House Bill text for HB0800

HOUSE BILL 800

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

Luciano “Lucky” Varela

AN ACT

RELATING TO HIGHER EDUCATION; REDUCING THE PENALTY FOR DEFAULTING ON A STUDENT LOAN FOR SERVICE; RECONCILING MULTIPLE AMENDMENTS TO THREE SECTIONS OF LAW IN LAWS 2005.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 21-22-6 NMSA 1978 (being Laws 1975, Chapter 244, Section 6, as amended by Laws 2005, Chapter 321, Section 2 and by Laws 2005, Chapter 323, Section 1) is amended to read:

"21-22-6. MEDICAL STUDENT LOANS--CONTRACT TERMS--REPAYMENT.--

A. Each applicant who is approved for a loan by the [commission] higher education department may be granted a loan, in such amounts and for such periods as determined by the [commission] department, with which to defray expenses incurred in obtaining a medical education at any reputable and accredited medical school in the United States if the applicant files with the [commission] department a declaration of [his] intent to practice [his profession] as a licensed physician or physician assistant in areas of New Mexico designated as not being adequately served by medical practitioners.

B. The loans shall not exceed the necessary expenses incurred while attending a medical school or college and shall bear interest at the rate of:

(1) eighteen percent per year if the student completes [his] the student's medical education and no portion of the principal and interest is forgiven pursuant to Subsection F of this section; and

(2) seven percent per year in all other cases.

C. Loans made pursuant to the Medical Student Loan for Service Act shall not accrue interest until the department:

(1) [the commission] determines the loan recipient has terminated the recipient's medical education prior to completion;

(2) [the commission] determines the loan recipient has failed to fulfill the recipient's obligation to serve in a health professional shortage area; or

(3) [the commission] cancels a contract between a student and the [commission] department pursuant to Section 21-22-9 NMSA 1978.

D. The loan shall be evidenced by a contract between the student and the [commission] department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of a medical education and shall be conditioned upon the repayment of the loan to the state over a period established by the [commission] department in consultation with the student after completion of medical school and any period of internship or residency required to complete the student's education.

E. Loans made to students who fail to complete their medical education shall become due immediately upon termination of their medical education. The [commission] department, in consultation with the student, shall establish terms of repayment, alternate service or cancellation terms.

F. The contract shall provide that the [commission] department shall forgive a portion of the loan for each year that a loan recipient practices [his profession] as a licensed physician or physician assistant in areas approved by the [commission] department as not being adequately served by medical practitioners. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice in a designated health professional shortage area. Upon completion of service, one hundred percent of the loan shall be forgiven;

(2) loan terms of two years shall require one year of practice in a designated health professional shortage area for each year of the loan. Upon completion of the first year of service, fifty percent of the loan shall be forgiven. Upon completion of the second year of service, the remainder of the loan shall be forgiven; and

(3) for loan terms of three years or more, forty percent of the loan shall be forgiven upon completion of the first year of service in a designated health professional shortage area, thirty percent of the loan shall be forgiven upon completion of the second year of service and the remainder of the loan shall be forgiven upon completion of the third year of service.

G. Recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department.

H. If a loan recipient completes [his] a professional education and does not serve in a health professional shortage area, the [commission] department shall assess a penalty of up to three times the principal due, plus [eighteen] seven percent interest, unless the [commission] department finds acceptable extenuating circumstances for why the student cannot serve. If the [commission] department does not find acceptable extenuating circumstances for the student's failure to carry out [his] the declared intent to serve in a health professional shortage area in the state, the [commission] department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this subsection.

I. The [commission] department shall adopt [regulations] rules to implement the provisions of this section. The [regulations] rules may provide for the repayment of medical student loans in annual or other periodic installments."

Section 2. Section 21-22A-6 NMSA 1978 (being Laws 1978, Chapter 109, Section 6, as amended by Laws 2005, Chapter 321, Section 4 and by Laws 2005, Chapter 323, Section 2) is amended to read:

"21-22A-6. OSTEOPATHIC MEDICAL STUDENT LOANS--CONTRACT TERMS--REPAYMENT.--

A. Each applicant who is approved for a loan by the [commission] higher education department may be granted a loan, in such amounts and for such periods as determined by the [commission] department, with which to defray expenses incurred in obtaining an osteopathic medical education at any reputable and accredited osteopathic medical school in the United States if the applicant files with the [commission] department a declaration of [his] intent to practice [his profession] as a licensed osteopathic physician or osteopathic physician's assistant in areas of New Mexico designated as not being adequately served by osteopathic medical practitioners.

B. The loan shall not exceed the necessary expenses incurred while attending an osteopathic medical school or college or osteopathic physician's assistant program and shall bear interest at the rate of:

(1) eighteen percent per year if the [student] loan recipient completes [his] an osteopathic medical education and no portion of the principal and interest is forgiven pursuant to Subsection F of this section; and

(2) seven percent per year in all other cases.

C. Loans made pursuant to the Osteopathic Medical Student Loan for Service Act shall not accrue interest until the department:

(1) [the commission] determines the loan recipient has terminated the recipient's osteopathic medical education prior to completion;

(2) [the commission] determines the loan recipient has failed to fulfill the recipient's obligation to serve in an area of New Mexico designated as not being adequately served by osteopathic medical practitioners; or

(3) [the commission] cancels a contract between a [student] loan recipient and the [commission] department pursuant to Section 21-22A-9 NMSA 1978.

D. The loan shall be evidenced by a contract between the [student] loan recipient and the [commission] department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of an osteopathic medical education and shall be conditioned upon the repayment of the loan to the state over a period established by the [commission] department in consultation with the [student] loan recipient after the completion of osteopathic medical school or an osteopathic physician's assistant program and any period of internship or residency required to complete the [students] loan recipient's education.

E. Loans made to [students] loan recipients who fail to complete their osteopathic medical education shall become due immediately upon termination of their osteopathic medical education. The [commission] department, in consultation with the [student] loan recipient, shall establish terms of repayment, alternate service or cancellation terms.

F. The contract shall provide that the [commission] department shall forgive a portion of the loan for each year that a loan recipient practices [his profession] as a licensed osteopathic physician or osteopathic physician's assistant in areas approved by the [commission] department as not being adequately served by osteopathic medical practitioners. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice in a designated health professional shortage area. Upon completion of service, one hundred percent of the loan shall be forgiven;

G. Loan recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department.

H. If a loan recipient completes [his] a professional education and does not serve in a health professional shortage area, the [commission] department shall assess a penalty of up to three times the principal due, plus [eighteen] seven percent interest, unless the [commission] department finds acceptable extenuating circumstances for why the [student] loan recipient cannot serve. If the [commission] department does not find acceptable extenuating circumstances for the [student's] loan recipient's failure to carry out [his] the declared intent to serve in a health professional shortage area in the state, the [commission] department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this section.

I. The [commission] department shall adopt [regulations] rules to implement the provisions of this section. The [regulations] rules may provide for the repayment of osteopathic medical student loans in annual or other periodic installments."

Section 3. Section 21-22C-6 NMSA 1978 (being Laws 1994, Chapter 57, Section 8, as amended by Laws 2005, Chapter 321, Section 9 and by Laws 2005, Chapter 323, Section 4) is amended to read:

"21-22C-6. ALLIED HEALTH STUDENT LOANS--CONTRACT

TERMS--REPAYMENT.--

A. Prior to receiving a loan, each applicant approved for a loan shall file with the [commission] higher education department a declaration of intent to practice as a licensed allied health professional in areas of New Mexico designated as underserved.

B. The loans shall not exceed the necessary expenses incurred while attending an allied health profession program and shall bear interest at the rate of:

(1) eighteen percent per year if the [student] loan recipient completes [his] an allied health profession education and no portion of the principal and interest is forgiven pursuant to Subsection F of this section; and

(2) seven percent per year in all other cases.

C. Loans made pursuant to the Allied Health Student Loan for Service Act shall not accrue interest until the department:

(1) [the commission] determines the loan recipient has terminated the recipient's allied health profession education prior to completion;

(2) [the commission] determines the loan recipient has failed to fulfill the recipient's obligation to practice as a licensed allied health professional in areas of New Mexico designated as underserved; or

(3) [the commission] cancels a contract between a [student] loan recipient and the [commission] department pursuant to Section 21-22C-9 NMSA 1978.

D. The loan shall be evidenced by a contract between the [student] loan recipient and the [commission] department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of an allied health profession education and shall be conditioned on the repayment of the loan to the state over a period negotiated between the [student] loan recipient and the [commission] department after completion of an allied health profession education.

E. Loans made to [students] loan recipients who fail to complete their allied health profession education shall become due immediately upon termination of that education. The [commission] department, in consultation with the [student] loan recipient, shall establish repayment terms, alternate service or cancellation terms.

F. The contract shall provide that the [commission] department shall forgive a portion of the loan for each year that a loan recipient practices an allied health profession in areas approved by the [commission] department. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice in a designated health professional shortage area. Upon completion of service, one hundred percent of the loan shall be forgiven;

(3) for loan terms of three years or more, forty percent of the loan shall be forgiven upon completion of the first year of service, thirty percent of the loan shall be forgiven upon completion of the second year of service and the remainder of the loan shall be forgiven upon completion of the third year of service.

G. Loan recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department.

H. If a loan recipient completes [his] a professional education and does not serve the required number of years in a health professional shortage area, the [commission] department shall assess a penalty of up to three times the principal due, plus [eighteen] seven percent interest, unless the [commission] department finds acceptable extenuating circumstances for why the student cannot serve. If the [commission] department does not find acceptable extenuating circumstances for the [student's] loan recipient's failure to carry out [his] the declared intent to serve in a health professional shortage area in the state, the [commission] department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this subsection.

I. The [commission] department shall adopt [regulations] rules to implement the provisions of this section. The [regulations] rules may provide for the repayment of allied health student loans in annual or other periodic installments."

Section 4. Section 21-22D-6 NMSA 1978 (being Laws 1995, Chapter 144, Section 21, as amended) is amended to read:

"21-22D-6. AWARD CRITERIA--CONTRACT TERMS--PAYMENT.--

A. Prior to receiving an award, the health professional shall file with the [commission] higher education department a declaration of intent to practice as a health professional in areas of New Mexico designated as underserved by the [commission] department.

B. Award criteria shall provide that:

(1) amounts shall be dependent upon the location of the practice, the applicant's total health professional education indebtedness and characteristics of the practice;

(2) preference in making awards shall be to [individuals] persons who have graduated from a New Mexico public post-secondary educational institution;

(3) recruitment awards shall be made to eligible participants who agree to relocate to an approved designated area;

(4) highest priority shall be given to participants in practices in which health profession vacancies are difficult to fill, practices that require after hours call at least every other night and practices that have heavy obstetrical responsibilities;

(5) award amounts may be modified based upon available funding or other special circumstances; and

(6) an award shall not exceed the total medical education indebtedness of any participant.

C. The following education debts are not eligible for repayment pursuant to the Health Professional Loan Repayment Act:

(1) amounts incurred as a result of participation in state loan-for-service programs or other state programs whose purpose states that service be provided in exchange for financial assistance;

(2) scholarships that have a service component or obligation;

(3) personal loans from friends or relatives; and

(4) loans that exceed individual standard school expense levels.

D. The loan repayment award shall be evidenced by a contract between the health professional and the [commission] department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum to the health professional's debtors and shall state the obligations of the health professional under the program, including a minimum two-year period of service, quarterly reporting requirements and other policies established by the [commission] department.

E. Loan recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department.

F. If a health professional does not comply with the terms of the contract, the [commission] department shall assess a penalty of up to three times the amount of award disbursed plus [eighteen] seven percent interest, unless the [commission] department finds acceptable extenuating circumstances for why the health professional cannot serve or comply with the terms of the contract. If the [commission] department does not find acceptable extenuating circumstances for the health professional's failure to comply with the contract, the [commission] department shall require immediate repayment plus the amount of the penalty.

G. The [commission] department shall adopt [regulations] rules to implement the provisions of this section. The [regulations] rules may provide for the disbursement of loan repayment awards to the lenders of health professionals in annual or other periodic installments."

Section 5. Section 21-22E-6 NMSA 1978 (being Laws 2001, Chapter 288, Section 6, as amended) is amended to read:

"21-22E-6. TEACHER LOANS--CONTRACT TERMS--REPAYMENT.--

A. Each applicant who is approved for a loan by the [commission] higher education department may be granted a loan in such amounts and for such periods as the [commission] department determines. The loan shall not exceed the necessary expenses incurred while attending a teacher preparation program.

B. A loan shall bear interest at the rate of:

(1) eighteen percent per year if the loan recipient completes [his] a teacher preparation program and no portion of the principal and interest is forgiven pursuant to Subsection F of this section; or

(2) seven percent per year in all other cases.

C. Loans made pursuant to the Teacher Loan for Service Act shall not accrue interest until the department:

(1) [the commission] determines the loan recipient has terminated the recipient's teacher preparation program prior to completion;

(2) [the commission] determines the loan recipient has failed to fulfill the recipient's obligation to practice as a licensed teacher in New Mexico; or

(3) [the commission] cancels a contract between a student and the [commission] department pursuant to Section 21-22E-9 NMSA 1978.

D. The loan shall be evidenced by a contract between the loan recipient and the [commission] department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of a teacher preparation program and shall be conditioned on the repayment of the loan to the state over a period established by the [commission] department after the completion of the teacher preparation program and any postgraduate study or internship required to complete the loan recipient's education.

E. A loan made to a recipient who fails to complete [his] a teacher preparation program shall become due immediately upon termination of [his] the teacher preparation program. The [commission] department, in consultation with the loan recipient, shall establish terms of repayment, alternate service or cancellation terms.

F. The contract shall provide that the [commission] department shall forgive a portion of the loan for each year that the loan recipient practices [his profession] as a licensed teacher in New Mexico. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice. Upon completion of service, one hundred percent of the loan shall be forgiven;

(2) loan terms of two years shall require one year of practice for each year of the loan. Upon completion of the first year of service, fifty percent of the loan shall be forgiven. Upon completion of the second year of service, the remainder of the loan shall be forgiven; and

G. A loan recipient shall serve a complete contract year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department.

H. If a loan recipient completes [his] a teacher preparation program and does not serve in a New Mexico public school, the [commission] department shall assess a penalty of up to three times the principal due, plus [eighteen] seven percent interest, unless the [commission] department finds acceptable extenuating circumstances that prevent the loan recipient from serving. If the [commission] department does not find acceptable extenuating circumstances for the loan recipient's failure to carry out [his] the recipient's declared intent to serve, the [commission] department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this section.

I. The [commission] department shall adopt and promulgate rules to implement the provisions of this section. The rules may provide for the repayment of loans in annual or other periodic installments."

Section 6. Section 21-22F-6 NMSA 1978 (being Laws 2005, Chapter 83, Section 6) is amended to read:

"21-22F-6. LOAN REPAYMENT CONTRACT TERMS--PAYMENT.-- A. The loan repayment award shall be evidenced by a contract between the participating attorney and the [commission] higher education department acting on behalf of the state. The contract shall state the amount of the award and the obligations of the participating attorney under the public service law loan repayment program, including a minimum three-year period of service, quarterly reporting requirements and other policies established by the [commission] department.

B. A participating attorney shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the [commission] department. The maximum credit for a year shall not exceed seven thousand two hundred dollars ($7,200).

C. If a participating attorney does not comply with the terms of the contract, the [commission] department shall require immediate repayment of the award plus [eighteen] seven percent interest and may assess a penalty of up to three times the amount of award disbursed, unless the [commission] department finds acceptable extenuating circumstances for why the participating attorney cannot serve or comply with the terms of the contract. If the [commission] department does not find acceptable extenuating circumstances for the participating attorney's failure to comply with the contract, the [commission] department shall require immediate repayment of the award plus the amount of the penalty.

D. The [commission] department, in consultation with the committee, shall adopt rules to implement the provisions of this section. The rules may provide for the disbursement of loan repayment awards in annual or other periodic installments."

Section 7. APPLICABILITY.--This act applies to loans made on or after July 1, 2006.

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