HB0407

HOUSE BILL 407

51st legislature - STATE OF NEW MEXICO - first session, 2013

INTRODUCED BY

Larry A. Larrañaga

AN ACT

RELATING TO HIGHER EDUCATION; DECREASING THE INTEREST REQUIRED ON LOAN-FOR-SERVICE PROGRAMS; ELIMINATING PENALTIES FOR NONSERVICE; RECONCILING MULTIPLE AMENDMENTS TO SECTIONS OF LAW IN LAWS 2005.

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

SECTION 1. Section 21-22-3 NMSA 1978 (being Laws 1975, Chapter 244, Section 3, as amended) is amended to read:

"21-22-3. DEFINITIONS.--As used in the Medical Student Loan for Service Act:

A. ["commission"] "department" means the [commission on] higher education department;

B. "loan" means a grant of funds to defray the costs incidental to a medical education, under a contract between the [commission] department and a medical student, requiring either repayment with interest or repayment in services; and

C. "student" means a resident of New Mexico who is a student enrolled in a school of medicine."

SECTION 2. 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] 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] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent 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. 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 percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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 3. Section 21-22A-3 NMSA 1978 (being Laws 1978, Chapter 109, Section 3, as amended) is amended to read:

"21-22A-3. DEFINITIONS.--As used in the Osteopathic Medical Student Loan for Service Act:

A. ["commission"] "department" means the [commission on] higher education department;

B. "loan" means a grant of funds to defray the costs incidental to an osteopathic medical education, under a contract between the [commission] department and an osteopathic medical student, requiring either repayment with interest or repayment in services;

C. "osteopathic medical education" means the education required to be an osteopathic physician or osteopathic physician's assistant; and

D. "student" means a resident of New Mexico who is a student enrolled in a school of osteopathic medicine or an osteopathic physician's assistant program."

SECTION 4. 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] 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] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent 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 [student's] 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 percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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 5. Section 21-22B-3 NMSA 1978 (being Laws 1987, Chapter 299, Section 3, as amended) is amended to read:

"21-22B-3. DEFINITIONS.--As used in the Nursing Student Loan for Service Act:

A. ["commission"] "department" means the [commission on] higher education department;

B. "loan" means a grant of funds to defray the costs incidental to a nursing education, under a contract between the [commission] department and a nursing student, requiring repayment with services or repayment with interest;

C. "student" means a resident of New Mexico who is a student enrolled in a program of nursing; and

D. "program of nursing" means a nursing education program in a New Mexico institution accredited by a member of the council on post-secondary accreditation or a nursing education program approved by the New Mexico board of nursing."

SECTION 6. Section 21-22B-6 NMSA 1978 (being Laws 1987, Chapter 299, Section 6, as amended by Laws 2005, Chapter 321, Section 6 and by Laws 2005, Chapter 323, Section 3) is amended to read:

"21-22B-6. NURSING STUDENT LOANS--CONTRACT TERMS--REPAYMENT.--

A. Each applicant who is approved for a loan by the [commission] department may be granted a loan, in such amounts for such periods as determined by the [commission] department, with which to defray expenses incurred in obtaining a nursing education; provided that the applicant files with the [commission] department a declaration of intent to practice as a licensed nurse in areas of New Mexico designated as underserved.

B. The loans shall not exceed the necessary expenses incurred while attending a program of nursing and shall bear interest at the rate of [(1) eighteen percent per year] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent if the [student] loan recipient completes [his] a nursing 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 Nursing Student Loan for Service Act shall not accrue interest until the department:

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

(2) [the commission] determines the loan recipient has failed to fulfill the recipient's obligation to practice nursing in areas approved by the health profession advisory committee; or

(3) [the commission] cancels a contract between a [student] loan recipient and the [commission] department pursuant to Section 21-22B-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 a nursing education and shall be conditioned upon the repayment of the loan to the state over a period negotiated between the [student] loan recipient and the [commission] department after completion of a nursing program.

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

F. The contract shall provide that the [commission] department may forgive a portion of the loan for each year that a loan recipient practices nursing 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;

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

SECTION 7. 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] 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] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent 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 percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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 8. Section 21-22D-3 NMSA 1978 (being Laws 1995, Chapter 144, Section 18) is amended to read:

"21-22D-3. DEFINITIONS.--As used in the Health Professional Loan Repayment Act:

A. ["commission"] "department" means the [commission on] higher education department;

B. "health professional" means a primary care physician, optometrist, podiatrist, physician's assistant, dentist, nurse, member of an allied health profession as defined in the Allied Health Student Loan for Service Act or a licensed or certified health professional as determined by the [commission] department; and

C. "loan" means a grant of money to defray the costs incidental to a health education, under a contract between the federal government or a commercial lender and a health professional, requiring either repayment of principal and interest or repayment in services."

SECTION 9. 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] 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 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 percent] interest at the fixed rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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] interest.

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 10. Section 21-22E-3 NMSA 1978 (being Laws 2001, Chapter 288, Section 3, as amended) is amended to read:

"21-22E-3. DEFINITIONS.--As used in the Teacher Loan for Service Act:

A. ["commission"] "department" means the [commission on] higher education department;

B. "loan" means a payment of money under contract between the [commission] department and a student that defrays the costs incidental to a teacher preparation program offered in a regionally accredited post-secondary educational institution in New Mexico and that requires repayment in services;

C. "student" means a United States citizen who is enrolled in or accepted by an undergraduate or graduate teacher preparation program at a regionally accredited post-secondary educational institution in New Mexico; and

D. "teacher preparation program" means a program that has been formally approved as meeting the requirements of the public education department and that leads to initial licensure or to additional licensure endorsements, including a program in a two-year post-secondary educational institution that meets the requirements for a teacher education transfer module established pursuant to Subsection C of Section 21-1B-4 NMSA 1978."

SECTION 11. 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] 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] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent 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 loan recipient's obligation to practice as a licensed teacher in New Mexico; or

(3) [the commission] cancels a contract between a [student] loan recipient 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 percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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 12. 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] 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 percent interest and may assess a penalty of up to three times the amount of award disbursed] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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] interest.

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 13. Section 21-22G-3 NMSA 1978 (being Laws 2009, Chapter 225, Section 3) is amended to read:

"21-22G-3. PRIMARY CARE PHYSICIAN CONDITIONAL TUITION WAIVER PROGRAM CREATED--ADMINISTRATION--RULEMAKING--SELECTION PROCESS--REPAYMENT.--

A. The "primary care physician conditional tuition waiver program" is created and shall be administered by the department. The department shall:

(1) promulgate rules for implementing the program in consultation with the university;

(2) publicize the program to medical students and to prospective medical students;

(3) collect and manage repayments from students who do not meet their obligations under the program; and

(4) solicit and accept funds for the program, including grants and donations.

B. A participant shall be a New Mexico resident and either a graduate of a New Mexico high school or a graduate of a New Mexico college or university.

C. The department shall select participants according to rules it promulgates and, in consultation with the university, shall create a standard process for medical students to declare their intentions to be primary care physicians and to apply to participate in the program.

D. The department shall award no more than ten new waivers a year, in addition to renewing existing waivers for eligible participants, subject to the availability of funding.

E. Participation in the program shall be evidenced by a contract between the participant and the department. The contract shall provide for the payment of a participant's medical school tuition, fees and a reasonable stipend at the university from the fund and shall be conditioned upon the participant fulfilling the program obligations. An applicant whom the department offers to accept for enrollment in the program shall sign the contract before being accepted into the program. The department shall award a waiver to a medical student upon accepting the student into the program.

F. The department shall promulgate rules setting the maximum amount of the reasonable living stipend. The department shall determine the maximum amount of the living stipend based upon the availability of funds and information provided by the university regarding the current cost of attendance at the school of medicine.

G. For a period of no more than five years, the department shall allow participants to remain in the program and receive continued waivers in accordance with the availability of funds and the department's finding that the participant is meeting the university's standards for satisfactory academic progress.

H. The department shall award waivers to participants from the fund. The department shall approve the amount of the waiver granted to a participant. The amount of the waiver awarded to a participant shall not exceed a reasonable living stipend plus the amount of resident tuition and fees that a participant incurs. A student may receive a waiver on the following terms:

(1) interest shall accrue upon termination of the participant's course of study; the waiver amount shall bear interest at the rate of [(a) eighteen percent per year] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent if the participant completes a course of study and no portion of the principal and interest is forgiven pursuant to Subsection J of this section [and

(b) seven percent per year in all other cases]; and

(2) the maximum period for repayment shall be ten years, commencing six months from the date the participant completes or discontinues the course of study, including a residency.

I. The department shall promulgate rules to implement the provisions of the Conditional Tuition Waiver for Primary Care Medical Students Act.

J. The contract shall provide that the department forgive a portion of the waiver for each year that a participant practices as a primary care physician in an underserved area of New Mexico as defined in the Rural Primary Health Care Act.

K. The waiver shall be forgiven as follows:

(1) a waiver term of one year shall require one year of practice as a primary care physician in an underserved area of the state for the one-year term of the waiver received. Upon completion of service, one hundred percent of the waiver and accrued interest shall be forgiven;

(2) a waiver term of two years shall require two years of practice as a primary care physician in an underserved area of the state for the two-year term of the waiver received. Upon completion of the first year of service, fifty percent of the waiver and accrued interest shall be forgiven; upon completion of the second year of service, the remainder of the waiver and accrued interest shall be forgiven;

(3) a waiver term of three years shall require three years of practice as a primary care physician in an underserved area of the state for the three-year term of the waiver received. Upon completion of the first year of service, twenty-five percent of the waiver and accrued interest shall be forgiven; upon completion of the second year of service, fifty percent of the waiver and accrued interest shall be forgiven; and upon completion of the third year of service, the remainder of the waiver and accrued interest shall be forgiven;

(4) a waiver term of four years shall require four years of practice as a primary care physician in an underserved area of the state for the four-year term of the waiver received. Upon completion of the first year of service, thirty percent of the waiver and accrued interest shall be forgiven; upon completion of the second year of service, forty percent of the waiver and accrued interest shall be forgiven; upon completion of the third year of service, fifty percent of the waiver and accrued interest shall be forgiven; and upon completion of the fourth year of service, the remainder of the waiver and accrued interest shall be forgiven; or

(5) a waiver term of five years shall require five years of practice as a primary care physician in an underserved area of the state for the five-year term of the waiver received. Upon completion of the first year of service, ten percent of the waiver and accrued interest shall be forgiven; upon completion of the second year of service, twenty percent of the waiver and accrued interest shall be forgiven; upon completion of the third year of service, thirty percent of the waiver and accrued interest shall be forgiven; upon completion of the fourth year of service, fifty percent of the waiver and accrued interest shall be forgiven; and upon completion of the fifth year of service, the remainder of the waiver and accrued interest shall be forgiven.

L. In the event that a participant completes the participant's course of study and does not meet the program obligation to serve as a primary care physician in an underserved area of the state, the department shall assess [a penalty of up to three times the principal due, plus eighteen percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, unless the department finds acceptable extenuating circumstances for why the participant cannot serve. [The department shall collect the penalty and remit it to the state treasury for deposit in the fund.]

M. The department is authorized to cancel any contract made between it and any participant pursuant to the Conditional Tuition Waiver for Primary Care Medical Students Act, or set terms of alternative service in lieu of monetary repayment, for any cause the department deems reasonable.

N. The department shall be responsible for collecting repayments made pursuant to this section and shall exercise due diligence in collecting repayments and maintaining all necessary records to ensure that full repayments are made. The department shall collect and service repayments under this section to the full extent of the law, including wage garnishment where practicable. The department shall forgive all or parts of repayments under the criteria established in this section and shall maintain all necessary records of repayments it forgives.

O. When a participant makes payment of principal or interest to the department pursuant to the provisions of this section, the department shall deposit these payments into the fund and shall use these payments to cover the costs of granting waivers and the administrative expenses associated with the program and collection activity on its behalf. The department shall maintain accurate records of these expenses, and all receipts beyond those necessary to pay these expenses shall be used to grant waivers to participants."

SECTION 14. Section 21-29-2 NMSA 1978 (being Laws 1997, Chapter 126, Section 2, as amended) is amended to read:

"21-29-2. DEFINITIONS.--As used in the WICHE Loan for Service Act:

A. ["commission"] "department" means the [commission on] higher education department; and

B. "student" means a New Mexico resident who is a graduate of a New Mexico high school or has resided in New Mexico for three consecutive years immediately preceding application to the program and who attends or is about to attend a graduate or professional program of education through the auspices of the Compact for Western Regional Cooperation in Higher Education."

SECTION 15. Section 21-29-3 NMSA 1978 (being Laws 1997, Chapter 126, Section 3, as amended) is amended to read:

"21-29-3. STUDENT EXCHANGE PROGRAM--TERMS OF STUDENT LOANS--PAYBACK REQUIREMENTS.--

A. Financial assistance by the state for the student exchange program of the western interstate commission for higher education shall be through a loan program established pursuant to this section.

B. A student may receive a loan of tuition assistance on the following terms:

(1) the loan shall not exceed an amount equivalent to the negotiated support fee for the graduate or professional program; and

(2) the loan shall bear interest at [the rate of (a) eighteen percent per year] the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent if the student completes [his] the student's education and no portion of the principal and interest is forgiven pursuant to Subsection F of this section [and

(b) seven percent per year in all other cases].

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

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

(2) the [commission] department determines the loan recipient has failed to fulfill the recipient's obligation to practice the recipient's profession in New Mexico; or

(3) the [commission] department cancels a contract between a student and the [commission] department pursuant to Section 21-29-6 NMSA 1978.

E. Loans made to a student who fails to complete [his] the student's education shall become due immediately upon termination of [his] the student's education. The [commission] department 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] the recipient's profession in New Mexico. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice for each year of the loan. 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;

(4) the [commission] department may establish other forgiveness terms for professionals providing service in serious shortage areas.

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 student completes [his] a professional education and does not return to New Mexico to practice [his] the profession, the [commission] department shall assess [a penalty of up to three times the principal due, plus eighteen percent] interest at the fixed interest rate that the federal government charges for direct subsidized loans for graduate and professional students plus five percent, 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 student's declared intent to practice [his] the profession in New Mexico, 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 may provide by [regulation] rule for the repayment of student exchange program loans in annual or other periodic installments."

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