Repayable Debt
In exchange for a two-year (or three-year for the Intramural General Research LRP) commitment to your research career, the NIH will repay your educational loan debt at the rate of 25% annually, up to a maximum of $35,000 per year. You will receive the maximum annual disbursement only if your repayable debt remains equal to or greater than $140,000 over your LRP contract. The NIH Loan Repayment Programs (LRP) payment projections are based on the repayable debt calculated at the start of an LRP contract. Repayable debt is a participant's total eligible student loan debt (principal plus existing accrued interest) at the beginning of an LRP contract, less participant obligation (which is 10 percent of a participant's base institutional salary), plus estimated future interest on a participant's eligible loans through the end of the LRP contract.
Repayable debt is computed using the loan documentation submitted with
an LRP application. Initial quarterly payment projections assume a constant
interest rate and that a participant does not make any loan payments
for the duration of their LRP contract.
Initial repayable debt is not a fixed dollar amount. Throughout the
contract period repayable debt changes every time we update a loan
balance when verifying a quarterly payment made by the LRP. Since LRP awards
are paid at an annual rate of 25 percent of repayable debt (up to a maximum
of $35,000.00), the quarterly payment amount is subject to being increased
or decreased during an LRP contract. A participant's repayable debt and quarterly LRP payment amount is subject to change if:
- the interest rate on a loan(s) changes during the participant's
LRP contract. A change in interest rate causes repayable debt to increase or decrease to coincide with the change in estimated
future interest that is calculated for the LRP payment projections;
- a participant makes payments on their loans during their
LRP contract. The smaller principal balances resulting from
participant payments will decrease the estimated future interest
calculated for the LRP payment projections, which reduces repayable debt;
- a loan's status is changed
based on updated or more accurate information. A change
to a loan's status (e.g., payment, deferment with/without interest,
forbearance with/without interest) or the status begin/end date could
cause repayable debt to increase or decrease since such change impacts the estimated future interest calculated for the LRP payment projections;
or
- an eligible loan is added or an ineligible loan is removed
from a participant's LRP portfolio after the beginning of their
LRP contract.
Please note that LRP payments will change only if repayable debt is
less than $140,000. Otherwise a participant will receive the maximum
annual award of $35,000 or $8,750 per quarter.
We may adjust the amount of a participant's quarterly payments
if there has been a significant change in the participant's repayable debt. If the change in repayable debt is not significant, an adjustment
may be made to a participant's final quarterly payment amount based
on an audit of their LRP account that is conducted prior to the end the
contract. All adjustments ensure total repayment remains equal to one-half
of repayable debt at the time of the adjustment.
Repayable Debt Formula
A two-step formula is used to calculate the annual loan repayment amount:
Step 1:
Total Educational Debt
- Participant Obligation (10% of Institutional
Base Salary)
= Total Repayable Debt
Step 2:
Total Repayable Debt
x .25 (25%)
= Potential Annual Repayment (up to $35,000 annual ceiling)
Repayable Debt Definitions
Debt Threshold: The debt threshold amount serves two purposes in the determination of loan repayment support:
- The debt threshold amount is used to establish basic eligibility
to apply to the program -- participants must have total eligible
educational loans that equal or exceed 20 percent of their annual institutional
base salary at the time of initial participation in a loan repayment
program.
- The debt threshold amount is also used to calculate the amount
of a participant's debt (see participant obligation below), which
the LRP will not repay.
Institutional Base Salary: The institutional base salary is the annual income or compensation that the organization pays for the applicant's appointment, whether the time is spent on research, teaching, patient care, or other activities. Institutional base salary excludes any income that an applicant earns outside the duties of the organization (Click here for more detailed information on salary and compensation).
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.
Total Educational Debt: The Total Educational Debt is the principal,
capitalized interest, interest projected from the beginning to the end
of your LRP Contract, and related expenses (such as the required insurance premiums on the unpaid balances of some loans) of qualified U.S. Government (Federal, state, local), academic institutions, and commercial U.S. educational loans obtained by participants for: undergraduate, graduate, and health professional school tuition expenses; other reasonable educational expenses required by the school(s) attended, including fees, books, supplies, educational equipment and materials, and laboratory expenses; and reasonable living expenses, including the cost of room and board, transportation and commuting costs, and other living expenses as determined by the Secretary.
Repayable Debt Schedule
NIH will repay the remaining educational debt as follows (Click here to see the estimated Annual Disbursement table):
- at the rate of 25% of the repayable debt for each year of qualified service, up to the $35,000 annual maximum per year;
- one or two year renewal contracts beyond the second year may be
entered into;
- 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 annual maximum; or 100% of the repayable debt if it is $5,000 or less.
In return for the repayment of their educational loans, LRP participants
must agree to (1) engage in qualified research as specified during the
period of the contract as a health professional engaged in qualifying
research , (2) make payments to lenders on their own behalf for periods
of Leave Without Pay (LWOP); (3) Pay monetary damages as required for
breach of contract; and (4) satisfy all other terms and conditions of
the LRP contract and application procedures.
Payments are to be made on a quarterly schedule after completion of
qualified research, unless otherwise agreed to by the Secretary and
the participant. Payments will not be made to lenders until the NIH
receives confirmation of the receipt of the prior payment, the account
balance and the Research Assignment/Employment Verification (obtained
from the Research Supervisor). Participants are responsible for obtaining
payment confirmations, current account balances from their lenders,
and ensuring that this information is provided to the NIH Division of
Loan Repayment. Accounts are monitored to ensure accurate crediting
of payments, to avoid lost or misapplied payments, and to prevent payment
of the participant's obligation.
Examples of Loan Repayment Benefits
Example No. 1
Dr. Jackson has $51,900 of outstanding, qualified educational loans
(principal and current interest) for which she has applied for repayment
by the Loan Repayment Program for Pediatric Research (PR-LRP). She is
selected to participate in the PR-LRP and her annual base pay at the
date of program eligibility is expected to be $75,000.
Dr. Jackson's debt threshold is $15,000, or 20 percent of her $75,000 salary. Thus, she qualifies to submit an application for the PR-LRP, since she has total debt ($51,900) exceeding her threshold amount of $15,000.
Dr. Jackson will have to pay half of the debt threshold amount, or $7,500, and she qualifies to receive $44,400 (plus expected interest) in repayments. This figure represents Dr. Jackson's total educational debt minus the amount she is required to pay (half of her debt
threshold amount of $15,000). For the initial two-year contract, the Extramural Loan Repayment Program agrees to repay one-fourth of the repayable debt for each year of qualified service, or $11,100 per year for a total of $22,200 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. Jackson will receive payments at the rate of one-half of the remaining repayable debt for the renewal period or $11,100 in loan repayments.
In addition, Dr. Jackson 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 PR-LRP benefits (see Appendix II), and are dependent upon the availability of funds.
Example No. 2
Dr. Saunders has $95,000 of outstanding, qualified educational loans
(principal and current interest) for which he has applied for repayment
in the Loan Repayment Program for Clinical Research (LRP-CR). He is
selected to participate in the LRP-CR and his annual salary at the date
of program eligibility is expected to be $75,000.
Dr. Saunders's debt threshold is $15,000, or 20 percent of his $75,000 salary. Thus, he qualifies for participation in the LRP-CR, since he has total debt ($95,000) exceeding his debt threshold amount ($15,000).
Dr. Saunders will have to pay half the debt threshold amount, or $7,500, and he qualifies to receive $87,500 (plus expected interest) in repayment. This amount is the product of Dr. Saunder's total educational debt minus the amount he is required to pay (half of his threshold amount of $15,000). For the initial two-year contract, the Extramural Loan Repayment Program agrees to repay one-fourth of the repayable debt for each year of qualified service, or $21,875 per year for a total of $43,750 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. Saunders will receive payments at the rate of one-half of the remaining repayable debt for the renewal period or $21,875.
In addition, Dr. Saunders 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. Saunders document an increase in either State or local tax liability as a result of receiving Extramural Loan Repayment Program benefits (see Appendix II), and are dependent on the availability of funds.
Example No. 3
Dr. Sampson has $170,000 of outstanding, qualified educational loans
(principal and current interest) for which she has applied for repayment
in the LRP-CR. She is selected to participate in the LRP-CR and her
annual salary at the date of program eligibility is expected to be $75,000.
Dr. Sampson's debt threshold is $15,000, or 20 percent of her $75,000 salary. Thus, she qualifies to apply the LRP-CR, since she has total debt ($170,000) exceeding her threshold amount ($15,000).
Dr. Sampson will have to pay half of the debt threshold amount, or $7,500, and she qualifies to receive $162,500 in repayment. This figure represents Dr. Sampson's total educational debt minus the amount she is required to pay (half of her threshold amount of $15,000). For the initial 2-year contract, the Extramural Loan Repayment Program 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 $70,000 during her 2-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. Sampson will receive payments at the rate of one-half of the remaining repayable debt for the renewal period up to the annual maximum of $35,000.
In addition, Dr. Sampson 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. Sampson document an increase in either State or local tax liability as a result of receiving Extramural Loan Repayment Program benefits (see Appendix II), and are dependent on the availability of funds.
Reimbursements to Participants by the Extramural Loan Repayment Program
Extramural Loan Repayment Program participants are responsible for keeping all their educational loans current during their participation. In addition, participants are responsible for the participant obligation, which equals 50 percent of their debt threshold. There are 2 circumstances that may result in reimbursement to 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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To reimburse participants for payments made after an LRP contract is entered into and before the LRP begins making payments.
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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 - the 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 exceeded their participant obligation (one-half of their debt threshold).
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Annually
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By written request at least 45 days prior to the end of four quarters of participation
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Notes on Reimbursements to Participants
Reimbursements are provided to assist participants with their cash flow. Participants are not required to request reimbursements.
Reimbursement requests are optional and are offered to assist participants
with their cash flow. All requests for reimbursement must include
written verification of the payment amount and date credited to the
educational loan(s), such as a payment history from the lender. Payment
verifications must be obtained from lenders and should show the payment
amount, payment date, and resulting account balance. This document
should be submitted via facsimile to 301-480-0756. Upon approval of
the reimbursement request, payments are made directly to the LRP participant's
bank.
Reimbursements are substitutes for loan repayments to lenders.
Participant Reimbursement Example
Dr. Johnson is projected to receive $25,000 in loan repayments for each year of her two-year Extramural Loan Repayment Program contract. Since her annual salary is $30,000, her debt threshold is $6,000 and her participant obligation is $3,000. Dr. Johnson makes payments of $300 per month directly to her lenders.
Dr. Johnson may request an initial reimbursement of the $900 paid during her first quarter of participation (before the first disbursement by the Extramural Loan Repayment Program, which occurs after 90 days of initial participation). This reimbursement amount will not reduce her $3,000 participant obligation, but will reduce the $25,000 in projected repayments to her lenders in the first year of her Extramural Loan Repayment Program contract.
Alternatively, at the end of her fourth quarter of participation (12 months), Dr. Johnson 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. Johnson 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 Extramural Loan Repayment Program. However, the total loan repayment benefit to Dr. Johnson for her 2-year contract would be unchanged.
Reimbursement for Increased Income Tax Liabilities
Extramural Loan Repayment Program repayments made to lenders represent taxable income for program participants. This income is reported annually to the IRS and may result in an increase in participant's Federal, State, and local tax liabilities. Participants should seek professional financial guidance on the implications of extramural loan repayment program 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 loan payment. Depending upon the availability of funds, the
NIH may make additional tax reimbursement payments to participants who
document State and/or local tax liability increases (Appendix
II), or additional Federal tax liability beyond the 39% payment.
Extending Participation
Participants may apply to continue their Extramural Loan Repayment Program
participation. Renewal contracts are issued for one or two year periods
and are based upon the same criteria as the initial contract. Additionally,
a demonstration of research accomplishments during the previous contract
is required. Progress toward development as an independent investigator
is a major factor in renewal of Extramural Loan Repayment Program support.
Renewal applications are competitively reviewed and the submission of
a renewal application does not assure the award of benefits.
Portability of Award
During the initial two-year period and subsequent renewal periods the LRP awards are portable and can be transferred across institutions and research projects. However, the portability of the awards is subject to a review of continuing eligibility by the NIH Institute or Center (IC) that funded the award. In their review of continuing eligibility, the funding IC will assess the appropriateness of the research project, research environment, and mentoring plan, as well as reconfirm that basic eligibility conditions will be satisfied, e.g., that the research is supported by domestic nonprofit funding and will occupy at least 50 percent or more of your total level of effort for an average of at least 20 hours per week during each quarterly service period. That is, during each contract quarter, you must conduct the required research for a minimum of 240 hours (based on a 12-week quarter) or 260 hours (based on a 13-week quarter.
You should notify the
NIH LRP of any changes to your research assignment and/or institution during the
two-year period, and we will provide you with instructions on requesting NIH
approval for the changes to your institution or research project.� It is
recommended that you advise us of these changes 2 months prior to their
effective date, to allow sufficient processing time within the NIH.
If
you are unable to establish qualifying research assignments for the two-year
period, you should consider reapplying when you are in a better position to
comply with the contract provisions.� Loan repayment is expected to be offered
every year.
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