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Service Agreement and Progress Reviews
Initial contracts for the AIDS and CR-LRPs are executed to cover a consecutive two-year period. For
the General LRP, initial contracts cover a consecutive three-year period. Participants agree to conduct
qualified research as NIH employees for the entire two- or three-year period as required, while the
NIH agrees to make loan repayments and tax liability reimbursements according to a LRP-determined
repayment schedule.
LRP participants and their advisors/supervisors must Submit Form annual progress reports to the LRC.
The LRC reviews the research accomplishments and plans of participants in consideration of continued
LRP support.
Extending Participation
Participants may apply to continue their LRP participation if their total repayable debt has not been
repaid during their initial two- or three-year contracts. Renewal contracts are issued for one-year
periods and based upon the same criteria as the initial contract. Additionally, a demonstration of
research accomplishments during the previous contract are required. Progress toward development as
an independent basic science or clinical investigator is a major factor in renewal of LRP support.
Participants must appear before the LRC in person, and present a 10-minute (maximum) oral progress
review describing their research as follows: introduction, methods, results, and conclusions.
Participants in certain NIH fellowship programs should focus on their training and development,
and not research projects. LRP renewal participants should consult with their research mentors
for specific guidance on the approach and content of their renewal presentation. Research mentors
are strongly encouraged to attend the renewal meeting.
Loan Repayments
Each participant must have total eligible educational loans which exceed 20 percent of annual NIH
base salary ("debt threshold"). Participants are required to pay 50 percent of their debt threshold
("participant obligation"). The participant obligation is an amount that NIH never repays, no matter
how long you are in the LRP. It represents 10% of your institutional compensation calculated just prior
to your initial loan repayment program contract and it does not change. You are not required to repay
your participant obligation during your participation in the LRP, however, you are always responsible
for keeping your loan accounts in good standing. If you do make payments to your lenders, they will be
credited toward your participant obligation only if you provide us with a statement or print-out from
your lender's website which clearly indicates the posting date and amount of each payment, as well as
the current balance of your account. This information should be faxed to 301-480-0756.
NIH salaries vary by position and grade. For participants appointed under the Commissioned Corps, NIH
salary is comprised of base pay plus Basic Allowance for Subsistence (BAS) and Basic Allowance for Housing
(BAH). Special and bonus pays, such as board certified, variable, and contract pays, are not included in
the LRP salary calculation. For physicians appointed in the civil service who qualify for a Physicians
Comparability Allowance (PCA), the amount of the allowance is not included in the salary calculation;
however, receipt of loan repayments will reduce the PCA amount (see "Physicians Comparability Allowance (PCA) Recipients").
NIH will repay the remaining educational debt ("repayable debt") as follows:
- At the rate of 25% of the repayable debt for each year of qualified service, for those who are on a two-year or three-year contract, up to a $35,000 maximum per year;
- For the first, second and third year of qualified service, otherwise qualified applicants for the
General Research LRP, who are participating in ACGME accredited clinical training programs, payment
of repayable debt will be no more than $20,000 per year.
- One-year continuation renewal contracts, beyond the second year (or third year, for contracts
under the General Research LRP), may be entered into if the total repayable debt has not been repaid
during the initial 2- or 3-year contract;
- If the applicant's contract is renewed, the NIH will repay at the rate of 50% of the remaining repayable debt up to a $35,000 maximum; or 100% of the repayable debt if it is $5,000 or less.
For more information on repayable debt, click here.
Payments are to be made on a delayed quarterly schedule after completion of qualified research, unless
otherwise agreed to by the Secretary and the participant. After a loan repayment is sent to a lender,
a subsequent repayment is released contingent upon lender confirmation of the prior payment's receipt
and the account balance. Participants are responsible for obtaining verification from their lenders of
payment crediting and account balances. Accounts are monitored to ensure accurate crediting of LRP repayments,
to avoid lost or misapplied payments, and to prevent repayment of the participant's debt obligation.
Reimbursements to Participants by the LRP
LRP participants are responsible for keeping all their educational loans current during their participation.
In addition, participants are responsible for the participant obligation,
which equals one-half of their debt threshold. There are 2 circumstances which
may result in the LRP reimbursing participants for payments they have made toward their educational loans:
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Type of Reimbursement
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Why Provided by LRP
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When Provided by LRP
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How & When Requested by Participants
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Initial Reimbursement
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For reimbursement of payments made by participants prior to the release of funds to lenders by LRP
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After first quarter of participation; reimbursement will not be applied to participant obligation
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By written request during the first quarter of participation–deadline is 45 days after notification of acceptance to LRP
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Participant Obligation Exceeded
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For reimbursement of payments made by participants which exceed their participant obligation (one-half of their debt threshold)
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Annually
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By written request at least 30 days prior to the end of each 4 quarters of participation
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NOTES
- Reimbursements are provided to assist participants with their cash-flow. Participants are not required to request reimbursements.
- All requests for reimbursement must include written verification of the payment amount and date credited to the educational loan(s). Verifications must be obtained from lenders.
- Reimbursements are substitutes for LRP loan repayments to lenders. Participants who receive reimbursements will have a reduction in total annual payments made to their lenders; however, the total annual repayment amount is not changed.
EXAMPLE
Dr. Jones is projected to receive $25,000 in loan repayments for each year of her two-year LRP contract.
Since her starting NIH salary is $30,000, her debt threshold is $6,000 and her participant obligation is
$3,000. Dr. Jones makes payments of $300 per month directly to her lenders.
Dr. Jones may request an initial reimbursement of the $900 paid during her first quarter of participation
(before the first disbursement by the LRP, which occurs after 90 days of initial NIH research service).
This reimbursement amount will not reduce her $3,000 participant obligation, but will reduce the $25,000
in repayments projected to be made to her lenders in the first year of her LRP contract.
Alternatively, at the end of her fourth quarter of participation (12 months), Dr. Jones can permit the
$900 she paid in her first quarter to be applied to her participant obligation. If she continues to make
$300 monthly payments, she would have satisfied her $3,000 participant obligation after 10 months, entitling
her to a reimbursement of $600. If Dr. Jones continues to make payments of $300 per month to her lenders,
after one additional year she will be eligible for reimbursement of $3,600 (12 months times $300). This
would result in a total reduction of $4,200 in repayments made to her lenders by the LRP. However, the
total loan repayment benefit to Dr. Jones for her 2-year contract would be unchanged.
Physicians Comparability Allowance (PCA) Recipients
Under 5 C.F.R. § 595.105(e), PCA recipients who are accepted into the LRP must have their PCAs reduced by
the amount of loan repayments received under the LRP. For additional information, PCA recipients should
consult with their IC personnel office or your ICD LRP Coordinator (see Appendix I).
Physicians Special Pay (PSP) Allowance Recipients
Under 5 C.F.R. § 5379, PSP recipients who are accepted into the LRP may have the amount of PSP that normally
would be paid offset by an amount up to the annual loan repayment. The offset, if any, is discretionary, and
determined by the employee's IC. PSP is not part of basic pay for determination of the debt threshold or
participant obligation. For additional information, PSP recipients should consult with their IC personnel
office or your IC LRP Coordinator (see Appendix I).
Reimbursement for Increased Income Tax Liabilities
LRP repayments made to lenders represent taxable income to program participants. This income will be reported
annually to the IRS and may result in an increase in participants' Federal, State, and local tax liabilities.
Participants should consult their income tax preparers for guidance on the implications of LRP repayments and
tax reimbursements.
To partially offset Federal tax liability increases, tax reimbursement payments, equal to 39 percent of the
total repayment amount, will be credited directly to the participant's IRS (Federal tax) account simultaneously
with each repayment. Dependent upon the availability of funds, the Secretary may make additional tax reimbursement
payments to participants who document State and/or local tax liability increases (see Guidelines for Tax Reimbursement Requests), or additional
Federal tax liability beyond the 39% payment. As verification of increased tax liability for requests in excess
of $1,000, certified copies of the participant's tax returns for the year(s) in which loan repayments and tax
liability reimbursements have been made must be submitted to the DLR.
Example of Benefit Payments
Example No. 1
Dr. Smith has $51,900 of outstanding, qualified educational loans (principal and current interest) for which she
has applied for repayment by the AIDS-LRP. She is selected to participate in the AIDS-LRP and is to be employed
as a Clinical Fellow by the Commissioned Corps, USPHS. Her annual NIH base pay at the date of program eligibility
is expected to be $25,000, but she also anticipates receiving $14,000 in subsistence, quarters, and variable housing
allowances plus $5,000 in variable special pay.
Dr. Smith's debt threshold is $7,800, or 20 percent of her $39,000 NIH salary ($25,000 base pay plus $14,000 in allowances only).
Thus, she qualifies for participation in the AIDS-LRP, since she has total debt exceeding her threshold amount.
Dr. Smith qualifies to receive $48,000 (plus expected interest) in repayments, and she will have to pay half of the
debt threshold amount, or $3,900. For the initial two-year contract, the AIDS-LRP agrees to
repay one-fourth of the repayable debt for each year of qualified service, or $12,000 per year for a total of $24,000
in her initial 2-year contract. She will have to apply for renewal contracts to receive additional payments toward
the remaining repayable debt. If a renewal contract is awarded, Dr. Smith would receive payments at the rate of
one-half of the remaining repayable debt for the renewal period or $12,000 in loan repayments.
In addition, Dr. Smith will receive tax reimbursements, equal to 39 percent of the loan repayments made to her lenders,
to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are
deposited with the Federal Reserve Bank for credit to her IRS tax account. Additional tax reimbursement payments
will require that Dr. Smith document an increase in either State or local tax liability as a result of receiving
AIDS-LRP benefits (see Guidelines for Tax Reimbursement Requests).
Example No. 2
Dr. Jackson has $95,000 of outstanding, qualified educational loans (principal and current interest) for which he has
applied for repayment in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds. He is selected to
participate in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds and is to be employed as a
Clinical Fellow by the Clinical Center. His annual NIH salary at the date of program eligibility is expected to be
$50,000.
Dr. Jackson's debt threshold is $10,000, or 20 percent of his $50,000 NIH salary. Thus, he qualifies for participation
in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds, since he has total debt exceeding his threshold
amount.
Dr. Jackson qualifies to receive $90,000 (plus expected interest) in repayment, and he will have to pay half of the debt
threshold amount, or $5,000. For the initial two-year contract, the Clinical Research LRP for Individuals from Disadvantaged
Backgrounds agrees to repay one-fourth of the repayable debt for each year of qualified service, or $22,500 per year for
a total of $45,000 in his initial 2-year contract. He will have to apply for a renewal contract to receive additional
payments toward the remaining repayable debt. If a renewal contract is awarded, Dr. Jackson would receive payments at
the rate of one-half of the remaining repayable debt for the renewal period or $22,500.
In addition, Dr. Jackson will receive tax reimbursements, equal to 39 percent of the loan repayments made to his lenders,
to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are deposited
with the Federal Reserve Bank for credit to his IRS tax account. Additional tax reimbursement payments will require that Dr.
Jackson document an increase in either State or local tax liability as a result of receiving Clinical Research LRP benefits
(see Guidelines for Tax Reimbursement Requests).
Example No. 3
Dr. Levi has $170,000 of outstanding, qualified educational loans (principal and current interest) for which she has applied
for repayment in the General Research LRP. She is selected to participate in the General Research LRP and is to be employed
as a Research Fellow by the NCI. Her annual NIH salary at the date of program eligibility is expected to be $75,000.
Dr. Levi's debt threshold is $15,000, or 20 percent of her $75,000 NIH salary. Thus, she qualifies for participation in the
General Research LRP, since she has total debt exceeding her threshold amount.
Dr. Levi qualifies to receive $162,500 (plus expected interest) in repayment, and she will have to pay half of the debt
threshold amount, or $7,500. For the initial three-year contract, the General Research LRP agrees to repay one-fourth
of the repayable debt for each year of qualified service, up to a maximum of $35,000 per year, or a total of $105,000
during her 3-year contract. She will have to apply for a renewal contract to receive additional payments toward the
remaining repayable debt. If a renewal contract is awarded, Dr. Levi would receive payments at the rate of one-half
of the remaining repayable debt for the renewal period or $28,750.
In addition, Dr. Levi will receive tax reimbursements, equal to 39 percent of the loan repayments made to her lenders,
to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are deposited
with the Federal Reserve Bank for credit to her IRS tax account. Additional tax reimbursement payments will require that
Dr. Jackson document an increase in either State or local tax liability as a result of receiving General Research LRP
benefits (see Guidelines for Tax Reimbursement Requests).
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