The student eligibility requirements for PCL funds correspond to the requirements under the HPSL program. Readers should refer to HPSL, Chapter 3 of this book.
In addition to the HPSL requirements, PCL recipients also must:
Primary health care is defined as family medicine, general internal medicine, general pediatrics, preventative medicine, or osteopathic general practice.
The law requires that PCL recipients practice in primary care, but does not specify that the practice be full-time or that it involve a minimum number of hours per week. Even though part-time practice is acceptable, the recipient would be in breach of the service obligation if he or she were to obtain any type of subspecialty training that would allow him or her to subspecialize during his or her remaining service.
The recipient is required to submit self-certification of compliance with the service obligation on an annual basis in a format determined by the school. A sample form is provided as Exhibit B. This form is not required; each school has discretion in determining how it can most easily obtain the primary care practice certification for its PCL recipients. At a minimum, the certification must state that the recipient is practicing primary care in accordance with the terms of the PCL promissory note and must be signed and dated by the recipient. The Department has modified the HPSL deferment form to include a section for PCL recipients to complete to certify that they are in an eligible residency program. This form is sufficient for documenting compliance with the agreement to enter primary care during residency training. Upon completing residency andentering primary care practice, the recipient can begin using the form described above or the school can develop its own form or documentation procedures for its recipients to use.
To assure that the PCL program is most effective in helping to achieve the national goal of making primary care more widely available, and in contributing to the success of health care reform, the Department requires that PCL recipients fulfill their primary care service obligation in the United States or one of its territories. Service outside of the United States is only permitted if the borrower is in military service and is assigned to serve at a location outside of the United States.
A service obligation with the military or a service obligation with PCL does not have precedence over the other. Both must be fulfilled in accord with the terms of the promissory note and may be fulfilled concurrently. For example, a student who has taken PCL and has a military service obligation would be required to practice primary care in accord with the PCL agreement and would also be required to comply with the military obligation.
Fiscal Management, Collections, Chapter 2 also addresses primary health care service obligations for PCL recipients.
[Sections 723(a) and 723(d) of the Public Health Service Act]
PCL borrowers are subject to penalty when he/she either
The first documentation of the recipient's annual activities is due at the time of graduation. Information on where graduates have matched would be sufficient to satisfy this documentation requirement for the first year and recipients are required to self certify activities annually thereafter. The school may allow the recipient to submit the required documentation up to 120 days after the due date without placing the recipient in default. If the required documentation is NOT submitted within 120 days of the due date, the school must place the recipient in default using the original due date.
The school has discretion in deciding whether to reverse the default status of a PCL recipient in cases where the recipient was placed in default for failing to provide certification of his or her practice activities, but later demonstrates that he or she has been in compliance with the service obligation.
Fiscal Management, Collections, Chapter 2 also addresses penalties to PCL recipients who do not fulfill their primary health care service obligations.
The PCL promissory note states in section 3 that if the borrower fails to comply with the service obligation, "...the balance due on the loan involved will be immediately recomputed from the date of issuance (using the original principal) at an interest rate of 12 percent per year, compounded annually" for loans made prior to November 13, 1998. In accord with this provision, when a PCL recipient defaults on the service obligation, the school must recalculate the total amount owed on the debt by calculating interest at 12 percent per year, compounded annually, on the original principal amount of each disbursement, based on the date that each disbursement was made. If the recipient has already repaid a portion of the loan, these payments would be credited against the newly calculated indebtedness in accord with the time the payments were actually made.
For loans made on or after November 13, 1998, stature requires that if a PCL borrower fails to comply with the primary care service requirement, the PCL will begin to accrue interest at a rate of 18 percent per year beginning on the date of noncompliance. The penalty is calculated on the outstanding balance of the PCL on the date of noncompliance.
[Sections 723(a)(1) and 723(a)(3) of the Public Health Service Act]
A PCL recipient must complete residency training within 4 years of graduation. Upon completion of residency training, the recipient must enter and remain in primary care practice unless: (1) he or she is in an allowable deferment; or (2) there are extenuating circumstances for which the school determines that a break in service is appropriate, such as extended illness, maternity/family leave, or time to establish a practice or secure employment.
The school must obtain documentation which supports the recipient's request for a break in service (e.g., a signed statement from the recipient stating the reason for the break in service). The school has discretion to approve a break in service that does not exceed 12 months. Anybreak in service exceeding 12 months must be approved by the Department. Requests for approval of such must be submitted to:
DHHS/HRSA/BHPr
Division of Student Assistance
Office for Campus Based Programs
5600 Fishers Lane, Room 8-34
Rockville, MD 20857.
For PCL, a break in service is not a deferment, but merely allows the borrower to avoid default on the service obligation in the event of extenuating circumstances approved by the school or the Department. The repayment period continues to run, interest continues to accrue, and payments continue to come due during this time. If forbearance is also granted during a break in service, payments would be adjusted accordingly.
If the borrower is in a deferrable activity, as identified in the statute and the promissory note, payments on the loan would be deferred and interest would not accrue. If the activity does not qualify for deferment under the terms of the promissory note, the borrower's grace and/or repayment period would begin and, during periods of repayment, interest would accrue.
If the related educational activities interrupt the course of study, this would not reduce the 4-year period provided for completing residency training. The 4-year period for completing residency training begins upon graduation from medical school. The PCL statute requires that the primary care residency training must be completed within 4 years of graduation from medical school and deferment cannot interrupt that period. A deferment form is provided as Exhibit C.
The primary health care obligation does not apply to allopathic and osteopathic medical students who obtained HPSLs prior to July 1, 1993. New borrowers would include students who received an HPSL for the first time on or after July 1, 1993. Any student who has received an HPSL previously, as evidenced by a promissory note signed and dated prior to July 1, 1993, may continue to receive HPSLs under the same terms as their previous loans until completion of professional training. The law gives the school discretion in determining whether to continue to fund prior HPSL recipients who are not committed to primary health care. However, consistent with the program's intent of targeting funds to prospective primary health care practitioners, schools are strongly encouraged to use other sources of financial aid for previous HPSL recipients who do not have a commitment to primary health care.
[Section 723(a) of the Public Health Service Act]
The Secretary of Health and Human Services has the authority to waive or suspend the primary health care service obligation under two circumstances. These circumstances are described below:
Waiver of the service obligation will be determined by the Secretary on a case-by-case basis.
These provisions do not waive or suspend the borrower's obligation to repay the PCL. Any borrower who does not graduate from an allopathic or osteopathic medical school must still repay the PCL in accordance with its normal terms--that is, at five percent interest over a 25-year repayment period. This should be determined by the school on a case-by-case basis. The waiver and suspension absolves borrowers in certain circumstances from having to fulfill the primary health care service obligations and protects these borrowers from being subject to the financial penalties described under Penalties for Not Fulfilling the Primary Health Care Service Obligation.
[Section 723(a)(4) of the Public Health Service Act]
