F. Qualifying Educational Loans

1. Loans Qualifying for Repayment - NHSC LRP participants will receive loan repayment funding to be applied to the principal, interest, and related expenses of Government (Federal, State, or local) and commercial loans obtained by the participant for:  school tuition; other reasonable educational expenses (see Definitions, Section B of this Bulletin); and reasonable living expenses (see Definitions, Section B of this Bulletin). The loans for tuition and expenses are limited to those incurred by the participant for undergraduate or graduate education pursued prior to obtaining a degree in the health profession in which the participant will satisfy his or her NHSC LRP service commitment. 

   If applicants are currently in school working towards another health professions degree, those loans will not be considered for NHSC LRP repayment until the applicant has finished that future degree and applies to participate in the NHSC LRP in that new health profession.  For example, an applicant currently applying as a Licensed Professional Counselor (LPC) may only submit educational loans incurred prior to receipt of the LPC degree.  If the applicant is pursuing further education and incurring loans towards obtaining his/her Health Service Psychologist (HSP) degree, only the loans incurred prior to the LPC degree will be eligible for repayment at this time.  Upon the applicant completing his/her HSP degree, those loans may become eligible for repayment only if the applicant reapplies to participate in the LRP as an HSP.

   Applicants must submit the following proof of their qualifying educational loans:  original loan applications, promissory notes, disclosure Statements, and Statements from the current holder indicating the borrower’s name, original amount borrowed, date of original disbursement, and type of loans.  In addition, include a current account Statement showing your loan balance. The current account Statement must be dated not more than 30 days before the postmark date of NHSC application.  Additional loan documentation may be required during the review process to determine the eligibility of the loan.  We have provided an example for your convenience.  (See examples at the end of this Bulletin.)

   All loans submitted for loan repayment will be verified to determine whether they are eligible for repayment under NHSC LRP by contacting lenders and holders and checking the applicant’s credit report.  For former NHSC LRP awardees, a complete loan payment history of the previously awarded NHSC LRP funds must be submitted with the loan documentation.

2. Loans Not Qualifying for Repayment - The following are examples of financial obligations that do not qualify for repayment by the NHSC LRP:
   1. loans for which the associated documentation (e.g., promissory notes and lender statements) does not identify the loans as applicable to undergraduate or graduate education;
   2. loans not obtained from a government entity or commercial lending institution (see Definitions, Section B of this Bulletin). Most loans made by private foundations or individuals are not eligible for repayment;
   3. loans, or that portion of loans, obtained for educational or living expenses which exceed the school's estimated standard student budget in the year the loan was made and the student is unable to substantiate, to the NHSC LRP's satisfaction, that the excess educational and/or living expenses were reasonable;
   4. loans that have been repaid in full;
   5. loans for residency relocation (e.g., Medex loans);
   6. PLUS loans (made to parents); and
   7. personal lines of credit.

3. Consolidated/Refinanced Loans

If eligible educational loans are consolidated and/or refinanced, the original loan documentation must be submitted to establish the educational purpose and contemporaneous nature of such loans. The consolidated/refinanced loan must be from a Government (Federal, State, or local) or commercial lender and be for the applicant’s qualifying educational loans only. If an eligible educational loan is consolidated/refinanced with any debt other than another eligible educational loan of the applicant, no portion of the consolidated/refinanced loan will be eligible for loan repayment.  

For eligible loans to remain eligible for the NHSC LRP, applicants/participants must keep their eligible educational loans segregated from all other debts. Also, eligible educational loans should not be consolidated with loans owed by any other person, such as a spouse or child.  Finally, borrowers should be sure to get a disclosure Statement on the consolidated loans from their lenders.  (See examples at the end of this Bulletin.)

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