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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature First Regular Session |
Senate: APPROP DP 9-0-1-0 | 3rd Read 29-0-1-0House: APPROP DP 12-1-0-0 |
SB 1078: medical student loan program
Sponsor: Senator Livingston, LD 22
Caucus & COW
Overview
Appropriates $2,000,000 from the state General Fund (GF) in FY 2022 to the Medical Student Loans Fund (Fund). Prescribes penalties for liquidated damages for a loan recipient who fails to fulfill the conditions of a contract. Continues the Board of Medical Student Loans (Board) for 8 years.
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 provide for each student's tuition and are capped at $20,000 per year for each student's 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 can 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 is 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)
Penalties for Liquidated Damages
2. Requires a person who does not fulfill the conditions of a contract to pay the full amount borrowed and 7% interest plus the following penalty for liquidated damages:
a) If the recipient withdraws from the program while in medical school, there is no penalty for liquidated damages;
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)
Fund
3. Removes the requirement that at least 50% of the monies from the Fund be apportioned for students attending private medical schools. (Sec. 2)
4. Repeals language stating a recipient who withdraws or is dismissed must repay a loan to the Board. (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. Continues, retroactive to July 1, 2021, the Board until July 1, 2029. (Sec. 6)
8. Repeals the Board on January 1, 2030. (Sec. 6)
9. Allows current Board members to continue to serve until the expiration of their normal terms. (Sec. 7)
10. Appropriates $2,000,000 from the state GF in FY 2022 to the Fund. (Sec. 8)
11. Exempts the appropriation from lapsing. (Sec. 8)
12. Contains a purpose statement. (Sec. 9)
13. Makes technical and conforming changes. (Secs. 1, 2, 3, 4)
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17. SB 1078
18. Initials TG/IR Page 0 Caucus & COW
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