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What are the Terms and Conditions of HEAL Loans

Until September of 1998, students who were interested in a career in the health industry could consider special funding. While the HEAL program is not longer offering new loans, it is still important to learn about the terms and conditions of HEAL loans in that there might still be some of these loans needing to be refinanced.

Under the terms and condition of HEAL loans, people interested in going to school for health and medical degrees could take out a special loan from 1978 through 1998. With this loan, students had to focus on graduate studies and specific areas of study to include pharmacy, public health, veterinary medicine, health administration, osteopathy, dentistry, podiatry, optometry, and even clinical psychology. As mentioned, most of these loans were refinanced up to 2004.

One of the terms and conditions of HEAL loans that made this such an appealing option was that the maximum interest rate that could be attached could not ever be more than the average bond equivalent rate while in a prior calendar quarter and for a period of 91 days. Additionally, the loan was designed so both the principal amount of the HEAL loan, as well as the interest, could be deferred but only during specific and allowed deferment periods. Keep in mind, HEAL loans were not made to offer any type of subsidy payment associated with interest. Therefore, the accrued interest could be compounded more often.

Another of the terms and conditions of HEAL loans was specific to the repayment of funds. These loans were established so the payment plan would begin on the first day in the tenth month once the student no longer attends classes full-time at an official HEAL college. Keep in mind, as with most types of student loans, the terms and conditions of HEAL loans did allow for a grace period. Even then, there were restrictions in that if at any time the student were to change to a residency or intern program with nine months after having graduated, repayment would be pushed out to the first day of the tenth month, but only after the student is not longer a resident or in an internship program.

Other dynamics of the terms and conditions of HEAL loans associated with how repayment was structured included the following:

•    Anyone lending money for a HEAL loan would need to give the student a repayment option for after he or she graduated, creating payments of smaller amounts during the initial portion of the repayment schedule
•    Lenders are also mandated to provide the student with a repayment schedule for an income contingent loan but again, this would apply to the first five years and the payments would be established on the person’s earned income.

Other things that were important to the terms and conditions of HEAL loans included:

•    Forbearance – An extension of time could be offered in which the student could pay the loan back or if needed, he or she could make smaller monthly payments.
•    Deferment – With this, the loan’s principal and interest could be deferred for a variety of reasons but even so, there would still have been an accrual of interest. Some of the circumstance in which deferment would occur are:
o    Student going to a HEAL school full time or completing his or her higher education using a Federal Family Education Loan Program
o    While serving full-time active duty in the military up to three years
o    Residency or intern training up to four years
o    Graduating from chiropractic school up to one year
•    Total and Permanent Disability – Under the terms and conditions of HEAL loans, for a student to be deemed totally and permanently disabled, he or she would have no longer been able to participate in gainful activity or work due to some type of medical impairment.
•    Due Diligence – Finally, the terms and conditions of HEAL loans stated that lenders were governed by certain criteria such as:
o    The student borrowing the money would need to be contacted every six months, being provided by an update on the loan
o    Every 30 to 60 days prior to the final repayment schedule, the student would receive in writing any new repayment plans if needed
o    For students behind on payments 90 days, a pre-claim assistant request would be provided
o    The three credit reporting agencies would be notified of any HEAL loans 60 days past due and more
If the loan were to become 120 days past due, the student would receive four contacts from the lender at regular intervals.

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