PRIA, Government Policy, Made Personal

Summary

Schools may lend students money from a school-run loan fund, but each loan for a school year cannot be larger than the school’s stated cost of attendance for that year (tuition, other school costs, and living expenses). For students in the third or fourth year of medical or osteopathic school, the loan may be increased to cover existing balances from other loans if the student and school agree to use the extra money only for that purpose. Loans may be made only to full-time students studying for certain health-related degrees (for example, medicine, dentistry, pharmacy, optometry, podiatry, and veterinary medicine). Repayments are made in equal or graduated installments over a period the school sets between 10 and 25 years, starting one year after the student stops full-time study. Certain times are not counted in the repayment period, including up to 3 years of active military duty, up to 3 years in the Peace Corps, periods of internships or residencies and times the borrower is back in school full time, plus up to 2 years for certain related educational activities or fellowships (with timing rules). Loans are canceled if the borrower dies or becomes permanently and totally disabled. Interest is 5% per year on balances only while the loan is repayable. No collateral is normally required except when a borrower is a minor. Notes generally cannot be transferred except when the borrower moves to another participating school. Schools may charge for insurance against cancellations and may charge up to 6% for late payments (but not if paid within 60 days). Schools may require minimum payments of $40 per month. The federal Secretary can, in certain hardship or special cases, repay some or all of a loan and can try to collect defaulted loans for schools. Schools can pursue collections without time limits.

Title 42, §292r

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Amount of loan

(1)In general

Loans from a student loan fund (established under an agreement with a school under section 292q of this title) may not, subject to paragraph (2), exceed for any student for a school year (or its equivalent) the cost of attendance (including tuition, other reasonable educational expenses, and reasonable living costs) for that year at the educational institution 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 osteopathic 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 expended 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 conditions 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, doctor of optometry or an equivalent degree, or doctor of veterinary medicine or an equivalent degree.

(c)Repayment; exclusions from repayment period

Such loans shall be repayable in equal or graduated 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 pursue a full-time course of study at a school of medicine, osteopathic medicine, dentistry, pharmacy, podiatry, optometry, or veterinary medicine, 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 training program or a full-time educational activity which—

(i)is directly related to the health profession for which such borrower prepared at such school, as determined by the Secretary; and

(ii)may be engaged in by the borrower during such a two-year period which begins within twelve months after the completion of the borrower’s participation in advanced professional training described in paragraph (1)(C) or prior to the completion 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 without security or endorsement, except that if the borrower is a minor and the note or other evidence of obligation executed by him would not, under the applicable law, create a binding obligation, 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 assigned 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 to cover the costs of insuring against cancellation of liability under subsection (d).

(i)Charge with respect to late payments

Subject to regulations of the Secretary, and in accordance with this section, a school shall assess 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 evidence 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 payment

A school may provide, in accordance with regulations of the Secretary, that during the repayment period of a loan from a loan fund established pursuant to an agreement under this subpart payments of principal and interest by the borrower with respect to all the outstanding loans made to him from loan funds so established 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 student to enable him to study medicine, osteopathy, dentistry, veterinary medicine, optometry, pharmacy, or podiatry, the Secretary may undertake to repay (without liability to the applicant) all or any part of such loan, and any interest or portion thereof outstanding thereon, upon his determination, pursuant to regulations establishing criteria therefor, that the applicant—

(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, osteopathy, dentistry, veterinary medicine, optometry, 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 collect any loan which was made under this subpart, which is in default, and which was referred to the Secretary by a school with which the Secretary has an agreement under this subpart, on behalf of that school under such terms and conditions as the Secretary may prescribe (including reimbursement from the school’s student loan fund for expenses the Secretary may reasonably incur in attempting collection), but only if the school has complied with such requirements as the Secretary may specify by regulation 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 Secretary desires the institution of a civil action regarding any such loan, the Secretary shall refer the matter to the Attorney General for appropriate 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 section are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.

(2)Prohibition

Notwithstanding any other provision of Federal or State law, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, 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 borrower on such loan.

Notes & Related Subsidiaries

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 complete classification of this Act to the Code, see

Short Title

note set out under section 2501 of Title 22 and Tables.

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), substituted “the cost of attendance (including tuition, other reasonable educational expenses, and reasonable living costs) for that year at the educational institution 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 necessary” 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, substituted “repayment” for “ten-year” and, in introductory 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 student 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), redesignated 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 doctor of medicine or doctor of osteopathy, is of exceptional 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].”

§292r Loan Provisions