from such capital contributions to authorize in writing assignment to the Secretary of the note or other evidence of that loan, and the note or other evidence of each prior loan made by the school to the student under this part, and the school must agree to assign to the Secretary so much of these notes or other evidence of loans as he may determine. The school shall continue to collect, as agent of the Secretary and for so long as he may determine, payments of principal and interest with respect to any such notes or other evidence of loans which may be assigned. Ten per centum of such payments with respect to notes or other evidence of loans which have been assigned shall be retained by the school and 90 per centum of such payments shall be paid to the Secretary. "(c)(1) For any fiscal year, the aggregate of (A) the amount of loans which may be guaranteed under clause (A) of paragraph (1), (2), or (3) of subsection (a) of section 746, (B) the amount of any other loans with respect to which the Secretary agrees to pay the interest differential authorized by section 746(a), (C) the amount of deposits to student loan funds made from the fund established under subsection (a), and (D) the amount of loans with respect to which the Secretary may be required, by virtue of section 741 (j), to make loan reimbursement payments, may not exceed such maximum amount as may be authorized by an appropriation Act, except that this amount in turn may not exceed the amount authorized to be appropriated for that year by section 742(a). Whenever a specified maximum amount is so authorized by an appropriation Act, there shall be established on the books of the Treasury as indefinite appropriations such sums as may be necessary from time to time to enable the Secretary to make payments required by a contract of guaranty or by any other undertaking made by him pursuant to section 746 with respect to such maximum amount. "(2) For any fiscal year, the share of the maximum amount determined under paragraph (1) which shall be available for students attending any school shall be determined by the Secretary by allocating such maximum amount among schools and organizations with which he has agreements under this part in a manner which he deems to be consistent, considering the availability of student assistance under title IV-B of the Higher Education Act of 1965, with the provisions of section 742(b)." (b) Section 743(b) of such Act is amended to read as follows: "(b) After September 30, 1966, each school with which the Secretary has made an agreement under this part shall pay to the Secretary, not less often than quarterly, 90 per centum (or such lesser proportion as the Secretary may deem to be equitable in light of the relative contributions to the loan fund) of the amounts received by the school after that date in payment of principal or interest on student loans made from the student loan fund established pursuant to such agreement, and the remainder of such amounts shall be retained by the institutions." ENCOURAGING PRIVATE CAPITAL FOR LOANS TO STUDENTS IN SCHOOLS OF NURSING SEC. 6. (a) Part B of title VIII of the Public Health Service Act is amended by inserting at the end thereof the following new sections: "ENCOURAGING PRIVATE CAPITAL FOR STUDENT LOANS "SEC. 829. (a) For the purpose of substituting for direct Federal support to the maximum extent practicable private and other non-Federal funds for student loans, the Secretary is authorized to provide the following forms of assistance, upon such terms and conditions as he may deem appropriate, for the benefit of students attending schools of nursing: "(1) If such a school borrows non-Federal funds (or otherwise receives or makes available repayable non-Federal funds) for deposit in a student loan fund established under this part, the Secretary may (A) guarantee timely repayment of all or part of such funds (plus interest thereon), (B) agree to reimburse the school for up to 90 per centum of the loss to it from defaults on student loans made from such funds, and (C) agree to pay to the school the amount of the interest differential (as defined in subsection (c)) with respect to such funds. "(2) If such a school arranges for a student assistance organization (as defined in subsection (c)) to make loans to students attending the school, the Secretary may enter into an agreement with the organization upon the terms set forth in section 822(b) and may (A) guarantee timely repayment of funds (plus interest thereon) borrowed by the organization for deposit in a student loan fund established under this part, (B) agree to reimburse the organization for up to 90 per centum of the loss to it from defaults on student loans made from such borrowed funds, and (C) agree to pay to the organization the amount of the interest differential with respect to such borrowed funds. A student assistance organization with which the Secretary makes an agreement pursuant to this paragraph shall be deemed to be a school of nursing for purpose of applying the other provisions of this part. "(3) If such a school enters into an arrangement with one or more lenders pursuant to which the lender makes loans (upon terms and conditions set forth in section 823 (b)) in such amounts and to such students as the school may determine on the basis of the criteria set forth in section 823, the Secretary may (A) guarantee to the lender timely repayment of the loans (including amounts thereof which are canceled), and (B) agree to pay to the lender such amount as the Secretary determines will give the lender, considering the interest on the loan, a reasonable rate of return on such loan. The Secretary shall condition any such assistance upon agreement by the school to pay the Secretary promptly an amount equal to 10 per centum of the amount paid by him to the lender on account of defaults on such student loans. "(b) The assistance provided by the Secretary pursuant to subsection (a) shall be subject to the following limitations: “(1) If the interest on an obligation is exempt from income taxation by reason of section 103(a) of the Internal Revenue Code of 1954, the Secretary shall not guarantee timely payment of that obligation except during such time or times as it is held beneficially by a holder which is exempt from income tax because it is a State or an instrumentality of a State or because of section 501(c) of such Code. "(2) No payment shall be made under this section with respect to a loan if the rate of interest on that loan exceeds such per centum per annum on the principal obligation outstanding as the Secretary (after consultation with the Secretary of the Treasury) determines to be reasonable, taking into account the range of interest rates prevailing in the private market for similar loans and the rate of interest the borrower pays or would have to pay with respect to other loans of a similar duration. "(c) For purposes of this section "(1) the term 'interest differential' means the excess of (A) the amount of interest paid by a school or organization with respect to sums deposited by it as capital contributions to a student loan fund established under this part, over (B) the amount of interest received by it on student loans made from such funds. "(2) the term 'student assistance organization' means a nonprofit organization authorized to make loans to students in one or more schools of nursing. "REVOLVING FUND; APPROPRIATIONS AUTHORIZED "SEC. 830. (a) There is hereby created in the Treasury a separate fund (hereinafter in this section called 'the fund') which shall be available to the Secretary without fiscal year limitation as a revolving fund for making Federal capital contributions to schools which have agreements with the Secretary under this part but which for legal or other reasons are unable (as determined by the Secretary) to take adequate advantage of assistance under section 829. Federal capital contributions made from the fund shall be made upon such terms and conditions as the Secretary may deem appropriate, and they may be made without regard to the allocation provisions of section 825. There shall be deposited into the fund all amounts appropriated pursuant to this section, all amounts appropriated pursuant to section 824 and not obligated prior to the date of enactment of this section, all amounts received by the Secretary as repayments of sums deposited by him in student loan funds, and any other moneys, property, or assets derived by him from his operations in connection with the fund, including any moneys derived directly or indirectly from the sale of assets, or beneficial interests or participation in assets, of the fund. There shall be paid from the fund all payments to schools required by section 823 (c) with respect to student loans financed from capital contributions from the fund, and all expenses and payments of the Secretary in connection with the sale (through the Federal National Mortgage Association or otherwise) of participations in obligations acquired under this part. If at any time the Secretary determines that moneys in the fund exceed the requirements of the fund, such excess shall be transferred to the general fund of the Treasury. "(b)(1) There are authorized to be appropriated $15,000,000 for the fiscal year ending June 30, 1967, and such sums for the succeeding fiscal year as may be necessary for making payments into the fund established under subsection (a). "(2) In order to receive capital contributions from the fund (and notwithstanding section 823(b)(7)), a school must agree to require each student who receives a loan financed from such capital contributions to authorize, in writing, assignment to the Secretary of the note or other evidence of that loan, and the note or other evidence of each prior loan made by the school to the student under this part, and the school must agree to assign to the Secretary so much of these notes or other evidence of loans as he may determine. The school shall continue to collect, as agent of the Secretary and for so long as he may determine, payments of principal and interest with respect to any such notes or other evidence of loans which may be assigned. Ten per centum of such payments with respect to notes or other evidence of loans which have been assigned shall be retained by the school and 90 per centum of such payments shall be paid to the Secretary. "(c) (1) For any fiscal year, the aggregate of (A) the amount of loans which may be guaranteed under clause (A) of paragraph (1), (2), or (3) of subsection (a) of section 829, (B) the amount of any other loans with respect to which the Secretary agrees to pay the interest differential authorized by section 829(a), (C) the amount of capital contributions to student loan funds made from the fund established under subsection (a), and (D) the amount of loans with respect to which the Secretary may be required, by virtue of section 823 (f), to make loan reimbursement payments, may not exceed such maximum amount as may be authorized by an appropriation Act, except that this amount in turn may not exceed the amount authorized to be appropriated for that year by section 824. Whenever a specified maximum amount is so authorized by an appropriation Act, there shall be established on the books of the Treasury as indefinite appropriations such sums as may be necessary from time to time to enable the Secretary to make payments required by a contract of guaranty or by any other undertaking made by him pursuant to section 829 with respect to such maximum amount. "(2) For any fiscal year, the share of the maximum amount determined under paragraph (1) which shall be available for students attending any school shall be determined by the Secretary by allocating such maximum amount among schools and organizations with which he has agreements under this part in a manner which he deems to be consistent, considering the availability of student assistance under title IV-B of the Higher Education Act of 1965, with the provisions of section 825." (b) Section 826(b) of such Act is amended to read as follows: "(b) After September 30, 1966, each school with which the Secretary has made an agreement under this part shall pay to the Secretary, not less often than quarterly, 90 per centum (or such lesser proportion as the Secretary may deem to be equitable in light of the relative contributions to the loan fund) of the amounts received by the school after that date in payment of principal or interest on student loans made from the student loan fund established pursuant to such agreement, and the remainder of such amounts shall be retained by the institutions." (c) Paragraph (1) of section 806(c) of the Public Health Service Act is amended by inserting "(A)" after "year" and by inserting the following before the semicolon at the end of such paragraph: ", or (B) a loan of $100 or more (i) pursuant to section 823 (f) (except so much as refinances a loan) or (ii) pursuant to section 829(a)(3)". AUTHORIZING LOAN INSURANCE FOR LOANS TO REFINANCE LOANS MADE FROM FEDERALLY ASSISTED STUDENT LOAN FUNDS SEC. 7. A loan by an eligible lender (as that term is defined in section 435 of the Higher Education Act of 1965) shall also be insurable by the Commissioner of Education, or by a State or nonprofit private institution or organization, under the provisions of title IV-B of that Act if it is made for the purpose of enabling the borrower to repay one or more student loans obtained by him from a loan fund established under title VII or VIII of the Public Health Service Act. The Commissioner of Education shall promulgate such regulations as he may deem appropriate to assure that loans which are insurable by virtue of this section shall be used for the purpose for which they are made. A loan shall be insurable by virtue of this section only if it is evidenced by a note or other written agreement which meets the requirements of section 427(a) (2) of the Higher Education Act of 1965, except that if the repayment period has begun for any loan which is to be repaid, the new loan may not be insured unless its repayment period begins when the loan is paid to the borrower. The amount of any loan which is made insurable by virtue of this section shall not be included in determining whether a student has exceeded the annual or aggregate limits set forth in section 425(a) (1) or section 428(c)(1)(A) of such Act. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Hon. HARLEY O. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to your request of February 4, 1966, for a report on H. R. 13196, the Allied Health Professions Personnel Training Act of 1966. This bill embodies the provisions of a draft bill transmitted by us to the Congress in order to carry out the recommendations on assistance for training in the allied health professions contained in the President's message to the Congress on domestic health and education. A more detailed justification for this legislative proposal will be presented in testimony before your committee. We urge that your committee give favorable consideration to this bill and that it be enacted by the Congress. Sincerely, WILBUR J. COHEN, Under Secretary. U.S. DEPARTMENT OF LABOR, OFFICE OF THE SECRETARY, Washington, D.C., March 24, 1966. Hon. HARLEY O. STAGGERS, Chairman, Committee on Interstate and Foreign Commerce, Dear Mr. CHAIRMAN: This is in response to your request for the views of the Department of Labor on H.R. 13196, the "Allied Health Professions Personnel Training Act of 1966." The Department of Labor strongly favors measures which would help in meeting the critical and growing shortage of medical services in our Nation. H.R. 13196 is designed to help meet this important need and is intended to carry out some of the recommendations made by President Johnson in his March 1, 1966, domestic health and education message to the Congress. We note with approval that the bill appropriately protects the working standards of laborers and mechanics employed on projects authorized under its terms. The Bureau of the Budget advises that there is no objection from the standpoint of the administration's program to the submission of this report. Sincerely, Hon. HARLEY O. STAGGERS, W. WILLARD WIRTZ, DEPARTMENT OF THE NAVY, Chairman, Committee on Interstate and Foreign Commerce, MY DEAR MR. CHAIRMAN: Your request for comment on H. R. 13196, a bill to amend the Public Health Service Act to increase the opportunities for training of medical technologists and personnel in other allied health professions, to improve the educational quality of the schools training such allied health professions personnel, and to strengthen and improve the existing student loan programs for medical, osteopathic, dental, podiatry, pharmacy, optometric, and nursing students, and for other purposes, has been assigned to this Department by the Secretary of Defense for the preparation of a report thereon expressing the views of the Department of Defense. This bill would amend the Public Health Service Act to increase the opportunities for training of medical technologists and personnel in other allied health professions. It would provide for grants for new construction or rehabilitation or improvement of existing training centers, and improvement of the educational quality of the schools training such personnel. It would further improve the existing loan programs for students of medicine, osteopathy, dentistry, pharmacy, podiatry, optometry, and nursing. The Department of the Navy, on behalf ot the Department of Defense, would have no objection to the enactment of H. R. 13196; however, we would defer to the 62-707-662 Department of Health, Education, and Welfare as the agency having primary interest in the bill. This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee. Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in response to your request of March 7, 1966, for a report of our Office on H.R. 13196. The bill would provide assistance to colleges and universities with training programs in the allied health professions by authorizing grants for (1) construction of teaching facilities for allied health professions personnel, (2) basic and special improvements in the quality of training centers, (3) traineeships for advanced training of allied health professions personnel, and (4) development of new training methods. It also would amend portions of the Health Professions Educational Assistance Act of 1963, the Nurse Training Act of 1964, and the Higher Education Act of 1965 relating to educational loans to students pursuing a full-time course of study leading to a degree in medicine, dentistry, osteopathy, pharmacy, podiatry, or nursing, encourage the use of private capital for student loans, and establish revolving funds for the health professions and nursing student loan programs. Section 2 of the bill would amend title VII of the Public Health Service Act by adding a new part G which provides grants for construction (sec. 791) and for improvement of the quality of teaching and training facilities (sec. 792). Although these sections authorize appropriations to carry out the legislation they do not specify the amount of funds authorized to be appropriated for each of the programs. Also, sections 793 and 794 of the bill, providing grants for advanced training of health professions personnel and development of new curriculums, respectively, do not specify the amount of funds to be appropriated. The above-cited sections of the bill do not contain a specific requirement for the maintenance of accounting records by grant recipients, except for section 792, and for access to such records for audit purposes. The committee may wish to amend the bill to establish the amounts to be authorized for each of the programs, and to include a provision for access to records and audits. On the latter point we suggest inclusion in the bill of language similar to that contained in section 304 of the Clean Air Act, approved December 17, 1963, Public Law 88–206, which requires maintenance of prescribed records and that access to such records be afforded to the Secretary of Health, Education, and Welfare and the Comptroller General, or their duly authorized representatives, for the purposes of audit and examination. See, also, section 909 of the Public Health Service Act, as added by Phblic Law 89-239. Section 4 of the bill would amend titles VII and VIII of the Public Health Service Act to increase the annual loan cancellation percentage for physicians who choose to practice in rural areas and to make an additional 50 percent for a total of 100 percent of the loan eligible for cancellation. To encourage students to obtain new loans or to refinance existing student loans with loans from private lending institutions insured under the Higher Education Act, this section would further provide loan reimbursement payments. These reimbursement payments would be comparable to the loan cancellation privilege available under the Public Health Service health professions and nursing loan programs. According to information on the bill furnished to us by Public Health Service officials, the reason for encouraging the transfer and refinancing of student loans and the making of new loans under the insured program of the Higher Education Act is to substitute the use of private funds for direct Federal appropriations which would also result in additional funds being available in the student loan programs for the health professions and nursing loans. |