ARIZONA HOUSE OF REPRESENTATIVES Fifty-fourth Legislature Second Regular Session
	Senate: ED DP 7-0-0-0 | 3^rd Read 29-0-1-0

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SB 1152: medical student loan program

Sponsor: Senator Livingston, LD 22

Committee on Education

Overview

Modifies membership of the Board of Medical Student Loans (Board). Prescribes penalties for liquidated damages for a loan recipient who fails to fulfill the conditions of a contract. Appropriates $2,000,000 from the state General Fund (GF) in FY 2021 to the Medical Student Loans Fund (Fund).

History

Under current law, the Board consists of the following eight members: 1) two members appointed by the chairman of the Arizona Medical Board; 2) three members appointed by the Governor and who are knowledgeable in the problems of health care in Arizona; 3) one member from the staff of the College of Medicine of the University of Arizona appointed by the President of the University of Arizona; 4) one member who is a licensed osteopathic physician or surgeon and is appointed by the Board of Osteopathic Examiners in Medicine and Surgery; and 5) the director of the Arizona Department of Health Services (DHS) or the director's designee who is an ex officio nonvoting member (A.R.S. § 15-1722).

The Board may grant loans from the Fund to bear the expenses of the medical education of students at a public or private school of medicine who intend to enter and complete an approved residency program. Loans are capped at $20,000 per year for each student's tuition plus a living allowance. Current law requires at least 50% of Fund monies to be apportioned for students attending private medical schools (A.R.S. § 15-1723).

Each applicant who is approved by the Board may receive a loan for up to five years and each loan bears an interest of 7% per year. If a loan recipient does not fulfill the conditions of a loan contract, the recipient is required to repay the full amount borrowed, including tuition, at the 7% interest rate plus a penalty for liquidated damages in an amount equivalent to the full amount borrowed, including tuition, less the amount credited for time actually served. The Board may waive the payment of principal, interest and liquidated damages if a loan recipient fails to fulfill the contract due to death or permanent physical disability (A.R.S. § 15-1724).

Provisions

Board Membership

1. Modifies Board membership as follows:

a) Removes the following:

i. Two members who are appointed by the chairman of the Arizona Medical Board;

ii. One member who is appointed by the Governor and who are knowledgeable in the problems of health care in Arizona;

iii. One member who is appointed from the staff of the College of Medicine of the University of Arizona and who is appointed by the president of the University of Arizona; and

iv. One member who is a licensed osteopathic physician or surgeon and is appointed by the Board of Osteopathic Examiners in medicine and surgery;

b) Adds one representative from each accredited medical school in Arizona who is appointed by the president or chief officer of that medical school; and

c) Provides voting powers to the director of DHS. (Sec. 1)

Fund

2. Removes the requirement that at least 50% of the monies from the Fund be apportioned for students attending private medical schools. (Sec. 2)

3. Allows the Board to waive the payment of penalties for liquidated damages if the recipient fails to fulfill the contract due to death or permanent physical disability. (Sec. 3)

4. Requires a person who does not fulfill the conditions of a contract to pay, in addition to the full amount borrowed and 7% interest, the following penalties for liquidated damages:

a) If the recipient withdraws from the program while in medical school, there is no penalty;

b) If the recipient withdraws from the program during residency, an amount equal to 10% of the loan amount; and

c) If the recipient withdraws from the program while serving as a physician in the area listed in the recipient's contract, an amount equal to 25% of the loan amount. (Sec. 3)

5. Removes the requirement that DHS administer the Fund. (Sec. 4)

6. Specifies that all appropriated monies and penalties received by the Board must be deposited in the Fund. (Sec. 4)

Miscellaneous

7. Appropriates $2,000,000 from the state GF in FY 2021 to the Fund. (Sec. 6)

8. Allows current Board members to continue to serve until the expiration of their normal terms. (Sec. 5)

9. Exempts the appropriation from lapsing. (Sec. 6)

10. Makes technical and conforming changes. (Sec. 1-4)

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14.                   SB 1152

15. Initials CH/EB       Page 0 Education

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