N.M. Stat. § 21-22-6 — NM_STATUTES Code / Chapter 21 / Article 22 / Section 21-22-6
§ 21-22-6. Medical student loans; contract terms; repayment
Status: in_force

A. Each applicant who is approved for a loan by the commission [department] may be granted a loan, in such amounts and for such periods as determined by the commission [department], with which to defray expenses incurred in obtaining a medical education at any reputable and accredited medical school in the United States if the applicant files with the commission [department] a declaration of his intent to practice his profession as a licensed physician or physician assistant in areas of New Mexico designated as not being adequately served by medical practitioners.

B. The loans shall not exceed the necessary expenses incurred while attending a medical school or college and shall bear interest at the rate of:

(1) eighteen percent per year if the student completes his 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 Medical Student Loan for Service Act shall not accrue interest until:

(1) the commission [department] determines the loan recipient has terminated the recipient's medical education prior to completion;

(2) the commission [department] determines the loan recipient has failed to fulfill the recipient's obligation to serve in a health professional shortage area; or

(3) the commission [department] cancels a contract between a student and the commission [department] pursuant to Section 21-22-9 NMSA 1978 .

D. The loan shall be evidenced by a contract between the student and the commission [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 a medical education and shall be conditioned upon the repayment of the loan to the state over a period established by the commission [department] in consultation with the student after completion of medical school and any period of internship or residency required to complete the student's education.

E. Loans made to students who fail to complete their medical education shall become due immediately upon termination of their medical education. The commission [department], in consultation with the student, shall establish terms of repayment, alternate service or cancellation terms.

F. The contract shall provide that the commission [department] shall forgive a portion of the loan for each year that a loan recipient practices his profession as a licensed physician or physician assistant in areas approved by the commission [department] as not being adequately served by medical practitioners. The loan shall be forgiven as follows:

(1) loan terms of one year shall require one year of practice in a designated health professional shortage area. Upon completion of service, one hundred percent of the loan shall be forgiven;

(2) loan terms of two years shall require one year of practice in a designated health professional shortage area for each year of the loan. Upon completion of the first year of service, fifty percent of the loan shall be forgiven. Upon completion of the second year of service, the remainder of the loan shall be forgiven; and

(3) for loan terms of three years or more, forty percent of the loan shall be forgiven upon completion of the first year of service in a designated health professional shortage area, thirty percent of the loan shall be forgiven upon completion of the second year of service and the remainder of the loan shall be forgiven upon completion of the third year of service.

G. 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 his professional education and does not serve in a health professional shortage area, the department shall assess a penalty of up to three times the principal due, plus eighteen percent interest, unless the commission [department] finds acceptable extenuating circumstances for why the student cannot serve. If the commission [department] does not find acceptable extenuating circumstances for the student's failure to carry out his declared intent to serve in a health professional shortage area in the state, the department shall require immediate repayment of the loan plus the amount of any interest and penalty assessed pursuant to this subsection.

I. The department shall adopt regulations to implement the provisions of this section. The regulations may provide for the repayment of medical student loans in annual or other periodic installments.