Because physicians who default on their medical school loans don't always respond to the prodding of a guilty conscience, the government tightened the vise a couple of years ago by excluding them from the Medicare and Medicaid programs. Now they also face public derision.
For the first time, HHS has released to the public the names of more than 1,300 health professionals who have not paid their Health Education Assistance Loans. Together they owe more than $107 million.
HEAL is a guaranteed federal loan of up to $80,000 over four years that has helped 160,000 health professionals finance their educations since 1981. More than 120,000 current borrowers owe a total of about $4 billion.
About 40% of HEAL borrowers are allopathic students and about 15% are osteopathic students. About 70% of current osteopathic and 20% of current allopathic medical students have HEAL loans, according to the Health Resources and Services Administration, a division of HHS.
In 1993 HHS began publishing the names of defaulters in the Federal Register and in 1995 the department began excluding defaulters from Medicare and Medicaid. This is the first year defaulters are listed by name, discipline and location on the HHS Web site. More than a million people have visited the site, according to Michael Heningburg, director of student assistance at HRSA.
"For the 120,000 HEAL borrowers who have yet to enter repayment, this is a very graphic reminder to them that they need to take advantage of the various repayment options, but defaulting is not an option," Heningburg says.
Repayment is supposed to begin upon graduation and about 95% of HEAL borrowers honor the loan terms and set up 25-year repayment schedules soon after they graduate.
Those who don't honor the loan terms receive past-due letters and are sometimes taken to court by the borrowing institution (usually a private bank), Heningburg says. Because the loan is federally guaranteed, the government eventually must pay the lender and begin its own collection tactics. In addition, the defaulters are excluded from Medicare and Medicaid until a repayment plan is in place.
"Only the people who do not get into repayment after all of our efforts are excluded. If they set up repayment arrangements with their local Department of Justice and start repaying, we will lift the exclusion," Heningburg says.
Since the names of defaulters first appeared on the Web, about 67 names have been deleted, some because they died, others because they filed for bankruptcy and a few because they set up repayment plans. The first HEAL loans were issued in 1981 when Congress declared health professionals a national resource and required the government to shoulder some of the financial burden.