42 U.S.C. § 297n — Loan repayment and scholarship programs

(a) In general This applies to anyone who: (1) earned a bachelor's or associate nursing degree (or equivalent), a nursing diploma, or a graduate nursing degree; (2) took out either (A) one or more loans from a fund set up under subpart II, or (B) any other education loan to cover nurse training costs; and (3) agrees with the Secretary to work as a nurse for at least two years, either at a health facility with a critical nursing shortage or as nursing faculty at an accredited nursing school (as defined in section 296(2)). For that person, the Secretary will make payments — as described in subsection (b) — on the loan's remaining principal and interest, as of the day the person starts the agreed service. (b) Manner of payments The Secretary pays as follows: (1) After the person finishes the first year of service, the Secretary pays 30% of the loan's principal and interest that was outstanding when service began. (2) After the second year, another 30%. (3) After the third year, another 25%. (c) Payment by due date Even before the person finishes each year of service, the Secretary must pay, on time, any loan payment that comes due during the service period — as long as the borrower declares (in whatever form the Secretary requires, backed by evidence if asked) that they are currently serving as described in (a)(3) and will keep serving long enough to earn the payments under (b). But no more than 85% of any loan's principal can be paid this way overall. (d) Scholarship program (1) In general: The Secretary must run this program for fiscal years 2003 and 2004, and may run it in later years. Under it, the government agrees to pay nursing school scholarships to people who agree, in return, to work as nurses for at least two years at a health facility with a critical nursing shortage. (2) Eligible individuals: This means anyone enrolled, or accepted for enrollment, full-time or part-time, at a nursing school. (3) Service requirement: (A) The Secretary can only sign a scholarship contract if the person agrees to at least two years of full-time nursing service at a critical-shortage facility, or an equivalent amount of part-time service under (B). (B) Part-time service is allowed if there's a written agreement — approved by the Secretary and signed by both the facility and the individual — that stretches the service period out so the total amount of work equals what two years of full-time service would be. (4) Applicability of certain provisions: The rules from subpart III of part D of subchapter II (which govern the National Health Service Corps Scholarship Program) apply to this scholarship program too, the same way, except where they conflict with this section. (e) Preferences regarding participants When deciding who gets an agreement under (a) or (d), the Secretary must favor qualified applicants with the greatest financial need. (f) Condition of agreement The Secretary can only make payments under (a) if the agreement says section 298b–7(c) applies to that person. (g) Breach of agreement (1) In general: If a program under this section requires someone to provide health services in exchange for federal education funding (including loan repayment), and the agreement says this subsection applies: (A) for a program that pays for someone's nursing education, that person owes the government the full award amount (plus interest at the top legal rate) if they fail to keep acceptable academic standing, get kicked out for discipline reasons, or voluntarily quit the program. (B) The person also owes the government the full award (plus interest at the top legal rate) if they fail to actually provide the promised health services for the required time. (2) Waiver or suspension of liability: The Secretary must waive or pause this liability if following the agreement is impossible or an extreme hardship for the person or facility, and if enforcing it would be unfair. (3) Date certain for recovery: Unless waived, any money owed must be paid to the government within three years of when the government became entitled to collect it. (4) Availability: Money recovered this way stays available for the same program's purposes until it's spent. (h) Reports Starting no later than 18 months after August 1, 2002, and every year after that, the Secretary must report to Congress on the programs run under this section, including: (1) the number of enrollees, scholarships, loan repayments, and grant recipients; (2) the number of graduates; (3) the dollar amount of scholarships and loan repayments paid; (4) which schools the recipients attended; (5) how many recipients ended up at critical-shortage facilities, and where; (6) the default rate and what's being done about it; (7) how much default money is outstanding in both programs; (8) the reasons for defaults, where known; (9) demographic information about participants; (10) the reasoning behind how funds are split between the scholarship and loan-repayment programs; and (11) an overall evaluation of the programs' costs and benefits. (i) Allocations Out of the money appropriated under section 298d(b), the Secretary may decide how to divide it between the program in (a) and the program in (d).