The NHSC LRP default provision includes three components in the damages formula:
- The amounts paid to the participant for any period not served;
- The number of months not served, multiplied by $7,500; and
- 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.