ESTABLISHMENT OF LOAN REPAYMENT PROGRAM.

SEC. 201. ESTABLISHMENT OF LOAN REPAYMENT PROGRAM. Subpart II of part D of title ID (42 U.S.C. 254d et seq.) is amended— (1) by redesignating section 388G (42 U.S.C. 254r) as section 338I; (2) by redesignating sections 338B through 338F (42 U.S.C. 254m through 254q) as sections 338C through 338G, respectively; and (3) by inserting after section 338A the following new section: “SEC. 338B. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENT PROGRAM. “(a) Establishment.—The Secretary shall establish a program to be known as the National Health Service Corps Loan Repayment Program (hereinafter in this subpart referred to as the ‘Loan Repayment Program’) in order to assure— “(1) an adequate supply of trained physicians, dentists, and nurses for the Corps; and “(2) if needed by the Corps, an adequate supply of podiatrists, optometrists, pharmacists, clinical psychologists, graduates of schools of veterinary medicine, graduates of schools of public101 STAT. 993 health, graduates of programs in health administration, graduates of programs for the training of physician assistants, expanded function dental auxiliaries, and nurse practitioners (as defined in section 822), and other health professionals. “(b) Eligibility.—To be eligible to participate in the Loan Repayment Program, an individual must— “(1)(A) be enrolled— “(i) as a full-time student— “(I) in an accredited (as determined by the Secretary) educational institution in a State; and “(II) in the final year of a course of study or program, offered by such institution and approved by the Secretary leading to a degree in medicine, osteopathy, dentistry, or other health profession; or “(ii) in an approved graduate training program in medicine, osteopathy, dentistry, or other health profession; or “(B) have— “(i) a degree in medicine, osteopathy, dentistry, or other health profession; “(ii) completed an approved graduate training program in medicine, osteopathy, dentistry, or other health profession in a State, except that the Secretary may waive the completion requirement of this clause for good cause; and “(iii) a license to practice medicine, osteopathy, dentistry, or other health profession in a State; “(2) be eligible for, or bold, an appointment as a commissioned officer in the Regular or Reserve Corps of the Service or be eligible for selection for civilian service in the Corps; “(3) submit an application to participate in the Loan Repayment Program; and “(4) sign and submit to the Secretary, at the time of the submission of such application, a written contract (described in subsection (f)) to accept repayment of educational loans and to serve (in accordance with this subpart) for the applicable period of obligated service in a health manpower shortage area. “(c) Application, Contract, And Information Requirements.— “(1) Summary and information.—In disseminating application forms and contract forms to individuals desiring to participate in the Loan Repayment Program, the Secretary shall include with such forms— “(A) a fair summary of the rights and liabilities of an individual whose application is approved (and whose contract is accepted) by the Secretary, including in the summary a clear explanation of the damages to which the United States is entitled under section 338E in the case of the individual’s breach of the contract; and “(B) information respecting meeting a service obligation through private practice under an agreement under section 338D and such other information as may be necessary for the individual to understand the individual’s prospective participation in the Loan Repayment Program and service in the Corps. “(2) Understandability.—The application form, contract form, and all other information furnished by the Secretary under this subpart shall be written in a manner calculated to be understood by the average individual applying to participate in the Loan Repayment Program. 101 STAT. 994 “(3) Availability.—The Secretary shall make such application forms, contract forms, and other information available to individuals desiring to participate in the Loan Repayment Program on a date sufficiently early to ensure that such individuals have adequate time to carefully review and evaluate such forms and information. “(d) Priority.—In determining which applications under the Loan Repayment Program to approve (and which contracts to accept), the Secretary shall give priority to applications made by— “(1) individuals whose training is in a health profession or specialty determined by the Secretary to be needed by the Corps; and “(2) individuals who are committed to service in medically underserved areas. “(e) Approval Required for Participation.— “(1) In general.—An individual becomes a participant in the Loan Repayment Program only on the Secretary’s approval of the individual’s application submitted under subsection (b)(3) and the Secretary’s acceptance of the contract submitted by the individual under subsection (b)(4). “(2) Written notice.—The Secretary shall provide written notice to an individual promptly on— “(A) the Secretary’s approving, under paragraph (1), of the individual’s participation in the Loan Repayment Program; or “(B) the Secretary’s disapproving an individual’s participation in such Program. “(f) Contents of Contracts.—The written contract (referred to in this subpart) between the Secretary and an individual shall contain— “(1) an agreement that— “(A) subject to paragraph (3), the Secretary agrees— “(i) to pay on behalf of the individual loans in accordance with subsection (g); and “(ii) to accept (subject to the availability of appropriated funds for carrying out sections 331 through 335 and section 337) the individual into the Corps (or for equivalent service as otherwise provided in this subpart); and “(B) subject to paragraph (3), the individual agrees— “(i) to accept loan payments on behalf of the individual; “(ii) in the case of an individual described in subsection (b)(1)(A), to maintain enrollment in a course of study or training described in such subsection until the individual completes the course of study or training; “(iii) in the case of an individual described in subsection (b)(1)(A), while enrolled in such course of study or training, to maintain an acceptable level of academic standing (as determined under regulations of the Secretary by the educational institution offering such course of study or training); and “(iv) to serve for a time period (hereinafter in this subpart referred to as the ‘period of obligated service’) equal to 2 years or such longer period as the individual may agree to, in a health manpower shortage area (designated under section 332) to which such individual101 STAT. 995 is assigned by the Secretary as a member of the Corps or released under section 338D; “(2) a provision permitting the Secretary to extend for such longer additional periods, as the individual may agree to, the period of obligated service agreed to by the individual under paragraph (1)(B)(iv); “(3) a provision that any financial obligation of the United States arising out of a contract entered into under this subpart and any obligation of the individual that is conditioned thereon, is contingent on funds being appropriated for loan repayments under this subpart and to carry out the purposes of sections 331 through 335 and sections 337 and 338; “(4) a statement of the damages to which the United States is entitled, under section 338E for the individual’s breach of the contract; and “(5) such other statements of the rights and liabilities of the Secretary and of the individual, not inconsistent with this subpart. “(g) Payments.— “(1) In general.—A loan repayment provided for an individual under a written contract under the Loan Repayment Program shall consist of payment, in accordance with paragraph (2), on behalf of the individual of the principal, interest, and related expenses on government and commercial loans received by the individual for— “(A) tuition expenses; “(B) all other reasonable educational expenses, including fees, books, and laboratory expenses, incurred by the individual; or “(C) reasonable living expenses as determined by the Secretary. “(2) Payments for years served.— “(A) In general.—Except as provided in subparagraph (B) and paragraph (3), for each year of obligated service that an individual contracts to serve under subsection (f) the Secretary may pay up to $20,000 on behalf of the individual for loans described in paragraph (1). “(B) Indian service.—For each year of obligated service that an individual contracts under subsection (f) to serve in the Indian Health Service, or to serve in a health program or facility operated by a tribe or tribal organization under the Indian Self-Determination Act (25 U.S.C. 450f et seq.), the Secretary may pay up to $25,000 on behalf of the individual for loans described in paragraph (1). “(C) Repayment schedule.—Any arrangement made by the Secretary for the making of loan repayments in accordance with this subsection shall provide that any repayments for a year of obligated service shall be made no later than the end of the fiscal year in which the individual completes such year of service. “(3) Tax liability.—In addition to payments made under paragraph (2), in any case in which payments on behalf of an individual under the Loan Repayment Program result in an increase in Federal, State, or local income tax liability for such individual, the Secretary may, on the request of such individual, make payments to such individual in a reasonable amount, as101 STAT. 996 determined by the Secretary, to reimburse such individual for all or part of the increased tax liability of the individual. “(4) Payment schedule.—The Secretary may enter into an agreement with the holder of any loan for which payments are made under the Loan Repayment Program to establish a schedule for the making of such payments. “(h) Employment Ceiling.—Notwithstanding any other provision of law, individuals who have entered into written contracts with the Secretary under this section, while undergoing academic or other training, shall not be counted against any employment ceiling affecting the Department. “(i) Reports.—The Secretary shall, not later than March 1 of each year, submit to the Congress a report specifying— “(1) the number, and type of health profession training, of individuals receiving loan payments under the Loan Repayment Program; “(2) the educational institution at which such individuals are receiving their training; “(3) the number of applications filed under this section in the school year beginning in such year and in prior school years; and “(4) the amount of loan payments made in the year reported on.”.