ARIZONA STATE SENATE
Phoenix, Arizona
medical student loans
Purpose
Makes numerous changes to
the medical student loan program.
Background
Laws 1977, Chapter 171
established the Board of Medical Student Loans (Board) to provide loans to
Arizona medical school students who are residents of the state and agree to
practice in rural and other medically underserved areas after completing
medical school and residency training.
In exchange for the financial assistance, the program participants agree
to provide primary care services in rural or medically underserved areas for at
least two years, or one year of service for each year of loan support,
whichever is greater. As of June 30,
2000, 122 students have received loan assistance from the Board; 17 are
students, 16 are in medical residency training, 10 are fulfilling their service
obligations, 36 have either repaid or are repaying their loans, 39 have
completed their service, 3 are pending approval or repayment and 1 is
disabled. Pursuant to A.R.S. §15-1724,
loan recipients who do not fulfill the service obligation must repay the Board
the full amount borrowed, including tuition, at a seven percent interest rate
plus a penalty in an amount equivalent to the amount borrowed, less any time
the recipient served.
In May 2000, the Office of
the Auditor General (OAG) completed a performance audit of the Board. The OAG made the following two findings: (1)
changes to the Board’s statutes could help ensure that doctors are serving in
appropriate locations and clarify how long the Board should track where the
doctors serve and (2) changes to the applicant selection process could help
ensure that the increased number of eligible students receive equal consideration
for available funding. To address these
findings, the OAG recommended the Legislature define “rural” or provide the
Board with rulemaking authority and prescribe an amount of time the Board
should track doctors who continue to practice in service areas on completion of
their obligation. The OAG also
recommended the Legislature add a definition of Arizona resident to the Board’s
statues.
On August 29, 2000, the
Senate Education and House of Representatives Public Institutions and
Universities Committee of Reference recommended continuing the Board for ten
years and adopted the OAG’s recommendations. S.B. 1109 includes the OAG
recommendations as well as other changes to the administration of the medical
student loan program.
For the school year 2000-2001,
the Board loaned $21,250 to 16 medical school students. Due to the provision in this bill that
increases the maximum stipend amount in 2003-2004, there would be an additional
cost to the program if the Board provided the maximum amount for stipends and
continued the program at 16 students.
That cost is approximately $63,000.
Provisions
1. Expands the definition of “medically underserved area” and adds definitions for “medically underserved population” and “rural” under the loan program.
2. Specifies the medical residency program of loan recipients are to be approved by the Accreditation Council for Graduate Medical Education or the American Osteopathic Association.
3. Clarifies the services a loan recipient must practice in to qualify for the program.
4. Conforms the loan program’s residency requirements to the residency requirements for in-state status at the state’s public universities.
5. Increases, beginning in school year 2003-2004, the maximum stipend amount of the loan from $10,000 to $16,000 per year.
6. Replaces language capping the total loan amount that is based on the costs of a medical education with a cap on tuition based on the cost of registration at a public college of medicine in this state.
7. Authorizes the Board to approve service locations:
a. in rural or medically underserved areas;
b. for medically underserved populations;
c. in a facility whose primary mission is to serve medically
underserved populations; or
d. on an Indian reservation in this state.
8. Specifies the service location is subject to approval by the Board.
9. Allows the Board to designate an approved service area for a loan recipient in the contract.
10. Allows, for good cause, the Board to approve other health related services in an approved site, defer service or allow service that is equivalent to full-time service in lieu of repayment.
11. Limits, to ten years, the amount of time the Board is required to collect and maintain data on the retention of doctors in service areas on completion of their obligation.
12. Increases, from four to five, the number of years the Board can grant a loan to a recipient.
13. Eliminates the prohibition to grant a loan to cover the cost of courses conducted outside this state.
14. Authorizes, for good reason, the Board to extend the period of repayment as specified in the recipient’s contract.
15. Includes the principal of the loan under the authority of the Board to waive interest and liquidated damages in the event a recipient’s death or a permanent physical disability results in the nonfulfillment of the contract obligations.
16. Authorizes, for good cause, the Board to waive, reduce or suspend a recipient’s service, payment obligation or enter into payment arrangements. Specifies the Board is not required to implement this authority.
17. Makes clarifying, conforming and technical changes.
18. Contains a June 30,1978 retroactivity clause for the provisions relating to the Board’s authority to approve service locations and loan repayment arrangements.
19. Provides for a general effective date.
Prepared by Senate Staff
January 26, 2001