Increased Unsubsidized Stafford
Loan Limits for Health Professions Students
Current Status
The Department of Education issued a "Dear Colleague"
letter (GEN-99-21)
expanding the institutional eligibility to award increased
unsubsidized loan amounts to all health professions schools
in disciplines that were eligible for the HEAL program, regardless
of the school's previous participation in HEAL. Health professions
students may now borrow up to $38,500 per year in federal
Stafford Loans ($8,500 subsidized, $30,000 unsubsidized).
The new guidance is effective for any loan period that begins
after May 1, 1999.
Background
The Omnibus Consolidated Rescissions and Appropriations Act
of 1996 authorized the Secretary of Education to provide increased
loan limits for unsubsidized loans made under the Federal
Family Education Loan (FFEL) Program and William D. Ford Direct
Loan (Direct Loan) Program to students engaged in specialized
training requiring exceptionally high costs of education.
In an August 1996 "Dear Colleague" letter (GEN-96-14),
the Department of Education interpreted this provision to
apply to health professions students that would otherwise
borrow under the Health Education Assistance Loan (HEAL) program,
but were unable because the program was targeted for phaseout.
Instead of the normal $18,500 ($8,500 subsidized, $10,000
unsubsidized), eligible borrowers at eligible institutions
can receive up to an additional $20,000 in unsubsidized federal
loans, for a total of $38,500 per year.
The increased unsubsidized loan limits were intended to assist
health professions students who became ineligible for the
HEAL program solely because of budgetary restraints placed
on the program due to the phaseout. Therefore, only students
enrolled at schools that actively participated in the HEAL
program (i.e., made at least one HEAL disbursement) in FY
1995 were eligible for the increased amounts. Subsequent guidance
in the form of a Direct Loan Bulletin (DLB-97-1)
from the Department of Education also required that schools
must not have officially withdrawn, or been terminated, from
the HEAL program after October 1, 1995, in order to certify
loans at the increased limits. Eligibility was limited to
these schools because, the Department argued, students at
these schools were unable to receive HEAL loans solely because
of the phaseout, rather than because their schools chose not
to participate in the program.
Originally, the authorization for the increased unsubsidized
loan limits was limited to loans for the 1996-97 academic
year. This authority was subsequently extended to the 1997-98
(DLB-97-1)
and 1998-99 (GEN-98-18)
academic years. In February 1999, the Department released
a "Dear Colleague" (GEN-99-7)
letter extending the eligibility requirements indefinitely.
In December 1997, that the Department issued guidance (GEN-97-14)
allowing for a corresponding increase in aggregate unsubsidized
loan limits to a total of $189,125 minus the aggregate amount
of the borrower's subsidized loans.
Further guidance from the Department in August 1998 (GEN-98-18)
allowed eligible schools to certify loans at the increased
limits for former HEAL borrowers because the insurance authority
for the HEAL program was rapidly being depleted. Former HEAL
borrowers may not also accept a HEAL disbursement during the
same loan period.
In July 1999, the Department issued a "Dear Colleague"
(GEN-99-21)
letter expanding the institutional eligibility to award increased
unsubsidized loan amounts to all health professions schools
in disciplines that were previously eligible for the HEAL
program regardless of the school's actual participation in
the HEAL program. In its analysis, the Department concluded
that "it is not fair to health professions students to
base their maximum loan amount on their school's former participation
in a program which no longer provides any loans." The
increased authority is effective for any loan period beginning
after May 1, 1999 and is limited to accredited programs in
the 11 disciplines (allopathic medicine, osteopathic medicine,
dentistry, veterinary medicine, optometry, podiatric medicine,
pharmacy, public health, chiropractic medicine, health administration
graduate programs, and clinical psychology) included under
the HEAL program.
AAMC Action
At a regional hearing on the reauthorization of the Higher
Education Act in Boston in December 1996, the AAMC advocated
for all allopathic medical schools to have access to the increased
loan limits regardless of previous institutional HEAL participation.
On August 7, 1998, AAMC President Jordan J. Cohen, M.D., sent
a letter to Secretary of Education Richard Riley requesting
that eligibility for the increased unsubsidized loan limits
be expanded to include all medical students, including those
at more than 20 AAMC member institutions that are currently
not eligible under the Department's temporary provisions.
In an October 21, 1998, response, Secretary Riley restated
the Department's reasons for the limited eligibility and argued
that "this limitation was appropriate because of the
high cost of a broadening of the eligibility requirements."
In the wake of the reauthorization of loan programs under
Title VII of the Public Health Service Act, which included
the deauthorization of the HEAL program, Dr. Cohen reiterated
his concerns to Secretary Riley in a June 1, 1999, letter.
Dr. Cohen again asked the Department to reconsider the institutional
eligibility standards for the additional unsubsidized Stafford
loan program and offered the AAMC's assistance in exploring
possible options.
Contacts
Jonathan Fishburn, Director, Research, Education and Veterans' Legislative Affairs
AAMC Office of Governmental Relations
jfishburn@aamc.org
(202) 828-0525
|
