How to Manage the State Loan Repayment Program Grant

• Participant's Name
• Contract Award Period
• Contract Amount: Total award amount of contract
• Practice Site: Name and physical location (not mailing address) of eligible practice site (including 9-digit zip code and HPSA identification number).
• State Funding: The state agrees to pay all or part of the principal, interest, and related expenses of the qualifying educational loans of the health professional.
  • Full-time - the maximum award amount per clinician is = $50,000 for a two-year service commitment.
    If you wish to make awards above $50,000 for a two-year full-time service commitment, the state/territory is responsible for non-federal funds of more than of the maximum award amount per clinician.
  • Half-time -  a half time award receives a maximum awards amount of $25,000 for 2 years of service.
    If you wish to make awards above $25,000 for a two-year full-time service commitment, the state/territory is responsible for non-federal funds in excess of the maximum award amount per clinician.
• Practice Agreement: In return for repayment of qualifying loans, the clinician agrees to provide primary health services of one year for each year of loan repayment, with a minimum two-year obligation, at a public or nonprofit private entity that serves a federally designated HPSA.
• Practice Hours: The clinician agrees to provide either full- or half-time clinical service at a HPSA site.
  • Full-time = no fewer than 40 hours per week for at least 45 weeks per year.
  • Half-time = between 20 and 39 hours per week for at least 45 weeks per year.
• Site Requirements: The clinician agrees to work at a service site that accepts reimbursement under Medicare, Medicaid, and the Children’s Health Insurance Program, uses a sliding fee scale, and sees all patients regardless of their ability to pay.
• Service Obligation: If the clinician fails to begin or complete service, he/she will incur a debt to the state in an amount not less than the damages that would be owed under the NHSC Loan Repayment Program (NHSC LRP) default provision.
• Waiver: The state should have a waiver provision to accommodate cases where the clinician is unable to complete the service obligation due to illness or other compelling personal circumstances that would cause undue hardship.
  The waiver provision must not be more favorable than the NHSC LRP’s waiver provision.
• Contract Cancellation: The state may cancel the obligation in the case of the clinician’s death.
• Contract Rescission: If the State makes payments in installments, the State’s legal counsel can recommend a pro-rated payment and rescind the contract with the provider if there is no longer eligible student loans due to other loan forgiveness programs (for example, PSLF).
• Contract Termination: The state may allow clinicians to request termination of their NHSC State LRP contract. The contract should clearly state the terms and conditions for termination. The state may fashion its own termination provision so long as it is not more favorable than the NHSC LRP’s termination provision.
  • An NHSC loan repayor may request termination of his/her contract by submitting a written request for termination and repaying all funds disbursed under the contract, no later than 45 days prior to the end of the fiscal year in which the contract was entered into - i.e., by August 17 of the year in which the contract was executed.

It is your responsibility to recover the amount specified in the NHSC State LRP contract’s default provision. While we do not require your state to return any of the money you recover from an NHSC State LRP defaulter, we do expect you to enforce your NHSC State LRP contracts, including the default provision.

The NHSC LRP default provision includes three components in the damages formula:

1. The amounts paid to the participant for any period not served;
2. The number of months not served, multiplied by $7,500; and
3. Interest on (A) and (B).

If the amount resulting from the above formula equals less than $31,000, then the defaulter owes $31,000. The amount owed is due to be paid within one year of breach.

You may use a breach formula in your state loan repayment program contract different than the one above; however, the amount due to the state cannot be less than what would be owed if the above formula was used. In addition, your state must require that individuals who breach owe not less than $31,000 to the state, even if its breach formula would result in a lower amount due.

We consider NHSC State LRP participants to be in default if they do not complete the period of obligated service at an eligible site in accordance with their NHSC State LRP contract, or otherwise fail to comply with the terms of the contract.

If one or more clinicians you awarded with SLRP funds breaches their contract in the fiscal year preceding a grant application, we will reduce funding in your state’s next grant award.

We do this to “recover” federal dollars.