Secretary will place the applications into categories based upon the selection priorities described in paragraph (b) of this section. The Secretary will then evaluate each applicant on the basis of the selection criteria listed in paragraph (c) of this section, giving special consideration to (1) medical and osteopathic students who indicate their intention to enter family practice, internal medicine, pediatrics, or osteopathic general practice residencies, and to (2) dental students who indicate their intention to undertake general practice training following graduation or who plan no postgraduate training.

(b) Priorities. (1) First priority will be given to individuals who have previously received a scholarship under the PH/NHSC Scholarship Training Program, a scholarship under this Scholarship Program, or a scholarship under section 758 of the Act, authorizing scholarships for first-year students of exceptional financial need.

(2) Second priority will be given to applications submitted by applicants who (i) for the school year beginning in calendar year 1978, are entering their first, second, or third years of study; (ii) for the school year beginning in calendar year 1979, are entering their first or second years of study; and, (iii) for each school year beginning in calendar years after 1979, are entering their first year of study.

(c) Selection criteria. Selection of participants will be made on the basis of the following criteria: (1) Work experience; (2) community background; (3) career goals; (4) faculty recommendation; and, (5) academic performance.

(d) Duration of scholarship award. Subject to the availability of funds for the Scholarship Program and the National Health Service Corps, the Secretary will award a Scholarship Program participant a scholarship under this part for a period of 1 school year. The Secretary will award a continuation scholarship if (1) the participant requests a continuation, (2) the award will not extend the total period of Scholarship Program support beyond 4 years, and (3) the participant is eligible for continued participation in the Scholarship Program.

§ 62.7 What will an individual be awarded for participating in the Scholarship Program?

(a) Amount of scholarship. (1) A scholarship award under this part for each school year will consist of (i) tuition, (ii) reasonable educational expenses, including required fees, books, supplies, and required educational equipment, and (iii) a monthly stipend for the 12-month perod beginning with the first month of each school year in which the individual is a Scholarship Program participant. For purposes of this section "required fees" means those fees which are charged by the school to all students pursuing a similar curriculum and “required educational equipment" means educational equipment which must be rented or purchased by all students pursuing a similar curriculum at that school.

(2) The Secretary may enter into a contract with the school in which the Scholarship Program participant is enrolled for the direct payment of tuition and reasonable educational expenses in the Scholarship Program participant's behalf.

(b) Payment of scholarship: leave-ofabsence; repeated coursework. The Secretary will suspend scholarship payments to or on behalf of a Scholarship Program participant if the school in which the participant is enrolled (1) approves a leave-of-absence for health, personal, or other reasons, or (2) requires the participant to repeat course work for which the Secretary has previously made scholarship payments under § 62.7. However, if the repeated coursework does not delay the participant's graduation date, scholarship payments will continue except for any additional costs relating to the repeated coursework. Any scholarship payments suspended under this paragraph will be resumed by the Secretary upon notification by the school that the participant has returned from the leave-of-absence or has completed the repeated coursework and is pursuing as a full-time student the course of study for which the scholarship was awarded.

§ 62.8 What does an individual have to do in return for the Scholarship Program award?

(a) General. Except as provided in paragraphs (d), (f), and (g) of this section, each Scholarship Program participant is obligated to serve in the full-time clinical practice of the participant's profession as a Commissioned Officer in the Regular or Reserve Corps of the Service or as a civilian member of the National Health Service Corps in the health manpower shortage area to which the participant is assigned.

(b) Beginning of service. Except as provided in § 62.9(d), the period of obligated service will begin as soon as possible following (1) the completion of the Scholarship Program participant's course of study leading to a degree in medicine, osteopathy, dentistry, or other health profession, and (2) appointment of the participant as a Commissioned Officer in the Regular or Reserve Corps of the Service or as a civilian member of the National Health Service Corps. For purposes of this paragraph, "appointment" means only those appointments as a Commissioned Officer in the Regular or Reserve Corps of the Service or as a civilian member of the National Health Service Corps made specifically for the purpose of serving the participant's period of obligated service.

(c) Duration of service. Except as provided in § 62.14(b)(1), the period for which the Scholarship Program participant is obligated to serve is equal to 1 year for each school year for which the participant receives a scholarship award under this part, or 2 years, whichever is greater.

(d) Service by detail. If the Secretary determines that there is no need in a health manpower shortage area for a member of the profession in which the Scholarship Program participant is obligated to provide service, the Scholarship Program participant may be detailed to serve the period of obligated service as a full-time member of the profession for which the participant has been trained, in any of the Department of Health, Education, and Welfare as the Secretary may determine.

(e) Creditability of approved graduate training. Except as provided in § 62.14(b)(2), no period of approved graduate training will be credited toward satisfying the period of obliunder gated service incurred the Scholarship Program.

(f) Service under the National Research Service Award Program. A Scholarship Program participant who demonstrates exceptional promise for medical research may perform the period of obligated service owed under this section by participating in the National Research Service Award Program for Individual Postdoctoral Fellows authorized under section 472 of the Act. Exceptional promise for medical research will be demonstrated if the participant applies for a National Research Service Award for Individual Postdoctoral Fellows, is selected to participate in this research program, and accepts the offer of participation. A Scholarship Program participant in the National Research Service Award Program will receive credit toward satisfying the period of obligated service incurred under this section for any period of time he or she is engaged in activities which meet the service requirements of the National Research Service Award Program. If the time served under the National Research Service Award Program is less than the total period of obligated service owed under the Scholarship Program, the participant will serve the remainder of the period of obligated service as a member of the National Health Service Corps. A participant who fails to begin or complete the service requirements under the National Research Service Award Program may be subject to the default penalty under § 62.10(c) of this Part and the default penalties under the National Research Service Award Program.

(g) Release from service obligation to engage in private practice. The Secretary will release a participant from all or part of the service obligation if the participant applies for a release under section 753 of the Act and enters into a written agreement to engage for a period equal to the remaining period of the participant's service obligation in the full-time private clinical prac

tice of the participant's health profession, in accordance with the requirements of section 753 of the Act.

§ 62.9 Under what circumstances can the period of obligated service be deferred to complete approved graduate training?

(a) If a Scholarship Program participant receives a degree from a school of medicine, osteopathy, or dentistry, the Secretary will, upon request of the participant, defer the beginning date of the obligated service for a period not to exceed three years for the purpose of completing an approved graduate training program. Each Scholarship Program participant receiving a degree in medicine or osteopathy who does not intend to enter training which can be completed within the maximum three-year period must complete at least one year of approved graduate training before the period of obligated service. This one year of training must be in (1) an allopathic flexible first-year program whose sponsorship includes approved residencies in family practice, internal medicine or pediatrics or a categorical first-year program in family practice, internal medicine, or pediatrics, or (2) a rotating internship in osteopathic medicine. Any Scholarship Program participant receiving a degree in medicine or osteopathy who fails to complete the one year of required training or an approved graduate training program will be subject to the default penalties of § 62.10(c). Participants graduating from a dental school not seeking deferment may begin the obligated service upon their graduation.

(b) If the Scholarship Program participant anticipates changing or altering the type of approved graduate training for which the deferment was granted under paragraph (a) of this section, the participant must submit a request for approval of the change or alteration to the Secretary.

(c) The Secretary may, from time to time, prescribe additional terms and conditions for deferment under paragraphs (a) and (b) of this section when in his or her judgment these additional terms and conditions are necessary

to carry out the purposes of the Scholarship Program.

(d) Any Scholarship Program participant whose period of obligated service has been deferred under paragraph (a) of this section, must begin the obligated service after completing the requested or required graduate training for which the deferment was granted, and upon being appointed as a Commissioned Officer in the Regular or Reserve Corps of the Service, or as a civilian member of the National Health Service Corps.

§ 62.10 What will happen if an individual does not comply with the terms and conditions of participating in the Scholarship Program?

(a) If a Scholarship Program participant, other than one described in paragraph (b) of this section, fails to accept payment or instructs the school not to accept payment of the scholarship provided by the Secretary, the participant must, in addition to any service or other obligation incurred under the contract, pay to the United States the amount of $1,500.00 liquidated damages. Payment of this amount must be made within 30 days of the date on which the participant fails to accept payment of the scholarship award or instructs the school not to accept payment.

(b) When a Scholarship Program participant fails to maintain an acceptable level of academic standing, is dismissed from the school for disciplinary reasons, or voluntarily terminates the course of study or program for which the scholarship was awarded before completing the course of study or program, the participant must, instead of performing any service obligation, pay to the United States an amount equal to all scholarship funds awarded under § 62.7. Payment of this amount must be made within 2 years of the date the participant becomes liable to make payment under this paragraph.

(c) If a Scholarship Program participant fails to begin or complete the period of obligated service incurred under § 62.8, including failing to comply with the applicable terms and conditions of a deferment granted by

the Secretary, the participant must pay to the United States an amount determined by the formula set forth in section 754(c) of the Act. Payment of this amount shall be made within 1 year of the date that the participant failed to begin or complete the period of obligated service, as determined by the Secretary.

§ 62.11 When can a Scholarship Program payment obligation be discharged in bankruptcy?

In accordance with section 754(d)(3) of the Act, any payment obligation incurred under § 62.10 may not be discharged in bankruptcy until 5 years after the date on which the payment obligation is due.

§ 62.12 Under what circumstances can the service or payment obligation be canceled, waived, or suspended?

(a) Any obligation of a Scholarship Program participant for service or payment will be canceled upon the death of the participant.

(b)(1) A Scholarship Program participant may seek a waiver or suspension of the service or payment obligations incurred under this part by written request to the Secretary setting forth the bases, circumstances, and causes which support the requested action. The Secretary may approve a request for a suspension for a period of 1 year. A renewal of this suspension may also be granted.

(2) The Secretary may waive or suspend any service or payment obligation incurred by a participant whenever compliance by the participant (i) is impossible, or (ii) would involve extreme hardship to the participant and if enforcement of the service or payment obligation would be against equity and good conscience.

(c) For the purpose of paragraph (b)(2)(i) of this section, compliance by a participant with a service or payment obligation will be deemed impossible if the Secretary determines, on the basis of information and documentation as may be required, that the participant suffers from a physical or mental disability that results in the

permanent inability of the participant to perform the service or other activities which would be necessary to comply with the obligation.

(d) For the purpose of paragraph (b)(2)(ii) of this section, in determining whether to waive or suspend any or all of the service or payment obligations of a participant as imposing an undue hardship and being against equity and good conscience, the Secretary, on the basis of information and documentation as may be required, will take into consideration the following:

(1) the participant's present financial resources and obligatons;

(2) the participant's estimated future financial resources and obligations; and

(3) the extent to which the participant has problems of a personal nature, such as physical or mental disability, terminal illness in the immediate family, which so intrude on the participant's present and future ability to perform as to raise a presumption that the individual will be unable to perform the obligation incurred.

§ 62.13 What are the limitations on the receipt of concurrent benefits?

Under section 741(f) or 836(h) of the Act, the Secretary may agree to repay a portion of an individual's educational loans in return for the individual's agreement to practice his or her profession in an area in need of health manpower. However, a Scholarship Program participant may not enter into an agreement with the Secretary under section 741(f) or 836(h) of the Act, until either (1) the participant has completed the service obligation under the Scholarship Program, (2) the Secretary has recovered from the participant an amount determined in accordance with § 62.10, or (3) any service or payment obligation has been waived in accordance with § 62.12. In no case shall a scholarship received under this part be considered an educational loan for the purposes of section 741(f) or 836(h) of the Act.

§ 62.14 What are the special provisions relating to recipients of awards under the PH/NHSC Scholarship Training Program and who will also receive awards under the Scholarship Program?

(a) Except as provided in paragraph (b) of this section, if a participant has previously received an award under the PH/NHSC Scholarship Training Program and also receives an award under the Scholarship Program, the terms and conditions of this part will apply to the participant's entire obligation incurred under both the PH/ NHSC Scholarship Training Program and the Scholarship Program.

(b) If a participant has previously reIceived an award under the PH/NHSC Scholarship Training Program and also receives an award under the Scholarship Program, the following conditions apply:

(1) Period of obligated service-carry over. The period of obligated service owed by the participant is equal to the total number of school years for which scholarship support was awarded under both the PH/NHSC Scholarship Training Program and the Scholarship Program without regard to each Program's minimum support requirement under 42 CFR 62.7(a) (1976) as adopted on May 22, 1974 (see 39 FR 17962), and under § 62.8(c) of this part.

(2) Creditability for internship and residency training. (i) If a Scholarship Program participant received a scholarship under the PH/NHSC Scholarship Training Program for any school year beginning before October 12, 1976, the participant will receive credit toward satisfying the periods of obligated service incurred under the PH/ NHSC Scholarship Training Program and under § 62.8 of this part for any periods of internship or residency training served in a Service or National Health Service Corps facility.

(ii) If a Scholarship Program participant received a scholarship for the first time during the 1977-78 school year under the PH/NHSC Scholarship Training Program, the participant will only receive 1 year of credit toward satisfying the period of obligated service incurred under the PH/NHSC Scholarship Training Program for in

ternship or residency training served in a Service or National Health Service Corps facility.

(3) Default penalties. The PH/NHSC Scholarship Training Program default penalty will apply to a participant who fails to begin or complete the active duty service obligation incurred under that Program, and the § 62.10 default penalties will apply to a participant who fails to begin or complete the service obligation incurred under § 62.8 of this part. For purposes of determining which default penalty to apply when an individual who has received a scholarship award under both the PH/ NHSC Scholarship Training Program and the Scholarship Program fails to begin or complete his service obligation, the service obligations will be deemed to have been served in the order in which they were incurred.

63.5

Terms and conditions of award. 63.6 Termination of traineeships. 63.7 Appropriate Institute.

AUTHORITY: Sec. 215, 58 Stat. 690, secs. 301, 402, 403, 58 Stat. 691, 707, sec. 303, 60 Stat. 423, secs. 412, 422, 62 Stat. 464, 598, sec. 433, 64 Stat. 444; 42 U.S.C. 216, 241, 282, 283, 242a, 287a, 288a, 289c.

SOURCE: 21 FR 9868, Dec. 12, 1956, unless otherwise noted.

§ 63.1 Nature and purpose of traineeships.

(a) A National Institutes of Health traineeship is an award of funds to an individual for his subsistence during a period in which he is acquiring advanced training in the diagnosis, prevention or treatment of diseases of public health significance. The purpose of such traineeships is to make available in the United States for the community effort against such diseases an increased number of persons having special competence in such diagnosis, prevention or treatment.

(b) A National Library of Medicine Traineeship is an award of funds to an