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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4688 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4688

 To amend the Internal Revenue Code of 1986, the Public Health Service 
Act, and certain other Acts to provide for an increase in the number of 
              health professionals serving in rural areas.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 30, 1994

 Ms. Lambert introduced the following bill; which was referred jointly 
to the Committees on Energy and Commerce, Ways and Means, and Education 
                               and Labor

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986, the Public Health Service 
Act, and certain other Acts to provide for an increase in the number of 
              health professionals serving in rural areas.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Rural Health Care 
Practitioners Revitalization Act of 1994''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
          TITLE I--TAX INCENTIVES REGARDING RURAL HEALTH CARE

Sec. 101. National Health Service Corps loan repayments excluded from 
                            gross income.
Sec. 102. Deduction for medical school education loan interest incurred 
                            by health professionals serving in 
                            medically underserved rural areas.
Sec. 103. Nonrefundable credit for certain primary health services 
                            providers.
Sec. 104. Expensing of medical equipment.
  TITLE II--PUBLIC HEALTH SERVICE PROGRAMS REGARDING RURAL HEALTH CARE

               Subtitle A--National Health Service Corps

                     Part 1--General Corps Program

Sec. 201. Designation of health professional shortage areas.
Sec. 202. Funding for special loans for former Corps members to enter 
                            private practice in health professional 
                            shortage areas.
Sec. 203. Assignment of Corps personnel; priority for rural medical 
                            facilities providing experience regarding 
                            health professions as career choice.
            Part 2--Scholarship and Loan Repayment Programs

Sec. 211. Provision regarding increase in funding.
Sec. 212. Priority for certain individuals from rural backgrounds.
 Part 3--Low-Interest Loans Regarding Obligated Service in Underserved 
                              Rural Areas

Sec. 221. Establishment of program of loans.
         Subtitle B--Other Programs Regarding Rural Health Care

Sec. 231. State offices of rural health.
Sec. 232. Area health education center programs; authorization of 
                            appropriations.
      TITLE III--STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS

Sec. 301. Purpose.
Sec. 302. State health service corps demonstration projects.
     TITLE IV--TREATMENT OF STUDENT LOANS FOR HEALTH PROFESSIONALS

Sec. 401. Loans under Higher Education Act of 1965; deferments 
                            regarding postgraduate primary-care 
                            programs in underserved rural areas.

          TITLE I--TAX INCENTIVES REGARDING RURAL HEALTH CARE

SEC. 101. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 137 as section 
138 and by inserting after section 136 the following new section:

``SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
    (b) Conforming Amendment.--Paragraph (3) of section 338B(g) of the 
Public Health Service Act is amended by striking ``Federal, State, or 
local'' and inserting ``State or local''.
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by striking the item relating to section 137 and inserting the 
following:

                              ``Sec. 137. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 138. Cross references to other 
                                        Acts.''.
    (d) Effective date.--The amendments made by this section shall 
apply to payments made under section 338B(g) of the Public Health 
Service Act after the date of the enactment of this Act.

SEC. 102. DEDUCTION FOR MEDICAL EDUCATION LOAN INTEREST INCURRED BY 
              HEALTH PROFESSIONALS SERVING IN MEDICALLY UNDERSERVED 
              RURAL AREAS.

    (a) In General.--Paragraph (1) of section 163(h) of the Internal 
Revenue Code of 1986 (relating to disallowance of deduction for 
personal interest) is amended by striking ``and'' at the end of 
subparagraph (D), by redesignating subparagraph (E) as subparagraph 
(F), and by inserting after subparagraph (D) the following new 
subparagraph:
                    ``(E) any qualified medical education loan interest 
                (within the meaning of paragraph (5)), and''.
    (b) Qualified Medical Education Loan Interest Defined.--Subsection 
(h) of section 163 of such Code is amended by redesignating paragraph 
(5) as paragraph (6) and by inserting after paragraph (4) the following 
new paragraph:
            ``(5) Qualified medical education loan interest.--
                    ``(A) In general.--The term `qualified medical 
                education loan interest' means interest--
                            ``(i) which is on a medical education loan 
                        of a health professional,
                            ``(ii) which is paid or accrued by such 
                        health professional, and
                            ``(iii) which accrues during the period--
                                    ``(I) such health professional is 
                                providing care to residents of a 
                                medically underserved rural area, and
                                    ``(II) such health professional's 
                                principal place of abode is in such 
                                area.
                In the case of a health professional who is a 
                physician, the requirement of clause (iii)(I) shall be 
                met only if such physician is providing primary care 
                (including internal medicine, pediatrics, obstetrics/
                gynecology, family medicine, and osteopathy) to such 
                residents.
                    ``(B) Medical education loan.--For purposes of 
                subparagraph (A), the term `medical education loan' 
                means indebtedness incurred to pay the individual's--
                            ``(i) qualified tuition and related 
                        expenses (as defined in section 117(b)) 
                        incurred for the medical education of such 
                        individual, or
                            ``(ii) reasonable living expenses while 
                        away from home in order to attend an 
                        educational institution described in section 
                        170(b)(1)(A)(ii) for the medical education of 
                        such individual.
                    ``(C) Health professional.--For purposes of 
                subparagraph (A), the term `health professional' means 
                any physician, physician assistant, nurse practitioner, 
                nurse clinician, nurse midwife, and allied health 
                professional.
                    ``(C) Physician.--For purposes of this paragraph, 
                the term `physician' has the meaning given such term by 
                section 1861(r)(1) of the Social Security Act.
                    ``(D) Physician assistant; nurse practitioner.--For 
                purposes of this paragraph, the terms `physician 
                assistant' and `nurse practitioner' have the meanings 
                given to such terms by section 1861(aa)(3) of the 
                Social Security Act.
                    ``(E) Allied health professional.--For purposes of 
                this paragraph, the term `allied health professional' 
                has the meaning given such term by section 799(5) of 
                the Public Health Service Act.
                    ``(F) Medically underserved rural area.--For 
                purposes of subparagraph (A), the term `medically 
                underserved rural area' means any rural area which is a 
                medically underserved area (as defined in section 
                330(b) or 1302(7) of the Public Health Service Act).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 103. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY HEALTH SERVICES 
              PROVIDERS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25 the 
following new section:

``SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.

    ``(a) Allowance of Credit.--In the case of a qualified primary 
health services provider, there is allowed as a credit against the tax 
imposed by this chapter for any taxable year in a mandatory service 
period an amount equal to the product of--
            ``(1) the lesser of--
                    ``(A) the number of months of such period occurring 
                in such taxable year, or
                    ``(B) 36 months, reduced by the number of months 
                taken into account under this paragraph with respect to 
                such provider for all preceding taxable years (whether 
                or not in the same mandatory service period), 
                multiplied by
            ``(2) $1,000 ($500 in the case of a qualified primary 
        health services provider who is a physician assistant or a 
        nurse practitioner).
    ``(b) Qualified Primary Health Services Provider.--For purposes of 
this section, the term `qualified primary health services provider' 
means any physician, physician assistant, nurse practitioner, nurse 
clinician, or nurse midwife who for any month during a mandatory 
service period is certified by the Bureau to be a primary health 
services provider who--
            ``(1) is providing primary health services--
                    ``(A) full time, and
                    ``(B) to individuals at least 80 percent of whom 
                reside in a rural health professional shortage area,
            ``(2) is not receiving during such year a scholarship under 
        the National Health Service Corps Scholarship Program or a loan 
        repayment under the National Health Service Corps Loan 
        Repayment Program,
            ``(3) is not fulfilling service obligations under such 
        Programs, and
            ``(4) has not defaulted on such obligations.
    ``(c) Mandatory Service Period.--For purposes of this section, the 
term `mandatory service period' means the period of 60 consecutive 
calendar months beginning with the first month the taxpayer is a 
qualified primary health services provider.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bureau.--The term `Bureau' means the Bureau of Health 
        Care Delivery and Assistance, Health Resources and Services 
        Administration of the United States Public Health Service.
            ``(2) Physician.--The term `physician' has the meaning 
        given to such term by section 1861(r) of the Social Security 
        Act.
            ``(3) Physician assistant; nurse practitioner.--The terms 
        `physician assistant' and `nurse practitioner' have the 
        meanings given to such terms by section 1861(aa)(3) of the 
        Social Security Act.
            ``(4) Primary health services provider.--The term `primary 
        health services provider' means a provider of primary health 
        services (as defined in section 330(b)(1) of the Public Health 
        Service Act).
            ``(5) Rural health professional shortage area.--The term 
        `rural health professional shortage area' means--
                    ``(A) a rural health professional shortage area (as 
                defined in section 332(a)(1)(A) of the Public Health 
                Service Act) in a rural area (as determined under 
                section 1886(d)(2)(D) of the Social Security Act),
                    ``(B) an area which is determined by the Secretary 
                of Health and Human Services as equivalent to an area 
                described in subparagraph (A) and which is designated 
                by the Bureau of the Census as not urbanized, or
                    ``(C) a community that is certified as underserved 
                by the Secretary for purposes of participation in the 
                rural health clinic program under title XVIII of the 
                Social Security Act.
    ``(e) Recapture of Credit.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event, then the tax of the taxpayer under this 
        chapter for such taxable year shall be increased by an amount 
        equal to the product of--
                    ``(A) the applicable percentage, and
                    ``(B) the aggregate unrecaptured credits allowed to 
                such taxpayer under this section for all prior taxable 
                years.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

                    ``If the recapture
                                                  The applicable recap-
                      event occurs during:
                                                    ture percentage is:
                            Months 1-24..............         100      
                            Months 25-36.............          75      
                            Months 37-48.............          50      
                            Months 49-60.............          25      
                            Months 61 and thereafter.          0.      
                    ``(B) Timing.--For purposes of subparagraph (A), 
                month 1 shall begin on the first day of the mandatory 
                service period.
            ``(3) Recapture event defined.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `recapture event' means the failure of the 
                taxpayer to be a qualified primary health services 
                provider for any month during any mandatory service 
                period.
                    ``(B) Cessation of designation.--The cessation of 
                the designation of any area as a rural health 
                professional shortage area after the beginning of the 
                mandatory service period for any taxpayer shall not 
                constitute a recapture event.
                    ``(C) Secretarial waiver.--The Secretary may waive 
                any recapture event caused by extraordinary 
                circumstances.
            ``(4) No credits against tax.--Any increase in tax under 
        this subsection shall not be treated as a tax imposed by this 
        chapter for purposes of determining the amount of any credit 
        under subpart A, B, or D of this part.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25 the following new item:

                              ``Sec. 25A. Primary health services 
                                        providers.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 104. EXPENSING OF MEDICAL EQUIPMENT.

    (a) In General.--Section 179 of the Internal Revenue Code of 1986 
(relating to election to expense certain depreciable business assets) 
is amended--
            (1) by striking paragraph (1) of subsection (b) and 
        inserting the following:
            ``(1) Dollar limitation.--
                    ``(A) General rule.--The aggregate cost which may 
                be taken into account under subsection (a) for any 
                taxable year shall not exceed $17,500.
                    ``(B) Rural health care property.--In the case of 
                rural health care property, the aggregate cost which 
                may be taken into account under subsection (a) for any 
                taxable year shall not exceed $25,000, reduced by the 
                amount otherwise taken into account under subsection 
                (a) for such year.''; and
            (2) by adding at the end of subsection (d) the following 
        new paragraph:
            ``(11) Rural health care property.--For purposes of this 
        section, the term `rural health care property' means section 
        179 property used by a physician (as defined in section 1861(r) 
        of the Social Security Act) in the active conduct of such 
        physician's full-time trade or business of providing primary 
        health services (as defined in section 330(b)(1) of the Public 
        Health Service Act) in a rural health professional shortage 
        area (as defined in section 25A(d)(5)).''.
    (b) Effective Date.--The amendments made by this subsection shall 
apply to property placed in service in taxable years beginning after 
the date of the enactment of this Act.

  TITLE II--PUBLIC HEALTH SERVICE PROGRAMS REGARDING RURAL HEALTH CARE

               Subtitle A--National Health Service Corps

                     PART 1--GENERAL CORPS PROGRAM

SEC. 201. DESIGNATION OF HEALTH PROFESSIONAL SHORTAGE AREAS.

    Section 332(b) of the Public Health Service Act (42 U.S.C. 254e(b)) 
is amended by adding at the end the following paragraph:
            ``(4) With respect to determining the need for health 
        services through the indicators of need under paragraphs (1) 
        and (2), consideration of the following:
                    ``(A) The number of individuals in the population 
                involved whose means of payment for health services is 
                the program under title XVIII of the Social Security 
                Act.
                    ``(B) The number of individuals in the population 
                whose means of payment for health services is the 
                program under title XIX of such Act.
                    ``(C) The number of individuals in the population 
                who are uninsured with respect to health policies or 
                plans.
                    ``(D) The percentage of the population constituted 
                by the aggregate number of individuals under 
                subparagraphs (A) through (C).
                    ``(E) In the case of community-based physicians who 
                provide primary health services and who are accepting 
                additional patients whose means of payment is through 
                the program established in title XVIII or XIX of the 
                Social Security Act, the percentage constituted by the 
                ratio of the number of such physicians to the number of 
                individuals in the population.''.

SEC. 202. FUNDING FOR SPECIAL LOANS FOR FORMER CORPS MEMBERS TO ENTER 
              PRIVATE PRACTICE IN HEALTH PROFESSIONAL SHORTAGE AREAS.

    (a) In General.--
            (1) Allocation.--Section 338(a) of the Public Health 
        Service Act (42 U.S.C. 254k(a)) is amended by adding at the end 
        the following paragraph:
    ``(3) Of the amounts appropriated under paragraph (1) for a fiscal 
year, the Secretary shall reserve not less than 5 percent for carrying 
out section 338G.''.
            (2) Conforming Amendment.--Section 338G(a) of the Public 
        Health Service Act (42 U.S.C. 254p(a)) is amended in the matter 
        preceding paragraph (1) by striking ``authorized under section 
        338'' and inserting ``reserved under section 338(a)(3)''.
    (b) Study.--
            (1) In general.--During the fiscal years 1996 through 2000, 
        the Secretary shall conduct a study for the purpose of 
        determining the extent to which the program under section 338G 
        of the Public Health Service Act has been effective in 
        increasing the number of health professionals who begin private 
        practice in health professional shortage areas after 
        terminating the membership of the individuals in the National 
        Health Service Corps. The study shall separately state the 
        number of such individuals who have completed a period of 
        obligated service under the scholarship or loan repayment 
        program under section 338A or 338B of such Act, respectively.
            (2) Date certain for completion.--Not later than February 
        1, 2001, the Secretary shall complete the study required in 
        paragraph (1) and submit to the Congress a report describing 
        the findings made in the study.
            (3) Definitions.--For purposes of this subsection:
                    (A) The term ``health professional shortage area'' 
                has the meaning given such term in section 331(a)(3) of 
                the Public Health Service Act.
                    (B) The term ``Secretary'' means the Secretary of 
                Health and Human Services.

SEC. 203. ASSIGNMENT OF CORPS PERSONNEL; PRIORITY FOR RURAL MEDICAL 
              FACILITIES PROVIDING EXPERIENCE REGARDING HEALTH 
              PROFESSIONS AS CAREER CHOICE.

    Section 333A(a)(1)(B) of the Public Health Service Act (42 U.S.C. 
254f-1(a)(1)(B)) is amended--
            (1) in clause (iii), by striking ``and'' after the 
        semicolon at the end;
            (2) in clause (iv), by adding ``and'' after the semicolon 
        at the end; and
            (3) by adding at the end the following clause:
                            ``(v) in the case of entities providing 
                        health services in rural areas, is operating a 
                        program for students of rural secondary schools 
                        or institutions of higher education under which 
                        program the students are provided with 
                        opportunities to visit or work at rural 
                        hospitals (or other rural health facilities) 
                        for the purpose of gaining experience regarding 
                        a career in a field of primary health care;''.

            PART 2--SCHOLARSHIP AND LOAN REPAYMENT PROGRAMS

SEC. 211. PROVISION REGARDING INCREASE IN FUNDING.

    Section 338H(b)(1) of the Public Health Service Act (42 U.S.C. 
254q(b)(1)) is amended--
            (1) by striking ``and'' after ``1991,'';
            (2) by striking ``through 2000'' and inserting ``through 
        1994,''; and
            (3) by inserting before the period the following: 
        ``$150,000,000 for fiscal year 1995, and such sums as may be 
        necessary for each of the fiscal years 1996 through 2000''.

SEC. 212. PRIORITY FOR CERTAIN INDIVIDUALS FROM RURAL BACKGROUNDS.

    (a) Scholarship Program.--Section 338A(d) of the Public Health 
Service Act (42 U.S.C. 254l(d)) is amended--
            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by inserting ``, subject to paragraph (3),'' after 
        ``shall''; and
            (2) by adding at the end the following paragraph:
    ``(3)(A) Of individuals receiving priority under paragraph (2)(B), 
the Secretary shall give further priority to any individual who has 
resided in a rural area for a significant number of years and who has 
characteristics indicating the individual will, after the period of 
obligated service, serve in a rural health professional shortage area.
    ``(B) Factors considered by the Secretary in determining priorities 
for purposes of subparagraph (A) shall include consideration of whether 
the health professions school attended (or to be attended) by the 
individual involved is a school whose graduates include a significant 
number of health professionals who are serving in rural areas.''.
    (b) Loan Repayment Program.--Section 338B(d) of the Public Health 
Service Act (42 U.S.C. 254l-1(d)) is amended--
            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by inserting ``, subject to paragraph (3),'' after 
        ``shall''; and
            (2) by adding at the end the following paragraph:
    ``(3)(A) Of individuals receiving priority under paragraph (2)(B), 
the Secretary shall give further priority to any individual who has 
resided in a rural area for a significant number of years and who has 
characteristics indicating the individual will, after the period of 
obligated service, serve in a rural health professional shortage area.
    ``(B) Factors considered by the Secretary in determining priorities 
for purposes of subparagraph (A) may include consideration of whether 
the health professions school attended by the individual involved is a 
school whose graduates include a significant number of health 
professionals who are serving in rural areas.''.

 PART 3--LOW-INTEREST LOANS REGARDING OBLIGATED SERVICE IN UNDERSERVED 
                              RURAL AREAS

SEC. 221. ESTABLISHMENT OF PROGRAM OF LOANS.

    Subpart III of part D of title III of the Public Health Service Act 
(42 U.S.C. 254l et seq.) is amended by adding at the end the following 
section:

``SEC. 338M. LOAN FUND REGARDING OBLIGATED SERVICE IN UNDERSERVED RURAL 
              AREAS.

    ``(a) Establishment of Rural Primary Health Care Fund.--There is 
established in the Treasury of the United States a fund to be known as 
the Rural Primary Health Care Fund (in this section referred to as the 
`Fund'). The Fund shall consist of such amounts as may be appropriated 
under subsection (f) (and such amounts as may be appropriated in 
subsections (d) and (e)(3)). Amounts appropriated to the Fund are 
available until expended.
    ``(b) Expenditures From Fund.--Amounts in the Fund are available to 
the Secretary for the purpose of carrying out subsection (c), subject 
to the extent of amounts made available in advance in appropriations 
Acts.
    ``(c) Low-Interest Loans for Attendance at Health Professions 
Schools; Obligated Service Regarding Underserved Rural Areas.--
            ``(1) In general.--
                    ``(A) Subject to the provisions of this subsection, 
                the Secretary may, from amounts available under 
                subsection (b), make loans to assist individuals with 
                the costs of attending health professions schools if 
                the individuals agree to provide primary health 
                services in an underserved rural area.
                    ``(B) For purposes of this subsection, the term 
                `underserved rural area' means a rural area with a 
                shortage of personal health services, except that such 
                term does not include any health professional shortage 
                area.
                    ``(C) The Secretary shall issue criteria for 
                determining whether an area is an underserved rural 
                area.
            ``(2) Certain requirements.--The Secretary may make a loan 
        under paragraph (1) to an individual only if the following 
        conditions are met:
                    ``(A) The individual is enrolled (or accepted for 
                enrollment) as a full-time student in a course of study 
                or program leading to a degree in medicine, osteopathic 
                medicine, dentistry, or other health profession, and 
                such course or program is offered by an accredited 
                educational institution (as determined by the 
                Secretary) and is approved by the Secretary.
                    ``(B) The individual is eligible for, or holds, an 
                appointment as a commissioned officer in the Regular or 
                Reserve Corps of the Service or is eligible for 
                selection for civilian service in the Corps.
                    ``(C) The individual and the Secretary enter into 
                the contract described in paragraph (3).
            ``(3) Loan contract.--For purposes of paragraph (2)(C), the 
        contract described in this paragraph is a written contract 
        containing provisions as follows:
                    ``(A) The Secretary agrees to provide the 
                individual involved with loans under paragraph (1) for 
                a number of academic years (not to exceed 4 academic 
                years) determined by the individual, during which 
                period the individual is pursuing a course of study or 
                program described in paragraph (2)(A).
                    ``(B) The Secretary agrees to accept the individual 
                into the Corps (or for equivalent service as otherwise 
                provided in this subpart), subject to the availability 
                of funds for carrying out sections 331 through 335.
                    ``(C) The individual agrees as follows:
                            ``(i) To accept the loan.
                            ``(ii) To maintain enrollment in the course 
                        or program involved until the individual 
                        completes the course or program.
                            ``(iii) While enrolled in the course or 
                        program, to maintain an acceptable level of 
                        academic standing (as determined under 
                        regulations of the Secretary by the educational 
                        institution offering the course or program).
                            ``(iv) To provide obligated service for 
                        purposes of paragraph (5).
                            ``(v) To other provisions of this 
                        subsection that are applicable to the 
                        individual, including paragraph (8) (relating 
                        to the breach of the obligations of the 
                        individual under this subsection).
                    ``(D) A provision specifying the purposes for which 
                the loan will be expended, subject to paragraph (6)(A), 
                and the amount to be expended for each of the purposes.
                    ``(E) A provision that any financial obligation of 
                the United States arising out of the contract, and any 
                obligation of the individual under the contract, is 
                contingent upon funds being available under subsection 
                (b) for loans under paragraph (1) and upon funds being 
                available to carry out the purposes of sections 331 
                through 335.
            ``(4) Amount of loan; interest rate.--The amount of a loan 
        under paragraph (1) for an academic year may not exceed 
        $35,000. The rate of interest on the unpaid principal balance 
        of such a loan may not exceed 4 percent annually, and may not 
        be less than 2 percent annually.
            ``(5) Period of obligated service.--For purposes of 
        paragraph (3)(C)(iv), the obligated service of an individual is 
        as follows:
                    ``(A) The service to be provided is the provision 
                of primary health services.
                    ``(B) The service is to be provided in an 
                underserved rural area to which the individual is 
                assigned pursuant to paragraph (10).
                    ``(C) The period of service is the greater of the 
                following periods:
                            ``(i) 1 year.
                            ``(ii) 1 year for each 2 academic years for 
                        which loans under paragraph (1) are provided to 
                        the individual.
                            ``(iii) 1 year for each $35,000 provided in 
                        such loans to the individual.
            ``(6) Expenditure of loan.--
                    ``(A) A loan under paragraph (1) to an individual 
                may be expended only for the following purposes:
                            ``(i) The tuition of the individual for the 
                        course or program involved for the academic 
                        year involved.
                            ``(ii) Any other reasonable educational 
                        expense, including fees, books, and laboratory 
                        expenses, incurred by the individual in the 
                        academic year.
                            ``(iii) Reasonable living expenses incurred 
                        in attending the educational institution 
                        involved, not to exceed the amount in effect 
                        under section 338A(g)(1)(B) for stipends.
                    ``(B) In the case of an educational institution 
                offering a course or program for which a loan under 
                paragraph (1) is made, the Secretary may contract with 
                the institution to make payments to the institution of 
                the amounts provided for the purposes specified in 
                clauses (i) and (ii) of subparagraph (A). The payments 
                may be made to the institution without regard to 
                section 3648 of the Revised Statutes (31 U.S.C. 529).
            ``(7) Repayment of loan; deferments.--The provisions of 
        subparagraphs (B) and (C) of section 705(a)(2) apply to loans 
        under paragraph (1) to the same extent and in the same manner 
        as such provisions apply to loans under subpart I of part A of 
        title VII.
            ``(8) Breach of loan contract.--With respect to an 
        individual who has entered into a written contract under 
        paragraph (3) and who breaches the contract, an agreement under 
        paragraph (3)(C)(v) is as follows:
                    ``(A) If, for any reason other than a reason 
                specified in subparagraph (B), the individual fails to 
                provide obligated service under paragraph (5)--
                            ``(i) the balance due on the loan involved 
                        will be immediately recomputed from the date of 
                        issuance at an interest rate of 12 percent per 
                        year, compounded annually; and
                            ``(ii) the recomputed balance will be paid 
                        not later than the expiration of the 3-year 
                        period beginning on the date on which the 
                        individual breaches the contract.
                    ``(B) The individual is liable to the United States 
                for the amount which has been paid to or on behalf of 
                the individual under paragraph (1) if the individual--
                            ``(i) fails to maintain an acceptable level 
                        of academic standing for purposes of paragraph 
                        (3)(C)(iii);
                            ``(ii) is dismissed from the educational 
                        institution involved for disciplinary reasons;
                            ``(iii) voluntarily terminates the course 
                        or program involved before the completion of 
                        the course or program; or
                            ``(iv) fails to accept payment under the 
                        loan under paragraph (1), or instructs the 
                        educational institution not to accept payment, 
                        in whole or in part, of payments under the 
                        loan.
            ``(9) Waiver of obligations; limitation regarding 
        bankruptcy.--
                    ``(A) With respect to the obligation of an 
                individual under a contract under paragraph (3), the 
                Secretary shall provide for the partial or total waiver 
                or suspension of the obligation whenever compliance by 
                the individual is impossible, or would involve extreme 
                hardship to the individual, and if enforcement of the 
                obligation with respect to the individual would be 
                unconscionable.
                    ``(B) An obligation of an individual under the 
                contract under paragraph (3) to make payments may be 
                released by a discharge in bankruptcy under title 11, 
                United States Code, only if such discharge is granted 
                after the expiration of the 5-year period beginning on 
                the first date that such payment is required (exclusive 
                of any period in which the obligation to make payments 
                is suspended), and only if the bankruptcy court finds 
                that nondischarge of the obligation would be 
                unconscionable.
            ``(10) Assignment of corps personnel pursuant to obligated 
        service.--The provisions of section 333 apply to the obligated 
        service of individuals under paragraph (5) with respect to 
        underserved rural areas to the same extent and in the same 
        manner as such provisions apply to the obligated service of 
        individuals under section 338A with respect to health 
        professional shortage areas.
            ``(11) Priorities in making loans.--
                    ``(A) In making loans under paragraph (1), the 
                Secretary shall give priority to any individual (if 
                otherwise a qualified applicant) who has resided in a 
                rural area for a significant number of years and who 
                has characteristics indicating the individual will, 
                after the period of obligated service under paragraph 
                (5), continue to serve in an underserved rural area.
                    ``(B) Factors considered by the Secretary in 
                determining priorities for purposes of subparagraph (A) 
                shall include consideration of whether the health 
                professions school attended (or to be attended) by the 
                individual involved is a school whose graduates include 
                a significant number of health professionals who serve 
                in rural areas.
            ``(12) Miscellaneous provisions.--Individuals who have 
        entered into written contracts with the Secretary under this 
        subsection, while undergoing academic training, shall not be 
        counted against any employment ceiling affecting the Department 
        of Health and Human Services.
    ``(d) Availability of Repayments.--Payments of principal and 
interest by (or on behalf of) recipients of loans under subsection 
(c)(1) are hereby appropriated to the Fund.
    ``(e) Investment.--
            ``(1) In general.--The Secretary of the Treasury shall 
        invest such amounts of the Fund as such Secretary determines 
        are not required to meet current withdrawals from the Fund. 
        Such investments may be made only in interest-bearing 
        obligations of the United States. For such purpose, such 
        obligations may be acquired on original issue at the issue 
        price, or by purchase of outstanding obligations at the market 
        price.
            ``(2) Sale of obligations.--Any obligation acquired by the 
        Fund may be sold by the Secretary of the Treasury at the market 
        price.
            ``(3) Availability of income.--Any interest derived from 
        obligations acquired by the Fund, and proceeds from any sale or 
        redemption of such obligations, are hereby appropriated to the 
        Fund.
    ``(f) Authorization of Appropriations.--For the purpose of 
providing amounts for the Fund, there are authorized to be appropriated 
$20,000,000 for fiscal year 1995, and such sums as may be necessary for 
each of the fiscal years 1996 and 1997.''.

         Subtitle B--Other Programs Regarding Rural Health Care

SEC. 231. STATE OFFICES OF RURAL HEALTH.

    (a) Requirement Regarding Recruitment of Physicians.--Section 
338J(c) of the Public Health Service Act (42 U.S.C. 254r(c)) is 
amended--
            (1) in paragraph (2), by striking ``and'' after the 
        semicolon at the end;
            (2) in paragraph (3), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following paragraph:
            ``(4) activities to recruit and retain physicians to serve 
        in rural areas of the State.''.
    (b) Authorizations of Appropriations.--
            (1) In general.--Section 338J(j)(1) of the Public Health 
        Service Act (42 U.S.C. 254r(j)(1)) is amended--
                    (A) by striking ``and'' after ``1992,''; and
                    (B) by inserting before the period the following: 
                ``, and $1,500,000 for each of the fiscal years 1995 
                through 1998''.
            (2) Conforming amendment.--Section 338J(k) of the Public 
        Health Service Act (42 U.S.C. 254r(k)) is amended by striking 
        ``$10,000,000'' and inserting ``$16,000,000''.

SEC. 232. AREA HEALTH EDUCATION CENTER PROGRAMS; AUTHORIZATION OF 
              APPROPRIATIONS.

    Section 746(i)(1) of the Public Health Service Act (42 U.S.C. 
293j(i)(1) is amended--
            (1) by striking ``is authorized'' and inserting ``are 
        authorized'';
            (2) by striking ``through 1995'' and inserting ``and 
        1994''; and
            (3) by inserting before the period the following: ``, and 
        $50,000,000 for each of the fiscal years 1995 through 1997''.

      TITLE III--STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS

SEC. 301. PURPOSE.

    It is the purpose of this title--
            (1) to promote recruitment and training of physicians and 
        other primary care providers from among the poor and from 
        disadvantaged populations;
            (2) to place physicians from health professional shortage 
        areas into similar areas in order to encourage retention of 
        physicians in health professional shortage areas; and
            (3) to provide flexibility to States in filling positions 
        in health professional shortage areas.

SEC. 302. STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS.

    The Public Health Service Act is amended by inserting after section 
338L (42 U.S.C. 254t) the following new sections:

``SEC. 338M. STATE HEALTH SERVICE CORPS DEMONSTRATION PROJECTS.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Area health education center.--The term `area health 
        education center' means--
                    ``(A) a cooperative program of one or more medical 
                schools (or the parent institutions of such schools) 
                and one or more nonprofit private or public area health 
                education centers; or
                    ``(B) a regional or statewide network of the 
                cooperative programs described in subparagraph (A).
            ``(2) Health professional shortage area.--The term `health 
        professional shortage area' has the meaning provided in section 
        332(a)(1).
            ``(3) Medical school.--The term `medical school' means a 
        school conferring the degree of Doctor of Medicine or Doctor of 
        Osteopathy.
            ``(4) Nonphysician provider.--The term `nonphysician 
        provider' means an occupational therapist, physical therapist, 
        nurse, nurse midwife, nurse practitioner, social worker, or 
        optometrist.
            ``(5) Nurse.--The term `nurse' means a registered nurse, or 
        an individual with a baccalaureate or master's degree in 
        nursing.
            ``(6) Parent institution.--The term `parent institution' 
        means any health sciences university housing a medical school 
        and one or more other health professions schools.
            ``(7) Physician provider.--The term `physician provider' 
        means--
                    ``(A) a physician specializing in general practice, 
                family medicine, general internal medicine, pediatrics, 
                obstetrics and gynecology, general surgery, psychiatry, 
                preventive medicine and public health, or physiatry; or
                    ``(B) a dentist.
            ``(8) Project.--The term `Project' means a State Health 
        Service Corps Demonstration Project established under 
        subsection (b).
            ``(9) Service area.--The term `service area' means an area 
        designated in subsection (d)(2)(A).
    ``(b) Grants.--The Secretary shall establish a State Health Service 
Corps Demonstration Project under which the Secretary shall make grants 
to up to 10 States to pay for the Federal share of the costs of 
conducting Projects for the training and employment of eligible 
participants as physician and nonphysician providers serving health 
professional shortage areas.
    ``(c) State Participation.--
            ``(1) Requirements.--In order for a State to be eligible to 
        receive a grant under this section, the State shall--
                    ``(A) enter into an agreement with an area health 
                education center to administer the Project in 
                accordance with subsection (d);
                    ``(B) provide for evaluation of the Project in 
                accordance with subsection (e);
                    ``(C) establish a State Health Service Corps 
                Scholarship Program in accordance with section 338N; 
                and
                    ``(D) meet such other requirements as the Secretary 
                may establish for the proper and efficient 
                implementation of the Project.
            ``(2) Grant awards.--In allocating grants under subsection 
        (b), the Secretary shall give priority to States that have 
        demonstrated a commitment to developing and funding area health 
        education center programs.
            ``(3) Application.--To be eligible to receive a grant under 
        this section, the State shall submit an application at such 
        time, in such manner and containing such agreements, 
        assurances, and information as the Secretary determines to be 
        necessary to carry out this section. At a minimum, the 
        application shall contain--
                    ``(A) information specifying the actions the State 
                will take against individuals, and the methods the 
                State will use to recover all funds paid under section 
                338N(i) to individuals, who breach contracts described 
                in section 338N(g); and
                    ``(B) assurances that the State will reimburse the 
                Secretary for all funds recovered from individuals who 
                breach contracts described in section 338N(g).
            ``(4) Duration.--A Project under this section shall be for 
        a maximum duration of 8 years, plus up to 6 months for final 
        evaluation and reporting.
    ``(d) State Agreements With Area Health Education Centers.--
            ``(1) In general.--To be eligible for a grant under this 
        section, a State shall enter into an agreement with an area 
        health education center for the planning, development, and 
        operation of a program to train and employ eligible 
        participants as physician and nonphysician providers.
            ``(2) Requirements.--Under an agreement entered into under 
        paragraph (1), an area health education center shall agree to--
                    ``(A) designate a health professional shortage area 
                or areas as the service area for the area health 
                education center;
                    ``(B) provide for or conduct training in health 
                education services in the service area;
                    ``(C) assess the health professional needs of the 
                service area and assist in the planning and development 
                of training programs to meet the needs;
                    ``(D) provide for or conduct a rotating internship 
                or residency training program in the service area;
                    ``(E) provide opportunities for continuing 
                education to physician and nonphysician providers 
                practicing within the service area;
                    ``(F) conduct interdisciplinary training and 
                practice involving physician and nonphysician providers 
                in the service area;
                    ``(G) arrange and support educational opportunities 
                for students studying to become physician or 
                nonphysician providers at health facilities, ambulatory 
                care centers, and health agencies throughout the 
                service area;
                    ``(H) provide for the active participation in the 
                Project by individuals who are associated with the 
                administration of the sponsoring health professions and 
                each of the departments or specialties of physician or 
                nonphysician providers (if any) which are offered under 
                the Project; and
                    ``(I) have an advisory board of which at least 75 
                percent of the members shall be individuals, including 
                both health service providers and consumers, from the 
                service area.
    ``(e) Evaluation.--Not later than March 30, 1998, and March 30, 
2002, each State receiving a grant under this section shall, through 
grants to or contracts with public and private entities, provide for--
            ``(1) an evaluation of Projects--
                    ``(A) which were carried out pursuant to this 
                section during any fiscal year preceding the fiscal 
                year in which such date occurs, and
                    ``(B) for which no prior evaluation under this 
                subsection was made, and
            ``(2) a review of the area health education center 
        providing services under the Projects. The evaluation shall 
        include an evaluation of the effectiveness of the Projects in 
        increasing the recruitment and retention of physician and 
        nonphysician providers in health professional shortage areas.
    ``(f) Federal Share.--The Federal share of the costs of any program 
established under this section with respect to any State shall be the 
percentage of such costs equal to the Federal medical assistance 
percentage applicable to such State under section 1905(b) of the Social 
Security Act. The State may include as a part or all of the non-Federal 
share of grants--
            ``(1) any State funds supporting area health education 
        centers, and
            ``(2) the value of in-kind contributions made by the State, 
        including tuition remission and other benefits for students 
        participating in the State Health Service Corps Scholarship 
        Program established under section 338N.
    ``(g) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        for each of the 1994 through 2001 fiscal years to carry out the 
        purposes of this section an amount equal to the product of--
                    ``(A) $250,000, multiplied by
                    ``(B) the number of States receiving grants under 
                this section for such fiscal year.
        Any amount appropriated under this section shall be available 
        without fiscal year limitation.
            ``(2) Cost recovery.--No more than 10 percent of the funds 
        spent under paragraph (1) may be used for purposes of 
        recovering funds or taking other action against individuals who 
        breach the provisions of a contract entered into under section 
        338N(g).

``SEC. 338N. STATE HEALTH SERVICE CORPS SCHOLARSHIP PROGRAMS.

    ``(a) Definitions.--For purposes of this section:
            ``(1) Area health education center.--The term `area health 
        education center' means--
                    ``(A) a cooperative program of one or more medical 
                schools (or the parent institutions (as defined in 
                section 338M(a)(6)) of such schools) and one or more 
                nonprofit private or public area health education 
                centers; or
                    ``(B) a regional or statewide network of the 
                cooperative programs described in subparagraph (A).
            ``(2) Graduate education.--The term `graduate education' 
        means a course of study at a medical school or other health 
        professions school leading to a degree in a field practiced by 
        a physician or nonphysician provider.
            ``(3) Health professional shortage area.--The term `health 
        professional shortage area' has the meaning provided in section 
        332(a)(1).
            ``(4) Medical school.--The term `medical school' means a 
        school conferring the degree of Doctor of Medicine or Doctor of 
        Osteopathy.
            ``(5) Nonphysician provider.--The term `nonphysician 
        provider' means an occupational therapist, physical therapist, 
        nurse, nurse midwife, nurse practitioner, social worker, or 
        optometrist.
            ``(6) Nurse.--The term `nurse' means a registered nurse, or 
        an individual with a baccalaureate or master's degree in 
        nursing.
            ``(7) Physician provider.--The term `physician provider' 
        means--
                    ``(A) a physician specializing in family medicine, 
                general internal medicine, pediatrics, obstetrics and 
                gynecology, general surgery, psychiatry, preventive 
                medicine, or physiatry; or
                    ``(B) a dentist.
            ``(8) Program.--The term `Program' means a State Health 
        Service Corps Scholarship Program established under subsection 
        (b).
            ``(9) Service area.--The term `service area' means an area 
        designated in section 338M(d)(2)(A).
            ``(10) State official.--The term `State official' means an 
        individual designated by the head of the agency designated in 
        subsection (b)(2) to carry out the Program in the State.
            ``(11) Undergraduate education.--The term `undergraduate 
        education' means a course of study at a health sciences 
        university or a 4-year college that affords an appropriate 
        basis for professional training or graduate education to become 
        a physician or nonphysician provider.
    ``(b) Establishment.--
            ``(1) In general.--Each State carrying out a State Health 
        Services Corps Demonstration Project established under section 
        338M shall establish a State Health Service Corps Scholarship 
        Program, in accordance with this section, to ensure an adequate 
        supply of trained physician or nonphysician providers in health 
        professional shortage areas in the State.
            ``(2) State agency.--A State participating in the Program 
        shall designate a State agency to administer or be responsible 
        for the administration of the Program within the State.
    ``(c) Eligibility.--To be eligible to participate in the Program, 
an individual must--
            ``(1)(A) be accepted for enrollment, or be enrolled, as a 
        full-time student in a health professions program in a health 
        sciences university or a 4-year college; or
            ``(B) be accepted to participate in, or be participating 
        in, a professional internship or residency as preparation to 
        become a physician or nonphysician provider;
            ``(2) reside within a health professional shortage area;
            ``(3) submit an application to participate in the Program; 
        and
            ``(4) sign and submit to the State, at the time of 
        submission of the application, a written contract containing 
        the information specified in subsection (g) to accept payment 
        of a scholarship and, if appropriate, of loans, and to serve in 
        the service area.
    ``(d) Selection.--Individuals described in subsection (c)(1)(B)--
            ``(1) shall comprise not more than 50 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1994;
            ``(2) shall comprise not more than 40 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1995;
            ``(3) shall comprise not more than 30 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1996;
            ``(4) shall comprise not more than 20 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1997;
            ``(5) shall comprise not more than 10 percent of all 
        individuals selected to participate in the Program during 
        fiscal year 1998; and
            ``(6) shall not be selected to participate in the Program 
        during fiscal years 1999 through 2001.
    ``(e) Information on Service Obligation.--In disseminating 
application forms and contract forms to individuals desiring to 
participate in the Program, the State official shall include with the 
forms--
            ``(1) a fair summary of the rights and liabilities of an 
        individual whose application is approved (and whose contract is 
        accepted) by the State official, including in the summary a 
        clear explanation of the remedies to which the State is 
        entitled in the case of breach of the contract by the 
        individual; and
            ``(2) such information as may be necessary for the 
        individual to understand the prospective participation of the 
        individual in the Program and the service obligation of the 
        individual.
    ``(f) Application Forms.--The application form, contract form, and 
all other information furnished by the Secretary under this section 
shall be written in a manner calculated to be understood by the average 
individual applying to participate in the Program. The State official 
shall make the application forms, contract forms, and other information 
available to individuals desiring to participate in the Program on a 
date sufficiently early to ensure that the individuals have adequate 
time to carefully review and evaluate the forms and information.
    ``(g) Contract.--The written contract between the State official 
and an individual shall contain--
            ``(1) a statement that the State official agrees--
                    ``(A) to provide the individual with a scholarship 
                for a period of up to 8 years, during which period the 
                individual is--
                            ``(i) pursuing an undergraduate education 
                        described in subsection (a)(11);
                            ``(ii) pursuing graduate education; or
                            ``(iii) participating in an internship or 
                        residency program as preparation to become a 
                        physician or nonphysician provider; and
                    ``(B) to place the individual into obligated 
                service, taking into account the specialization of the 
                individual and the needs of health professional 
                shortage areas for service, in--
                            ``(i) a rural health professional shortage 
                        area, if the individual resided in a rural 
                        health professional shortage area at the time 
                        of acceptance into the Program; or
                            ``(ii) an urban health professional 
                        shortage area, if the individual resided in an 
                        urban health professional shortage area at the 
                        time of acceptance into the Program;
            ``(2) a statement that the individual agrees--
                    ``(A) to accept provision of the scholarship, and 
                if appropriate, loans, to the individual;
                    ``(B) to maintain enrollment in a program of 
                undergraduate or graduate education or participation in 
                an internship or residency described in subsection 
                (c)(1)(B) until the individual completes the program, 
                internship, or residency;
                    ``(C) while enrolled in a program of undergraduate 
                or graduate education, to maintain an acceptable level 
                of academic standing (as determined under regulations 
                of the State by the educational institution offering 
                the course of study); and
                    ``(D) to serve in the service area or on the 
                clinical staff of the area health education center or 
                the medical school for a time period equal to the 
                shorter of--
                            ``(i)(I) 1 year for each year in which the 
                        individual received a scholarship under the 
                        Program; and
                            ``(II) 1 month for each $1,000 in loans 
                        that the individual received under the Program; 
                        or
                            ``(ii) 6 years;
            ``(3) a statement of the damages to which the State is 
        entitled for breach of contract by the individual; and
            ``(4) other statements of the rights and liabilities of the 
        State and of the individual, not inconsistent with this 
        section.
    ``(h) Acceptance.--
            ``(1) Approval.--An individual shall become a participant 
        in the Program only on approval by the State official of the 
        application submitted by the individual under subsection (c)(3) 
        and acceptance of the contract submitted by the individual 
        under subsection (c)(4).
            ``(2) Notification.--The State official shall provide 
        written notice to an individual of participation in the Program 
        promptly on acceptance of the individual into the Program.
    ``(i) Scholarship and Loans.--
            ``(1) Payment.--In providing a loan to an individual under 
        subsection (g)(1)(A) or a scholarship to an individual under 
        subsection (g)(1)(B), the State official shall pay--
                    ``(A) to an individual undertaking a program of 
                undergraduate or graduate education, or on behalf of 
                the individual in accordance with paragraph (2)--
                            ``(i) the amount of the tuition of the 
                        individual in the school year;
                            ``(ii) the amount of all other reasonable 
                        educational expenses, including fees, books, 
                        and laboratory expenses, incurred by the 
                        individual in the school year; and
                            ``(iii) a stipend; and
                    ``(B) to an individual described in subsection 
                (c)(1)(B)--
                            ``(i) the amount of expenses for medical 
                        equipment necessary to the practice of a 
                        physician or nonphysician provider;
                            ``(ii) the amount of expenses for travel to 
                        and from clinical sites; and
                            ``(iii) a stipend.
            ``(2) Payment to an educational institution.--The State 
        official may contract with an educational institution, in which 
        a participant in the Program is enrolled, for the payment to 
        the educational institution of the amounts of tuition and other 
        reasonable educational expenses described in clauses (i) and 
        (ii) of paragraph (1)(A).
    ``(j) Report.--The State official shall report to the Secretary on 
January 1 of each year--
            ``(1) the number, and type of health profession training, 
        of students receiving scholarships under the Program in the 
        preceding year;
            ``(2) the educational institutions at which the students 
        are receiving their training;
            ``(3) the number of applications filed under this section 
        in the school year in the preceding year and in prior school 
        years; and
            ``(4) the amount of tuition paid in the aggregate and at 
        each educational institution for the school year in the 
        preceding year and in prior school years.''.

     TITLE IV--TREATMENT OF STUDENT LOANS FOR HEALTH PROFESSIONALS

SEC. 401. LOANS UNDER HIGHER EDUCATION ACT OF 1965; DEFERMENTS 
              REGARDING POSTGRADUATE PRIMARY-CARE PROGRAMS IN 
              UNDERSERVED RURAL AREAS.

    (a) Stafford Loans.--
            (1) GSL loans.--Section 428(b)(1)(M) of the Higher 
        Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
                    (A) in clause (ii), by striking ``or'' at the end;
                    (B) in clause (iii), by adding ``or'' after the 
                semicolon at the end; and
                    (C) by adding at the end the following clause:
                            ``(iv) during which the borrower is serving 
                        in an internship or residency program, in a 
                        health facility in a rural area, in preparation 
                        for practice in an area of primary care 
                        (including internal medicine, pediatrics, 
                        obstetrics/gynecology, family medicine, and 
                        osteopathy);''.
            (2) FISL loans.--Section 427(a)(2)(C) of the Higher 
        Education Act of 1965 (20 U.S.C. 1077(a)(2)(C)) is amended--
                    (A) in clause (ii), by striking ``or'' at the end;
                    (B) in clause (iii), by adding ``or'' after the 
                semicolon at the end; and
                    (C) by inserting after clause (iii) the following 
                clause:
                            ``(iv) during which the borrower is serving 
                        in an internship or residency program, in a 
                        health facility in a rural area, in preparation 
                        for practice in an area of primary care 
                        (including internal medicine, pediatrics, 
                        obstetrics/gynecology, family medicine, and 
                        osteopathy);''.
    (b) Perkins Loans.--Section 464(c)(2)(A) of the Higher Education 
Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--
            (1) in clause (iii), by striking ``or'' at the end;
            (2) in clause (iv), by adding ``or'' after the semicolon at 
        the end; and
            (3) by inserting after clause (iv) the following clause:
                            ``(v) during which the borrower is serving 
                        in an internship or residency program, in a 
                        health facility in a rural area, in preparation 
                        for practice in an area of primary care 
                        (including internal medicine, pediatrics, 
                        obstetrics/gynecology, family medicine, and 
                        osteopathy);''.
    (c) Effective Date.--The amendments made by this section shall 
apply on and after the date of the enactment of this Act with respect 
to loans made under the Higher Education Act of 1965 before, on, or 
after such date.
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