Department of Health and Human Services
OFFICE OF 
 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
 
H E A
EALTH  DUCATION  SSISTANCE 
 
L   D W
OAN  EFAULTERS  ITH 
 
I F Y 2008 
NCOM  E IN  ISCAL  EAR 
 
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
February 2010 
OEI-03-09-00100   
  
   
 E X E C U T I V E   S U M M A R Y  
OBJECTIVE
 
To determine whether individuals who have defaulted on their Health 
Education Assistance Loans (HEAL) received income in fiscal year   
(FY) 2008 that might enable them to make payments on these loans. 
BACKGROUND 
The HEAL program began in 1978 to help eligible graduate students in 
health professions finance their education.  Although no new HEAL 
loans have been issued since September 30, 1998, the Health Resources 
and Services Administration (HRSA) in the Department of Health & 
Human Services (HHS) continues to oversee prior loans made by 
participating lenders, such as banks and credit unions.  HHSs Program 
Support Center (PSC) provides HRSA with debt management services, 
which include many of the activities involved in trying to obtain 
payments when individuals default on HEAL loans.  Through the HEAL 
program, 157,388 borrowers received $4 billion in HEAL loans.   
HHS reimburses lenders for any HEAL loans that are not repaid 
because of borrowers default, bankruptcy, death, or total and 
permanent disability.  After a lender has tried to obtain repayment from 
a HEAL borrower and failed, it requests payment from HRSA.  HRSA 
approves the claim for payment and then PSC initiates an extensive 
loan collection process.  If, at the end of this process, the borrower does 
not enter into a repayment agreement, the Department of Justice (DOJ) 
requests that PSC refer the case to the HHS Office of Inspector General 
(OIG).  OIG then notifies the borrower that he or she is being excluded 
from participation in Federal health care programs. 
When OIG excludes a HEAL borrower, PSC includes the individual on 
the defaulted borrowers list.  PSC provides this list to HRSA to publish 
on its Web site (http://www.defaulteddocs.dhhs.gov) at the next 
quarterly update.  HEAL defaulters are removed from this list when 
their debt is repaid or they enter into settlement agreements with DOJ 
and OIG to repay their debt.  HEAL defaulters may make loan 
payments, but unless they enter into settlement agreements, they are 
still considered to be in default and remain on the defaulted borrowers 
list.     
Almost all HEAL borrowers have repaid or are in the process of 
repaying their loans through their original or refinancing agreements.  
However, 1,065 HEAL borrowers on the defaulted borrowers list owed 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  i   
  
   
E X E C U T I V E   S U M M A R Y  
$147 million in principal and interest as of November 1, 2008.  Because 
of the accrual and compounding of interest, the amounts some 
defaulters owed far exceeded their original loan amounts. 
The State Identification Inquiry (SIDI) is an application States use to 
obtain information on individuals wages and unemployment benefits 
nationwide.  Using data obtained from SIDI, we determined whether 
any of the 1,065 defaulters on the defaulted borrowers list earned 
income in FY 2008.  We also obtained from PSC a file containing 
information on any of the 1,065 HEAL defaulters who had made 
payments toward their loans but did not have settlement agreements.  
We used this file to determine whether any of the HEAL defaulters with 
income in FY 2008 had made loan payments during that time.     
FINDINGS 
Of the 486 HEAL defaulters who earned income in FY 2008,           
312 made no payments on their loans during that time.  Based on 
wages identified through SIDI, 486 of the 1,065 HEAL defaulters 
earned income in FY 2008.  The remaining 579 defaulters did not have 
income information identified in SIDI.  Of the 486 defaulters, 312 made 
no loan payments during that time.  These 312 HEAL defaulters owed        
$47.5 million on their loans and earned $13.4 million in FY 2008.  The 
median income for these defaulters was $34,387.  Ninety-eight 
defaulters (31 percent) earned $50,000 or more.  Four of these 
defaulters earned $200,000 or more.  The 98 defaulters were responsible 
for nearly $15 million (31 percent) of the $47.5 million owed.   
Of the 174 HEAL defaulters who earned income and made loan 
payments in FY 2008, nearly half paid less than $2,000 each during 
that time.  A total of 174 HEAL defaulters earned income and made one 
or more loan payments in FY 2008.   The median income for these 
defaulters was $47,331.  However, 78 (45 percent) paid less than $2,000 
each and, of these, 24 paid less than $500 each toward their loans in        
FY 2008.  These 174 HEAL defaulters owed $22.5 million on their loans 
and earned $9.6 million in FY 2008.  The amounts these defaulters paid 
totaled $659,135 in FY 2008, or just 3 percent of their total loan balance 
during that time.      
RECOMMENDATIONS 
The HEAL program was established to help students in the health 
professions finance their education.  Almost all HEAL borrowers have 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  ii   
  
   
E X E C U T I V E   S U M M A R Y  
repaid or are in the process of repaying their loans; however, as of 
November 2008, a small number of borrowers had defaulted on their 
loans.   
Our review found that 486 of the 1,065 HEAL defaulters on the 
defaulted borrowers list had earned income in FY 2008.  A portion of 
these defaulters earned income that seemingly would enable them to 
make payments on their outstanding loans; however, these defaulters 
made minimal or no such payments.   
We recommend that HRSA work with PSC to: 
Use the information we provide on these HEAL defaulters to assist 
with HEAL collection efforts.   
Consider obtaining wage data from Federal or State sources to 
enable HRSA and PSC to target future collection efforts on defaulters 
with income.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
HRSA concurred with our recommendations and stated that upon 
receipt of the data from OIG, PSC will review and share the information 
with DOJ.  Additionally, HRSA stated that consideration will be given 
to obtaining wage data on health professionals who have defaulted on 
their financial obligation.  We have provided PSC with detailed 
information on the 486 HEAL defaulters who earned income in           
FY 2008.   
 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  iii   
 T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
 
I N T RO DU C T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
 
F I N D ING S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
   
Of the 486 defaulters who earned income in FY 2008, 312 made        
no payments on their loans during that time . . . . . . . . . . . . . . . . . 6  
Of the 174 defaulters who earned income and made loan        
payments in FY 2008, nearly half paid less than $2,000 each      
during that time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7  
 
 
R E C OMME N DA TIO N S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 
  Agency Comments and Office of Inspector General Response . . . . 9 
 
 
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 
A:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 
 
 
A CKN OW LEDGMEN TS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12   
  
   
I N TI RN OT DRU OC DT IUO CN T  I O N  
OBJECTIVE 
To determine whether individuals who have defaulted on their Health 
Education Assistance Loans (HEAL) received income in fiscal year   
(FY) 2008 that might enable them to make payments on these loans. 
BACKGROUND 
The HEAL program began in 1978 to help eligible graduate students in 
health professions finance their education.  Although no new HEAL 
loans have been issued since September 30, 1998, the Health Resources 
and Services Administration (HRSA) in the Department of Health & 
Human Services (HHS) continues to oversee prior loans made by 
participating lenders, such as banks and credit unions.    
Under the HEAL program, students of allopathic and osteopathic 
medicine, dentistry, veterinary medicine, optometry, and podiatry were 
allowed to borrow up to $80,000.  Students of pharmacy, chiropractic 
medicine, health administration, public health, allied health, and 
clinical psychology were allowed to borrow up to $50,000.  Through this 
program, 157,388 borrowers received $4 billion in HEAL loans.  
In recent years, several HEAL defaulters have been identified as 
receiving income that would enable them to repay their loans.  In 
October 2008, a local Boston television station identified two HEAL 
defaulters, with a total of approximately $600,000 in HEAL debt, as 
practicing dentists.  Another HEAL defaulter was indicted for making 
false statements to conceal his income and ability to repay his HEAL 
loan.  In October 2007, he was sentenced to 1 year probation and 
ordered to pay $158,469 in restitution to the Government.     
Interest accrues on HEAL loans from the dates of disbursement until 
the dates the loans are paid in full .1  Interest can be compounded (i.e., 
added to the principal) as often as every 6 or 12 months depending on 
the date of the original loan.  HEAL borrowers have as long as 25 years 
to repay their original loans.  If HEAL borrowers refinanced their loans, 
they have 25 years from the refinance dates to repay the new loans.2   
 
1 HRSA, Student Financial Aid Guidelines,  October 2000.  Available online at 
http://www.bhpr.hrsa.gov/dsa/sfag/PDFs/6healcor.pdf.  Accessed on November 4, 2008. 
2 The HEAL refinancing program ended on September 30, 2004.  
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  1   
  
   
I N T R O D U C T I O N  
Almost all HEAL borrowers have repaid or are in the process of 
repaying their loans through their original or refinancing agreements. 
As of September 2008, there were 31,785 borrowers in the process of 
repaying lenders $980 million in principal and interest.   
However, 1,065 HEAL borrowers were on the defaulted borrowers list 
as of November 1, 2008.  These 1,065 defaulters owed $147 million in 
principal and interest.  The amounts owed by individual defaulters 
ranged from $453 to $759,984.  The 1,065 HEAL defaulters owed a 
median of $106,146.  Because of the accrual and compounding of 
interest, the amounts some defaulters owed far exceeded their original 
loan amounts.   
Default Process 
HHS reimburses lenders for loans that are not repaid because of 
borrowers default, bankruptcy, death, or total and permanent 
disability.  HHSs Program Support Center (PSC) provides HRSA with 
debt management services, which include many of the activities 
involved in trying to obtain payments when individuals default on 
HEAL loans.  After a lender has tried to obtain repayment from a HEAL 
borrower and failed, it requests payment from HRSA.  The claims for 
payment are approved by HRSA, and PSC sends the funds to the lender.  
PSC then initiates an extensive loan collection process.  PSC notifies the 
borrower that the Government holds the promissory note and that 
payment is due.  If repayment does not begin, the account is sent to a 
collection agency.  If the collection agency is unable to collect within 6 
months, the account is returned to PSC and a final demand letter is 
sent to the borrower to begin repayment.  PSC sends the borrowers 
information to the Treasury Offset Program, which offsets payments 
made by Federal agencies, such as the Internal Revenue Service.  PSC 
then applies these offsets to the borrowers debt. 3 
If the borrower does not begin repayment, PSC sends the account to the 
Department of Justice (DOJ) to obtain and/or enforce a judgment 
against the borrower.  If the borrower does not comply with DOJ 
demands, DOJ requests PSC to send a 60-day warning letter to the 
borrower.  This notifies the borrower that he or she must enter into a 
repayment agreement with DOJ or risk exclusion from all Federal 
 
3 For example, payments from Federal income tax refunds can be offset, which means 
that the tax refund would be withheld and applied to the defaulters debt instead.   
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  2   
  
   
I N T R O D U C T I O N  
health care programs.4  If the borrower does not enter into a repayment 
agreement, DOJ requests that PSC refer the case to the Office of 
Inspector General (OIG).  OIG then notifies the defaulter that he or she 
is being excluded from participation in Federal health care programs.5 
Defaulted Borrowers List 
HRSA is required by law to publish a quarterly list of HEAL borrowers 
who have been excluded by OIG.6  Information concerning each 
defaulter, including name, State, amount due, school, and field of study, 
is published on this list.  When OIG excludes a HEAL defaulter, it sends 
a copy of the exclusion letter to PSC.  PSC then includes the individual 
on the defaulted borrowers list.  PSC provides this list to HRSA to 
publish on its Web site (http://www.defaulteddocs.dhhs.gov) at the next 
quarterly update.  HEAL defaulters are removed from the defaulted 
borrowers list when their debt is repaid or they enter into settlement 
agreements with DOJ and OIG to repay their debt.  The defaulted 
borrowers list changes as defaulters are removed and as new defaulters 
are added.   
HEAL Payment Information 
HEAL defaulters may make payments on their loans; however, they still 
remain on the defaulted borrowers list until they enter into settlement 
agreements to repay their loans.  According to PSC, HEAL defaulters 
may not have an incentive to enter into settlement agreements if the 
consequences of exclusion from Federal health programs do not affect 
them.   
METHODOLOGY 
Data Collection  
HEAL defaulter information.  We obtained from PSC an electronic file 
containing information about the 1,065 individuals on the HEAL 
defaulted borrowers list as of the November 2008 quarterly update.  
 
4 The Social Security Act,  1892, also provides the borrower with the opportunity to cure 
the default using an offset agreement, 42 U.S.C.  1395ccc.   
5 OIG has the authority to exclude these defaulters under Social Security Act,                   
 1128 (b)(14), 42 U.S.C.  1320a-7(b)(14).  To the extent the borrower is offered an offset 
agreement and refuses to enter into it, breaches the agreement, or does not provide 
sufficient services to maintain the offset collection, OIG must also exclude the borrower 
from participation in Medicare under the Social Security Act,  1892(a)(2)(C) or (a)(3)(B),         
42 U.S.C.  1395ccc(a)(2)(C) or (a)(3)(B). 
6 Public Health Service Act,  709(c)(1), 42 U.S.C.  292h(c)(1). 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  3   
  
   
I N T R O D U C T I O N  
This file included each individuals name, address, Social Security 
number, date of default, and default amount.  We use the term HEAL 
defaulter throughout this report to refer to individuals who are on the 
defaulted borrowers list.   
HEAL payment data.  We obtained from PSC a file containing information on 
any of the 1,065 HEAL defaulters who had made payments toward their 
loans but did not have settlement agreements.  This file included each 
individuals name, Social Security number, date of payment, and payment 
amount.  We received the payment file in January 2009.   
State Identification Inquiry.  The State Identification Inquiry (SIDI) is an 
application the Department of Labor has made available to State 
unemployment insurance agencies so that they can obtain information on 
individuals wages and unemployment benefits nationwide.7  With the 
exception of Hawaii, all States and the District of Columbia contribute 
data to and have agreements enabling them to access the information in 
SIDI.   
Data Analysis 
We used data obtained from SIDI to identify HEAL defaulters 
employers and income for FY 2008.  The Social Security numbers of the 
1,065 defaulters were entered into SIDI to obtain employer names and 
amounts earned per quarter.  Based on the SIDI search results, we 
quantified the number of HEAL defaulters who earned income in        
FY 2008 and the amount they earned.  The SIDI search was performed 
in February 2009.   
We also determined whether any of the HEAL defaulters with income in 
FY 2008 had made loan payments during that time.  To do this, we 
matched the payments data received from PSC with those defaulters 
identified in SIDI as having income for FY 2008.  We quantified the 
number of HEAL defaulters who had made payments in FY 2008 and 
the amount of those payments.     
For defaulters who earned $200,000 or more in FY 2008, we reviewed 
the employer names identified through SIDI to determine whether 
these defaulters earned income in the health care field.   
Limitations.  Our analysis was limited to those defaulters who had FY 2008 
income information identified in SIDI.  There were 579 of 1,065 defaulters 
 
7 Wages on which employers do not pay unemployment insurance tax (e.g., payment to 
independent contractors) are not contained in SIDI.   
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  4   
  
   
I N T R O D U C T I O N  
on the defaulted borrowers list who did not have FY 2008 income 
information identified in SIDI.  We did not independently verify 
information obtained through SIDI.  Since the defaulted borrowers list is 
updated quarterly, some individuals identified on the November 2008 list 
may have since been removed.    
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections approved by the Council of the Inspectors General on 
Integrity and Efficiency.   
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  5   
  
   
F F  I IN NFD DII INN NGDGSI   N G S  
Of the 486 HEAL defaulters who earned      BBaasseedd  oonn  wwaaggeess  iiddeennttiiffiieedd  tthhrroouugghh  
income in FY 2008, 312 made no payments      SSIIDDII,,  448866  ooff  tthhee  11,,006655  HHEEAALL  
ddeeffaauulltteerrss  ((4466  ppeerrcceenntt))  wwhhoo  wweerree  iinn  
on their loans during that time 
ddeeffaauulltt  aass  ooff  NNoovveemmbbeerr  22000088  
eeaarrnneedd  iinnccoommee  iinn  FFYY  22000088..    TThhee  rreemmaaiinniinngg  557799  ddeeffaauulltteerrss  ddiidd  nnoott  hhaavvee  
iinnccoommee  iinnffoorrmmaattiioonn  iiddeennttiiffiieedd  iinn  SSIIDDII..    TThhee  448866  HHEEAALL  ddeeffaauulltteerrss  oowweedd  
$$7700  mmiilllliioonn  oonn  tthheeiirr  llooaannss  aanndd  eeaarrnneedd  $$2233  mmiilllliioonn  iinn  FFYY  22000088..      
OOff  tthhee  448866  HHEEAALL  ddeeffaauulltteerrss  wwhhoo  eeaarrnneedd  iinnccoommee  iinn  FFYY  22000088,,  331122  mmaaddee              
nnoo  llooaann  ppaayymmeennttss  dduurriinngg  tthhaatt  ttiimmee..    TThheessee  331122  HHEEAALL  ddeeffaauulltteerrss  oowweedd                    
$$4477..55  mmiilllliioonn  oonn  tthheeiirr  llooaannss  aanndd  eeaarrnneedd  $$1133..44  mmiilllliioonn  iinn  FFYY  22000088..    TThhee  
mmeeddiiaann  iinnccoommee  ffoorr  tthheessee  ddeeffaauulltteerrss  wwaass  $$3344,,338877..    NNiinneettyy--eeiigghhtt  ooff  tthhee                            
331122  ddeeffaauulltteerrss  ((3311  ppeerrcceenntt))  eeaarrnneedd  $$5500,,000000  oorr  mmoorree..    TThheessee                                      
9988  ddeeffaauulltteerrss  wweerree  rreessppoonnssiibbllee  ffoorr  nneeaarrllyy  $$1155  mmiilllliioonn  ((3311  ppeerrcceenntt))  ooff      
tthhee  $$4477..55  mmiilllliioonn  oowweedd..    
TTaabbllee  11  sshhoowwss  tthhee  iinnccoommee  rraannggeess  ooff  tthhee  331122  HHEEAALL  ddeeffaauulltteerrss  wwhhoo  
eeaarrnneedd  iinnccoommee  bbuutt  ddiidd  nnoott  mmaakkee  aannyy  llooaann  ppaayymmeennttss  iinn  FFYY  22000088  aalloonngg  
wwiitthh  tthhee  aammoouunnttss  tthheeyy  oowweedd..  
  
TTaabbllee  11..    IInnccoommee  EEaarrnneedd  aanndd  AAmmoouunntt  OOwweedd  bbyy 312 HEAL Defaulters 
Who Did   Not Make Any Loan Payments in FY 2008  
   Amount  Percentage 
Number of  Percentage of 
FY 2008 Income  Owed in  of Total 
   Defaulters Defaulters
Millions  Balance
  
Under $30,000  143 46% $21.9   46%
  
$30,000$  49,999  71 23% $10.8   23%
  
$50,000$74,999  47 15% $6.1   13%
  
$75,000$  99,999  25 8% $3.8   8%
  
$100,000$199,999  22 7% $4.2   9%
  
$200,000   or more  4 1% $0.7   1%
  
     Total  312 100% $47.5   100% 
  
Source:  OIG analysis of SIDI data. 
  
  
AAss  TTaabbllee  11  sshhoowwss,,  ffoouurr  ddeeffaauulltteerrss  wwhhoo  eeaacchh  eeaarrnneedd  oovveerr  $$220000,,000000  iinn        
FFYY  22000088  mmaaddee  nnoo  ppaayymmeennttss  ttoowwaarrdd  tthheeiirr  HHEEAALL  llooaannss  iinn  tthhaatt  ttiimmee..    OOnnee  
ooff  tthheessee  ddeeffaauulltteerrss  eeaarrnneedd  $$338811,,333399  wwhhiillee  eemmppllooyyeedd  iinn  aa  ddeennttaall  pprraaccttiiccee  
iinn  FFYY  22000088..    AAnnootthheerr  ddeeffaauulltteerr  eeaarrnneedd  $$225588,,442244  tthhrroouugghh  aa  ddeennttaall  
pprraaccttiiccee  aass  wweellll..    
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  6   
  
   
F I N D I N G S  
There were 174 HEAL defaulters 
Of the 174 HEAL defaulters who earned income 
who earned income in FY 2008 and 
and made loan payments in FY 2008, nearly half 
made at least one loan payment 
paid less than $2,000 each     
during that time.  HEAL defaulters 
during that time 
may make loan payments at any 
time, but they are still considered to be in default and remain on the 
defaulted borrowers list until they enter into settlement agreements. 
These 174 HEAL defaulters owed $22.5 million on their loans and 
earned $9.6 million in FY 2008.  The amount these defaulters paid 
totaled $659,135 in FY 2008, or just 3 percent of their total loan balance 
during that time. 
Table 2 shows the income ranges, the total amounts paid, and the 
amounts owed for the 174 HEAL defaulters who made loan payments in 
FY 2008.   
Table 2 .  Income Earned, Total Amounts Paid, and Amounts Owed by   
174 HEAL Defaulters Who Made Loan Payments in FY 2008 
 
Total  Amount  Percentage 
Number of 
FY 2008 Income  Amount  Owed in  of Balance 
  Defaulters
Paid Millions1  Paid Off
Under $3 0,000  53 $187,248 $7.8   2%
 
$30,000$49,999  39 $119,090 $4.1   3%
 
$50,000$74,999  44 $158,509 $5.6   3%
 
$75,000$99,999  21 $76,571 $2.5   3%
 
$100,000$199,999  13 $95,583 $2.2   4%
 
$200,000 or more  4 $22,134 $0.4   6%
 
     Total  174 $659,135 $22.5   3%
 
1 The amounts owed in this table add up to $22.6 million instead of $22.5 million because of rounding.            
Source:  OIG analysis of PSC payments data.   
 
The median income for defaulters who made loan payments was 
$47,331.  However, 78 (45 percent) paid less than $2,000 each and, of 
these, 24 paid less than $500 each toward their loans in FY 2008.   
Table 3 shows the range of payments for the 174 HEAL defaulters who 
made payments in FY 2008. 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  7   
  
   
F I N D I N G S  
 
Table 3.  Range of Payments for 174 HEAL Defaulters Who Made 
Loan Payments in Fiscal Year 2008 
 
Number of  Percentage of 
FY 2008 Loan Payments 
  Defaulters  Defaulters
Under $500  24  14%
 
$500$999  18  10%
 
$1,000$1,999  36  21%
 
$2,000$2,999  27  16%
 
$3 ,000$4,999  28  16%
5, 000$9,999  29  17%
$1 0,000 or more  12  7%
      Total  174  100% 1
1 Pe rcentages in this table do not total 100 percent because of rounding.   
Source:  OIG analysis of PSC payments data.   
 
Four HEAL defaulters who earned over $200,000 in FY 2008 made loan 
payments during that time.  One of the defaulters who earned over 
$200,000 paid just $227 in FY 2008; the remaining three defaulters paid 
between $5,238 and $9,700.  Two of these defaulters, who earned 
$274,708 and $207,846 respectively, earned income through dental 
practices.   
 
 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  8   
  
   
 R E C O M M E N D A T I O N S  
 
The HEAL program was established to help students in the health 
professions finance their education.  Almost all HEAL borrowers have 
repaid or are in the process of repaying their loans; however, as of 
November 2008, a small number of borrowers had defaulted on their 
loans.        
Our review found that 486 of the 1,065 HEAL defaulters on the 
defaulted borrowers list had earned income in FY 2008.  A portion of 
these defaulters earned income that seemingly would enable them to 
make payments on their outstanding loans; however, these defaulters 
made minimal or no such payments.   
We will share the results of our review with HRSA and PSC staff to 
assist them in their HEAL collection efforts.  HRSA can share this 
information with DOJ to enhance its debt collection efforts for those 
defaulters.     
We recommend that HRSA work with PSC to: 
Use the information we provide on these HEAL defaulters to assist 
with HEAL collection efforts 
HRSA and PSC staff may want to focus their efforts on those HEAL 
defaulters we identified as having the highest income in FY 2008.   
Consider obtaining wage data from Federal or State sources to enable 
HRSA and PSC to target future collection efforts on defaulters with 
income   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
HRSA concurred with our recommendations and stated that upon 
receipt of the data from OIG, PSC will review and share the information 
with DOJ to assist DOJ with its collection and litigation efforts.  PSC 
will initially focus its efforts on individuals who had income greater 
than $75,000.  Additionally, HRSA stated that consideration will be 
given to obtaining wage data on health professionals who have 
defaulted on their financial obligation.  We have provided PSC with 
detailed information on the 486 HEAL defaulters who earned income in 
FY 2008.  For the full text of HRSAs comments, see Appendix A.   
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  9  x 
A  P  PEN  0  A 
Agency Comments 
/"""'~~ 
\  .r,  DEPARTMENT OF HEALTH &. HUMAN SERVICES
~E  Health Resources and Services 
Administration
"~/:":It"...~o{} 
Rockville, MD 20857 
JAN  1 2 2010 
TO:  Inspector General 
FROM:  Administrator 
SUBJECT:  OIG Draft Report: "Health Education Assistance Loan Defaulters With Income in 
Fiscal Year 2008" (OEI-03-09-00100) 
This is in response to the OIG's request for comments on the draft report, "Health Education 
Assistance Loan Defaulters With Income in Fiscal Year 2008" (OEI-03-09-001 00). Attached are 
the Health Resources and Services Administration's (HRSA) comments. If you have any 
questions, please contact Patricia A. Reese in HRSA's Office ofFederal Assistance Management 
at (301) 443-0270. 
Mary KWakefield, Ph.D., R.N. 
Attachment 
oEI-03 -0 9-00 1 00  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  10   
  
   
A P P E N D I X   ~   A  
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  11   
  
   
 A C K N O W L E D G M E N T S  
 
This report was prepared under the direction of Robert A. Vito, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia 
regional office, and Linda M. Ragone, Deputy Regional Inspector 
General.   
Tara Bernabe served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Philadelphia 
regional office who contributed to the report include Nancy J. 
Molyneaux; central office staff who contributed include Talisha Searcy.  
 
  OEI-03-09-00100  HEALTH EDUCATION ASSISTANCE LOAN DEFAULTERS WITH INCOME IN FISCAL YEAR 2008  12   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.