Read first time 01/20/11.   Referred to Committee on Higher Education.

     AN ACT Relating to administrative consistency between conditional scholarship and loan repayment student financial aid programs; amending RCW 28B.115.020, 28B.115.120, and 28B.102.060; reenacting and amending RCW 28B.115.110; and repealing RCW 28B.115.060.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 28B.115.020 and 1991 c 332 s 15 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Board" means the higher education coordinating board.
     (2) "Department" means the state department of health.
     (3) "Eligible education and training programs" means education and training programs approved by the department that lead to eligibility for a credential as a credentialed health care professional.
     (4) "Eligible expenses" means reasonable expenses associated with the costs of acquiring an education such as tuition, books, equipment, fees, room and board, and other expenses determined by the board.
     (5) "Eligible student" means a student who has been accepted into an eligible education or training program and has a declared intention to serve in a health professional shortage area upon completion of the education or training program.
     (6) "Forgiven" or "to forgive" or "forgiveness" means to render health care services in a health professional shortage area in the state of Washington in lieu of monetary repayment.
     (7) "Health professional shortage areas" means those areas where credentialed health care professionals are in short supply as a result of geographic maldistribution or as the result of a short supply of credentialed health care professionals in specialty health care areas and where vacancies exist in serious numbers that jeopardize patient care and pose a threat to the public health and safety. The department shall determine health professional shortage areas as provided for in RCW 28B.115.070((, or until June 1, 1992, as provided for in RCW 28B.115.060)). In making health professional shortage area designations in the state the department may be guided by applicable federal standards for "health manpower shortage areas," and "medically underserved areas," and "medically underserved populations."
     (8) "Credentialed health care profession" means a health care profession regulated by a disciplining authority in the state of Washington under RCW 18.130.040 or by the state board of pharmacy under chapter 18.64 RCW and designated by the department in RCW 28B.115.070((, or until June 1, 1992, as established in RCW 28B.115.060)) as a profession having shortages of credentialed health care professionals in the state.
     (9) "Credentialed health care professional" means a person regulated by a disciplining authority in the state of Washington to practice a health care profession under RCW 18.130.040 or by the state board of pharmacy under chapter 18.64 RCW.
     (10) "Loan repayment" means a loan that is paid in full or in part if the participant renders health care services in a health professional shortage area as defined by the department.
     (11) "Nonshortage rural area" means a nonurban area of the state of Washington that has not been designated as a rural physician shortage area. The department shall identify the nonshortage rural areas of the state.
     (12) "Participant" means a credentialed health care professional who has received a loan repayment award and has commenced practice as a credentialed health care provider in a designated health professional shortage area or an eligible student who has received a scholarship under this program.
     (13) "Program" means the health professional loan repayment and scholarship program.
     (14) "Required service obligation" means an obligation by the participant to provide health care services in a health professional shortage area for a period to be established as provided for in this chapter.
     (15) "Rural physician shortage area" means rural geographic areas where primary care physicians are in short supply as a result of geographic maldistributions and where their limited numbers jeopardize patient care and pose a threat to public health and safety. The department shall designate rural physician shortage areas.
     (16) "Satisfied" means paid-in-full.
     (17) "Scholarship" means a loan that is forgiven in whole or in part if the recipient renders health care services in a health professional shortage area.
     (18) "Sponsoring community" means a rural hospital or hospitals as authorized in chapter 70.41 RCW, a rural health care facility or facilities as authorized in chapter 70.175 RCW, or a city or county government or governments.

Sec. 2   RCW 28B.115.110 and 1991 c 332 s 24 and 1991 c 164 s 8 are each reenacted and amended to read as follows:
     Participants in the health professional loan repayment and scholarship program who are awarded loan repayments shall receive payment from the program for the purpose of repaying educational loans secured while attending a program of health professional training which led to a credential as a credentialed health professional in the state of Washington.
     (1) Participants shall agree to meet the required service obligation in a designated health professional shortage area.
     (2) Repayment shall be limited to eligible educational and living expenses as determined by the board and shall include principal and interest.
     (3) Loans from both government and private sources may be repaid by the program. Participants shall agree to allow the board access to loan records and to acquire information from lenders necessary to verify eligibility and to determine payments. Loans may not be renegotiated with lenders to accelerate repayment.
     (4) Repayment of loans established pursuant to this program shall begin no later than ninety days after the individual has become a participant. Payments shall be made quarterly, or more frequently if deemed appropriate by the board, to the participant until the loan is repaid or the participant becomes ineligible due to discontinued service in a health professional shortage area or after the required service obligation when eligibility discontinues, whichever comes first.
     (5) Should the participant discontinue service in a health professional shortage area, payments against the loans of the participants shall cease to be effective on the date that the participant discontinues service.
     (6) Except for circumstances beyond their control, participants who serve less than the required service obligation shall be obligated to repay to the program an amount equal to twice the total amount paid by the program on their behalf ((in addition to any payments on the unsatisfied portion of the principal and interest)). This amount is due and payable immediately. Participants who are unable to pay the full amount due shall enter into a payment arrangement with the board, including an arrangement for payment of interest. The maximum period for repayment is ten years. The board shall determine the applicability of this subsection. The interest rate shall be determined by the board and be established by rule.
     (7) The board is responsible for the collection of payments made on behalf of participants from the participants who discontinue service before completion of the required service obligation. The board shall exercise due diligence in such collection, maintaining all necessary records to ensure that the maximum amount of payment made on behalf of the participant is recovered. Collection under this section shall be pursued using the full extent of the law, including wage garnishment if necessary.
     (8) The board shall not be held responsible for any outstanding payments on principal and interest to any lenders once a participant's eligibility expires.
     (9) The board shall temporarily or, in special circumstances, permanently defer the requirements of this section for eligible students as defined in RCW 28B.10.017.
     (10) The board shall establish an appeal process by rule.

Sec. 3   RCW 28B.115.120 and 1993 c 423 s 2 are each amended to read as follows:
     (1) Participants in the health professional loan repayment and scholarship program who are awarded scholarships incur an obligation to repay the scholarship, with penalty and interest, unless they serve the required service obligation in a health professional shortage area in the state of Washington.
     (2) The interest rate shall be ((eight percent for the first four years of repayment and ten percent beginning with the fifth year of repayment)) determined by the board and established by rule.
     (3) The period for repayment shall coincide with the required service obligation, with payments of principal and interest ((accruing quarterly)) commencing no later than ((nine)) six months from the date the participant completes or discontinues the course of study or completes or discontinues the required ((residency)) postgraduate training. Provisions for deferral of payment shall be determined by the board.
     (4) The entire principal and interest of each payment shall be forgiven for each payment period in which the participant serves in a health professional shortage area until the entire repayment obligation is satisfied or the borrower ceases to so serve. Should the participant cease to serve in a health professional shortage area of this state before the participant's repayment obligation is completed, payment((s on)) of the unsatisfied portion of the principal and interest ((shall begin the next payment period and continue until the remainder of the participant's repayment obligation is satisfied)) is due and payable immediately.
     (5) In addition to the amount determined in subsection (4) of this section, except for circumstances beyond their control, participants who serve less than the required service obligation shall be obliged to ((repay to the program)) pay a penalty of an amount equal to twice the ((total amount paid by the program on their behalf)) unsatisfied portion of the principal.
     (((5))) (6) Participants who are unable to pay the full amount due shall enter into a payment arrangement with the board for repayment including interest. The maximum period for repayment is ten years.
     (7) The board is responsible for collection of repayments made under this section and shall exercise due diligence in such collection, maintaining all necessary records to ensure that maximum repayments are made. Collection and servicing of repayments under this section shall be pursued using the full extent of the law, including wage garnishment if necessary, and shall be performed by entities approved for such servicing by the Washington student loan guaranty association or its successor agency. The board is responsible to forgive all or parts of such repayments under the criteria established in this section and shall maintain all necessary records of forgiven payments.
     (((6))) (8) Receipts from the payment of principal or interest or any other subsidies to which the board as administrator is entitled, which are paid by or on behalf of participants under this section, shall be deposited with the board and shall be used to cover the costs of granting the scholarships, maintaining necessary records, and making collections under subsection (((5))) (7) of this section. The board shall maintain accurate records of these costs, and all receipts beyond those necessary to pay such costs shall be used to grant scholarships to eligible students.
     (((7))) (9) Sponsoring communities who financially contribute to the eligible financial expenses of eligible medical students may enter into agreements with the student to require repayment should the student not serve the required service obligation in the community as a primary care physician. The board may develop criteria for the content of such agreements with respect to reasonable provisions and obligations between communities and eligible students.
     (((8))) (10) The board may make exceptions to the conditions for participation and repayment obligations should circumstances beyond the control of individual participants warrant such exceptions. The board shall establish an appeal process by rule.

Sec. 4   RCW 28B.102.060 and 2004 c 58 s 7 are each amended to read as follows:
     (1) Participants in the conditional scholarship program incur an obligation to repay the conditional scholarship, with interest and an equalization fee, unless they teach for two years in an approved education program for each year of scholarship received, under rules adopted by the board. Participants who teach in a designated teacher shortage area shall have one year of loan canceled for each year they teach in the shortage area.
     (2) The interest rate shall be determined ((annually)) by the board. Participants who fail to complete the teaching service shall incur an equalization fee based on the remaining unforgiven balance of the loan. The equalization fee shall be added to the remaining balance and repaid by the participant.
     (3) The minimum payment shall be set by the board. The maximum period for repayment shall be ten years, with payments of principal and interest ((accruing quarterly)) commencing six months from the date the participant completes or discontinues the course of study. The interest rate shall be determined by the board and be established by rule. Provisions for deferral of payment shall be determined by the board. The board shall establish an appeal process by rule.
     (4) The entire principal and interest of each payment shall be forgiven for each payment period in which the participant teaches in an approved education program until the entire repayment obligation is satisfied. Should the participant cease to teach in an approved education program in this state before the participant's repayment obligation is completed, payments on the unsatisfied portion of the principal and interest shall begin the next payment period and continue until the remainder of the participant's repayment obligation is satisfied.
     (5) The board is responsible for collection of repayments made under this section and shall exercise due diligence in such collection, maintaining all necessary records to insure that maximum repayments are made. Collection and servicing of repayments under this section shall be pursued using the full extent of the law, including wage garnishment if necessary. The board is responsible to forgive all or parts of such repayments under the criteria established in this section and shall maintain all necessary records of forgiven payments.
     (6) Receipts from the payment of principal or interest or any other subsidies to which the board as administrator is entitled, which are paid by or on behalf of participants under this section, shall be deposited in the future teachers conditional scholarship account and shall be used to cover the costs of granting the conditional scholarships, maintaining necessary records, and making collections under subsection (5) of this section. The board shall maintain accurate records of these costs, and all receipts beyond those necessary to pay such costs shall be used to grant conditional scholarships to eligible students.
     (7) The board shall adopt rules to define the terms of repayment, including applicable interest rates, fees, and deferments.

NEW SECTION.  Sec. 5   RCW 28B.115.060 (Eligible credentialed health care professions -- Required service obligations) and 1991 c 332 s 19 are each repealed.