I
103D CONGRESS
1ST SESSION
H. R. 2077
To amend the Public Health Service Act and the Internal Revenue Code
of 1986 to establish an entitlement of certain individuals to receive
payments for attendance at certain health professions schools.
IN THE HOUSE OF REPRESENTATIVES
MAY 11, 1993
Mr. STARK introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce and Ways and Means
A BILL
To amend the Public Health Service Act and the Internal
Revenue Code of 1986 to establish an entitlement of
certain individuals to receive payments for attendance
at certain health professions schools.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Health Education
Lending Program Act’’.
SEC. 2. ESTABLISHMENT OF ENTITLEMENT PROGRAM RE-
GARDING ATTENDANCE AT CERTAIN HEALTH
PROFESSIONS SCHOOLS.
Title VII of the Public Health Service Act (42 U.S.C.
292 et seq.), as amended by section 102 of Public Law
102–408, is amended by adding at the end of part A the
following subpart:
‘‘Subpart III—Entitlement Program
‘‘SEC. 735A. PAYMENTS FOR ATTENDANCE AT CERTAIN
HEALTH PROFESSIONS SCHOOLS.
‘‘(a) IN GENERAL.—
‘‘(1) PROVISION
OF
ASSISTANCE.—Subject to
the provisions of this section, in the case of an indi-
vidual described in subsection (c) who submits to the
Secretary an application in accordance with sub-
section (i), the Secretary shall make payments on
behalf of the individual for the costs related to the
attendance of the individual at any school of medi-
cine, osteopathic medicine, dentistry, podiatry, or op-
tometry.
‘‘(2) RECAPTURE TAX.—The Secretary may not
approve an application for payments under para-
graph (1) unless the individual involved acknowl-
edges in writing that the individual understands that
receiving such payments may subject the individual
to taxation under section 59B of the Internal Reve-
nue Code of 1986.
‘‘(b) ENTITLEMENT STATUS OF PAYMENTS.—
‘‘(1) IN GENERAL.—Subject to paragraph (3),
each eligible individual is entitled to payments under
subsection (a) on behalf of the individual in an
amount determined under subsection (e) and for the
purposes specified in such subsection. The preceding
sentence constitutes budget authority in advance of
appropriations Acts, and represents the obligation of
the Federal Government to make the payments.
‘‘(2) TRUST
FUND.—Payments under sub-
section (a) shall be made from amounts in the
Health Professions Education Trust Fund estab-
lished in section 9511 of the Internal Revenue Code
of 1986.
‘‘(3) LIMITATION.—The obligation of the Fed-
eral Government to make payments under subsection
(a) is effective only to the extent of amounts in the
Fund.
‘‘(c) ENROLLMENT
STATUS; IMMIGRATION
STA-
TUS.—For purposes of subsection (a), an individual de-
scribed in this subsection is any individual—
‘‘(1) who is enrolled or accepted for enrollment
as a full-time student at a designated health profes-
sions school in any of the States; and
‘‘(2) for whom being in any of the States, or at-
tending an educational institution in any of the
States, does not constitute a violation of the Immi-
gration and Nationality Act.
‘‘(d) REQUIREMENT REGARDING COMPLETION
OF
EDUCATIONAL PROGRAM.—With respect to the program
of education in which an individual is enrolled or accepted
for enrollment at the designated health professions school
involved, an application agreement for payments under
subsection (a) for the individual is that the individual
will—
‘‘(1) maintain an acceptable level of academic
standing in the program (as determined by the
school in accordance with standards issued by the
Secretary); and
‘‘(2) complete the program of education.
‘‘(e) AMOUNT OF PAYMENTS; AUTHORIZED EXPEND-
ITURES.—
‘‘(1) AMOUNT.—
‘‘(A) For purposes of subsection (b)(1), the
amount of payments determined under this sub-
section is, subject to subparagraph (B), the
total of payments described in paragraph (2)
that the Secretary determines is necessary for
the individual to complete the program of edu-
cation in which the individual is enrolled or ac-
cepted for enrollment at the designated health
professions school involved.
‘‘(B) The total of payments made under
subsection (a) during the life of the individual
involved may not exceed $120,000, as adjusted
for each academic year beginning after July
1994 to offset the effects of inflation occurring
after October 1, 1993, as indicated by changes
in the consumer price index for all urban con-
sumers (U.S. city average), published by the
Bureau of Labor Statistics.
‘‘(2) AUTHORIZED
EXPENDITURES.—For pur-
poses of paragraph (1)(A), the payments described
in this paragraph are payments for the purposes
of—
‘‘(A) tuition and all other reasonable edu-
cational expenses of the program of education
involved, including fees, books, and laboratory
expenses; and
‘‘(B) a stipend.
‘‘(3) CERTAIN
CONSIDERATIONS
REGARDING
STIPENDS.—In determining the amount of a stipend
that an individual is to receive under paragraph (1),
the Secretary shall consider the costs of living in the
locality involved, the costs of child care for the chil-
dren of the individual (if any), the costs involved in
taking examinations required by the States involved
as a condition of practicing the health profession
with respect to which payments under subsection (a)
are provided, and such other costs as the Secretary
determines to be appropriate with respect to attend-
ance at a designated health professions school.
‘‘(4) TRANSFER OF LOAN BALANCES TO SEC-
RETARY.—In the case of an eligible individual to
whom a financial institution has made a loan for any
of the purposes specified in paragraph (2), the Sec-
retary may, upon the request of the individual, pay
the balance of the loan (except to the extent that the
loan was provided for other purposes). Payments
made under the preceding sentence on behalf of an
eligible individual shall be included in determining
the total of payments made for the individual for
purposes of paragraph (1)(B).
‘‘(5) AGREEMENT.—An application agreement
for payments under subsection (a) for an individual
is that the individual will expend the payments in
accordance with such restrictions on amount as the
Secretary may, under paragraph (1), establish for
the various categories of expenditures authorized in
paragraph (2).
‘‘(f) AUTHORITY
FOR
DIRECT
PAYMENTS
TO
SCHOOLS.—The Secretary may enter into an agreement
with a designated health professions school under which
the payments made under subsection (a) on behalf of an
individual for the purposes specified in subsection
(e)(2)(A) are made directly to the school. Payments under
the preceding sentence are not subject to section 3324 of
title 31, United States Code (relating to advance pay-
ments).
‘‘(g) FAILURE REGARDING SATISFACTORY COMPLE-
TION OF EDUCATIONAL PROGRAM.—
‘‘(1) IN GENERAL.—An application agreement
for payments under subsection (a) for an individual
is that, if the individual fails to comply with sub-
section (d), the individual is liable to the Federal
Government in an amount equal to the sum of—
‘‘(A) the amount of the payments that
have been made; and
‘‘(B) an amount representing interest on
such payments, accruing during the period in
which the payments were made and determined
by the Secretary of the Treasury on the basis
of the average of the bond equivalent of the
weekly 90-day auction rate of Treasury bills.
‘‘(2) WAIVER.—The Secretary may waive the
right of the Federal Government to recover amounts
pursuant to paragraph (1) if compliance by the indi-
vidual with the agreement made under subsection
(d) is impossible or would involve extreme hardship
and if enforcement of the agreement with respect to
any individual would be unconscionable.
‘‘(3) BANKRUPTCY.—The liability of an individ-
ual pursuant to paragraph (1) 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 7-year period beginning on the
first date that payments pursuant to such liability
are required, and only if the bankruptcy court finds
that nondischarge of the obligation would be uncon-
scionable.
‘‘(h) CHOICE OF SCHOOL.—The entitlement estab-
lished pursuant to subsection (a) regarding an individual
applies to any designated health professions school with
respect to which the requirements of this section are met.
Application agreements made under this section may not
be construed as prohibiting an individual from transfer-
ring between schools.
‘‘(i) APPLICATION FOR PAYMENTS.—For purposes of
subsection (a), an application for payments under such
subsection is in accordance with this subsection if—
‘‘(1) the application is submitted to the Sec-
retary by the date established by the Secretary re-
garding payments for the academic year involved;
‘‘(2) the application contains the acknowledg-
ment required in subsection (a)(2);
‘‘(3) the application contains assurances satis-
factory to the Secretary that the individual involved
is an individual described in subsection (c);
‘‘(4) the application contains each application
agreement described in this section; and
‘‘(5) the application is in writing, is signed by
such individual, and otherwise is in such form as the
Secretary may require.
‘‘(j) DENTAL RESIDENCIES.—The entitlement estab-
lished pursuant to subsection (b) applies to the costs relat-
ed to participation in a residency training program in den-
tistry to the same extent and in the same manner as the
entitlement applies to the costs related to attendance at
a designated health professions school. For purposes of
subsection (e)(1)(B), the preceding sentence does not af-
fect the limitation on the total of payments under sub-
section (a) that may be made to an individual during the
life of the individual.
‘‘(k) DEFINITIONS.—For purposes of this section:
‘‘(1) The term ‘application agreement’, with re-
spect to payments under subsection (a) for an indi-
vidual, means that the Secretary may not make the
payments unless the individual makes the agreement
involved.
‘‘(2) The term ‘costs’, in the case of the costs
related to the attendance of an individual at a des-
ignated health professions school, means the costs
for which payments may be made for purposes of
subsection (e)(2).
‘‘(3) The term ‘designated health professions
school’ means a school specified in subsection (a)(1).
‘‘(4) The term ‘eligible individual’ means an in-
dividual described in subsection (c) who submits to
the Secretary an application in accordance with sub-
section (i).
‘‘(5) The term ‘Fund’ means the Health Profes-
sions Education Trust Fund established in section
9511 of the Internal Revenue Code of 1986.’’.
SEC. 3. FINANCING OF ENTITLEMENT PROGRAM.
(a) HEALTH PROFESSIONS ASSISTANCE RECAPTURE
TAX.—
(1) IN GENERAL.—Subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to
determination of tax liability) is amended by adding
at the end thereof the following new part:
‘‘PART III—HEALTH PROFESSIONS ASSISTANCE
RECAPTURE TAX
‘‘Sec. 59B. Imposition of additional tax.
‘‘SEC. 59B. IMPOSITION OF ADDITIONAL TAX.
‘‘(a) GENERAL RULE.—In the case of any individual
to whom this section applies, there is hereby imposed (in
addition to any other tax imposed by this subtitle) a tax
equal to 1 percent of the recapture income of such individ-
ual for the taxable year.
‘‘(b) HIGHER TAX RATE WHERE ASSISTANCE EX-
CEEDS CERTAIN AMOUNT.—If the aggregate amount of
payments made to the taxpayer (or spouse of the tax-
payer) under section 735A of the Public Health Service
Act exceeds an amount equal to 50 percent of the amount
in effect for purposes of subsection (e)(1)(B) of such sec-
tion (as of the time the taxpayer completes the program
of education with respect to which such payments were
provided), subsection (a) shall be applied by substituting
‘2 percent’ for ‘1 percent’.
‘‘(c) INDIVIDUALS TO WHOM SECTION APPLIES.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, this section shall apply to
an individual who—
‘‘(A) received payments under section
735A of the Public Health Service Act, and
‘‘(B) before the close of the taxable year,
successfully completed the program of education
with respect to which such payments were pro-
vided.
‘‘(2) 
THREE-YEAR
RESIDENCY
FORBEAR-
ANCE.—If an individual is enrolled in a residency
training program in medicine, dentistry, or podiatry,
this section shall not apply to the individual for a
taxable year—
‘‘(A) which includes any portion of the pe-
riod beginning on the date on which the individ-
ual begins participation in the program and
ending on the earlier of the date on which the
individual completes the program or the date
that is 3 years after the individual begins such
participation; and
‘‘(B) for which the individual participates
in the program in accordance with the terms of
the program.
‘‘(3) SERVICES
IN
HEALTH
PROFESSIONAL
SHORTAGE AREAS.—With respect to an individual
who completes a residency training program in medi-
cine, dentistry, or podiatry and who continues or be-
gins practice as a provider of primary health services
(as defined in section 331(a)(3)(D) of the Public
Health Service Act), this section shall not apply to
the individual for a taxable year during which, for
not less than 6 months, the individual provides such
services in a health professional shortage area (as
designated under section 332 of such Act).
‘‘(4) TAXPAYERS NOT REQUIRED TO FILE RE-
TURN.—This section shall not apply to any individ-
ual for any taxable year if such individual is not re-
quired to file a return of the tax imposed by this
chapter for such taxable year.
‘‘(5) INDIVIDUALS WHO HAVE ATTAINED AGE
67.—This section shall not apply to any individual
for any taxable year if such individual has attained
age 67 before the close of such taxable year.
‘‘(d) RECAPTURE INCOME.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the term ‘recapture income’ means modi-
fied adjusted gross income (as defined in section
86(b)(2)).
‘‘(2) TREATMENT OF MARRIED INDIVIDUALS.—
‘‘(A) JOINT RETURNS.—In the case of a
joint return where only 1 spouse is an individ-
ual to whom this section applies, the term ‘re-
capture income’ means the sum of—
‘‘(i) the portion of the modified ad-
justed gross income of the individuals fil-
ing such return which is attributable to
earned income (as defined in section
911(d)(2)) of the individual to whom this
section applies, plus
‘‘(ii) 50 percent of the portion of such
modified adjusted gross income which is
not described in clause (i) and is not at-
tributable to the earned income (as so de-
fined) of the other spouse.
‘‘(B) SEPARATE RETURNS.—In the case of
a married couple where only 1 of the spouses is
an individual to whom this section applies (de-
termined without regard to this subparagraph)
and where the spouses file separate returns for
the taxable year—