U.S. Code > Title 42 The Public Health and Welfare > CHAPTER 6A—PUBLIC HEALTH SERVICE > SUBCHAPTER VI—NURSING WORKFORCE DEVELOPMENT > Part E—Student Loans > § 297b. Loan provisions

§ 297b. Loan provisions

(a) Maximum amount per individual per year; preference to first year students
The total of the loans for any academic year (or its equivalent, as determined under regulations of the Secretary) made by schools of nursing from loan funds established pursuant to agreements under this part [1] may not exceed $2,500 in the case of any student, except that for the final two academic years of the program involved, such total may not exceed $4,000. The aggregate of the loans for all years from such funds may not exceed $13,000 in the case of any student. In the granting of such loans, a school shall give preference to licensed practical nurses, to persons with exceptional financial need, and to persons who enter as first-year students after enactment of this subchapter.
(b) Terms and conditions
Loans from any such student loan fund by any school shall be made on such terms and conditions as the school may determine; subject, however, to such conditions, limitations, and requirements as the Secretary may prescribe (by regulation or in the agreement with the school) with a view to preventing impairment of the capital of such fund to the maximum extent practicable in the light of the objective of enabling the student to complete his course of study; and except that—
(1) such a loan may be made only to a student who
(A) is in need of the amount of the loan to pursue a full-time or half-time course of study at the school leading to a baccalaureate or associate degree in nursing or an equivalent degree, or a diploma in nursing, or a graduate degree in nursing,
(B) is capable, in the opinion of the school, of maintaining good standing in such course of study, and
(C) with respect to any student enrolling in the school after June 30, 1986, is of financial need (as defined in regulations issued by the Secretary);; [2]
(2) such a loan shall be repayable in equal or graduated periodic installments (with the right of the borrower to accelerate repayment) over the ten-year period which begins nine months after the student ceases to pursue a full-time or half-time course of study at a school of nursing, excluding from such 10-year period all
(A) periods (up to three years) of
(i) active duty performed by the borrower as a member of a uniformed service, or
(ii) service as a volunteer under the Peace Corps Act [22 U.S.C. 2501 et seq.],
(B) periods (up to ten years) during which the borrower is pursuing a full-time or half-time course of study at a collegiate school of nursing leading to baccalaureate degree in nursing or an equivalent degree, or to graduate degree in nursing, or is otherwise pursuing advanced professional training in nursing (or training to be a nurse anesthetist), and
(C) such additional periods under the terms of paragraph (8) of this subsection;
(3) in the case of a student who received such a loan before September 29, 1979, an amount up to 85 per centum of any such loan made before such date (plus interest thereon) shall be canceled for full-time employment as a professional nurse (including teaching in any of the fields of nurse training and service as an administrator, supervisor, or consultant in any of the fields of nursing) in any public or nonprofit private agency, institution, or organization (including neighborhood health centers), at the rate of 15 per centum of the amount of such loan (plus interest) unpaid on the first day of such service for each of the first, second, and third complete year of such service, and 20 per centum of such amount (plus interest) for each complete fourth and fifth year of such service;
(4) the liability to repay the unpaid balance of such loan and accrued interest thereon shall be canceled upon the death of the borrower, or if the Secretary determines that he has become permanently and totally disabled;
(5) such a loan shall bear interest on the unpaid balance of the loan, computed only for periods during which the loan is repayable, at the rate of 5 percent per annum;
(6) such a loan shall be made without security or endorsement, except that if the borrower is a minor and the note or other evidence of obligation executed by him would not, under the applicable law, create a binding obligation, either security or endorsement may be required;
(7) no note or other evidence of any such loan may be transferred or assigned by the school making the loan except that, if the borrower transfers to another school participating in the program under this part [1] such note or other evidence of a loan may be transferred to such other school; and
(8) pursuant to uniform criteria established by the Secretary, the repayment period established under paragraph (2) for any student borrower who during the repayment period failed to make consecutive payments and who, during the last 12 months of the repayment period, has made at least 12 consecutive payments may be extended for a period not to exceed 10 years.
(c) Cancellation
Where all or any part of a loan, or interest, is canceled under this section, the Secretary shall pay to the school an amount equal to the school’s proportionate share of the canceled portion, as determined by the Secretary.
(d) Installments
Any loan for any year by a school from a student loan fund established pursuant to an agreement under this part [1] shall be made in such installments as may be provided in regulations of the Secretary or such agreement and, upon notice to the Secretary by the school that any recipient of a loan is failing to maintain satisfactory standing, any or all further installments of his loan shall be withheld, as may be appropriate.
(e) Availability to eligible students in need
An agreement under this part [1] with any school shall include provisions designed to make loans from the student loan fund established thereunder reasonably available (to the extent of the available funds in such fund) to all eligible students in the school in need thereof.
(f) Penalty for late payment
Subject to regulations of the Secretary and in accordance with this section, a school shall assess a charge with respect to a loan from the loan fund established pursuant to an agreement under this part [1] for failure of the borrower to pay all or any part of an installment when it is due and, in the case of a borrower who is entitled to deferment of the loan under subsection (b)(2) of this section or cancellation of part or all of the loan under subsection (b)(3) of this section, for any failure to file timely and satisfactory evidence of such entitlement. No such charge may be made if the payment of such installment or the filing of such evidence is made within 60 days after the date on which such installment or filing is due. The amount of any such charge may not exceed an amount equal to 6 percent of the amount of such installment. The school may elect to add the amount of any such charge to the principal amount of the loan as of the first day after the day on which such installment or evidence was due, or to make the amount of the charge payable to the school not later than the due date of the next installment after receipt by the borrower of notice of the assessment of the charge.
(g) Minimum monthly repayment
A school may provide in accordance with regulations of the Secretary, that during the repayment period of a loan from a loan fund established pursuant to an agreement under this part [1] payments of principal and interest by the borrower with respect to all the outstanding loans made to him from loan funds so established shall be at a rate equal to not less than $40 per month.
(h) Loan cancellation
Notwithstanding the amendment made by section 6(b) of the Nurse Training Act of 1971 to this section—
(A) any person who obtained one or more loans from a loan fund established under this part, [1] who before November 18, 1971, became eligible for cancellation of all or part of such loans (including accrued interest) under this section (as in effect on the day before such date), and who on such date was not engaged in a service for which loan cancellation was authorized under this section (as so in effect), may at any time elect to receive such cancellation in accordance with this subsection (as so in effect); and
(B) in the case of any person who obtained one or more loans from a loan fund established under this part [1] and who on such date was engaged in a service for which cancellation of all or part of such loans (including accrued interest) was authorized under this section (as so in effect), this section (as so in effect) shall continue to apply to such person for purposes of providing such loan cancellation until he terminates such service.
Nothing in this subsection shall be construed to prevent any person from entering into an agreement for loan cancellation under subsection (h) [1] of this section (as amended by section 6(b)(2) of the Nurse Training Act of 1971).
(i) Loan repayment
Upon application by a person who received, and is under an obligation to repay, any loan made to such person as a nursing student, the Secretary may undertake to repay (without liability to the applicant) all or any part of such loan, and any interest or portion thereof outstanding thereon, upon his determination, pursuant to regulations establishing criteria therefor, that the applicant—
(1) failed to complete the nursing studies with respect to which such loan was made;
(2) is in exceptionally needy circumstances; and
(3) has not resumed, or cannot reasonably be expected to resume, such nursing studies within two years following the date upon which the applicant terminated the studies with respect to which such loan was made.
(j) Collection by Secretary of loan in default; preconditions and procedures applicable
The Secretary is authorized to attempt to collect any loan which was made under this part,[1] which is in default, and which was referred to the Secretary by a school of nursing with which the Secretary has an agreement under this part,[1] on behalf of that school under such terms and conditions as the Secretary may prescribe (including reimbursement from the school’s student loan fund for expenses the Secretary may reasonably incur in attempting collection), but only if the school has complied with such requirements as the Secretary may specify by regulation with respect to the collection of loans under this part.[1] A loan so referred shall be treated as a debt subject to section 5514 of title 5. Amounts collected shall be deposited in the school’s student loan fund. Whenever the Secretary desires the institution of a civil action regarding any such loan, the Secretary shall refer the matter to the Attorney General for appropriate action.
(k) Redesignated (j)
(l) Elimination of statute of limitation for loan collections
(1) Purpose
It is the purpose of this subsection to ensure that obligations to repay loans under this section are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.
(2) Prohibition
Notwithstanding any other provision of Federal or State law, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action may be initiated or taken by a school of nursing that has an agreement with the Secretary pursuant to section 297a of this title that is seeking the repayment of the amount due from a borrower on a loan made under this part [1] after the default of the borrower on such loan.

[1] See References in Text note below.

[2] So in original.