15-1724. Medical student loans; interest;
obligations; penalty; authority of attorney general
A. Each applicant who is approved for a loan by the board may be granted a loan for
a period of up to five years.
B. The loans shall bear interest at the rate of seven per cent per year.
C. Each loan shall be evidenced by a contract between the student and the board,
acting on behalf of this state. The contract shall provide for the payment by the state
of a stated sum or sums defraying the costs of a medical education at a public or private
school of medicine in this state and shall be conditioned upon the contractual agreement
by the recipient of such loan to complete the service required by section 15-1723. The
contract shall provide that the recipient serving as a physician in an area listed in
section 15-1723, subsection E may receive compensation from the board for such service
and other services designated in the contract. This compensation shall be credited
against amounts due under the loan and shall not exceed the amount of the loan and any
interest accrued on the loan. Such service shall be full time as determined by the board
and shall be for two years or one year of service for each year of loan support,
whichever is longer. A loan and the interest accrued thereon may be fully paid with
compensation received for services as required by the contract or at the option of the
recipient by payment of all monies, interest and penalties for failure to fulfill the
contract.
D. A loan recipient shall begin the service for which the recipient contracted as a
condition of the loan within three years of completion of the recipient's undergraduate
medical education unless extended to four years by the board or within three months of
finishing or leaving a residency program. A recipient who is ordered into military
service or for other cause beyond the recipient's control deemed sufficient by the board
is unable to commence the required service within three years of such graduation shall
begin service within one year after completing military service or the termination of
such other cause.
E. If a recipient decides not to fulfill the conditions of the contract by serving
in an area listed in section 15-1723, subsection E, the contract shall provide that the
recipient shall be required to repay the full amount borrowed, including tuition, at the
seven per cent interest rate plus a penalty for liquidated damages in an amount
equivalent to the full amount borrowed, including tuition, less the amount credited for
time actually served in a site approved by the board, to be calculated on a prorated
monthly basis. The board for good reason may provide for extensions of the period of
repayment specified in the loan recipient's contract. The board may waive the payment of
principal, interest and liquidated damages if it determines that death or permanent
physical disability accounts for the recipient's failure to fulfill the contract.
F. If a recipient withdraws or is dismissed from medical school, the recipient
shall be required to repay the loan to the board with interest with no penalty within one
year of withdrawal. The board may for good reason provide for extensions on the period of
repayment.
G. On receipt of supporting documentation, the board for good cause shown may defer
the recipient's service or payment obligation or may enter into repayment arrangements
with the recipient or allow service that is equivalent to full-time service if the board
determines that this action is justified after a review of the individual's
circumstances. At the discretion of the board, the board may allow service by practicing
another specialty of recognized need in this state that is not specified in the student's
contract, but only following prior written approval by the board.
H. The attorney general may commence whatever actions are necessary to enforce the
contract and achieve repayment of loans provided by the board pursuant to this article.
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