Service Act [this part] from appropriations for fiscal years ending after June 30, 1969."

Amendment of subsec. (c) (2) (A) by section 103 (a) (3) of Pub. L. 90-490 applicable in the case of assurances given after Aug. 16, 1968, under this part, see section 103(b) of Pub. L. 90-490, set out as a note under section 293c of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment of subsecs. (b), (c), and (d) of this section by Pub. L. 88-581 effective with respect to applications for grants from appropriations for fiscal years beginning after June 30, 1965, see effective date note under section 291c of this title.

ABOLITION OF OFFICE OF SURGEON GENERAL

The Office of the Surgeon General was abolished by section 3 of 1966 Reorg. Plan No. 3 eff. June 25, 1966, 31 F.R. 8855, 80 Stat. 1610, and all functions thereof were transferred to the Secretary of Health, Education, and Welfare by section 1 of 1966 Reorg. Plan No. 3, set out as a note under section 202 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 293d, 294, 294d, 295f-1, 295g of this title.

§ 293b. Amount of grant. (a) Maximum payments.

(1) Except as provided in paragraph (2) of this subsection, the amount of any grant under this part shall be such amount as the Surgeon General determines to be appropriate after obtaining the advice of the Council; except that (A) in the case of a grant for a project for a new school, and in the case of a grant for new facilities for an existing school in cases where such facilities are of particular importance in providing a major expansion of training capacity, as determined in accordance with regulations, such amount may not exceed 66% per centum of the necessary cost of construction, as determined by the Surgeon General, of such project; and (B) in the case of any other grant, such amount may not, except where the Secretary determines that unusual circumstances make a larger percentage (which in no case may exceed 66% per centum) necessary in order to effectuate the purposes of this part, exceed 50 per centum of the necessary cost of construction, as so determined, of the project with respect to which the grant is made.

(2) The amount of any grant under this part for construction of a project with respect to a school of public health shall be such amount as the Surgeon General determines to be appropriate after obtaining the advice of the Council, and may not exceed 75 per centum of the necessary cost of construction, as determined by the Surgeon General, of such project.

(b) Reservation of amount of grants; manner of pay

ments.

Upon approval of any application for a grant under this part, the Surgeon General shall reserve, from any appropriation available therefor, the amount of such grant as determined under subsection (a) of this section; the amount so reserved may be paid in advance or by way of reimbursement, and in such installments consistent with construction progress, as the Surgeon General may determine. The Surgeon General's reservation of any amount under this section may be amended

by him, either upon approval of an amendment of the application or upon revision of the estimated cost of construction of the facility.

(c) Exclusion of amounts granted by certain other funds.

In determining the amount of any grant under this part, there shall be excluded from the cost of construction an amount equal to the sum of (1) the amount of any other Federal grant which the applicant has obtained, or is assured of obtaining, with respect to the construction which is to be financed in part by grants authorized under this part, and (2) the amount of any non-Federal funds required to be expended as a condition of such other Federal grant.

(d) Grants for multipurpose facilities.

In the case of a project for construction of facilities which are primarily (as determined in accordance with regulations of the Secretary) for teaching purposes and for which a grant may be made under this part, but which also are for research purposes, or research and related purposes, in the sciences related to health (within the meaning of part A of this subchapter) or for medical library purposes (within the meaning of sections 280b to 280b-11 of this title), the project shall, insofar as all such purposes are involved, be regarded as a project for facilities with respect to which a grant may be made under this part. (July 1, 1944, ch. 373, title VII, § 722, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 168, and amended Aug. 16, 1968, Pub. L. 90-490, title I, §§ 120 (a), 104(a), 82 Stat. 773, 774.)

AMENDMENTS

1968 Subsec. (a)(1). Pub. L. 90-490, § 102(a), substituted "such amount may not, except where the Secretary determines that unusual circumstances make a larger percentage (which in no case may exceed 66% per centum) necessary in order to effectuate the purpose of this part, exceed 50 per centum" for "such amount may not exceed 50 per centum".

Subsec. (d). Pub. L. 90-490, § 104(a), added subsec. (d).

EFFECTIVE DATE OF 1968 AMENDMENT

Section 102(b) of Pub. L. 90-490 provided that: "The amendment made by this section [to subsec. (a)(1) of this section] shall apply in the case of projects for which grants are made from appropriations for fiscal years ending after June 30, 1969."

Section 104(b) of Pub. L. 90-490 provided that: "The amendment made by subsection (a) [adding subsec. (d) of this section] shall apply in the case of projects for which grants are made under part B of title VII of the Public Health Service Act [this part] from appropriations for fiscal years ending after June 30. 1969."

ABOLITION OF OFFICE OF SURGEON GENERAL

The Office of the Surgeon General was abolished by section 3 of 1966 Reorg. Plan No. 3 eff. June 25, 1966, 31 F.R. 8855, 80 Stat. 1610, and all functions thereof were transferred to the Secretary of Health, Education, and Welfare by section 1 of 1966 Reorg. Plan No. 3, set out as a note under section 202 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 293a, 293c of this title.

§ 293c. Recapture of payments.

If, within twenty years after completion of any construction for which funds have been paid under this part

(a) the applicant or other owner of the facility shall cease to be a public or nonprofit school or,

in case the facility was an affiliated hospital, the applicant or other owner of the facility ceases to be a public or other nonprofit agency qualified to file an application under section 291h of this title, or

(b) the facility shall cease to be used for the teaching purposes (and the other purposes permitted under section 293b of this title) for which it was constructed, unless the Secretary determines, in accordance with regulations, that there is good cause for releasing the applicant or other owner from the obligation to do so,

(c) the facility is used for sectarian instruction or as a place for religious worship,

the United States shall be entitled to recover from the applicant or other owner of the facility the amount bearing the same ratio to the then value (as determined by agreement of the parties or by action brought in the United States district court for the district in which such facility is situated) of the facility, as the amount of the Federal participation bore to the cost of construction of such facility. (July 1, 1944, ch. 373, title VII, § 723, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 168, and amended Aug. 16, 1968, Pub. L. 90-490, title I, § 103 (a) (1), (2), 82 Stat. 773.)

AMENDMENTS

1968 - Pub. L. 90-490, § 103(a) (2), substituted "twenty" for "ten" in the introductory text.

Subsec. (b). Pub. L. 90-490, § 103 (a) (1), provided for recapture of payments when the facility is not used for the purposes permitted under section 293b of this title and substituted “Secretary" for "Surgeon General".

EFFECTIVE Date of 1968 AMENDMENT

Section 103(b) of Pub. L. 90-490 provided that: "The amendments made by subsection (a) (1) and (2) [to subsec. (b) and text preceding subsec. (a) of this section] shall apply in the case of facilities for which a grant has been or is in the future made under part B of title VII of the Public Health Service Act [this part]. The amendment made by subsection (a) (3) [to section 293a (c) (2) (A) of this title] shall apply in the case of assurances given after the date of enactment of this Act [Aug. 16, 1968] under such part B [this part]."

ABOLITION OF OFFICE OF SURGEON GENERAL

The Office of the Surgeon General was abolished by section 3 of 1966 Reorg. Plan No. 3, eff. June 25, 1966, 31 PR. 8855, 80 Stat. 1610, and all the functions thereof were transferred to the Secretary of Health, Education, and Welfare by section 1 of 1966 Reorg. Plan No. 3, set out as a note under section 202 of this title.

§ 293d. Definitions.

As used in this part and parts C, E, and F(1) The terms "construction" and "cost of construction" include (A) the construction of new buildings, the expansion of existing buildings, and remodeling, replacement, renovation, major repair (to the extent permitted by regulations), or alteration of existing buildings, including architects' fees, but not including the cost of acquisition of land or offsite improvements, and (B) initial equipment of new buildings and of the expanded, remodeled, repaired, renovated, or altered part of existing buildings; but such term shall not include the construction or cost of construction of so much of any facility as is used or is to be used for sectarian instruction or as a place for religious worship;

(2) The term "nonprofit school" means a school owned and operated by one or more corporations or 47-500 0-71-vol. 9-12

associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual;

(3) The term "affiliated hospital" means a hospital, as defined in section 291i of this title, which is not owned by, but is affiliated (to the extent and in the manner determined in accordance with regulations) with, a school of medicine or school of osteopathy which meets the eligibility conditions set forth in section 293a (b) (1) of this title; (4) The terms "school of medicine", "school of dentistry", "school of osteopathy", "school of pharmacy”, “school of optometry”, “school of podiatry", "school of veterinary medicine", and "school of public health" mean a school which provides training leading, respectively, to a degree of doctor of medicine, a degree of doctor of dentistry or an equivalent degree, a degree of doctor of osteopathy, a degree of bachelor of science in pharmacy or doctor of pharmacy, a degree of doctor of optometry or an equivalent degree, a degree of doctor of podiatry or doctor of surgical chiropody, a degree of doctor of veterinary medicine or an equivalent degree, and a graduate degree in public health, and including advanced training related to such training provided by any such school; and

(5) The term "school of nursing" means a department, school, division, or other administrative unit, in a college or university, which provides, primarily or exclusively, a program of education in professional nursing and allied subjects leading to the degree of bachelor of arts, bachelor of science, bachelor of nursing, or other baccalaureate degree of equivalent rank; or to a graduate degree in nursing. (July 1, 1944, ch. 373, title VII, § 724, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 169, and amended Oct. 22, 1965, Pub. L. 89-290, § 2(b), 79 Stat. 1056; Nov. 2, 1966, Pub. L. 89-709, § 2(c), 80 Stat. 1103; Aug. 16, 1968, Pub. L. 90-490, title I, § 105(c), 82 Stat. 774.)

AMENDMENTS

1968 Par. (4). Pub. L. 90-490 inserted "and including advanced training related to such training provided by any such school".

1966-Par. (4). Pub. L. 89-709 included school of veterinary medicine and defined such term to mean a school which provides training leading to a degree of doctor of veterinary medicine or an equivalent degree. 1965-Pub. L. 89-290 substituted "As used in this part and parts C, E, and F", for "As used in this part." EFFECTIVE DATE OF 1968 AMENDMENT

Amendment by Pub. L. 90-490 applicable in the case of projects for which grants are made under this part from appropriations for fiscal years ending after June 30, 1969, see section 105(d) of Pub. L. 90-490, set out as a note under section 293a of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 295h-4 of this title and in title 20 section 751.

of whom shall be ex officio members, and seventeen members appointed by the Secretary without regard to the civil service laws. Four of the appointed members shall be selected from the general public and thirteen shall be selected from among leading authorities in the fields of higher education, at least nine of whom are particularly concerned with training in medicine, dentistry, osteopathy, pharmacy, optometry, podiatry, veterinary medicine, or the public health professions. In selecting persons for appointment to the Council, consideration shall be given to such factors, among others, as (1) experience in the planning, constructing, financing, or administration of schools of medicine, dentistry, osteopathy, pharmacy, optometry, podiatry, veterinary medicine, or schools of public health, and (2) familiarity with the need for teaching facilities in all areas of the Nation.

(b) Functions.

The Council shall advise the Surgeon General in the preparation of general regulations and with respect to policy matters arising in the administration of this part, and in the review of applications thereunder.

(c) Administration.

The Surgeon General is authorized to use the services of any member or members of the Council in connection with matters related to the administration of this part, for such periods, in addition to conference periods, as he may determine. The Surgeon General shall, in addition, make appropriate provision for consultation between and coordination of the work of the Council and the National Advisory Council on Health Research Facilities with respect to matters bearing on the purposes and administration of this part. (July 1, 1944, ch. 373, title VII, § 275, as added Sept. 24, 1963, Pub. L. 88129, § 2(b), 77 Stat. 169, and amended Sept. 4, 1964, Pub. L. 88-581, § 3(c), 78 Stat. 919; Nov. 2, 1966, Pub. L. 89-709, § 2(d), 80 Stat. 1103; Nov. 3, 1966, Pub. L. 89-751, § 3(a), 80 Stat. 1230; Dec. 5, 1967, Pub. L. 90-174, § 12(c), 81 Stat. 541; Oct. 30, 1970, Pub. L. 91-515, title VI, § 601(b) (2), 84 Stat. 1311.) REFERENCES IN TEXT

The civil service laws, referred to in subsec. (a), are classified generally to Title 5, Government Organization and Employees.

AMENDMENTS

1970-Subsec. (d). Pub. L. 91-515 struck out subsec. (d) which related to the payment of compensation and travel expenses of appointed members of the Council.

1967 Subsec. (a). Pub. L. 90-174 increased the number of Council members appointed from among leading authorities in fields of higher education from twelve to thirteen.

1966-Subsec. (a). Pub. L. 89-709 substituted "seventeen members" for "sixteen members" and "at least nine of whom" for "at least eight of whom", and inserted words "veterinary medicine," after "podiatry," in two instances. Subsec. (d). Pub. L. 89-751 substituted "$100" for "50."

1964 Subsec. (a). Pub. L. 88-581 eliminated references to "nursing" to conform to the enactment of subchapter VI of this chapter by Pub. L. 88-581 which relates to nurse training.

EFFECTIVE DATE OF 1964 AMENDMENT Section 3(c) of Pub. L. 88-581 provided that the amendment to subsec. (a) of this section by Pub. L. 88-581 shall be effective with respect to appointments to the National Advisory Council on Education for Health Professions made after Sept. 4, 1964.

TRANSFER OF FUNCTIONS

All functions of Public Health Service, of the Surgeon General of the Public Health Service, and of all other offcers and employees of the Public Health Service, and all functions of all agencies of or in the Public Health Service transferred to Secretary of Health, Education, and Welfare by 1966 Reorg. Plan No. 3, 31 F.R. 8855, 80 Stat. 1610, effective June 25, 1966, set out as a note under section 202 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 293a of this title. § 293f. Noninterference with administration of institutions.

Nothing contained in this part shall be construed as authorizing any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over or impose any requirement or condition with respect to, the personnel, curriculum, methods of instruction, or administration of any institution. (July 1, 1944, ch. 373, title VII § 726, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 170.)

§ 293g. Regulations.

(a) The Surgeon General, after consultation with the Council and with the approval of the Secretary, shall prescribe general regulations for this part covering the eligibility of institutions, the order of priority in approving applications, the terms and conditions for approving applications, determinations of the amounts of grants, and minimum standards of construction and equipment for various types of institutions.

(b) The Surgeon General is authorized to make, with the approval of the Secretary, such other regulations as he finds necessary to carry out the provisions of this part. (July 1, 1944, ch. 373, title VII, § 727, as added Sept. 24, 1963, Pub. L. 88–129, § 2(b), 77 Stat. 170.)

ABOLITION OF OFFICE OF SURGEON GENERAL The Office of the Surgeon General was abolished by section 3 of 1966 Reorg. Plan No. 3 eff. June 25, 1966, 31 F.R. 8855, 80 Stat. 1610, and all functions thereof were transferred to the Secretary of Health, Education, and Welfare by section 1 of 1966 Reorg. Plan No. 3, set out as a note under section 202 of this title.

§ 293h. Technical assistance.

In carrying out the purposes of this part, and to further the development of State, or joint or coordinated regional or other interstate, planning of programs for relieving shortages of training capacity in the fields of medicine, dentistry, osteopathy, pharmacy, optometry, podiatry, and public health, through constructing teaching facilities, providing adequate financial support for schools, or otherwise, the Surgeon General is authorized to provide technical assistance and consultative services to State or interstate planning agencies established for any of such purposes. (July 1, 1944, ch. 373, title VII, § 728, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 170, and amended Sept. 4, 1964, Pub. L. 88581, § 3(d), 78 Stat. 919.)

EFFECTIVE DATE OF 1964 AMENDMENT Section 3(d) of Pub. L. 88-581 provided that the amendment of this section by Pub. L. 88-581 shall be effective July 1, 1965.

ABOLITION OF OFFICE OF SURGEON GENERAL

The Office of the Surgeon General was abolished by section 3 of 1966 Reorg. Plan No. 3 eff. June 25, 1966, 31 FR. 8855, 80 Stat. 1610, and all functions thereof were transferred to the Secretary of Health, Education, and Welfare by section 1 of 1966 Reorg. Plan No. 3, set out as a note under section 202 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 293a of this title.

PART C.-STUDENT LOANS

PART REFERRED TO IN OTHER SECTIONS

This part is referred to in sections 293d, 295g-1 of this title.

§ 294. Loan agreements for establishment of student loan funds.

(a) Authority of Secretary of Health, Education, and Welfare.

The Secretary of Health, Education, and Welfare is authorized to enter into an agreement for the establishment and operation of a student loan fund in accordance with this part with any public or other nonprofit school of medicine, osteopathy, dentistry, pharmacy, podiatry, optometry, or veterinary medicine which is located in a State and is accredited as provided in section 293a (b) (1) (B) of this title.

(b) Terms and conditions.

Each agreement entered into under this section shall

(1) provide for establishment of a student loan fund by the school;

(2) provide for deposit in the fund, except as provided in section 294f of this title, of (A) the Federal capital contributions to the fund, (B) an amount equal to not less than one-ninth of such Federal capital contributions, contributed by such institution, (C) collections of principal and interest on loans made from the fund, (D) collections pursuant to section 294a (j) of this title, and (E) any other earnings of the fund;

(3) provide that the fund, except as provided in section 294f of this title, shall be used only for loans to students of the school in accordance with the agreement and for costs of collection of such loans and interest thereon;

(4) provide that loans may be made from such fund only to students pursuing a full-time course of study at the school leading to a degree of doctor of medicine, doctor of dentistry or an equivalent degree, doctor of osteopathy, bachelor of science in pharmacy or doctor of pharmacy, doctor of podiatry or doctor of surgical chiropody, doctor of optometry or an equivalent degree, or doctor of veterinary medicine or an equivalent degree and that while the agreement remains in effect no such student who has attended such school before July 1, 1971, shall receive a loan from a loan fund established under section 424 of Title 20; and

(5) contain such other provisions as are necessary to protect the financial interests of the United States.

(July 1, 1944, ch. 373, title VII, § 740, as added Sept. 24, 1963, Pub. L. 88-129, § 2(b), 77 Stat. 170, and amended Oct. 13, 1964, Pub. L. 88-654, § 1 (a), (b), 78 Stat. 1086; Oct. 22, 1965, Pub. L. 89-290, §§ 2(b), 4 (a), (f) (1), (2), 79 Stat. 1056-1058; Nov. 2, 1966, Pub. L. 89-709, § 3(a), (b), 80 Stat. 1103; Nov. 3, 1966, Pub. L. 89-751, § 5(c) (1), 80 Stat. 1232; Aug. 16, 1968, Pub. L. 90-490, title I, § 121(a) (1), (2), (5) (B), 82 Stat. 777, 778.)

AMENDMENTS

1968-Subsec. (b) (2). Pub. L. 90-490, § 121(a) (1), (5) (B), inserted ", except as provided in section 294f of this title," after "fund" where first appearing and added cl. (D) and redesignated former cl. (D) as (E), respectively. Subsec. (b) (3). Pub. L. 90-940, § 121(a)(1), inserted except as provided in section 294f of this title," after "fund" where first appearing.

Subsec. (b) (4). Pub. L. 90-490, § 121(a) (2), substituted "1971" for "1969".

1966 Subsec. (a). Pub. L. 89-709, § 3(a), included schools of veterinary medicine.

Subsec. (b) (2). Pub. L. 89-751 substituted "(A) the Federal capital contributions to the fund, (B) an amount equal to not less than one-ninth of such Federal capital contributions, contributed by such institution" for "(A) the amounts allocated under this part to the school by the Secretary, (B) an additional amount from other sources equal to not less than one-ninth of amounts deposited pursuant to clause (A)."

Subsec. (b) (4). Pub. L. 89-709, § 3 (b), included students pursuing a full-time course leading to a degree of doctor of veterinary medicine or an equivalent degree.

1965 Subsec. (a). Pub. L. 89-290, §§ 2(b), 4(f) (1), struck out "(as defined in section 293d of this title)" following "optometry", and inserted "pharmacy, podiatry."

Subsec. (b)(4). Pub. L. 89-290, § 4(a), (f)(2), substituted "July 1, 1969" for "July 1, 1966", and inserted "bachelor of science in pharmacy or doctor of pharmacy, doctor of podiatry or doctor of surgical chiropody."

1964 Subsec. (a). Pub. L. 88-654, § 1(a), included schools of optometry.

Subsec. (b) (4). Pub. L. 88-654, § 1(b), inserted doctor of optometry or an equivalent degree.

EFFECTIVE DATE OF 1968 AMENDMENT Amendment of subsec. (b) (2), (3) by section 121(a) (1), inserting the exception provisions, applicable with respect to appropriations for fiscal years ending after June 30, 1969, and amendment of subsec. (b) (2) by section 121(a) (5) (B), inserting new cl. (D), applicable with respect to loans made after June 30, 1969, see section 121(f) of Pub. L. 90-490, set out as a note under section 294f of this title.

EFFECTIVE DATE OF 1966 AMENDMENT Section 5(d) (1) of Pub. L. 89-751 provided that: "The amendments made by this section [to this section and sections 294b-294d of this title] shall be effective in the case of payments to student loan funds made after the enactment of this Act [Nov. 3, 1966], except in the case of payments pursuant to commitments (made prior to enactment of this Act [Nov. 3, 1966]) to make loans under section 744 of the Public Health Service Act [section 294d of this title] as in effect prior to the enactment of this Act [Nov. 3, 1966]."

EFFECTIVE DATE OF 1965 AMENDMENT Section 4(f) (5) of Pub. L. 89-290 provided that: "The amendments made by paragraphs (1), (2), (3), and (4) of this subsection [to subsecs. (a) and (b) (4) of this section and subsecs. (b) and (c) of section 294a of this title] shall be effective with respect to periods beginning on or after July 1, 1966."

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 293d, 294b294d, 294f of this title.

§ 294a. Loan provisions.

(a) Academic year limitation; preferences.

Loans from a loan fund established under this part may not exceed $2,500 for any student for any academic year or its equivalent. In the granting of such loans, a school shall give preference to persons who enter as first-year students after June 30, 1963.

(b) School determination of terms and conditions; needy students eligible.

Any such loans shall be made on such terms and conditions as the school may determine, but may be made only to a student in need of the amount thereof to pursue a full-time course of study at the school leading to a degree of doctor of medicine, doctor of dentistry or an equivalent degree, doctor of osteopathy, bachelor of science in pharmacy or doctor of pharmacy, doctor of podiatry or doctor of surgical chiropody, doctor of optometry or an equivalent degree, or doctor of veterinary medicine or an equivalent degree.

(c) Repayment in periodic installments; acceleration; commencement and duration of period; exclusions from period.

Such loans shall be repayable in equal or graduated periodic installments (with the right of the borrower to accelerate repayment) over the ten-year period which begins one year after the student ceases to pursue a full-time course of study at a school of medicine, osteopathy, dentistry, pharmacy, podiatry, optometry, or veterinary medicine excluding from such ten-year period all periods (up to three years) of (1) active duty performed by the borrower as a member of a uniformed service, or (2) service as a volunteer under the Peace Corps Act; and periods (up to five years) of advanced professional training including internships and residencies)1

(d) Cancellation of liability for repayment.

The liability to repay the unpaid balance of such a loan and accrued interest thereon shall be canceled upon the death of the borrower, or if the Secretary determines that he has become permanently. and totally disabled.

(e) Interest.

Such loans shall bear interest, on the unpaid balance of the loan, computed only for periods for which the loan is repayable, at the rate of 3 per centum per year.

(f) Cancellation of part of loan and interest thereon. Where any person who obtained one or more loans from a loan fund established under this part

(1) engages in the practice of medicine, dentistry, optometry, or osteopathy in an area in a State determined by the appropriate State health authority, in accordance with regulations provided by the Secretary, to have a shortage of and need for physicians, optometrists or dentists; and

(2) the appropriate State health authority certifies to the Secretary of Health, Education, and Welfare in such form and at such times as the Secretary may prescribe that such practice helps

1 So in original. There is no opening parenthesis.

to meet the shortage of and need for physicians, optometrists or dentists in the area where the practice occurs; then 10 per centum of the total of such loans, plus accrued interest on such amount, which are unpaid as of the date that such practice begins, shall be canceled thereafter for each year of such practice, up to a total of 50 per centum of such total, plus accrued interest thereon. In the case of a physician, dentist, or optometrist, the rate shall be 15 per centum (rather than 10 per centum) for each year of such practice in an area in a State which for purposes of this subsection and for that year has been determined by the Secretary, pursuant to regulations and after consultation with the appropriate State health authority, to be a rural area characterized by low family income; and, for the purpose of any cancellation pursuant to this sentence, an amount equal to an additional 50 per centum of the total amount of such loans plus interest may be canceled.

(g) Security or endorsement; minor borrowers.

Loans shall be made under this part without security or endorsement, except that if the borrower is a minor and the note or other evidence of obligation executed by him would not, under the applicable law, create a binding obligation, either security or endorsement may be required.

(h) Transfer or assignment of evidences of loans.

No note or other evidence of a loan made under this part may be transferred or assigned by the school making the loan except that, if the borrower transfers to another school participating in the program under this part, such note or other evidence of a loan may be transferred to such other school. (i) Payments to school upon cancellation of loans or interest.

Where all or any part of a loan, or interest, is canceled under this section, the Secretary shall pay to the school an amount equal to the school's proportionate share of the canceled portion, as determined by the Secretary.

(j) Penalty for late payment.

Subject to regulations of the Secretary, a school may assess a charge with respect to a loan made under this part for failure of the borrower to pay all or any part of an installment when it is due and, in the case of a borrower who is entitled to deferment of the loan under subsection (c) of this section or cancellation of part or all of the loan under subsection (f) of this section, for any failure to file timely and satisfactory evidence of such entitlement. The amount of any such charge may not exceed $1 for the first month or part of a month by which such installment or evidence is late and $2 for each such month or part of a month thereafter. The school may elect to add the amount of any such charge to the principal amount of the loan as of the first day after the day on which such installment or evidence was due, or to make the amount of the charge payable to the school not later than the due date of the next installment after receipt by the borrower of notice of the assessment of the charge.