeff Baker at (202)
708-9261 if you have any questions about this letter.
Yours sincerely
Richard W. Riley
Enclosures
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