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Health Professions Title VII Student Loan Programs

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Sequestration: No new federal funds are required to maintain the Title VII Health Professions Student Loan 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. As such, these programs are exempt from Sequestration under the Budget Control Act; however, cuts to the Health Resources and Services Administration (HRSA) may affect the administration of the loans.

Health Care Reform: The Affordable Care Act (ACA, P.L.111-148 and P.L. 111-152) includes a number of changes to HRSA’s Primary Care Loan (PCL) program, which provides low-interest loans to physicians in exchange for service in primary care specialties. ACA also includes a “Sense of the Congress” that funds repaid under PCL loan program should be recycled back into the program instead of returned to the U.S. Treasury.

Effective March 23, 2010, the law establishes a more reasonable default rate (2 percent greater than the rate the student would pay if compliant, instead of the current 18 percent); caps loan recipients’ service requirement at 10 years (or the date the loan is repaid); and directs HRSA to amend loan guidelines to reflect that HHS shall not require parental information to determine financial need for independent students.  HRSA has clarified that these changes will apply only to PCL and not to other Title VII or Title VIII loan programs.  On May 5, 2010, HRSA issued a new Promissory Note for PCL with the new loan terms.  HRSA has elected to use the Scholarships for Disadvantaged Students (SDS) definition for “independent student”: at least 24 years old and has not been listed as a dependent on parent’s taxes for at least 3 years.

Institutions that stopped participating in PCL, but wish to return to the program are encouraged to contact Jim Essel, PCL Project Officer, HRSA Bureau of Health Professions at or 301-443-5799.

Background: The 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.


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