A. Each applicant who is approved for a loan by the department may be granted a loan, in such amounts and for such periods as determined by the department, with which to defray expenses incurred in obtaining an osteopathic medical education at an accredited osteopathic medical school in New Mexico if the applicant files with the department a declaration of intent to practice as a licensed osteopathic physician or osteopathic physician's assistant in a health professional shortage area.
B. The loan shall not exceed the necessary expenses incurred while attending a New Mexico osteopathic medical school or college or osteopathic physician's assistant program and shall bear interest at the rate of:
(1) eighteen percent per year if the loan recipient completes an osteopathic medical education and no portion of the principal and interest is forgiven pursuant to Subsection F of this section; and
(2) seven percent per year in all other cases.
C. Loans made pursuant to the Osteopathic Medical Student Loan for Service Act shall not accrue interest until the department:
(1) determines the loan recipient has terminated the recipient's osteopathic medical education prior to completion;
(2) determines the loan recipient has failed to fulfill the recipient's obligation to serve in a health professional shortage area; or
(3) cancels a contract between a loan recipient and the department pursuant to Section 21-22A-9 NMSA 1978.
D. The loan shall be evidenced by a contract between the loan recipient and the department acting on behalf of the state. The contract shall provide for the payment by the state of a stated sum covering the costs of an osteopathic medical education and shall be conditioned upon the repayment of the loan to the state over a period established by the department in consultation with the loan recipient after the completion of osteopathic medical school or an osteopathic physician's assistant program and any period of internship or residency required to complete the loan recipient's education.
E. Loans made to loan recipients who fail to complete their osteopathic medical education shall become due immediately upon termination of their osteopathic medical education. The department, in consultation with the loan recipient, shall establish terms of repayment, alternate service or cancellation terms.
F. The contract shall provide that the department shall forgive a portion of the loan for each year that a loan recipient practices as a licensed osteopathic physician or osteopathic physician's assistant in a health professional shortage area and shall require a period of four years of service in exchange for the loan. Ten percent of the loan shall be forgiven upon completion of the first year of service, twenty percent of the loan shall be forgiven upon completion of the second year of service, thirty percent of the loan shall be forgiven upon completion of the third year of service and the remainder of the loan shall be forgiven upon completion of the fourth year of service.
G. Loan recipients shall serve a complete year in order to receive credit for that year. The minimum credit for a year shall be established by the department.
H. If a loan recipient completes a professional education and does not meet all requirements of this section, the department shall assess a penalty of up to three times the principal due, plus eighteen percent interest, unless the department finds acceptable extenuating circumstances for why the requirements should be waived. If the department does not find acceptable extenuating circumstances for the loan recipient's failure to meet the requirements of this section, the department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this section.
I. The department shall adopt rules to implement the provisions of this section. The rules may provide for the repayment of osteopathic medical student loans in annual or other periodic installments.
History: 1978 Comp., § 21-22A-6, enacted by Laws 1978, ch. 109, § 6; 1981, ch. 292, § 1; 1991, ch. 262, § 42; 1994, ch. 57, § 2; 1995, ch. 144, § 7; 2005, ch. 321, § 4; 2005, ch 323, § 2; 2016, ch. 42, § 4.
ANNOTATIONSCross references. — For the health profession advisory committee, see 21-1-26.8 NMSA 1978.
The 2016 amendment, effective May 18, 2016, changed references to the commission on higher education to the higher education department, and provided for osteopathic medical student loans to students of a New Mexico college or osteopathic medicine or osteopathic physician's assistant program in exchange for service in a health professional shortage area; throughout the section, changed "commission" to "department", and changed "student" to "loan recipient"; in Subsection A, after "medical education at", deleted "any reputable and" and added "an", after "medical school in", deleted "in United States" and added "New Mexico", after "declaration of", deleted "his", after "intent to practice", deleted "his profession", and after "physician's assistant in", deleted "areas of New Mexico designated as not being adequately served by osteopathic medical practitioners" and added "a health professional shortage area"; in Subsection B, in the introductory sentence, after "while attending", deleted "an" and added "a New Mexico", and in Paragraph (1), after "completes", deleted "his" and added "an"; in Subsection C, in the introductory sentence, after "accrue interest until", added "the department", in Paragraph (1), after the paragraph designation, deleted "the commission", in Paragraph (2), after the paragraph designation, deleted "the commission", and after "obligation to serve in", deleted "an area of New Mexico designated as not being adequately served by osteopathic medical practitioners" and added "a health professional shortage area", in Paragraph (3), after the paragraph designation, deleted "the commission"; in Subsection F, after "recipient practices", deleted "his profession", and after "osteopathic physician's assistant in", deleted "areas approved by the commission as not being adequately served by osteopathic medical practitioners. The loan shall be forgiven as follows:", deleted Paragraphs (1) and (2) of Subsection F, deleted the subparagraph designation for Paragraph (3) and deleted "for loan terms of three years or more, forty", and added "a health professional shortage area and shall require a period of four years of service in exchange for the loan. Ten", after "first year of service", deleted "in a designated health professional shortage area, thirty", after the comma, added "twenty", after "second year of service", added "thirty percent of the loan shall be forgiven upon completion of the third year of service", and after "remainder of the loan shall be forgiven upon completion of the", deleted "third" and added "fourth"; in Subsection G, after the subsection designation, added "Loan"; in Subsection H, after "recipient completes", deleted "his" and added "a", after "does not", deleted "serve in a health professional shortage area" and added "meet all requirements of this section", after the first occurrence of "extenuating circumstances for why the", deleted "student cannot serve" and added "requirements should be waived", and after "failure to", deleted "carry out his declared intent to serve in a health professional shortage area in the state", and added "meet the requirements of this section"; and in Subsection I, after "shall adopt", deleted "regulations" and added "rules", and after the second occurrence of "The", deleted "regulations" and added "rules".
The 2005 amendment, effective June 17, 2005, added Subsections C(1) through (3); deleted former references to repayment of the loan "together with interest" and loan "principal and interest"; deleted the former provision in Subsection D which provided that the contract shall provide that immediately upon completion or termination of the student's osteopathic medical education, all interest then accrued shall be capitalized; changed "health professional advisory committee" to "commission" in Subsection F; changed "principal plus accrued interest" to "loan"; and provided in Subsection H that if the commission does not find acceptable circumstances for a student's failure to serve in a health professional shortage area, the commission shall require repayment of the loan plus the amount of any interest.
The 1995 amendment, effective July 1, 1995, substituted "health profession advisory committee" for "medical shortage area committee" throughout the section; inserted "or osteopathic physician's assistant" following "osteopathic physician" in Subsections A and E; inserted "or osteopathic physician's assistant program" following "medical school" in Subsections B and C; inserted "osteopathic" preceding "medical education" in Paragraph (1) of Subsection B, in the last sentence of Subsection C, and in Subsection D; in Subsection E, substituted Paragraphs (1) to (3) for a previous loan forgiveness formula; redesignated the last two sentences of Subsection E as Subsection F; and redesignated the remaining subsections accordingly.
The 1994 amendment, effective July 1, 1994, substituted "if the applicant" for "providing the applicant" in Subsection A and "shall" for "may" in the first three sentences in Subsection E; divided the formerly undivided language in Subsection B into an introductory paragraph and Paragraphs (1) and (2); added present Subsection F; and redesignated former Subsection F as present Subsection G.
The 1991 amendment, effective June 14, 1991, substituted "commission" for "board" throughout the section; substituted "eighteen percent per year if the student completes his medical education and no portion of the principal and interest is forgiven pursuant to Subsection E of this section and seven percent per year in all other cases" for "nine percent per year" at the end of Subsection B; in Subsection C, substituted "over a period established by the commission in consultation with the student" for "within five years" in the second sentence and added the third sentence; rewrote Subsection D which read "In the event a loan recipient fails to complete his osteopathic medical education, the board shall establish a period of time, within five years of the date the student leaves school, in which the loan must be repaid with interest"; rewrote Subsection E which read "The contract shall provide that the state may forgive one year of the principal amount of the loan together with interest for each year that a student practices his profession as a licensed osteopathic physician in areas designated by the osteopathic medical advisory committee as not being adequately served by osteopathic medical practitioners. However, in order to qualify for such repayment credit, the student must enter into an agreement with the board to serve in one of these areas for at least two years"; and made minor stylistic changes throughout the section.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Constitutionality of statute authorizing state to loan money or engage in business of a private nature, 14 A.L.R. 1151, 115 A.L.R. 1456. 81A C.J.S. States §§ 155, 208, 225.