ARIZONA STATE SENATE
Phoenix, Arizona
REVISED
medical student loans
Purpose
Continues the Board of
Medical Student Loans (Board) for ten years and makes numerous changes to the
medical student loan program.
Background
Laws 1977, Chapter 171
established the 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 statutes.
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 continues the Board for
ten years and 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 2002-2003, 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, in addition to medically underserved areas, the Board to approve service locations in this state:
a. in a rural and medically underserved area;
b. in a medically underserved population; or
c. on an Indian reservation.
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. 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.
11. Increases, from four to five, the number of years the Board can grant a loan to a recipient.
12. Eliminates the prohibition to grant a loan to cover the cost of courses conducted outside this state.
13. Authorizes, for good reason, the Board to extend the period of repayment as specified in the recipient’s contract.
14. 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.
15. Authorizes, for good cause, the Board to defer a recipient’s service or payment obligation, enter into payment arrangements or allow service that is equivalent to full-time service. Specifies the Board is not required to implement this authority.
16. Continues the Board for ten years.
17. Contains a purpose clause.
18. Makes clarifying, conforming and technical changes.
19. Grandfathers service locations that were approved by the Board prior to July 1, 2000.
20. Contains a June 30, 1978 retroactivity clause for the provisions relating to the Board’s authority to approve service locations and loan repayment arrangements and a July 1, 2001 retroactivity date relating to the continuation of the Board.
21. Provides for a general effective date except as noted.
Amendments Adopted by Committee
1. Eliminates the specific federal law citations under the definition of "medically underserved area" and "medically underserved population" and specifies these areas can be designated by federal law.
2. Stipulates program participants must serve in either (a) rural and medically underserved areas or (b) areas designated as medically underserved population.
3. Maintains the current stipend cap until June 30, 2002.
4. Eliminates the ability of the Board to approve a service location in a facility with a primary mission to provide services for a medically underserved population.
5. Eliminates the authority of the Board to approve health related services in lieu of repayment to fulfill the service contract.
6. Eliminates the authority of the Board to waive, reduce or suspend a loan recipient's service or payment obligation.
7. Grandfathers service locations that were approved by the Board prior to July 1, 2000.
8. Continues the Board for ten years.
9. Makes conforming changes.
Amendments Adopted by Committee of the Whole
1. Maintains the ability of the Board to locate participants in medically underserved areas.
2. Makes conforming changes.
Senate Action
HEA 2/13/01 DPA 6-0-2-0
3rd Read 2/28/01 29-0-1-0
Prepared by Senate Staff
March 12, 2001