42 U.S.C. § 292r — Loan provisions

Page 1004 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 292r (3) Definitions For purposes of this subsection: (A) The term ‘‘default’’ means the failure of a borrower of a loan made under this sub- part to— (i) make an installment payment when due; or (ii) comply with any other term of the promissory note for such loan, except that a loan made under this subpart shall not be considered to be in default if the loan is discharged in bankruptcy or if the school reasonably concludes from written contracts with the borrower that the bor- rower intends to repay the loan. (B) The term ‘‘defaulted principal amount outstanding’’ means the total amount bor- rowed from the loan fund of a school that has reached the repayment stage (minus any principal amount repaid or canceled) on loans— (i) repayable monthly and in default for at least 120 days; and (ii) repayable less frequently than monthly and in default for at least 180 days; (C) The term ‘‘grace period’’ means the pe- riod of one year beginning on the date on which the borrower ceases to pursue a full- time course of study at a school of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine; and (D) The term ‘‘matured loans’’ means the total principal amount of all loans made by a school under this subpart minus the total principal amount of loans made by such school to students who are— (i) enrolled in a full-time course of study at such school; or (ii) in their grace period. (July 1, 1944, ch. 373, title VII, § 721, as added Pub. L. 102–408, title I, § 102, Oct. 13, 1992, 106 Stat. 2011.) Editorial Notes PRIOR PROVISIONS A prior section 721 of act July 1, 1944, was classified to section 293a of this title prior to the general revision of this subchapter by Pub. L. 102–408. § 292r. Loan provisions (a) Amount of loan (1) In general Loans from a student loan fund (established under an agreement with a school under sec- tion 292q of this title) may not, subject to paragraph (2), exceed for any student for a school year (or its equivalent) the cost of at- tendance (including tuition, other reasonable educational expenses, and reasonable living costs) for that year at the educational institu- tion attended by the student (as determined by such educational institution). (2) Third and fourth years of medical school For purposes of paragraph (1), the amount of the loan may, in the case of the third or fourth year of a student at a school of medicine or os- teopathic medicine, be increased to the extent necessary to pay the balances of loans that, from sources other than the student loan fund under section 292q of this title, were made to the individual for attendance at the school. The authority to make such an increase is subject to the school and the student agreeing that such amount (as increased) will be ex- pended to pay such balances. (b) Terms and conditions Subject to section 292s of this title, any such loans shall be made on such terms and condi- tions as the school may determine, but may be made only to a student who is in need of the amount thereof to pursue a full-time course of study at the school leading to a degree of doctor of medicine, doctor of dentistry or an equivalent degree, doctor of osteopathy, bachelor of science in pharmacy or an equivalent degree, doctor of pharmacy or an equivalent degree, doctor of podiatric medicine or an equivalent degree, doc- tor of optometry or an equivalent degree, or doctor of veterinary medicine or an equivalent degree. (c) Repayment; exclusions from repayment pe- riod Such loans shall be repayable in equal or grad- uated periodic installments (with the right of the borrower to accelerate repayment) over the period of not less than 10 years nor more than 25 years, at the discretion of the institution, which begins one year after the student ceases to pur- sue a full-time course of study at a school of medicine, osteopathic medicine, dentistry, phar- macy, podiatry, optometry, or veterinary medi- cine, excluding from such period— (1) all periods— (A) not in excess of three years of active duty performed by the borrower as a member of a uniformed service; (B) not in excess of three years during which the borrower serves as a volunteer under the Peace Corps Act [22 U.S.C. 2501 et seq.]; (C) during which the borrower participates in advanced professional training, including internships and residencies; and (D) during which the borrower is pursuing a full-time course of study at such a school; and (2) a period— (A) not in excess of two years during which a borrower who is a full-time student in such a school leaves the school, with the intent to return to such school as a full-time student, in order to engage in a full-time educational activity which is directly related to the health profession for which the borrower is preparing, as determined by the Secretary; or (B) not in excess of two years during which a borrower who is a graduate of such a school is a participant in a fellowship train- ing program or a full-time educational activ- ity which— (i) is directly related to the health pro- fession for which such borrower prepared at such school, as determined by the Sec- retary; and Page 1005 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 292r 1 So in original. Probably should be ‘‘under this subpart’’. (ii) may be engaged in by the borrower during such a two-year period which be- gins within twelve months after the com- pletion of the borrower’s participation in advanced professional training described in paragraph (1)(C) or prior to the comple- tion of such borrower’s participation in such training. (d) Cancellation of liability The liability to repay the unpaid balance of such a loan and accrued interest thereon shall be canceled upon the death of the borrower, or if the Secretary determines that he has become permanently, and totally disabled. (e) Rate of interest Such loans shall bear interest, on the unpaid balance of the loan, computed only for periods for which the loan is repayable, at the rate of 5 percent per year. (f) Security or endorsement Loans shall be made under this subpart with- out security or endorsement, except that if the borrower is a minor and the note or other evi- dence of obligation executed by him would not, under the applicable law, create a binding obli- gation, either security or endorsement may be required. (g) Transferring and assigning loans No note or other evidence of a loan made under this subpart may be transferred or as- signed by the school making the loan except that, if the borrowers transfer to another school participating in the program under this subpart, such note or other evidence of a loan may be transferred to such other school. (h) Charge with respect to insurance for certain cancellations Subject to regulations of the Secretary, a school may assess a charge with respect to loans made this subpart 1 to cover the costs of insuring against cancellation of liability under sub- section (d). (i) Charge with respect to late payments Subject to regulations of the Secretary, and in accordance with this section, a school shall as- sess a charge with respect to a loan made under this subpart for failure of the borrower to pay all or any part of an installment when it is due and, in the case of a borrower who is entitled to deferment of the loan under subsection (c), for any failure to file timely and satisfactory evi- dence of such entitlement. No such charge may be made if the payment of such installment or the filing of such evidence is made within 60 days after the date on which such installment or filing is due. The amount of any such charge may not exceed an amount equal to 6 percent of the amount of such installment. The school may elect to add the amount of any such charge to the principal amount of the loan as of the first day after the day on which such installment or evidence was due, or to make the amount of the charge payable to the school not later than the due date of the next installment after receipt by the borrower of notice of the assessment of the charge. (j) Authority of schools regarding rate of pay- ment A school may provide, in accordance with reg- ulations of the Secretary, that during the repay- ment period of a loan from a loan fund estab- lished pursuant to an agreement under this sub- part payments of principal and interest by the borrower with respect to all the outstanding loans made to him from loan funds so estab- lished shall be at a rate equal to not less than $40 per month. (k) Authority regarding repayments by Secretary Upon application by a person who received, and is under an obligation to repay, any loan made to such person as a health professions stu- dent to enable him to study medicine, osteop- athy, dentistry, veterinary medicine, optom- etry, pharmacy, or podiatry, the Secretary may undertake to repay (without liability to the ap- plicant) all or any part of such loan, and any in- terest or portion thereof outstanding thereon, upon his determination, pursuant to regulations establishing criteria therefor, that the appli- cant— (1) failed to complete such studies leading to his first professional degree; (2) is in exceptionally needy circumstances; (3) is from a low-income or disadvantaged family as those terms may be defined by such regulations; and (4) has not resumed, or cannot reasonably be expected to resume, the study of medicine, os- teopathy, dentistry, veterinary medicine, op- tometry, pharmacy, or podiatric medicine, within two years following the date upon which he terminated such studies. (l) Collection efforts by Secretary The Secretary is authorized to attempt to col- lect any loan which was made under this sub- part, which is in default, and which was referred to the Secretary by a school with which the Sec- retary has an agreement under this subpart, on behalf of that school under such terms and con- ditions as the Secretary may prescribe (includ- ing reimbursement from the school’s student loan fund for expenses the Secretary may rea- sonably incur in attempting collection), but only if the school has complied with such re- quirements as the Secretary may specify by reg- ulation with respect to the collection of loans under this subpart. A loan so referred shall be treated as a debt subject to section 5514 of title 5. Amounts collected shall be deposited in the school’s student loan fund. Whenever the Sec- retary desires the institution of a civil action regarding any such loan, the Secretary shall refer the matter to the Attorney General for ap- propriate action. (m) Elimination of statute of limitation for loan collections (1) Purpose It is the purpose of this subsection to ensure that obligations to repay loans under this sec- tion are enforced without regard to any Fed- eral or State statutory, regulatory, or admin- istrative limitation on the period within which debts may be enforced. (2) Prohibition Notwithstanding any other provision of Fed- eral or State law, no limitation shall termi- Page 1006 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 292s 1 See References in Text note below. nate the period within which suit may be filed, a judgment may be enforced, or an offset, gar- nishment, or other action may be initiated or taken by a school that has an agreement with the Secretary pursuant to section 292q of this title that is seeking the repayment of the amount due from a borrower on a loan made under this subpart after the default of the bor- rower on such loan. (July 1, 1944, ch. 373, title VII, § 722, as added Pub. L. 102–408, title I, § 102, Oct. 13, 1992, 106 Stat. 2012; amended Pub. L. 103–43, title XX, § 2014(b), June 10, 1993, 107 Stat. 215; Pub. L. 105–392, title I, § 134(a), (b)(1), Nov. 13, 1998, 112 Stat. 3577, 3578; Pub. L. 117–103, div. R, § 104(2), Mar. 15, 2022, 136 Stat. 821.) Editorial Notes REFERENCES IN TEXT The Peace Corps Act, referred to in subsec. (c)(1)(B), is Pub. L. 87–293, Sept. 22, 1961, 75 Stat. 612, which is classified principally to chapter 34 (§ 2501 et seq.) of Title 22, Foreign Relations and Intercourse. For com- plete classification of this Act to the Code, see Short Title note set out under section 2501 of Title 22 and Ta- bles. PRIOR PROVISIONS A prior section 722 of act July 1, 1944, was classified to section 293b of this title prior to the general revision of this subchapter by Pub. L. 102–408. AMENDMENTS 2022—Subsec. (b). Pub. L. 117–103 substituted ‘‘to a student who is in need’’ for ‘‘to a student— ‘‘(1) who is in need’’ and struck out par. (2) which read as follows: ‘‘who, if required under section 3802 of title 50 to present himself for and submit to registration under such section, has presented himself and submitted to registration under such section.’’ 1998—Subsec. (a)(1). Pub. L. 105–392, § 134(a)(1), sub- stituted ‘‘the cost of attendance (including tuition, other reasonable educational expenses, and reasonable living costs) for that year at the educational institu- tion attended by the student (as determined by such educational institution).’’ for ‘‘the sum of— ‘‘(A) the cost of tuition for such year at such school, and ‘‘(B) $2,500.’’ Subsec. (a)(2). Pub. L. 105–392, § 134(a)(2), substituted ‘‘the amount of the loan may, in the case of the third or fourth year of a student at a school of medicine or osteopathic medicine, be increased to the extent nec- essary’’ for ‘‘the amount $2,500 may, in the case of the third or fourth year of a student at school of medicine or osteopathic medicine, be increased to the extent necessary (including such $2,500)’’. Subsec. (c). Pub. L. 105–392, § 134(a)(3), in heading, sub- stituted ‘‘repayment’’ for ‘‘ten-year’’ and, in introduc- tory provisions, substituted ‘‘period of not less than 10 years nor more than 25 years, at the discretion of the institution, which begins’’ for ‘‘ten-year period which begins’’ and ‘‘such period’’ for ‘‘such ten-year period’’. Subsec. (j). Pub. L. 105–392, § 134(a)(4), substituted ‘‘$40’’ for ‘‘$15’’. Subsec. (m). Pub. L. 105–392, § 134(b)(1), added subsec. (m). 1993—Subsec. (a). Pub. L. 103–43, § 2014(b)(1), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: ‘‘Loans from a stu- dent loan fund (established under an agreement with a school under section 292q of this title) may not exceed for any student for each school year (or its equivalent) the sum of— ‘‘(1) the cost of tuition for such year at such school, and ‘‘(2) $2,500.’’ Subsec. (b)(2), (3). Pub. L. 103–43, § 2014(b)(2), redesig- nated par. (3) as (2) and struck out former par. (2), which read as follows: ‘‘who, if pursuing a full-time course of study at the school leading to a degree of doc- tor of medicine or doctor of osteopathy, is of excep- tional financial need (as defined by regulations of the Secretary); and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–392, title I, § 134(b)(2), Nov. 13, 1998, 112 Stat. 3578, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall be effective with respect to actions pending on or after the date of enactment of this Act [Nov. 13, 1998].’’ § 292s. Medical schools and primary health care (a) Requirements for students (1) In general Subject to the provisions of this subsection, in the case of student loan funds established under section 292q of this title by schools of medicine or osteopathic medicine, each agree- ment entered into under such section with such a school shall provide (in addition to the provisions required in subsection (b) of such section) that the school will make a loan from such fund to a student only if the student agrees— (A) to enter and complete a residency training program in primary health care not later than 4 years after the date on which the student graduates from such school; and (B) to practice in such care for 10 years (including residency training in primary health care) or through the date on which the loan is repaid in full, whichever occurs first. (2) Inapplicability to certain students (A) The requirement established in para- graph (1) regarding the student loan fund of a school does not apply to a student if— (i) the first loan to the student from such fund is made before July 1, 1993; or (ii) the loan is made from— (I) a Federal capital contribution under section 292q of this title that is made from amounts appropriated under section 292t(f) 1 of this title (in this section re- ferred to as an ‘‘exempt Federal capital contribution’’); or (II) a school contribution made under section 292q of this title pursuant to such a Federal capital contribution (in this sec- tion referred to as an ‘‘exempt school con- tribution’’). (B) A Federal capital contribution under sec- tion 292q of this title may not be construed as being an exempt Federal capital contribution if the contribution was made from amounts appropriated before October 1, 1990. A school contribution under section 292q of this title may not be construed as being an exempt school contribution if the contribution was