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Setup Instructions |
APR 5 1994
To: Schools and Lenders Participating in the Health Education Assistance Loan (HEAL) Program
Subject: Fiscal Year (FY)
1995 HEAL Insurance Authority Allocations by Lender and Discipline (Assuming
a $375 million appropriation)
Lender Policy Memorandum L-94-11
School Policy Memorandum S-94-10
Purpose
The purpose of this memorandum is to notify the HEAL community which lenders will receive an FY 1995 HEAL insurance authority allocation. This allocation will be distributed on October 1, 1994.
Background
During FY 1994 the Division of Student Assistance (DSA) conducted three technical assistance workshops. Two major issues surfaced regarding the HEAL allocation process: (1) Early notification of insurance authority and; (2) Greater "choice" of lenders for borrowers and schools. On December 3, 1993, the HEAL Program held a meeting with various school, lender, and association representatives to further discuss these issues and other concerns regarding the allocation of HEAL insurance authority.
Approach
On January 15, 1994, DSA solicited comments from the attendees of the December 3 meeting in a detailed memorandum regarding the FY 1995 allocation methodology. Those comments were due by January 31. The proposed methodology included ranking lenders on cost-to-the-borrower (based on the cost of a $10,000 loan over the life of the loan period) and constructing "bands" of lenders having costs within a range of $600. The fair share insurance authority for each discipline will be allocated among bands until it is exhausted. The lenders in these bands will become "qualifying lenders." We will grant the full discipline allocation request for the lowest cost bands, provided those requests do not exceed the fair share for each discipline. The final band of qualifying lenders will receive proportionate insurance allocations based on their requests.
A consensus was reached to disclose the results of the allocation methodology by approximately March 31, 1994.
Outcome
Lenders submitted their FY 1995 insurance allocation requests to the HEAL Program on March 15. Tables 1 and 2 display lender requests and rank the lenders according to the cost-to-the borrower. The $600 bands are also depicted. Allopathic and Osteopathic Medicine allocations were determined using the costs reflected in Table 1. The remaining discipline allocations are based on the costs reflected in Table 2. Table 3 displays the initial FY 1995 allocation for each lender by discipline. Approximately seventy-five percent of the allocation will be made on October 1. The remainder will be issued on an as-needed basis considering qualifying lender demand.
Thank you for participating in the development of the FY 1995 allocation methodology. Our combined efforts have resulted in lower cost loans for the borrower, while at the same time giving borrowers a greater choice of lenders.
If you have any questions regarding this policy memorandum please contact the HEAL Branch at (301) 443-1540.
Stephen J. Boehlert
Chief, HEAL Branch
Division of Student Assistance
