Title VII Student Loan Programs
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Related Resources
AAMC Documents
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Current Status
On June 28, the President proposed to rescind $6.7 million of the
"unobligated balances" of the Title VII health professions
student loan programs in FY 2006 to offset an FY 2006 supplemental
for VA Information Technology.
The President's FY 2007 Budget Request proposes to recall the "Federal
portion of all of the liquid assets" of the Title VII and Title
VIII student loan programs. This would require participating institutions
to return the "Federal capital contribution" of all funds
that have not yet been dedicated to students. The "Federal capital
contribution" amounts to roughly 8/9ths of institution's cash-on-hand,
or as much as $4 million from participating institutions. The Administration
estimates this rescission will recall over $100 million from the
student loan programs.
As part of the Labor-HHS-Education Appropriations for FY 2005 and
FY 2006, Congress rescinded the "unobligated balances"
from the Title VII and VIII student loan programs. Consequently,
HRSA returned $21 million to the U.S. treasury in 2005 and $26.5
million in 2006.
On June 13, the House Committee on Appropriations rejected the
President's proposal and approved a FY 2007 Labor-HHS-Education
Appropriations bill without any rescissions from the Title VII student
loan programs.
AAMC Activity
The AAMC sent a May 24 letter to the House and Senate Appropriations
Committees urging appropriators not to approve any further rescissions
to the Title VII and VIII health professions student loan programs.
On May 30 and 31, representatives of the AAMC Committee on Student
Financial Assistance (financial aid administrators from AAMC institutions),
met with House and Senate appropriators to discuss the impact of
previous rescissions, the President's proposed rescission for FY
2007, and the anticipated increase of demand for these loans in
coming years.
On October 28, 2005, the Administration submitted to Congress a
package of rescission requests to offset hurricane relief efforts,
including the rescission later adopted in the President's FY 2007
Budget Request. The AAMC joined with 40 health organizations in
a December 5, 2005, letter to House and Senate Appropriators, urging
them to reject the Administration's proposed rescissions.
Background
The Department of Health and Human Services (HHS) Health Resources
and Services Administration (HRSA) offers affordable Student Loan
Programs authorized under Titles VII and VIII of the Public Health
Service Act, including:
- The Health Professions Student Loan (HPSL) program awards funds
to accredited schools of dentistry, optometry, pharmacy, podiatric
medicine, and veterinary medicine;
- The Primary Care Loan (PCL) program awards funds to accredited
schools of allopathic and osteopathic medicine for medical students
who agree to enter and complete residency training in primary
care within four years after graduation and practice in primary
care for the life of the loan;
- The Loans for Disadvantaged Students (LDS) program awards funds
to HPSL and PCL eligible students who are from a disadvantaged
background as defined by HHS; and
- The Nursing Student Loan (NSL) program awards funds to accredited
schools of nursing under Title VIII.
All of the Title VII and VIII student loans offer a 5 percent interest
rate. Variable interest rates for Stafford loans have reached historic
lows of 2.77 percent in recent years, and 4.70 percent in the 2005/2006
academic year. Without commensurate decreases in the Title VII and
VIII student loan programs' interest rates, participation in these
programs decreased. However, on July 1, 2006, Stafford loan interest
rates were fixed at 6.80 percent. Under this new rate, the average
medical student participating in the Title VII student loan programs
will save over $50,000 when compared to current Stafford loans.
With student loan interest rates rising and medical student educational
debt continuing to increase, financial aid administrators anticipate
that demand for these affordable loans will swell in the coming
years.
No federal funds are required to maintain these programs. They
receive no annual appropriation, thereby posing no burden on taxpayers.
They are funded with the interest from student/graduate repayment,
creating a self-sustaining revolving fund designed by Congress to
address shortages in the health professions workforce.
Contacts
Matthew Shick, Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 828-0525
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