42 U.S.C. § 292g — Risk-based premiums

Page 998 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 292g (1) read as follows: ‘‘after the expiration of the five- year period beginning on the first date, as specified in subparagraphs (B) and (C) of section 292d(a)(2) of this title, when repayment of such loan is required;’’. Subsec. (j). Pub. L. 103–43, § 2014(a)(2)(B), added sub- sec. (j). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–392, title I, § 142(c), Nov. 13, 1998, 112 Stat. 3581, provided that: ‘‘The amendments made by sub- sections (a) and (b) [amending this section] shall apply with respect to loans submitted to the Secretary for payment on or after the first day of the sixth month that begins after the date of enactment of this Act [Nov. 13, 1998].’’ Pub. L. 105–392, title I, § 144(b), Nov. 13, 1998, 112 Stat. 3581, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to any loan insured under the authority of subpart I of part A of title VII of the Public Health Service Act (42 U.S.C. 292 et seq.) that is listed or scheduled by the debtor in a case under title XI, United States Code [Title 11, Bankruptcy], filed— ‘‘(1) on or after the date of enactment of this Act [Nov. 13, 1998]; or ‘‘(2) prior to such date of enactment in which a dis- charge has not been granted.’’ § 292g. Risk-based premiums (a) Authority With respect to a loan made under this sub- part on or after January 1, 1993, the Secretary, in accordance with subsection (b), shall assess a risk-based premium on an eligible borrower and, if required under this section, an eligible insti- tution that is based on the default rate of the el- igible institution involved (as defined in section 292o of this title). (b) Assessment of premium Except as provided in subsection (d)(2), the risk-based premium to be assessed under sub- section (a) shall be as follows: (1) Low-risk rate With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of not to ex- ceed five percent, such borrower shall be as- sessed a risk-based premium in an amount equal to 6 percent of the principal amount of the loan. (2) Medium-risk rate (A) In general With respect to an eligible borrower seek- ing to obtain a loan for attendance at an eli- gible institution that has a default rate of in excess of five percent but not to exceed 10 percent— (i) such borrower shall be assessed a risk- based premium in an amount equal to 8 percent of the principal amount of the loan; and (ii) such institution shall be assessed a risk-based premium in an amount equal to 5 percent of the principal amount of the loan. (B) Default management plan An institution of the type described in sub- paragraph (A) shall prepare and submit to the Secretary for approval, an annual de- fault management plan, that shall specify the detailed short-term and long-term proce- dures that such institution will have in place to minimize defaults on loans to bor- rowers under this subpart. Under such plan the institution shall, among other measures, provide an exit interview to all borrowers that includes information concerning repay- ment schedules, loan deferments, forbear- ance, and the consequences of default. (3) High-risk rate (A) In general With respect to an eligible borrower seek- ing to obtain a loan for attendance at an eli- gible institution that has a default rate of in excess of 10 percent but not to exceed 20 per- cent— (i) such borrower shall be assessed a risk- based premium in an amount equal to 8 percent of the principal amount of the loan; and (ii) such institution shall be assessed a risk-based premium in an amount equal to 10 percent of the principal amount of the loan. (B) Default management plan An institution of the type described in sub- paragraph (A) shall prepare and submit to the Secretary for approval a plan that meets the requirements of paragraph (2)(B). (4) Ineligibility An individual shall not be eligible to obtain a loan under this subpart for attendance at an institution that has a default rate in excess of 20 percent. (c) Reduction of risk-based premium Lenders shall reduce by 50 percent the risk- based premium to eligible borrowers if a credit worthy parent or other responsible party co- signs the loan note. (d) Administrative waivers (1) Hearing The Secretary shall afford an institution not less than one hearing, and may consider miti- gating circumstances, prior to making such institution ineligible for participation in the program under this subpart. (2) Exceptions In carrying out this section with respect to an institution, the Secretary may grant an in- stitution a waiver of requirements of para- graphs (2) through (4) of subsection (b) if the Secretary determines that the default rate for such institution is not an accurate indicator because the volume of the loans under this subpart made by such institution has been in- sufficient. (3) Transition for certain institutions During the 3-year period beginning on Octo- ber 13, 1992— (A) subsection (b)(4) shall not apply with respect to any eligible institution that is a Historically Black College or University; and (B) any such institution that has a default rate in excess of 20 percent, and any eligible Page 999 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 292h borrower seeking a loan for attendance at the institution, shall be subject to sub- section (b)(3) to the same extent and in the same manner as eligible institutions and borrowers described in such subsection. (e) Payoff to reduce risk category An institution may pay off the outstanding principal and interest owed by the borrowers of such institution who have defaulted on loans made under this subpart in order to reduce the risk category of the institution. (July 1, 1944, ch. 373, title VII, § 708, as added Pub. L. 102–408, title I, § 102, Oct. 13, 1992, 106 Stat. 2004.) Editorial Notes PRIOR PROVISIONS A prior section 292g, act July 1, 1944, ch. 373, title VII, § 707, as added Oct. 12, 1976, Pub. L. 94–484, title II, § 205, 90 Stat. 2249; amended Aug. 1, 1977, Pub. L. 95–83, title III, § 307(r), 91 Stat. 395, related to delegation of author- ity by the Secretary, prior to the general revision of this subchapter by Pub. L. 102–408. Another prior section 292g, act July 1, 1944, ch. 373, title VII, § 708, as added July 30, 1956, ch. 779, § 2, 70 Stat. 720; amended Oct. 5, 1961, Pub. L. 87–395, § 8(d), 75 Stat. 827; Sept. 24, 1963, Pub. L. 88–129, § 2(a), 77 Stat. 164, pro- hibited Federal interference with administration of in- stitutions where grants were made for construction of health research facilities, prior to repeal by Pub. L. 94–484, title II, § 201(a), Oct. 12, 1976, 90 Stat. 2246. A prior section 708 of act July 1, 1944, was classified to section 292h of this title prior to the general revision of this subchapter by Pub. L. 102–408. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Jan. 1, 1993, and until such date, former section 294e(c) of this title, as in effect on the day before Oct. 13, 1992, to continue in effect in lieu of this section, see section 103 of Pub. L. 102–408, set out as a note under section 292 of this title. § 292h. Office for Health Education Assistance Loan Default Reduction (a) Establishment The Secretary shall establish, within the Divi- sion of Student Assistance of the Bureau of Health Professions, an office to be known as the Office for Health Education Assistance Loan De- fault Reduction (in this section referred to as the ‘‘Office’’). (b) Purpose and functions It shall be the purpose of the Office to achieve a reduction in the number and amounts of de- faults on loans guaranteed under this subpart. In carrying out such purpose the Office shall— (1) conduct analytical and evaluative studies concerning loans and loan defaults; (2) carry out activities designed to reduce loan defaults; (3) respond to special circumstances that may exist in the financial lending environ- ment that may lead to loan defaults; (4) coordinate with other Federal entities that are involved with student loan programs, including— (A) with respect to the Department of Edu- cation, in the development of a single stu- dent loan application form, a single student loan deferment form, a single disability form, and a central student loan database; and (B) with respect to the Department of Jus- tice, in the recovery of payments from health professionals who have defaulted on loans guaranteed under this subpart; and (5) provide technical assistance to bor- rowers, lenders, holders, and institutions con- cerning deferments and collection activities. (c) Additional duties In conjunction with the report submitted under subsection (b), the Office shall— (1) compile, and publish in the Federal Reg- ister, a list of the borrowers who are in default under this subpart; and (2) send the report and notices of default with respect to these borrowers to relevant Federal agencies and to schools, school asso- ciations, professional and specialty associa- tions, State licensing boards, hospitals with which such borrowers may be associated, and any other relevant organizations. (d) Allocation of funds for Office In the case of amounts reserved under section 292i(a)(2)(B) of this title for obligation under this subsection, the Secretary may obligate the amounts for the purpose of administering the Office, including 7 full-time equivalent employ- ment positions for such Office. With respect to such purpose, amounts made available under the preceding sentence are in addition to amounts made available to the Health Resources and Services Administration for program manage- ment for the fiscal year involved. With respect to such employment positions, the positions are in addition to the number of full-time equiva- lent employment positions that otherwise is au- thorized for the Department of Health and Human Services for the fiscal year involved. (July 1, 1944, ch. 373, title VII, § 709, as added Pub. L. 102–408, title I, § 102, Oct. 13, 1992, 106 Stat. 2006; amended Pub. L. 105–392, title I, § 141(b), Nov. 13, 1998, 112 Stat. 3579.) Editorial Notes PRIOR PROVISIONS A prior section 292h, act July 1, 1944, ch. 373, title VII, § 708, as added Oct. 12, 1976, Pub. L. 94–484, title II, § 206, 90 Stat. 2250; amended Aug. 1, 1977, Pub. L. 95–83, title III, § 307(a), 91 Stat. 389; Nov. 9, 1978, Pub. L. 95–623, § 12(a), 92 Stat. 3457; Dec. 11, 1980, Pub. L. 96–511, § 4(c), 94 Stat. 2826; Aug. 13, 1981, Pub. L. 97–35, title XXVII, § 2719, 95 Stat. 914; Oct. 22, 1985, Pub. L. 99–129, title II, § 220(b), 99 Stat. 543; Nov. 4, 1988, Pub. L. 100–607, title VI, §§ 616(c)(1), 626, 102 Stat. 3139, 3144; Nov. 18, 1988, Pub. L. 100–690, title II, § 2615(a), 102 Stat. 4239; Aug. 16, 1989, Pub. L. 101–93, § 5(m), 103 Stat. 613, related to health professions data, prior to the general revision of this subchapter by Pub. L. 102–408. See section 295k of this title. Another prior section 292h, act July 1, 1944, ch. 373, title VII, § 709, as added July 30, 1956, ch. 779, § 2, 70 Stat. 720; amended Sept. 24, 1963, Pub. L. 88–129, § 2(a), 77 Stat. 164; Nov. 18, 1971, Pub. L. 92–157, title I, § 102(k)(2)(C), 85 Stat. 437, provided for issuance of general, administra- tive, and other regulations for implementation of grants for construction of health research facilities, prior to repeal by Pub. L. 94–484, title II, § 201(a), Oct. 12, 1976, 90 Stat. 2246.