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1993.08.30 :  Health Education Assistance Loan Defaulters

Contact:  Patricia Campbell (301) 443-3376
August 30, 1993

    HHS Secretary Donna E. Shalala today announced the first in
what will be the annual publication in the Federal Register of
the names of Health Education Assistance Loan program defaulters.
    The names of approximately 5,000 persons who have defaulted
on their HEAL loans and for whom insurance claims have been paid
by HHS to HEAL lenders from 1979 to March 31, 1993, will be
published in this first list.
    Since the HEAL program began in 1979, more than 128,000
health professions students have benefited from $2.7 billion in
loans from this federally insured student loan program, which is
administered by the Health Resources and Services
Administration's Bureau of Health Professions.
    Secretary Shalala said, "It's apparent that the majority of
HEAL borrowers honor their commitment to repay their loans. 
However, for those who have not honored their commitment, we need
to expose their lack of payment and do what we can to recover
these tax dollars."
    The total number of defaults has increased because of an
increase in the number and dollar value of loans in repayment. 
In 1987, defaults totaled $16 million; in 1992, $42 million. 
Cumulatively the default rate is about 5 percent.
    The HEAL defaulters listed in the Federal Register were
consistently encouraged to repay their loans through a variety of
methods, including notification letters, referral to collection
agencies, reports to credit bureaus and enforcement of state
court judgments.  Despite all these efforts, those listed in the
Federal Register failed to establish repayment schedules.
    Defaulters listed in the Register are subject to referral to
the HHS Office of the Inspector General for exclusion from the
Medicare and Medicaid programs, to the IRS 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.      
     When it reauthorized the program in 1992, Congress expressed
its concern over high HEAL default rates by requiring by law the
yearly 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.
    The information will be made available to schools, school
associations, state licensing boards, hospitals and other
relevant organizations, which will also have access, unlike the
general public, to the Social Security numbers and street
addresses of the defaulters.
    HEAL loans are available to medical, dental, veterinary
medicine, podiatry, optometry, pharmacy and chiropractic students
as well as to graduate students in health administration, public
health and clinical psychology.  
    The loans are made by eligible lenders such as banks, credit
unions, savings and loan associations, pension funds, HEAL
schools, state agencies and insurance companies.  
    Federal payments on defaulted loans are made from the Student
Loan Insurance Fund, which is supported by an insurance premium
paid by the borrower at the time the loan is initiated as well as
Congressional appropriations.
    The Health Resources and Services Administration is one of
eight Public Health Service agencies within HHS.