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Date: March 15, 1995
FOR IMMEDIATE RELEASE
Contact: Public Health Service  (301) 443-3376 (HRSA)

The Health Resources and Services Administration listed the names in today's Federal Register, the official listing of federal actions and regulations, as required by law. HRSA administers the loan program for HHS.

Besides being named in the Federal Register, defaulters may be barred from participating in Medicare and Medicaid or, in some cases, may have their wages garnished or property attached.

A recent tabulation shows that 1,648 of defaulters on the 1993 list are now in satisfactory repayment status or have paid their obligation in full. The amount paid back from those listed in 1993 has now grown to $10.5 million.

Secretary Shalala said, "The HEAL program has helped more than 130,000 students finance their health professions education. Without it, many would not have been able to complete their training.

"Consistently, more than 95 percent of HEAL borrowers pay back their loans," Secretary Shalala said. "But for those who choose not to honor their commitment, we have to do everything we can to get payment -- including the pressure of publishing their names."

Payment from the HEAL defaulters listed has been sought over a long period of time by notification letters, referrals to collection agencies, reports to credit bureaus and obtaining state court judgments. All on the current list also received letters during May and June of 1994 telling them of HRSA's intent to publish their names.

HEAL program loans are made from private banks, pension funds, credit unions and other private and state lending institutions to medical, dental, veterinary, podiatry, optometry, pharmacy, health administration, clinical psychology, public health and chiropractic students.

The loans are guaranteed by the federal government -- meaning the federal government must pay the banks if students default.

Chiropractic students have the poorest record of payments, and the five schools with the largest number of defaulters are chiropractic schools.

People who have arranged to make even small, regular payments on their loans were not included in the list. However, 2,784 defaulters noted on the 1993 list appear in today's list.

Philip R. Lee, M.D., HHS assistant secretary for health and director of the Public Health Service, said, "We will take additional steps to try to ensure that these defaulters live up to their contracts. The defaulters listed in the Federal Register will be subject to referral to the HHS Office of the Inspector General for exclusion from the Medicare and Medicaid programs, to the Internal Revenue Service for tax refund offsets, and to the Department of Justice for litigation or enforcement of judgments through wage garnishment or attachment of property.

"Defaulters who are federal employees have also had their names sent to their agencies for salary offsets."

Dr. Lee also said that the information will be made available to health professions schools, school associations, state licensing boards, hospitals and other relevant organizations.

HRSA Administrator Ciro V. Sumaya, M.D., said, "We take seriously our obligation to the American taxpayers as well as our obligation to the institutions and students that benefit from the program. We therefore will continue to aggressively pursue health professionals who fail to honor their financial obligations."

When it reauthorized the program in 1992, Congress expressed its concern over HEAL default rates by requiring by law the publication of defaulters' names.

The Federal Register listing is arranged by state, and within each state, by profession. It includes each defaulter's name, latest available city and state of residence, total HEAL debt amount, the school last attended with a HEAL loan and the estimated school separation date.

Federal payments on defaulted loans are made from the Student Loan Insurance Fund, which is supported by an insurance premium paid by the borrower and, in some cases, the school at the time the loan is initiated, as well as by congressional appropriations.

HRSA is one of eight Public Health Service agencies within HHS.