Financial aid and scholarships to students may be offered only on the following bases and in accordance with State and federal requirements: A school may grant bona fide loans to worthy and needy students; Financial aid, such as work or service scholarships, may be granted, provided the duties performed are bona fide and the remuneration paid is not in excess of current local rates for comparable service; Scholarship programs shall be submitted to the Secretary for review and approval before their implementation. Funded scholarships, from sources other than the current operating budget of the school, may be granted upon the following conditions: The value, number, and source of these scholarships shall be described in the school catalog; The scholarships shall be applied for in writing by scholarship candidates and awarded by the head of the school, or the school's executive committee, on a truly competitive or merit basis. Default Management Plan. Schools whose students are eligible to participate in federal or State student loan programs shall have a default management plan to promote the prevention or reduction of student defaults on federal or State student loans. Student Loans and Financial Aid. Student loans or other financial aid funds received from federal, State, or local governments or administered under the Federal Student Financial Assistance Programs governed by Title IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et seq., as amended, shall be collected and applied in the manner dictated by the applicable federal, State, or local statutes and regulations. Student loans or other financial aid funds received from private entities including, but not limited to, banks, financing companies, credit card companies, and other lending sources shall be collected or disbursed in the following manner: Loans or other financing payments for amounts not greater than $5,000 may be disbursed as a single disbursement, regardless of program length; Loans or other financing payments for amounts greater than $5,000 for a program that is less than 6 months shall have at least two equal disbursements as follows: 1/2 of the amount released initially; and The remainder released halfway through the length of the program; Loans or other financing payments for amounts greater than $5,000 for a program that is at least 6 months but less than 12 months shall have at least three equal disbursements as follows: 1/3 of the amount released initially; The second disbursement released 1/3 of the way through the program; and The remainder released 2/3 of the way through the length of the program; and Loans or other financing payments for amounts greater than $5,000 for a program that is at least 12 months in length shall have at least four equal disbursements as follows: 1/4 of the amount released initially; The second disbursement released 1/4 of the way through the program; The third disbursement released halfway through the program; and The remainder released 3/4 of the way through the program. A school may not enter into any contract or agreement with, or receive any money from, private entities including, but not limited to, banks, financing companies, credit card companies, and any other private lending sources, unless the private entity has a disbursement policy that, at a minimum, meets the requirements of §D(2) of this regulation.